Author Archives: ZerotoBillion

So the mount 19K on Nifty and 64K on Sensex are behind us. The market has made a classical- nobody could guess kind of a breakout on the upside, opened higher, and climbed both the erstwhile life highs and the new highs as I mentioned without much fuss. Anybody who went home last Friday couldn’t have believed any such move was even remotely possible and this is exactly what I have been discussing with my friends and in the https://zerotomillion.business.blog/2023/06/20/life-highs-2-0/ .

And today’s move on TaMo to ₹590, which is almost its lifetime high is a tribute to the inherent strength in this stock and this bull market which to nobody’s realisation is being led by the two duds of the past 8 years- TaMo and ITC. Yes, people haven’t still noticed that TaMo is up 50% YTD, while ITC has doubled in the past one year and still people are obsessing about Asian Paints and HDFC twins and what not.

Though TaMo didn’t cross ₹600 today but I’m sure it’s only a matter of a few days that it breaks out of this eight year range and finally regain the lost glory, just like the cars it produces these days. And am I Delighted? Yes I am! For I hold this stock going back December 2017 and have seen it plunge from ₹430 odd levels to ₹60 in 2020 and then all the way back to where it is today. Here’s a link to my first blog, written in May 2021 when I narrated my thoughts on this issue, reiterated in multiple earlier blogs, especially the Hello Tata and Hello Tata 2.0!

Random Investment Thoughts

Hello Tata!

Hello Tata 2.0!

So what do I feel is happening now! I believe that once a stock breaks out of a multi year range, for ex, HUL in 2014 or Reliance in 2016 or ITC in 2022, it at least doubles in the next one or two years to make up for the lost time on returns. And of course in the meantime, news changes, more positive news and developments happen, company cleans up its balance sheets, restart paying dividends, demerge here and there etc. This all is the accompanying cheerleaders which allow new money to pile in and stock to move higher. TaMo has been a dud for 8 years and just as the company, the stock has to reimagine itself now.

People’s hatred for this stock is legendary, worse than that for ITC. People come on TV and criticise it just like the left criticise the RSS. It is almost intellectually suicidal to buy TaMo. Well, my conviction in it goes back 2017 December and I’m all too happy to keep holding on to what I own currently and possibly buy if I can. The vision to see, courage to buy and patience to hold is easier said than done!

I hold a consistent view that it’s not a ₹2 lakh crore company but at least a $100Billion market cap company, which is ₹8lakh crore company. I might be wrong but even if I miss the target by half, it’s a ₹1200 stock.

I also would remember the legendary investor, Shri Rakesh Jhunjhunwala who came on TV and announced his stake in TaMo with the same belief which made me buy and add- a company with ₹3 lakh crore sales can’t be trading at 20000 crore market cap! The sales this year are likely to be at least ₹4lakh crore and so should be the market cap!

Cheers on a new high!

We all woke up to this 11.52PM exchange filing that the board of ISEC is going to consider a voluntary delisting on June 29,2023. This is a most strange corporate development from the stable of ICICI Bank which has never attempted such a move for any of its listed subsidiaries, let alone itself. So here is my rational and what I believe might be the course or events.

Firstly, for those of us who remembered the failed Vedanta delisting story will recall that the trigger for such a move is depressed price behaviour. Vedanta went up 3.5x in the next one year following the failure of its delisting offer at ₹87/- share. So one primary trigger is that ISEC is horribly undervalued and I have long held that view in multiple earlier blogs.

Now let’s discuss the motive. Vedanta has a promoter who wanted to gain at the cost of minority shareholders but in this case, promoter is ICICI Bank, an institution with no one person or a group of persons as beneficiary. Also, the management with hefty ESOPs can only make money if they can exercise the right to sell for which a listing is essential. Otherwise, all your ESOPs are worth a lot but essentially locked and illiquid. Second, once you delist, you can’t relist for another three years at least. So the current management will be extremely foolish to give up its liquidity for a better life.

