Quest PMS
PMSIME's View on Quest PMS
AMC View
Quest AMC, founded by Ajay and Bharat Sheth, has added Aniruddha Sarkar to their team from IIFL. The AMC has all the ingredients - equity pedigree, experienced team, scale, well-articulated flexible philosophy and good performance track record. Investors, specifically looking for a sector rotation investment approach, could consider the AMC.
AMC Pedigree
Quest was established in 1987 as an equity research house specialising in midcap and smallcap companies. They launched their Portfolio Management Services (PMS) in 2007 and have over 15+ years of experience managing investor money in Indian equities. They have remained focused on equities without diversifying into other business lines.
Team Pedigree
The Quest investment team is led by co-founder Bharat Sheth, with over 25 years of investment experience at Quest. The stability of the investment philosophy is supported by having a co-founder as the CIO. Aniruddha Sarkar, the Fund Manager, has a strong track record at IIFL and works closely with Sheth in the investment decision process. The key risk is the departure of Aniruddha, who has been a good addition to the team, given his lack of ownership in the firm.
Investment Philosophy
Quest Investment Advisors follows a multi-pronged investment approach, summarised by the acronym "QUEST" - Quality, Earnings, Sector Rotation and Timing. They employ a blend of value and growth investing styles, seeking mispriced opportunities in both segments of the market.
AMC Background
Quess was set up in the 1980’s by Ajay Sheth, as an institutional equity research firm focussed on small & mid caps. On the back of a rich research heritage, they launched their PMS services in 2007 and have scaled into one of the larger PMS houses in India (Top 10-20 ranking). Good Pedigree of the AMC Quest has a rich 30 year+ heritage that is focused on listed Indian equities, with a focus on small & mid-caps. Quest investment team is largely driven by its co-founder Bharat Sheth's substantial investment track record (25 years+ managing investments at Quest). Having a co-founder as the CIO provides the much needed stability to the investment philosophy & processes.Investment Philosophy
The investment philosophy is driven by a set of investment principles, that include- Management: Unquestionable management track record on ethics and execution capability
- Strong businesses: Strong leadership position in its domain and within the industry, with strong pricing power and not a ‘me too’ player in the industry
- Profitability: Companies with strong ROE which are upward trending and steady or growing margins
- Scalable Opportunities: Companies which have exponential growth potential owing to large addressable market compared to its current size
- Financial Strength: Strong cash flow generation and ability to pass through difficult times owing to strong balance sheet. Look at manageable leverage in books lower than industry average.
- Valuation: comfort with enough margin of safety
Portfolio Construction
Principles of Portfolio Construction Portfolio construction is sector and market-cap agnostic with a mix of top-down and bottom-up approach to identifying investment opportunities. The investment team strives to be agile and move across sectors, looking for mispriced opportunities and not overpay for businesses with an aim of delivering high risk-adjusted returns. The team also actively manages cash levels to take advantage of market volatility. Portfolio is a blend of 'Growth' and 'Value' stocks.- Growth Stocks (35-45% in sectors such as financials, NBFCs, and consumer discretionary): Companies which are cycle resistant and continue to deliver in all markets typically high EPS growth and high ROCEs
- Re-rating Stocks (35-45% in sectors such as technology, chemicals, Pharma, and consumer discretionary): Companies which are in a large expansion mode or on the cusp of an industry disruption mode and have the potential for high EPS growth (typically mid-teens) and improving ROEs
- Value Stocks (15-25% in sectors such as capital goods, autos, cement and telecom): Companies in sectors which have recently seen a downturn and available at deep value typically low teen EPS growth and low teen ROE/ROCEs
Investment team
Bharat Sheth | 5-star rated FM
Head Equities | 46 yrs Experience | 32 yrs at current firm
Bharat Sheth is a highly seasoned & respected investment professional, having spearheaded the growth of Quest's advisory & PMS business over the past 25 years. Being part of the core founding team, he has provided the much-needed stability and thought leadership that has helped Quest grow into one of the larger PMS providers in India.
Aniruddha Sarkar | 4-star rated FM
CIO | 17 yrs Experience | 6 yrs at current firm
Past Experience: IIFL AMC (FM)
Aniruddha joined Quest in Feb-2020, after a successful stint of over 10 years at IIFL across various roles including Fund Manager for the MF & PMS and as a research analyst.
