Start of Blogging my Investment Journey

[Varun_Raipat]

Using this medium to document my investment learnings, stock picks, investment psychology in a structured manner.

Why Investing?
Goal is to be financial independent through investing and generate returns such that passive income (investment) becomes larger than my active source of income.
I don’t have any particular figure in my mind but i started investing just for fun, but i have developed keen interest in investing by making lots of mistakes; i.e. picking stocks just by looking technical charts/froth in market/fomo.
Learning:
I have started researching on my own, not getting caught up in FOMO, staying away from hot picks across social media, investing in my research and learning. I have started to write blog for making my thoughts bit structured and my picks more intelligent.
Do provide your invaluable insights what all i can do to start making good bets

[Varun_Raipat]

(post deleted by author)

[Stock_research]

Can you also post how are you analysing the companies fundamentally. What are the things you look for and why?
Also what is your current portfolio and thesis behind buying them?

[Stock_research]

I learned first point the hard way. I’ve decided to initiate my position in a new company with max 5% allocation of my portfolio.

[Stock_research]

Currently reading “The making of a value investor” by Gautam baid. He has shared his experience and learning from 2017 to 2020 bear market. It’s a great read with a lot of learnings. You can give it a try.

[Varun_Raipat]

Pinning down my thesis on one of my picks, which I am adding in tranches, added near 4900-5000 levels, and will keep adding in that level.

I presented my thesis to Ishmohit and the SOIC Team a few weeks ago; my calculations and thesis will be shared below:

KOVAI MEDICAL CENTRE & HOSPITAL
Sector: Healthcare

About the hospital sector:

• Currently, healthcare is highly underserved as compared to other nations, and as well the WHO recommendation of having 4.9 mn beds for India (currently 2 Mn beds only)
  There is a huge demand-supply mismatch in India as the World average of hospital beds is 29 (per 10000 population), and India has only 15.
  

  

• Along with this, Indian hospital chains have undergone consolidation for the past few years, growing at just 2% CAGR FY17-24 and are expected to catch up speed at CAGR 10% by FY27E

• Insurance Penetration is also rising in India, and has one of the highest out-of-pocket expenditures as compared to the rest of the world

• Lastly, medical tourism is coming back to pre-covid levels, which is a positive sign for the sector as India is a hub for affordable medical destinations for at least nearby countries like Bangladesh
  

  

Promoter Overview

• Highly experienced promoter and management with decades of experience and doctor by profession

Business Overview: All their centers are located in or around Coimbatore; they

• KMCH Main Centre: This is their primary revenue stream, contributing 70-75% Rev, one of the largest Tertiary Care Hospital in south India
• Investing highly in deploying the latest tech in orthopedics, neurology, oncology, etc streams which have higher ARPOB
• Medical College : Rev contribution is 7-9%, focused in providing affordable healthcare,lower ARPOB
• Rest are satellite centers focussing on diagnostic centers and primary care

Key Metrics:

• ARPOB: Back to pre-covid level, although their ARPOB from the main center is way higher, around 28,479, as compared to 20,173 at the group level due to affordable healthcare
• ALOS: Reduction in this to 4.06 (lowest in past 4 years) is showing good signs of higher churning
• INPATIENT & OUTPATIENT : Both growing at a decent rate of ~10% CAGR
• Occupancy Percentage: Back to pre-covid levels of 60% (can be improved)

I NEED TO KEEP TRACK OF THESE METRICS EVERY QUARTER

Key Triggers / Variant Perception

• Capacity Expansion in Main Hospital - assuming 250 beds to be added (hostel being shifted will contribute ~100, and new block coming up ~ 150 (functional from Q4); will generate 135 Cr. need to keep track
• New Hospital in Chennai: Bough new piece of land in Aug in Chennai; assuming 250 beds, 180 cr impact from FY27 need to check again
• PG Programme: Start of PG Programme, ~ 3Cr. impact on Rev
• Board approved purchase of 1.11 Acre land on 18th Mar 2025, need to know more details

