"I feel not just 2/3/5 years but the coming 10/15/20 years, if not more, is when Inda will really shine out. India as an economy, India as a business, India's stock market and India's capital markets. I think it's a dream period and I salivate almost." Bharat Shah ASK. "Today India is at a fortuitous set of circumstances. Many quality businesses are abounding, entrepreneurship is flourishing, the govt is enabling ease of doing business in the right way, infra is growing at an unprecedented pace and tech embraced by the govt is remarable."

Today's column by @dhirendra_vr in @ETPrime_com is an absolute must-read for ultra LT investors like @dmuthuk

Some highlights.

"Let’s do something unusual. Let us consider the progression from bottom to bottom. Look at where the Sensex ended up after those terrible bear mkts "We’ll start at 120 points in 1980. Here’s the bottom to-bottom series after that. March 1988: 390; July 1993: 2,100; September 2001: 2,600; March 2009: 8,200. April 2020: 28,000" Those were the sad times when investors were down in the dumps.

"The $30 bn a month mark has historically been the “psychological barrier” for Indian exports. When in March 2021, the goods exports crossed the mark comfortably, the lazy analysis in the opinion pieces was a regurgitation of usual ideas— change a trend rather than a blip. Commodity prices are up, there is a shipping cost inflation, it’s just a blip and so on. The analysis—and the failure to spot an emerging trend—could not have been more wrong. From March 2021-February 2022, every month has clocked more than $30 billion in goods exports.

In IT services there is only one company with high barriers to entry. There is only one Goliath. and that company is TCS. It is bigger now than the next 2 IT services companies in India put together. TCS's barrier to entry as it consistently grows at 15/16% each year, is its ability to create its moat, built around training and re-retraining 2.5 lac people every year. It's the world's largest trainer/retrainer of white-collared professionals.

Berkshire Hathaway Inc. is trading at more than $421,000 per Class A share, and the market is optimistic. That’s a problem. The price has grown so high, it has nearly hit the maximum number that can be stored in one common way exchange computers handle digits. Nasdaq’s computers can only count so high because of the compact digital format they use. The biggest number they can handle is $429,496.7295. Nasdaq is rushing to finish an upgrade later this month that would fix the problem. It’s the stock-market version of the Y2K bug.

Tony Hseih, the founder of Zappos.com, who tragically died Friday at the age of 46 of injuries from a house fire in New London, Conn., was a true genius. A thread on him, sourced from a WSJ obit column. As a young entrepreneur, he changed the face of internet retailing with bold strokes. To overcome customer skittishness about ordering shoes without trying them on first, Zappos offered free shipping/free returns, giving customers as long as a year to send back unwanted products.

Additions and subtractions to the S&P 500 are normally a ho-hum affair, but Dec 18th 2020, the day on which Tesla debuts' in the Index (which coincides with a quadruple witching day) will be nothing like any one's seen before. It will be a chaotic and a tumultuous event. Tesla’s inclusion is expected to put more than $100 bn into motion. Index funds will have to sell smaller stocks already in the S&P 500, somewhere between $60 to $80 bn depending on Tesla’s market cap, and use that money to buy shares of the carmaker.

Jack Ma, the founder of e-commerce giant Alibaba, made headlines in 2008 when he bemoaned how hard it was for small businesses to get loans: “If the banks don’t change, we’ll change the banks.” He has not repeated his warning since then. He has not needed to. Alibaba is now a giant in its own right. Over the past year, it counted more than 1bn active users. Last year it handled 110trn yuan ($16trn) in payments, nearly 25 times more than PayPal, the biggest online payments platform outside China

Last year Domino’s Pizza began testing a new service: a way to pick up a pizza without entering the store. Upon arrival, you check-in via the Domino’s app on your phone or text message, and an employee deposits the pie in the trunk of your car. You never make contact. Then the pandemic hit, and suddenly customers either couldn’t or wouldn’t enter stores. Domino’s quickly rolled out “Carside” pickup to its stores. It is one reason why Domino's thrived during the pandemic. Its sales and stock price surged while other restaurants struggled.

Apple Still Wears the Market Crown. It Can Easily Slip.
Many investors seem to believe that today’s giant technology companies will dominate the stock market for decades to come. Years, maybe. Decades, probably not. On Aug. 31, Exxon Mobil Corp. was booted from the Dow Jones Industrial Average. That should serve as a warning about the technology stocks that, at least until Thursday’s shocking 5% decline, have been the market’s darlings.

