CCP’s Earnings Have Compounded at 18% Per Annum

Marcellus contends that in a low-churn, concentrated portfolio, earnings growth is the dominant long-run performance driver — not P/E multiple expansion, which mean-reverts over time. The firm's CCP portfolio delivered a 17.8% EPS CAGR over FY19-24, closely matching its 17.4% pre-fee return over the same period, which the firm presents as validation of the earnings-first framework. Marcellus acknowledged two missed opportunities. First, it identified the shift toward "enterprising compounders" — companies entering new industries while growing their core — 12-18 months later than it could have, which held back EPS growth in the 2019 and 2020 cohorts to roughly 11-13%. Second, it noted that trimming Dr. Lal Pathlabs, Asian Paints, and Bajaj Finance by half in early 2022 would have reduced a 14% NAV drawdown to 10-11% and added 80-100 basis points to since-inception gross returns. On the broader market, Marcellus argued that Nifty50's 24.3% EPS CAGR over FY21-24 — fuelled by commodities and government capex — is unlikely to persist, given India's nominal GDP growth of 10-12%. The firm said it will continue to avoid sectors outside its quality criteria regardless of benchmark weight. CCP returned 15.35% net of fees and expenses since FY19.