Here’s my current allocations for those interested. These deep-value type stocks have done well, and I’ve refined my short thesis into either more 1) catalyst driven (Colpal) or 2) as a hedge (IndoCount).
Although many stocks are repeated, here are some of the thesis for the new ones that aren’t covered in VP:
Dish TV: merger with VD2TH should drive synergies, purchasing power with media cos’, and pricing power in industry due to consolidation. Classic telecom sector consolidation wave, and a bet on the biggest player. As APRU increases, marginally flows straight to EBITDA. Very low base APRU in India vis-a-vis other developing markets. Also ~8x EV/EBITDA valuations
Rel Cap: RCOM bankruptcy is almost immaterial, huge value from SOTP perspective, bargain valuations with high growth
Indocount: Much more highly valued than GHCL’s textile division, should be a good hedge if textile cycle falls off the cliff, allows me to hedge exposure to GHCL’s unit which is valued at almost 0 by the market. I am also just generally bearish on the textile cycle and I think it can turn bad very soon.
ColPal: Crazy valuations, almost saturated growth (~80% penetration of toothpaste in india), price war by Patanjali - a player with an unfair advantage of free publicity, no profit incentive, not paying employees (?), and super low pricing that is actively increasing its distributor network. Margins have remained good despite price cuts in recent quarters due to low oil prices, and even then they have steadily lost market share to patanjali.