Author Archives: ZerotoBillion

As the weekend beckons, I take a look back at some of the developments which has happened in the past two weeks and are of a lot of relevance to me, personally. Markets are on fire absolutely and the whole talk of Nifty falling back to sub 18000 has slowly fizzled though there are enough people still waiting for that elusive correction we were sure to have gotten in April, then in May and for certain in June. Market still holds up at over 19500 and in my opinion as long as this fear of an impending correction looms large, it is only going to go up to much higher levels.

Classic bull run plays are unfolding. In mega performing stocks, such as ITC or a Reliance, there’s a sharp correction of 5-10% and fear spreads that the top has been made. It goes nowhere for a couple of weeks and then once the retailers have sold thinking they got out on a high, stock moves up another 10%. This is exactly what has and will play out in both ITC and in TaMo and in other stocks.

Let’s discuss a few darlings close to my heart. TaMo came out with fantastic numbers and as I’ve been relentlessly saying, it has begun to throw big cash profits. A stock which made successive losses for five years is now making over 3000crore profit every quarter with reducing debt to add on. What was trading at negative PE to a PE of over 80 till March numbers because of earlier losses has now gone to hardly 20PE even at ₹640/-. And if it does continue on this path, it’s hardly trading at 10-12 times earnings one year down the line. So once debt goes down which is happening, dividend alone will be north of 15-20₹ and stock will be extremely cheap even at ₹4 lakh crore market cap as the PAT will be easily above 20-25k crore. That’s easily a double from here without missing a beat.

Now the second part. Tata Motors must be saluted for getting the DVR shares delisted at such a fantastic premium of 0.7x the normal shares. In its 15 year history, it has traded at best .55 times the ordinary shares. My friends will agree that when DVR was 300 and TaMo was over 600, I was screaming loud that the convergence has to play out to historical levels. And how beautifully has it played out. The TaMo management is exchanging DVR shares at lifetime high valuations with high premium, something ICICI Bank should learn. The price at which DVR is being offered to be extinguished is a level at which these shares have never traded!

On the issue of ISEC delisting, there was not even a word mentioned in the analyst call, investor presentation or alike. I am sure that this is more of a gimmick to move the needle on share price than anything else and personally, I believe that ISEC is an excellent business to own.

Reliance came out with Jio Financial de merger while ITC finally got the hotels business off its balance sheet. This makes us future owner of two more stocks and everybody with some sense of financial history knows that spinoff are the closest to free money in markets.

There’s an excellent intra-sectoral rotation playing out which is furling the rally upwards. Way back in 2018-19, only a handful of HDFC twins. Bajaj twins, HUL, Nestle type stocks moved up. Now even in FMCG, it’s not the HUL and Nestle but forgotten heroes such as Colgate joining the party. United Spirits will also now be a dividend paying stock and the re rating is happening. People who are chasing the last year’s favourites will be in for a disappointment as every bull run is led by a new leader. For this run, it’s clearly TaMo and ITC.

Now how can I not mention of the run BSE has had. It’s up 100% since it’s March 28 lows and now the business is stronger than ever. The F&O volumes at least on Fridays is well over 10% threshold and is only going to grow from here. Mutual Funds business is growing rapidly too. So earlier, I used to value the net cash sum of the part as an indicator but if the F&O turnover results in contributing to revenue, we are in for a multifold jump in the bottom line. One more thing, the buyback price is now within touching distance of the market price and I won’t be surprised if the board revised the buyback price upwards in the range of 1000₹ if the CMP will go upwards.

This has been a very hectic week in terms of corporate developments. Apart from the fact that the market went up considerably over the course of the last few months, Portfolios having moved significantly indicates that people are now waking up to the fact that this is not a false breakout. So even the long pending corporate developments are happening and let’s see how I’m bothered with them:

1. Reliance announcing the record date for demerger of its Jio Financial subsidiary is the latest one today. Anyone who has studied investing knows that the surest form of making money is a spin-off stock. The big institutions won’t own it for its too small for them and the retail will treat it as additional dividend which needs to be encashed. So after a while it might be a bit too neglected if it doesn’t go up circuit to circuit in the first few months of listing. In any case, it’s a pretty decent business and with Reliance’s money power, it can easily grow at 50% for long times to come for the base is so small! If you remember what Reliance did to Voda and Airtel, if it only does 5% of what it did then, a lot of money chasing Bajaj Twins can find its way to Jio Financial.

