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1/ THREAD on improving understanding of a business.
Usually the first step in fundamental investing. Over time I have found it useful to simplify the complex positioning of a biz into a few simple categories
2/ Most biz I know can be classified into one or more combinations of the following categories (pt3) Some simplified examples later in the thread to explain.

Disclaimer: This is limited to my understanding. It’s not perfect. It’s not a formula. May not work for you.
3/ These basic categories are:
- Manufacturing / Production
- Financing / Leasing
- Store / outlet
- Rental
- Construction / Project based
- Distribution
- Trading / Arbitrage
- Platforms / Exchanges
- Capacity creation
- Intellectual Property monetisation
- Manpower
4/ Ex: FMCG / Durables - mfg (or trading) + distribution
Aviation / Telecom - capacity creation + distribution
Pharma - IP monetisation + mfg + distribution
Power - capacity creation + mfg + (distribution)
5/ Indian IT - arbitrage + manpower + IP monetisation (sometimes?)
Hotels - capacity creation + outlet
EPC / Real Estate - construction / project
Banks - Lending + platforms (select)
6/ Why I use this? Helps me quickly understand what to analyse. Identify strong / weak areas. And gives you an idea of where value lies or where value can be built / get destroyed. Also helps identify how you want to structure your themes
7/ Ex: Educomp (for those who remember) wasn’t an education business. At its heart SmartClass was a product leasing business.
Ex: Telecom towers are a rental biz.
8/ Ex: Pure lending is a financing biz. But quality mgmt can make it a lending + platform biz (ie product cross-sell = fees)
Ex: By this frame real estate players = EPC players since it’s a project / construction biz
9/ Ex on playing themes: One can play real estate through projects / construction (operators) or mfg + distribution (building materials) or capacity creation + distribution (cement) or lending (HFCs)
10/ More ex on theme plays: Play power through capacity creation (plants) or distribution (elect appliances). Play tourism through capacity creation (hotels) or manpower + distribution (forex, travel ops)
11/ I could go on but I hope you get the drift. Most importantly simplifying a biz to basic elements can help you call out incorrect positioning or avoid paying too much for stories. Happy to hear views /fin
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