Land and Price
Think you have 100 cent of land.
And by some magic, every year, it expands 20%.
Starting with 100 cent
1st year = 120 cent
2nd year = 144 cent
3rd year = 173 cent
You get the idea.
Let's say, the locality values your land 2 times of area.
Value in the beginning = 200 units
1st year = 2x of land area = 2 times of 120 = 240
2nd year = 2x of land area = 2 x 144 = 288
You get the idea.
Easy so far. Right ?
Now, let's say .. sometimes, there are floods in your locality. The price of land may reduce. Not 2x. Let's say 1.5x.
And sometimes, new airport is coming nearby. Land value will shoot up. 3x.
But, let's say, the land area grows at 20% on a constant basis.
Now, depending on the time you look at your land, the price will fluctuate.
Sometimes, 1.5x and sometimes 3x or even more.
If you want to buy a land in that area, when will you prefer to buy?
Answer is...when the price is 1.5x you can buy. Land area will grow next year. Apart from this, if the price goes up to 3x , you double your money. Even though the land area does not. This is re-pricing or re-rating.
Let's say, you buy the land at 1.5x and then stay put. Land area will keep growing at 20%. And you get double engine.
Land growing plus price doubling!
Replace the analogy with book value (land) and price to book for a lender.
ROE 20% means the land (book value) is growing at 20%. Price to book is the multiple 1.5x or 3x.
P.S. I was lucky to sell HDFC Bank when price to book was going down.
I was lucky to buy AU Bank at 2.6x with 7% allocation. Now, AU Bank trades at 4x. With 11% allocation. The thesis was simple. Buy the land with flood and wait for airport to be announced. Similar opportunity was abundant in MFI space one or two quarters back.
I am planning to record a paid course where I will explain in a way that you cannot forget. And the concept gets cemented in your mind. Obviously, it will take some time to record. Idea is to add value to your journey.
Think you have 100 cent of land.
And by some magic, every year, it expands 20%.
Starting with 100 cent
1st year = 120 cent
2nd year = 144 cent
3rd year = 173 cent
You get the idea.
Let's say, the locality values your land 2 times of area.
Value in the beginning = 200 units
1st year = 2x of land area = 2 times of 120 = 240
2nd year = 2x of land area = 2 x 144 = 288
You get the idea.
Easy so far. Right ?
Now, let's say .. sometimes, there are floods in your locality. The price of land may reduce. Not 2x. Let's say 1.5x.
And sometimes, new airport is coming nearby. Land value will shoot up. 3x.
But, let's say, the land area grows at 20% on a constant basis.
Now, depending on the time you look at your land, the price will fluctuate.
Sometimes, 1.5x and sometimes 3x or even more.
If you want to buy a land in that area, when will you prefer to buy?
Answer is...when the price is 1.5x you can buy. Land area will grow next year. Apart from this, if the price goes up to 3x , you double your money. Even though the land area does not. This is re-pricing or re-rating.
Let's say, you buy the land at 1.5x and then stay put. Land area will keep growing at 20%. And you get double engine.
Land growing plus price doubling!
Replace the analogy with book value (land) and price to book for a lender.
ROE 20% means the land (book value) is growing at 20%. Price to book is the multiple 1.5x or 3x.
P.S. I was lucky to sell HDFC Bank when price to book was going down.
I was lucky to buy AU Bank at 2.6x with 7% allocation. Now, AU Bank trades at 4x. With 11% allocation. The thesis was simple. Buy the land with flood and wait for airport to be announced. Similar opportunity was abundant in MFI space one or two quarters back.
I am planning to record a paid course where I will explain in a way that you cannot forget. And the concept gets cemented in your mind. Obviously, it will take some time to record. Idea is to add value to your journey.
❤5
Direct Equity vs Mutual fund
Both are good and have their own advantages and disadvantages.
If someone does not want to take headache of research, mutual fund is a beautiful tool to invest.
Question comes ... Shall I invest in active or passive mutual funds ?
Over a long term, 9 out of 10 funds will underperform the benchmark. For large and midcap index.
For small cap funds, chances of under performamce is slightly lower.
Does it mean that index funds are better.
Recall what Rajeeb Thakkar said once..
All the index funds underperform the index itself. Bcz of cost.
Mutual funds are good with right expectations.
