TAP GAP….. Equity Poser 6/11……Respond by June 15,2011
I love you Guys !…Just look at the varied responses…Till just before Midnight Tuesday, June 7,2011,14 of you have responded with 25 choices,adjusting for overlaps but including unlisted Godrej Agrovet…..In absolute terms the Choice with the Lowest Price being Rs 50 Gujarat NRE Coke and the highest being Titan Industries at Rs 4375 !…..Wow !…Imagine Titan being a 5 bagger in 5 Years and crossing Rs 20000 or even a 10 bagger and crossing Rs 40000 !…. I’ve listed the choices in the addenda below for easy reference….Come on Others !…am sure you can inspire many with your Choice and Reasoning for it !…remember respond by Wednesday midnight IST June 15,2011…It’s going to be fun,but tough too, to decide the winner of the gauravblog hamper
Winning Response wins the gauravblog hamper that includes a gauravblog Collared T Shirt above….Six Hampers have already been won in earlier Equity Posers.You can check out the Winners Scroll and their comments after they were delivered the hamper
Equity Poser
Which Industrialist and his or her Company will be a huge Wealth Creator for Shareholders in the next Five Years ,just like Ambanis of Reliance, Murthy & his Group of Infosys and Sunil Mittal of Bharti Airtel and many others like Matrix Labs and Mercator Lines did for you in the past ?
Addenda
Addendum 1
Would appreciate if responses are a bit more detailed than just one word or two….preferably with some reasoning and share price targets for the choice…..it would be easier to first prepare your response on a Word document and then copy paste it to the response box on this blog post….Simultaneously,if you wish,you can also forward it directly to my email [email protected] or [email protected]
All the best….Amit has responded first with his choice being the Jindal Group…I’m assuming it is Sajjan Jindal and not Naveen Jindal….have asked him to clarify though
And when I state Wealth Creation,I mean Wealth Creation !…..huge multibagger …over 1000% perhaps…..but surely atleast 500% in the next Five Years !….so you can retire early in life !
Cheers !
Addendum 2
Wow! Really Interesting and Inspiring Response Choices till date Near 6 pm Friday,June 3,2011
Amit….Sajjan Jindal Group : JSW and Saw Pipes
Amit Gupta……Anand Mahindra Group :Mahindra & Mahindra
Pejavur……Narendra Murkumbi :Shree Renuka Sugars
Sachin……Indiabulls Group :Indiabulls Financials
Addendum 3
Lovely ! Some more Varied Selections in responses poured in between IST 6 pm Friday,June 3,2011 and 8 am Sunday morning, June 5,2011
Jigs….Muruggapa Group : Coromandel International
Raoji (earlier TAP GAP gauravblog hamper winner)……Arun Jagtramka : Gujarat NRE Coke
Ranjit…… 1) Muruggapa Group : Coromandel International…..2) Education Sector
Ravi Kanth Pulavarthy…..1)Vinod Ramnani : Opto Circuits….2) Gautam Adani : Mundra Port,Adani Enterprises,Adani Power…..3) Larsen & Toubro
I’m overwhelmed at the response to this TAP GAP 6/11 !…Thoroughly enjoing it as I’m sure all of you too are….some more responses that have come in between IST 8 am Sunday morning, June 5,2011 and just before midnight Tuesday,June 7,2011
BS Reddy….1) Adani Group & Gautam Adani : Mundra Port,Adani Enterprises,Adani Power…. 2) Mukesh Ambani : Reliance Industries
Sameer……1) Rana Kapoor : Yes Bank…..2) Adani Group & Gautam Adani : Mundra Port,Adani Enterprises…. 3) Jaidev Modi: Delta Corp…..4) P D Mundhra: eClerx……5) V Guard…..6) Titan Industries…..7) His best choice is Adi Godrej : Godrej Properties,Godrej Consumer,Godrej Agrovet (Unlisted)
Swaroop (earlier TAP GAP gauravblog hamper winner)…..Zyden Wellness
Suresh….Indian Oil Corporation
RR aka Raghavendra Bhat (earlier TAP GAP gauravblog hamper winner)….1) Biocon…..2) Geodesic
Ekansh…..Cera Sanitaryware
Come on all you others out there !….I’m sure you have your own strong conviction and choice of a huge Multibagger Wealth Creator that one simply must have in their Equity Portfolio in strong weightage….Respond with this Selection of Yours and you may just get your hands on the gauravblog hamper…This is going to be one fun ,though tough decision,winning response to select….would be an arguable selection too…… Cheers !
