Wealth Creators for Next 5 years
Warren Buffett has rightly said "Most people get interested in stocks
when everyone else is. The time to get interested is when no one else
is. You can't buy what is popular and do well."
So let us look at potential sectors and stocks which can give us
multibaggers for the next 3-5 years. Rather then giving tips purpose
of this newsletter is to take you through the process of identifying
multibaggers that will help you in future selection of stocks.
The sector/stocks discussed below confirm to our earlier
recommendations of concentrating on 7-8 sectors and having a 60:40 mix
of mid caps and large caps in the portfolio.
Disclaimer: Do your own research before buying any stocks and build
your own conviction.
Sectors to Invest:
Steel and other Natural Resources
Engineering
Railway Infrastructure
Logistics
Banking
Hotels
Media and Entertainment
Pharma Packaging and Clinical Trials
Sectors to Avoid:
Real Estate
Airlines
Textiles
Cement
Gems of the market
· Tata Steel – Capacity to grow ten fold from pre-corus
acquisition time in the next 6-7 years. Margins expected to double
from current 13% to 25% in the next 5 years as the cost of producing
steel in India at $500 per tonne is lowest in the world while in UK it
is $1000 per tonne. Slowly company will bring down cost of producing
steel in UK by synergizing the operations in India and UK like
shipping semi finished products from India to UK etc. Demand-supply
scenario of steel remains favorable so prices will remain strong in
next few years. Management is of top quality and price remains
reasonable (PE of less then 10).
· Reliance – Benefits of new businesses like RPL refinery in
Jamnagar (RIL has 60% stake in it), Reliance Retail, Oil exploration
will start kicking in from this year itself. Also the company is
entering into SEZ business in a big way. After the fall price is now
reasonable. As everybody is well aware about the company let us not go
into more details.
· Punj Lloyd – 2nd biggest engineering company after L&T in
India. Over last few years the reputation and size of projects
undertaken by the company has consistently grown. While high raw
material prices remains a risk in the near term the long term
prospects are good as the company undertakes big projects in different
sectors and margins are expected to improve steadily.
· Kalindee Rail – With the railways turning around Indian
government is going to spend liberally on improving the rail
infrastructure in next few years. Also rail sector is going to benefit
from the high crude oil prices.
The company has good performance track record on metro projects which
is the focus of many cities like Delhi, Mumbai, Calcutta. The company
has a current order book of Rs 500 crore and
expected to get Rs 10000 crore of orders in next few years. Do we need
to say more
· Aegis Logistics – Logistics sector is booming in India with
high growth rate of the economy. Logistics industry is expected to
grow at a compounded growth rate of 30% for the next few years. The
company is investing a lot of money to increase the cargo handling and
warehousing capacity. Valuations are dirt cheap due to high crude oil
prices but company can overcome it by passing on the costs to the
consumers.
· SBI – Largest bank of India trying to change the PSU culture
to compete with private banks. Big trigger will be merger of its
subsidiaries with itself which will make it 40% bigger, demerger of
its high growth businesses like insurance, Mutual Funds. Price
reasonable as compared to similar size private banks.
· Sayaji Hotels – A small player in restaurants, hotels
business dreaming big(From one 3 star hotel, 15 restaurants now to 300
restaurants, five-six 3 star hotels planned in next three years) and
having all the qualities to do it. Unique concept of barbeque on each
table of the restaurant and superb customer services gives it an edge
over rivals. I urge all the potential investors to visit their
restaurant chain 'Barbeque Nation' at least once to see it themselves.
Margins are high at 30% and financial performance is impressive.
· ENIL – Radio is a powerful medium to reach out to people in
India as TV is still out of pocket for many people. Till now the
company has been in investment phase and doing very well by increasing
the number of stations/cities covered at a fast rate. Ad rates are
expected to remain strong and next 2-3 years will see a explosive
growth in this sector.
ENIL or 'Radio Mirchi' is the undisputed leader of the FM space.
The company's outdoor advertising business is also growing at a very
impressive rate.
· Pyramid Symaira – Dreaming to be the biggest entertainment
company of the world it already has 1000+ screens with revenues
doubling every quarter last year. It is present in the entire value
chain of entertainment business starting from production, special
effects, distribution, exhibition, food and beverage etc. and all the
geographies-US, UK, Australia, India, China.
The company tries to lease the old cinema halls and convert them into
multiplexes rather then buying land thus reducing costs. They also
plan to digitally distribute films in all the screens via satellite
simultaneously and have launched innovative schemes like low cost
monthly pass, personalized customer services like birthday reminders
for regular customers.
Only concern is their over aggressive style of management which can be
a boon if handled properly but a bane if not.
· Time Technoplast – is in the niche market of pharma packaging
and clinical trials which is expected to more then double in size in
the next 3 years. It is market leader of the sector with very healthy
margins of 30%.
It has few innovative products like anti counterfeit packaging of
pharma products etc. Pharma companies spend billions of dollars every
year on R&D and clinical trials of new drugs is an integral part of
that process which they are now outsourcing to companies like Time
technoplast, Bilcare etc.
Quote of the week:
No gambler/speculator brings the winning amount to his home. When he
wins he plays to win more and when he loses he plays to cover his
loss.
So invest for long term in equities and create wealth for yourself,
your family and underprivileged sections of the society.
Aaryan
Wealth Creators
Learning of the week:
Monitor the results of the companies regularly and base your buy/sell
decisions on performance rather then price movements. Always let your
flowers bloom and cut the weeds from your portfolio.
Whenever your investment goes wrong take full responsibility of it so
that you learn from it and become a better investor in future.
