WHAT TO BUY?
We start by building a strong thesis around a company using our proprietary LMVT framework. This framework allows us to identify businesses with solid fundamentals, scalable models, and a clear path to long-term value creation.
WHEN TO BUY?
Timing is critical, and we strive to enter as early as possible, often at the pre-IPO or IPO stage. This ensures we position at the beginning of a company’s growth curve, maximizing the potential for returns as the business scales.
WHEN TO EXIT?
Our exit strategy is guided by clear principles. We step away when growth expectations are not met, when valuations become unreasonably high, or when corporate governance issues arise. These criteria help us preserve capital and maintain discipline in our investment decisions.
How we approach
Earnings Driven Approach
We invest in high-growth small-cap companies within the SME sector, focusing on their potential for substantial earnings growth. A disciplined evaluation of valuation and fundamentals ensures consistent and sustainable results.
Sector Focus
We target emerging sectors with limited competition, prioritizing businesses capable of gaining market share during high-growth phases. Investments are made at attractive valuations compared to listed peers.
Exit Visibility
Our approach emphasizes multiple clear exit opportunities, typically within 6 months to 5 years, ensuring optimized returns and portfolio liquidity.
Leadership & Vision
We seek companies led by experienced management with proven track records, strong promoter backing, and strategic growth potential, ensuring alignment with long-term value creation goals.
Due diligence
Every investment undergoes detailed analysis, focusing on competitive strengths, expansion plans, and financial health to ensure sustainable growth and resilience.
Research Team
Investment Banking
Operations
Soumyadeep Chatterjee
Senior Financial Analyst
Qualification
B.Tech. (Hons). (Marine), CFA L2
Sector
EPC, Renewables, Energy, Real Estate
Anmol Garg
Financial Analyst
Qualification
B.Com., CFA L3
Sector
Consumer Discretionary
Manik Sharma
Financial Analyst
Qualification
B.Com. (Hons), CFA L2
Sector
Healthcare, Chemicals
Vanshika Kataria
Financial Analyst
Qualification
B.Com. (Hons), CFA L1
Sector
Consumer Discretionary
Nishchay Mehra
Senior Financial Analyst
Qualification
B.Tech. (Hons), (CSE)
Sector
Industrial, Tech
Akshit Chauhan
Financial Analyst
Qualification
MBA (Finance)
Sector
Financial Services
Ravinderbir Singh
Financial Analyst
Qualification
B.Com.
Sector
Banks & NBFCs
Advaitya Chandhoke
Financial Analyst
Qualification
BBA (General)
Sector
Defence, Infrastructure
Mahak Jain
Financial Analyst
Qualification
B.Com. (Hons.)
Sector
Metals, Consumer Staples
Given the consistent outperformance, even a modest allocation to SME’s within a portfolio has the potential to significantly boost overall returns and push them towards superior, risk-adjusted performance.
"It's not the big that eats the small – it's the fast that eats the slow." - Ishmael Khalidi
1,026
SME
Listings
307
Migrated to
Mainboard (~30%)
128s
# of companies giving
more than 33.42% CAGR
3.57 Years
Average Time for
Migration to Mainboard
Largest Wealth Creators
Fastest Wealth Creators
Name | Listing Date | Listing Price(₹) | Current Price(₹) | Holding Period(Yrs) | Absolute Return | CAGR Return |
Aditya Vision Ltd | 12 Dec 2016 | 15 | 4,409 | 7.7 | 29,293% | 110% |
Insolation Energy Ltd | 10 Oct 2022 | 38 | 3,108 | 1.8 | 8,079% | 986% |
Waree Renewable Technologies Ltd | 09 Aug 2012 | 22 | 1,502 | 12.0 | 6,726% | 42% |
Suyog Telematics Ltd | 22 Jan 2022 | 25 | 1,455 | 10.6 | 5,719% | 47% |
Nintec Systems Ltd | 18 Apr 2016 | 10 | 506 | 8.3 | 4,964% | 60% |
Investing in India's booming SME sector, fueled by government support and poised for explosive growth, could be a game-changer for your portfolio.