Valuation Analysis
Keeping in mind the above developments and assuming 10-11% Growth from existing revenue streams, attaching my calculations, * WILL REVISIT THIS ANALYSIS EVERY QUARTER*

Key Risks

• Geographical Concentration: Currently concentrated in Coimbatore, need to keep track of Chennai expansion closely about how it turns out
• Lots of competition intensity
• Regulatory risks- a cap on the price of treatments, etc

Many developments are happening in this, so we need to keep track and keep adding money in tranches as long as the thesis is not changed.

[Dhiren_Barvadiya]

What is your current portfolio like and maybe it will be helpful if you can share average price too of buying

[Dhiren_Barvadiya]

Dhiren Personal Portfolio

Updated portfolio I think so I have allocated all the cash I needed to in this correction and will top up probably after the quarterly results or when my future price triggers get breached for now my portfolio stands as follows: Hang seng bees - 9.2% Vaibhav Global- 9.2% Kaveri Seed Company- 9% Indiamart Intermesh- 8.8% Matrimony- 7.3% Brookfield REIT- 5.3% Kotak Bank- 5% Maharashtra Scooters- 4.4% Linc- 4% Antony Waste Handling Cell- 3.9% VST Industries- 3.1% Credo Brands- 3% Flair Writing In…

Can Visit my portfolio and provide some reviews.
All or your mentioned names are new for me so u don’t have any view on them will add them to my watchlist.

[Dhiren_Barvadiya]

I have shared in thread if you visit it summary of kind for every company why I have invested.

[Stock_research]

Hi @Varun_Raipat
Did some analysis on Kamat hotels.

Analysis of Kamat Hotels

1. Financial Health & Liquidity

• The interest coverage ratio(2.4) and current ratio(0.6) appear weak.
• It is essential to assess whether the company is facing any liquidity issues.
• On a positive note, borrowings have been declining year after year.

2. Growth Financing Challenges

• Being a low-ROE business, the company must determine how it will fund its growth—through debt or equity dilution.
• Given that the hospitality industry is capital-intensive, significant initial investments are required.
• If growth is primarily debt-funded, it could further weaken the interest coverage ratio.

3. Profitability & Competitive Positioning

• Can the company increase its profitability? If so, what strategies will drive this improvement?
• Does Kamat Hotels possess any competitive advantage?
• What factors differentiate it from other players in the industry?

[Stock_research]

Analysis of Shree Karni Fabcom

1. Business Model & Competitive Advantage

• It is very difficult to create a moat in a commodity business, as differentiation is limited.

2. Transparency & Communication

• The company does not conduct earnings conference calls (concall), which may impact investor communication and transparency.
• In a microcap illiquid company with no track record of business and management, if something goes wrong with results or execution, quarterly concalls provide crucial clarity to investors. And gives strength to hold the company if nothing has changed fundamentally.

3. Financial Health

• The interest coverage ratio is modest at 5.7, indicating a reasonable ability to cover interest expenses, but it’s crucial to monitor any potential risks.

Please share your views.

[Stock_research]

GGBL

1. Only concern I could see is how will they manage healthy cash flow from operations. Generally contracting/B2G companies find it difficult to generate healthy cashflows from operations as a lot of money is stuck in receivables.

Analysis of Tolins Tire

1. Financial Health

• Cash flow from operations is negative, raising concerns about liquidity and sustainability. Monitoring future cash flows is essential.

2. Growth & Profitability

• Growth has slowed down, indicating potential challenges in expanding market presence.
• Margins have shown softness, which may signal pricing pressure, higher costs, or competitive challenges.

3. Industry & Competitive Landscape

• Operates in a highly competitive industry dominated by big and branded players with strong market presence.
• Key Question: What is Tolins Tire doing differently to carve out a niche or build a competitive advantage?

