Equinova Allocates 60% Portfolio to Manufacturing, Hikes Bank Exposure on Credit Cycle

Equinova Investment Managers is doubling down on smallcaps. Stronger earnings momentum—not market capitalisation—remains the firm's core compass.

Co-Founder and Chief Investment Officer Aniruddha Sarkar confirmed the fund is aggressively scaling its banking exposure while anchoring nearly 60% of its total portfolio in Indian manufacturing. Largecap valuations have turned attractive after months of consolidation. Yet Sarkar insists the real alpha sits lower down the capitalization curve, where balance sheets are converting operational leverage into earnings.

Capital Goods and the 60% Manufacturing Core

Sarkar expects manufacturing to dethrone banking and information technology as India's premier investment theme over the current decade. Equinova has positioned nearly six-tenths of its assets across industrial supply chains.

The capital deployment stretches across auto ancillaries, power transmission gear, private defence equipment, aerospace components, textiles, capital goods, and precision engineering. Automobile suppliers form the bedrock of this thesis. Domestic passenger and commercial vehicle demand remains disciplined, while global original equipment manufacturers are steering export contracts toward Indian machine shops.

Crucially, auto component suppliers are climbing the value chain. Precision fabricators are securing aerospace and defence certifications, opening higher-margin revenue streams that decouple them from standard automotive volume cycles.

Banking Rebound and the Non-Bank Financial Pivot

Banks now form the secondary pillar of Equinova's tactical reallocation. Sarkar pointed to three converging catalysts: a supportive interest-rate landscape, accelerating private capital expenditure, and double-digit system credit growth.

Public sector lenders remain a core holding—a position the fund has held for years. But the fresh cash is moving into premier private banks. Several top-tier private lenders have absorbed sharp price and time corrections, compressing multiples to multi-year discounts against historic valuation bands. Sarkar noted that this compression offers a clean margin of safety.

Balance sheets across the wider financial spectrum have also shed legacy stressed assets. Asset quality at non-banking financial companies, microfinance institutions, and small finance banks has stabilized. Yet Equinova is drawing a hard boundary inside the sector: the fund is outright avoiding gold financing companies, channeling liquidity instead toward secured lenders and small finance banks benefiting from the credit cycle.

Market Context: Asset managers are recalibrating allocations as India's private capital expenditure cycle stirs. By sidelining export-reliant IT and consumer staples facing margin pressures, money managers are shifting toward hard infrastructure, domestic industrial capacity, and the balance sheets financing commercial expansion.

Equinova intends to maintain its strict earnings-momentum hurdle rate across all market segments. The fund plans to reassess its private banking allocations and industrial order books as fourth-quarter corporate earnings unveil the trajectory of fiscal year expenditure.