The second point is negated to the extent that this is a swap delisting and not a cash for share one. So in the swap ratio to be decided in the board meeting, we will get ICICI Bank’s shares in return.

One thing is certain- Unless the price at which ICICI securities is delisted, if it does get delisted, is at a significantly high premium to today’s price, yes even today’s 620₹ is nothing; the premium ICICI Bank gets for its corporate governance will erode tremendously. Simply because the bank shares are at a lifetime high while the securities shares are trading at the pit bottom. So if they cash out at the retailer’s cost, forget about the potential ICICI AMC listing.

The fact stands that the company is marching ahead at this point and the eyes are on the outcome of the June 29th meeting. I opine that unless they announce a 1:1 swap, valuing the company at around ₹900, there will be a disappointment and it will be seen as a steal deal. I’m not sure if I really know how it will play out but I for certain has been a big believer in the ISEC potential and feel a bit cheated for we are at the beginning of a revival and the shares would have taken care of themselves!

Coming back to what the markets are sensing- today, over 1.6 crore shares worth ₹1000crore plus traded hands and the stock still closed up 11%. On a decent day, hardly one lakh shares used to trade. I believe we’re going to witness at least a ₹100 move more going into the 28th for anybody and everybody, including the institutions who wanted to sell have sold today. 1.6crore is 20% of the available float and is more than 80% of the total shares held by public. So it just wasn’t the retail fishing today. Someone big went in to buy big. I can smell 💰 here! So exciting times ahead!

Today’s move was a classical bull market rally- markets sold quite sharply yesterday, just around at the life highs levels, fell a bit more today and then made a massive one side up move. Anybody who sold his shares has certainly missed the bus. The best thing about such moves is that they make you fearful- oh this is the top, the market is moving south, this is the pullback we were waiting for and markets drop 2-3% in a day or two and then you sell. In a day or two, markets regains the lost ground and boom, you can’t enter at a higher level than you sold at!

So the belief gets cemented that people have burnt their hands buying the dip so much that they’re extremely scared of any reversal, a minor pullback is enough to throw them off and panic sets in. This is the phase when even through you’re making money, you’re so afraid of that 10% correction CNBC or Zee Business was telling you or that report from Goldman wrote about is that you’re extremely nervous at the slightest of the bad move. And, people have now been waiting for that correction for two months while markets have gained strength over strength. Portfolios have recovered a lot more than we anticipated but nervousness pervades the market. This makes me so happy because the more people doubt, the higher the market rallies and ultimately this doubt will lead to FOMO and acceptance which eventually will lead us to much higher levels and a booming bull market.

So coming back to a more recent events. The SEBI order barring IIFL securities from client acquisition is the answer to all the questions people have asked me about my belief in ISEC instead of an Angel or potentially a Zerodha. The problem with all Lala type companies, and that includes the new age tech entrepreneurs as well is that once they are on a high, they’re after a fancier lifestyle- Malabar Hills Apartment, Porsche and the business takes a beating. Also, since the gains are so concentrated that the owner is more likely to either let the competition mount an attack or do some hanky Panky to further increase his net worth by all means, not all of them fair. We have had numerous examples of large broiling houses vanishing overnight for that extra ounce of greed.

Now I’m not saying that it can’t happen with an ISEC. Only that the rewards are not disproportionate for its CEO to fudge his accounts because like we have seen with leading ex Bank CMDs, all their earnings are clawed back. And most of the employees are system driven because at the end of the day, reputation of the $100B bank is at stake. So the incentive to fudge is minuscule compared to the punishments which could be meted out. And this safety net of having a bank behind the broker is what makes me so bullish on this stock. The Indian capital markets are going to explode over the next decade or so and anybody who manages to just do his boring job with a 7-8% market share and doesn’t blow up is a guaranteed ten bagger. It’s almost like buying an HDFC Bank in 2002-03. And best part is they have no state owned banks to compete against. If ISEC simply manages to remain in business, it’s a $25B market cap in ten years by default. That’s more than a ten bagger!

