SA Research Desk

Wind Energy Revival & Proxies

Posted by | Industries, Investing Framework, Scuttlebutt, Stocks | No Comments

Presentation by Jatin Khemani, Founder & CEO, Stalwart Advisors on Wind Energy Revival & Proxies Presentation (Video): Notes to Video: 00:00 Introduction 00:40 Wind Energy – Journey 01:20 FY18 Regime Change 05:30 Old Regime Vs New 09:15 Coal Vs Solar Vs Wind 10:00 Visibility for FY19 12:50 India’s Energy Target 2022 14:20 Key Concerns 18:40 Q4FY18 Turning Point? 19:30 Proxies for Investors 20:58 Disclosures Presentation (Slides): For any queries or feedback, please write to us at support@stalwartvalue.com

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Investing Mantra for Large-Caps – Go Contrarian (Case Study)

Posted by | Investing Framework, Stocks | No Comments

Until a few years ago, there were 100s of hidden gems/emerging companies available at throw-away valuation, however, since the beginning of this bull market in mid-2013, all those low hanging fruits got slowly taken out. As always pendulum did not stop in the center rather went to other extreme re-rating emerging companies to astronomical levels (~2x of their larger peers). There is a difference between a great business and a great investment- no matter how attractive a business may appear, as investors, we have to be cognizant of the price we are paying for it. Every market cycle teaches the same lesson to new investors, whether it was those who bought Technology, Media and Telecom (TMT) stocks in 2000 or Infra in 2007. Realizing this we also started exploring large caps …

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[Video] Thematic Research on Pollution & Actionable Investment Ideas

Posted by | Industries, Investor Meetup, Scuttlebutt, Stocks | No Comments

Presentation made by Jatin Khemani, Founder of Stalwart Advisors, during a conference organized by ‘Strictly Invest’ a group of around 150 passionate investors on 13th January 2018 in Mumbai’s Orchid Hotel. Presentation (Video): Notes to Video: 00:00 Introduction 01:00 Sneak peek in 2030 04:20 Pollution – A silent killer 05:40 Environmental Kuznets Curve 07:40 Sources of Air Pollution 09:20 New Emission Norms for India’s Thermal Power 11:00 Size of the Opportunity 12:45 List of companies to benefit 13:30 Top bet – GE Power India 15:20 Risk & Concerns 17:30 Other Proxies – Respirators & Masks 19:15 Other Proxies – Air Purifiers 20:15 Other Proxies – Pharma & Healthcare 20:40 Plants at Rescue 26:00 Disclaimers Presentation (Slides): FREE Access to research report on GE Power India & Scuttlebutt Note on Power …

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‘Growth Investing’ Vs ‘Growth Revival’ – Which style to follow?

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

Style 1: Growth Investing Growth stocks are companies which are consistently and predictably growing at supernormal rates and given the visibility in their earnings trajectory, the market keeps re-rating them to levels which look obscenely high when one looks at price-earnings multiple of trailing twelve months. But proponents of this approach chose to ignore trailing multiple and, considering growth potential, feel comfortable with multiple it would be at two or three years out. Assume Stock X trades at Rs 100 and earned Re 1 per share in FY17 implying a price to earnings ratio of 100 times. If earnings grow at 40% CAGR the forward price to earnings would keep contracting as follows:  FY17A FY18E FY19E FY20E FY21E FY22E EPS @ 40% CAGR 1 1.40 1.96 2.74 3.84 5.37 Price-Earning …

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How we caught & dropped a 5-bagger – Story of AGL

Posted by | Investing Framework, Scuttlebutt, Stocks | 3 Comments

Ceramic Tiles is one space which we have been tracking for many years now. In the past, we have misjudged the potential of branded players and missed some multi-baggers like Kajaria Ceramics and Somany. (blog post from 2013) During 2015, we studied a company called ‘Asian Granito’. With Rs 850 Cr. in annual sales AGL is the 4th largest in India’s Rs 24,000 Cr. ceramic tile industry. It was available at Rs 160 a share and a market cap of Rs 360 Cr. i.e. 0.45 times sales vs. 2-3x for Kajaria and Somany. Despite throwaway valuations, we gave it a pass owing to some concerns on the business and management quality. We again looked at it when we learned Mr. Tapan Jena, a professional with 27+ years of experience in …

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Why we prefer ‘First-Generation Owner-Operator with Skin-in-the-game’?