4. Threat from Larger Competitors

• If large players feel threatened, they have the financial strength to take a temporary hit in profitability to undercut pricing and capture market share, potentially putting pressure on smaller players like Tolins Tire.

Read this great article by Michael mauboussin

article_measuringthemoat.pdf

[Varun_Raipat]

Company 2: Windlas Biotech
Will add detailed analysis tomorrow, covering business overview today:

Business History:

• 2001: Dehradun Plant – 1 was inaugurated
• 2010: Dehradun Plant – 4 was inaugurated, Rev. crossed 100 Cr.
• 2014-15: Dehradun Plant – 2 was inaugurated; received USFDA inspection clearance; 200 Cr. Rev
• 2018: Started exporting to US; reached 300 Cr. In rev, Dehradun Plant 3 started production
• 2021-22: Got listed, capacity of capsules/tablets increased from 5Bn+ as of Mar’20 to 7 Bn+ as of
  Mar’22
• 2023: Plant 4 approved by South Africa & Europe
• 2024: Revenue crossed 630 Cr. ; Commissioning Plant-V injectable facility

Business Verticals:
1. Generic Formulations CDMO

• Diverse range of pharmaceutical & nutraceutical generic products
• New schedule M (Focus on quality) implemented in Oct’21 – makes small manufacturers
  unviable
• IP of 99% products owned by Windlas
• Products: Fixed dosage, customized gnerics, chewable/dispersible and plain oral solids
• Revenue Contribution: 77% (Reduced from 88% in FY20)
  2. Trade Generics & Institutional
• Drugs for which patents has expired and are used as a substitute to branded generic medicines
• Revenue Contribution: 19% (Increased from 9% in FY20)

3. Exports

• Operated in semi-regulated international markets & select regulated markets
• Revenue Contribution: 4%

Understanding Value Chain

• Innovator Value Chain: Research – Clinical Trials (I-III) – Bulk Drugs Manufacturing – Formulation
  Manufacturing – Patent Expiry
• Generic Value Chain: Generic API Dev & Manufacturing – Formulation Dev & Manufacturing –
  Clinical (III+) – Packaging – Marketing (Windlas operated here)

Portfolio Bifurcation

• Chronic/Sub- Chronic: 66% ; Anti-Diabetic, Cardiovascular, neuropsychiatry, respiratory; These
  are complex generics
• Acute: 34% ; Gastroenterology, Vitamins, Minerals, Supplements

Non-Financial Performance over the Years:

• Segmental Revenue %: CDMO Vertical Revenue reduced slightly, while Trade Generics and OTC
  vertical revenue increased slights
• CDMO Products growing at a CAGR of 42% from last 5 years
• No. of CDMO customers growing at a CAGR of 60% in last 5 years
• Client concentration risk is getting reduced
• Trade generics products growing at a CAGR of 22% from last 5 years
• R&D Expenditure growing at 19% CAGR
• Variation in complex generics growing at 45% CAGR
• Capacity wise Utilization – 60% in FY24 as compared to 43% in FY23

Financial Performance over the Years:

• Highest Revenue quarter 8 th time in a row
• 9 Month Performance
  o 21% Rev Growth
  o 22% EBITDA Growth
  o 12.3% EBITDA Margin
  o CDMO: 15% Growth
  o Trade Generics: 44% Growth
  o Exports: 23% Growth
• Quarterly Performance:
  o 20% Rev Growth
  o 21% EBITDA Growth
  o 12.6% EBITDA Margin
  o CDMO: 8% Growth
  o Trade Generics: 74% Growth
  o Exports: 19% Growth
• Yearly Growth (5 Years)
  o Revenue: 18% CAGR
  o EBITDA: 23% CAGR
  o PAT: 38% CAGR
  o CDMO: 14% CAGR over 5 Years
  o Trade Generics: 42% CAGR over 5 years