34 thoughts on “TAP GAP Equity Poser 6/11……Which Industrialist and his or her Company will be a huge Wealth Creator in the next Five Years ?”
Jindal group
Amit…Which Jindal Group? Sajjan’s or Naveen’s ? …and any specific Company…can you substantiate this hope or conviction of yours with reasoning and targets?….Cheers
it will be anand mahindra M&M for sure. defense logistics auto TW tourism and what not.
Hi Gaurav, its surely Sajjan Jindal Group.
JSW steel and PR Jindal`s Jindal SAW. I`ve conviction as i`ve already met with management of both these cos and found a great upside remaining in both these stocks.
Why did Sunil M succeed?
1.Huge external opportunity
2.Excellent management
3.Willingness to share wealth with stakeholders (his initial investors still sing his praises)
Why did Murthy succeed?
1.Huge external opp
2.Excellent management
3.Willingness to share wealth with stakeholders (ask any early Infoscion)
Why did Ambani succeed?ok ok u got the picture.
So the way to go forward is to identify a huge external opp and a top class mgmt dying to exploit it.
So what is a big macro trend going on?
Scarcity of water
Scarcity of land
Growing population
High energy prices
All these forces will lead to high food prices
So a promoter who can exploit this opp can be the next LN Mittal
Is there such a promoter?The answer is yes.
Would like the readers of this blog to see the track record of Narendra Murkumbi.
He started with nothing and in a short span has built one of the largest sugar companies in the world.His track record of rewarding shareholders is peerless.His Brazilian acquisitions are just the beginning of his global ambitions.One day he will be the Sugar Samrat of the world.Anybody wanting to ride the agro commodity boom should hitch their stars to his wagon
Dear Gaurav, I think IndiaBulls Group will be multibagger in next 5 years. If you see India Bulls Financial, They have transformed business in last 3 years and the way they are growing with derisk model, I think Indiabulls Financials will be one of pick.
Murugappa group’s Coromandel International and Shriram group’s Orient Green Power – Agriculture and Energy being biggest themes for next 5 years.
Mr.Arun Jagatramka of Guj NRE Coke gets my vote.
Coke is a key ingredient for steel making.All the huge capacities coming up in India need lots of iron ore and coke.
He is one of the few players to have ventured out to australia and already bought the mines.
He will expand his capacity 3x in the next 3 years.
What I like best is that this gentleman has created tremendous wealth for his existing shareholders.His achievements are on par with Murthy of Infosys in terms of wealth creation.
This is a play on 2 macro themes-growing steel consumption in India and elsewhere and increasing scarcity of coke
I feel Muruguppa group will be the biggest wealth creator in times ahead as a group. Coromandel International, its company, is leader in fertilizers. And agricultur e is the best business to be in. So fertilizers business should do well. Just imagine the opportunity if Coromandel is able to do something similar in fertilzers etc, just like the way we have retail.
I also like education sector as a theme. Am not listing any specific companies here, but I feel the opportunity is huge. And any company having the right expertise, resources, skills etc should do exceedingly well. We already have premier management institutes like IIM’s which are world famous. Just imagaining if these increase and a similar standard comes up in early stages of education, what a big opportunity lies ahead in this sector.
At present, I find very few promoter familys which would want to really share wealth
for the investors.After careful analysis, I have come 3 choices:
1)The medical device conglomerate of india Opto Circuits run by Vinod Ramnani is my first choice.
