Buy Page or GRUH or Repco.
Why should we go for turnaround candidates when there are straight-forward growth stories. Including Kotak Mutual fund (My favourite, you will find many best stocks there.) all big guys are seeing the scope in Page now. Now the valuations are highly sustainable. And only now Page has started attracting biggies. I don’t know why a small retail investor should not be convinced. Page is going to be expensive and very expensive for the next 4-5 years.
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I Morning. **
** The ** 40.Growth ** _ The Page also.
Suryaji,
What all things we can keep in mind while considering investments in Hawkins/Page/Repco. Can you pls give your opinion on the comparative prospects of these three from a 2-3 year perspective? Also may I request you to give a peek into your study comparing growths of Page, Hawkins and Repco to arrive at Page investment decision.
If one wishes to buy all the three, what would be an appropriate allocation percentage?
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Surya, Firstly, I must admit I am impressed with your thought process .Been enjoying your post in various threads.
Coming to Page, its a great buy. It scores on all parameters. Look at the consistency in sales, eps growth and dividend payout. And also the scalability of the business. No company comes even close. Good thing is that it hasn’t run up even after q2 results. (I think thats because its already priced in. Its now at a TTM pe of 44. )
One thing to keep in mind is the quality of products. Somehow I feel that, its not what it used to be. Perhaps the weak ( non existent) competition is helping them here. Page is about 30% of my portfolio. So these days I buy a lot of jockey stuff just to check the quality. (I cant return to the store. Nor can I donate to charity. So thers been an oversupply of jockey at home :-)). I will continue to hold, as long as there is healthy topline growth.
I Morning. **
** The ** 40.Growth ** _ The Page
** also.I’d **
** anymore.As **
_ And__**
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Hi Ramesh,
Hawkins , Page and Repco are three different kinds of Ideas.
Hawkins: It is a bet on gaining lost market-share. It can grow at 30% with 75% dividend payout. But do not know when.
**Page: **Page is a super-bet on Scalability of a business. Page is one-kind of a stock. It is recession free and highly scalable. Actually I think the market is more confident on Page than before. By market cap it looks a bit big but is a very small company in profits. I think the higher PE in Page should be seen as Confidence rather than Overvaluation. **The argument here If Justdial can get 80 PE why can’t Page get 60 PE. **
Repco: Repco is a growth business. HFC’s like Gruh and Repco are in for a big growth. The uniqueness of HFC portfolio and risk-free nature of the business can deliver superior stock market returns.
A study comparing growths of different businesses will only give past performance. My investment decisions are thematic. Any investment I make is linked to a theme. The future of a business is linked to the theme i invest.
You can buy Page and Repco at CMP. Both can be taken to an allocation of 20% and a max of 25% each.Not more than that. We are still in bear market.
In case of Hawkins, I prefer waiting. Many would say it is undervalued and could be bought but in my view the future is still uncertain. I need earnings trigger. **As usual I believe: “If the future is certain I am ready to pay higher price.”
**
Thanks,
Surya.
I Morning. **
** The ** 40.Growth ** _ The Page can_**
As usual I woke up at 10 AM and made a Nescafe. The Lazy Sun in Bangalore is no where visible. The climate is sullen and looked as if it is going to rain. A sexy drizzle would have been romantic, I thought. And It started. White marble chips falling on greenish-wheatish earth. The phone rang and disturbed the whole scene.
My friend from Mumbai (doing his MBA) called me to discuss his job prospects with a certain company. I saw my “Jockey” getting wet in the rain.
And I told “Hey Vivek, Do you know Page, Page Industries. Why don’t you join them?”
“A company growing at 40% can give 30% hikes very easily. And Page will offer it on higher bases.” I added.
“Yeah, I know but the jockey is a monopoly. What will be there for a marketing person like me to learn there.” He shot back.
"Yeah But there are a lot of unexplored markets. " I told in my jargon.
“See babai”, Vivek started, “We are twenty people staying in 3 apartments far from urban mumbai. I decided to stop using Jockey. You know why?”…
“Why?”
“All of us are using jockey and “Jockeys” are getting exchanged. Nobody wants to switch even after exchanges. At last I decided to switch. But for god’s sake the moment i move out I will buy Jockey where-ever I am. I don’t think they need a marketing department. The Jockey sells by itself.”
That’s it. The statement hit me right in the head. I did not understand why people are buying more Page. I got the answer. Jockey not only has a big scalability. It has got fan base.
My mind started racing. I do not know where i left the phone, I forgot the sexy drizzle, I left vivek baffled in the phone. I opened my laptop… In 15 min i came to a conclusion that I have to buy Page.
Do not worry too much about quality, The brand name speaks for itself.
).
Surya,
You are wasting precious space on the valuepickr which is known for the quality stuff. Please refrain from putting too much description as the fellow valuepickrs are too good to read between the lines from a concise posts.
I am sorry Posts got duplicated.
Not only for the duplication, but also while replying to any post you try to delete all the stuff from the previous post other than the points you are answering to. Also try to be precise and to the point. By the way your thought process is worth reading except it is little long and repetitive in various threads.
