PORTFOLIO CONSTRUCTIO

N OF
SMALL CAP STOCKS
AMIT DEY 20PGPM006
DEBARGHA DEY 20PGPM017
SOWMYA NARAYANAN S 20PGPM056
VINAY KUMAR GUPTA 20PGPM067
TRIDIB KUNDU 20PGPM069
HARDIP TOSAR 20PGPM061
ROHAN BHATNAGAR 20PGPM114
 I VE
EC T
BJ
O

MAXIMIZING SHARPE
01 RATIO CREATING A WELL DIVERSIFIED
04 PORTFOLIO
MINIMIZING STANDARD
02 DEVIATION (RISK) 05 TO HAVE ATLEAST 20 STOCKS
IN OUR PORTFOLIO
03 FUNDAMENTAL ANALYSIS
( EPS AND P/E RATIO)
 RATIONALE BEHIND SELECTION OF SECTORS

Auto Sector-
•The main Reason for Indian automobile industry growth can be attributed these factors availability of skilled labour
at low cost, robust R&D centers, and low-cost steel production
•The EV market is expected to grow at CAGR of 44% between 2020-2027 and is expected to hit 6.34 million-unit annual
sales by 2027.
Pharmaceuticals -
• India ranks 3rd worldwide pharmaceuticals for production by volume
•Expected to reach $65 bn by 2024, and ~$120-130 bn by 2030
•About 20% of the global exports in generic drugs are met by India for fy 20-21
FMCG-
• The major growth drivers for this sector is Growing awareness for branded products, increased spending power, ease
of access, and changing lifestyles.
• This sector gets nominal return even in case of uncertain situations
Real estate
• According to Savills India, real estate demand for data centres is expected to increase by 15-18 million sq. ft. by 2025.
• Home sales volume across eight major cities in India jumped by 2x to 61,593 units from October 2020 to December 20
20
• Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as reside
ntial spaces
 RATIONALE BEHIND SELECTION OF SECTORS

IT-
• India is emerging as the hub for “Digital Skills”. The IT industry is the largest employer within the private se
ctor.
• Amid the lockdown, the IT & BPM sector was one of the quickest to adapt to remote work culture
• India is projected to have 900 mn active Internet users by 2025 compared to 750 mn+ in 2020

Steel Sector-
• The steel industry is typically good to invest in early on in the cycle, i.e., when a market is recovering or
when it is growing. So capacity expansions and infrastructure builds are obvious positives
• The Industry is witnessing consolidation of players which has led to investment of entities from other sec
tors.
 
Banking Sector-
• The penetration of various banking and financial services in the Indian economy is low, which in turn me
ans that there is a still significant growth potential in this sector.
• The introduction of bad banks has also enabled the banks to become free of the burden of the NPA owin
g to which the growth is going to be higher
RATIONALE BEHIND SELECTION OF COMPANIES (1/2)

Banking Pharma
Dhanlaxmi Bank Advance Enzymes
Limited
Dishman Carbogen
Karnataka Bank P/E between 20-40
P/E between 5-12 Indoco Remedies
DCB Bank
EPS between 5-15
J & K Bank Shilpa
Karur Vysya Bank IOLCP

Real Estate Steel

Koltepatil GPIL
Purva Welcorp
Nesco P/E between 15-45 Suryarosni P/E between 4-12
Mahlife TataMetali
Hemisphere TataStllp
RATIONALE BEHIND SELECTION OF COMPANIES (2/
2)

Auto sector IT SECTOR

India Motor Parts Saksoft Ltd.
Swaraj Engines Ltd. Cybertech
P/E between
Atul Auto Ltd. Quick Heal P/E between 15-35
15-35
Scooters India Ltd. Expleo
Jamna Auto Industries Ltd. Sasken