Posted by | Investing Framework | One Comment

We often say while talking about our investment philosophy that we prefer companies which are led by ‘First generation, owner-operator with skin-in-the-game’. Why do we have such a preference? A company is called to be owner-operated when it is led by the promoter(s) who own the majority stake in the company. It is said to be first generation owner-operated if it is led by the founding promoter(s). Think Relaxo Footwear or Wonderla Holidays. Over time the leadership could be passed on to the next generation though it will continue to be termed as owner-operated. Think Garware-Wall Ropes which is currently led by 3rd generation or Amrutanjan Healthcare led by 4th generation. The baton could also be passed on to a professional management team; qualified and experienced managers who would now …

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Should you invest in IPOs?

Posted by | Food for thought, Indian Markets, Investing Framework, Investing wisdom, Investment Gurus, IPO | No Comments

There are two kinds of Initial Public Offering (IPO) – 1). Fresh Issue where new shares are issued and money raised goes to the company which can be used for growth or retire debt and 2). Offer for Sale where existing investors (promoters and private equity) sell their shares and money goes to them rather than the company. Unlike earlier times when most IPOs were a fresh issue in order to raise growth capital, now most issues these days are Offer for Sale. During rapid growth phase companies go to private equity firms for capital and after achieving reasonable scale comes up with an IPO at rich valuations, leaving hardly anything on the table for new investors, to offer an exit to private equity. IPO is a seller’s market, they …

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[Memo] A Note from CEO – View on Current Markets & Portfolio Strategy

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Following is a copy of memo shared with Stalwart’s clients during August 2017 – Markets were rallying one way up since the start of 2017 and many began to believe there’s really nothing that can stop this rally amidst so much liquidity and no alternate opportunity for deployment. Then happened the least expected regulation twist during the month of August which should have ideally effected just those 331 alleged “Shell” companies in whose stocks trading got suspended with immediate effect, but when it comes to markets the ‘cause and effect’ is complex and often goes beyond the obvious and even minor developments could spread into deadly contagion.   Some of our stocks too have corrected, however, these are merely mark-to-market changes as long as we have confidence in the underlying thesis. …

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[Memo] Penny-wise & pound-foolish – how brokers dupe investors?

Posted by | Indian Markets, Memo | No Comments

Following is a copy of recent memo shared with Stalwart’s clients – It is unfortunate that despite such strict regulations and risk management by SEBI and Exchanges, in a recent case a Delhi-based broker could pledge his clients’ securities worth Rs 55 Cr., borrow money, divert funds for trading/personal use and eventually default. The investors are now at risk of losing a part or all of their portfolio. A broker can do that because sometimes clients agree to transfer their securities to broker’s pool account, whereas in many cases it could also be done fraudulently without letting clients know about it. Why do investors allow the broker to transfer their DP holding to broker’s pool account? Brokers lure clients by offering interest on securities as high as 7-10% if they agree to …

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Am I Ready?

Posted by | Food for thought, Investing wisdom | No Comments

There is clearly a wild rush towards equity, some are doing this out of FOMO (Fear Of Missing Out), whereas some are left with no other choice given relative unattractiveness of hitherto popular asset classes of Bank Deposits, Real Estate and Gold. The magnitude of this irrational exuberance can be gauged by reading chats in  some whatsapp groups, comments on investing blogs or discussion forums like MMB (one such snapshot shared at the end of this short post). Stalwart Advisors doesn’t have a sales team (& hence no sales target or incentive to mis-sell). Rather we have transparently put all the information on our website and let investors decide for themselves. If prospects contact us over email or telephone, we also ask lot of questions to gauge whether they are ready or not, and accordingly counsel them. Yet, there …

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