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ICICI Pru Value

Scheme Rating

IME Scheme Rating

3 of 5 stars

Common concerns with MF-promoted PMS firms: Pedigree built on their experience in managing mutual fund assets which cannot compare to the more investor-cum-promoter driven quality-PMS firms that have stable investment teams, highly defined investment processes & philosophies. Additionally, FM churn is often a concern in AMC-driven PMS firms.

IME Strategy Rating

4 of 5 stars

Value Approach: The Strategy adheres to a value investing philosophy, employing a buy-and-hold approach with a concentrated portfolio of 25-30 stocks across market caps. Value strategy when executed well can deliver very attractive longer-term returns. It requires identifying stocks that are trading at a discount to their intrinsic value, and that have the potential to re-rate (often driven by some trigger/event/change in the cycle).

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 Value

Type: Flexi Cap | Value | AUM (454.7 cr) | Inc Date (28 Jan 2004)

ICICI Value- Investment Strategy

Focusing on value strategy by identifying companies trading at sharp discount to their intrinsic value

ICICI Pru PMS Value Strategy follows a value investment style. The core value investment philosophy is driven by the belief that stocks cannot continue to quote at values significantly below their fair value over the long-term. By identifying and investing in companies that trade at sharp discounts to their intrinsic value, a value strategy can deliver strong returns when these companies re-rate (often based on specific triggers) to reflect their true value.

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.

Investment Process

The Investment process driven by following parameters: 

  • Stock Picking Parameters: Stocks are picked based on certain characteristics- sectors easy to understand, having a visible competitive advantage and a capable management. 
  • Due Diligence: Once the stocks are picked based on these characteristics due diligence process is adhered to
  • Investment Decision:  A investment decision is made based on stock selection and a due diligence process. An investment decision is mostly driven by risk & reward. Risk & reward is in turn identified by businesses having a potential  to generate a compounded performance over the long term

Further on businesses are classified into 3 buckets to identify the best pick: 

  • Bucket A: Consists of stocks and sectors that could be out flavor right now but long term potential is not damage and could be available at discount to their intrinsic value. 
  • Bucket B: Stocks  and sectors that could be a potential turn in business cycle which could lead for a chance in multiple expansion and improvement in cash flows, Return metrics etc. 
  • Bucket C: Some stocks where reverse DCF implied growth expectation can be reasonably justified even when world markets goes into a slightly low growth environment after few years.  

Portfolio is construction is built on these stages: 

  • Listed Firms in India: 5044 are the total listed firms in India (NSE and BSE)
  • Firms CMP> Rs.10 and Market Cap> Rs.100 Cr: Shortlist 1500 firms. 
  • Segregating stocks into 2 sets (Tier 1 and Tier 2): 250 firms are segregated into Tier 1 and Tier 2 based on different qualitative and quantitative filters. These filters consist of  earnings, asset quality over a period of time, ownership structure, asset quality over a period of time, ownership structure, existence over a long period of time. 
  • Tier 1 high tracking: Identifying 125 stocks from Tier 1 for detailed tracking 
  • Final Portfolio: 15-20 Stocks  

Trailing Performance

1yr 3yr 5yr Since Inception
ICICI Pru Value 70.8 33.6 25.1 13.8
S&P BSE 500 TRI 34.7 18 18 13.2
Alpha over Broad Mkt BM 36.1 15.6 7.1 0.6
Nifty 500 33.8 16.9 16.6
Alpha over Category BM 37 16.7 8.5

Performance as of: 31-May-24 | Inception Date: 28-Jan-04

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 + 20% 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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