They have consistently grown 30% to 40% every year organically and also inorganically with many acquisitions. Further i dont find many companies in india which are into production of medical devices in India. Also they have declared bonuses in each of these years 2006,2007 and 2008 and also pays dividend consistently.They always had a ROE of 30% without any margin pressure due to pricing of raw materials.So this company should do really well under the aegis of good management in coming 5 years.
2)One of the other intelligent and efficient promoter is Gautam Adani. For any business to be successful,you have to be able to plan or visualize trends beforehead. He has been very successfull in building or making acquisitions of ports,ships,coal mines and Power Projects way before any company.
So the companies under him like Mundra port,Adani Enterprises and Adani power should do well in next 5 years. He had single handedly been able to convert a unknown town of kutch mundra into a employment hub.
3)I personally prefer companies that are not run by promoters holding large chunk of company but are run by qualified and able persons. Larsen and Turbo is one such choice.This is one of the big companies in India into technology, engineering, construction and manufacturing company.Breaking the subsidaries of L&T into different companies will itself be enough double or triple the wealth in a day.
my choice is two persons -Adani Group’s -Gautam Adani is going to be Mini Dirubhai Ambani in coming days
Mukesh Ambani -RIL is unbeatable for the coming days
1)Rana Kapoor – Yes Bank
Banking sector is best India growth procy play and Rana Kapoor very ambitious man also promising to be conservative in future
2)Gautam Adani – Mundra Port,Adani Enterprises
I feel like he is another dhirubhai ambai and also Narendra modi’s Gujarat in on high growth future
3)Jaydev Modi – Delta corp
Alreay delievred 100-multibagger and Gambling sector has huge opportunities
4)Adi Godrej – Godrej Properties, Godrej Agrovet, Godrej Consumer
Give your money to Godrej and you can have tension free at night. Debt free ambitious Godrej Properties with huge land bank from parent group, Africa+India consume play Godrej consumer, Rural/Agri play Godrej Agrovet
5)P.D Mundhra – eClerx
Best KPO play As till now they have utilized all IPO money properly. Very good financial numbers.
Note: v-guard, Titan insustires (extra :))
If u are asking for one company or one group I will go with “Adi Godrej” as wise people say “Key to successuful investment is to emphasize more on minimising losses than maximising profit. If you take care of losses, you will automatically make money”.
By investing in Godrej group companies, I am sure that I am with best management.
After seeing your latest poser on the blog & reading TOI’s Saturday edition which featured Rakesh Jhunjunwala’s interview & after having just re-re-read Peter Lynch’s Investment bible ‘One up on Wall Street’ i have based by ‘Wealth Creator/Multiplier’ pick based on their guiding principles & of course on the bedrock of ‘The Oracle of Omaha’s time-tested wisdom.
The company i have chosen is a new-age trail blazer in India’s ‘Niche FMCG’ business of health & health related products. I always have been looking for India’s version of Pepsi/Coca Cola & though there were many businesses in the FMCG business these were very complex(huge portfolio of products/brands) & difficult to understand (some extremely profitable businesses along with some ugly/hyper competetive ones!). Also most were behemoth’s & MNC’s with super high valuations(although outstanding in every financial, operational metric & loved by consumers & investors alike) eg. Nestle, HUL,ITC, Godrej Consumer,Dabur,Marico, etc. Most of these have multi-billion dollar valuations & as Lynch & common sense would suggest it would be very hard for these established businesses to turn ‘multi-baggers’ from these elevated levels.
After much research i stumbled open the stock by that great incident which has lead to many great scientific innovations & sometimes to grievous injuries – i.e by accident!
Rummaging through my sis/mom’s cupboards for products to short-list my ‘great FMCG’ stock i came across an ‘unknown’ (to me!) brand called ‘EverYuth’ i had never seen its ads on TV & since it was not a product i was interested in never bothered about its Ads in Glossy Newspaper supplements/Health magazines,etc. So i assumed my sis would have bought it influenced by the ‘glossy ads’ but to my great surprise found out that she had bought it after being influenced by her friends who swore by the product(s) (an Orange peel off/face wash) & she in turn influenced my mom to take it up & so the tribe grows & grows…..
