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Rohan Profile picture
@techlunatic
May 15, 2021 • 8 tweets • 4 min read • Read on X
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Astral Pipes fundamentals :
They have 2 major segments, pipes and adhesives. 77% revenue comes from Piping and the rest from Adhesives.
Both segments have very high margin.
25% PAT CAGR over the past 5 years.
Capacity utilization is far from saturation point.
Astral is already a CPVC leader (77% revenue share) and has diversified into Pidilite's monopoly in the high-margin adhesives segment (23% revenue share) and held up pretty well.
Recent acquisitions show the management's ambition to use inorganic means to make a dent into the high margin segment that Pidilite currently has a dominating market share in (M Seal, Dr fixit)
Comparison with Supreme Industries would be a bit unfair since Supreme does a lot more than just pipes. They make furniture and packaging foam etc. Detailed comparison of Supreme Inds here :

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More from @techlunatic

Rohan Profile picture
Sep 16, 2021
The leaders rally first & become overvalued FAST. There's great premium for showing urgency to pump a lumpsum amount in such stocks early on in the rally.

The laggards start their journey after all the good stocks have already gone up. << One can do SIP in such slow movers. Image
Should we only buy the leaders?

No.

Figure out where we are in the Bull cycle.

Have the leaders..

1. a) taken off in a big way
1. b) or starting to take off

Have the second rung stocks..

2. a) caught up with the leaders
2. b) yet to catch up

Your alpha comes from there
The second rung stocks too have the potential to reach the same destination, albeit, with a lag. Use this lag for timing your investments. If the leader is in a strong uptrend, start SIP-ing into the other one. Catch the leader at any future drawdown.

Read 5 tweets
Rohan Profile picture
Sep 9, 2021
A short thread🧵

The US armed forces faced a dilemma during WW2, because returning bomber planes were riddled with bullet holes and they needed better ways to protect them.

The army knew they needed armor to protect their planes but the question was, “Where should they put it?”
When they plotted out the damage these planes were incurring, it was spread out, but largely concentrated around the tail, body and wings. So the most natural impulse was to armor the parts with the most bullet holes.

But..
Abraham Wald, a statistician, made an observation—the military would make a terrible mistake by upgrading the armor along these sections.

Why?

Because the military was only looking at the damage on returned planes. They hadn’t factored in damage on planes that didn’t return.
Read 5 tweets
Rohan Profile picture
Sep 8, 2021
Maruti, fundamentals history :

20Y EPS growth CAGR : 12%
10Y growth CAGR: 7%
Current EPS : 140rs /share
Yield at CMP : 2.5%

What is this *Yield? 👍

Explanation in the comments section below 👇 Image
Read 4 tweets
Rohan Profile picture
Jul 30, 2021
When a stock falls, it opens up deeper arbitrage opportunities during a 'falling knives' scenario. This discount attracts a rapid influx of fresh cash until the arbitrage opportunity gap is filled (i.e the market stabilizes) to the point of 0 alpha.
Earnings yields is mostly stable and smooth curve. It's the stock price that fluctuates due to sentiments, liquidity, news cycle, perception etc.

Let's say the long term earnings yield was growing at 9%. If you bought at

(A), your returns = 5%.
(B), your returns = 15%
If you track yield, you'll get better entry points and get better bang for buck. If you track only price, there's a risk of getting trapped at (A) where all technical indicators are bullish.
Read 7 tweets
Rohan Profile picture
Jul 29, 2021
Stock prices respond disproportionately to free float availability (or lack thereof) than to theoretical Excel valuations. The growth rate x float decides the PE multiple, that's why every co. can't be 15PE. A co. with just 10% float will deviate that much from its DCF valuation.
If there's 2 similar co.'s, one listed (with 15% float available to investors) vs another co. unlisted. The market will arrive (rightly so) at wildly divergent valuations for both. The second co.'s valuation is based on 100% ownership, while the 1st one on a limited supply basis.
If both were listed with 100% float available to free-market forces, or if both were unlisted, then one can do a side by side DCF, otherwise sharing social media infographics comparing stats of Nestle vs Amul, vs ITC without considering locked up float shows lack of wit.
Read 6 tweets
Rohan Profile picture
Jul 29, 2021
The central narrative of my investment narrative has never been and will never be :

a) Catching stocks at the bottom
b) Catching potential multibaggers
c) Being obsessed with the chosen few 'potential multibaggers'
d) Buying 'safe' stocks and avoiding errors at any cost.

👇
a) Never caught these at the bottom :

b) Never treated this as a 'potential multibagger' when I bought it, just a better-than-average candidate among others.
Read 6 tweets

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