2. NSDL has finally announced its DRHP and BSE its buyback. How are they two related? Well, NSDL is a subsidiary of NSE and thus can only be listed on BSE, just like both CDSL and BSE are listed only on the NSE. It creates additional volume for BSE as the demand for this business is going to be huge and I’m sure it also retakes the CDSL stock. Now read this with the fact that F&O turnover on BSE has gone up over 13l crore, easily above the 8% mark on Friday combined volumes on NSE and BSE. Remember, BSE started with zero market share in derivatives( F&O) so anything above 5% is like a dream come true. It hits the top and bottom line positively.

Now add to this that the buyback price is ₹816/- which is almost in the range of lifetime high price for the stock. It values the company at 11000 crore while the stock traded at below 5000crore, as early as late March this year. This is a fantastic management returning money and rewarding minority shareholders lavishly. This reduces the share capital by 3.39%, which sounds small but in the long run, enhances per share valuation by a lot. I’m not selling a single share in buyback is certain!

3. TaMo announced an expected free cash flow of £400M plus, roughly ₹4100 crore in JLR for Q1, FY 2024. This means at the current rate, the company will easily do £2B in the entire FY, which means the company is only trading at 10x FY 2024 earnings and that’s a steal! Any company which is likely to grow its earnings from a loss to over 20000 crores will be easily valued at at least twice the current valuation! Why am I so bullish? Well, it took TaMo 8 years to cross its previous highs of ₹605 and the way it did on Friday clearly indicates a huge momentum building up on the upside. Don’t believe me? ITC crossed its 2015 high of ₹367 in February and it has gone up 30% without breaking sweat!

4. ISEC hasn’t even come out with a press release, leave alone media blitzkrieg to discuss and sell its delisting proposal. I mean, it’s the number one Investment Bank in the country and it can’t sell its own delisting! Give me a break! The only reason is that it’s all too non serious attempt to make the market realise what prized gem it’s stock is and the timing is amazing. Its stock was trading at IPO level when the news broke. Now in the middle of a new bull run, June quarter numbers will be bumper because the last June quarter was disastrous. So the market will say, why are you getting a premium company growing at 30% so cheap. And the share will get restated. In the meantime when it tries to pretend to take regulatory approvals, September quarter will be over and with such a market and a huge IPO pipeline, it’s numbers will be much better than June. The stock is bound to go up and react to numbers, once the reality subsides. Also, at the worst, at 0.67 times ICICI Bank, the shares should at least be worth ₹645. So if ICICI Bank goes up 10% with market, the price crosses ₹700. And then the management will quietly come and make excuse, oh that fund didn’t sell or LIC refuses to sell below 1200 and what not. And the delisting will be withdrawn! I absolutely am super bullish on ISEC and can empathise with the frustration of the management with the stock performance.

Look at it from the POV of the CEO. That guy has been at the helm since 2019, developed the app which is kickass customer interface, delivered the numbers but was first hit by Covid and then by a sharp pullback. So do you assume the CEO of the largest Investment Bank in India will convert his ESOPs which is 100% of his net worth at lowest price possible and exchange them with shares of ICICI Bank, trading at lifetime highs! You need to be a genius psychopath to assume this. I don’t buy this. This can’t happen. End of story! If delisting does take place at this price, my belief in common sense will certainly take a hit!

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Today I have so much to talk about. You live for days like this in markets when a gap up is not filled and markets make higher highs, stocks participate further and your favourites are on the top of the charts. Today’s move has buried all the bear talks, of people calling it a fake-out instead of a breakout and what not.

Bulls on the street are always seen as the lesser mortals- for they dismiss the macro mumbo-jumbo as nonsense which is exactly what it is. Bears on the other hands come across as the intellectualised lot- they will tell you the hundred reasons for why stocks are expensive, market is going down and the economy is collapsing. They will throw in numbers- GDP, exports. GST, money supply, inflation, PE ratios and everything else to sound somber. Well, it defies common sense that when in the end the maximum money is made when markets go up, why does people believe the bullshit!

So now that we are experiencing a renewed bull run, it’s not going away in a hurry. The last time Nifty broke out of the 12000 mark, it went up 50% before catching a breath. My best case is that Nifty is poised for at least a 25-27K move. This is the time when networths move, when portfolios quadruple and maximum money is made. I remain 110% invested and the stocks I own are slowly moving to not for sale basket.