The next day we were invited to our neighbours flat for a House warming ceremony & i was surprised to find them using a sugar substitute called ‘Sugar Free’ and found out that both of them were Diabetic & they joked that knowing the socia-economic strata of our Apartment dwellers & their sedentary life-styles they thought it better to use this as they assumed,correctly, that most would be Diabetic!
To my great surprise i found out that it was manufactured by the same company that made ‘EverYuth’ – Zydus Wellness & from there my research led me to believe that my long & arduous journey for finding my FMCG ‘pick’ had finally ended!
Zydus Wellness was spun out of Cadila Healthcare as a Product company concentrating on the niche & fast growing Health & wellness segment which though represents a tiny fraction of the overall FMCG pie is growing at a scorching pace of 25-30% CAGR.
Key products:
Sugar free – India’s no.1 sugar substitute with 80% market share
Nutralite – India’s no. 1 margarine/spread with 70% market share (which they beat powerhouse Amul’s offering ‘Delicious’!)
Everyuth – No.1 in peel off/face wash
Upcoming/new products:
Dlite : Sugar free drinks
Actilife: Health drink targeted at the mid-older aged population
Sugar free ice-cream ,medicated shampoos, etc
Zydus has been growing at ~70% (profitability) CAGR for the last 5 years & has moved from a tiny turnover of 18 Crore in FY04 to a siezable 336 Crore in FY11. It has strong return ratios(ROCE/ROE) of more than 30% in the last 5 years (50%+ in the last two years!).It has zero debt and cash of around 100 Crore, strong positive cash flows & great management pedigree & a huge unmet,growing & scalable business opportunity
So this qualifies on my First principle of equity investment : Ethical & Outstanding Management pedigree , high promoter ownership(also Lynch’s principle) of around 72.5%
Rakesh’s principles (as stated in Saturday’s edition of TOI):
1.
Size of opportunity: India’s burgeoning health conscious middle class & India’s disproportionate share of Diabetic & heart related illnesses
2.
Scalability: Though the initial investment in product dev/research is high, they have their own research wing called ‘Zydus Wellness institute’ which does R&D of new products, the cost of Raw materials is low (around 30% of sales) & once consumers chose their products they stick on due to their higher quality & stickiness (Brand strength).They are also getting into allied products (eg Sugar free drinks- Dlite, sugar free ice-cream, Health drink focused on ‘elders’ ActiLife, skin-care products for men Everyuth Menz, medicated shampoos,etc)
3.
Competetive advantage/Moat : Brands, strong focus on research, swiftness of introducing new products & winning market leader positions(Sugarfree,Everyuth, Nutralite) in multiple products/segments in realtively short time spans.
4.
Finance: They are a zero debt, net cash & positive cash flow company with all future capex fully funded by op cash flow! Extremely high return ratios & with lower incidence of Tax in the future as they are moving manufacturing to lower Taxed state- Sikkim.
Lynch’s Principles:
Buy what you see others use & buy what you understand!
And last but not the least the Oracle of Omaha:
Price is what you pay & value is what you get!
You are getting India’s premier health & wellness focused company for a bargain market-cap of ~2300 Crore which is a market leader, growing faster than the market, rewards shareholders & is satiating India’s unmet demands in health & wellness/lifestyle oriented products!
P.S : Due to the length of my response (i hope it didn’t put you to sleep!) i have mailed you my response rather than post it on the blog. I give you full freedom to edit/abbreviate & post(if necessary) on your blog my response.
Lastly, i would love to hear your feedback on my pick. I have written this response to gauge my fundamental research skills which i’m constantly honing (with your help!) & would greatly appreciate your feedback, the hamper is an added bonus with Nagchocs as the icing on the cake (errr or choco in the hamper?).