TaMo is very close to its life highs and the move has been significant for a few reasons. It’s market cap used to be a fraction of Maruti’s and about half of M&M’s. Over the past one month, it’s lead over Mahindra has gone up to almost 35k crores and tha gap with Maruti has narrowed to less than 80k crores. There was a moment in automobile history when Tesla crossed Toyota in market cap, way back in 2020 and then went up 5x from there. Over the next one year or so, TaMo will cross Maruti and that will mark the end and a simultaneous beginning of an era unparalleled in Indian markets. That’s still a long shot but well, this elephant has only managed to deliver zero returns in past 8 years, peak to peak. Similar consolidation breakout led ITC to 450 while HUL went 5x and Reliance went up 4x after crossing the peak. Moonshot, maybe. Possible, hell yeah!

PS: if you haven’t yet noticed Oracle, please do! Thank me later

If there has been one debate raging across twitter and among the so called experts is whether we’re in for a larger, sustainable bull market or are we readying ourselves for another 5-10% downtick, like it has happened in the past two years now.

People have drawn out charts going back 2000s when the bear market rally led to another cataclysmic drop in the Nasdaq and how we’re in for a similar drop this time. People in India have seen so many false tops at around 18.5-18.9k on Nifty that everyone and their aunt is scared as hell for a major reversal beginning Monday morning tomorrow. Everyone who’s known me knows I’m a perma bull and I’ve been extremely bullish on the India story for reasons I’ve made clear on more than a few times.

This debate to my mind is because of the recency bias. Humans have a tendency to believe that whatever has happened most recently is most likely to happen again. So a stock going up is bet upon to keep rising, a range bound market is most likely to play in that range and vice versa. We, however, miss the fact that markets move in a range for long periods only to breakout on the way up, delivering outsized returns in extremely short periods of time and then making us play the waiting game. sSo just because we have been in this 15-19k range for two years does not mean we will never break out and that the lifetime high is permanent. Always remember, lifetime high is like your current age, it has to go up everyday and is only a reflection of how far you’ve come, not how far you will go. It’s a rear view mirror, not a forward looking crystal ball.

History, to my mind, is the greatest teacher of markets. People in 2005 didn’t believe it was a raging bull market. People, especially the market experts tend to talk of 20003-07 as the time when everything went up, all the time and everyone was making money. No, if you go back and read articles from 2005-06, or watch interviews during that time, you will see that people weren’t believing even then, in the midst of the last mega run India has seen. The 2010s has been a lost decade for the indices but it has made our markets much more resilient, cleaner and less immune to the FII outflows.

The only person who has made money in this market is the guy who bought into businesses, bought steadily and sold rarely. There is a guy Shelby Davis who started in 1947 with $50K and turned that into $400 Million by the time he died in 1994! And, he was a retail investor!!! The best investors, the people who have made big money are the ones who just refused to believe the experts, and who never sold. I’m nowhere close to that kind of discipline but I have only made one sell decision in the last year and plan to cut it down to zero this year. It’s not easy but it works.

People are so disbelieving of the current rally and the stocks which are going up that ITC is still treated with disdain, TaMo is still a lumpy cyclical stock and BSE still a second rate also ran stock exchange. The views I have may not turn out to be correct but if even half of it is correct, I’m three years time we’ll make so much money that the entire capital base will change.

One thought on TaMo- the best performing stocks in the world currently are the luxury goods- the Ferraris and the LVMH of the world. I don’t understand how JLR isn’t a luxury carmaker when all the cars it makes oozes luxury of the highest order. The new Range Rover is a $250K per car and even if I’m a bit biased, I believe that it makes the sexiest cars among the big 4- BMW, Merc, Audi and JLR. Maserati and Ferraris are in a different league no doubt but over the past few months, there are a lot many Defenders and Ranges on road, even in a second tier town like Jaipur. If you discount the $10B valuation of Tata Motors EV, the entire JLR is valued at less than $12B with zero valuation for Indian PV and CV business. This must be a joke, right. Mind you, Indians have only recently fallen in love with the luxury cars. The annual sale of even the biggest, which is Merc is less than 20k cars. Imagine in 10 years, that will be more than ten times that number, easily. Why, you may ask. Because, even the JLR sales more than 100k vehicles a quarter globally. I don’t see any reason it can’t sell close to 25k in India in five years.

