Alpha Managers: Why Is Buoyant Capital's Jigar Mistry Bullish On Equities?

[00:00:00]Jigar Mistry's with us, co-founder at Boyant Capital. Jigar, great to have you with us here. Thanks for joining us.

[00:00:05]Uh you know, Boyant's of course done phenomenally well in terms of uh is the performance has been great, and of course consequently AUM growth has been pretty great as well. So, just just we chatting after a while Jigar, what's the what's the size of the fund now at?

[00:00:23]At Boyant?

[00:00:24]>> Uh Hi Prashant. Thank you as always for inviting us. All included, we are a little over 2 billion dollars now.

[00:00:32]>> Wow, that is uh uh and and it's been an amazing, I think I think Boyant can be the poster child for the growth of >> [laughter] >> you know, the the fund industry, the non-mutual fund industry uh really done a remark- the you and your of course your team has run remarkably well. So, how are you What what's the view now? And just just give us a sense of you know, where you're invested, fully invested, uh how much large caps, how much broad uh you know, mid caps, small caps. Just give us that sense.

[00:01:04]>> Uh right Prashant. So, I think see we operate this philosophy where we turn aggressive or defensive basis the way in which we think the stocks are positioned. So, we changed our stance to aggressive for the fourth time as we completed our 10 years of existence at the end of March 2026. So, when the conflict was still ongoing.

[00:01:27]Uh the way in which we approached this essentially was that, you know, if you looked at from a 52-week high, the micro caps on average had fallen about 41% median average, and large caps were down about 17%, but you know, the small caps on a 5-year or a 10-year cager, and large caps on a 10-year cager looked fairly priced. Right? So, the earnings growth was broadly in sync with what the stocks were returning.

[00:01:52]Post that essentially what we thought was that you know, there will be a slow recovery as the conflict situation subsides, you would see some amount of, uh, you know, recovery in the Indian markets. But, what happened in April, frankly, you know, was way beyond a relief rally. And when you look at the, you know, details of that, you find that much of it had to do with the color of the money coming in. Right? So, a lot more domestic money came in, mutual fund SIPs continue, uh, even though, you know, the, the other inflow can be a bit lumpy. But, the stocks that did the best were the ones where retail holding was the highest and the institutional holding was the lowest. Uh, obviously, we the small-cap exposure that we had, uh, essentially also did well and we took some money off the table there. So, as we speak, uh, we should be about 62-63% on large caps and the balance on small and mid caps.

[00:02:49]>> All right. Hi, Jigar.

[00:02:51]You know, congratulations, as Prashant said, what a way y'all have scaled up business and Vestal's happy, y'all are happy. I recall the day when, you know, you were moving on from the sell side and you said you're going to be starting your own. We had a coffee that day. And wow, strength to strength, brother. Well done.

[00:03:06]Let's talk about some of the recent investments then, uh, you know, that, uh, that y'all have made. Smart meters. That seems to be a place that you like. Uh, uh, tell us a little bit more about that. You know, the street has been a little bit cautious because order inflows have slowed down. But, that's not happened for a while. So, we could be bracing for orders to open up yet again in the smart meters space. And also that working capital cycle has been elevated, cash conversion has been elevated, which managements have indicated they're gradually working on that and things should improve. So, tell us about this theme.

[00:03:39]>> Right, Nigel. So, see, obviously, uh, the electrification theme, people play it through different ways. Uh, the allocation that we had just got which got announced was a reasonably small allocation. So, from that standpoint, uh, it's not a large one.

[00:03:54]What we are building in essentially is that when you value businesses like this, the O&M part of the business is something that you don't really get to see, right? And the margins in the O&M business when that starts becoming a larger part of the product or the large part larger part of the revenue mix leads to improvement in margins and the recovery that was pending at least the way we see this in the working capital cycle broadly appears like it will play out. So, but as I said, see this is the very small part of what we have been allocating at. The larger chunk, to answer your broader question, is that for the first time in a decade, we are allocating very heavily to consumption.

[00:04:37]Right? And very briefly, see between 15 and 20, you saw consumption do very well.

[00:04:43]People, you know, went to an extreme to suggest that, you know, they're buys even at 150 and 200 P. But the economic impulse of the of the RBI, of the government was to spend on consumption.

[00:04:56]Post COVID, however, if you take the state, center, and PSU capex, that number together has been growing between 25 and 13% 30% between 2020 and 2024.

[00:05:10]And that completely changed the volume dynamics of consumption and the valuations also normalized. So, for a majority of the past 6 or 7 years, these stocks have not done great and the valuations have come back to what we think is normalized.

[00:05:25]From 2024, initially it started with the state budgets and now the central budgets as well. The money is moving in the hands of people. By our calculation, something like 6 lakh crores have moved in. That's about 1.7% of GDP. Anything above 1% in absence of a crisis period is considered massive. We are tracking on where that plays out through consumption, but now I think what happened with the 15 to 20 cycle is something that we are expecting in consumption to play out again. And that is where the last 12 months has seen the largest amount of additions.

[00:06:02]We've added something like 8% of our portfolio into the consumption theme. In addition, you know, uh, lending institutions and healthcare are, you know, if you add these three, they make something like 50% of our portfolio allocation.

[00:06:19]>> Okay. All right. Uh, got that, Jigar.

[00:06:21]Thanks a lot for joining in and giving us, uh, your view on, uh, couple of themes that you like as well. Appreciate you joining in. Thanks a lot.