@rshankv - Going by the thread by Aditya, there are going to be good times for ENA and IMIL due to the shift from buyer’s market to seller’s market. Wouldn’t Associate Alcohol also be a good beneficiary especially given it’s significantly lower valuation against Globus.
1 Like
-
ITC in the 160 to 200ish range was a rare beast. A blue chip with a bottom that was clearly visible was one of the most risk free bets I’d ever take. It was almost like a liquid fund where I could keep excess cash… Even emergency cash… Since I was confident I could withdraw cash at any time without the fear of a downturn. Now that bottom is even further away and since I have built a fairly big position il be moving on
-
I guess so… With a caveat that I stick to non cyclical sectors (atleast sectors that have looong cycles like fmcg, IT, Bfsi, chemicals and pharma). For eg I dint know heads or tails about IT and then spent a few months studying and invested. Recently I was interested in amaraja at what I felt was a bottom(posted above about it too) but I hadnt completed my studying and ended up putting my money in my comfort zones instead lol. I’m not interested in zee type situations… Once the news breaks there’s nothing left for retailers imo. Ideally you own a good company and enjoy these kind of optionalities when they occur(for eg a laurus labs demerger in 2027+ and an ITC demerger in 2072 haha)
-
I am not a fan of timing the market either. But this situation isn’t normal currently. I’m not waiting for a market crash… I’m just waiting for more reasonable valuations in the companies I track before adding more… It could be by eps growth catching up even if the stock price doesn’t crash too. I have almost all my networth in equity and over a span of 5 years I will have all of it too… But with a few breaks for a few months like now whenever we are at an extreme.
@rshankv I’m a fan of both tobacco and alcohol haha. I’m not a fan of investing in them (regulations and taxes and even bans, esg regulations causing stagnation etc) is what I meant.
3 Likes
Yes that would help to know more. What I could see that it’s not clear what business comes under listed Indian entity. Xchanging UK had a decent product XUBER used by the giant insurer Lloyds…but when I checked latest AR of Indian entity, post restructuring, indian entity has only 3 major subsidiaries with business operations only in india, US and Singapore…so the UK parent (which is now DXC itself) is no longer in business with listed Indian entity anymore…this made me think that even if any product like XUBER or DXC Assure (another major insurance product from DXC…maybe they rebranded XUBER post restructuring, not sure) results in any business for indian entity or it’s just a dying business…
What interested me is that it’s the only listed part of DXC in India…
Apologies @Malkd for taking up your thread space!!
Thanks for the reply : -
-
ITC vs. FD - A fairly big position can be trimmed whnever money reqd & for specific amounts, whereas FD doesn’t serve this exact purpose. It is to be broken with penalty & entire amt. Bt still got ur point, relative allocatn of a positn in a portfolio is personal choice & an art that is governed by individual assessment of risk vs. reward.
-
Nothing to add here
Jst that I have decent exposure to IT industry work-wise & auto components family-wise, so happy to help out. -
After a decade of jumping\trading\speculating, I hv also come to blv that focus on specific cos. & building up knowledge base is the key. Apart from sm cash in the portfolio, I blv the onus is on investor to work hard to find mispriced bets which are present in every type of market. And again, the final call is the risk involved & the capacity of ur portfolio to afford that.
Always nice to hear from u… 
Keeping valuations & ENA buzz aside, I blv the trigger for these liquor manufacturers is USL’s decision to move out of manufacturing & non premium segment. Thr franchise plants hv got capacity utilization up & manufacturing facilities of USL too are up for acquisitons & futher ramp-up.
An idea is to play this as a win-win basket bet with Assoc Alcohols, Globus, USL & probably Gulshan Polyols. This diversified set will provide satisfactory rate of return vis-a-vis index.
2 Likes
Thanks for asking
- USL is giving away their low end work to other companies like Associate Alcohol, So AAs margin is capped all the time , whereas GS is moving out of the low end work like bottling and they are using this bottling units for their own consumption
- AAs growth or lack of growth is a concern, whereas GS is expanding rapidly their brownfield exp in WB is adding additional 30% capacity to the existing volume, and currently their efficiency is much higher , GS is 5 times bigger in terms of volume/revenue and they will double their capacity in next 18 months,
- GS has entered premium segment and has a future , though it is has not realized any profits through UniBev but yes one day they would play in the same league of USL
- AAs management has a sketchy past , the promoters went absconding after IT raids … Please read the below excerpts and with these background I will NEVER EVER enter AA
" Red flags in Corporate Governance
The Kedia family, which is the promoter group, is not part of the board. However they have been withdrawing salaries at a large percentage of the net profits.
When the promoter family is literally taking away 40% to 50% of the profits of a company as way of salaries which are beyond the limits stated by law, it is a major red flag. The family has a ~ 58% stake and can also take dividends, which would also benefit retail shareholders. The Companies Act, 2013 specifically puts a 11% cap on the managerial remuneration. Moreover, this payment is made without the approval of shareholders."
5 Likes
Please see my response above to shardhr
I completely agree to his thought. Being in testing for last 12 years, I can say if anyone says testing is a specialized skill and the company which does testing has moat is just lying through his teeth or they dont know what they are speaking.
Almost anybody can do manual testing, In my company we were not getting people for manual testing we hired bunch of ITI, Diploma, BA and Bcom guys to do the testing. I have been part of manual,automation,performance and currently security testing. I can say automation gets 10 to 20% premium over manual testing, performance testing has 30% premium, Security/Pen testing has 40 to 50% premium. Now a days lot of company’s are seeking SDET engineers (Software Developer Engineer in Test), Those who can do both development and testing. So standalone testing is kind of commodity.
