This has been the most kind year for my portfolio, which went up over 140% YoY. Two of the biggest wealth creators were right up there- BSE and TaMo. I’ve held both for over 5years now and the story has been fantastic.
One has been a true 10 bagger from the first purchase while the other is up almost 4x on the average price. Both are up 25x and 13x from COVID lows. Tata motors DVR is up over 17x from COVID lows. Why I am still holding on to it is pretty simple:
I’m trying to compound wealth over time, one year at a time. In 2021, my portfolio was up 100% while it stayed literally flat in 2022. This year, from March lows, I went up over 2.75x. This is the nature of the beast when you make almost lifetime money in a flash while you make nothing for what feels like a lifetime.
I look back and recollect the COVID days when TaMo was available at around 20k crore market cap and stock languished at 60₹. The market cap was less than one fifteenth of the annual sales! It felt horrendously low and I doubled down multiple times. My personal targets have been very clear that TaMo will be 1000₹ and still be cheap. It’s a matter of elation that now pundits are coming out with 1500-2000₹ targets on the stock. TaMo for me is a story which is going to unfold in the following way:
TaMo was in 2020 valued at less than Hero Moto. It recently crossed the market cap of Mahindra and is ne within touching distance of crossing Maruti’s market cap. At one point, Maruti was valued at over 2lakh crore more than TaMo. Today, the difference is less than 35k crore. In a few months, TaMo will cross the market cap of Maruti for one obvious reason- Maruti is facing the Kodak moment where doesn’t matter what it sells, its product is laughed and scoffed at. A Maruti car is undesirable, considered inferior and cheap- all things anachronistic in an aspiration also Indian marketplace. TaMo sells aspirational luxury- JLR, its SUVs and EVs are all premium to luxury and people flaunt their cars.
Most importantly, Maruti has been consistently valued at 3-4x annual sales. On that count, TaMo, when it reduces its debt fully and cash on the EV story, should also get similar treatment, if not more. So in a base case, TaMo should be valued at around ₹10lakh crore which means the share price should be ₹3000/-. And if that sounds outlandish, please remember that I was talking of a valuation of $100B for TaMo, which will be approximately 2400₹ a share. A company which sells aspirational luxury to this rising Indian upper middle class will laugh its way to the bank. And what better luxury than a gorgeous Range Rover or a Jaguar.
So TaMo is very well a 4-5x in 5 years time from here, if nothing really special happens. Also, note that in the meantime, it is also going to sell for almost $50B a year. So if you really give it a Maruti type valuation of 4x sales, even ₹5000/- is possible. Don’t feel nervous, NVIDIA is still selling like hotcake at over 30x Sales!
BSE on the other hand is on to something significantly different. Its market share in equity derivatives has crossed 15% in December and it holds the key on both Monday and Fridays now. A 200crore profit company is on its way to do 1000crore profit in 2-3 years is going to change the entire landscape of Indian equity markets. It was a micro cap which is now a small mid cap which is most likely going to be a significant large cap in ten years time. BSE is a very solid 10x in 10 years or less story as the second largest exchange of the then $8 trillion or more economy should at least be worth 3lakh crore, which is the current grey market valuation of NSE.
One more stock I am supremely bullish is HDFC AMC. The kind of flow Indian markets is going to get over the next 5-10 years will mean that a company with this business- 60% PAT margin will make a lot of money by just being there. It is also a ten x in ten year story, if not earlier.
All I can say is that the party in India is just starting. It’s not everyday that you feel the economy running at full throttle and growing fast so what you have is an even more faster P/E expansion as market begins to price in faster revenue growths. Over the next three five years, our entire lives will be changed as India crosses the rubicon or $5 trillion and marches ahead towards $10 Trillion. The per capita GDP will be almost $7000 by then and some of us will have per capita income of over $100K. That is the market we are trying to capture through our stocks.
It is India’s year, Indian decade and The Bhartiya century. Stay bullish on Bharat, you’ll be phenomenally rich.
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Life is all about Compounding! 