tag:blogger.com,1999:blog-735209523627178736.post6659947471315240128..comments2024-01-22T16:29:52.183+05:30Comments on Value Investing: An Intutive Approach to Investing: Investing in stocks:A much better alternative to starting one's own business - Part IDhwanilhttp://www.blogger.com/profile/02537043667425952923noreply@blogger.comBlogger21125tag:blogger.com,1999:blog-735209523627178736.post-84876531648132300292014-05-05T16:29:38.218+05:302014-05-05T16:29:38.218+05:30Hi Karthik,
I must admit that I did miss out on p...Hi Karthik,<br /><br />I must admit that I did miss out on part 2 of the post. But will post that once I post the second part on capital allocation is posted.<br /><br />BR<br />Dhwanil.Dhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-51512156272856202942014-05-03T17:59:41.945+05:302014-05-03T17:59:41.945+05:30Is Part 2 on the making? Awaiting for the Posts......Is Part 2 on the making? Awaiting for the Posts....KKRhttps://www.blogger.com/profile/01207928851925724977noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-60854967387996997382014-02-02T19:01:05.758+05:302014-02-02T19:01:05.758+05:30Hi Vikas,
Thanks for posting a comment and encour...Hi Vikas,<br /><br />Thanks for posting a comment and encouraging in spite of very infrequent and irregular posts on my blog. I wish your assumption was true, and I would have already gained financial freedom..:-) <br /><br />Yes, It makes immense sense to partner with competent and ethical managers running great businesses on your terms and I am equally happy doing that...!<br />Dhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-87846483919600502602014-01-27T21:59:29.405+05:302014-01-27T21:59:29.405+05:30Good to see you back Dhwanil.
I thought you had ...Good to see you back Dhwanil. <br /><br />I thought you had moved in with your in-laws :-) just kidding.<br /><br />Great post. I wonder the same and ask my business friends how much profit/return do they expect after putting in 12-16 hours of work. Somehow I can't justify it.<br /><br />I'm happy to make 20% plus annualized return on my investments in fraction of the time they put in :-)<br /><br />Vikas<br /><br /><br /><br /><br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-71420451974229209582014-01-19T14:37:08.642+05:302014-01-19T14:37:08.642+05:30Agree to most of the content above!
Great Info! I ...Agree to most of the content above!<br />Great Info! I have a small value investing calculator based on Graham’s principle. Would welcome your thoughts. Is it too simplistic ? http://www.tankrich.com/stock-calculators/tankrichhttp://www.tankrich.comnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-9900084249006615402013-12-09T16:19:28.363+05:302013-12-09T16:19:28.363+05:30Hi Dhwanil,
Even I have been reading your blog si...Hi Dhwanil,<br /><br />Even I have been reading your blog since last few months and really like the way you present your ideas. I enjoy the process of learning and am always enthusiastic to share and discuss ideas with fellow investors like you.<br /><br />You estimation about starting a restaurant in a city like Ahmedabad is correct, but I think 1 crore would be required if one goes for the outright purchase of the property on which the restaurant would be sitting. If somebody can rent a decent place at let's say Rs.75 per sq.ft, then his capex would reduce to a great extent, but monthly rentals would be incurred as a recurring cost. <br />The leftover capex would be in the form of furniture, construction, equipments, raw materials, legal costs etc. All this could be managed much below 50 lakhs if I am not wrong in my estimation. But I personally feel that rather than taking the plunge to build one’s own brand, taking the franchise of a well established brand can be the easier route. Due to the mushrooming of shopping complexes and malls, renting a place instead of purchasing the property would be less capital intensive and risky for a small businessman in my opinion. However, other numbers should have to be worked out to understand where ROI is getting maximized.<br />Rental yields are 3-4% in residential real estate, but in commercial real estate the yield is usually higher than 8%. I have observed this at the micro level, but even if you take a closer look at the high profile deal of Express Towers bought by the Blackstone Group, the math works out like this :<br /><br />Total deal size = Rs. 900 crs approx.<br />Total Area bought = 3, 84,000 sq. ft <br />Average Rent per month at Express Towers = Rs. 300 per sq. ft approx<br />Total Annual Rent = Rs. 138 crs approx<br />Annual Rental Yield = 138/882 = 15.36%<br />If 75% of the total area is leasable and average rent is taken conservatively at Rs. 250 per sq. ft, then also the annual yield would be around 9.6 % .<br /><br />I read in one of the interviews of Mr. Rakesh Jhunjhunwala that he bought some land at Secunderabad way back. If he constructs a mall on that land and then lease it to the tenants, the annual yield would be around 25% as per his calculations! That’s the only investment which pleases him apart from his equity investments :)<br /><br />Best Regards,<br />Saurav Jalan<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-46785081844045579382013-12-07T15:12:01.951+05:302013-12-07T15:12:01.951+05:30Hi Saurav,
