Please check on Godrej , it’s spread all key major cities in India. Am sorry to say that commenting without doing study is very easy part on social forums. But please keep in mind ,if you quote wrong data or quote without facts ,your whole credibility comes down.
Example :When I read your comment “Godrej and Oberoi who are basically Mumbai based players” , I stopped reading further because I try to save my time by not reading the analysis by someone who has not done his homework.
Thanks, your analysis and your conviction will be with you. Investment is not always in growth companies, i am strong follower of peter lynch and for me any stock which has a value in short or long term is an opportunity. You can always have your views and comments. Just a disclosure, i made close to 22 lakhs in power utility companies:grinning:
.with close to 400% return. Its always different style if investing for different people.
About Banks :I’ve started liking DCB . What’s your view?
Great prospects for Force. Sales growth is decent at 10%plus. It will be a little tough for the management to fuel this growth because the business is not generating enough cash due to mediocre ROE. As a result, it will need to dilute or borrow.
Good news is that it has zero debt currently, hence there is plenty of room to go in that direction without rocking the boat.
The stock has already corrected sharply. 4500 to 1500. Good to have on ones radar.
Thanks .Please do look at DCB and help us with your views. Appreciate your point of view.
Agree with your point but look at the other side of the coin. In this model, if you have a strong brand name and marketing skills, you don’t need to get tied up with debt for buying land. And also it gives you lot of space to multiply your business as your hands are not tied with too many things to do. An asset light model always helps in the long run.
Occl and nocil, both great companies that are using their cash well. But they appear to be cyclical.
I agree that 35% of holdings in RE is a risky bet. I generally keep 25% Cap on any sector.
Coming to prospects of RE , i am reading and hearing from many people that the youth in India is moving towards 30+ in next 5-10 Years. Currently we have 65% of population below 35 Years and 50% below 25 years. Average age when a person like to own a Home is around 30. So there are possibilities of a good revival in RE businesses in coming years. There are n number of builders as well as RE players. Difficult to choose which is going to be successful and where this growth will come from : Rural or Urban. Mostly youth prefer owning a home in Metros or Cities while government focus is more on Rural. I like to play RE theme as proxy. I am looking for good Cement Companies which are showing growth. Asian Paints and Pidilite are no brainer in this sector.
Occl has grown sales at 6% cagr in last six years. That is decent, but the other numbers are really good. When available cheap, it is a safe and long term addition to PF.
OCCL looks a commodity business but if you will look at the financials , it has maintained the OPM levels above 25% in last 7-8 Years. More interestingly , it has not shown any degrowth when the Auto Sector was stagnant in 2012-15 period. The Average Return on Capital Employed and Equity for 10 Year and 5 year period is above 20. Though Sales growth is not that exciting in past but future looks very good due to huge expansions taking place by Tire Manufacturers. Their products are needed in very low proportion (usually 3-4% of a tire manufacturing Cost) but are necessary for tires durability and no other alternatives are there… Currently due to disruptions in China , market is coming more towards India. US tire players like Yokohama , Bridgestone are also trying to reduce their dependence on China and shifting towards India.
Their customers which are tire manufacturers take around 18 months time before approving any supplier. So they have a moat and High entry barriers . Though China has a lot of expertise in rubber chemical business and is known for huge dumping in International Markets , The anti dumping duty is helping Indian Companies. Also it would not be possible for China now to produce the chemicals at lower levels due to high regulatory environmental norms as well as increased labor costs.
NOCIL is more of a commodity business but it also enjoys the benefit of Anti Dumping duty as well as high entry barriers. Some Notes from Nocil Concall :
Worldwide tire manufacturers are expanding their capacity to a tune of Rs. 55000 Cr , Indian Companies have Capex of around Rs 10000 Cr -12000 Cr which will come in 1 year opening up significant opportunities for the company.
US has levied 10% additional duty on Chinese rubber chemicals effectively from 24th September 18 and an additional 15% duty will be imposed effectively from 1st January 2019.
Nocil existing clients like Yokohama Rubber and Sumitomo rubber are opening up the gates for their US based plants and this opportunity was not available earlier.
