I have always maintained that investing in markets is a mirror image of your living style. If you’re genuinely committed to your goals, can work towards them over long periods of time, have patience to go through rough patches with a conviction to trust yourself and your destiny, you’re bound to be successful. Of all the virtues listed above, patience is the rarest.
Just like someone who goes to gym four days a week, for five years will be fitter than most people in life, someone who holds his big conviction ideas through 50% falls and adds to them is bound to make a ton of money. This is simple but not easy. Looking at your portfolio going down 15% in a week is painful and can break a lot of will. Once you master this pain, as you can never be immune to its sufferings, you grow as an investor and as a person.
I’m also a firm believer in the benign nature of the markets. If you come here to make a lakh, you’ll have it. It f you’re here to make a thousand crores, you’ll have it too. As long as you choose your goals wisely and not give in to the temptations on the way of making a quick buck, success follows. This is as true in markets as in any walk of life.
So coming back to the markets. This has been a pretty solid month for broader markets. Portfolios have gone up 15-20% since March bottom and the feel good factor is slowly being felt. I however am sure it’s only a beginning when the pains of the past 18 months will give way to massive gains for those who have held through.
Just look at ITC! It’s now at lifetime highs of 414₹ and still trading at less than 30x trailing earnings! Compare that to a lever or a Nestle or anything to Asian paints which hover at not less than 60-70x after underperforming for three years. ITC was cheap at 200, it’s still cheap at 400 and it’s going to remain cheap at even 500! It’s a double in three years from now kind of story!
TaMo is poised to breakthrough on the upside as with the cash kicking in, it’ll make close to a $ 1 Billion profits every year, if not more. And like I’ve maintained, its EV play is the real jewel.
One sector I really feel needs your attention is the Broking and AMC one. You can have the biggest AMC stocks with cumulative AUM of almost 12.5 lakh crores, available at less than $9 Billion market cap. That is over 3200 crores of PAT with operating margins of over 75% and PAT margins of over 50% available at less than 25 times earnings. This represents 30% of Indian mutual fund industry. Similarly, the two big brokers together with 15% of Indian market share is available at less than a combined market cap of $3B! This can’t be true!
Just see the disparity. HDFC life does annual PAT of 1360 crores with dividend yield of less than 0.2% has a market capitalisation of 1.15 lakh crores. HDFC AMC with 2.8% yield does 1426 crores of PAT has a market capitalisation of 37k crores. ISEC did 1115 crores of PAT yielding over 5% has a market capitalisation of 14k crores!
Now coming to a stock which is kind of a recent entrant. Oracle Financial Software is yielding 7% trading at 16x trailing earnings sound too much like ITC at 200! All the best 🧐
Life is all about Compounding! 