Government Initiatives Propel SMEs Toward
Improved Cashflow
Section 43B(h) ensures payment to SME suppliers within 45 days
Ease of Credit
₹ 5 lakh Cr through (ECLGS) ₹ 50,000 crore equity infusion through SME Self-Reliant India Fund
Policy Drive
Make in India, ODOP, PLI and other schemes to benefit SME growth
India is expected to cross the $5 trillion mark by 2026-27 and likely to remain the fastest growing large economy
Investment Framework LMVT
This framework focuses on identifying SMEs with strong competitive advantages (moats), capable leadership, and a history of value creation, all at a reasonable price.
Leadership
History of Strong Execution
Demonstrated Business Acumen
Coupled with Entrepreneurial Spirit
High Promoter Holding
Relevant Experience and Track
Record of Management
Valuation/Value Drivers
Attractive Value Counters using PE, PEG & EV/EBITDA Framework
Margin of Safety in Investment
5 year average D/E < 1
Consistent Shareholder Wealth Creation
Moat
Presence of High Pricing Power
Product Differentiation having an edge over peers
Presence of High Entry Barriers / Licensees / Patents
Robust Business Model
Following Tailwinds
Positioned in high-growth sectors with government policy push
Focused on disruptive technologies, green energy and AI
Ready to scale in evolving markets
Beyond the Facade
Qualitative Financial-Snapshot Assessment
Too high goodwill or presence of revaluation reserves
Rising days of receivables, Inventory rising faster than profits
Excessive leverage and falling DSCR, ICR
Related party transactions
Large business-unrelated investments as a % of asset Contingent Liabilities
Quantitative Evaluation of Earnings Forecast
Revenue rising at a slower pace than profits
Discrepancy between Accrual and Cash Earnings
Capitalisation vs Expensing (R&D, interest cost etc)
Sharp decline in taxes
Frequent large Extraordinary/Miscellaneous Expenses
Overstatement of revenue using Non-Recurring income/Channel Stuffing
Corporate Governance Assessment
Abrupt frequent change in auditors
Qualified audit opinions
Sudden/Frequent changes in top management
Reduced disclosures/Non-Compliance with Regulator/Exchange
Board lacking Competence/Independence
Excessive auditor/management compensation
Promoter/Director Criminal History
By combining a game-changing product analysis, risk mitigation strategies, and superior growth expectations, this approach selects high-potential SMEs poised to outperform.
Investments in Unlisted Securities
Waaree Energies Ltd.
Investment Rationale
High-growth Emerging sector
Leader ex-China
Ability to Scale Up
Experienced Entrepreneur
Target Backward Integration
Focus on Exports
National Stock Exchange
Investment Rationale
Market Leader
Increase in Active User Base
Under Penetration of the Capital Market
Focus on Revenue Diversification
Nayara Energy Ltd
Investment Rationale
Dominant Market Share
Integrated Business Model
Macro-driven Profit Surge
Robust Parental Backing
Quadrant FutureTek Ltd
Investment Rationale
High Growth Sector
Experienced Entrepreneur
Government Support (Kavach)
Strong Order Book
Hindusthan Engineering & Industries Ltd
Investment Rationale
Rapidly Growing Market
Investments in Mass Transit Systems
Focus on exports
Strong Execution of Orders
Anand Rathi Wealth Ltd
Investment Rationale
Recurring Revenue Dominance
In-House Research Expertise
High Customer Retention Rates
HNI-Centric Approach
Scalable Business Model
Well-Diversified Asset Mix
NNT Developers Pvt Ltd
Investment Rationale
Legacy Business
Robust Order Book
Policy Impetus
Dominance in Niche Sectoral Expertise
TBI Corn Ltd
Investment Rationale
Health-Conscious Demand
Increased Production Capacity
Diverse Product Portfolio
Efficient Working Capital Use
Mohan Meakin Ltd
Investment Rationale
Trusted Brand
Self-Funded Expansion
Beverage Diversification
Operational Excellence
Orbis Financial Corporation
Investment Rationale
Specialized Security Services
Capital-Backed Growth
Strong Expansion of Assets under Custody
Reasonable Valuation
Ecosurepulpmolding
Investment Rationale
Eco-friendly sector
Focusing on Expansion
Investments in Sustainability and Safety
Sizeable Order Book
Deepak Houseware
Investment Rationale
Rapidly Emerging Sector
Ability to rapidly scale up
Policy Push (PLI Scheme)
Strategic Partnerships
Madhur Iron and Steel
Investment Rationale
Impressive Growth Trajectory
Strategic Client Base
Operational Efficiency
Capacity Expansion Leadership
JSR Dynamics Pvt. Ltd.
