Thanks for summarizing the list of books Donald (and reducing it 4 from a considerable large number…:))
I am also not veryfrequentuser of screener (due to my own self created limitations). 'll try to use it regularly and get in touch with Pratyush for any help on that.
I think the key lies in identifying earlythe sectors/companies that will undergo the rapid growth in the coming future(1-5 yrs).Then you can always analyse the ratios, balance sheet etc.
Hi Rudra,
Thank You for uploading your spreadsheet. Very neat and useful. Can compare b/w cos and sectors.
Thanks to Donald for making it easier for beginners by his valuable suggestions on reading and analysis.
I too have this habit of writing down all figures from the ARs and then using the spreadsheet, somehow feel that I will miss-out something with the ready-made stuff. Still haven’t explored screener.in fully.
Love reading ARs now though it was a strain in the beginning. You can actually see the com, plant and the characters when you are fully involved :)) (I am a bit dreamy)
Happy building investors edge!
Vinod
Hi Rudra,
You are saying you can get the above spreadsheet from screener.in directly!!! Seems awesome feature for me, which should do all that I want from it.
I shall ring you today and learn how did you get the spreadsheet yourself.
-Subash
Another pattern that I noticed is focusing on second/third best companies in an oligopoly industry that is growing at crisp rate.
Take example of Cera and Amara Raja. Both these companies operate in an oligopoly market and are second/third largest players catching up with the leaders. Logically also it makes lot of sense.
One of the advantagecomapnies playing secondfiddle to leadersenjoy is that typically their margins are protected because most of the time market leader in an oligopoly markethas pricing power and hence market leader protects its margins. This ensures that even second/third largest players also protect their margin.
Another obvious advantage is low base second/third largest players have. So if the company operate in a reasonably growing industry having,say, 10% CAGR, second third largest players typically outgrow the industry by some margin hence decent growth is a highly probable scenario. Growth with protected margins ensures earning growth.
Moreover, typically market discount second/third largerst players with respect to market leaders. Hence valuation wise they trade at discount to leaders while growth/other matrix are comparable to leaders.
Another such example is OCCL which also is in similar situation as it operates in oligopoly and is a siginificant player in the IS market dominated by Solutia.
It will be useful to find such other opportunities.
Best Regards
Dhwanil Desai
Thanks Dhwanil.
Useful to pay attention on this pattern. And as usual you bring the focus bang on - on protection of margins, set by market leader. And if there is a big difference between #1 and #2, all the more happy situation of seeing decent growth.
Amara Raja, Cera, OCCL are good examples.
There was another case I was attracted to in 2009/10 - Vinati Organics for precisely the same reason.
Somehow I get the “feel” Chemicals sector is a different beast than most other sectors. For one, mostly the oligopolies are for Niches, the size of the opportunity is never very large. Secondly the sector has its problems of high RM dependency, also cyclicality. So the specialty chemicals oligopolies are viewed not very differently from commodity chemicals by Mr Market, that’s my sense.
Balaji Amines is another chemical oligopoly case in point - of course the business also had many issues.let’s throw more examples of oligopoly situations, and the interplays of multiple patterns will become clearer I guess.
From the 3-4 examples discussed here, it becomes more clear Oligopoly businesses may be a good bet, if they are operating in a market with large opportunity size.
This is becoming interesting. what else. Guys??
Yet another example that can be a good fitto my mind is Atul Auto. Playerspresentin both 3 wheeler passenger/commercial vehiclemarket are Bajaj/Piaggio/Force/Scooters India with Bajaj Auto and Piaggio having major market share. Both of them are likely to protect healthy profit margins means probability of margin contraction is less. To top it, Atul has much lower base hence growth can be much faster than industry average. (here competition from other products is surely relevant i.e. Tata ACE and similar LCV)
I kind of agree with you that chemical sector (even in oligopoly) has fluctuating margins due to high variability in RM price. Moreover most of these chemicals are used in certain applications where there are other competeing products having similar characteristics. Another threat that they face is new chemical entity that is better than existing product. So obsolencerisk persist.No such threat exist for W/C or Battery!
