Really awesome that you could make 10 bagger out of it. Also appreciate your patience to hold it for long time to realise such high gains.
I would seek your opinion on one related point of view.
Recently saw interview of Kuntal Shah and he said that, once your selected stock start performing in a very good manner, the logical approach is to averaging upwards. Since your conviction about the company has come true , you will keep on adding to it and hence your returns will not turn into multibagger as u have kept adding into it. Similar when ur stock is not performing, you will not do logically averaging down.
So from 2020 till today it has become 10 bagger. So since your stand on the business got validated, you didnt think its appropriate to average it upā¦Not now may be, but in 2021, or 2022 etc.
One can pivot anytime. The end goal is not to get written about on what/how is ur thesis. People evolve.
I was in the same boat. It could have been a 10 bagger but it ended up being a 8x which is not bad too.(possibly due to averaging and pyramiding)
For me i found umpteen ideas like Deepak Praj Aarti and many more. And valuations for Elxsi were not in favour after it being at a certain stage. Also financial models aorund Elxsi told me that it was more of HOLD stock vs a ADD stock after 8500 bucks.
U always evaluate ur PF and not single stock.
Thanks. It depends on ones style of investing.
I own a concentrated pf of 15 stocks max (currently holding 14) and strive to hold stocks for fairly long periods of time (i.e. as long as the thesis is intact). Within these 15 stocks, I have ~9 stocks that are coffee can candidates (aspirational hold period of 10+ years) and the rest are tactical bets ranging from 2-4 years (if these perform well, I can move them to my coffee can candidates or sell them).
Being a concentrated pf, the bets usually range from 2-5% of my entire pf. In the overall scheme of things these work out to be decent sized bets. In a scenario where the stocks donāt go anywhere or have slight up moves, I keep averaging, especially if it goes down (e.g. Divis, Info Edge etc). However, if any of these stocks move up and if they fetch me a few bags, I tend to then hold and let the story play out. The benefit of betting BIG does wonders to your pf returns in scenarios like these and because you get over exposed, you donāt need to really add more, unless you want to concentrate your holdings further and take on more risk. That is a personal choice and preference, but it isnāt for me.
Coming to Elxsi (was 4% of my pf), at its peak, the stock became ~15-16% of my pf. I sold a little (about 10% of my Elxsi holding) and over time I added to my other positions across the pf - stocks, MFs, FDs, EPF etc. This led to the over exposure to the stock come down and also let me hold on to my still fairly large position here. I intend to hold on to the stock and hopefully see my fairly large position become bigger (fingers crossed). So, Iām operating on the premise that 10 became 100, can the 100 say double in 5 yrs and double again in another 5 yrs, that would mean 100 going to 200 and then 400, making this a truly big win! (one can hope 
)
I have the conviction in the company to be far bigger 5-10 years from now and thus my decision to hold even though there are many other companies growing at a faster rate. Iād also like to share my favourite quote with you (borrowed from Thomas Phelps) and the maxim I try to live by in investing,
To make money in stocks you must have āthe vision to see them, the courage to buy them and the patience to hold them.ā *Patience is the rarest of the three.
For you to be a successful investor, you need to have an edge in something, it could be data, analysis, access to better info etc. I figured, I can develop āmy edgeā by being one of the patient investors. As I figured, It only takes half a brain, no skill and some luck for this edge to work in your favour!
Really liked your write up, rationale and your journey of Tata Elxsi. Would be great to know thoughts of a patient investor like you. It would be great for community if experienced investors like you can start their own threads so that interactions are even more meaningful. If you already have one, pls post the linkā¦would love to read more from you!!
Thanks for the kind words. Iāll attempt to write something in due course, in the meantime Iāll try and increase the frequency of my posting in companies Iām invested in or are of interest to me.
Also, tbh the rest of my pf performance is avg at best, definitely index beating over 11 yrs of investing in stocks directly, but Iām confident itāll get better as time progresses, lot of my latest investments havenāt quite clicked, learnt the hard way that you canāt buy a company at any valuation and still make money, contrary to what a certain market pundit makes you believe. Even if that approach works itāll take a decade to reflect in the stock price, so biding my time and letting my edge play out.