Also a word on Valuations of Zydus as that is not my forte (esp. With a 5-10 year horizon & complex DCF/Sum of parts valuations!!) as Zydus is not exactly ‘cheap’ by conventional valuation metrics
Disclosure: I have a sizeable position in Zydus Wellness & hence a vested interest in the stock
Hi Gaurav,
Can u advice with regard to Sundaram Clayton Limited. SCL is holding company of TVS Motors and TVS Electronics. market Cap of SCL is Rs 550 crores as compared to Maret Cap of TVS Motor is 2500 Crores. SCL is holding 60% stake in TVS Motors. Its stand alone EPS is Rs 9.9. Please advice why this share is so much undervalued
My choice is IOC.
It will be give atleast 400-500% returns in the next 3-5 years. Diesel de-regulation has to happen and by sheer volume of commodities related to energy – OIL will be the most valuable company in India.
I believe 3 things will drive value—scarce products/service, mass market product /service & revolutionary products/service
a) Scarce products,—products, services, anything eg: spectrum 😉 which is scarce will drive value.
b) Mass market product eg: FMCG product
c) Revolutionary Product: By revolutionary , I mean some new invention / discovery which is going to change the way we live/ do things.
Among the 3, my favorite is the revolutionary products…it can be a revolutionary technology, revolutionary drug, revolutionary product…
Since we are looking at Indian listed space….we have few choices to make because revolutionary products need investment , the outcome may or may not succeed, and being in listed space you are under constant pressure to perform to the unreasonable expectation of markets…. Very few listed Indian companies can afford this.
I lay my bet on Pharma & Technology sectors in this cateogry.
2 companies are my favorites and I think they have de-risked business model.
Biocon & Geodesic.
Biocon is well known, Geodesic Iam not quite sure if everybody has heard this name.. enough can be found if one googles hence I don’t believe in copy- pasting business.
I would like to end by saying… A revolutionary product which is mass market and also scarce (can be so.. because of various reasons including legal / technological / patent etc) will succeed in next 5 years.
I feel my bets in terms of company can go wrong but chances of my concept to predict the winner in next 5 years going wrong is very unlikely…
Cera Sanitaryware
I believe this company is going to create huge wealth for it’s shareholders over the next many years. The company is the third largest player in the organized sanitaryware segment and does command a very good brand equity.
I think we are at an inflexion point and going forward the sanitaryware industry can record a very good growth. Another good thing about this industry is that:
it’s a relatively very slow changing business (makes it easier for us to hold it for long term in comparison to education or technology where the trends change very fast and thus a company doing well today may end up on a losing side in a very short period of time).
the gradual shift from joint families to nuclear families and then everyones’s aspiration to own a flat. Thus the long term demand economics look great.
the best part about sanitaryware segment in comparison to say ceramics sector (tiles etc) is that companies command good brand value. We may probably not get to know if the tiles are from Kajaria or say somani, but brands like Parryware, Hindware and Cera are easily noticeable.
Why Cera and not HSIL?
HSIL and Parryware are the market leaders and Cera comes after them in terms of market share, however Cera started almost 20 years after HSIL did and so I find it commendable on their part to be able to corner 20% market share (organized segment).
For every 1 share of HSIL, one get’s a fraction of sanitaryware business and container glass business. The business economics of container glass business do not look good considering the balance sheet of HSIL, they have been piling on debt for expansion, while Cera too has been able to record a similar growth with their cash accruals and very minuscule debt.
I find Cera in a very sweet spot where they have been generating good cash flows from operations (almost in line with earnings) and have been able to deploy capital at good returns.
As mentioned earlier the company commands a good brand equity and considering the way brands have been re-rated, we may see a similar re-valuation of Cera (There’s no institutional holding in Cera, probably because of low liquidity but that’s where we are at an advantage). I believe the company is still out of sight of smart investors.
For the last 8-9 years, the company never recorded a drop in revenue nor in profits.
To add more, Murugappa group sold of their 47% stake in Parryware-Roca joint venture in 2008 for a sum of Rs 720 crore while the company had recorded a turnover of Rs 360 crore for FY 08, thus valuing the company at 4 times it’s annual turnover.
Murugappa group sold their stake as sanitaryware constituted less than 10% of their annual turnover and thus they unlocked the value to focus on core business.
4 times annual turnover seems expensive and it could be due to over exuberance during those times, however Cera is currently quoting at an enterprise value of 246 crore which is roughly equal to its turnover for FY 11.
