Long Term

Why we bought Amrutanjan Healthcare and continue to like it!

Posted by | Stocks | 4 Comments

‘While, I was reading about this company I literally fell asleep’ said a smart analyst during one of our Chai pe Charcha meetings sometime in mid 2014. ‘You know.. it’s a 120-year old company and still does only about 140 Crores in sales, and by the way who really uses balm these days? I guess it’s a dying business’ he continued.
That’s what really got us interested to study it more as we had some idea already that it’s an owner-operated FMCG business with a net cash balance sheet, and zero institutional ownership- seemed like a classic Peter Lynch type boring story which nobody wants to even talk about. The only missing part was growth potential and over next few weeks that one question kept us busy.
Amrutanjan until 2012 was mainly

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[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

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Tasty Bite Eatables turning Tastier

Posted by | Business Models, Stocks | No Comments

We had invested in Tasty Bite Eatables in April 2015 when the stock price was Rs 640. In this post, we will briefly cover what attracted us to the company and how the thesis is playing out. 
Tasty Bite Eatables (TBE) is a company incorporated in 1986 and is mainly into ready-to-eat food. It was promoted by Ghai Family who also used to own franchise of Kwality Ice Cream in Western India. The company went through some interesting times in its brief history; sometimes a great idea fails because it is ahead of its time. Perhaps this was true for Tasty Bite too which questioned its very survival leading it into Board for Industrial & Financial Reconstruction (BIFR). Eventually it got acquired by Hindustan Unilever which withdrew from Indian markets as Indians weren’t ready for ‘ready-to-eat’ food

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3-wave framework & its implications on growth potential

Posted by | Food for thought, Investing wisdom, Stocks | 3 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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Significance of Management Quality in Long Term Investing

Posted by | Investing wisdom, Stocks | No Comments

What would you do if I give you the following information about a listed B2C company:

The brands of the company are jointly owned with promoter’s private entity.
The most premium brand owned by this company which brings a third of the revenue and bulk of the profitability, is under litigation, filed by company’s closest competitor and market leader, which claims that it registered it first.
The founding brother-duo are getting old (now in late 60’s) and its time for their next generation to take-over, we have no clue how competent they are and how well they gel with each other.

No matter how amazing the prospects of this company seem to be, would you be able to bet big on this opportunity? Take a while before you

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