Okay, Iāll take this discussion and my philosophical gyan of this board and post only about the company, cheers
Tata Elxsi, Q4FY24: Concall notes
Growth:
FY25 growth: Management hasnāt given any implicit numbers, however theyāve provided the following directional guidance
- Transportation business: Aiming to repeat the growth performance from FY24 in FY25. Some deals expected to ramp up starting Q1 FY25 and will continue to ramp up beyond that.
- Media and communication business: Management believes that the segment has bottomed out and they see growth coming back into the vertical starting Q1FY25 or Q2FY25. The pipeline is building up and they are bullish that they will see a recovery soon.
- Note from FY24: The decline in revenue in this segment (topline impacted by 3%) was from the media operator segment (a single customer). The ramp down is done and it wonāt impact the business and its growth going forward.
- Healthcare business: Mgmt is hoping to accelerate the growth of the healthcare business in FY25 as the challenges faced earlier (with the MDR business) are a thing of the past.
- Overall, they are expecting to put up a better performance in FY25 viz a viz FY24. The management expects the change will be visible from Q1 itself and that momentum will carry through the entire financial year.
Margins: Aiming to see if they can get back to the levels seen in FY23 (~30-31%)
Hirings: 1500-2000 fresh hires expected in the coming year. The hiring will be dependent on how the business is ramping up.
Accounting: Going forward, IDV revenues will be merged with the EPD segment (three verticals) revenues. This is being done as theyāve been winning deals because of their design capabilities and it is getting hard to differentiate the contribution from IDV within such deals (due to the bundled nature of the deals).
In summary, I think the management is heading in the direction they have alluded to in the last concall. The transportation and medical business grew. Media and communication struggled. Considering the overall macro environment, the management has a decent job in the FY gone by.
They sounded confident about the opportunities and seemed bullish about better growth prospects in FY25. I personally continue to remain bullish about the business for FY25 (and beyond).
Disc: Invested. Largest holding in my stock pf.
Hi,
Revenue growth +5.1% YoY in Constant currency, +0.2% QoQ in Constant currency terms. I wonder why these companies whose business models boast of new gen technologies and operate in high growth sectors like Automobiles are posting stagnant growth figures. The inflation growth figures are more than these companies revenue growth figures.
The saviors of IT companies are currency depreciation, better margins and cash flow positive business model which is negating these muted growth figures.
Here Company has also increased its margins which shows its pricing power and brand value.
Thanks,
Deb
We need to also see the Revenue and Profit Growth of MNC IT players like Accenture, Cap Gemini and others to check if this slow growth witnessed by TCS and Tata Elxsi both is across the world or India specific.
Since the growth of 5% looks certainly low, one reason could be US elections which are round the corner and certain large deals might be on hold, which might be awarded after election results and/or start of USA New Financial Year.
Generally Q1 and Q2 are better than Q3 for IT industry due to long holidays in Q3, but if Q2 it self is slow than expectations then we need to look at other data points as well.
Just an opinion since worked in IT industry for 2.5 decades.
Iād take a longer term view of the sector than focusing on 1-2 years. There is no industry in the world that doesnāt face a rut periodically and IT sector is no exception.
Reason IT sector is struggling is simply because of deferral in project execution from their end customers. This has been primary a result of high interest rates in their markets and slowdown in tech spending in verticals like telecom, banking etc.
Itās the same issue with MNCs like Accenture who have been reporting flat growth for last several quarters.
So when the sector gets back into upcycle weāll see IT companies doing well again.
Yes, you are right. This has also attributed to the Low Sales growth by IT sector by and large. Things should improve going forward and we may see a repeat of 2020-2022 period when Interest rates were on the downfall, off course it will be muted this time but it should have a positive impact on IT spends.
And it is one of the industries that benefits from weak rupee.
And rupee just went below 84 against dollar.