Why Porinju Veliyath is betting big on small and micro-caps

The founder of Equity Intelligence, who has zero investment in real estate, is also bullish on India's growth story

- Shipra Singh

The markets are in a tizzy—a fallout of the war between Israel and Gaza after Palestinian militant group Hamas launched a surprise attack on Israel over the weekend. Oil prices surged and markets tumbled in early trade on Monday, even as the death toll from the Middle-East conflict rose to more than 2,000. For investors, such global geopolitical events typically have a negative impact on their investment portfolios. And that is the reason why financial experts always promote diversification of assets to counter risks. Yet, it is not uncommon for fund managers to allocate 100% of their personal investments in equity. Porinju Veliyath, founder and portfolio manager, Equity Intelligence, does just that. But, his equity portfolio stands apart for one reason. It is concentrated in small- and micro-cap stocks, the most volatile segments in the markets.

The reason for Veliyath’s confidence in the small-caps stems from, what he says, abundant value opportunities in the space. He believes that growth is imperative and not a choice for small companies. He also avers that it is among these small companies that one can find the multi-baggers. Among his small-cap picks, Hindware Homes, Tata Elxsi, CDSL, PDS, Raymond, Gati, and West Coast have proved to be multi-baggers.

In line with the ongoing small-, mid-cap rally, some of his stock holdings have increased in value by up to 30 times in the last three years. The same is playing out in the PMS (portfolio management services) and AIF (alternative investment fund) schemes of his firm Equity Intelligence. “We have stuck on to our strengths, delivering 61% CAGR (compound annual growth rate) in PMS and 69% CAGR in AIF since March 2020 (when the covid pandemic was at its peak)," he said in an interaction with