Hi Subash,
I wish if this was that easy 
What I meant is screener.in do have data pulling and updatingcapabilities. So you don’t need to go in for huge efforts in Python again.
Pratyush need to give your accoount (in screener.in)access rights for excel uploading feature. I have tested the basic functionality for companieswhere your custom fields in excel sheets are updated and data pooled in directly from screener.in.
However, we need to automate the entire process using excel macros (wherever applicable). Most of the formualas are derived and only the yellow cells need data input.
I will work on automating the Lynch dashboard, while you can start working on the Pat Dorsey framework with help from Pratyush.
More will discuss over call.
Thanks,
Rudra
Summarizing all the patterns found so far.
1). Extreme perseverance : Company has started from very small scale and has taken good number of year to reach where it is (Mayur, Kaveri, GRP)
2). Out-of-flavour boring or niche industry with huge potential in its field. (Mayur, GRP, Kaveri, Indag, astral, Zicom security)
3). Very down-to-earth conservative management (preferably started from a very small scale). Under-promise, over-deliver kind of guy.
4). Industry beating numbers - must
5). Combinations of these
)----> Amongst the few organized player in a very unorganized industry (Mayur, Indag, Kajaria)
)----> 2nd/3rd in industry with scope for further gaining share from the market leader (Cera, Amar raja, Atul auto)
)----> Tie-up with foreign partner helping the company ride with other’s IP : Amar raja, Astral
)-----> Home grown innovator : GRP, Kaveri
6). Low base effect : Huge growth opportunity
Hi Guys,
One more important pattern which I learned from a senior - Mr D :)) is - one should keep a tab on capacity utilization too. He explained the example of the rags to riches story of Mr. Anil Agarwal of Vedanta. He acquired the govt cos when they used to have huge capacities, mines etc but were inefficient…he was able to acquire the cos at less than 1% (infact even much less than that) of the valuation what they would be if they were to utilize thecapacities at full and at at high commodities.
Thesimilarpattern (not to that extent 
)did play out in Avanti Feeds recently. The industry was in bad shape for 2-3 years till 2009. Then the industry dynamics changed and Avanti was able to make major profits quickly as it had capacities.
Something similar can happen with some of our cos like BKT, OCCL in future. As of now the demand is pretty weak and hence these cos are having tough time for sometime. But the next time whenever we see demand coming back, we should just load up 
Ayush
Excellent discussion in this thread. One company that comes quickly to my mind when I think of success patterns is Shriram Transport Finance Company (STFC). STFC thrived on doing business with a section of society which was not catered to by anyone else. They brought a completely informal sector of private lending into their business model. They started providing vehicle loans to the unbanked section of society. Their customers did not even have bank accounts. Today STFC is the largest NBFC in India. It also satisfies some of the other success patterns like ethical down-to-earth management, perseverance, industry-beating numbers (just look at their NIMs and you will know – it’s nearly double that of HDFC Bank!!).
So, critical success pattern here - Pioneering an industry segment where none existed before.
Note: The case of micro-lending was somewhat similar but for the problems of execution in the leading companies. The opportunity is still there for some company to break through.
Other good examples of pionnering can be Apple (ipad/ipod/itv??). Closer home, Astral in the CPVC segment, AMUL (though not listed), Cadbury’s chocloates in India (again not listed in India), Starbucks globally and Cafe Coffee Day in India.
One important pattern comes to mind is change in management or inducing efficient person in managing that company.If we look at Accelya Kale solutions as example management change create’s huge wealth.After appointment of Mr.Harish Batt as Md for Tata Global Beverages lot of changes happened.It’s quickly rerated. We all know the role of Late Vidush Somany in steering CERA to great hight’s against biggies like Hindware & Jaguar.So it’s one of the important factor to keep a tab on.
Another factor is some regulation’s may create very good oppportunities. Say for example ban of artificial rubber in US creates very good opportunity for Mayur.In the same way ban of dyes and pigments creates very good opportunities for companies like Asahi songwon .Some new regulations and Environment norms create good demand for Pharma gelatine.Ever growing rubber prices and tyre prices create opportunity for retreading and Indag creates wealth.Rejections due to contamination of Black tiger creates opportunity for Avanti which grows feed and seeds of Vannamie. Failure of marigold production and shortage creates opportunity for AVT. If such opportunities come the companies with efficient managements will exploit the situations.We have to justify whether this opportunity is sustainable or not.
