Piper Serica, led by founder and fund manager Abhay Agarwal, has announced significant adjustments to its leadership portfolio during the June quarter. The fund strategically added Gland Pharma Ltd and Astra Microwave Products Ltd, while simultaneously divesting its holdings in Central Depository Services (India) Ltd (CDSL) and Computer Age Management Services Ltd (CAMS).
Strategic Additions: Gland Pharma and Astra Microwave
Agarwal emphasized that Piper Serica's investment strategy is centered on growth, targeting emerging sectors and companies poised for industry leadership. The recent portfolio changes reflect a strong focus on electronic manufacturing services (EMS) and pharmaceuticals, a direction the portfolio has maintained for the past 12 to 18 months.
- Gland Pharma: This addition follows a multi-year price and time correction post-IPO, making it an attractive entry point. Agarwal anticipates Gland Pharma will achieve an annual growth rate of 15-20 percent over the next four to five years, deeming the stock fairly valued within the fund's assessment. The fund prioritizes pharmaceutical companies engaged in innovation, research and development, complex formulations, and those targeting advanced markets like the US and Europe, deliberately avoiding reliance on the generics business.
- Astra Microwave Products: Piper Serica has tracked Astra Microwave for an extended period. The investment was driven by the company's robust order-book growth and proven execution capabilities, particularly in the critical area of radar systems.
Exits from CDSL and CAMS
The decision to exit CDSL and CAMS, both held for approximately five years, was based on identifying more compelling opportunities elsewhere. While these capital-market infrastructure companies had delivered strong returns, Agarwal noted that their future growth rate might not match the accelerated pace observed in the post-Covid-19 pandemic period.
Broader Investment Philosophy
Piper Serica's portfolio management framework typically allocates individual stock positions between 5 percent and 10 percent. The fund's model portfolio is heavily weighted towards small-cap stocks, comprising around 75 percent of its holdings. This reflects a deliberate strategy to identify companies earlier in their growth trajectories.
Agarwal also highlighted the fund's continued underweight position on large private banks and its complete lack of exposure to IT services for the past three years, further underscoring its focused approach on specific high-growth sectors and innovative companies.