Abakkus Asset Manager has locked roughly 30% of its portfolio assets into financials, anchoring its balance sheet to capital markets and credit plays while staging a complete exit from traditional IT services. The money went elsewhere. The asset management house rotated capital directly into profitable new-age technology platforms and consumer delivery businesses, turning its back on legacy software exporters until real demand triggers emerge.
Valuation alone will not tempt the fund back. Legacy software providers may look historically inexpensive, but Abakkus refuses to touch them without a tangible earnings spark. Instead, the firm is betting big on manufacturing, engineering, and domestic distribution—treating industrial capital goods as the bedrock of an extended multi-year expansion.
A few quarters back, Abakkus pulled the plug entirely on traditional IT services. The proceeds moved into cash-generative internet businesses and profitable food delivery operators. While tech platforms trade at steeper valuation multiples than legacy code vendors, the fund manager is willing to pay up for proven cash flow.
We are not deviating from our style of avoiding loss-making companies," said Aman Chowhan, Fund Manager at Abakkus Asset Manager LLP.
The math on legacy tech remains sour. Chowhan views artificial intelligence tools not as an instant margin driver for legacy outsourcing vendors, but as a disruptive headwind. AI software developers are releasing faster, cheaper enterprise iterations by the month, forcing traditional services firms to defend their margins against pricing erosion. Without distinct operational triggers or re-accelerating order books, Abakkus is keeping its exposure at zero. Cheap multiples are not enough.
Within its dominant 30% financial services exposure, Abakkus is heavily tilted toward asset managers, wealth advisory networks, and retail capital market distributors. These four or more entities represent roughly 5% to 7% of total fund assets. Yet the fund steers clear of stock exchange operators themselves. Chowhan noted exchange operators are already "priced to perfection," leaving no margin of safety for new capital.
Liquor businesses command a mid-single-digit allocation. Life and general insurance holdings occupy a similar mid-single-digit position—a slice Abakkus has held steady for seven to eight years without deploying fresh cash in recent months. Traditional consumer staples remain sidelined due to bloated price-to-earnings multiples.
Industrials and capital goods form the second-largest exposure block across Abakkus portfolios, tracking the government's Make in India drive. Chowhan projects manufacturing as a five-to-seven-year structural opportunity that could comfortably stretch to a full decade.
| Sector / Segment | Portfolio Weighting | Investment Stance & Strategic Thesis |
|---|---|---|
| Financial Services (Total) | ~30% | Core overweight; favors wealth managers, AMCs, distributors |
| Capital Markets (AMCs, Wealth) | 5% to 7% | Spread across 4+ firms; stock exchanges avoided as fully priced |
| Insurance (Life & Non-Life) | Mid-single digits | Long-term 7-8 year core holding; no fresh capital deployed |
| Traditional IT Services | 0% (Full Exit) | Exited; awaits clear earnings catalysts and AI margin clarity |
Some machinery and engineering counters recently hit multiples exceeding 30 to 40 times earnings, prompting price corrections. Elevated base metal prices have chewed into operating margins over the past two quarters. Yet management is brushing aside the short-term squeeze.
For us, barring one or two quarters of margin compression, which should hopefully ease as time goes by, the demand environment remains pretty strong, both in India and in export markets," Chowhan stated.
The cash is ready, but the trigger has not been pulled. Abakkus has kept building materials below 5% of portfolio assets, waiting for import competition to subside and raw material volatility to break before allocating capital.
White goods, kitchen appliance makers, and brown goods manufacturers sit on the internal tracking desk. The fund has shortlisted specific brand leaders that possess pricing power, waiting to see operating margins stabilize against sticky input costs. The mandate is strict: wait for the cycle to clear before committing institutional capital.
Market Context: Asset managers running high-conviction portfolios face a classic split-cycle dilemma. Legacy technology counters trade at compressed price-to-earnings multiples of 18-to-24 times forward earnings, yet earnings revisions continue to slide downward. Conversely, industrial capital goods and manufacturing equipment counters trade at steep multiples above 35 times earnings, sustained solely by state infrastructure outlay and domestic order pipelines.
Fresh institutional capital from Abakkus will stay concentrated in domestic credit creators, market intermediaries, and capital goods factories. Chowhan will monitor input cost indices and corporate margin trajectories through the coming quarters before deciding whether to expand the firm's building materials basket or reconsider software exporters.
| New-Age Consumer Platforms | Selective / High | Profitable food delivery and tech platforms; zero cash-burn policy |
| Building Materials | < 5% | Watchlist; awaiting margin stabilization before adding exposure |
| Liquor Stocks | Mid-single digits | Steady holding; favored over expensive consumer staples |
| Industrials & Capital Goods | Secondary Core | 5-to-10 year structural runway; looking through near-term raw material spikes |