If one goes back and read the history of the USA, and there’s a fantastic book I’m currently reading about the Brown Brothers Harrison, the financial powerhouse in the US for over 225 years, you realise that even the US didn’t become the financial behemoth it is today overnight. I’m an Indian patriot and truly believe that in 25 years, India will become the second largest economy with over $10K per capita income, overall $15T plus economy and the amount of money up for grabs is just mind boggling. The Reliances and the TCS are just warming up. Google does $40B profit a quarter, Reliance does $9B a year! The opportunity is massive, massive being a tad too conservative.

My personal belief is that this time, market will break through the range and by the time it’s elections in 2024, we would be at least 15-20% higher on the index alone. But, as I say, opinion is cheap, unless backed by money. I’m at least 110% invested and that’s how I’ve always been.

PS: one thing which has caught my attention is the REITs stocks. They look interesting to me as of now. Who knows what lies ahead!

The trigger for this blog is many- a recent visit to a mall over the weekend made me realise just how much Indians are consuming and at what pace! Second, the recent macro data, be it GST numbers, auto sales, luxury goods sale reported by big brands, etc. all corroborate to the above and signifies the growing propensity of Indians to consume better and at a faster pace. A fantastic elucidation of this can be found in a recent interview Roshan Desai of Morgan Stanley has given to a bunch of media outlets.

Now we all know this, right. It’s my 95th blog and over the course of just over two years, I’ve only maintained one position that betting big on India has worked, is working and will work going forward. So this post is a recollection of some of the key learnings I’ve had in writing for two years:

1. People don’t invest for the long term. A lot many are here just trying to make a quick buck to feel good about themselves and will go back to their old ways once they lose some substantial portion of invested capital. Markets is an ocean which will give you as much as you ask for. So dream big and bite bigger.

2. Investing is simple but not easy. After having read almost every decent investing book, one thing I’ve learnt is that the best investors are the ones who have the courage of conviction and patience to hold in the face of a vast swath of unfavourable information.

3. The best time to buy is during a panic. Most fund managers will then come on TV and say how they predicted the crash or called the bottom but it’s utter nonsense. Except maybe a very tiny majority, most follow the herd- sell low and buy high. I’ve lost a lot of respect for the so called market masters after having observed them carefully to either try and buy Zomato in the name of quality or to pretend to be intellectualised investors in order to generate AUM for themselves.

4. Only your research will work. Most people around you will never appreciate the work put in to find a stock and ride it through thick and thin. I still hold some TaMo stocks bought at ₹64 but at that time through now, there must be a million reasons for me to have sold it. Conviction can’t be borrowed and patience can’t be inherited.

5. Ignore the economists, TV experts and plague at all cost. The macro calls, the concerns about a debt default, Russia Ukraine, Elections 2024, rate tightening/ loosening, and everything else is just plain vanilla bullshit. Ask yourself why you bought something and what’s the story you know and believe. Big money is made in the face of biggest uncertainty and all these experts will forever write articles and publish unfathomable research articles incorporating ultra complicated Greek alphabet salad in order to look smart. Well, it doesn’t work at all in real life, in markets. One of my famous lines is- the economists can at max buy a Maserati watch while lecturing someone who drives one!

6. Unless you put in a substantial portion of your net worth to a stock, you are not invested and this, any opinion you have is not relevant. Everyone can have an opinion but unless it’s backed by money, it’s worth zero!

7. Spending time in the market after buying into a position and holding it with all the patience you can muster will make a lot of money. TaMo went from 430 to 65 to now 555 over the course of my holding but it hasn’t been an easy ride. It’s taken many a turns where the rally was almost over and I had to literally push myself to keep invested. Same is the story for a lot of other stocks in the markets. Anyone who has made a real Multi-baggers will tell you how people only see the reward, not the journey!