It gives you a slightly lower return than the index.
This must be the right expectation.
P. S. Mutual funds can beat the inflation comfortably without doing any hardwork
Both are good and have their own advantages and disadvantages.
If someone does not want to take headache of research, mutual fund is a beautiful tool to invest.
Question comes ... Shall I invest in active or passive mutual funds ?
Over a long term, 9 out of 10 funds will underperform the benchmark. For large and midcap index.
For small cap funds, chances of under performamce is slightly lower.
Does it mean that index funds are better.
Recall what Rajeeb Thakkar said once..
All the index funds underperform the index itself. Bcz of cost.
Mutual funds are good with right expectations.
It gives you a slightly lower return than the index.
This must be the right expectation.
P. S. Mutual funds can beat the inflation comfortably without doing any hardwork
❤1
Facts
Nifty small cap 250 has come out of the base after almost two years. And it is now touching at an all time high.
Big mutual fund managers are calling out this index at higher PE multiples. And they are anchoring their funds with a large cap water base.
Valuation matters. With earning.
People has been calling out Nvidea in bubble. The stock has printed money bcz the earnings have been equally fast. Recent quarter, the guidance has been further upgraded.
Valuation matters. With earning.
Don't miss out the "with earning" part.
P.S. Only 30% of The IPOs In the last 2 Yrs have outperformed Nifty 500 by 5%. With Nifty smallcap 250 zooming now, the IPO will fall from the sky like rain. I will remain cautious and never apply in a quick money scheme on listing gain , aka IPO.
Nifty small cap 250 has come out of the base after almost two years. And it is now touching at an all time high.
Big mutual fund managers are calling out this index at higher PE multiples. And they are anchoring their funds with a large cap water base.
Valuation matters. With earning.
People has been calling out Nvidea in bubble. The stock has printed money bcz the earnings have been equally fast. Recent quarter, the guidance has been further upgraded.
Valuation matters. With earning.
Don't miss out the "with earning" part.
P.S. Only 30% of The IPOs In the last 2 Yrs have outperformed Nifty 500 by 5%. With Nifty smallcap 250 zooming now, the IPO will fall from the sky like rain. I will remain cautious and never apply in a quick money scheme on listing gain , aka IPO.
Active Mutual funds
Active mutual funds in large and medium cap space will underperform the benchmark. In 10 years. With 85-90% of the mutual funds.
Still, to feed our ego, the majority of the people will do SIP in these funds.
If you think , this is a wonderful theme to make money.
AUM business. It is easy to track. Check the fast growing mutual funds.
If industry AUM is growing at 15%, and any AMC is growing at a faster pace, it is shouting out loud. I'm gaining market share.
The AUM will be bigger with time. And cost will not increase at the same rate... Activating the most deadly denonator, called operating Leverage.
Track AUM growth and Equity share. And it takes less than one minute for each AUM business.
And there are only handful companies in this space.
1. Largest: SBI
2. ICICI prudential AMC
3. HDFC AMC
You will see a weird pattern here. Bigger gets bigger at a faster pace.
And smaller AMC keeps showing historical data because their AUM growth is slower than Industry growth!
You just need 30 min in a quarter to track all these AMC businesses.
Now experts will scare you uttering one matra. Repeatedly. Valuation.
Take three years forward earning here and calculate PEG. It will make sense.
Another set of people. They will tell you that how will I know my X AMC will remain market leader.
Answer is...you don't have to know. Because no CEO or manager or guru knows it. You have to track. Every quarter. And assess.
Remember?
When fact changes, I change my mind. What do you do, Sir ?
Active mutual funds in large and medium cap space will underperform the benchmark. In 10 years. With 85-90% of the mutual funds.
Still, to feed our ego, the majority of the people will do SIP in these funds.
If you think , this is a wonderful theme to make money.
AUM business. It is easy to track. Check the fast growing mutual funds.
If industry AUM is growing at 15%, and any AMC is growing at a faster pace, it is shouting out loud. I'm gaining market share.
The AUM will be bigger with time. And cost will not increase at the same rate... Activating the most deadly denonator, called operating Leverage.
Track AUM growth and Equity share. And it takes less than one minute for each AUM business.
And there are only handful companies in this space.
1. Largest: SBI
2. ICICI prudential AMC
3. HDFC AMC
You will see a weird pattern here. Bigger gets bigger at a faster pace.
