Portfolio Re-Structuring/25% CAGR quality-growth for next 2-3 years


(Donald Francis) #125

Thanks Dhwanil for pointed responses.

Most of the regulatory/government mischief/misadventures come about when new spectrum is to be distributed, or licences to be renewed, etc. So having valid licences for next 15 years provides great comfort, on continued business predictability. Though sudden turns in policy in between cannot be ruled out.

I am purposely trying to put on the questioning hat :slightly_smiling:
Will next put my mind to Competitive dynamics - the current happy picture on this front remaining unchallenged - how sanguine can we be on that front. Let me do some thinking/familiarising and come back on that.

But before that I would like you to share your thoughts on this other crucial part
3. Future Growth - increasing the distance with peers/other players
2nd frequency in 9 out of 13 top cities (70% of FM industry revenues); the nearest competitor has bagged the 2nd frequency in only 2 cities?? this seems like a huge huge lead - even consolidation among others may not be able to take this away. How much of a strategic advantage is this?? or this is transient like some others opine?


(Rohit Ojha) #126

Guys although im enjoying this discussion, please move specific discussion to ENIL thread.


(Dhwanil Desai) #127

@pikrohit
I agree. We should take this discussion in ENIL thread.


(Donald Francis) #128

@pikrohit Rohit,
Sorry. Agreed.
Now that basic premise has been established to a large extent, we should shift specifics to ENIL thread. We can be a little tolerant till the time - the basic premise - gets a bit established, through counter-questioning.


(khashyap) #131

Hi All,

Let me start with a disclaimer. I’m an amateur investor in my early twenties and this is my first post here, please do forgive and correct me if there are errors.
I wanted to bring to notice the huge opportunity which lies in the luxury segment in our country. With the noises about India’s growth story growing louder every year, I feel this sector would provide enough opportunities in the near future
The country is expected to have more millionaires in the coming years. The number of dollar millionaires are around 1.4 lakhs and is expected to triple (source: kotak wealth) in the next few years. The average household income is also growing which means there would be more disposable income.
I did do some basic googling on the luxury market in india, the rising income levels and the millionaire growth and the statistics look positive.
Based on the above inferences I feel that the demand for aspirational and luxury goods will grow at a much more faster rate than the normal ones. I’m somehow of the opinion that the aspirational ones would be even better than the luxury ones though I may be completely wrong. With more and more people having money in their hands and they going after the products which they would definitely want to buy when they have money.

Please do reply with your views


#132

Any listed plays. Luxury brands are owned by mostly European companies


(Tolaha) #133

A few Indian listed luxury plays:

Cars - Jaguar Land Rover via Tata Motors
Watches - Various brands via Ethos
Hotels - EIH, Hotel Leela etc (I think they are to be counted as a brand)

Not invested in any of the above.


(Vishal Bharti) #134

How about Hitachi in the white goods space? People here have high preference for its products specially ACs?


(Chandrasekar) #135

Good theory and validated in developed markets. Fashion and cosmetic stocks have given consistent results across the world. However, in India, as it was mentioned, there is nothing listed worthwhile like lakme or revlon or luxurious goods. UTI India Lifestyle fund was listed few years back with similar objectives.

The closest proxies I can think which are listed in this space is pvr or wonderla. To an extent “Mahindra holidays”, which is like a financial company.


(Chandrasekar) #136

Voltas has given very good and consistent returns over a decade


(Vishal Bharti) #137

One problem with stocks like PVR/Wonderala/Airlines/Hotel stocks I see is this. Say a Screen/Flight/Room/Holiday home goes empty for sometime(for whatever reason) - it is permanent loss - its unrecoverable. This is not the case with a manufacturing firm say Hitachi, Hawkins etc… If ACs or cookers are unsold for sometime, they are still available to be sold at a later date(obviously the product has to be good and desirable). However there is no permanent loss but just a delay in realizing the revenue…