8. Don’t try and chase every bull market. Your stocks will go up or down even when the market does totally opposite. There might be a time when you underperform massively due to a particular style being in favour. That’s part of life and should not make you dump your Colgate to buy a Paytm! Things do return to normalcy, it’s only a matter of when.

9. Don’t chase junk, quality trumps everything! I can’t repeat this more often. In every bull market, the absolute junk rises the highest. It’s okay for your neighbor or your colleague to bask in glory after making a quick three four times his money while your portfolio stay flat to negative for two reasons. One, anybody buying junk will only tout the percentage gain he made; in absolute terms it will be peanuts. Two, he will most certainly lose it all, if not in the same stock then in some other stock but lose he will, surely!

10. The best time to buy is when you have money!

So this has been a phenomenal run from the bottom of the March lows. Exactly two months ago, on March 28,2023, Nifty was reeling under severe selling pressure at around 16800 thereabouts with the consensus being a hit of about 15000 not so far away. The rebound took everyone with surprise and to be honest, even someone like me who remains extremely optimistic all the time felt the pain. I was actually worried if my portfolio was all set for another 10-15% downtick!

So at 18600+, what are we seeing and feeling about the markets. I believe that except the last 500 points rally, nobody really bought in big because everyone was waiting for the eventual downtick, the kind we have been experiencing for the past 18 months. Thus, the moment market corrected around 400 points last week, people sighed a heave of relief believing that 17000 was in sight. Not this time, though. I’m sure this is one of those nobody believes in kind of rallies which will first propel the indices to a new life highs and then take it onward to 22-25K Nifty before catching a break before the next election.

The way portfolios have behaved is most satisfying. I’m personally up 25% from March lows and this has been a group performance. When three stocks with over 45% weightage of my portfolio are down between 30-50% from their last year’s peak, except an ITC, No stock has yet hit its life high and except TaMo, no other stock is even close to its 52w highs, I don’t think there’s even a beginning of a sign of exuberance in the market. This is just the fruit of patience, when people like me who like to remain fully invested all the times recover lost grounds before an onward march.

My basic contention is, Nifty should hit 23K if not more in this upswing while portfolios should be at least 2-3x in two years, marking one of the mega home runs in recent times. Does this sound too much? Well, Sensex went 5x in four years between 2003-07!

Coming back to a few of my favourite names! BSE is doing a lot better under the new leadership with renewed vigour though I’d still believe it’s waiting for one or more triggers to blast- maybe an HPX revenue stream, an NSE IPO or a Gift city exchanges merger- I don’t know! All I know is that at this valuation, I can’t lose money in a stock trading at less than the cash on its books plus the building valuation!

TaMo is in top gears, brisling with energy. The kind of two quarters it had delivered has made heads turn, just like the cars it make these days! I can’t even wait to make enough money to buy a Defender. Any company which makes aspirational, luxurious products will do incredible in India and JLR is right there at the top.

On similar lines, just see the kind of luxury items available on TataCliq, Ajio or even NykaaFashion etc. Right from pens to watches to clothes to better cars, Indians are beginning to splurge like Chinese in the early 2000s! Even though I’m extremely disappointed with the lack of sales growth in United Spirits, I do believe that Indians will end up drinking more of our good old Johnny!

One industry I have recently developed a taste for is the hotels though I would rather be a guest than an investor. The kind of opulence available in India in tier two cities like Jaipur is unbelievable! And the prices they charge is nothing compared to the services offered. It’s however a capital intensive business and even though I did look at an Indian Hotels at 150-180, I don’t think they’re going to be more than a fad in the investing world.

What I really, truly like is the financialisation and domestic consumption theme. I hold Reliance for it is slowly building an Amazon plus Apple kind of an ecosystem, earning almost regular subscription type money from repeat customers- Ajio, Reliance digital, Jio, and what not! Myntra and NykaaFashion are having a run for their money with the kind of competition Ajio and Tata Cliq are giving.

