Healthcare Investing: Insights from DSP Mutual Funds’ Chirag Dagli

In an enlightening interview, Chirag Dagli, Vice President, Equity at DSP Mutual Funds, shares his journey, investment philosophy, and unique insights into the healthcare sector. With over two decades of experience, Chirag brings a wealth of knowledge and a nuanced understanding of both domestic and international markets. This blog post distills the key takeaways from his conversation with Radhakrishnan Chonat, providing readers with valuable insights into managing a thematic healthcare fund.

A Journey Through the World of Finance

Chirag Dagli’s Career Path and Early Inspirations: Chirag Dagli recounts his career journey, from his early days as a chartered accountant to his current role at DSP Mutual Funds. He emphasizes the importance of passion and continuous learning in the field of finance. His experience spans prestigious institutions like ICICI Securities, HDFC Mutual Fund, and Citi, where he honed his skills in equity research and portfolio management.

Buy Side vs. Sell Side: A Learning Curve

Understanding the Nuances Between Different Investment Roles : Chirag delves into the differences between buy side and sell side roles in the financial industry. He highlights how the buy side fosters a deeper understanding of decision-making and its impacts, teaching humility and patience. The sell side, on the other hand, focuses on detailed analysis and understanding specific companies in depth.

Intrinsic Value: The Core of Investment Strategy

Balancing Market Dynamics and Intrinsic Value in Healthcare Investments : Chirag discusses his approach to identifying intrinsic value in businesses, particularly in the dynamic healthcare sector. He explains the concept of replacement cost and the importance of staying within one’s circle of competence. By focusing on obvious undervalued opportunities, investors can make informed decisions and achieve significant returns.

Sector-Specific Insights: Healthcare Sub-Sectors

Navigating Pharma, Diagnostics, Hospitals, and CDMOs : The healthcare sector comprises diverse sub-sectors, each with unique drivers and challenges. Chirag outlines his approach to allocating funds across these sub-sectors, emphasizing the need to build competence and continuously evaluate businesses. He provides examples of how to differentiate between companies within the same sub-sector based on metrics like occupancy rates and susceptibility to disruption.

Global Exposure: A Strategic Advantage

Leveraging International Markets to Enhance Portfolio Value : One of the distinctive features of Chirag’s fund is its allocation to global stocks, particularly in segments where India lacks strong representation, such as medical equipment and genomics. He explains how international investments allow Indian investors to benefit from global healthcare trends and access high-quality businesses at attractive valuations.

Razor and Blade Model: A Common Theme

Identifying Sustainable Business Models in International Investments : Chirag shares his methodology for selecting international healthcare companies, focusing on those with a “razor and blade” business model. This model, characterized by recurring revenue from consumables and services, ensures long-term sustainability and growth, making it an attractive investment strategy.

To Conclude

Insights and Learnings from Chirag Dagli’s Investment Philosophy : Chirag Dagli’s interview offers a wealth of knowledge for investors, particularly those interested in the healthcare sector. His emphasis on intrinsic value, staying within one’s circle of competence, and leveraging global markets provides a comprehensive framework for making informed investment decisions. As healthcare continues to evolve, Chirag’s insights serve as a valuable guide for navigating this complex and dynamic sector.

This interview with Chirag Dagli underscores the importance of a disciplined and strategic approach to investing. By focusing on intrinsic value, building sector-specific competence, and leveraging international opportunities, investors can achieve significant returns while mitigating risks. Chirag’s journey and insights are a testament to the value of experience, continuous learning, and thoughtful analysis in the world of finance.