Value Research published an interview with Soumendra Nath Lahiri, CIO, L&T Mutual Fund on May 31, 2018. In this interview Mr. Lahiri takes us through the stock selection process, investment strategies and key principle of the fund house.
How do you zero in on small-cap stocks?
Our preference is for companies which are in the early stage of development, with positive cash flows and have the potential to grow their revenue and profits at a faster rate than established businesses. Within our shortlisted universe, we look for companies that are undervalued, under owned and under researched and can deliver strong growth in the future.
Apart from that another very important parameter in small cap investing is an understanding about the promoters and the company's operational risk, which can help avoid disasters in the portfolio and limit the risk. We continue with our investment approach of sticking to bottom-up stock picking, and while timing entry into markets can be challenging, we recommend using declines as opportunities to buy.
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