I do like Sula vineyard as a potential product but maybe am too old fashioned to understand why people who’ll drink to flaunt their social status would want to buy a cheap 1500₹ wine bottle which tastes like shit! Wine is like golf. It’s for the extreme premium customers who will pay obscene amounts to get their hands on to a rare name. It’s not a mass product because the guy who buys one bottle to show off or announce his arrival as a nouveau riche will never buy another bottle!

PS: ITC hit 452₹ today and I am sure it’s at least a ₹600+ in one to two years from now!

Everyone who has met me knows how bullish I’ve been on Tata Motors for the past four five years. The logics have been dweleved into the namesake blogs multiple times. So what triggers this one!

An innocuous notification on the Stock-Exchange’s website today states that TaMo is going to consider declaring dividend in its next board meeting scheduled on the 12th of May. This sounds innocent and doesn’t suggest anything unless you take into account that the last time TaMo declared a dividend was in 2016! The share price has languished well below the price it hit in September 2015&2016 which is just above and below ₹600. Now the fact that it’s coming off a mega year loss making cycle and spree of debt reduction measures which has emboldened enough to dole out money as cash dividend means only one thing- the turnaround is over and the company is sure enough to mint money going forward.

Whenever a loss making entity has finally turned profit, stocks have rallied the most. Be it Amazon in 2003-04 or Airtel in early 2000s or even Tesla in 2010s, the moment a loss making company with extremely high fixed costs turn into black, the operating leverage kicks in and the profitability rises exponentially. It’s not a coincidence that company has made all the right noises about making JLR profitable with a much reduced break even volume requirements and selling highest ever cars in Indian markets.

The time for the stock to come out and deliver fabulous profits has arrived. The kind of sales it does, we’ll over $10B every quarter, it is not too far fetched to imagine it making around $500M to $1B a quarter going forward. If nothing happens magically on the flip-side, TaMo will deliver FCF of almost a couple of Billion Dollars every year at the least. It’s then trading at hardly 15x FCF yield which means the stock can easily double from here without being expensive.

Not everyday such moments come in a stock investors life when this kind of move is anticipated! I’m sure this is that point when TaMo will finally rally towards making a new life high, just like ITC at 200 quickly rallied to 425 and counting.

PS: Oracle has just made its 52W high and still trading at 17x trailing earnings with 6% yield! This can’t be true unless it at least a goes up 40-50% ! Fingers crossed

It’s been a while that I’ve discussed a new idea. Today, I wanted to revisit some of the mistakes I’ve made in the past six years which has made me who I’m and maybe through the discussion, I can justify to myself the reason I believe a stock I hold dear has a lot of room to rally.

The first stock my father bought for me was HUL. Actually he bought Asian paints and HUL back in February 2017 when the two were trading at around 800-850 each. Now you’ll get excited and tell me that I’d have made a ton of money because the duo has already tripled from those levels by now. Well, we’re discussing mistakes today ,right!

So from around 2017 to 2019 end, I had learnt what I thought was the Gospel of making money in this market. The Grahamic way of not paying more than 15x earnings and 1.5x Book value and through which you end up wealthy. So I kept adding all the Oil stocks, the metals and everything which went down 30% while the markets rallied from 8500 nifty to 12k nifty and HUL and Asian Paints became the market outperformers

In my little own world, I saw my HUL double in two years and Asian paints grow by 50-60% while the HPCL and Oil India going nowhere. So I took the cue from my master and converted all my lever and Asian paints into additional oil and metal stocks believing that I’ve hit the jackpot. Also, I was extremely happy averaging into Yes Bank with immense confidence in my uncanny abilities to turn lead into gold while the stock dwindled from 150 down to around 30₹. So in the first three years of my investing journey, I had read possibly a fifty investing books and learnt all the wrong lessons! I was sure the world was wrong and a guy with ten books in his cupboard held the key to the golden goose.

Fast forward three years, I got out of the oil and metal stocks, of course by making some money through the Covid dips but learnt the hard way and by a lot of losses the importance of quality. Hence, one of my earlier blogs was titled Don’t eat junk.

