Loved this research on Who Makes the Data Center by Bank of America Securities
Bank of America Securities on Who Makes the Data Center.pdf (1.6 MB)
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insightful pdf thanks for sharing
How to build a resilient portfolio to achieve sustainable growth:
Quant Investing from Scratch using Screener & Excel - Parijat Garg
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Lots of upside still left. What a bullish commentary but with valid reasoning. Enjoy.
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10 part video series on Risk by Howard Marks, highly recommend watching.
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If youâre looking to dig deeper, read the enclosed compilation of his selected blogs in one pdf.
Anand Sridharan blogs.pdf (4.3 MB)
P.S. i have read most of his blogs 10+ times and have personally benefited greatly (cognitively, financially, and psychologically) from Anandâs writings.
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Understanding Bank Deposits, Money Creation and Economic Growth
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Important lessons learned over the past two decades of investing by Pankaj Tibrewal, Founder & CIO of IKIGAI Asset Manager.
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Good discussion of Current Markets on Market Masters with Manish Chokani - CNBC TV18
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Thanks for Sharing!
The post has many pearls that can be implemented through the investing journey.
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One of the best s1 forms Iâve ever read is from Palantir. itâs a beautifully written document
https://www.sec.gov/Archives/edgar/data/1321655/000119312520230013/d904406ds1.htm
Form S-1 is a registration statement that a company files with the U.S. Securities and Exchange Commission (SEC) when it goes public
Found interesting hence sharing.
My note of above video:
Key Sectors Discussed:
Tiles/Ceramics
Pipes
Wood
Branded vs. Unorganized Players:
Leading companies in these sectors include Kajaria, Somany, Century Ply, Green Ply, Supreme, Astral, and Prince. For example, Kajaria charges a 15% premium over unorganized players, highlighting the power of branding.
Spotlight on the Plastic Pipes Industry:
The plastic pipe industry stands out as the most interesting sector with organized players gaining market share. From 50% in FY10, organized players now control over 65% of the market. Hereâs why the big players are getting bigger:
Raw Material Advantage: Large companies source raw materials like PVC directly from manufacturers such as Reliance, while smaller players have to rely on intermediaries.
Proximity to Customers: With transportation costs accounting for 10-12% of pipe prices, being close to customers is a significant advantage. For instance, Supreme has 30 plants across India, ensuring efficient logistics. Other big players like Astral and Prince follow the same strategy.
Builder Preferences: Pipes account for less than 1% of a building projectâs total cost, but poor-quality pipes can severely damage a builderâs reputation. Hence, builders prefer branded products for their reliability.
Supreme currently holds a 16% market share and is growing at 25%. The management remains optimistic about future growth, in line with their guidance.
High-Margin Opportunities with uPVC:
Lubrizol and Astral initially partnered to produce uPVC, a high-margin specialty material compared to the low-margin PVC commodity. Although the tie-up ended, Astral now manufactures its own raw materials for uPVC.
Growth Drivers for Plastic Pipes:
Irrigation: A strong growth sector.
Plumbing: Driven by the booming real estate market.
Government Projects: Initiatives like âNal se Jalâ have accelerated growth. Previously, DI pipes dominated these projects, but now uPVC is replacing them.
New Applications: Plastics are finding use in fire safety systems, gas pipelines, door panels, etc., contributing 2-3% of current revenue with potential to grow to 15-20%.
The Wood Industry (Laminates, Plywood, MDF):
This industry is highly competitive, leading to lower margins as companies struggle to operate at full capacity.
In India, plywood dominates with an 80-90% market share, while globally, MDF is preferred. Although MDF was once considered a commodity, over the last decade, many players have shifted focus to it, leading to an overcapacity situation.
Challenges:
The cost of raw wood has doubled in a short time, putting pressure on margins.
Farmers prefer supplying wood for MDF due to its shorter aging process (3-4 years compared to plywoodâs 8-10 years), causing a shift in supply dynamics.
Disclaimer: This summary is for educational purposes only. I have investments in Prakash Pipes, not in any of the companies discussed in the video. Some details may not be accurate, so please verify the data.
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Samit Vartak Sir of Sage One Capital Talk on PMS AIF World
Samit Vartak Sirâs talk on PMS AIF World on 6th Octâ24:
Always value earnings growth. Investors always move towards growth.
In the 2011-20 cycle, the FMCG companies, private banks, likes of Asian Paints and Pidillite were growing at 10-11%, and during the same time the capital goods, real estate companies were growing at 5-6%. Investors moved towards these so called blue chips as growth was high there comparatively and drove the valuations higher by 3x in the time frame.
