Hi Srinivasan,
Please drop the Sir! I am a fellow learner on the path…miles to go!
The way to think about how much capital to allocate has been detailed in our Capital Allocation Link: …/…/…/forum/valuepickr-scorecard-aug-2011/399834292 framework, quite nicely before. High Conviction and_High Undervaluation_ are the two things that can tell you how dominant your allocation can be. Please read that thread, with the nice examples given. If conviction or undervaluation is middling its better to have a middling allocation.
Suprajit is a quality company with an excellent track record of maintaining margins & returns. With the general gloom in Auto, there was a time in the last 3-4 months itself when Suprajit had corrected to 16+ (from its usual 20+ levels). Some of my friends who did not have positions in Suprajit had loaded up then. Even I had added significantly then.
Look at its track record, look at the dominant market share, and the quality of its customer profile. In 4 wheelers too, it may outstrip the main competition in a few years as competition supply to specific vendor/platforms only and not across platforms like Suprajit.Sometimes we need to track quality companies and wait for a bargain price!
Having said that, we need to get clearer about which businesses enjoy the best economic characteristics. Suprajit while its a quality company is not in the same league as a few others in ValuePickr Portfolio.