BONANZA VALUE

What Is the Bonanza Value PMS Strategy?

A value investing PMS seeks to invest in companies whose market valuations appear low relative to the underlying business fundamentals and future potential. The central idea is not simply to buy stocks because they have fallen or trade at a low valuation multiple, but to identify a gap between the market's current assessment and the investment team's assessment of the business.

Bonanza Value applies this approach primarily across mid-cap and small-cap stocks. The strategy is sector agnostic and combines top-down and bottom-up research.

The investment approach looks for companies with a strong fundamental track record, generally over a five- to ten-year period, while also identifying a potential earnings catalyst that could help the market reassess the business. The stated investment horizon is five years, and the minimum investment is ₹50 lakh.

For investors new to PMS, see portfolio management services for a broader explanation of how PMS works.

Bonanza Value Snapshot

The above strategy-level information is based on the APMI record. AUM, fees, turnover and other portfolio information can change over time, so investors should refer to the latest available disclosure before making an investment decision.

Bonanza Value Investment Strategy

Bonanza Value is built around the search for undervalued businesses with strong fundamentals, growth prospects and a credible path toward earnings improvement. The strategy is primarily invested in mid-cap and small-cap stocks and uses both top-down and bottom-up analysis.

Margin-of-safety approach

The value process begins with the assessment of whether the market valuation provides a sufficient margin of safety relative to the underlying business fundamentals. A low price or low valuation multiple by itself does not make a company attractive. The investment thesis needs to be supported by business quality, financial history and a reasonable path to improvement.

This distinction matters because a company can remain inexpensive for a long period if its earnings outlook, competitive position or balance sheet does not improve.

Long-term fundamental track record

The strategy looks for companies with a five- to ten-year fundamental track record. This can include the history of the business, its earnings profile, competitive characteristics and ability to execute through different operating conditions.

The objective is to understand the underlying business rather than rely primarily on short-term market movements.

Earnings catalysts

A key part of the investment process is identifying a potential catalyst that can improve earnings over the next one to two years. The strategy's stated examples include:

• Plant or capacity expansion
• Addition of new clients
• Entry into new markets
• Launch of new products
• Debt reduction
• Reduction in underlying raw-material costs
• Execution of new orders

The purpose of identifying these catalysts is to connect the valuation thesis with a potential fundamental change in the business. A stock may look inexpensive, but the investment case becomes stronger when there is a credible reason why earnings, cash flows or business visibility could improve.

Top-down and bottom-up research

The strategy combines top-down and bottom-up approaches.

Top-down analysis can help assess the broader economic, industry and sector environment. Bottom-up research then focuses on individual companies, including fundamentals, valuation, growth prospects and catalysts.

This combination allows the strategy to remain sector agnostic while still building positions around specific company-level opportunities.

What "value" does not mean

Value should not be interpreted as simply buying the cheapest stocks in the market. A stock can trade below historical or peer valuation levels because the business genuinely deserves a lower valuation.

The investment thesis therefore needs to distinguish between an undervalued business and a business facing structural deterioration. This is particularly important when investing in mid- and small-cap companies, where liquidity and business-specific risks can be higher.

Why Bonanza Value Focuses on Mid and Small Cap Companies

Bonanza Value primarily allocates across mid-cap and small-cap stocks because the strategy seeks opportunities where business fundamentals and earnings potential can create a meaningful gap between current valuation and perceived intrinsic value.

Mid- and small-cap companies can offer a wider range of business situations, including emerging leaders, turnaround opportunities, capacity expansion stories and companies entering new markets. However, these opportunities also come with a different risk profile from large-cap equities.

Smaller companies can experience higher price volatility, lower trading liquidity and greater sensitivity to changes in funding conditions, demand, input costs and competitive dynamics. A value thesis may therefore take time to play out.

The strategy's stated five-year investment horizon is consistent with this long-term orientation. Investors considering Bonanza Value should be prepared for periods in which the market does not immediately recognise the underlying investment thesis.

For investors comparing PMS with direct stock investing, see PMS vs Direct Equity.

Bonanza Value vs Aegis, Edge, Growth and Multicap

Bonanza's five equity PMS strategies have different portfolio-construction orientations. The distinction is less about ranking one strategy above another and more about understanding the investment problem each mandate is designed to address.

