2020 May

Memo: Let’s Brace for P&L Accidents But Not Overestimate Impact on Intrinsic Values

Posted by | Indian Markets, Investing wisdom, Stocks | No Comments

(Following is a copy of Memo shared with subscribers of SA’s Model Portfolio) Starting this earning season i.e. of Q4FY20 (& beyond), we would hear a lot of exceptional items in the form of loss of revenue and profits due to lockdown, increased operating expenses, changes in the way businesses operate, etc. For some businesses like Wonderla Holidays, the impact of lockdown is extreme – All its parks are closed and revenue will be zero until they reopen, while a significant cost base is fixed in nature (salaries & maintenance) so the company will report losses for this period. On the other extreme, there are a few businesses in our portfolio from agro-chem/pharma sectors for whom it is literally life as usual. In reality, most of the businesses will lie somewhere in the …

Read More