Total Returns = (Closing price + dividends )/opening price.
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@Yogesh, Would you consider Reliance Home as a valuable buy, mispriced (due to promoter reputation) for a high growing business?
Also if you have any view on Mas financial and Lancer container, kindly share…
Lenders should either be a deposit franchise or asset franchise (or both). Reliance Home and MAS Financial both rely on agents, DSAs, other financial institutions or bulk borrowers (builders) for a large part of their lending portfolio. these companies and their partners are intermediaries that add a layer of cost without adding equivalent value. They mainly bank on the unbankable to grow their business. Over long term, disintermediation and higher awareness and penetration of cheaper loans will reduce their opportunity size especially for MAS.
Reliance home generates poor ROE as their operating costs are high even though they lend to builders and other bulk borrowers. I don’t think market is mispricing the stock given their fundamentals.
no idea on lancer container.
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Thanks @Yogesh_s. I saw your presentation on CSL finance. Will they also be subject to disintermediation risk? Or is there another driver for their growth…
also is the risk so near future…? I think it will be a while before this can happen given the present level of banking penetration in India…
Yogeshji, thank you for the inputs !
Hi Yogesh, Which corporate database you use for data analysis ?
Hi Yogesh,
How do you see steel companies now in India given lot of dumping by China, S Korea and Japan. Still Holding Beekay ?
Disc: Holding Prakash Ind, SRIPIPES, Maithan Alloys and Vedanta
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@rajsuccess
CSL does business directly with borrowers in the wholesale portfolio which makes up 90% of its current portfolio. In fact, until recently they had just a few loans given to few builders so the CEO would underwrite each one of them.
Going forward this will change. SME lending involves DSA but not sure what model CSL is following.
Disintermediation is not an immediate risk and it may not even happen. It is just an emerging trend but large lenders like Bajaj Finance are going direct to reduce costs so others may follow to stay competitive.
@aammiitt2
I use Capitaline.
I am still holding beekay and in fact added some during recent pullback in stock price. Economics of a rolling mill is different from that of a integrated steel plant. While an integrated steel plant benefits from higher steel prices (especially when coupled with stable ore prices) a rolling mill benefits from rising volumes. Moreover, for a small company like Beekay, local demand-supply situation is far more important than global steel scenario. Beekay is benefiting from rising utilization of its own TMT plant in Vizag than anything else.
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@Yogesh_s can we have your view on building material sector please? There is reports of excess supply and shortage in demand…how do see this for next 5 - 10 years? Will you still consider ceramic players - Cera etc. What are your top picks/bets
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Waiting for the annual update to your Blue Chip 10 Portfolio
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Building material industry is feeling the slowdown in the real estate sector. I have no idea when the slow down will be over and growth will pick up. For Cera and Kajaria, sales appears to be rising but margins are going down and balance sheet isn’t as strong it used to be so I am doubtful if the stocks will trade at premium valuations they were trading before. I think these stocks will get valuations of cyclical stock rather than that of a growth stock. From the perspective of a cyclical stock, valuations of Cera and Kajaria is still high.
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Here is a link to a presentation I made at a recent Mumbai Investors meet. It is about lessons learned over last 15 years of investing journey. This presentation is inspired by a similar session at VP meet in Goa earlier this year.
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Yogesh sir very nice and informative presentation. Sir what is your view on CGD company specially on IGL.Can we think it for 15% cagr perspective. Company is on average showing 12% to 15% volume growth.Only company in NCR region. RC Bhargav of Suzuki pushing for hybrid and cng car rather than electric varient.Pet coke furnance oil ban across NCR. Same time threat of elctric cooking device for png.
@yogesh Beautiful and crisp presentation.I was reading Mr Damani,'s interview wherein he talks about great ideas, lasting businesses and pricing power of business.With my limited exposure, I find it difficult to connect these.Any insight ?
@yogesh referring to yr last slide of presentation, wherein there r companies like hdfc bank, Britannia, Bajaj finance etc.Most of these companies have become multiple times before they came down 8 to 10% in recent correction.At the end current mkt levels and macros like currency and crude rising, which of these or even outside the presentation list could qualify having pricing power, could b candidate for long term investment .
@yogesh referring to yr last slide of presentation, wherein there r companies like hdfc bank, Britannia, Bajaj finance etc.Most of these companies have become multiple times before they came down 8 to 10% in recent correction.At the current mkt levels and macros like currency and crude rising, which of these or even outside the presentation list could qualify having pricing power, could b candidate for long term investment .
Disclaimer:I HV a small investment in some of them and looking for addition at lower levels
CGDs like IGL and MGL are regulated utilities rather than natural monopolies. When you change the narrative, your valuation metric changes accordingly. Such utilities are regulated in such a way that these earn an ROE of usually around 15-18% and in some cases upto 20-25% when regulator want the utility to earn extra profit to enable to utility to grow and build long term infrastructure and attract competition in same or other circles. Thus higher profits are expected to get reinvested rather than get distributed as dividends or fat paychecks.
Such companies with clear visibility of their cashflows are generally priced as perpetual bonds with their valuation dictated by level of interest rates rather than typical factors used for valuation of equities. Since interest rates are hardening, I will not be surprised if the valuations come down further.
Even after the pullback from highs, IGL share price has gone up 39% CAGR over last 5 years while EPS has gone up only 14% CAGR. So some froth that built up during Sept 16 to Sept 17 rally still remains.
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Sorry, but can you please direct me to this presentation? Thanks.
Sorry for pestering you but I am sure there are others as well looking forward to your portfolio’s annual update 
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I think Yogesh has mentioned that he reviews his annual portfolio and makes necessary changes during/after Diwali . So I think the wait will have to stay for another 2 months
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