1)Cerebra (Mkt Cap->90 cr): e-waste mgmt – 250 cr turnover with 25% margin by FY13 as read in http://www.cerebracomputers.com/downloads/Press%20Release-Cerebra%20Integrated%20e-Waste%20Recycling.pdf
2)Vineet Agarwal TCI Developer(Mkt cap:80 crore) -> Management has clearly said they will develop exiting land (maybe 200 crore worth as read in MMB) to generate cashflow to be used for warehousing. Warehousing has BIGG…G opportunities with high margin business.
3) Anil Ambani Reliance broadcast(mkt cap: 500) -> good bet on Indian entertainment sector. Also good opportunity in this synchronous fall in all ADAG stocks.
4) Ramdorai Tata Elexsi -> Bet on Animation sector
My best choice is “TCI Developers”
It has just spin-off
Will look into corporate action over next one year and will keep on accumulating if management is willing to focus on warehousing
Riddhi Siddhi gluco…EPS 150..largest manufacturer of corn which is in cement to consumables to medicine….huge play of consumption story…
Here are a few interesting nuggets from Bloomberg:
“The world population has grown at a rate of 78 million people per year, and will reach 9 billion by 2050, according to the United Nations. To meet the demand, world food production must increase by 70 percent. The concern is so pressing that Larry Fink, CEO of $3.5 trillion asset manager BlackRock (BLK), told the Australian Wall Street Journal in February, “Go long agriculture and water, and go to the beach.”
In a March interview with Bloomberg, Jim Rogers expressed his bullish sentiments regarding agriculture: “Huge bull market in agriculture,” he said. “Agriculture prices are still extremely depressed on a historic basis. You know, the price of sugar has gone up 600% in the last 6 years, 5 years. It is still 50% below its all time high. 50% below its all time high. The scope for price increases in agriculture is staggering.”
Huge Macro Trends+Young Ambitious Promoter+Top Class Team+$ weakness makes Renuka a 500% stock in the next 5 years
my another multibagger would be jaiprakash…….JPA in 2 years (a) the 3rd largest cement company in India; (b) one
of the largest land-bank holders in India; (c) a power capacity
holder of repute with a coal mine; (d) an E&C company without
dependence on external orders; (4) a road asset holder; and (e) an
executor of a F1 project.
My multi-bagger stock for the next 5 years is Reliance Communications (RCOM) – (CMP Rs. 92.60 on 10th June 2011)
This asset rich company will be a multi-bagger in the next five years, for the reasons given below.
Association with Mukesh Ambani –
I foresee both Ambani brothers coming together for their telecom businesses, which will
be a huge sentiment booster for RCOM. My reasoning is like this.
Mukesh Ambani has spent more than 2 billion dollars for acquiring 4G license. His nearest formidable competitor in this space would be Sunil Mittal of Airtel. Here, Sunil Mittal has an advantage of having 2G, 3G and 4G licenses and hence can provide multiple types of services (Voice/Data) as per the subscriber’s necessity and budget. As of now 4G supports only Data (and research is going on for Voice too) and it will be very difficult for Mukesh Ambani to recover his investment by just relying on Data service at a higher tariff. Moreover, Mukesh Ambani requires Telecom Towers to start the 4G service and association with Anil Ambani will be useful here.
If Mukesh joins hands with Anil, then he will get towers readily available and also can provide 2G/3G/4G services similar to Airtel.
Considering all these, I feel both Ambani brothers will join hands in future, for their telecom business. When? No idea. But, definitely within the next 5 years.
Just imagine RCOM, when these things happen. RCOM will have – all India GSM/CDMA 2G license, 3G license, 4G license, more than 50000 telecom towers, all India optical cable backup and GlobalCom business with undersea cables all over the world – envy of any telecom service provider.
2G Scam –
Allegation against RCOM in 2G scam is that they owned more than 10% stake in Swan Telecom. As per the rule, a telecom service provider cannot have more than 10% stake in another telecom company.