[Varun_Raipat]

Indian Diagnostics Report (Phillip Capital Research)

Industry Overview:

• Unorganized Indian diagnostic industry saw 8% CAGR over the last five years to touch US $12Bn in FY24

• Organized industry grew by 12% CAGR over last 5 years
  

  

-Key reasons for industry tailwinds:

o Significant under-penetration of diagnostic services (6% of healthcare market)

o Low organize market share (15% only) which will increase
o Low lab accreditation and misdiagnosis (12% causes of death)

o Fast-growing trend of preventive diagnosis (12% Share)

o Initiatives by Govt. of India

• Organize diagnostics is estimated to grow at an 14% rate over FY23-28, set to outpace industry growth

Industry fragmentation based on Diagnosis Tests:

• Pathology: Hold market share of 58% (USD 7.5Bn) is estimated to grow in double digit

• Radiology: 42% Market share (USD 5.4Bn) has the potential to grow faster than pathology

Current market share distribution in diagnostic industry:

• Organized Chain – 15%

• Hospitals: 37%

• Standalone Centres: 48%

Geographical mix of test volumes:

• Rural Share: 66%

• Urban Share: 34%

This highlights vast untapped potential for organized player’s expansion

Structure of pathology market:

• Specialized tests have relatively smaller pie (20% of pathology market) but are growing at a high pace led by an aging population and awareness

Comparative Test Pricing by leading peers in Pathalogy Market:

• Premium and high price players: Metropolis in Mumbai & Hyderabad, Dr.Lal and Agilus in Delhi, Vijaya in Hyderabad

• Krsnaa Diagnostics operate at a lower cost as compared to peers

• Online players usually have less price as compared to offline players and have uniform pricing across states

Structure of Radiology Market:

• Standalone Labs dominate 80% of the market in terms of number, 2/3rd share in terms of no. of scans, 1/3rd share in terms of revenue

• Major segmentation:

o Soft Radiology: 55% of market; basic tests like X-Ray, Ultrasound

o Advance Radiology: 45% of market; CT Scan, MRI, Nuclear Imaging, etc.

Geographical Distribution of Indian Diagnostics:

•      North India leads the market due to high population (28-30%), Dr. Lal has positioned itself
  

•      South India has the best infrastructure and disease prevalence (25-27%); highest bed density, doctors,etc
  

•      Western India has the most premium market with around 70% of India’s total NCD (Non Communicable Diseases), which makes it attractive for diagnostics
  

•      Eastern India lags behind and has highest growth opportunity due to under-penetration
  

Business Models for Positioning in this Market:

•      Pathology Focused Diagnostic Model
  

o Nature of Service : Only pathology test with or without minimal soft radiology
o Rationale: For the mass, asset light, lower capital intensive
o Listed Peers (Best to least positioned): Dr. Lal, Metropolis, Thyrocare, Agilus

•      Integrated Diagnostics
  

o Nature of Service: Pathology & Radiology (more focused)
o Rationale: Capital Intensive, less competitive, higher growth, B2C oriented
o Listed Peers (Best to least positioned): Vijaya, Suraksha

•      Integrated Diagnostics with focus on Govt Tenders & Hospitals
  

o Nature of Service: Pathology & Radiology in govt. hospitals
o Rationale: Scale of operation, high volumes, test realizations are lower, less capital outlay
o Listed Peers (Best to least positioned): Krsnaa is the leader, second largest volume in industry (after Dr. Lal), second highest number of tests per patient (after suraksha), largest radiology revenue

Story from Charts:

•      DLPL has highest network and patient pool
  

•      Vijaya leads in margins; Integrated diagnostics offer higher profitability
  

•      Krsnaa is leading in test growth due to its focus on B2G
  

•      DLPL leads in revenue growth in Pathology with 12% CAGR over last 5 years
  

•      Krsnaa leads in revenue growth in Radiology with 30% CAGR