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Process
Ideation and Universe Screening
At Alchemy, the investment process begins with a broad universe of over 500 companies. This universe is systematically narrowed down to approximately 250 investible companies using clearly defined parameters. These include consistent growth in revenues and profits, minimum return on capital employed (ROCE) thresholds, prudent leverage levels, strong conversion of EBITDA into cash flows, and adherence to sound corporate governance practices.
Management Interaction and Ecosystem Assessment
Once companies with clear competitive advantages and scalable business models are identified, the investment team engages directly with senior management. These interactions focus on understanding business strategy, growth roadmaps, and capital allocation discipline.
To gain a well-rounded perspective, the team also interacts with the wider business ecosystem—industry experts, suppliers, dealers, and customers wherever feasible. This multi-angle assessment helps build a deeper, more holistic understanding of the company and its operating environment.
In-Depth Financial Analysis
Following the initial evaluation, the team undertakes a detailed financial analysis. Historical performance and forward-looking financial models are developed, with rigorous internal discussions around key variables and value drivers. Sensitivity analyses are conducted to assess “what-if” scenarios and determine the company’s risk-reward profile.
The experience and judgment of the investment team, led by the CIO, play a crucial role in evaluating whether insights from management interactions and industry analysis align with Alchemy’s investment philosophy. Companies that meet both quantitative and qualitative criteria, and demonstrate an attractive risk-return equation, are included in Alchemy’s investment universe.
Continuous Monitoring and Risk Assessment
Alchemy embeds the principle of “better safe than sorry” into its investment framework. Portfolio companies are reviewed regularly to track performance and reassess the original investment thesis. The team continuously evaluates the impact of internal developments and external factors to determine whether corrective action is required.
Exit Philosophy and Portfolio Discipline
Alchemy does not operate with predefined exit prices or fixed return targets. Instead, it follows a disciplined philosophy of allowing strong performers to compound while exiting weaker positions when necessary.
A stock may be sold under three key circumstances:
- When the original investment thesis no longer holds due to external changes or company-specific actions
- When portfolio rebalancing is required to manage position sizes
- When the risk-reward equation turns unfavourable and superior alternatives emerge
Backed by a long-term track record and a strong foundation of research-led decision-making, Alchemy remains committed to continuous learning and adaptation. This ensures robust investment processes that stay aligned with evolving market realities and consistently aim to meet investor expectations.