And smaller AMC keeps showing historical data because their AUM growth is slower than Industry growth!
You just need 30 min in a quarter to track all these AMC businesses.
Now experts will scare you uttering one matra. Repeatedly. Valuation.
Take three years forward earning here and calculate PEG. It will make sense.
Another set of people. They will tell you that how will I know my X AMC will remain market leader.
Answer is...you don't have to know. Because no CEO or manager or guru knows it. You have to track. Every quarter. And assess.
Remember?
When fact changes, I change my mind. What do you do, Sir ?
Interesting Develops
Hero motors are having Vida in EV 2 wheelers.
Additionally, they are around 32% owner of Ather Energy. Rival companies taking stakes at competitors are very interesting. Worth observing.
P.S. Tomorrow is Ather's Community day. It will be interesting to see their product launches.
Many investors are still doing long term investing through ITCs, HDFCs of the world. They cannot digest any new developments. Remain flexible.
Hero motors are having Vida in EV 2 wheelers.
Additionally, they are around 32% owner of Ather Energy. Rival companies taking stakes at competitors are very interesting. Worth observing.
P.S. Tomorrow is Ather's Community day. It will be interesting to see their product launches.
Many investors are still doing long term investing through ITCs, HDFCs of the world. They cannot digest any new developments. Remain flexible.
Powerful thoughts
When you are fine and healthy, you have many problems in life. But you are not fine and have health issues, you have only one problem.
-
Shaolin Warrior
When you are fine and healthy, you have many problems in life. But you are not fine and have health issues, you have only one problem.
-
Shaolin Warrior
I have heard so many good praises from this book. Time to read...
Today's world attention is the most rare commodity. Thumb is doing endless scrolling without gaining anything. Dopamine rush is killing our intelligence and making us dumb.
A beautiful way to break the loop is to read books!
There is no good day to start something than today. No one is stopping you !
Today's world attention is the most rare commodity. Thumb is doing endless scrolling without gaining anything. Dopamine rush is killing our intelligence and making us dumb.
A beautiful way to break the loop is to read books!
There is no good day to start something than today. No one is stopping you !
Internet business
Many of the app-based internet businesses are profitable. Don't ignore them because you cannot live without them.
These are new raising giants. Check for revenue growth more than 20+ %. Operating Leverage will be an in-built feature here.
These are moated businesses because there is no alternative.
Remain flexible. The fact has changed. They are not loss making anymore!
Many of the app-based internet businesses are profitable. Don't ignore them because you cannot live without them.
These are new raising giants. Check for revenue growth more than 20+ %. Operating Leverage will be an in-built feature here.
These are moated businesses because there is no alternative.
Remain flexible. The fact has changed. They are not loss making anymore!
👍2
Retail Edge now cuts sharp
Earlier, only a big or institutional team could do this after reading hundreds of pages of Concall and PPT. Now, retail investors can access these types of resources almost for free.
Thanks to AI, I can track 100+ companies. It was almost impossible few years back!
Earlier, only a big or institutional team could do this after reading hundreds of pages of Concall and PPT. Now, retail investors can access these types of resources almost for free.
Thanks to AI, I can track 100+ companies. It was almost impossible few years back!
👍2
Here is a new Age Internet Business
Urban Company. Understand how to read the numbers!
https://youtu.be/HBXJfIqh6n4
Urban Company. Understand how to read the numbers!
https://youtu.be/HBXJfIqh6n4
YouTube
How to Read Urban Company - Simplified | Q1FY27 Number
Understand Urban Company’s numbers — simply and without complicated financial jargon.
In this video, we break down Urban Company’s financial performance and try to understand what the numbers are really telling us about the business.
Instead of just looking…
In this video, we break down Urban Company’s financial performance and try to understand what the numbers are really telling us about the business.
Instead of just looking…
❤2
Recently Listed company
Milky mist management - Concall Notes
95% of the paneer sold in India is from unorganized sector. Only 5% is organized.
Also, a high proportion of the paneer sold in unorganized sector is analogue paneer (a cheap, factory-made imitation of traditional dairy paneer that uses vegetable oils, starches, and chemical additives instead of pure milk).
Govt/FSSAI is planning to ban Analogue Paneer.
