Hello, I’m new to analysing SME stocks. One query I had, is it possible to find a company with decent management and plans to scale up and then maybe actively track and hold that for several years (lets say 5yrs) that can give good returns like 20x or 30x+. As I have seen cos. with Mcap of 200-300 reach 2000Mcap in 1-2yrs. Or was this just due to the bull run. Penny for your thoughts?

Good to see management going aggressive on new fund launches with 2 NFOs. Multi Sector Rotation Fund (https://www.shriramamc.in/smurf) and Liquid Fund (https://www.shriramamc.in/liquidfund).

A new Fixed Income Fund Manager has recently joined their Investment team. (Shriram AMC Enhances Fixed Income Team with the Appointment of Mr. Sudip More as Fund Manager – APN News)
Another interesting appointment of Head of Wealth Management seen on LinkedIn (Don’t think Wealth Management biz comes under the listed AMC, but gives comfort as Shriram has accelerated the Wealth Management Biz). (Vikas Satija on LinkedIn: I’m happy to share that I’m starting a new position as Head of Wealth… | 255 comments)

One major concerning factor is that their AUM is still not growing at a faster pace. Equity AUM stands at 482cr as of Sep 2024.

As per reports, Accelya is the clear leader in terms of a 50% market share in NDC transactions (Source), and NDC is the future standard that is expected to be adopted by the airline software industry in the next 10 years because it dramatically saves operational costs and time (I don’t have growth numbers to validate this).

A parallel point to consider is that Accelya operates in an industry that has inertia built in its core, which means that its customers i.e. airline companies are loath to fix what’s not broken. Accelya has been operating in this industry for the last 20+ years and counts 200+ airlines as its customers (Source). Most likely, unless these 200+ airlines don’t significantly come across better software, they will most likely not switch to new players.

So in short, there are 2 ways to look at this:

• In the worst-case scenario, Accelya doesn’t grow its revenue but hums along with a 1-2% y-o-y growth rate because adoption of NDC is slower than expected and airlines are fine with ‘not changing what’s working’. In this case, Accelya won’t appreciate but is still a great source of dividends i.e. ~4% dividend yield.

In the best case, Accelya grows because of faster than expected adoption of NDC, increasing its revenue by 10%+ y-o-y. In this case, Accelya is not only a great dividend source, but also a potential source of capital appreciation.

Disclosure: Invested