1. Disproportionate returns are generated from companies undergoing ROCE expansion, pharma saw a massive run due to Roce expansion playing out. Roce expansion takes place when sectoral tailwinds are blowing.
2.Running vanilla screeners wont do it and one is likely to lose out on returns depending solely upon them.
3.A lot of our investee companies such as Laurus, Neuland were trading at close to single digit Roce in the last year.
4. We expect a similar story to play out in Strides pharma. Long gestation investments lead to higher interest,Rnd cost and depreciation and underutilization of sales force leading to optically depressed Roce.
5. Inturn leading to a company that is actually strengthening its business moat appear as if its going down the drain. Reading between the lines is essential for seperating wheat from the chaff.
@Rachitpandey299 @moatseeker @chiragdashj @blazingbhat
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