Hello Hitesh Sir,
Sir, how much importance should be given to operating cash flow..what should be done in case a company’s top line and bottom line is growing but it’s not reflecting in the operating cash flow..
Also Sir, minimum what percentage of profit should come in operating cash flow…please guide…
Thanks & Regards.
Hi, Sorry to intervene - but you can watch this, and you will get all the answers.
Hi Hitesh,
If one has to go by the queries put to you, it looks like the Volumes have dried up :).
Quick Question.
In the past, I have seen that after a correction, while the market tries to recover, it rolls back down often (but not necessarily) Close to the ATH/at ATH/few% abv ATH. The observation has been approx 10%; also, it never crossed the absolute low made before.
However, a recent Tweet by MarkMinervine said that although an absolute Bottom might have happened, while the market tries to recover, there could be another correction, which could be swift like a whiplash.
My question to you is, how do you play such scenarios? If we sit out, we can miss the rally, if we play it & set smaller SL we can be shakenout.
Aside, apart from the obvious sectors that are showing strength like Financias (especially Housing), Agriculture (Agrochem/Seeds/Tractors), Textiles & Hospitals. I can see PEB (pre Engineered Buildings) stocks setting up.
Pennar Industries
InterArch
If you could share you thoughts, that would be of great help.
The current rally that started post the near six month correction has been a stop start kind of rally due to various factors. There have been Tariff worries, Indo Pak mini war, and other macro factors like US downgrades, rising bond yields etc.. So we have not seen the typical sharp broad based rally that we have been accustomed to during 2024.
Usually the first leg of any rally is one which has a lot of disbelievers and hence there is often selling at various levels which needs to be digested. Regarding whether we will go down and form a higher low as compared to earlier low, its anybody’s guess. Its better to focus on individual portfolio companies rather than worry too much about market levels or where markets are headed.
Currently the good thing is that a lot of results are out of the way and one can work on a list of companies where results have been good, and or prospects going forward also are good.
Sector rotation will keep happening from time to time. If we can identify the big outperforming sectors going ahead, it can be lucrative. I think as of now, financials and defense seem to be going strong. Need to see how things pan out ahead.
Regarding the charts you have shared, both look strong and seem to be in a strong uptrend.
Sir .are you still Bullish on OAL.wt is your view on OAL to enter in a current level.wt is the best practice need to enter in any stock with SL .or
I dont track OAL currently.
@hitesh2710 ji wanted to know your thoughts on Asian Paints - the once and still market leader in Paints industry, with books written on its moats and entry barriers but swiftly and efficiently broken by Birla. Competetion intensifying amd demand muting simultaenously amd Birla gaining almost 7% market share in just 1 year. 35K annual revenue of Asian paints in FY24 and Birla targetting 10k in next 3 years (almost one third the size of FY24 Asian Paints).
What about the moats of distrubution, dealers and innovation that were case studies for decades in top B schools? I think now the entry and execution of Birla can be another case study.
Asian Paints handling competetion so far in their own strong manner (at least so far) with no
panicking, no price wars (thats what is claimed) but rather by product innovation and superior product & services targets and building larger in the home improvement eco system. So far I trust the management who did not want to do any knee jerk reaction to competetion (probably also because such a playbook was never seen before in the history of paint industry in India) and their true reaction and strong steps and hence the character of reaction is yet to be seen…however the damage to market share in just one year has been severe and beyond anyone’s anticipation and Asian paints itself mentioned soemwhere that the fact Birla grew so rapidly means that entry barriers in this industry are very low.
This makes me think that as any industry matures, does entry barriers and moats always dilute? New moats need to be formed and disruption is the ultimate truth.
With all this backdrop what are your thoughts on the future of Asian Paints in the paint industry?
Will this competetion be a very long term painful process or as demand comes back, both Asian amd Birla would be able to achieve what they target?
Has Asian reacted well to competetion danger so far and what do you feel of their strategy to competetion?
What could be new
moats of this industry and can Asian Paints continue to be leader in growth for long time to come?
Disc: Invested hence biased & critical. Added recently as well. Can be wrong in all my assessments and views only for learning purposes. Not a buy/sell recommendation. Not eligible for any advice.
The writing was on the wall for Asian Paints ever since the two big companies JSW Paints and Birla group announced their foray into paints. Paints itself is a market that does not grow too fast. But there are repeat customers albeit at a slower pace, say every 5 to 10 years. And fresh demand comes from construction projects and renovations.
In the initial phase when a moat is being breached, the usual reaction is denial and rejection. Most of the investors don’t take these threats seriously. But after a few quarters, or sometimes few years, the impact on business in terms of sales, margins etc is felt. That’s when some kind of de rating starts and then it keeps progressing till a sort of equililbrium in terms of PE valuations is reached. Post that it remains at best a market performer.
If you want to study the strength of moats of a business, study Pidilite. I feel it has a stronger moat as compared to Asian paints, maybe because the addressable market is too small for other players to bother. But here too, the moat will remain only till a strong competitor emerges. My personal view is that stocks like Asian paints will find it very difficult to achieve the kind of PE valuations that they used to command earlier.
Moats had a definite place in investing since past few decades, but with an ever changing world the durability of even strong moats has reduced.
which are the sectors in your RADAR
@hitesh2710 Ji, a follow-up question to @Investor_No_1: Recently, Birla’s and Adani’s announced their entry in cable & wire space. Polycab, KEI etc fell and recovered somewhat. Would you Paint Cable & Wire industry with same brush as Asian Paints or do you feel this industry players still have some moat?
