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Harish Krishnan,CFA Profile picture
Harish Krishnan,CFA
@hktg13
Investing from 1st principles. These are my personal views & may not necessarily represent the views of my organisation - ABSL AMC
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Apr 11 • 4 tweets • 2 min read
Interesting data point from NSE on different marketcap exposures various categories of investors are exposed to -(each decile is approx 200 companies) Image .. and how it has progressed in post Covid for individuals, pre Covid the holding was similar to current DMF with 80pct in 1st decile - big shift as investors have embraced the size effect Image
May 6, 2023 • 12 tweets • 5 min read
One of the most exhaustive reads on climate change from Indian perspective, on credit, opportunities, challenges, impact on economy, lives n livelihood - RBI recent report on Currency & Finance.

Few charts that caught my eye... steady rise in temperature,more so in last decade Image ...though from a trendline and anomaly pov, rest of world seems to have it worse... ImageImage
May 3, 2023 • 4 tweets • 1 min read
I have been fascinated by this set of companies -"Super-compounders". These are basically companies, where sales of today is equal to profits few years down the line (5 to 10/12 years down the line). I study how rare these extra-ordinary cos (base rates) over 2000-2022... ...how the base rates have moved over time, the key sectors where these super-compounders have been present in (and how they hv changed with time), & how companiess in otherwise "boring" sectors have compounded their profit n revenue pools, often without raising external equity!
Apr 29, 2023 • 11 tweets • 3 min read
"Value" or "Growth" style have been debated endlessly, and while each market participant have their own perspective of what constitutes "Value" & "Growth" - an alternative "quant" insight basis historical evidence over last 22 years of Top 200 stocks in India Image Universe is Top 200 Indian stocks at any point, monthly rebalanced of Top Quintile Equal Weighted long-only portfolios of composite growth & composite value.These are theoretical portfolios with no impact cost,high churn etc,but can help in providing sense on broader style perf
Apr 14, 2023 • 20 tweets • 5 min read
Value accretion of companies over time generally translates to returns to investors,but many a times the difference is so stark that almost all phenomenal gains in market cap of underlying doesn't translate to investor returns-even in a buy & hold strategy!(So not behavioral gap) Case in point China, where returns to investors over 30 years is 0, even though country grew rapidly and so did country's market capitalisation...
Dec 28, 2022 • 10 tweets • 3 min read
Follow up post on how returns were made in equity markets as various countries transited the milestones from 500bn$ onwards... Image Returns in US (period from 1959, when it crossed 500bn$ to 1991, when it crossed 6tn$). Broadly, returns have improved as US moved from 3 to 6tn$, giving good double digit returns.
Dec 25, 2022 • 5 tweets • 2 min read
Interesting visualisation of growth of countries of years needed to hit various trillion $ milestones after it crossed 1tn$, as projected by IMF WEO.
The legends not the easiest to read, so I have just added the 4 countries (CN,JP,India, US). While it is anyone's guess if these projections for India will hold true,few intrstg points
1. Incredible slope of scorching growth that China & Japan have seen, no parallels elsewhere
2. Expectations: India's slope will be faster than US (US hit a tn$ in 1969) & 6tn$ in 1991🤔
Dec 24, 2022 • 4 tweets • 2 min read
Interesting paper of RBI about measuring India's digital economy - the change in share of digital economy in real terms is about 3.5%, compared to about 3% in change in share in nominal terms - effectively consumer surplus (recycled VC money) Puzzled that two sectors of inland transportation and restaurant & hotels are sectors where digital linkages hv declined over time (given the uber/ola/Zomato/swiggy) as some areas which mainstreamed during this period🤔
Mar 29, 2022 • 5 tweets • 2 min read
Given tht ratio of private wealth to income in China is 450-500%(median shd be much lower),7 times today's income to raise child is v challenging ==>all wealth can't be only for education,so wealth has to earn significantly high returns to cover costs,apart from growing incomes.. Will be interesting to see how India stacks up here, our median wealth to income is much smaller than developed world or china, & our spends on education per capita hv grown almost 9x in last 20 years (govt+private spends) compared to almost 6.7x growth in GDP per capita Image
Mar 29, 2022 • 4 tweets • 2 min read
While incessant FII selling is making headlines these days,it is important to zoom out n see big picture. Plotted the cumulative FII flows since GFC bottom to Indian equities & all EM - ex India.Even as FII pulled out of most EM in 2014-17,they persisted with India & "topped up" India is small drop in ocean of financial markets - 3% of world market cap share,& even within EM,its share in MSCI has been 7-8% till the recent surge to 12%.Despite being such a small fraction of EM,cumulative flows hv been large positive all through n more than all EM-ex India
Mar 15, 2022 • 5 tweets • 2 min read
Thr is so much disbelief tht an economy that has gone up 50x in last 30 years had given almost 0 returns! Plotted since 90s,nominal GDP of china & marketcap of same index marketcap of index has grown v similar to economy.What matters is not GDP or mktcap, but returns to investor! While returns have been anaemic, what is incredible is the drawdown chart of MSCI China over these 30 years! Almost every year a 40 to 50% drawdown in index with nothing much to show in terms of returns over so long a period...phew!
Feb 25, 2022 • 13 tweets • 4 min read
With recent rejig announcement in prominent indices, there is a considerable opinion that valuation ratio will sky rocket especially as many loss making new age businesses make their way into some of the indices. Without passing any judgement on the "suitability" of such companies to be in indices etc, think it is important to see if valuation ratio (say P/E) can dramatically change due to such changes, and more importantly the need to look under the hood than just rely on headline ratios
Oct 18, 2021 • 11 tweets • 3 min read
Valuation creep getting mainstreamed?