Both of these companies are well placed and looks very good for 3 Year Period. They are definitely not a Long term Buy and forget stocks especially NOCIL.
OCCL has recently done a Buyback where Promoters did not participate. Shows the confidence in the prospects of the business for coming 3-5 years.
I like the way you approach the stock market as a business, we need to align with the needs of the general population with quality of business with good product. Any business needs capital to grow, so a business may go wrong with their capital allocation, debts & may make a comeback big time. We need to analyze it for a while before making our share of that business. Government plays a big part as their economic decisions/changes will impact any sectors. I think you have done pretty well with your investments in businesses in last 5 years.
Thanks for Compliments, Mr. Venkat. Learning the curve, still at initia stages. Dissapointed with all business media which is sold off in hands of corporates, brokers and small time manipulators. People look for gains in very short term which is nit good. I see lot of young blood on quora starting their own ventures and focusing on trading only. This is disturbing trend. Hope some sanity prevails and people understand holding the fruits of good business and same time detach their emotiins with bad businesses.
Dear radheyshyam ji…i respect your experience and allocation strategies. I was just thinking that should we invest in equities with intention to earn maximum possible returns or to be part owners of excellent businesses…because if the motivation is to be part of success stories we would identify winners across cycles and gather courage to hold for long…if intention is to generate max returns we would identify maybe recent themes or mid term momentum stocks…we may be successfull few times…in both scenarios results may be same and agilent investors which sm1 mentioned having hawks eye may earn much better in second scenarios…but as an experienced person in markets for years…i would really lime to know your thoughts on these two approaches…thanks!
If everyone is a buyer and no one sells, how could the others buy? Like they say, different opinions and different perspectives make the market, to each his own. All kinds of people should exist, otherwise there will be nothing new to learn.
Very Interesting … I am amazed at your ability to catch top ( to sell ) and bottom ( to buy ) of market and stocks . I would like to know what tool or simple thumb rules you use to get timing right .
On business since you are concentrated on real estate … I am including here some points that I made in another thread … Your comments on the same is welcome .
Real estate value chain is interesting . Lets look at where value is generated and who captures that value …
Now in this thread we have restricted discussion to developers without focussing on their competency in value generation across value chain and how much of generated value they can capture
In 1990s : DLF was king of Value chain formula 1 when large portion of Gurgaon agri land was converted to commercial and developed properties – They did a great job in capturing value across all three components … But they failed in other cities precisely as they were not able to do Step 1 of value chain in those cities …
Today if we look at real estate companies so interesting competence is visible
Very good analysis and effort to divide RE into sub-categories. You can add one more ie collaboration between a land-owner and developer-cum-marketer.
To me that’s going to be one of the important theme in the coming years. This is an asset -light model for the developer/marketer whereas for land-owner ,it takes away the specialized function of marketing and building.With customers trust all time low on small builders and credit-crunch for these new/small builders (but having large land -bank), it makes sense for them to tie -up with big brand names to get their project sold faster.
Am betting on Godrej Property because of this.
Well that is included in in Value creation Model 2 wherein a commercial property is turned into developed properties .
As rightly pointed by you … Many different models are operating in this scene - Turning commercial property to new developed properties
Industrial land - taking out non core assets ( read ) land and working with developers - In and around Mumbai many developers are working on this model
SRA : Slum rehabilitation Model : Again very popular model in Mumbai : Some developers are trying building competence in this niche area
JDA with land owners : Again popular model - I have seen many projects by Godrej and Mahindra
But these are medium value generation as highlighted by me …
On specific Godrej its strength is it has/had large available land bank in Mumbai which fuelled its initial growth … How it can grow in future is big question … It does not have this strength outside mumbai …
Sold Sun & Lupin , entered Yes Bank @162 today (it is approximately 6% of the portfolio now). Would be updating the portfolio soon.
Any reason for selling Lupin?
Nothing wrong , I found Yes Bank a better value at current prices. I try to churn my portfolio if I can find a better bet at a lower valuation.
