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ICICI Pru Pipe

Scheme Rating

IME Scheme Rating

4 of 5 stars

Can be considered for investment: We prefer investing in small-cap strategies that are (a) run by small-cap specialists or (b) follow a tightly defined investment philosophy that helps mitigate risk. While ICICI Pru PMS suffers from common MF-founded PMS concerns (churn in the investment team, lack of a tightly defined investment strategy), we take into cognisanse it’s strong & consistent performance since inception & the presence of Anand Shah (a senior investment professional). While not our top-rated small-cap scheme, ICICI Pru PMS PIPE can be considered for investments.

IME Strategy Rating

3 of 5 stars

Flexible Small-cap strategy: The Strategy seeks long-term capital appreciation through investments in Mid and Small Cap companies with economic moats, special situations, or those navigating unfavorable business cycles. While the strategy follows BMV Framework (Business, Management and Valuation), it remains generic compared to other funds in the market. The mandate provides the fund manager flexibility to invest in a wide range of small & mid-cap stocks. Given the high volatility in business fundamentals, governance and stock prices, a highly flexible mandate in small-caps can be a risky proposition.

PMS Scheme Ratings are driven by IME’s Proprietary Scheme Rating Methodology, which takes into account our ratings of the Scheme’s investment strategy, its maturity, the investment team, and our separate rating on the AMC that runs this particular scheme. Our views on each of these individual criteria are available via the IME RMS – which you can view by reaching out to one of our relationship managers (using either the live chat or book appointment feature on this site).

IME View on ICICI Pru Pipe

Type: Mid & Smallcap | GARP | AUM (6165.7 cr) | Inc Date (5 Sep 2019)

ICICI PIPE Portfolio-Investment Strategy

ICICI Pru PIPE Strategy aims to invest in small and mid-cap companies that satisfy one (or more) of the following criteria – an economic moat, a special situation or an unfavourable business cycle. The strategy aims to invest in companies whose market capitalisation is very small at the time of investment but has the potential to become largely based on dynamics like an upcoming business line, effective management, improving margins etc.

Investment Process

  1. Out of a stock universe of 2500 companies + IPOs, these companies are screened on the basis of market cap, liquidity, industry and corporate governance. 
  2. Out of which 350 companies are screened actively. For these companies an initiation note is prepared actively covering the stock. 
  3. There an active research that takes place based on Desk Research (Annual report analysis, quarterly result analysis, industry research and sell side research), Meeting (industry conferences, vendor meetings) and channel checks (Distributor meetings, expert meetings)
  4. Based on the research conducted a stock recommendation is made and the portfolio is built. 

Investment Framework 

They utilise a 3 filter framework in order to search for companies with meaningful and sustainable earnings growth

  1. Business
  2. Management 
  3. Valuation 

Business Economics:

  • Growth defined by Company growing faster than industry, industry faster than market, that are also looking for Structural and long-term sustenance and are simple to understand and in a focused segment. 
  • Moats defined by Brand Franchise, Industry Structure, Technology/Patents, Cost Advantage, License area, Distribution, etc

Management and Governance 

  • Competence driven by Sales(Faster than sector); Margin(Improving); Capital(Smarter)
  • Governance based on Interests(Aligned with shareholders); and having credible Track Record 

Valuation 

  • Cash- Cash flow being the centre of investment Process (Intrinsic value, DCF, Dividend Yield, Op. Cash Yield, etc)
  • Evaluate Margin of Safety- Identifying a greater margin of safety based on weaker moat for a better risk-reward profile.

Trailing Performance

1yr 3yr 5yr Since Inception
ICICI Pru Pipe 56.1 35 34.4
S&P BSE 500 TRI 38.3 20 22.9
Alpha over Broad Mkt BM 17.8 15 11.5
Nifty Smallcap 250 62.3 27
Alpha over Category BM -6.2 8

Performance as of: 30-Jun-24 | Inception Date: 05-Sep-19

Fund Managers

Anand Shah | 4-star rated FM

Fund Manager | 24 yrs Experience | 3 yrs at current firm

Past Experience: VP investments (Kotak MF), Co-Head Equities (ICICI Pru AMC), Head Equities (Canara Robeco AMC), Dy CEO & Head of Investments (BNP Paribas Asset Management), CEO (NJ Asset Management)

Chockalingam Narayanan

Fund Manager

Chockalingam Narayanan has over 17 years of extensive experience in Fund Management, Investment Research and Market Analysis. He has been instrumental in analysing business fundamentals to derive relevant and actionable analysis that has portfolio growth. He is consistently relied upon for providing detailed analysis of the macro-economy, financial markets and ESG that serve as some of the key foundation pillars for the various investment strategies that he has worked with in his career. In his career, he has earlier worked with leading organisations like Baroda BNP Paribas Asset Management India Pvt Ltd, Deutsche Equities India Private Limited and Batlivala & Karani Securities.

Fee Structure

Fee StructureFee
Fixed Fee Structure2.5
Variable Fee Structures1.5% fixed + 15% above 10% hurdle
Exit Fees1yr (1%)

AMC

AMC: ICICI Pru PMS (click link for detailed AMC review)

Not a top recommendation due to being an AMC-driven PMS: ICICI Pru PMS suffers from the common ailments of large AMC-driven PMS houses (PMS as an add-on instead of a segregated business unit, churn in the investment team, a lack of skin in the game for the CIO and typically loosely defined investment philosophies). While the distribution strengths of the AMC can help the PMS scale and there are benefits of research access, most AMC drove PMSs cannot compare to strong CIO-cum-founder driven PMS houses.

AMC Rating

3 of 5 stars

AMC Pedigree

3 of 5 stars

AMC Size

5 of 5 stars

Team Pedigree

3 of 5 stars

Inv Philosophy

2 of 5 stars

Performance

3 of 5 stars

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