CP recalls how serendipity pushed him into equity research when UTI MF recruited his batch in 2000. With strict training focused on asking 5–10 year questions—not quarterly—he developed a deeply long-term mindset. Over time, rising competition, investor expectations, and increasing churn across funds have tested this discipline, but CP believes staying true to long-term thinking remains his biggest edge.
From 2000 to 2024, CP has witnessed multiple market cycles. His biggest takeaway: markets have become increasingly short-term, but consistency of philosophy wins eventually. He emphasizes that disciplined investing and ignoring noise often lead to superior outcomes. He also highlights how poor balance sheets, excessive leverage, and misaligned incentives can permanently destroy capital—lessons especially learned from the 2006–08 cycle.
CP dives into the 2018 SEBI categorization that standardized large, mid, and small caps. With over 600 companies between ₹4,000–30,000 crore market cap, the small-cap universe is massive and largely under-researched. This provides mispricing opportunities—but also higher risks due to limited coverage, liquidity challenges, and governance concerns. Large and mid caps are widely tracked; small caps require far deeper due diligence, plant visits, and continuous management evaluation.
Scalability is CP’s primary filter: can the company compound at 20%+ for several years? He studies:
He stresses focusing first on downside risk. If downside is protected, upside takes care of itself. He also highlights how India’s nominal GDP growth (~10%+) naturally creates a wide runway—but not all sectors scale; e.g., solar manufacturing may face global overcapacity.
Operating with a Growth at Reasonable Price (GARP) philosophy, CP prefers businesses where ROCE > cost of capital and free cash flows can internally fund growth. In Tata Small Cap Fund, 90%+ of companies have zero debt. He explains how poor ROCE plus high leverage can collapse businesses during downturns—as seen in telecom, power, and infra during 2006–08. Governance, transparency, and the entrepreneur's intent to share wealth ultimately determine the longevity of returns.
🎧 Watch the Full Conversation: Ventura Spotlight with Chandraprakash Padiyar, TATA Mutual Fund
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