Dear Investor,
Trust you are well.
We extend a warm welcome to our new investors and sincerely thank all our investors for your continued trust and commitment to QRC Investment Advisors (QRC). We would like to briefly outline our investing philosophy and approach.
QRC is a boutique Portfolio Management Services (PMS) provider focused equally on sustainable wealth creation and capital preservation. Backed by decades of investing and capital markets experience, we seek to identify value within high-quality, growth-oriented businesses and prefer to hold them for a long time.
Our strategy is index, sector and market-cap agnostic. We follow a disciplined investment process guided by stringent criteria around business quality, management integrity and return on invested capital.
PORTFOLIO UPDATE
During a highly volatile and news-filled period for the world, the QRC Long Term Opportunity Portfolio (LTOP) delivered an 8.6% return during the quarter. With global events like tariffs, pause, roll-back, rising geopolitical tension in the middle east, the India market was well supported by strong institutional support from domestic funds which deployed INR 168,000cr and foreign investors purchases INR 39,600cr in local markets. The markets even shrugged off the brief but intense cross border conflict– Operation Sindoor.
Under the new governor, the Reserve Bank of India (RBI) continued its pro-growth path, lowering the policy repo rate by another 50bps (100bps since February). They also showed commitment to infusing more liquidity in the banking system by reducing the Cash Reserve Ratio (CRR) by 100bps. The policy stance has now shifted from accommodative to neutral, reflecting a more balanced approach to managing inflation and growth risks. We believe the positive impact of these actions should start to materialize in the second half of FY26, which will help loan growth, consumption and an overall acceleration in GDP growth. This should support our exposure to banks and NBFCs. With a near peak in delinquent loans, we have recently added a micro-finance lender to our client portfolios which stands to gain from lower rates and return to growth and profits.
Along with the RBI, the fiscal push from the government (income tax breaks plus continued infrastructure spending), we expect the more cyclical businesses in our portfolio (commercial vehicles, autos, general insurance) to gather momentum over the next few quarters. Some of these businesses have been facing growth and regulatory headwinds but that should continue to improve as the year progresses.
An above normal monsoon augurs well for rural consumption and recovery – a segment of the economy which has borne the brunt of higher inflation and slower growth over the last couple of years but is finally showing signs of revival. Our holdings in agrochemicals (also helped by global cycle bottoming out) and FMCG/consumer focused companies should benefit from this. We have recently started to build a position in a mid-sized consumer company which is showing good potential with its integrated business model, growing rural reach and a strong presence in emerging trade channels of modern retail and quick commerce.
“Insiders sell for many reasons but they only buy for one” – Peter Lynch
During the last quarter, the promoters of our largest portfolio holding have increased their stake in the company by ~0.5% via market purchases. This purchase is especially notable since majority of the promoter/insider activity in the market in the last couple of years has been a reduction in their stakes. We view this as a strong signal given the business has been in a transformation phase over the last 3 years.