You are so very right! This is precise...Hi Saurav,<br /><br />You are so very right! This is precisely one of the major downside of passive investing that you have paltry cash flow in terms of dividends only and that too at the discretion of the management! <br /><br />In terms of how to keep on generating regular cashflow, all the options that you have suggested are valid. However, again in terms of starting a restaurant/owning a real estate will require either large amount of capital deployment or one needs to resort to leverage. So, if one has that wherewithal to start a restaurant ( if my understanding is correct, owning a decent restaurant in a city like Ahmedabad,will cost around at least a crore rupee). In real estate, my understanding is that typical yield is 3-4% from rent. So the question is will if suffice? Here also one needs large enough kitty to match with the large ticket size.<br /><br />So, it is a perplexing situation. What I believe could work is either <br />1) If you are a professional,do freelancing which helps you meet day to day expenses while giving you enough time and liberty to spend time on focusing on investing.<br /><br />2) Do a job and start saving early and make sure you earn decent return by spending weekly 6-8 hrs work on investing largely revalidating ideas generated by other value investors through their websites/blogs/forums (valuepickr/TED) and eventually reach critical mass whereby your are financially independent. <br /><br />Though, neither of them are perfect solutions, life is never so simple and straightforward as such!<br /><br />BTW: just saw your blog and really liked it. Let's stay in touch and keep sharing ideas and keep debating!<br /><br />Regards<br />DhwanilDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-66867301989976254322013-12-06T18:23:29.382+05:302013-12-06T18:23:29.382+05:30Hi Dhwanil,
Thanks for sharing your valuable thou...Hi Dhwanil,<br /><br />Thanks for sharing your valuable thoughts with us. I agree that there are a lot of advantages of investment business over running one's own business like flexibility to rotate one's capital in the best opportunities available, scalibility, ability to carry out the business from anywhere with a laptop and internet connection etc.<br /><br />But one needs a continuous stream of cash flows to take care of day to day expenses and surplus capital for equity investments. One can plan such incoming stream of cash flows in many ways. Job, managing other people's money, passive rental income or profits from a small business. Job and managing other people's money would rob you of your independence. Additionally, job might also rob one's peace of mind and leisure time to relax and think. If one can build a small and successful business like owning a small restaurant which is typically a high margin business and it throws a lot of free cash flow, then one will have a lot of time, independence and capital to invest in the equities. Restaurant business has so much margin that one can also hire a good manager to look after the day to day operations. This would also give a hands on experience of efficient working capital management. If one is able to make some money from this business, then he can also buy commercial real estate and earn rental income where yields are typically between 8-12% annually and around 15% capital gains on the property price. This would provide a diversification among various asset classes and would be good for overall financial and emotional well being as for a full-time equity investor it's very difficult to read for 8-9 hours daily by sitting on a chair. 4-5 hours of morning reading daily is very good and sufficient in my opinion.<br /><br />Best Regards,<br />Saurav Jalan Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-76442012535511644602013-12-05T10:37:42.048+05:302013-12-05T10:37:42.048+05:30Hi Nabendu,
I had used Vinati for illustration. T...Hi Nabendu,<br /><br />I had used Vinati for illustration. Though, I was an investor in Vinati, few years ago, I no longer am actively tracking the developments. However, considering their position in the market, I feel it is a good business. With respect to your specific queries, I will need to dig deeper which I will do over the weekend and will get back to you.<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-71923361994462921182013-12-05T10:33:31.059+05:302013-12-05T10:33:31.059+05:30Hi Kb,
