India's Best Fund Managers

Tracking the stars

Vinay Paharia puts the diverse and varied lessons from each of his previous associations to good use at the schemes he manages

Soumik Kar

How diverse businesses could fetch non-linear profit from similar capital has always intrigued Vinay Paharia, who grew up watching his own relatives dabble in varied businesses — albeit on a much smaller scale — right from trading to chemicals to software. “It all seemed very fascinating to me,” he says. But instead of trying his hand at the family business, Paharia chose to complete his MBA and CFA to pursue a career in finance. “Until my graduation, I never knew that a formal career in equities was possible,” smiles the 36-year-old, who today manages Rs.600 crore in cumulative assets across Religare’s Mid N Small Cap funds, besides co-managing the Business Leaders and Tax schemes with Vetri Subramaniam, who is also the chief investment officer of the company. During his MBA, microeconomics was what caught Paharia’s fancy, as it dealt with businesses and the markets. But once he got a chance to read Peter Lynch’s One Up On Wall Street, Paharia knew his calling lay in investing. Back then, the most important takeaway from Lynch’s lucid tome for him was that stocks were slaves of earnings. “The fact that, irrespective of economic booms and crashes, stocks — over a period of time — always followed earnings was so insightful,” says Paharia, who got his first break with First Global after completing his CFA and later went on to work with KR Choksey and DBS Cholamandalam AMC.

From each of his bosses — including Subramaniam — Paharia says he learnt some unique lessons. If Devina Mehra introduced him to the rigours of analysis, Kisan Ratilal Choksey taught him how a passion for long-term investing can be transformed into good investment ideas, while Pradip Pathak at Cholamandalam trained him to have a process-driven mindset and a dispassionate approach to stocks. “If the facts change, your view, too, has to change,” says Paharia, who holds close to 50 stocks in his portfolio. Following are the parameters that he keeps in mind while picking stocks: first, the business should generate a RoC higher than 15% per annum on a sustainable basis, although it could have lower RoC in the interim. “Internally, we use 15% as the cost of equity and, hence, would want the company to generate a positive economic spread to

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