(Rohan) #138

Kaya is the best bet that fits the criteria of urban affluence


(PKumar) #139

One important parameter while screening for next set of growth companies would be to find management/CEO with integrity and vision which is, proverbially, easier said than done.
To provide some example, during the 90s, IT Industry was still in nascent stage with a mixture of stable and emerging companies. Out of this landscape, only few companies made it big. The biggest example is Infosys which lead the pack, to a large extent, due to the leadership of Mr Narayana Murthy. He was a principled leader who took a hit from GE in 2002-04 period than to negotiate on the billing rate. All other competitors incld Wipro cut the billing rate to retain business. In addition, he was willing to share wealth via stock options to even the junior-most employees. There was no such precedent of this, at that time, even in US where stock-option was the preserve of the senior-most employees. In circumspect, this created such a momentum that created a world beater organisation. Competitors like Patni/Wipro/Polaris/NIIT/Mastek/Sonata started at around the same time but didnt exactly compete - some of them even destroyed stockholders’ wealth.

There are multiple examples - in Indian context - of such wealth creator CEOs.
HDFC Bank (Aditya Puri), ICICI Bank (KV Kamath), Ajanta Pharma (Yogesh/Mannalal Aggarwal), Kaveri Seed (G V Bhaskar Rao)…Any star company will be having a visionary leadership.

The point that I am trying to make - identifying the next growth industry/sector is only half the job. If somehow we can identify the emerging Narayan Murthys/KV Kamaths of the India - that will help narrow down the probables.

So two queries -

  1. What are the characteristics of leadership/CEO that we should look for ?
  2. Are there any such examples - currently - which impressed people most ? (I recently read Equitas Holding CEO took a paycut voluntarily. For me this is a differentiator which will help in long run (http://economictimes.indiatimes.com/news/company/corporate-trends/pn-vasudevan-md-equitas-the-model-millionaire/articleshow/52002450.cms)

Pls let me know if this makes sense :slight_smile:


(Arun S G) #140

Perhaps this is shared elsewhere, but this is possibly the best thinking on the subject of what to look for in promoters - called Intelligent Fanatics.

https://dl.dropboxusercontent.com/u/28494399/Blog%20Links/Seven%20Intelligent%20Fanatics%20from%20India.pdf


(sagararya) #141

Surprisingly it includes Sabu too :slight_smile:


#142

Wipro has been a tremendous wealth creator though a tad slower than Infosys.


(A. King) #143

Given the challenges ahead for elderly parents living by themselves while the next generation is busy building their careers within India in another city or global gallivanting, here is a perspective of a 58 year guy from the US -

Ashiana Housing is a public limited company in this space. Awarded most promising company of the next decade. Notice Mr Parekh in the front row. I am sure hdfc is watching!

Can Ashiana be the growth stock for the next 10 years ?


(PKumar) #144

Agreed. I was a bit harsh on Wipro - maybe due to recent events. Wipro did start well but you have to agree that it seems to have lost its way now unfortunately


(PKumar) #145

Thanks Arun. Very relevant.
There are some studies done in US on - impact of CEO integrity on share performance.
Jim Collins popularised the concept of ‘Level 5 leadership’ -

The summary of the same is available on web - one of the link is : https://drglanton.wikispaces.com/file/view/Level+Five+Leadership.pdf

To paraphrase from this study -
'
Out of 1435 Fortune 500 conpaines that renowned management researcher Jim Collins studies, only 11 achieved and sustained greatness - gathering stock returns at least 3 times the market’s - for 15 years after a major transition period.

What did these 11 companies have in common ? Each had a ‘level 5’ leader at the helm ’

It will be good to learn from the esteemed members if they know any ‘level 5’ leader in Indian context ?
Eg : Mr Narayana Murthy (Infosys), in my view, fits the description exactly.

Pls revert on this thread if you know someone with these characteristics. Betting on these companies is like discovering the next ‘Tendulkar’ :slight_smile:


(Siva kumar) #146

i would prefer banking and NBFC companies (since if India is growing companies need money) but specially banking since they are beaten down at present and most of NBFC are too costly at present. SBI, Axis and ICICI look most undervalued due to the current sentiment (and results) but the question is will this correct over short term or long term.