Sure I will do that. Thanks.
Not only for duplication of posts, please try to be precise and avoid too many blank lines. Also while answering to the queries/posts, try to delete all the stuff except the points you are answering to from the previous posts. This is however not to discourage you from posting, I like your thought process but your posts are repetitive in various threads. This forum is self moderated and hence it is our duty to keep it clean and uphold the quality.
Guys,
We do not advertise this - Manishbhai is our defacto Moderator. He is a very busy and very successful entrepreneur. But it is his keen eye for quality and greater keenness to uphold the values, aims and culture of ValuePickr that everyday he devotes some time to check out discussions at ValuePickr.
That discussions are carried out in good humour, intervenes before anything can flare up, intervenes when people do not bother to read/adhere to guidelines, and gently cautions when he sees quality being compromised. One of things he is stressing on most these days - unnecessary repetition or quoting back - which we all have seen is mostly avoidable. If indeed you need to highlight a specific part you want to refer to - please do, but take care to edit out the rest of the unnecessary stuff. As more and more threads get added, Manishbhai strongly feels the reader will have less and less time to assimilate - so we must strive to be concise in our communication - ad definitely avoid repetitive stuff which is value-dilutive.
It’s great to have someone like him ensuring quality at ValuePickr. That ValuePickr has been able to grow and keep intact its culture of self-moderation among this spurt of growth in readership - is largely due to Manishbhai and a handful of others like him.
Please take his gentle words of caution with the due respect it deserves. Portfolio Q&A and all discussion threads have a seriousness of purpose - they are not meant for chit-chat of the type “As usual I woke up at10 AMand made a Nescafe. The Lazy Sun in Bangalore is no where visible. The climate is sullen and looked as if it is going to rain. A sexy drizzle would have been romantic, I thought. And It started. White marble chips falling on greenish-wheatish earth. The phone rang and disturbed the whole scene.” 
We recognise there is a need for that also. There is a new space created VP Hangout! for chit-chat and showing off your other talents. :). And we would love to discover the other sides of most people. Feel free to add threads here. If we use it with discretion, this may be another great addition to ValuePickr community bonding.
One other thing. ValuePickr prides itself on Originality - and original home-grown ideas, developed form active experience and grunge work of churning thru and participating in hundreds of opportunities. Most of the most popular threads at ValuePickr you WON’T FIND in textbooks or guruspeak - like Capital Allocation, ART of Valuation, Success Patterns, Lessons from Mr Market and the like.
Guruspeak and textbook-stuff there are lots of other places to go to read. Repeating similar thought process - however sensible - on every thread one participates in is bound to bring in readership fatigue. You are responsible for your own online reputation )- it is useful to remember that. Original in-depth work is what ValuePickrs are known and respected for.
Surya Kanthji,I read all your comments on various threads with interest…plz comment on my portfolio & capital allocation…
http://www.valuepickr.com/forum/portfolio-q-a/624679479
Regards,
Subhajit
Hi, Very Sorry to all.
My intention was different. The main reason I told the story is to explain the “Peter Lynch Style of Observation.” Don’t get me wrong. I know Page from two years. But a single conversation had changed my mind. The main thing is “I need to get conviction on the visibility of earnings of Page.” And suddenly it happened. So I was excited to give the whole story instead of a crisp consice point.
surya, can you help me in understanding what is a fat pitch multibagger. googled it but not able to find right answer. if possible, provide an example.
Definitely.
Let’s say you got 10 times on a 5% allocation in 4 years. That means you added only 45% to your portfolio even when you got big shot. But if you got the same on 25% allocation then you add 180% to your portfolio. If you have two such stocks in your portfolio then you can easily make 30-35% compounded on your portfolio for many years.
Fat-pitch multibagger is my coinage with the wording of Ashwin. I think you may not find it in google.
Thanks,
Surya.
In baseball, a fat pitch is the kind of easy toss any batter can hit.
For more clarity read the following article:
Yes that should be a good start. But I think the author’s point on “periodic fads” is a bit misleading. The best fat-pitches are made on fertile grounds of continuously growing earnings and competitive advantages.
Thanks Surya and Raj. Now it is clear.
Surya, When Companies like DLF which has huge debt and not growing well are commanding PE of 97 and why not companies like Page and Gruh which are steadily growing @ 25+% cannot command PE of greater than 50. Am I missing something here ?
Pavan, companies like DLF which are cyclicals have very high P/E when they are in the down cycle. This is due to the fact that their earnings are very low in down cycle, hence the normal P/E looks very high. Also when they are in up cycle, their P/E are very low <10 generally. Hope it helps. (This is what Peter Lynch says about cyclicals. Google for it)
Let me put it this way.
DLF is a case where earnings fell 80% and stock fell 60% in 4 years. Since stock fell slower than earnings there is a high PE. and there will be high PE. But Page is a case where even if PE looks to be growing faster, earnings growth is discounting it. In short Page is continuously creating demand for the stock despite its higher price.
