The Tried & the Tested: Quest for the Bluest of the bluechips!


(Supratik) #61

Got it Sir, that is exactly what members in the forum here look upto.

Thanks a tonne!!
~Supratik


(saurabh shankar) #62

Hi Donald,

Will be more than willing to work on this one :). Atul please do share with your inputs and lets take this ahead. You can mail me at [email protected]

regards,

Saurabh

experience, Link: http://in.linkedin.com/pub/saurabh-shankar/6/759/2a2 http://in.linkedin.com/pub/saurabh-shankar/6/759/2a2 Link: http://in.linkedin.com/pub/saurabh-shankar/6/759/2a2 is way:))

Donald,

I can pitch in for banking and finance sector. Please let me know what I need to do.

Atul


(Aman) #63

Dear All,

I have a particular reservation about Titan Industries (from a 10-15 year horizon POV). The Rev/Margins of this company depend on Gold prices. They make 9-20% of total value of jewellery as making changes which is their revenues. Considering the fact that gold price over last 200 years has broadly increased at Inflation rate (we can debate Indian vs US inflation rate) and the fact that gold prices clearly have run up so much in recent times that a longish period of consolidation/ decline seems ripe, how would you folks think about the gold price deflation risk for this stock (and sector as well)? My understanding is that historically gold price shoots up during periods of economic/political turmoil as investors rush to safety and its deflates in real terms over next few years as investors pile into risk eventually as economic outlook improves.

I love the stock but v uncomfortable with this risk. Any thoughts?

Cheers

Rish


(Akbar Khan) #64

My simple thought is that when prices decline, demand increases. Hence if over a long period if prices of gold come down, sales of jewelry should increase. Titan which is facing a problem with stagnating sales due to high gold prices, should therefore be able to increase revenues easily.

-Akbar


(Krishna kumar) #65

you are right. We are also discounting the studded jewellery market share of titan. They plan to make it 40% and further to 50% in the coming years from 22-26%. Studded jewellery margins are high when compared to plain gold jewellery. Apart from this the biggest moat of titan is ability to create aspiring brands - Tanishq, FastTrack, Mia, Zoya etc and capture share from unorganized sector. The next target of titan is creating an organized market for children just like they created fasttrack for youth.


(Aman) #66

Yup, I hear the argument that essentially increasing discretionary spending will drive sales either via price increase or volume increase. But what about purchases driven by investment/savings purpose. Would Indians keep buying gold if they see the value of their savings remain constant/decline for long periods of time? Or does that get manifested more in the form of gold coins/bars and not jewellery? Also what do folks make of Govt’s recent efforts to curb gold consumption? Bet against sustained regulatory interference?


(Praneet) #67

I don’t think that the demand for gold slackening.In a country when equity participation is not much by retail investor, the next best bet outside of safe havens (PPF, FD, etc) is Gold which acts as investment and usage. When an asset (read Gold) proves itself with time in periods of deflation/inflation, the attractiveness towards it increases plus Gold is culturally associated.

Though gold had (or still has) a good run up in its prices, so even after demand weakening prices don’t break much after establishing a base level (not familiar with technicals but my opinion) and supply side increases.

May be after seeing/setting macro-economic things rights govt might lift this duty, who knows [while governmental controls do work, they work only up to a point then are overwhelmed by market forces ]

Titan’s plan to increase market share in studded Jewelery should provide the required cushion.

http://economictimes.indiatimes.com/markets/commodities/gold-imports-expected-to-be-up-by-11-per-cent-despite-government-controls/articleshow/18508239.cms


(Aman) #68

helpful to get your views Akbar, Krishna and Praneet …Thanks


(P Sharma) #69

Hello Donald,

This is a great thread. Just wanted to check if we have taken this to its logical conclusion.

Thanks


(Donald Francis) #70

Hi P Sharma,

As you are aware this thread has branched off into separate FMCG and non-FMCG best buys threads. Check those threads for the latest.

We sure have collected more data, and we have more insights. A bit of modeling work is left before the conclusions can be presented for everyone’s benefit.

Shrey is busy next 2 months for his CFA Level-3 - wish him all the best. I will devote some time later this month and finish the modeling part and present, after I am through with current pre-occupations/opportunities in small caps like Kaveri Seed, Lumax Auto, Caplin Point and a few others.

Good part is - bluechips aren’t running away in a hurry (in either direction) so we can come back to it, in some time.

-Donald


(Supratik) #71

Hi Shrey,

Not sure if this is the correct thread but…Wish you all the best

~Supratik


(P Sharma) #72

Thanks for the response Donald. I was part of the FMCG thread.Let me have a look at the non-FMCG thread.

Regards


(Supratik) #73

Sun Pharma shows hwo mcap is only one of those param for analysis. A true worth studying model.


(Supratik) #74

http://www.thehindubusinessline.com/features/investment-world/macro-view/big-four-on-warrens-buffet/article4660825.ece


(Ashwin Iddya) #75

My current equity portfolio is entirely based on consumer focused companies that own brands. I’m stretching the definition of the terms “consumer” and “brands” when I include software companies (Infy, TCS etc) too in the list. After all, the big IT companies generate significant business solely on their brand name. The only difference is that the consumer of their services are big global corporates rather than individuals like you and me.

I would classify these companies into two segments -

Consumer Discretionary (Eg: Asian Paints), Automobiles (Bajaj Auto, M&M, Hero Honda) And Banks & FIs (HDFC Twins, Axis Bank, Indusind Bank)

And

Pharma (Cipla, Lupin), FMCG (HUL, ITC) and Software (Infy, TCS, HCL Tech, Wipro)

The stocks in the first segment will do well during “good times” while the stocks in the second segment are defensives, and will do well in “bad times”. An equal allocation to both the segment of stocks (preferably, equal allocation to each sector) will do well over a long period of time.


(Alok Bhola) #76

I was analysing Sun Pharmaceutical today. Following FY13 information surprised me:

Consolidated PAT (before Minority Interest): Rs 3469 cr;

Standalone PAT +Sum of PAT ofall subsidiaries: Rs 2300 cr.

Asthere is a massive difference between thetwo PAT figures, I am not sure which one to consider (or not consider either).

Does anyone has any insight on the reason for this massive difference in the two PAT figures.


(GSApte) #78

This is an interesting thread for long term compounding growth stories.

While some of these (HDFC Bank, HDFC, Indusind Bank, Asian Paints, Hero Motocorp, HUL) have stayed on their path so far even during past 5 years, there is some question mark on the following:

ITC - Continuous increase in taxes and stringent policies of governments can cause issues going forward.

TCS, Infosys and Other IT big players - Seems to have lost the magic of compounding wealth in last 3 years. Rupee depreciation can help them in future but growth seems difficult to come back easily, unless they reinvent themselevs. Probably mid size companies would add more wealth.

Rest all - Banking and Auto still look good going ahead in reduced interest rate era which can last for few more years.

Any thoughts from others are welcome.


(Karan Sharma) #79

Can we revive interest in this thread? It seems to have faded away. Over the last few years mid&small caps have grossly outperformed largecaps. Now would be a good time to discuss some companies which have a long runway of growth ahead for them. Almost everything is overvalued so atleast the risk would be lower in this space


(Siddhant) #80

Why do you say risk would be lower in this space - infact risk is much higher when things are overvalued. If growth does not pan out as it was projected/expected multiples will contract significantly.


(Deepen Thakkar) #81

I bought lupin at sub 1400 levels ,expecting that it already had fallen from 2100 , but in 4/5 mths lupin quoting below 1000 levels. I guess risk element is there in all stocks