Coolest comment in some while! 
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Sorry for the inappropriate post. Deleted.
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Hi @kb_snn @thecroc @dumboinvestor
Copied the above from your posts on page. Did not want to clutter that thread but had a question so I thought I will post it in a thread where we are discussing the carnage and thoughts going forward. I found that part of the conversation interesting so I mapped it to inflation.
This is just a quick run on my running a simple test. If you guys or our other members have some knowledge to share it would be wonderful.
So, we know and have discussed before that returns we can expect from a business are a mix of growth in earnings and growth in inflation. FMCG companies are a good proxy of the Indian growth and inflation story.
Please find below the data I gathered; example below is HUL.
So I can see (my view, I would like to learn here) that a company like HUL has in the last 10 years grown it’s earnings at 9.54 percent. But then I see that inflation has probably been a cause of 8% of that. So real growth is nominal.
Then I can also see that inflation is now very controlled. So is the growth in earnings real once we take out inflation?
Also, what are the implications for investors who are paying high prices. Are they hoping inflation will become high again? Is that going to drive returns?
What are the reasons for these high valuations?
Are analysts missing their estimate for the last 3 years because they have not been mapping it to earnings growth but hope of continuing inflation growth?
Is everyone on Kool-Aid?
Yours humbly.
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Interesting observation ,
Inflation to EPS Gr does not have great correlation in short term as your data indicates , but Product price increases has very strong link to inflation esp in companies with strong pricing power.
Most of these companies also have multiple levers besides price increase on account of inflation…However in last few years these companies have been pretty lazy and complacent in exploiting them
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Revenue Gr is fn ( Market share inc , Product upgradation , Category Growth , Price inc becos of inflation , New Category / Geography / Users adoption )
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Margin Gr is fn of Efficiencies ( due to scale in distribution , advt , product development etc ) , Product Mix changes , RM mix changes , Buy & Outsource options etc …
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Other leverages like Investment Income , Royalty , Tax incentives , Distribution value chain shifts etc. can also be exploited for profit Growth
Under a Dynamic CEO these companies can deliver higher growth with underleveraged assets
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Inflation or deflation shouldn’t have much to do with this. I base the entire argument on growing middle class and growing per capita income. https://www.livemint.com/Opinion/TvcFydQcN6KEFkvdW7BprM/Indias-burgeoning-middle-class.html
What if India has 90 crore above the lower middle class by 2030? I want to look at the exact figures for the lower middle to affluent class and per capita incomes, and base the arguments there. I will get back with more accurate data in this area.
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Disappointing sales in auto…
https://www.safalniveshak.com/silliest-and-dangerous-things-about-stock-prices/
Nicely explained with diagrams which will make a long lasting impression …
Nice work vishal…
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App-based cabs, traffic congestion slowing car sales in metros: Maruti
https://timesofindia.indiatimes.com/business/india-business/app-based-cabs-traffic-congestion-slowing-car-sales-in-metros-maruti/articleshow/66745568.cms?utm_campaign=andapp&utm_medium=referral&utm_source=whatsapp.com
Download the TOI app now:
https://timesofindia.onelink.me/efRt/installtoi
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All the duds were staged posthumously. It is convenient, to write little notes on a chart that has fallen. The people commenting did not add value either.
There was a seminar advertisement right at the start, and btw it is almost full.
If the intention was to teach, then a live example of a company being over or under valued would be picked and discussed. That would be something of true value.
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May be it is convenient to observe and conclude in hindsight, but you should see how intelligently the writer has put simple words on each chart to explain “fomo” mindset. He has covered biggest blunders of a decade or so in 16 plots and summarized it in a very meaningful way.
All new entrants to stock market run after rising stocks, mega IPO etc. He is warning them of the probable traps, that imho is adding great value to everyone who wants to learn. He is not trying to teach fundamental or technical analysis by writing few hundred words on a blog, no one can do that in few words so no point in taking live example.
The blog is well written and take away for the retail investor is very clear, run after great business, keep a watch on how the business is doing not the stock price as eventually stock price will follow business return not the other way round.
P. S: I am in no way associated with the Safalniveshak website or the writer. I tried reasoning in favour of the blog as I see few logical points in his writing.
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Bajaj Finance, HCL Tech To Be New Entrants On Sensex From Dec. 24
Wipro and Adani Ports will be dropped from the Sensex.
Poor quality out - Vakrangee, PC Jewellery, 8K miles, Kwolity, etc.
Sometimes, that’s why it is hard to beat index fund investment -because bad companies out and good companies in (automatic churning which sometimes difficult to follow)
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Well during the september/october carnage, Mutual Funds have lapped up many shares in Mid Cap Space .
Cash holdings of domestic mutual funds as a percentage of total asset under management slipped 112 basis points month-on-month to 6.12 per cent last month from a multi-year high of 7.33 per cent in September.
Crude at 52 wk low and looks like it might even break $60. All those companies that showed margin expansion in FY16 and FY17 and margin contraction in recent two quarters due to crude have been beaten down mercilessly like BEPL, Thirumalai Chemicals, Plastics, Packaging, Logistics, Aviation etc. should come back in favour slowly. I think it could be a negative as well for these players as they may have to take inventory losses in the near term, so better to be cautious if they are inventory heavy businesses.
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I am closing this thread as of now. This thread is not surving any useful purpose other than random ramblings on unrelated topics.
Request forum members to focus on businesses.
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All posters are requested to go back to their posts, rethink, re-evaluate it & if they think it does not add any value - they should delete it. Also request all the members to think twice before posting. Also all members are requested to flag such non value addition posts but without any prejudice. Non helpful flags will also be taken into account. Any violation of discipline will not be tolerated and may lead to suspension of membership.
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