When you invest in a company think like you have bought a stake in it
and reap the fruits of growth as long as the company does well.
when everyone else is. The time to get interested is when no one else
is. You can't buy what is popular and do well."
So let us look at potential sectors and stocks which can give us
multibaggers for the next 3-5 years. Rather then giving tips purpose
of this newsletter is to take you through the process of identifying
multibaggers that will help you in future selection of stocks.
The sector/stocks discussed below confirm to our earlier
recommendations of concentrating on 7-8 sectors and having a 60:40 mix
of mid caps and large caps in the portfolio.
Disclaimer: Do your own research before buying any stocks and build
your own conviction.
Sectors to Invest:
Steel and other Natural Resources
Engineering
Railway Infrastructure
Logistics
Banking
Hotels
Media and Entertainment
Pharma Packaging and Clinical Trials
Sectors to Avoid:
Real Estate
Airlines
Textiles
Cement
Gems of the market
· Tata Steel – Capacity to grow ten fold from pre-corus
acquisition time in the next 6-7 years. Margins expected to double
from current 13% to 25% in the next 5 years as the cost of producing
steel in India at $500 per tonne is lowest in the world while in UK it
is $1000 per tonne. Slowly company will bring down cost of producing
steel in UK by synergizing the operations in India and UK like
shipping semi finished products from India to UK etc. Demand-supply
scenario of steel remains favorable so prices will remain strong in
next few years. Management is of top quality and price remains
reasonable (PE of less then 10).
· Reliance – Benefits of new businesses like RPL refinery in
Jamnagar (RIL has 60% stake in it), Reliance Retail, Oil exploration
will start kicking in from this year itself. Also the company is
entering into SEZ business in a big way. After the fall price is now
reasonable. As everybody is well aware about the company let us not go
into more details.
· Punj Lloyd – 2nd biggest engineering company after L&T in
India. Over last few years the reputation and size of projects
undertaken by the company has consistently grown. While high raw
material prices remains a risk in the near term the long term
prospects are good as the company undertakes big projects in different
sectors and margins are expected to improve steadily.
· Kalindee Rail – With the railways turning around Indian
government is going to spend liberally on improving the rail
infrastructure in next few years. Also rail sector is going to benefit
from the high crude oil prices.
The company has good performance track record on metro projects which
is the focus of many cities like Delhi, Mumbai, Calcutta. The company
has a current order book of Rs 500 crore and
expected to get Rs 10000 crore of orders in next few years. Do we need
to say more
· Aegis Logistics – Logistics sector is booming in India with
high growth rate of the economy. Logistics industry is expected to
grow at a compounded growth rate of 30% for the next few years. The
company is investing a lot of money to increase the cargo handling and
warehousing capacity. Valuations are dirt cheap due to high crude oil
prices but company can overcome it by passing on the costs to the
consumers.
· SBI – Largest bank of India trying to change the PSU culture
to compete with private banks. Big trigger will be merger of its
subsidiaries with itself which will make it 40% bigger, demerger of
its high growth businesses like insurance, Mutual Funds. Price
reasonable as compared to similar size private banks.
· Sayaji Hotels – A small player in restaurants, hotels
business dreaming big(From one 3 star hotel, 15 restaurants now to 300
restaurants, five-six 3 star hotels planned in next three years) and
having all the qualities to do it. Unique concept of barbeque on each
table of the restaurant and superb customer services gives it an edge
over rivals. I urge all the potential investors to visit their
restaurant chain 'Barbeque Nation' at least once to see it themselves.
Margins are high at 30% and financial performance is impressive.
· ENIL – Radio is a powerful medium to reach out to people in
India as TV is still out of pocket for many people. Till now the
company has been in investment phase and doing very well by increasing
the number of stations/cities covered at a fast rate. Ad rates are
expected to remain strong and next 2-3 years will see a explosive
growth in this sector.
ENIL or 'Radio Mirchi' is the undisputed leader of the FM space.
The company's outdoor advertising business is also growing at a very
impressive rate.
· Pyramid Symaira – Dreaming to be the biggest entertainment
company of the world it already has 1000+ screens with revenues
doubling every quarter last year. It is present in the entire value
chain of entertainment business starting from production, special
effects, distribution, exhibition, food and beverage etc. and all the
geographies-US, UK, Australia, India, China.
The company tries to lease the old cinema halls and convert them into
multiplexes rather then buying land thus reducing costs. They also
plan to digitally distribute films in all the screens via satellite
simultaneously and have launched innovative schemes like low cost
monthly pass, personalized customer services like birthday reminders
for regular customers.
Only concern is their over aggressive style of management which can be
a boon if handled properly but a bane if not.
· Time Technoplast – is in the niche market of pharma packaging
and clinical trials which is expected to more then double in size in
the next 3 years. It is market leader of the sector with very healthy
margins of 30%.
It has few innovative products like anti counterfeit packaging of
pharma products etc. Pharma companies spend billions of dollars every
year on R&D and clinical trials of new drugs is an integral part of
that process which they are now outsourcing to companies like Time
technoplast, Bilcare etc.
Quote of the week:
No gambler/speculator brings the winning amount to his home. When he
wins he plays to win more and when he loses he plays to cover his
loss.
So invest for long term in equities and create wealth for yourself,
your family and underprivileged sections of the society.
Aaryan
Wealth Creators
Learning of the week:
Monitor the results of the companies regularly and base your buy/sell
decisions on performance rather then price movements. Always let your
flowers bloom and cut the weeds from your portfolio.
Whenever your investment goes wrong take full responsibility of it so
that you learn from it and become a better investor in future.
When you invest in a company think like you have bought a stake in it
and reap the fruits of growth as long as the company does well.