Great initiative by @rupaniamit Amit to host this;Thanks Amit!
Sorry for the delay in posting my presentation (as i did not have one! I did not prepare a slide deck like the other members did.)
I tried to bake in the content using the new template requested by @Donald - as stock stories. This was hard and made me go through my notes and revalidate a few points. I still have some ways to go to update the Red flags, corp govr. & industry trends. With limitation of time and gyrations of the market, wanted to get this to some decent shape…
Will post this on Rain industries thread too…
PS: I see that i cant upload docs and will request Amit to do it on my behalf.
Have you given Healthcare Global Enterprises a shot?. How different is its business model compared to Narayana’s?. Healthcare Global has got too much debt, now sure if it is reasonable or stretched. Just wanted to know your thoughts, if any.
Narayana’s business model is very different from HGE’s. Narayana gets structured deals from governments and private parties for most new hospitals where the capital outlay is not as big as other hospital groups. You might want to to dig into the way deals were structured for their hospitals in Jammu, Cayman Island, and the one they are going to open in Bangladesh. It is very interesting. I think this is their biggest advantage. Plus they do tiered pricing which is very unique. I am very impressed by Mr. Viren Shetty’s astute business acumen. He has amazing grip on the business intricacies and keeps interests of all stakeholders in mind while taking any critical business decisions, which I feel is lacking with other players. But Apollo Hospitals is also run well, in my view.
With hopsital business, one needs to understand if one wants to play the CAPEX on/off cycle or a long-term secular demand play. I prefer to participate in the consolidation cycle and ride the earnings growth and hopefully stock price growth. So entry and exit timing becomes more important.
Disc: with covid-19 getting hit, I have exited NH. Will monitor the progress post-COVID19 period.
In your opinion, what should one look at to value hospital chains. From the numbers, FCF doesn’t look like a good measure. Just wondering why big names like Apollo and NH have high market caps relative to their historical FCF. Why are investors betting on highly profitable growth in future?. What will work for these businesses (like Apollo Hospitals) that did not work before and why?. Because of the reputation and brand these names might be in business for a long time. But profitable growth for a long time, how?. End of the day, investors want money in their pockets.
What are the few qualitative and quantitative that you think are important for hospital business?. When it comes to shareholder returns, is hospital business comparable to cyclical industries like auto and some manufacturing companies?.
I like to keep things simple - a business is worth present value of its future cash flows. This applies to any/all kind of businesses or financial instruments.
FCF doesn’t look like a good measure for CAPEX heavy businesses because its derived after deducting for money spent on future growth. But we need to factor for this investments in future growth. This is where Buffett’s ‘owner earnings’ way of thinking is very helpful. Bharat Rasayan Ltd this link may give you some details into this. If you get this concept well, it should answer most of your above questions in your first para.
The most important thing for me is my entry point in hospital business. I generally prefer to enter at first signs of consolidation cycle turning around where 1) gestation period for new hospitals is 2-3+ years and are making positive EBITDAs 2) old hospitals are generating > 15-18% EBITDA 3) oldest hospitals generating > 23% EBITDA 4) no immediate plans to expand the business with huge debt (small expansion with some debt is fine). 5) enough capacity to sweat the assets and de-lever the balancesheet in next 2-3 years. When I see these signs, there is good chance that numbers should come out good for next 2ish years. And if market is not pricing for better numbers in next 2-3 years - that is even better. I can get business that is turning around and also get to enter at good price.
Generally, hospital business is not cyclical business but considered as defensive business. People will visit hospitals if they get heart attack or have to deliver a baby even in peak COVID-19 situation. Some electives can be postponed, but eventually most cannot be postponed beyond a certain time period.
We had our second meeting with our ValuePicker Carolina group, this time virtually though, however it was another insightful session nonetheless. it was great to meet and have @rohil part of the group and i could relate to his investing journey.
Attached my presentation on Mahindra Holidays Ram Dhawad_CLT VP Meet_July 2020.pdf (2.6 MB)
Hello, we had met this time (virtually again) and 3 of presented. Its not an immediate actionable idea, but something that should be monitored and invested in the opportune moment, when variables start to materialize.
With localization trend catching-up good momentum globally - it makes case for certain themes to play out with higher probability giving us clues as to what the winning sectors may be.
Thank you for sharing this @rupaniamit - this is thought-provoking and obviously, for the diligent minded, it should help layout a process/guard rails on “how to think and arrive at, what the next theme is” and for this, one has to put in their work to uncover the companies…
It was another insightful session. I attempted presenting my understanding of Vaibhav Global.
My presentation attached. Ram Dhawad_CLT VP Meet_Sep 2020.pdf.pptx (1.7 MB)
Sharing a presentation based upon my recent analysis, esp. taking into account the historical surge in Muthoot Finance share prices and the latest regulatory announcements…as I am intrigued by this unique gold loan business and plan to track it over long term.
Thoughts/suggestions are welcome! MUTHOOT FINANCE.pptx (1.5 MB)
I tried to compile key data from multiple brokerage reports to get an understanding of currently where the cycle is and where it is headed for the Indian Real Estate industry
Company related financials and business data was provided by @aritra_pal and @ganeshrpl.
