Value doesn't mean cheap; stay in companies that can deliver 18- 20% growth for a sustainable period: Vikas Khemani

economictimes.indiatimes.com:

Vikas Khemani, Founder, Carnelian Capital Advisors, says: “Our average portfolio valuation is about 19-20 times PE and average portfolio growth is about 17-18%. That tells you that you are in this market also able to find growth stories with a reasonable valuation and with the ROC or ROE portfolio upwards of 17-18%. We are not really worried about the lack of ideas in this market.

You have to avoid euphoria. You have to avoid fads. We try to avoid fads and stay invested in companies which can deliver 18- 20% growth for a sustainable period.”In your latest note you have talked about quality car companies at a reasonable price, which one should be looking at adding in the portfolios. You have them in your funds as well. Where is it that you are finding value in this market?Again value is a very misunderstood subject.

Value does not mean it is cheap. You know, it is about whether you are getting good companies at a reasonable price and that is what our focus has been right from the beginning and we will never buy something just because it is cheap. At times, cheapness or value can be a trap.

There are segments where – and I am again telling you with a lot of responsibility – at one level, I feel India is such a diverse market that one is spoiled for choice. There are a lot of choices to invest in. We constantly struggle to narrow down our portfolio because our mandate is between 20 to 25 stocks.

Every time you get a new idea, how do you fit into a portfolio? I really do not believe that there are investable ideas available, which are very promising, which can be compounded from a medium-term to long-term perspective and not an expensive valuation. So again, it is how you look at it. We constantly focus on companies, good