Value vs Growth

Bonanza Value starts with the valuation opportunity and looks for businesses where fundamentals and catalysts can support a re-rating. A growth-oriented strategy generally places greater emphasis on the durability and pace of future growth.

That means the same company can look attractive under one framework and unattractive under another, depending on its valuation, growth profile and stage of business development.

Explore Bonanza Growth.

Value vs Aegis

Bonanza Aegis has a broader tactical framework, combining fundamental and technical analysis and including quality-growth, turnaround and momentum opportunities. Bonanza Value is more specifically centred on the value thesis: identifying businesses perceived to be deeply undervalued and waiting for fundamentals or catalysts to support a reassessment.

Explore Bonanza Aegis.

Value vs Edge

Bonanza Edge focuses on mid- and small-cap companies with superior earnings-growth potential or special opportunities. Bonanza Value, by contrast, places the valuation gap and potential re-rating more centrally in the investment thesis.

Explore Bonanza Edge.

Value vs Multicap

Bonanza Multicap has the broadest market-cap mandate of the five, with flexibility across large-, mid- and small-cap companies. Bonanza Value has a more specific style orientation and primarily targets mid- and small-cap value opportunities.

Explore Bonanza Multicap.

Bonanza Value Minimum Investment, Fees and Exit Load

The minimum investment for Bonanza Value is ₹50 lakh, consistent with the regulatory minimum for PMS investors.

The APMI-disclosed fee structure is:

• Fixed fee: AMC charge of 2% p.a.
• Variable fee: AMC 0%
• Hurdle: 12% p.a.
• Profit sharing: 25%
• Exit load: 1% in the first year
• Exit load from the second year onwards: Nil

APMI reports one-year portfolio turnover of 4.67x as of 31 July 2026. Active turnover can increase transaction activity and may have tax and cost implications for investors.

Fees, terms and portfolio information can change, so investors should confirm the latest applicable terms before investing.

Key Risks of a Mid and Small Cap Value Strategy

Value-trap risk

The biggest risk in value investing is that a stock may be cheap for a reason. A low valuation does not guarantee a future re-rating. Business deterioration, weak governance, competitive pressure or structurally declining demand can prevent the investment thesis from working.

Turnaround execution risk

A value thesis can depend on a business improving its earnings, reducing debt, adding capacity, winning customers or executing new orders. If the expected catalyst is delayed or fails, the investment may remain undervalued for longer than expected.

Mid- and small-cap volatility

Mid- and small-cap stocks can experience sharper price movements than larger companies. Portfolio drawdowns can therefore be significant during adverse market conditions.

Liquidity risk

Smaller stocks can have lower trading liquidity. During stressed markets, selling positions at the desired price may become difficult, particularly when market-wide liquidity contracts.

Long holding periods

A value thesis may take years rather than months to play out. Investors should be prepared for periods where the market price does not reflect the investment team's assessment of the business.

Market-cycle risk

Mid- and small-cap stocks can behave differently across market cycles. A strategy concentrated in these segments can therefore underperform when market leadership shifts toward larger companies.

Concentration risk

Diversifying across companies does not eliminate concentration risk. Individual holdings, sectors or themes can still have a material impact on portfolio performance.

Manager-judgement risk

Security selection, valuation assessment, catalyst identification and portfolio allocation all depend on investment judgement. There is no guarantee that these decisions will produce the intended outcome.

Key-person risk

Achin Goel is the Fund Manager of Bonanza Value. Changes in investment leadership or the investment process may affect how the strategy is implemented.

Who May Consider the Bonanza Value Strategy?

Bonanza Value may be relevant for investors who:

• Have a long-term equity investment horizon
• Can tolerate the volatility associated with mid- and small-cap stocks
• Are comfortable waiting for a value thesis or earnings catalyst to play out
• Understand that an undervalued stock can remain undervalued for an extended period
• Meet the ₹50 lakh minimum investment requirement
• Are evaluating PMS as part of a broader equity allocation

Suitability depends on an investor's risk profile, liquidity needs, existing portfolio, investment horizon and overall asset allocation. The strategy should not be selected solely because a stock or portfolio is described as "value."