From a middle-class household in central Mumbai to a top fund manager, the rise of Jinesh Gopani has been as swift as some of his stock picks. Over the past five years, his fund — Axis Long Term Equity — has delivered an annual return of 18.6%, racing past its peers. When Gopani picked up Eicher Motors in July 2011, the stock was quoting at Rs.1,319. Today, it is trading 14x higher at Rs.18,682.
When they were deliberating on Eicher Motors, a new management was trying to revive the brand, offering an alternative to Harley Davidson at Indian prices. The question before Gopani was whether to invest in the big boys or in this company and did it have what it takes to become big, in terms of cash flows.
“This was at a time when there were just two or three big two-wheeler companies in the country. And here was this company — small at that time and operating in a niche segment.”
A series of checks on the management, corporate governance, dealer meetings were organised to receive feedback. The company was changing the model, design and size in its attempt to stand out. But the numbers were there for everyone to see. “Companies in the 100-250 cc category were growing at 10%-12%. And there was another company growing at 50%,” he adds.
“Corporate governance is of paramount importance,” he says, adding that management quality, strength of the business model and the company’s ability to reward shareholders are important.
There is also an in-house philosophy at Axis AMC, laid down when it started operations. “The fund house decided that PSUs and highly cyclical secto