Not sure if this is the right thread or not, but I wanted to understand how to value a stock which is already in your portfolio and it has reached slightly stretched valuation - I am referring to Kajaria. Most of the content that I found was w.r.t. when we buy the shares and it makes complete sense.
If you want I can share the detailed thesis on KCL. but the gist is : -
It is market leader, the tiles industry will continue to grow at decent rate for next 3-4 years, it has good distribution, it is spending good amount of money on branding (60+ cr consistently for last 3 yrs.) which is more than the PAT of some of its listed peers and branding is kind of reflected in good numbers (improving ROC, NPM etc.). It is launching new designs - but i am not weighing that in.
Everyone knows it - and market has provided a high valuation for it. Although, when i compared to some of its peers ( NITCO, Somany, Bell, orient, Asian granitio) - KCL does stand out in terms of business quality and financial with good able management running it. Unless they do something wrong or any irrational competitor comes into the market, KCL should continue to do better than the average market growth.
Now, my question is how should I value a stock which I already hold in the portfolio, for which I am hopeful that business will continue to do well but I am not sure how much of that is already priced in. Does it make sense for me to continue to own this business? Should my valuation of business for buy and hold not be different? How should I go about doing valuation for this and similar stocks.
I read the entire thread but could’nt find one. Mr Bakshi’s example on Asian paint does provide some insight but for every AP there might be thousands of failures as well, what key things I can look to ensure that whether i am holding a high quality business which still has a upside potential from 5 year perspective at current valuation?
In my mind conflict is - I have a feeling that its a good business but is it the right investment at current valuation to continue to hold for 3-5 years?
Any insights from VP team’s experience, Books , links etc would be of immense help to me and would help me to think currently about it.
If this is not the right thread, please direct me to right link( I could not find it though).
This question has been bugging me since long now and not able to get over it.