The ART of Valuation

[kunal_Kumar]

SaReGaMa is showing growth on profits but sales is almost flat and not so consistent with profits. So bit different from what’s discussed above.

[cabilalkhan]

@desaidhwanil

My hunch is that as the large opportunity size is important for high quality business so is the time for “repeat” buy! One may consume Maggie/Nescafe/Horlicks every month and buy it again. However, replacement for CPVC pipe or sanitaryware happens after a decade.

Amazing observation even though the thread is going to be a decade old soon but I must say I ve never thought this way ( time for repeat buy i.e frequency). A totally new perspective for me.

[krishnasristy]

In today’s world of abundant information ability, a good assessment of CAP will give long, continuos and peaceful investment opportunities.

[Rohit_Rathi-060621]

Sir, can you please share tutorial links related to valuation of company?

[basumallick]

Aswath Damodaran has an excellent online curriculum for valuation. It is the same course that he teaches in class.

It is one of the best resources to get a hang of valuation.

[Rohit_Rathi-060621]

thank you for sharing.

[kchaharia]

Great learning experience while reading this thread on the art of valuation here.

I have a question - whether one should have higher allocation in the stocks one is willing to hold for longer duration or should have lower allocation. Does Investment Horizon also factor in as a parameter alongside Undervaluation and Conviction when determining Capital Allocation?

Thanks.

[Balaji1974]

In investment time duration is a major factor. We should hold companies that will prosper during good and bad times.

[jeewangarg]

Sir, Thank you very much for the insight.

Sir, Do you mean Astral has less chance to become 10 bagger from hereon

@basumallick

For example, Astral, a stock which has been very well discussed at ValuePickr. It is a wannabe brand, large scale of opportunity, was available cheap a few years back when most of us bought.

[jeewangarg]

@Nikhilg

There is an interesting checklist on how to think about sustainable moats (based mostly on Porter 5 forces) from a Mauboussin paper that I have cut and kept. While not all elements on the checklist are equally important, this has started to serve as a nice guiding tool for me. Hopefully the VP folks may find it useful as well:

May I request you to please give any example for each of the valuation checklist (if possible)

[Nitisha_Bohra]

Hi Donald,

Thanks for insightful information. These pointers definitely are sure to look upon while investing. With the dynamic business scenario, was thinking there should also be some points on how fast the companies can adapt. With the advent of SME exchange, the money flows in faster, thereby increasing competition.

Need thoughts on how can we measure flexibility of a company to adapt to industry dynamics.

[akshay.git]

Low debtor days might help.

[ajmalmuhammedy]

Sir, I couldn’t find the table.
Can you please share it with me
mail id: ajmalmuhammedy10@gmail.com

[Dr_Sachin_Bharadwaj]

Hi
I recently joined the VP forum and in awe of the knowledge which is being shared here. Ans yes i have read Thinking fast and slow by Daniel Kahneman, It’s one of my favorite books, do read Noise another book by the same author and i have been reading a lot about our cognitive biases. Just a thought i wanted to share.
Thank you

[vikasbargale]

Welcome to VP.
Good to know that you have read these books.
From my side, I have created few VP posts on behavioral biases.

Interesting Stories of Investing Biases

Please check the link and the snapshot.

dr.vikas

[Mannu]

I am not able to visit the capital allocation and valuation of quality emerging business threads who link are provided in some of the conversations above. It says permission denied/ private group.

Why is that? Does anyone also facing similar issue? How this can be resolved? Am I not having all the credentials to visit those pages?

[vish1]

Wonderful thread and lots of learning as recommended by Mr. Donald as a starting point to pour into this forum.

As I have been going through this post, I was curious to look, how all 3 Type C companies have performed over more than 11 years and I struck in an awe to see how exceptionally well these companies have compounded over time.

For this calculation,
I assuming rough price estimation of a stock in month of December,2013 and price of May29,2025 from screener.
I also tried to adjust stock split and bonus shares issued after Decmber,2013 as per data from money control
I might have made a mistake in calculation, but I am open for discussion and any input.

                                ~ Dec 2013               29 May, 2025           ~ CAGR (%)    X times

1. Poly Medicure Rs 80 Rs 9144 53% 114
2. PI Industries Rs 225 Rs 3876 29% 17
3. Kaveri seeds Rs 335 Rs 7465 32% 22

If any of this senior investor tracking these companies throughout these years if can throw some lights as what events took place in the past which created this good and different might be very helpful to improve learning curve of new investors like me.

[Dhruv_Galada]

A nice reminder that in investing, identifying the key variables often matters more than building complex models.

“When I was a young analyst my Qantas model came to 150 separate Excel tabs. I forecasted every seat, food tray, flight attendant and landing slot for the next 20 years. All that to discover only the fuel price and US dollar mattered.”

FT.pdf (952.7 KB)