Post 2021, the likes of FMCG, Asian Paints, private banks kept growing at 10-11% continously but on the other hand, the capital goods, real estate started growing at 20-30-50% and hence the growth shifted to this side. And Investors moved to this bundle driving the valuations higher. The sharp run up that happened in this bundle have compensated the laggard movement in these segments that lasted for past 10-15 years pre 2021.
Investors always want earnings growth.
In long term, money can be made in both bundles, but what differentiates is the path of the returns, sometimes 10 years of lagging returns can be made in 2-3 years. Time and Rate are the factors that drive up the returns.
Why FMCG gets structurally very high valuations?
Because the longevity of growth is there. We know that the like HUL,Dabur will sure shortly grow at 5-10% YoY whatever the situation be for ânâ number of years. The rate of growth can be comparatively low but the time for which growth will persist is huge.
On the other hand, cyclicals such as steel is highly dependent on the global commodity prices.
Why arenât we long in private banks?
Because the minimum growth threshold we want is 20%. Though we are long in NBFC, the high growth NBFCs, we were long in Bajaj Finance; we are now long in Mannapuram Finance, Chola Holdings.
Plus the corporate india is deleveraged. Additionally, equity is cheaper than debt. Companies are more incentivised to raise equity rather than debt. Last 2 decades, companies were taking debt. Not that is not the situation.
On the savings side, investors are getting better returns in equity markets rather than having funds in savings accounts or term deposits. Hence, low CASA for banks.
Supply of money is not good for banks and also the demand of advances is not that good. Banks are certainly cheap but growth visibility isnât there.
Real Estate is what we liked and like. Inveatory levels is at 14 years low. Number of builders have shrunked. Plus India had K shaped recovery. Playing real estate through builders and building materials through good builders, cable manufacturers, steel tube makers. As usage of these building material is very diverse, not just real estate. Certainty of growth is much higher here. Plus moat is there in some these cable and tubes players.
Chinaâs home buying is 13-14% of GPD, in India it was 1%, now reached 2%. At the peak in India it was 3-4%. Though I have contra view here, Chinese mostly used to invest in Real Estate as an asset class, on the other side Indians love gold as their primary asset class.
CDMO space looks interesting. Indian players have put up good capacities. Divis Lab is a substantial player here. Have capacities for demand if pents up. Lauras and Neuland are good too.
Gold and home Finance, and Insurers we like and have started betting on these. Valuations is relatively cheaper here.
Very difficult to time the market. The known factors barely shooks the market by substantial percentage points, itâs the unknown factors that lead to good amount of corrections. If index corrects by 10%, individual stocks correct by 20-30%. Earlier in this cycle, individual stocks used to outperform the index, now the index is outperforming the individual stocks. It would be hard to generate alpha.
Would be not easy to make money in the market there on. Earlier the rally was board based. Now the need of bottoms up stock picking is required.
Now, back to fundamental and earnings growth will drive the stock returns. PE has expanded by leaps and bounds. No scope of PE expansion. Now the situation is like, if the earnings grow by 30% the stock will grow by 20%, the remaining 10% will be utilised for PE normalisation.
Needs to be a bottoms up stock picker and can keep cash in hand.
Now the fundamentals of corporate India is very strong, we donât anticipate crash but correction of 10-15% is anticipated. As it is always said, in bull markets the correction is sharp, short and brutal. Donât try to time these 10-15% corrections, as you cant get it right. Out of 4 times, you can only predict it correctly 1 time.
Only invest in companies where there is good growth and valuations. Donât focus majorly on macros otherwise you will book profits, pay up short term capital gains tax and again end up buying at higher prices.
2011-20, very little segment of markets were offering growth, investors migrated to that particular segment driving the valuations higher.
India is growing is 7%, inflation is 4% that is under control. 11% of growth is there, currency depreciation is lower than past it is at 2%, keeping in mind historically it was 3-4%.
Plus the growth in dollar terms that India is offering is really good. This would make investors moved towards India. As growth and Liquidity both are there. China is cheap but growth isnât there.
Wants to bet on the themes that will grow for next 4-5 years. Bottoms up stock picking is better as you can track individual companies easily.
Samit Vartakâs 3 years cycle of small cap. Last peak happened in Dec 21. Maybe sometime in 25 or mind of 25, the cycle will play out.
Though the percentage points downturn would be really less. Earlier it used to be 30-40%, now it could be 10-15%. Corrections that happens depends on the fundamentals of the companies. In Earlier corrections, likes of 18,21 the corporate India wasnât doing good the credit cycle was over extended, companies were over leveraged, CFO/PAT was very low.
Now companies are deleveraging and working capital days are constantly shruking. And there are no signs of breaking up.
No need of getting out forecasting 10-15% corrections.
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