I acknowledge and partially agree with you...Hi Kb,<br /><br />I acknowledge and partially agree with your view point that authenticity of data of many Indian companies is a question mark. However, I disagree that market is a scam in that sense. It is too critical a view. Instead, I would put it slightly differently. If one is investing in Indian equities, one has to be spend higher effort on due diligence both on numbers and management than one has to do that for companies in the developed world. I personally feel that given the "Age" of Indian equity market, SEBI has done a phenomenal job to serve the objective of bringing appropriate transparency in the market. Though, it is still in work in progress, we are far ahead of the game as compared to lot of developing markets world around.<br /><br />Also, I feel that Graham and Buffet principles become far more relevant as the whole "margin of safety" concept provides for the error one would make in the judgement. So, I personally feel that stick to Graham/Buffett core principle actually will make more sense in Indian context.<br /><br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-78654962788120337612013-12-01T11:30:21.231+05:302013-12-01T11:30:21.231+05:30Well written. But still, stock markets in India ar...Well written. But still, stock markets in India are a scam when compared with the degree of transparency of the markets in the USA managed by the SEC. SEBI is an evolving organization and has to walk many miles before we can truly apply the data available to Grahams and Buffet's model in India. In India it is reputation of a company and the promoter that makes it an investment grade stock. Rest is all air.kb kitnapaisa?https://www.blogger.com/profile/12674864561829140624noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-30570156964983888892013-11-29T22:56:58.289+05:302013-11-29T22:56:58.289+05:30let me try to answer your query. first of all fccb...let me try to answer your query. first of all fccb was only $5 mn, rest $11 mn was ecb. <br /><br />you are right when you say that the conversion price is rs. 100 per share but the exchng. rate is not going to be the current mkt rate but the rate at which the fccb was taken which was approx rs. 44. so even if the fccb is going to be converted it's not going to make a dilution of less than 5% only.<br /><br />with respect to your statement on PAT increasing by mere 1-2%, i can only suggest you to read the footnote of the unaudited results properly. read it and recalculate the adjusted EBIDTA or even the cash profit then you will realize how good the performance was.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-56934359598283122582013-11-29T13:34:21.791+05:302013-11-29T13:34:21.791+05:30Venkat, sure. I think the key is to own right busi...Venkat, sure. I think the key is to own right business run by competent and ethical management at right price. Rest, the time will take care!<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-53737206886368671152013-11-29T13:32:34.279+05:302013-11-29T13:32:34.279+05:30Thanks, Vivek. I have experienced some of my close...Thanks, Vivek. I have experienced some of my close relatives going through the arduous process, so I can vouch for that!<br /><br />Regards,<br />Dhwanil Dhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-50453155619001853642013-11-29T13:30:10.287+05:302013-11-29T13:30:10.287+05:30Dear Whatsup,
Thanks for writing and sharing your...Dear Whatsup,<br /><br />Thanks for writing and sharing your views. On Jayant Agro, it is too leveraged a business for my comfort especially when the NPM are hovering around 2%. That essentially means that the respectable ROE is largely derived from asset turnover and leverage. I have burnt my fingers, by investing in leverged companies, and observed that when going gets tough, investors pay heavy price for the leverage. Again, these are my personal views from may be 10,000 feet analysis and hence should not have bearing on either prospective or existing investors.<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-30045984248665748722013-11-29T08:54:48.402+05:302013-11-29T08:54:48.402+05:30HI Dhwanil,
Thanx for reflecting the feeling of lo...HI Dhwanil,<br />Thanx for reflecting the feeling of lots of tribesman through your sweet post.<br /><br />You mentioned about Vinati, i have couple of queries on Vinati --<br />Vinati borrowed 16 mil USD in the form of FCCB a couple of years back. In the foot-notes of the latest Annual Report, it is said that these FCCBs have the option of converting into stocks at Rs. 100 each, which using 60 Rs per USD translates to around 1 cr shares, as compared to the current 4.94 crore - representing a dilution of around 20%. Furthermore, the lenders earn only 4% if they hold it till maturity. With the current price at 175, is there a huge risk of dilution? Wouldnt the lenders exercise their option and covert their bonds to stock?<br /><br />Sales increased by 33% (in the past 2 quarters), PAT increased by a mere 1-2%. <br /><br />Would be glad to know your view on Vinati ...nabenduhttps://www.blogger.com/profile/08104799606984739148noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-65845832401408474532013-11-28T23:09:40.630+05:302013-11-28T23:09:40.630+05:30The post presents a different perception to stocks...The post presents a different perception to stocks. I do agree coming from a middle class background its difficult to raise capital for setting up an industry. Investing in stocks an easy way to own a business without running around too much....though the difficult part is owning the right business.Venkathttps://www.blogger.com/profile/05618757823275293585noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-74945228400504388612013-11-28T22:55:18.789+05:302013-11-28T22:55:18.789+05:30Great Words n thoughts.
