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| High return on capital is a necessary, but not sufficient, condition for stock selection. Tracking the change in return on capital can give fantastic returns |
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| Dileep Madgavkar, chief investment officer, Prudential ICICI Asset Management, has never been known as a hot-shot fund manager. |
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| But being in charge of investments at the largest private-sector mutual fund in the country with assets of Rs 13,117 crore (as on July 31, 2003) spread across 19 mutual fund schemes, the objective is to create wealth for investors consistently over a long period of time without assuming undue risks, says Madgavkar. |
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| He has certainly lived up to that reputation. Most of his funds have been consistent in beating the benchmarks with a relatively low level of volatility. |
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| A Chartered Accountant by profession, Madgavkar's strength in analysing financials is incredible and most of his investment ideas also culminate from his incisive understanding of numbers. |
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| His most successful calls in the past have been Telco (now Tata Motors), Bharat Forge, Mahindra & Mahindra, Tata Steel, Gujarat Ambuja, Punjab National Bank and UTI Bank. Most of these stocks have more than doubled in the last one year. |
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| Currently, Madgavkar is betting on an economic upturn and is bullish on most economy-related sectors including automobiles and ancillaries, steel, cement and banking and engineering. Madgavkar talks about his investment strategy and top sector picks. |
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| Could you briefly tell us about your investment philosophy? |
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| Risk control, the overriding feature |
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| We are aggressive investors. However, the overriding feature of our investment philosophy is risk control. |
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| One should not confuse aggression with dilution of risk control. You can be a very aggressive stock picker without diluting risk control; and that's where we really stand. |
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| Concentrate on efficient growth, not just growth |
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We concentrate on buying stocks that offer efficient growth
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