Hitesh bhai: Results season lasts for 2~3 weeks. Some days 100’s of companies declare their results, making it difficult to analyze every result. To identify new names, I rely on the price chart and gaze at the price action around results time. However, this approach misses gems that are yet to be recognized by the market.
I would love to know your approach to identify new names in the result season. TIA.
Thanks a ton Hitesh Sir…
Sir, please guide… what are the major points one should see in an annual report…
Regards.
What is difficult for majority of the people to do is exactly what it takes to be a big winner in the stock markets! In my opinion while there’s nothing wrong in relying on price action, it’s something almost everybody can do. Hence I question the real edge one can get from this to capture major moves. Note, I say ‘major’ moves with the stress on capturing wealth-changing outcomes!
The difficult path is in going through the fundamentals of every single of the 100’s of companies you have made a reference to. Regarding the lack of time for the same, I’m a firm believer that one needs to MAKE time to create enormous success in markets. Market doesn’t care for anybody’s “lack of time” excuse. Personally I create time to go through every single companies presentation I follow by waking up religiously at 3:30 am everyday, and creating time that way. This is the real hard work that is required to build one’s knowledge, intuitive sense and conviction in companies to gain a massive edge over the rest. This is the hard work that most people will not / cannot do! But alas, that’s what it takes!
Just thought I’ll add my 2 cents here.
@investorpradeep: You touch upon ‘Things to do right’. My quest was to know the approach to identify ‘Right to do things’ from the results season. And, then hit the path you elaborated. Thanks for sharing your viewpoint.
HItesh (@hitesh2710) bhai: Apologies for cluttering your thread.
I already have a list of companies I am tracking to watch out for results. I follow this set of companies closely and monitor results and wherever concalls are done, I listen and get a sense of things.
About other companies outside of my watchlist, when I find that results have been good, and have been so for 2-3 quarters in a row, then I try to follow these up. If I understand the business of the company and the underlying triggers, few of these companies get added to the above watchlist for regular follow up.
Finally technical analysis also provides a list of stocks that show good breakout and if that is on the back of results impact, I analyse these companies more closely.
@Shakti_Srivastava I think you can read a few books like One up on wall street, Pat Dorsey book etc multiple times to get an answer to such basic questions.
I welcome the presentation of one’s views, that is what forums are for, and I learn from them, but it would help us to check the person who is asking the questions because what was asked might sound rhetorical but it can have a deeper meaning.
You are burning the midnight oil, literally, and going the extra mile, nice to know that, inspiring too. @Surender is an experienced investor, he has even introduced a few businesses to the forum, along with other work.
Members who have been active for a while in the forum have evolved into better participants compared to their beginnings, and all have their own way of looking at things, completely unique perspectives, and want to get better, and in the pursuit of that objective, one of the few members who can be approached with questions and doubts regarding anything is Dr. Hitesh. He is the amalgamation of Buffett+Minvervini, and Munger.
@hitesh2710 Do you run or are aware of some amateur investors’ club in Vadodara? I too am from Vadodara and was looking for a community to discuss ideas and learn.
Hello @hitesh2710 sir,
I wanted to get your thoughts on something. So far, all the indices (large, mid, and small caps) have been corrected by a similar margin (10-12%). Normally, small caps, being inherently riskier, should experience a steeper decline, but that doesn’t seem to be happening this time.
People are suggesting that this might be because FIIs predominantly own large caps, not SMIDs.
Is there any angle I’m missing in understanding this trend? Looking forward to your perspective.
The ongoing correction has affected most stocks, (barring a few that have gone up while markets have gone down) be it large cap, or small cap. The extent of correction can be varied. But as of now I cannot find any evidence to suggest that small caps have held up more as compared to large caps.
Once the correction is over and a broad based rally begins, picture becomes more clear because the winners of the next leg of the rally will reveal themselves by their price action. So going forward, it makes sense to keep observing sectors/stocks that come out of the blocks the earliest. That time might be some time away, as first we need to see the correction end and then a rally begin and gain some strength.
This FII/DII buying and selling is only one part of the equation. Usually when markets get overheated, a correction usually ensues and the reasons for the correction keep changing. The current correction has been more in the nature of death by a thousand cuts, rather than a straight line correction.
As investors our focus has to be more towards the companies we want to invest in. Results season is over. And the current market turmoil keeps giving us chances to study companies, and if convinced, take appropriate action.
@pursuit I am not a part of any amateur or other investors club based in Baroda.
@hitesh2710 ji Hope you are doing good.
I needed your thoughts on business models, future growth prospects & relative valuations to their own historical valuations of two very well known companies - Dmart & Asian Paints. Both have been hammered pretty badly, rightly so, after their bad quarter results and commentary.
No doubt business is facing stiff long term challenges for both and in new enviornment of say quick commerce for dmart & competition landscape plus product mix/demand situation for Asian Paints…do you see the disruptions big enough to destroy their existing business models and kill growth for next many years? Do you see them getting derated more (scope for derating never ends)?
In short do you see the headwinds temporary (temporary can again have different time frames and if someone is looking over a decade timeframe, 2 years may also be temporary) or the issues faced by these companies are very worrisome & can impact the lifecycle of their business & leadership?
Thanks!
Hi @Investor_No_1:
Like you, I also wait to read Hitesh bhai’s eloquent qualitative commentary. Meanwhile, I took the liberty of sharing my rambling on this apsect.
From 23-Sep, Nifty 50 fell 10%. All the consumption oriented B2C names have fallen ~1.5x to 3x of the Nifty’s fall, which is not uncommon. [snapshot below]. Considering India’s consumption potential, all B2C names will flourish with time as they have proven, profitable, and scalable business. As all have corrected, it seems to be an outcome of prevailing equity market correction and industry headwinds due to demand slowdown.