I did try to study this industry a lot but still have some confusion.
Dear Hitesh,
Request your view on Shilpa Medicure. I have been holding it since 2017, only to see it churn our mediocre results and consequently price action, for years. Suddenly, it has started creating new highs. I read through the con-call following the March25 results, and my take was: management is predicting a good future in all segments, without divulging much details. But this has been done by the Co. before too. Is this for real this time? Or is it just narrative? Will appreciate your perspective.
@hitesh2710 Thank you for the insight about the moat and threat from the giant player’s entry. I would like to know your input on Pidilite because there are a few players entering into this space, like Astral and Jyoti Resins, already eating up small pie. So, is Pidilite still a MOAT in this space?
As of now Birla and Adani have only declared their intent to get into cables and wires space. Actually putting up capacities and starting production might be some time away and till that time, I think markets will try to ignore the event and go on as usual..
By itself, wires and cables are themselves a commodity business, with a lot of players, both in listed and unlisted space. So I will not consider this as a sector which throws up businesses with moats. But the lowest cost producers and best brand visibility and strengths will tend to do well.
PIdilite is slightly better placed as compared to the paints players. Mainly because the brand strength of Fevicol and other products from Pidilite is very strong. Plus the market itself is very shallow and I don’t think too many other players will be interested in putting up big capacities.
Its like a big fish in a small pond and the pond itself is not growing too fast. Hence other bigger fishes will not find it lucrative to get into this pond.
Going ahead, we need to see how things play out.
I don’t track Shilpa medicare too closely so not much idea about the company.
Coming to the state of the markets, I think Indian markets have crossed a lot of walls of worries in past few weeks and months.
We had formed a sort of double bottom below 22000 (at 21800-900 to be precise) and the intervening peak was at around 23800. Once markets cleared that level in April 2025, it went quickly up to post a swing high of 25200 and since then has been consolidating below that level, and has posted a higher low at around 24450. Last week we managed to cross and close confidently above previous swing high of 25200. This opens the way to much higher levels going ahead. ( I dont pay too much attention to absolute levels of where markets can go, because it can be anyone’s guess where it goes. ) But if I have it clear in my mind that the trend in the overall market is up, I can go ahead with selecting sectors and riding them and try to make decent money. (Having said all this, I can still be wrong and markets can go down from here or slightly higher, but investing is all about taking calculated bets and take action accordingly)
The worries that markets crossed consist of the geopolitical risk in form of wars in India-Pakistan, Russia-Ukraine, Israel-Iran etc… Besides the other bigger worry that markets cleared was tarrrifs and their associated disrputions. With all these worries, Indian markets and most of the global markets also have shown good uptrends after brief corrections.
Domestically speaking we are in a interest rate cut cycle, which is always good news for markets ( unless rate cuts are made in desperation to tide over crises). Crude has cooled off big time and that provides cushion to Indian economy which is dependent on imports for most of its crude needs. Indian economy macro things also seem to be gradually showing improvements ( though I am not a big fan of macro analysis). Dollar index and dollar itself vs rupee is weakening. Which again supports bullish arguments.
On sectors that I feel should be looked at , I think financials seem to be announcing themselves. Now financials seem to be a big sector with a lot of subsectors. My guess is we will see strength in most of these sub sectors, say 2-3 sub sectors at a time, or one after other or something else. These sectors are like private banks, public sector banks, NBFC ( even here there are micro finance cos, vehicle finance cos, real estate financiers, other broad basket lenders etc) , public sector NBFC, brokerages, insurance cos, wealth management cos, so on and so forth.
The other sectors would be interest rate dependent sectors like real estate, autos, etc.. And if the overall markets are to rally and we have a broad based rally, most of the sectors will ultimately rally at varying times going ahead.
So idea should be to work hard and try to identify companies with good growth triggers going ahead and ride them. Happy investing.
Hitesh bhai. What are your views on Transmission and Distribution Suppliers. Many companies like Transrail lighting, Skipper Ltd., have come out with good results
On first look both transrail and skipper have reported good numbers for Fy 25 and management commentary is bullish. I have not studied these businesses in details, so not much idea about business quality or management quality. Overall both seem to be companies worth looking at.
Problem with companies that have good results and good commentary is the valuations. As of now the starting valuations are not too cheap, ( not too expensive considering growth ahead). For us to make money here on and especially not lose money, growth has to be there, otherwise the margin for error is very small..
Found this extensive collection of long-term charts about the US markets. Wanted to know your views @hitesh2710 bhai on them. Please have a look at them when you have time. Request you to share your views if you find them useful.
Dear Hiteshji,
Thank you for your regular views on state of the marjets.
As market continues its roller coaster rides and changes fast and faster, turning like that of the mood of Mr. Trump, how do you see the indian market at 50% of Tarrif and further threat on more tariffs along with sudden turn of Mr. Trump looking at India with anger while dealing softly with China in terms of oil buy from Russia etc. Also US appears to be closer to Pakistan too in Trumps current scheme of things. Do you think this will affect FPI money flow ?
Also the Q1 results season is over. Even some of those names reported good numbers remain subdued or range bound. Thus coupled with PMs annoucements on Aug 15 adds to the volatility. How do you see sectors like defence, auto and even financials now? Looking forward your views along with technical views of different indices.
I continue to be invested fully, but switching names frequently or increasing or reducing allocations frequently resembling more of trading for almost 30-35% of overall Portfolio booking profits or losses regularly at 15-20% profit or 10-12% losses aa an attempt to benefit from high volatility seen these day. What do you think of this approach ?
