Hello Everyone,
Let us discuss very interesting kid on the block, Gaja AMC.
This is the only stock in it’s category and probably being discussed for the very first time on ValuePickr.
Gaja Invests in Alternative Things, Meaning Private companies which are not listed.
Typically they invest in 8 to 10 companies whenever they launch the fund.
Until now they have launched 4 Funds:
Fund I
Fund II (2007)
Fund III (2015)
Fund IV (2021)
And Now they are coming up with 2 more one is their classic Closed Ended 10 year 2500 Cr. The other one is 5 Year and they intend to get around 1500 for around 5 Years.
Where they Invest:
They typically invest in Mid sized company(500 Cr to 2500 Cr Revenue), typically minority stake in sectors like Education-Employment-Employability (“EEE”), financial services, consumer and digital technology sectors.
Management:
This is where it is interesting, All the founders who founded this company 21 years back are still there and they all have skin in the game. Promoter holds more than 50% stake even after IPO. One of the founder is CEO and others are involved in decision making.
Also, Company invest more than 7% of the capital in the funds they are launching meaning they are serious with their investments.
Why do i feel there is growth:
Stock value will increase only where there is Bottom line which can grown nicely. This is where we need to get into more details.
1st is Management fee: This fee typically can be applied when they are launching new funds and 1st 10 years they get this fees and once the investments are done via funds, they don’t get this fees. Their Fund 4 is still investing and 2 More funds are coming up, So this will keep going up.
2nd is Carried Interest: This they will get only when they pass through the agreed performance on the investments. Typically this they get when they exit the company they invested and since they have funds launched right from early 2000’s, They will keep receiving this at regular intervals. The only catch here is their invested companies has to do really well. So their expertise of investment is very important here.
3rd is Sponsor Commitment gains: Again this can only be encashed when they exit the investment and company can really earn some great returns here if they invest wisely.
Other Growth Areas:
If I compare this company with global peers, they can definitely get into lot of other business in similar ares.
Real Estate Investments: Their global peers do invests in Real Estates and this area is something they could expand in future, though no commitment from them yet.
Retirement Services, Finance are other possibilities.
Price:
Warren Buffet Says: Look for company with Great business, with Growth Prospect and very capable & ethical management and are available at great price.
We already discussed 3 aspects, I feel business is good with great growth prospect since India is just starting with Alternate Investments and though not sure looks to be capable management. Ethical part needs to be looked into.
Now coming to Stock price. Currently company is priced around 24 P/E. I feel with 2 more funds getting launched and lot of income that should come from previous funds, we should see some growth here.
Disclaimer:
This is my analysis of the company and this is not buy/ sell recommendation. I am just here to discuss about this stock with folks and get their valuable inputs.
Happy Investing. :)