"ITC was 10X in 10 years, 100 X in 20 years and 1000X in 35 years. The point is to reach my 10X goal. If I buy an expensive business like D-Mart, instead of 10 years I'll take 12 years to reach my 10X goal. But If I compromise my Business principles I'm never gonna reach the 10X" "If the company is zero debt, capable of growing 10/15% on volume growth and margin, expensive valuations are of little importance to me. You get asset inflation for good companies because there is so much money chasing it"

Rarely have I been so impressed hearing someone speak as I was with listening to Manish Sabharwal, Chairman and Co-Founder, Team lease speak to @jomalhotra , editor national and strategic affairs for @ThePrintIndia .Here's the video and a thread. Thread because you can refer. Nobody understands the real pain. We don't know if people will be frugal or will they be hedonistic when the crisis is over. This is not a crisis of liquidity this is a crisis of solvency. Banks are not in the business of providing solvency. They are in the business of lending.

"For the first time in my investing career, I will unfortunately experience a negative gross domestic product growth in India"

Akash Prakash at his very best.

mybs.in/2YNIb3r India has underperformed its emerging market peers quite dramatically over the past three months. Indian markets are down about 30 per cent (in dollar terms) compared to 15 per cent for the broader MSCI EM Index.

Abraham Germansky disappeared on October 24th, 1929. The New York Times posted a short story near the back of its October 26th edition, with Germansky’s lawyer, Bernard Sandler, asking for information on his whereabouts. It tells a powerful story in just a few words. Later that week another investor in the same city had a very different experience. Jesse Livermore returned home on October 29th to a wife who, seeing news of the day’s record market crash, was prepared to console her husband and return to a life of frugality.

Going by the GMP of roughly Rs.350 and an indicative Issue price of Rs.750 SBI Cards is likely to list at a market cap of over Rs.1 Trillion (94 cr shares X 1150). That would make it the most expensive financial services company in India at 19 times P/BV ( at FY20 EBV of Rs.60) There are multiple triggers to suggest that this valuation can sustain but an IRCTC like performance post listing (4 months on) seems difficult as unlike IRCTC, the management of SBI Cards is leaving little on the table for investors pricing the issue at over 12X book value.

So ITC is back to levels last seen in Dec of 2016. The stock often necessitates intense debate on whether it is genuinely undervalued or a value trap? I had a small chat with a friend, whom I reckon has one of India's finest research minds. I'm posting his views in this thread. There are multiple ways to look at ITC. Starting with a base of 100 customers from Q1 of FY09 they are down to 87 as of now. As a consumer business, ITCs inability to attract and retain customers has been the biggest reason behind PE contraction from 35x to 25x in a 10 yr period.

Let me tell you an incredible story about a mutual fund that bought a few stocks 84 years ago and hasn’t moved a muscle ever since.

The fund, known today as Voya Corporate Leaders Trust, was launched Nov. 18, 1935, with its hands tied. It would hold the identical number of shares in each of its 30 stocks. It could never buy new holdings or sell out of its existing ones unless a company went bankrupt, underwent a merger or became “inadvisable” to keep.

Here's an interesting story about a British bank called Natwest. Natwest invested Rs.40 cr for a 20% stake in an Indian bank in 1995. Less then 3 yrs later Natwest got involved in a major scandal of interest options, a complicated derivatives product it did not fully understand.

https://twitter.com/dmuthuk/status/1182222360704733184

Natwest revealed a £90 mn loss after investigations by authorities, deeply eroding the confidence of its investors and shareholders. By that time the Rs.40 cr investment in the Indian bank (20% stake) had grown to Rs.260 cr.

Many amongst us are asking this question,'Can India become the new factory to the world with the US-China trade war forcing manufacturers to look elsewhere?'. Sadly the answer is a resounding 'NO' (1/N) Comparative FDI data among EMs and the World Bank’s various business environment indicators offer us a rough index of India’s poor showing as a desirable invt destination. The narrative is well established: Red-tape, corruption, policy uncertainty, inadequate personal security.

While the government wants to double foreign tourist arrivals from the current 10 million by 2025, it appears a difficult task. Here's why (1/n) An additional 180,000 guest rooms are required to cater to such a volume - the present inventory is 120,000 rooms. At an average capital expenditure of Rs 1 crore per room, an estimated amount of Rs 180,000 crore would be required.