Milky Mist is having almost 20% share of organized market.
Their capacity utilization is just 50%, can generate 3X revenue from the current plant.
Milky mist management - Concall Notes
95% of the paneer sold in India is from unorganized sector. Only 5% is organized.
Also, a high proportion of the paneer sold in unorganized sector is analogue paneer (a cheap, factory-made imitation of traditional dairy paneer that uses vegetable oils, starches, and chemical additives instead of pure milk).
Govt/FSSAI is planning to ban Analogue Paneer.
Milky Mist is having almost 20% share of organized market.
Their capacity utilization is just 50%, can generate 3X revenue from the current plant.
Years of reading and learning are distilled in this audio.
Do listen for learning. And try not to multitask while listening 🎧.
Pure knowledge!
Do listen for learning. And try not to multitask while listening 🎧.
Pure knowledge!
A very Boring Routine
People are mocking my process often saying that it is dead compounding. Well, I have nothing to defend.
I am a simple person with a plan. My routine and process are boring. Here it goes..
1. Get up and drink water and go to daylight before checking the phone. Non-negotiable.
2. Go for a walk for at least 20 min. Non-negotiable. Run weekly once at least. Non-negotiable.
3. Return, take bath and have a healthy breakfast. The menu can change but not the concept
A. Protein 25 gm
B. Nuts (almond, Kaju) for healthy fat
C. Milk or some dairy products
D. Any one fruit based on session
E. Chia seeds for fibre.
It's at no scale cheap, in fact, a very expensive one.
But my thought process is clear that I get only one body in this birth. I have to take care. Cars, Bikes, Netflix, movie tickets are not my priority. No OTT subscription I have currently. Only Claude and ChatGPT subscription for boosting my work and research.
You may criticize my routine. It is very monotonous. The fact is...I do not gulp any pill and plan to not gulp any in coming at least three decades.
P.S. The biggest challenge I face is... getting separated from the community because my approach is different. I have to learn to live with this.
People are mocking my process often saying that it is dead compounding. Well, I have nothing to defend.
I am a simple person with a plan. My routine and process are boring. Here it goes..
1. Get up and drink water and go to daylight before checking the phone. Non-negotiable.
2. Go for a walk for at least 20 min. Non-negotiable. Run weekly once at least. Non-negotiable.
3. Return, take bath and have a healthy breakfast. The menu can change but not the concept
A. Protein 25 gm
B. Nuts (almond, Kaju) for healthy fat
C. Milk or some dairy products
D. Any one fruit based on session
E. Chia seeds for fibre.
It's at no scale cheap, in fact, a very expensive one.
But my thought process is clear that I get only one body in this birth. I have to take care. Cars, Bikes, Netflix, movie tickets are not my priority. No OTT subscription I have currently. Only Claude and ChatGPT subscription for boosting my work and research.
You may criticize my routine. It is very monotonous. The fact is...I do not gulp any pill and plan to not gulp any in coming at least three decades.
P.S. The biggest challenge I face is... getting separated from the community because my approach is different. I have to learn to live with this.
❤6
Read three times.
Especially, the last point
JEFFERIES ON BANKS
• FCNR-B mobilisation crossed $60 bn in just 10 days, taking total flows to $136 bn, ~4x the 2013 scheme flows.
• Strong flows enhance banking-system liquidity ahead of the festive season and may help keep rates lower.
• RBI may absorb some liquidity via repo operations; Jefferies sees a lower probability of a CRR hike.
• FCNR-B could lower NIMs, but remains accretive to NII.
• Better liquidity expected to benefit NBFCs and smaller private banks.
Especially, the last point
JEFFERIES ON BANKS
• FCNR-B mobilisation crossed $60 bn in just 10 days, taking total flows to $136 bn, ~4x the 2013 scheme flows.
• Strong flows enhance banking-system liquidity ahead of the festive season and may help keep rates lower.
• RBI may absorb some liquidity via repo operations; Jefferies sees a lower probability of a CRR hike.
• FCNR-B could lower NIMs, but remains accretive to NII.
• Better liquidity expected to benefit NBFCs and smaller private banks.
Proof
If you have listened to the last audio, you will know that companies from India are expanding to other countries...have a low probability of success.
Here is another example.
TATA CHEMICALS:
Kenya's president orders Tata Chemicals to end operations in the country , Says its presence had failed to benefit the country.