Its been my philosophy too...Great Words n thoughts.<br />Its been my philosophy too. Exiting a business in India is damn difficult. Vivek Gautamhttps://www.blogger.com/profile/18345598468732335256noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-43688746237516586762013-11-28T19:47:13.578+05:302013-11-28T19:47:13.578+05:30Thanks Karun for your kind words. It is the contin...Thanks Karun for your kind words. It is the continued support of readers like you which keeps one motivated! <br /><br />Best Regards,<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-13339177051490604022013-11-27T22:46:14.303+05:302013-11-27T22:46:14.303+05:30Dhwanil ji:
I think you should look at Jayant Agr...Dhwanil ji:<br /><br />I think you should look at Jayant Agro as an investment based on value investing.<br />Jayant is One of the largest processor of Castor oil and castor oil derivatives in India. India is the largest producer of castor in the world producing 70% of total castor production.. Castor oil and its derivatives have a unique position that .. they are established as "Green Chemicals" ie. they replace "Crude oil" in the chemical industry..<br /><br />Castor oil is used in Lubricants, coolants, high performance plastics, paints, ink, cosmetics, deodrants, soaps, chocolates and much much more.. (Intravenous - Parentals), jelly filled cables, capacitors, auto parts..<br /><br />Jayant has reported 600% increase in profits and 400% increase in sales in past 7 yrs .. the stock price is still languishing at 7yrs old levels.. <br />Consolidated Sales/NP numbers.<br />March 2007 Sales 462.49Cr Net Profit: 6.76Cr Div:1.25<br />March 2008 Sales 605.96Cr Net Profit: 9.51Cr Div:1.25<br />March 2009 Sales 875.86Cr Net Profit 7.49Cr Div: 1.25<br />March 2010 Sales 904.01Cr Net Profit: 12.47Cr Div:1.50<br />March 2011 Sales 1,175.26Cr Net Profit: 24.92Cr Div 1.75<br />March 2012 Sales 1,832.26Cr Net Profit: 31.35Cr Div: 2.00<br />March 2013 Sales 1,624Cr Net Profit: 36.24Cr Div: 2.25<br />Consistent dividend paying company since inception.. <br /><br />Castor oil and its derivatives are used to produce high value end products.. and demand is greater than supply.. Arkema French Speciality Chemicals giant 6 Billion Euro sales company has recently taken a 24.9% stake in 100% subsidiary of Jayant agro for approximately 30Cr..<br />Mitsu Chemicals and ITOH Oil of Japan have also signed JV agreements to produce Castor based Polyols in India with Jayant (50% stake)making them cost competetive with crude oil based polyols..<br /><br />Market Cap of Jayant is just 112Cr.. <br />One thing that always concerns investors in Jayant is large debt.. This was raised as a concern with Jayant management in AGM and management said that its nothing to worry as its part of how business is done.. short term debt is secured by the raw material bought during harvest season..<br /><br />Annual Report 2013 (Consoldiated)<br />Short term Debt: 236.76Cr (less than 12 months)<br />Long term debt: 48.40Cr<br />Total Debt: 285.16Cr<br />so 83% of debt is short term in nature used to buy raw material during the harvest season..<br /><br />Total Sales 1625.98Cr debt as percentage of sale is: 17.53%<br />-------------------<br />in these 7 yrs promoters have increased their shareholding by more than 10% in 2012 promoters bought close to 10Cr worth of share at avg price of 120 per share..<br /><br />there are only 5198 shareholders.. promoter stake 64.8%<br />--------------<br />PN: I have investments in jayant agro.. pls do your own deep dive before investing<br /><br />=happy investing<br />whatsup-indianstockideasWhatsUphttps://www.blogger.com/profile/06681102062328017892noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-88877382051885041772013-11-27T22:29:51.458+05:302013-11-27T22:29:51.458+05:30Dear Dhwanil,
Thanks for sharing pearls of wisdom...Dear Dhwanil,<br /><br />Thanks for sharing pearls of wisdom with us. I have been reader of your blog since beginning and believe me coz of smart guys like you I have left newspapers and News Channels for investment advise.<br /><br /><br />Regards<br />KarunZero Point SomeOnehttps://www.blogger.com/profile/12687303605569245335noreply@blogger.com