I read a nice article some time back. So i thought I could list it here for all to read. It is The Golden Rules for a Winning Portfolio. This had come way back in Forbes India. These rules are made by Kenneth Andrade of IDFC. Here is the link.
Tony
There are 2 distinct kind of pattern i.e. growth pattern, and turnaround pattern. We should try to find out patterns for each of them.
Peter Lynch has listed all the success patterns possible in One Up on Wall Street be it turnaround, growth stories, spin offs, cash flow bargains and many more. One needs only to apply that theory into practice while looking at stocks in the indian markets.
and once u uncover a list of stocks one should try applying the dorsey method of filtering stocks to avoid mistakes.
That has been very useful for me in searching for good stocks.
Thanks Tony, for pointing to another excellent article.
Usually its a good idea to highlight in 1 or 2 paras what you so liked in an article. For one, this exercise makes you retain what your read in some way; and on the other hand folks like me who consciously try to stay away from the information overload - may get drawn by the quality of the ideas/thoughts brought forward.
I am reproducing what I like from the article, as below:
On the other hand, even though the infrastructure space is being beaten down by the markets, Andrade remains bullish on a player like IRB. He says the company operates in the 561 km Ahmedabad-Baroda stretch and traffic on this stretch is expected to grow tremendously, thanks to the countryâs GDP growth. Back-of-the-envelope calculations suggest that IRB could collect Rs. 20,000 crore in toll by the end of 2020. These are the types of businesses that Andrade believes will outlive any recession.
At IDFC, Andrade is now brimming with optimism in spite of the drubbing that the mid-cap market has taken. He is hinging on Indiaâs consumption cycle to bail out mid-cap companies. âWe are hardly 25 percent into this (consumption) cycle. One of the biggest drivers for this change is the fact that you have migration happening from rural to urban areas which will help consumerism,â he says. In the last 10 years, Indiaâs per capita income has crossed $1,600, but is still 60 percent lower than Chinaâs. In another 15 years, he asserts, India and China will account for 30 percent of the market capitalisation and 40 percent of the world population. And when that happens we can expect the market to go up by four times from its present position.
What outsourcing was to the â90s and infrastructure in the last decade, globally, consumers can dictate the next decade,â he says. No wonder that India has followed in the footsteps of other countries to boost consumerism â lowering interest rates and increasing salaries. The increase in salaries has also put three public sector undertakings (PSUs) in the top five paymastersâ bracket in the Index. And this is the group that Andrade is pinning his hopes on as they account for 17 percent of the population. He believes that these are the people who will not downtrade in any kind of economic scenario.
**I have met Kenneth Andrade and has a brief discussion a few months back. He was then bullish on the select stocks like Kaveri, Page etc. He is a very good stock picker in the small/midcap space. **
His investing philosophy in the IDFC Premier Equity fund is "****Premier was conceptualized to invest into ideas early into their lifecycle.A typical business cycle adopts a 3-5 year window through which it transitions. Thus the ideal holding period in each idea is spread out over 3-5 years. The focus remains on buying into emerging business & taking a call on the entrepreneur /organization to ride through successfully the growth curve of the business cycle. Here we polarize capital into strong business trends. The fund strives to create long term investor wealth by opening for lump sum subscriptions during periods when such trends are identifiable. By this the endeavour is to prevent short term money from flowing into the fund which can prove detrimental to the interest of long term investors."
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Manishbhai,
You are such a cool guy. Thanks for the added perspective.
I will be in Mumbai in January sometime. Will take your help in connecting with Andrade.
-Donald
Hi Guys,
We have introduced a new feature in screener.in of exporting the data to an excel sheet. The unique thing would be that one can customize the downloaded sheet and upload it back, to get excel sheets in his own customized format for all future cos:
Please give it a try and do share your feedback.
Thanks.
PS: This may not be an appropriate thread but posting here as there was a discussion above