Investment Rationale
Sizeable Order Book
Highly Experienced Leadership
Niche Industry
Prestigious Clientele
Pace Digitek Pvt. Ltd.
Investment Rationale
Explosive Growth
Robust Margins
Strategic Leadership
IPO Upside
Proposed name of the AIF and Scheme | Venture X Fund |
Proposed Size of the Fund | 500 Crores |
Size of the Green Shoe (Optional) | 500 Crores |
Tenure of the Fund | 500 Crores |
First Closing of the fund | 3 Months from Registration |
Final Closing of the fund | 3 Years from date of first close |
Money Call | 10 Lakhs/Qtr. (40 Lakhs/yr, 1 Cr in 2.5 years) |
Investor Commitment Period or Drawdown Period | Up to 3 Years from the date of final close |
Exit | Distribution Waterfall: When a company profit is booked from portfolio companies and needs to be distributed to all Limited Partners (LP) investors |
Redemption (post Exit Load) | Monthly, to be executed only in case of investors have given 100% commitment |
Fund Investment Theme | SME (Anchor Investment Placement & Secondary Investment) |
Proposed investment by Sponsor/ Investment | Close Ended, Long-Only Cat-1, Alternative Investment Funds |
Classes | E1 | E2 | E3 | E5 | E10 | E25 | E50 |
Minimum Capital | 1 Cr | 2 Cr | 3 Cr | 5 Cr | 10 Cr | 25 Cr | 50 Cr |
Management Fees | 2% | 2% | 2% | 1.75% | 1.50% | 1.25% | 1.00% |
Setup Fees | 0.05% | 0.25% | 0% | 0% | 0% | 0% | 0% |
Opex | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% |
Hurdle Rate | 12% | 12% | 12% | 12% | 12% | 12% | 12% |
Carry | 80% | 80% | 80% | 80% | 85% | 90% | 90% |
Catchup | 25% | 25% | 25% | 25% | 25% | 25% | 25% |
Picture this:
You start with an investment of ₹1,000 crore and it doubles to ₹2,000 crore in just 1 year. Exciting, right? Let’s break it down step by step and analyze the returns for unit holders.Particular | Investor | Investment Management |
Towards 100% repayment of capital contribution for unit holders | 1000 | |
Toward hurdle rate (12%) on capital invested | 120 | |
Towards catch up rate on capital invested (25%) | 30 | |
Allocation of distribution proceeds in excess of capital contributed hurdle rate and catch-up to unit holders of each class (carry) | 680 | 170 |
Total distribution being made to unit holders excluding capital | 800% | 200% |
Total distribution being made to unit holders | 1800 | |
Net Absolute Returns in 5 years | 80 | |
CAGR Returns | 80% |
Now, picture the same ₹1,000 crore multiplying 5x to become an impressive ₹5,000 crore in 5 years. What does this mean for investors? Let’s dive into the distribution and understand the net gains.
Particular | Investor | Investment Management |
Towards 100% repayment of capital contribution for unit holders | 1000 | - |
Toward hurdle rate (12%) on capital invested | 762 | - |
Towards catch up rate on capital invested (25%) | - | 191 |
Allocation of distribution proceeds in excess of capital contributed hurdle rate and catch-up to unit holders of each class (carry) | 2438 | 609 |
Total distribution being made to unit holders excluding capital | 3200 (80%) | 800 (20%) |
Total distribution being made to unit holders | 4200 | - |
Net Absolute Returns in 5 years | 3200 | - |
CAGR Returns | 33% | - |
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