PS: If you have not listened yet, you are missing something very important. Do listen.
If you have listened to the last audio, you will know that companies from India are expanding to other countries...have a low probability of success.
Here is another example.
TATA CHEMICALS:
Kenya's president orders Tata Chemicals to end operations in the country , Says its presence had failed to benefit the country.
PS: If you have not listened yet, you are missing something very important. Do listen.
❤2
Interesting Updates
Sterlite Tech
Management said business is at a pivotal moment with scale of opportunity enhanced significantly by AI data centers (DC).
AI DC needs are very different from traditional DC, including higher AI density driving multi-fold growth besides interconnection between DCs.
In addition to US DC opportunity for STL Indian market will also see 10G by 2030 from the current 1.5GW.
India’s DC market will provide an added opportunity for STL to extend global relationships to the home market
STL is targeting Rs200bn revenue by FY29 (vs estimate of Rs104bn with margin of 27% (vs estimate of 23%).
STL will be expanding capacity to 1.5x to enable the next growth phase and will invest Rs10bn annually including a new greenfield manufacturing facility in India
Management said business is at a pivotal moment with scale of opportunity enhanced significantly by AI data centers (DC).
AI DC needs are very different from traditional DC, including higher AI density driving multi-fold growth besides interconnection between DCs.
Sterlite Tech
Management said business is at a pivotal moment with scale of opportunity enhanced significantly by AI data centers (DC).
AI DC needs are very different from traditional DC, including higher AI density driving multi-fold growth besides interconnection between DCs.
In addition to US DC opportunity for STL Indian market will also see 10G by 2030 from the current 1.5GW.
India’s DC market will provide an added opportunity for STL to extend global relationships to the home market
STL is targeting Rs200bn revenue by FY29 (vs estimate of Rs104bn with margin of 27% (vs estimate of 23%).
STL will be expanding capacity to 1.5x to enable the next growth phase and will invest Rs10bn annually including a new greenfield manufacturing facility in India
Management said business is at a pivotal moment with scale of opportunity enhanced significantly by AI data centers (DC).
AI DC needs are very different from traditional DC, including higher AI density driving multi-fold growth besides interconnection between DCs.
Trap of Retail Investors
If you find yourself in a hole, first thing that you do is STOP DIGGING.
-Buffet
We spent a lot of time to debate if IT sectors or big private sector banks are coming back.
The share price falls and the retail investors keep buying. We don't check the allocation and anchor ourselves to share the price. The concept of allocation does not exist in our mind.
I keep interacting with fellow investors and they keep buying HDFC/Infosys/IEX because they think that these shares are trading at discount.
I have no problem with buying any companies for whatever reasons that they believe.
If someone believes that the business will turn around and share price will go up eventually, fair enough.
But allocation must be on check. My limit is 15% of portfolio on the turn around story.
No matter how much the share price falls off those companies, I won't keep adding. Because allocation will hit the brakes. If you don't like 15%, pick your number.
Importantly, build a system in place. No youtube video will talk about such systems. It will either advocate to buy or convince you to sell.
PS: No buy or sell recommendations on any of these stocks. I have the MFI segment as a turn around bet. AU bank was in this list totalling 14%. No recommendation. This is to illustrate the concept.
If you find yourself in a hole, first thing that you do is STOP DIGGING.
-Buffet
We spent a lot of time to debate if IT sectors or big private sector banks are coming back.
The share price falls and the retail investors keep buying. We don't check the allocation and anchor ourselves to share the price. The concept of allocation does not exist in our mind.
I keep interacting with fellow investors and they keep buying HDFC/Infosys/IEX because they think that these shares are trading at discount.
I have no problem with buying any companies for whatever reasons that they believe.
If someone believes that the business will turn around and share price will go up eventually, fair enough.
But allocation must be on check. My limit is 15% of portfolio on the turn around story.
No matter how much the share price falls off those companies, I won't keep adding. Because allocation will hit the brakes. If you don't like 15%, pick your number.
Importantly, build a system in place. No youtube video will talk about such systems. It will either advocate to buy or convince you to sell.
PS: No buy or sell recommendations on any of these stocks. I have the MFI segment as a turn around bet. AU bank was in this list totalling 14%. No recommendation. This is to illustrate the concept.