Food for thought

[Video] Talk delivered at FIL Alumni Meet, Pune – July 2016

Posted by | Business Models, Food for thought, Industries, Investing Framework, Stocks | 15 Comments

Recently I had the privilege of sharing my thoughts on investing with my fellow FIL Alumni at Flame University, Pune. The video, along with the presentation, is shared below. I talked about ‘India’s Consolidation Wave'; how the organized players stand a great chance to grow amidst an on-going shift in consumer preferences towards standardised and branded offerings. Video_India’s Consolidation Wave Notes on Video (Time 31:11) 00:00 Introduction 01:00 Drivers of Long-term Returns 03:00 Case Studies – Page Industries & Relaxo Footwear 04:30 Defining Unorganised Sector 05:50 Industry Research Filters Applied 06:40 List of Industries with high potential 24:45 Case Study – Decorative Paints (1980 – 2016) 26:48 GST: A big enabler 29:00 Value Migration Vs. Consolidation Wave 30:25 Summary Presentation_India’s Consolidation Wave For convenient reading switch to full screen mode – click the second …

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What makes Thyrocare a great business?

Posted by | Food for thought, Scuttlebutt | 9 Comments

What makes Thyrocare a great business? I probably first got to know about Thyrocare Technologies Limited (a company into Healthcare Diagnostic) through a 2010 ET article titled ‘PE firm buys 30% in Thryocare as comapany seeks to tap radiology segment‘ and later in 2012 when Thyrocare had second round of funding  ‘Norwest Venture Partners invests Rs 120 cr in Thyrocare‘ As I read more about the company I found some very interesting pointers: First Indian laboratory to have an IT enabled, 24×7, fully automated diagnostic laboratory Set up covering over 2,00,000 sq. ft. floor space (a centralized laboratory) that ensures error free processing of over 40,000 specimens and over 2,00,000 Clinical Chemistry investigations per night. (mind-boggling numbers..isn’t it?) The unmatched speed factor is achieved through a combination of air-cargo logistics and IT enabled, …

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Is VLS Finance really a deep value stock?

Posted by | Food for thought, Stocks | No Comments

VLS Finance is a Delhi-based listed company which holds big chunks in some other listed companies like Relaxo Footwear, Ambika Cotton, Accelya Kale and many others, having a combined market value of Rs 950+ Cr. (as on 18th April 2016) The market cap of VLS Finance, on the other hand is just Rs 150 Cr. which implies one is getting a dollar for 15 cents – a mouth-watering deal for any ‘Value Investor’? Before we jump to any conclusion regarding the merit of this investment opportunity, let us have a look at how has the situation been historically and how has VLS’ marketcap moved with respect to the change in market value of its investments. VLS doesn’t seem to have any major operational business of its own and primarily act only as an investment vehicle for its promoter, so …

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3-wave framework & its implications on growth potential

Posted by | Food for thought, Investing wisdom, Stocks | 4 Comments

In the long run if there is one key variable that determines the return we make on any stock, it is the earnings growth of that company. Earnings can grow through growth in sales, sales-mix change and profit margin expansion. However, it is the first variable; sales, that is most important in the long run as the other two for practical reasons cannot improve forever. So to determine sales growth potential for a prospective investment, it is crucial to understand the drivers of sales growth and the tailwinds of the industry, if any. This post is an attempt to put a framework to understand how categories move; a category is a sub-segment within an industry; for example electric two-wheeler is a category within the larger personal mobility industry. One can …

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Obsession with P/e Multiple

Posted by | Food for thought, Investing wisdom | 14 Comments

Maruti says we are a country obsessed with mileage; see its famous NASA ad ‘Kitna Deti Hai’ Indians are known to be very smart consumers; always looking for value-for-money offerings. Fortunately or unfortunately, that should make us very good ‘Value Investors’ as defined by Ben Graham. However, how do we know if a stock is a bargain or not? By default P/e ratio has become that barometer on which majority is trying to answer this critical question. You mention a stock and the first question would be ‘Boss iska P/e kitna hai?’ (How much is its P/e?) P/e which is price-to-earnings ratio is the most commonly used valuation ratio to make sense of how expensive or cheap a stock is. The reason for its popularity is its simplicity; P/e of …

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Decoding Business Model of Meru Cabs

Posted by | Business Models, Food for thought, Scuttlebutt | 10 Comments

Since a long time, I have been a loyal customer of Meru Cabs whether I am in Dehi, Mumbai or Bangalore. Being a value investor and somebody who strongly practices scuttlebutt, I generally find it hard to resist interacting with the driver. In fact most of these guys turn out to be pretty interesting and knowledgeable. Over these years, I generally found that barring the usual small complaints every employee has, Meru drivers have largely been happy with the company on all crucial parameters like getting consistent bookings, monthly earnings and overall experience. I was in Mumbai recently when I booked a Meru from Thane to the airport using their android mobile application. (If you haven’t tried the app yet, please have a look. It is amazing as it shows you cabs around you …

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