While there are no doubts on Asian Paints being a great company, I wonder what gives people the courage to put completely incorrect information even on data which is public just to prove their point. I was really shocked by seeing the same in the video.
At 13:16 he says that Asian Paints doubles every 3 years, while if you look at their SALES CAGR over the past 12 years it is 14%, respectable still but doubling every 3 years and doubling every 5 years is a completely different story (over 15 years a company which doubles every 3 years is 4 times bigger than the company which doubles every 5 years). Same with the point on Nestle in the video - which is having sales CAGR of 10% over the past 13 years while he says that the same is doubling every 5 years (CAGR of 14%). (source: Screener.in)
After that, there is yet another stupid and wrong point - that the volatility of Asian Paints is similar to the Government of India Bond. Long term beta (measure for volatility all over the world) for Asian Paints is 0.728 and not close to Zero which is what Beta for GoI bonds are. I don’t know where he gets his data from. Of course, when the stock has only moved up in the recent few years, its volatility would be lower but that’s reversing the cause and effect.
And there is another blatant mis-representation at 16:51 - he says that last one and a half years business has doubled at Asian Paints, but if see last 6 quarters results of Asian Paints the average yoy sales growth is 12% - I don’t know how he concluded that the sales have doubled in last 6 quarters.
Then another blatant wrong data being mentioned at 28:58 - that Asian Paints P/E has remained the same - “aaj jo hai, bees saal pehle bhi wohi thi” - while I don’t have the data for 20 years readily available with me - a quick check on ratestar.in shows that in 2010 - Asian Paints was trading at 23 times while it is now trading at 66 times. So a large part of returns have come from PE re-rating (which has gone up 3 times). In the next decade would the company trade at 200 times earning to give similar return as the last decade is a big question that investors should answer.
I hope that people in the quest to make their offering look superior to others, don’t just become similar to promoters of the companies they are trying to avoid investing in.
A very important part to understand is that a combination of few things: a) all-round slow down in the economy including most of the core sectors, real estate etc, b) extreme risk averseness in behaviour of investors, bankers and industry and c) ample global liquidity with low-interest rates have pushed prices of certain stocks like Asian Paints in the never-seen-before type of stratosphere while pushing a lot of other stocks into high value buy zones. This is a cycle and will also change (as all cycles do). Trees don’t grow to sky and valuations are the law of gravity in the world of investments. It is easy to make fun of Buffett and Klarman who have proven their investing merit over decades versus a track record of maybe 1-2 years with far lesser money to manage but very difficult to replicate even 2/3rd of their performance over the really long term. In the markets, there are no cinches.