According to reports from ETMarkets, Equitree Capital's Emerging Opportunities Fund has delivered 21% compounded returns over five years and 40% returns from COVID bottom in 2020 over a six-year period. However, the fund's performance has been largely flat over the past two years, which Bharaddia considers a decent achievement given that the small-cap universe has declined by close to 30% during this period. The fund maintains a concentrated portfolio of 12-15 stocks with an over 14% cash allocation, receiving monthly inflows of ₹60-70 crore.
As reported by ETMarkets, Equitree Capital follows a private equity-style investing approach in public markets, buying 3-5% stakes in companies with market capitalizations between ₹1,000 crore and ₹5,000 crore. The strategy focuses on businesses with PEG ratios below 1 and a five-year investment horizon, with the portfolio currently trading at 0.5 PEG ratio and 14x FY27 valuations at a 20% discount to long-term average. The firm maintains 25% sectoral allocation limits and invests only in businesses with two-decade track records and management connections established over 5-7 years.
According to ETMarkets, Bharaddia identifies 20 months of consolidation since October 2024 as creating compelling small-cap opportunities. The fund targets companies with PEG ratios below 2 for exits and focuses on four key themes: import substitution across fertilizers, oil and gas, chemicals, and automobiles; Indian manufacturing gaining global supply chain presence; infrastructure ancillaries benefiting from continued spending; and consumption plays serving India's 140 crore population. The strategy emphasizes ground-up stock selection over macro themes, with the firm maintaining disciplined exits when PEG ratios cross 2.