Remember, this is only a charge sheet from CBI and charges have to be proved in the court.
It is very interesting to see the stand of the court, because we have had a precedence of one service provider owning more than 10% stake in another service provider. Tatas had 48.12% stake in Idea cellular, before selling it off to Birlas.
Considering all these, 2G battle in the court will prolong for a long time, eventually people losing interest in the Scam and case finally getting a quiet burial.
Debt –
Paid analysts of brokerage houses write about Debt position of RCOM and project a bleak future. Ambanis are shrewd business people. They know their business better than most of these Excel sheet analysts. They also know how to manage the debt. History is the best example.
Future –
Future of telecom business lies in Data & VAS and NOT in Voice. RCOM has realized this long back and focusing in a right direction. This is the only service provider which has got higher earnings from Data, among the top 5 telecom service providers, in India. They are working in a right direction by freeing up the spectrum from low return Voice service and focusing more and more on Data service.
Why is price not supported?
If RCOM has got so much inherent strength, why is promoter not supporting the price in the market? – this is the question which many of you may ask. I have an answer here too 🙂
If you remember, SEBI had a consent order on ADAG group some time last year-end and Anil Ambani had announced that “voluntarily refraining from investing in the market for one year”. Once this period ends sometime in 2011, I feel, he will aggressively go for acquiring RCOM from the market, if price stays low.
With all these reasons to support my theory, IMHO, RCOM will be the next multi-bagger.
Dear Praveen,
Great analysis!
I completely agree with your views & YET wouldn’t buy a SINGLE share in RCOM or RIL as neither qualify on my fundamental principle of equity investment: Ethical promoters with high integrity & outstanding management capabilty.
What led ADAG group to this mess (which is so bad that they’ve dropped the ADAG branding & stuck to RELIANCE) is a single-minded focus on Market-cap race to beat ‘Big Brother’ & in the process compromising ethics (accounting standards, unethical practises, unrealistic IPO pricing,etc) to the ruin of small shareholders.
Will Anil’s Hubris & inflated sense of ego allow to sell his business(es) (some say Reliance Infra will be taken over by RIIL) to his elder brother against whom he has run a sustained media blitzkreig accusing his company of gold plating costs to the detriment of GOI & subverting rules /Ministries, etc(all allegations true if you believe the CAG’s report submitted to Oil ministy as per todays Times of India)….?
Thats the billion dollar unanswerable question & i wouldn’t like taking punts about future unceratin outcomes, i’d much rather Gamble in a Casino & atleast have fun while at it!
To end with a quote from the Oracle of Omaha:”Its better to buy a fantastic company at a fair price , than a fair company for a fantastic price”
Ajay Piramal… he’s got the experience… and the money
@Swaroop,
Biggest mistake a retail investor commits in the stock market is – mixing emotions into investment
decisions.
Mr. Gaurav’s TAP GAP equity poser is – which company will be a huge Wealth Creator in the next five
years and NOT which company will be the most ethical one, right?
So, where is the question of mixing ethics into my investment decisions?
Why do you find fault in dropping ADAG branding & sticking to Reliance brand? Why don’t you consider
it as an indication of brothers coming together? Be an optimist.
If Anil Ambani had a single minded focus on Market-cap race to beat “Big Brother”,
what was wrong there? As a stock market participant I worship promoters with such
attitudes. After all, I’m in the market to earn money and any promoter who helps
me to achieve this goal, gets my support.
What is the use of Fundamentals & Ethics, if your stock is languishing with no interest
and your income is only from dividend. Look at Birla group. They own some of the best
companies in India. But, in my opinion, they are least bothered about me, ie. a shareholder.
They simply hate sharing wealth with shareholders. No doubts. They score high marks in
fundamentals and ethics.
These are my views on the market. I’m aggressive in my investment decisions. I go wrong
many of the times.
Before I conclude, some words on Anil Ambani. Tiger will remain a tiger and will not turn into a cat,
just because it is wounded.
my choice as multibagger :
1) lovable ling,
With the upshoot in number of orthopedic cases in the country due to various reasons including sedentary lifestyle, there seems to be a need for such medicines in the market. Apart from that the usage of medicines has increased in the current age as compared to the past.