BSE had its first breakout today when it closed above the pre bonus 2000₹ mark. Last time it was up there was in Sep 2022 and the trigger is the latest buyback news. I’ve maintained that the management of BSE is fantastically liberal- they dole out 95% of profits as dividends and announce liberal buy backs. The cash they own is almost 3000cr plus and is 35% of the today’s market cap. So just like Apple became a $3T company and the worlds best buyback stock. I will not be surprised if BSE goes up 10x in this decade with a much better business model and hefty dividend yield. It’s finally making the right noise in equity derivatives with month on month growth of 10x and on the last Friday, it captured as much as 5% of the total market share! HPX is doing a fantastic stuff in power market and the proof of that pudding is in IEX’s price- it is languishing at multi year lows in a roaring bull market.

TaMo might have missed on hitting the lifetime highs but that’s only a part of the story. Long time back, in an earlier blog, I had mentioned that Tesla makes a lot of its money by selling carbon credits. That market has just been approved in India. So TaMo with 85% plus market share in an ever growing electric car market will be a prime beneficiary by selling credits to all the supposedly polluting companies- the coal mining types.

Well, my bet on TaMo is on one more dimension. I’m looking forward for a day when India will contribute to its top line just like China does today. It won’t be a surprise if it begins to sell 10k cars in India every month for what beautiful, absolutely sexy cars it makes. Anyone who doesn’t find a Jaguar Hot or a Defender stunning or a Range Rover exotic is either a liar or blind or both.

India is going through the same moment which China had in the early 2000s. Our economy is firing on all cylinders and unless we collectively screw ourselves in 2024, we have a stable government at the centre for a foreseeable future. The biggest risk in this market is the risk of not investing! The bull is back, and it’s running! Are you?

This is the hundredth post on this blog; a culmination of 25 months’ journey. When I started, I didn’t know if I’ll write ten, let alone almost a post a week for two years plus. This is how compounding works- you start small, keep going as far as you can see, reach there and keep moving forward. In a few years, you’ve outpaced even the most optimistic projections and compounded yourself into something you could not have imagined.

So, ICICI Securities today announced the swap ratio- 67 shares of ICICI Bank for every 100 shares of ISEC which effectively means at current price of the Bank’s shares, ISEC is being valued at ₹628/-. I’ve two points to add here:

1. I don’t think the transaction will happen at this price when you’re trading ISEC shares at almost two year’s low with bank’s shares at lifetime highs. It’s a bad corporate governance precedent and will certainly dilute the premium ICICI group commands. I won’t be too surprised if all the group companies open sharply lower tomorrow. The fear will be that the moment ICICI Pru or Lombard shares fall the next time, Bank will get them delisted at throwaway prices. It’s almost as bad a price as Vedanta offered in 2020. There’s no premium at current valuations and is an affront to minority shareholder rights.

2. I do believe that the shares will rally because market will sense that the group has to raise the price as ISEC shares are in effect a warrant to buy ICICI Bank’s shares with the current .67 times valuation being the absolute floor. The arbitrageurs will not allow the shares to fall for simply because unless the Bank shares collapse, markets will not let the arbitrage widen. Mind you, it’s the beginning of a booming bull run and not the depths of a multi year bear grip that prices will be allowed to remain depressed for far too long.

The reason I’m so sure that the price will be revised upwards is because on Monday the 26th, over 1.65crore shares were traded and price didn’t crash a bit. So someone did want to take delivery and raise his bargaining power with the management. Remember, you need at least twice the votes of public shareholders in favour to get it delisted which means ICICI group needs 2/3 of total shareholders to vote yes. So anyone with over 9% total shares can veto this deal. LIC has been a big votary of value in Vedanta deal when it put its foot down and asked for ₹350 per share price. So a big FII and LIC can easily veto this deal if they combined have 9% shares which in this case is a possibility.

Anyways, even at this price, you are not getting junk but a fantastic company which is a big contributor to the India growth story. ICICI Bank is currently $78 Billion market cap and in a ten year period, there is not reason for it to not be a $200B company. I’ve reached a stage where I’m not selling any shares I own currently unless the business is going down the dumps.

You sell a stock if you think that the ceiling has been hit, think Berkshire Hathaway. It’s trading at more that $500K per share and people thought $5000 was a big deal. If you’re as excited about the India story as I am, just imagine how big India’s banks will become when the country is a $10 trillion economy! There’s a fantastic interview of Manish Chokhani on CNBC on this matter and it’s a great watch.

So my hunch is that the bottom has been made in ISEC and in days to come, market will rerate the stock upwards. I will at least want a parity on the swap ratio, a 1:1 to tender my stocks though as you know, I’ve always believed that ISEC is worth a lot more than that.

PS: one stock I do absolutely regret not owning despite always having it on my watchlist is ICRA- owned by Moody’s.

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!