The ratings reaffirmation from ICRA considers Natco Pharma Limited’s healthy abbreviated new drug application (ANDA) portfolio in the complex generics space in the US market.

Based on the report, the positive aspects of Natco Pharma Limited are:

1. Healthy ANDA portfolio in complex generics space

2. Strong R&D capabilities

3. Notable market position in domestic oncology segment

4. Robust financial profile with low debt and strong liquidity

5. Strong manufacturing capabilities and backward integration into API manufacturing

6. Diversification into agrochemical segment

7. Substantial revenue contribution from gRevlimid and gCopaxone

8. Improvement in operating profit margins (OPM)

9. Strong cash and cash equivalents position

10. Negative net-debt position

And the negative aspects are:

1. High product concentration risk

2. High working capital intensity

3. Increasing competition in key markets

4. Exposure to regulatory risks and litigations

5. Warning letter from US FDA for Kothur facility

6. Dependence on few critical molecules

7. High inventory days

8. Increasing scrutiny by US FDA

9. Compliance costs and risks associated with regulatory requirements

10. Potential adverse outcomes on product litigations.

Personal Investment Disclosure: Invested. My comments are my personal opinions and may not reflect the company’s current situation.

Typically many of these funds hold a large number of stocks and their rebalance frequency is also distant. For small cap and micro cap, we are rebalancing every week and therefore, I expect that we are more nimble. As we have limited number of stocks, I think we will be holding the stronger stocks, going up or down.

I had a brief look at the fund on valueresearch.

In addition to equity, they hold some debt also. Further, not clear what their universe is. Many of their top holdings like Reliance or Park Hotels, or United Spirits will not appear in any momentum screening. Therefore, they must be using a discretionary element also.

At the end of the day, it depends on what you want and how much time you have to spare.

It will give me greater pleasure in a pf that I have designed than investing in a MF, even if the returns are the same.

You are right.

The system is designed to allow the winners to run. Rule for additional investment is to bring them equi weights.

After that we allow the winners to run.

Essential point is that we do not equi weight them during rebalance.

Very valid question. You can build your system with any number of parameters or filters. We are trying to remove the discretionary element.

Ideal way would be to not look at the pf till the next rebalance. That way you are not swayed by any type of emotions.

When the time comes for rebalancing, follow what the system says.

If you start intervening every other day, it becomes active investing, and you start overriding the system.

If we start doing that, we could end up adjusting the pf out of turn.

Very unique declaration, must read the annual report
https://www.bseindia.com/xml-data/corpfiling/AttachHis/007c45d2-6a1a-4596-8455-e89552d6590a.pdf