Aurobindo Pharma & Ishita Drugs Industries Ltdlook like good scripts.
My bet is on “Warehousing”.
TCI Developer + Kesar Terminal
I have already posted on TCI Developer.
I will write about Kesar Terminal.
1)Demerged entity => Cheaper valuation due to irational sellling
2)Mkt cap : 40 crore with FY10 cash flow 10 crores and FY11 cashflow 11 crores.
3)Have two terminals at Gujarat Port. Planning to build terminals at Pipavav Port and Andhra port
I am extremely bullish on warehousing. Its fixed cost business with little maintaince cost and hence will enjoy great margins.
Also, both TCI dev and Kesar Terminal both aare demerged in last one year and available at cheaper market cap of 80 and 40 crore with zero/minute debt and little equity => can safely/aggressively raise money through equity and debt
Hello Sir,
I have selected my group now, after going through many different issues and parameters that I thought should be looked at while choosing a group altogether because of it’s integrated strength and not based on the power or growth of a single company benefiting from it.
I have also gone through the groups listed on the blog by various readers and ofcourse, they all are superb choices in their own way, but somehow I feel the response till now has tilted more towards individual co’s and not the entire group,as required by you, or atleast from what I am able to assess out of it. I may surely be wrong with that.
I was so tempted that i had almost selected the Sajjan Jindal group, as I do follow his companies and have seen them grow to amazing heights in last 10 years, but still somehow I am skeptical with their style of corp governance,especially when you want to think of a conglemorate for investment in the long run. But the funny part here is, that i do hold positions in many of his group companies 🙂
I also went through another long horse, ie. Bajaj group apart from vehicles,which now has a good diversification in insurance & finance also, consumer durables, sugar as well as steel (mukand ltd). I feel the this group cos can easily give compounded returns above 20% for next five years with very limited downside risks at play and a very good legacy of corporate governance comparably.
Even their plans to go for 4 wheelers from next year could be a gamechanger in the industry.
I am a diehard fan of Jim Rogers and do believe that the next 20, 30 or 40 years do belong to the companies playing the agri business theme well. For this, the group who can in its entirety benefit the best in India, is undoubtedly the Excel Shroff group with some 4-5 sound comanies doing pretty well for the long term. But i would place this as my third option.
One more group thats a nice play is the Sterlite group, with Hind Zinc, Sesa Goa and Sterlite Inds being some of my fav stocks, with so many strengths to their names. Very well managed and additionally more positives due to the pure commodity play in the years to come for the metal sector especially. Excellent financials too and hardly any debt for this group, plus their Cairn acquisition when complete, would really take this group to unrivaled position as a hardcore long term commodity player for India and globally. This group is my 2nd favorite.
Finally after boring you with so much of my thoughts, i would like to first list down some of the better companies of this group at the moment and let you get a glance through it.
tata coffee
indian hotels
tata investment
tata sponge iron
trent
rallis india
tata chemcials
tata power
tata global
tata motors
tata steel
voltas
tinplate co.
titan inds
tata elxsi
tata metaliks
CMC
TCS
I think that from a group perspective, no other group can rival this diversification and assets which has been built by the TATA’s.
I again would like to say, that my choice is purely on the rule put out by you for the long term, and i believe that if followed actively and bought at the right valuations , most of these companies can give us 4-5 times the return in min 5 years time and that too without having to worry much before going to sleep every night.
I really hope you understand my point of view in choosing this group over other, even if i myself know that there are maximum chances that the former groups can beat these cos in creating multiples of wealth for us, but on a riskier note.
Out of all these, i would invest in Tata Global Beverages at current levels and patiently let this fruit mature over 5 years or more, as the brands that it has as well as the marketing chain compared to its peers, it shoud soon command premium valuations in years to come.
And Sir, plz plz let us all know about a nice lunch or dinner gathering if planned anytime sooon. 🙂
Kind Rgds
Shahzad Jimmy Vasaigara