The other important lesson that I learnt from the HUL journey was that it was a good company coming out of a multi year sideways range after surviving through a big crash in 2008 while constantly increasing earnings, raising dividends and being a lot cheap on valuations. So a HUL which traded from 200-300 for seven years when it finally broke out of that range in 2010, it has gone up nine times to almost 2800 in the next 11 years. So as long as the company does well, earnings might run ahead of its times and which lead to a sideways decade when the entire world gives up on the stock and calls an end to it, valuations go from extremely frothy to extremely compressed, the stock eventually come back!

So here I am trying to talk to myself about the recent run in ITC. ITC didn’t go anywhere for almost 7 years when it traded in a 150₹ range from 180-330 types and made a lot of memes for itself. Two years back, it revisited its dividend policy which made it extremely attractive with almost 6% yield. At the bottom, it was yielding six percent plus and traded at around 15x earnings or less. At the current levels, it is at 3% yield at around 25x earnings. In three five years, if it makes 30000 crores and trades at even 40x earnings, the stock will be at around 1000₹ levels. So for all of you believing that the rally is over, it’s just the beginning.

Funnily, the rally is still being pooh poohed at. People are still in disbelief, both on the markets and in ITC in particular. As long as the skepticism prevails, both will rise unhindered.

Quality always survives and what survives, thrives!

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 🧐

Okay so this has been a pretty fantastic two weeks for the markets in general and portfolios in particular. We’ll see how things are shaping up and why I still am so optimistic!

First, the rally from 16800 to 17800 in just over seven trading sessions has provided a much needed relief to all investors who have seen their portfolios bleed red for the past one and a half year. The last uptrend which saw Nifty hit life highs in December just had nothing for the broader markets and my own portfolio was down 20% from the previous peak. It meant that the upswing was just index massaging and nobody really benefitted. The positive beta this time is almost +80-100% in portfolios which meant that while markets have moved 5%, portfolios are up almost 10-12%. The last week of March was pretty scary when I for a moment did fear if I’m going to go down an additional ten percent!

What I’m trying to say is that this rally is almost neglected. People are so scared and so convinced of an eventual downswing that everyone and their uncle aren’t participating. This is what I pointed out in a previous post that the skepticism index is sky high. Everyone is waiting for a correction they’re damn sure about. Most importantly, nobody wants to burn their hands buying another dip when it’s almost certain to go down, again! This is exactly how a new bull run takes birth- amidst pessimistic disbelief. Nobody is sure they can ever make money buying stocks and everyone wants to lock the best FD rates and add the glitter of gold to their holdings.

So my big call is that we’re due for a mega run, which is always my base case. Just look at monthly SIP numbers but for which we would have seen 10000 Nifty in the brutal FII sell off we have had.

Let’s talk some stocks. Tata Motors came out and reported a free cash flow of £900 M for the quarter gone by. That’s over 9100 crores liquid cash in one quarter! Fast forward next year and the stock is available at less than 4x forward Market cap to Cashflow! That doesn’t even account for the nearly $10B worth EV company sitting inside its Indian PV unit. It sold over 50K EV last FY, up over 2.5x YoY! So that market cap won’t be static but quickly move northwards beginning next January once the Ford plant gets operational. A base case scenario is a double in two years for this stock, without assuming too much.

Reliance just looks so stunning with the premiumisation of consumption kicks in. India is buying every luxury the world has to offer like there’s no tomorrow. Similar expansion happened in China when in the early 2000s when the world suddenly wanted to sell in China. Every luxury brand- watches, cars, liquor, bags sold like hotcakes. We’re seeing a similar beginning and mind you, we’re still a $3.5T economy! Over the next ten years, as we go up to $10T, just imagine how many Porches and Range Rovers and MacBooks and Gold Labels we’ll buy!

This,my friends, is an unbelievable buying opportunity in the India story and which is once in a lifetime! Don’t be scared of the little hiccups! If the Nifty itself will go up to 50000 in ten years, how does it matter if you buy at 16K or 17k!

Bet big on India, it’s a no brainier!