While median valuation across various quartiles have shown valuation creep over time, this chart shows percent of NSE500 (ex financial) over last few decades tht have price to sales >10x. Price to sale>10x is just one number, thr is no 'lakshman rekha' tht it can't be crossed etc,but across cycles and multiple markets, price to sales>10x has been a barometer of high valuations.(Over simplified by Sun Microsystems CEO-Scott Mcnealy in interview post dotcom crash)
Oct 10, 2021 • 20 tweets • 4 min read
Fuel prices in India - almost everyone has an opinion on what govts must do! Wading to this territory is like walking into a political minefield- attempting the same with data...hopefully adds to understanding of the issue First, overall energy mix over the last few decades has shown a shift towards electricity compared to oil based energy. Needless to say, our sources of electricity are more local (coal, renewable) while oil/gas is primarily hostage to world prices n vagaries of world supplies
Aug 28, 2021 • 14 tweets • 4 min read
Analysis of distribution of measure of capital efficiency(RoE) of listed India Inc over last 2 decades
-stark diff b/w number of cos that make atleast 10% RoE pre GFC and post that
(Total cos in this exercise varies from 1750-2250 across each of 20 years) -10% RoE itself is reasonably low threshold, so gives a sense of odds of identifying franchises tht accrete value over time
-plotting % of loss making cos gives sense of minefield, esp in micro/nano caps
Aug 19, 2021 • 5 tweets • 1 min read
While heartening to see strong earnings recovery for India Inc,imp to also view this is true almost everywhere globally.While there sure r likely to be differences in sectors/commodities driving profits pools across regions,pandemic has surprisingly record profits everywhere! Image Above chart from Citi, on YoY profit growth in various regions for June qtr. For India from June 2020, profits hv more than doubled (base qtr impacted by Covid almost everywhere).
Jul 25, 2021 • 6 tweets • 2 min read
Amazing how energy intensity has moved (energy equivalent required for 1 dollar of incremental $ of gdp) across last 30 years, for India While energy efficiency has improved across the board, the shape of fall in Indian energy intensity, despite such relative poor per capita consumption n incomes is staggering. Barring a few years, india energy intensity is lower than even US across the last 30 years!
Jul 21, 2021 • 18 tweets • 5 min read
Capex chronicles - a thread on India Inc Capex across last 2 decades and 4 key trends

1. Trend#1- headline capex flatlining....Listed India Inc capex (incl M&A) has flatlined across most of last decade, with capex to sales falling to 6-7% from 11%. US S&P500 (ex fin) capex to sales has also been in a narrow band of 6-7% (post dotcom bust), however proportion of spends on R& D hv gone up materially. For eg, Apple Inc has taken R&D to sales from 2%(2011) to 8% (2020)
Jul 20, 2021 • 6 tweets • 2 min read
Fascinating to see the shape of US (sell 2y & buy 10 y) trade indicator - a gauge that aims to arrive at collective market view of long term inflation/economic recovery in US, while reducing near term noise/base effects etc Are bond mkts signalling tht recovery ahead will be even more anaemic than previous decade (this cycle so far topping at 150bps as against 300 bps usually)? More imp,in the last few sessions, US2/10 has fallen below 100bps.Are we in for a muddle-through economy in decade ahead?
Jun 6, 2021 • 11 tweets • 3 min read
While there is a lot of focus on foreign reserves (and rightfully so, in its ability to help during shocks), on a sustainable basis, what matters is Net International Investment Position (NIIP), - ie whether a country is a net creditor or borrower to world. Image India NIIP has been on a gradual improvement trend in recent years, and FY21 should see marked improvement (better current account, sustained capital flows).
May 29, 2021 • 11 tweets • 3 min read
Cash-in-Circulation (CiC) dynamics- thr is a myth that RBI has been printing new money significantly causing CiC to trend up,or people hoarding cash etc. With RBI annual report out,we hv detailed data on both CiC (denomination wise) as well as printing of notes from mint. As can be seen, growth rates are stable. Of course, this is gross new notes printed by mint. Given we have CiC denomination wise from 2 years, we can also calculate the notes extinguished or withdrawn from circulation as well, and what matters is net supply by RBI to economy