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About Carnelian

Carnelian Values

Capital Protection: Margin of safety precedes return


Excellence: Excellence precedes


Law abiding: Compliance

precedes rewards

Know what you don't know:

Stay within core, expand core

Patience & trust: Patience precedes impulsiveness

Customer first: Customer interest precedes everything

Reputation risk: Reputation precedes rewards

We look at growth in three baskets

Resonating with the qualities of Carnelian*, Carnelian Asset Management, an investment management firm was founded by Vikas Khemani, Manoj Bahety, and Swati Khemani to pursue their passion towards investing in the capital markets. Carnelian’s mission is to help clients create and protect their wealth in the best optimal manner through investing in equities. Carnelian aspires to create a global scale asset management platform known for its values and expertise. 

In the Carnelian world, we believe investing success is an outcome of making good decisions consistently over a long period of time. Good decisions are those which are made “Objectively, Free of any bias”, considering “Probability of outcome” and factoring “Risk reward”. 

(*Carnelian is a semi-precious stone which stands for motivation, endurance, leadership and courage; it is believed to bring about prosperity and protect from negative energies) 

Carnelian Value Tree

Investment Philosophy

Our investment philosophy rests on two pillars


Investment Philosophy


We look at growth in three baskets


Aims at capturing earnings growth and valuation rerating 


  • Management/CEO change 

  • Industry structure change 

  • New growth catalyst 

  • Product innovation  

  • Completion of capex phase 


Aims at capturing earnings growth over a long period of time led by MRFG 


  • Large opportunity size & sustainable Moat 

  • High ROE - efficient capital allocation 

  • Robust Free cash flow generation 

  • Growth & Governance 


An opportunistic way of capturing opportunities market might offer 


  • Deep value with cash flows 

  • Special situations – IPOs/ mergers/ demergers/ delisting 

  • Temporary headwinds 



At Carnelian, we classify risks into 3 types

Type A

Risk of permanent loss of capital or Total loss risk: risk of losing ~70-100% of capital

Permanent Loss Risk

  • Disruption Prone Businesses

  • Quality of management

  • Quality of earnings/balance sheet


Max Time

Type B

Volatility Risk (MTM loss Risk): risk of an investment temporarily going below the investment price

Volatility Risk

  • Macro factors

  • Geo-political / political issues

  • Liquidity

  • Temporary market dislocation


Min Time

Type C

Underperformance risk/Opportunity loss risk: risk of investing into sub- optimal stocks/sectors/asset class due to various biases and lack of knowledge thereby missing superior returns

Opportunity Loss Risk

  • Biases

  • Lack of knowledge 


Max Time

In investing, avoiding an accident is equally important as getting the investment hypothesis right.  

We come from Marwari families where our forefathers are used to seeing “where is our profit vs what is our profit”. We learnt our first lessons from them to ascertain profits from the balance sheet not the P&L. Our childhood learnings learnt working with them coupled with professional qualification of Chartered Accountancy has immensely helped us. 

This Unique capability and rich experience of over 12 years on forensic research of the companies’ annual reports and seeing through some of the obvious accounting practices or frauds, helps us avoid accidents of investing in companies with dubious intent or misplaced objectives.  

Our unique forensic framework deep dives into the following before investing, what we call “CLEAR”.

C – Cash flow Analysis & Capital Allocation. We assign zero value to profits without cash flow conversion. We deep dive into source of cash flow instead of reported cash flow

L – Liability Analysis, True debt vs Reported debt, Contingent liability and likely impact on future earnings


E – Earning Analysis, True Economic Profit vs Reported Profit, Discretionary vs non-discretionary profit

A – Asset Quality Analysis, Some worrisome points - huge built up in loans and advances, large quantum of long duration inventories/receivables susceptible to value diminution, large payables supporting large receivables/inventory, profits getting re-deployed in non-core/expensive/uncertain inorganic growth, profits getting into intangible assets/goodwill – without visibility of commensurate profitability, subsidiaries/JVs which require consistent infusion of profit without any visibility of returns.


R – Related party transaction & Governance issues

Forensic Expertise

Pitfalls we avoid

Learned Investment Guru Charlie Munger says, Invert, always invert. Tell me where I will die, I won’t go there.

Below illustrated are companies / managements we will not invest with:

  • Companies with aggressive accounting practices

  • Companies with high financial leverage

  • Companies with low tax incidence

  • Companies with the management having no skin in the game or misaligned objective

  • Managements with consistent poor governance track record

  • Managements in a hurry to create value

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