FMCG SECTOR
ADF Foods
FM Foods Ltd.
Bajaj Consumer Care Ltd. EPS between 12-25

Heritage Foods Ltd

LT Foods Ltd.
 1. Automobile Sector - 55.52%

2. Banking Sector - (-40.326%)

AVERAGE RETURN 3. Pharma Sector - 128.622%

OF EACH SECTORS
4. Metal Sector - 581.158%
01
5. Real Estate Sector - 116.366%

6.IT Sector - 165.488%

 Equal Weighted Portfolio

Equal Weighted Portfolio TataStllp 28.45% 2.86%

Fund Annual Return Weights ADF Foods 56.22% 2.86%
Heritage Foods 11.68% 2.86%
Dhanlaxmi Bank 2.72% 2.86%
DFM Foods 12.11% 2.86%
Karnataka Bank -1.11% 2.86%
Bajaj Consumer -1.79% 2.86%
DCB Bank 4.61% 2.86% LT Foods 41.36% 2.86%
J & K Bank -4.15% 2.86% Saksoft 59.49% 2.86%
Karur Vysya Bank 6.65% 2.86% Cybertech 33.22% 2.86%
Advance Enzymes 8.56% 2.86% Quickheal 11.14% 2.86%
Dishman Car 23.66% 2.86% Expleo 25.75% 2.86%
Indoco Remedies 19.41% 2.86% Sasken 40.50% 2.86%
Shilpa 18.78% 2.86% India Motors Parts 1.33% 2.86%
IOLCP 77.40% 2.86% Swaraj Engines 11.55% 2.86%
Koltepatil 43.88% 2.86% Atul Ltd 39.05% 2.86%
Scooter India 11.80% 2.86%
Hemipros 35.99% 2.86%
Jamna Auto
Purva 47.03% 2.86% Industries 5.65% 2.86%
Nesco 14.53% 2.86% Total weights 100%
Mahlife 29.16% 2.86%
GPIL 154.50% 2.86% Return 28.69%
Welcorp 38.23% 2.86% Variance 9.42%
Suryarosni 57.30% 2.86% Standard Deviation 30.70%
TataMetali 39.39% 2.86% Sharpe Ratio 0.74
 SOLVER WEIGHTED PORTFOLIO

Solver Weighted Portfolio ADF Foods 56.22% 5.00%

Fund Annual Return Weights
Heritage Foods 11.68% 0.00%
DFM Foods 12.11% 0.00%
Dhanlaxmi Bank 2.72% 0.00%
Bajaj
Consumer -1.79% 0.00%
Karnataka Bank -1.11% 0.00% LT Foods 41.36% 5.00%
DCB Bank 4.61% 0.00% Saksoft 59.49% 5.00%
J & K Bank -4.15% 0.00% Cybertech 33.22% 5.00%
Quickheal 11.14% 5.00%
Karur Vysya Bank 6.65% 0.00%
Expleo 25.75% 5.00%
Advance Enzymes 8.56% 0.00% Sasken 40.50% 5.00%
Dishman Car 23.66% 5.00% India Motors
Parts 1.33% 0.00%
Indoco Remedies 19.41% 5.00% Swaraj Engines 11.55% 0.00%
Shilpa 18.78% 0.00%
IOLCP 77.40% 5.00%
Atul Ltd 39.05% 5.00%
Koltepatil 43.88% 5.00% Scooter India 11.80% 0.00%
Hemipros 35.99% 5.00% Jamna Auto
Purva 47.03% 5.00% Industries 5.65% 0.00%
Nesco 14.53% 0.00% Total weights   100%
Mahlife 29.16% 5.00%
GPIL 154.50% 5.00% Return 45.06%
Welcorp 38.23% 5.00%
Suryarosni 57.30% 5.00%
Variance 11.93%
TataMetali 39.39% 5.00% Standard Deviation 34.54%
TataStllp 28.45% 5.00% Sharpe Ratio 1.14
 Personal Portfolio
Personal Portfolio
Fund ReturnWeights  
Dishman Car 23.66% 3.16% Risk Free Asset 8.00% 27.62% 27.62%
Indoco
Remedies 19.41% 3.16%
IOLCP 77.40% 3.16% Total weights   100.00%  
Koltepatil 43.88% 3.16%
Return 34%
Hemipros 35.99% 3.16%
Purva 47.03% 3.16%
Mahlife 29.16% 3.16% Std Deviation 25%
GPIL 154.50% 3.16%
Welcorp 38.23% 3.16%
Suryarosni 57.30% 3.16% 72.38%
TataMetali 39.39% 3.16%
TataStllp 28.45% 3.16%
ADF Foods 56.22% 3.16%
LT Foods 41.36% 3.16%
Saksoft 59.49% 5.00%
Cybertech 33.22% 5.00%
Quickheal 11.14% 5.00%
Expleo 25.75% 5.00%
Sasken 40.50% 5.00%
Atul Ltd 39.05% 3.16%
 CONCLUSION

1) Small cap stocks have high risk reward ratio. Equal weighted portfolio has given 28.6

9% over the last 5 years.

2) With an objective to reduce standard deviation and maximise return, personal portfol

io has given return 5.41% more than eqally weighted one.

3) Metal industry, IT sector are expected to boom in the coming period. Significant amo

unt of exposure have been given in the portfolio to leverage the risk in other sectors.
THANK YOU