Asian paints competitor is giving free tinting machines, higher dealer margins and 10% free paint offers. Since they are luring the dealers for sales push, more than 10% OPMs are being distributed as incentives mentioned above and booking losses in their PnL. Paint industry players operate at OPM of 12~19%. All these schemes will either reduce drastically or stop as and when focus shifts from aggregating retail outlets to profitability, which the competitor intends to do over a 3 years time frame. Among all, Asian Paints has the highest OPM and can always use price lever if that remains the only tool to fight off the competition.
Business model of DMART and quick commerce (QC) companies are complementary with little overlap. DMART stands for maximum savings, bulk buying, and 1~2 times shopping for monthly groceries. QC stands for convenience and speed for items that are needed daily , immediately. or impulsively (high in value but weigh less). Hence, QC may shave-off some % of DMART stores SSSG if management remains aloof,which is not the case since it acknowledged the impact of QC publicly, but can’t harm the overall business model.
In the long run, I still wonder how quick commerce will make NET profits. EBITDA level breakeven is yet to be achieved, although the price of goods charged to the customer is at par. However, QC companies are on an expansion spree due to available funding. DMART will always be preferred by masses and occasionally by others.
Disc: No position in any of these names.
Thanks Surender, I appreciate your time and clarity of thoughts on each aspect. We would wait for most treasured @hitesh2710 ji comments as well 
Asian Paints and Dmart both have enjoyed robust business models and strong moats to their business. That was the reason these companies enjoyed premium valuations.
Asian Paints in particular started having the first hints of competition from deep pocketed guys in form of JSW and Birla. The addressable market seems to be growing at a slower rate as compared to the competition induced market share loss for Asian Paints. Or atleast that is the perception of the markets. Hence it is one stock that is undergoing serious de rating.
Dmart also enjoyed crazy valuations and of late these valuations have been coming off. And inspite of this kind of cut in valuations, it continues to trade at very expensive valuations as commpared to the growth numbers it is reporting.
If I compare competition to Asian Paints and Dmart, I think Dmart is better placed in the physical store retailing. There is always a fear that online retailing will at some point of time hurt Dmart business model, but we need to see how that plays out.
Personally I think with the kind of headwinds these businesses are experiencing, we need to see how far this derating continues. As with all things in the markets, when the pendulum swings, it does not stop at midpoint, which is the equilibrium level. The ride from optimism to pessimism is very painful for those holding the stock.
With the current ongoing correction, I think with some decent homework, there are a lot of better alternatives to make good money. But this is my personal view and I could be wrong.
@hitesh2710 sir very good morninig again. sir my concern on supreme industris .can supreme or astral replace the DI pipes by producing opvc pipes ? actually sir in water infra there will be huge demand of DI pipes in coming years so my concern is that opvc pipe can replace the di pipes ( i read somewhere that govt wants to replace di pipe by opvc ) am i right sir if that will happen then what will be impact on electrosteel casting types of company who is market leader in di pipes? sir if you have some view on this plz guide me ? thanks sir
Dear Hitesh Bhai,
Thank you for sharing your valuable wisdom with us. In your multibagger video, you mentioned that identifying consistent compounders available at a lower PE range could lead to multibagger opportunities.
Applying this framework, I came across Antony Waste Handling Cell, which seems to align with these criteria. The company has long-tenure projects that provide consistent earnings visibility. However, one potential red flag I noticed is its association with government projects, which might lead to higher receivables. That said, the company appears to be selective in taking up projects to manage this risk effectively.
At its current valuation (~25 PE on a TTM earnings basis), it seems like a compelling case. I would greatly value your thoughts on whether Antony Waste Handling Cell fits the profile of a consistent compounder.
Looking forward to hearing your perspective.
Antony Waste management is not the typical consistent compounder. The main characteristic of the consistent compounder category is the robustness of their cash flows and near consistent growth, besides a great business model. In case of AWL, not all these boxes are ticked.
AWL might be a growth story looking at the sector it is operating in, but I don’t track it too closely to be able to comment about its prospects.
@sanni_kumar I dont track Astral, Supreme or OPVC sector.
Dear @hitesh2710 Sir,
Your views on infra / manufacturing proxy plays Action Construction and Equipment ( ACE ) & Apar Industries.
Can they still be a part of core portfolio…
Regards.
@hitesh2710 sir, laurus labs and few more CDMO theme companies are moving and are at their 52 week high. are you tracking the company? what is your view on it after the stellar 15 x run in neuland labs in 2 years which is also a CDMO theme company.
Hitesh Bhai,
It’s fascinating how the carpenter reward model has contributed to the growth in recent years of Jyoti Resins with their Euro 7000 white glue. But I wonder about its sustainability—do you see this as a true competitive moat, or something competitors like Pidilite and Astral could easily replicate? With increasing competition in the white glue market, what factors do you think will be crucial for Jyoti Resins to sustain its momentum? Your insights would be greatly appreciated
I don’t track ACE or Apar so not much idea about valuations of these companies. But in general, with the kind of development work going on in all parts of the country, and the quantum of govt spending on infrastructure, this sector has done well till now and going ahead too can throw up some big winners, provided one buys good to great companies at attractive valuations. These kind of opportunities are provided off and on in current market volatility, so one must do the necessary homework and prepare a list of companies worth investing and take a call at appropriate times.
@Vikky CDMO as a sector has shown strong resilience and outperformance during the current turmoil in overall markets. I think sectors that show outperformance and resilience during market weakness deserve closer look. I don’t track any specific company in the sector, but thanks for pointing out this sector.
@Karthi_Keyan1 I don’t track Jyoti resins so not much idea about it.
