Congrats Sir, just saw you on CNBC-18 with Anuj. I hope this episode will be aired soon.
It will be aired tonite at 8.30 PM.
Great… will be keenly watching.
Can’t believe it Anil Kumar Goel picked up additional 2% stake in Dhampur Sugar.
“Something cheap now should not be ignored in hope of getting it cheaper”- WB
He must be doing this and may buy more on lower levels …
Disc : Just exited last year from dalmia and dhampur when everyone started talking about the bumber production ,remember the word Bumber production if you start to hear this word often just run with your money from sugar stocks, i think the better way to enter and exit from sugar stocks should be gradual, accumlate slowely for 3-5 years sell slowly in 1-2 years, I don’t know why he is buying now, history won’t repeat the exact way, future is unpredictable , otherwise it will be boring…
I have been trying to find the reasons why Mr Anil kumar Goel could be putting so much money into sugar mills. One of primary reasons for my investment into Dhampur being borrowed conviction from Mr Anil Kumar Goel (i invest in companies which are favourites of great investors).
Apart from the reasons mentioned in my earlier posts (which could part of Mr Anil Kumar Goel’s reasons), following two could be part too(counter arguments are invited) :
- Renuka sugars, which is one of the biggest in India could be going bankrupt in case of no revival in sugar sector (despite new globar owner) causing big disruption on supply side.
- i see lot of ads on tv regarding simple branded rice. Mr Anil kumar is famous for his investment in Basmati rice when it was considered commodity. He still holds to his stake as branded basmati has still scope to spread in india. I can not compare basmati rice with sugar. But there is migration towards brands in salt, cereals, rice, wheatflour etc. The only important one left out is sugar. In this too Eid parry is leading from front in creating brands for sugar like white label, amrit brown sugar and sulfur free sugar, fortified sugar etc at very good prices. I saw in amazon (none of them were in stock; not a good sign) some of the regular companies like dhampur etc are selling “pure” packed sugar at 40rs min per KG. If it works out, it could be multi year theme.
These are my wild guesses. Please dont invest based on this thesis.
There were two theories that I saw with a lot of well known investors
a) Sugar is a political commodity (Not sure about Anil Goel) and with NDA getting massive number of seats from UP and Maharashtra sugar prices will be maintained.
b) I have also heard from some investors who I respect commentary like: ‘Can sugar be the next cement?’.
Another reason could be psychological and that happens if you enter in the middle of the cycle and you feel the cycle hasn’t played out, you havent seen the 6x/7x returns.
I think what @jitenp said makes a lot of sense that ‘Cyclical investing should be kept simple’.
Finally do realize that all investors tend to make mistakes.
My only experience in cyclical investing has been DCM Shriram which I entered mid-cycle and have exited so I am still at learning phase. Currently no exposure to sugar.
Congrats Sir great interview ,lucky to have u on this forum
As Jiten Bhai pointed out on CNBC yesterday, may bring Mr. Goel is seeing bad monsoon years in coming 2-3 years. After two years of La Nina, El Nino may be around the corner.
As I have said earlier, I will comment only on what my view is. And for me, the sugar cycle has played out. My exits were in 2016 end and 2017 start.
And in commodities like sugar, I will just look at a couple of variables, like supply and international crop. I will enter only when there is confirmation of narrowing of supply-demand scenario or if their is a policy change in ancilliary divisions like ethanol, etc.
I am not going to make predictions on failure or success of monsoon. In fact, I will veer towards good monsoon, purely due to IMD and SkyMet predictions.
Hi Jiten, during interview you mentioned HAM infra co.'s . can you name them here
Good compiled data on understanding of sugar industry
I am not sure how much it will add value to sugar companies. I was going through Dwarikesh con call transcript and there was no hope even after this policy. As per Indian express article “The statement said Rs 800 crore is investment needed to set up a 100 kilolitre per day bio refinery”.
Currently there are only few plants which can generate ethanol. This decision may give some short term relief.
Came across this article on EID Parry:
EID parry holds 60% in Coromandel International valued around 8000 cr (Although Coromandel has fallen from 600 levels to 450 levels) and even if we give the 50% holding company discount the value of the holding is around 4000 cr which is the current market cap of EID Parry!!! So we are getting its sugar business, Nutraceutical, Ethanol and Distillery businesses having turnover of 4500 cr almost free!!! EID gets around 100 cr as dividend from Coromandel every year which provides the support to its bottom line.