You can pick anybody on the street and make him a manual tester by training him for very few days(Less than 20 days). We have done that in our company and quality has not been compromised at all. They are still finding the bugs
12 Likes
nice points : -
- Mgmt issue : - Globus Spirits too have thr mgmt shenanigans at play. Lots of inter party transactions, buying up promoter loss making units at shareholders’ expense etc. A summary(although exaggerated one) can be found here : -
And I’ll also put up a counter to this that yes, since business situation improved, the mgmt lately have taken up corrective actions it seems - Auditor change, no more bad assets written offs etc.
I guess this is a feature of industry whr in bad times every mgmt tries to resort to these measures ( except the leader Mncs perhaps).
- The move to premiumization is a theme everyone starting frm USL to Radico to Globus is playing. I dont seem to see the differentiation there. When a strategy is so obvious, thn it tends to become a prisoners’ dilemma kind of thing.
In fact, I blv the contrarian approach of going for volumes at capped margins might just play out better. The competitive intensity will reduce there and these manufacturing cos. will be a bit lesser under the regulatory radar. I mean rising profitability touted by the non-premium to premium migration players might just get the govt.'s attention back to raising up taxes more.
@Malkd :- Apologies for hijacking the thread 
@rshankv : - Feel free to share further thoughts over DM. I might be tempted to change my theory incase the risk reward is better in 1 player rather than the basket approach theory I have as of now.
3 Likes
Yes, I am aware about it , It was a mistake on the managements part to float a new company without allowing the benefits to be passed onto the existing shareholders, they were punished for the same and they realized their mistake after burning their fingers and figured out that without Globus there is no synergies and profits
There is value unlocking here, just bcos someone is doing shouldn’t stop them from building a brand, there is a reason why USL is commanding 80 PE and RK 40
This means that they will remain as a commodity company . well, who aspires to stay there ?
Lets not overlook the international market here, Indian Spirits are making space for themselves in international liquor market ,so aim for the sky
Me too , lets move further discussion in Globus Spirits thread 
Lets discuss in open forum so that others can benefit and also add value to this proposition 
2 Likes
Any update about xchanging solutions ? please share if you have any, thanks in advance
sure, i will update if receive any reply, thanks for the response
@sbuy210
I have been in a mini bear market of my own the last few weeks due to being overweight in laurus. However, it gave me a chance to Keep adding even more at under 600 to my already huge position . I’ve been desperately waiting for some place to put my cash and laurus obliged. My thoughts were that as usual a lot of people and the market were overreacting so I took advantage of it.
5 Likes
What are your views on the current development regards to LL? I think high raw material prices/containters shortage/logistics would continue for atleast next two quarters. DN is massively outperforming to counter LL’s underperformance in my pf. DN became 35% of my networth while LL is 53% rest 12% being polymed/Solara/Caplin.Market sentiment is slowly pushing pharma out of favour at least in the near term, which we must admit. Where do you see Dr. Chava’s LL by 2025 and beyond as our stakes are very high by remaining status quo?
2 Likes
@Patrioticindian
I’ve resigned myself to huge PF losses over the next 2 to 3 quarters Considering I’m so pharma and chemical heavy. I’ve already lost about 10 percent of my networth in the last few days and expecting further pain for the foreseeable. That being said nothing has changed long term… If anything this period will future proof companies like laurus and ingrevia in the long term since they would have to make changes. If laurus breaks its 590 support and ingrevia falls below 500 il be adding even more to them next few quarter. I’m uncomfortable with the valuations of almost every company and sector in the market. This short to medium term pain is welcome and had to happen at some point. I built my position with a 5 year timeframe at minimum and won’t be selling anything atleast until then since I’m only a year and few months in. These speed bumps will be aplenty along the way and one just needs to sit back and accept them when they appear/add more if the opportunity presents itself.
13 Likes
Any specific reason for today’s UC in UGRO. Touched new 52wk high today.
It’s been under or near book value for a while now and hasn’t participated at all in the bull market and had set a nice base. With these low liquidity stocks all it takes is for them to be “discovered” Since one big buyer can cause a huge rise. I won’t be surprised if it crashes back to book value soon… These false dawns have been aplenty last few months. Results in 12 days too so maybe there’s good news around… Plus their sales team is doing good jobs with tieups so maybe there’s an announcement on the way. Tbh 'll take any good news i can after the recent resignations got me a bit wary about my investment here lol.
My time horizon with this is at least 5 years too ie until they actually become a fully developed company based on their own predictions for 2025… and i don’t plan on adding more and I don’t have too much at stake in it either so I’m really not bothered about anything it does price wise and only really interested in the upcoming concalls and investor presentation and I’m hoping they are as fantastic with info as they’ve been so far.
That being said I’m not complaining about the rise especially since my PF was totally beaten up today (loss of nearly 6 percent in one day )
5 Likes
Agreed nothing has changed if we look at 5yrs intervals.In my view the managements of LL and DN are undoubtedly topnotch in their respective industry, they know very well how to manage headwinds and thrive. The only thing we need is to give them time ie. atleast 5yrs to prove their ability.By 2025 i beleive these two co’s will be significantly different than what they are now.
After more than a month I finally found a place to put my money. Put a truckload more in laurus at 520 to 522 rs. Oversold and at 200 dma. Never thought I’d get the opportunity again. The main reason for this crash is it’s overdependance on china. Imo the china power situation should correct itself by the end of this year/early next year. So it’s a matter of 2 to 3 quarters of pain and with the able management on board I won’t be surprised if they come out of this period even more Antifragile(hopefully under 40 percent dependability on china). Waiting for this quarters concall to add even more. Margins should take a hit in the short term so hopefully the window to buy remains open for a while even if the concall goes well. Will continue adding next few quarters if it breaks it’s 200 dma all the way to low 300s(one can only hope). After a looong break from the stock market I Finally feel like I have a plan for my saved money again
9 Likes