Asymmetric Upside In Investing Vineet Jain Accidental Investor Prince

TITLE: Asymmetric upside in Investing | Vineet Jain | Accidental Investor Prince | #sharemarket #DIY CHANNEL: Accidental Investor Prince DATE: 2024-02-12 ---TRANSCRIPT--- very warm welcome vinit so guys today we have with us vinit Jan and we’ll be discussing like positioning for asymmetric upside in the market so about vinit uh by education he’s an MBA from FMS Delhi and he’s a part of data administrative Services he’s a sharp fundamental investor who is in the market since 2017 so also those who are joining us most of them must be knowing he’s very active on Twitter and he always uh shares his thought process and rationale of any investment he’s he make his uh his portfolio is open to everybody and he he always uh share both the sides why he think this could be a good investment and what are the risk associated with the investment so v a very warm welcome would request you to start from like how it all started for you and then we Deep dive on the process you follow and the current market Outlook yeah over to you V thanks thanks a lot Prince thanks Ravi uh uh look forward to uh speaking to all of you uh and thank you very much for the kind words uh in the introduction Prince you’re you’re a kind guy uh so my journey uh with the markets actually began as a kid you know my dad was fairly active uh in the market and uh growing up there was always this curiosity uh you know around uh why is it that these strange numbers on uh the television screen are flickering and you know everybody is just focusing on uh how those numbers are moving and what this exactly means uh and uh I think I got introduced to the concept of the stock markets and equities fairly early uh in life uh unfortunately I didn’t act on that for a very long time uh so uh you know I went ahead and uh uh I think you know by education did the uh you know the Fairly traditional thing of trying to get into the best engineering school that I could so I went to udct and did my chemical engineering there uh realized that uh you know chemical engineering a great subject but not for me uh so moved then uh post engineering into Consulting worked for a year in uh at e in the climate change team uh then again you know traditional route did an MBA was lucky to get into FMS Delhi uh and then joined the Tata administrative services in 2014 and all through this time I didn’t act at all on uh on investing or uh or trading I knew what it was broadly but it just somehow wasn’t something that I could get my to start doing uh and uh obviously the lessons that uh I had learned throughout from uh from you know people around me who were involved in the market you know some of my relatives and my father uh were very different from what I practice today in terms of style uh so most of the people around me were uh were not really investing per se they were all uh you know focused on trying to make a quick Buck on as many trades as possible as frequently uh as possible and I could you know see uh from them often times how uh infuriating it could get you know when you get something wrong and how happy one can be when you get it right so just the you know the sheer swing in emotions uh was something that maybe you know subconsciously put me off a little bit initially uh and you know while at business school and having joined uh the tatas uh I was doing uh a lot of interesting work in learning about a lot of Concepts so I come from an engineering background so financial statements balance sheets Etc were very new to me and uh I remember in fact uh in in my first uh uh semester at FMS Delhi I failed the accounting course uh and that was quite embarrassing because i’ had been a fairly decent student all along and to you know fail an accounting course was uh was strange and and that’s when you know then I started digging deep and trying to really understand how uh you know how things work and the more time you spend the better your understanding gets and you eventually realize that these are not just you know numbers that are put out on uh on a piece of paper but you know what they actually mean and what they actually represent and how those numbers interact with each other uh and the implications that they have on uh the real world uh and so yeah I finally managed to start uh you know with uh with an sip in a couple of mutual funds in about 2016 or so and by 2017 2018 is when I finally uh decided that okay I think I should try and uh buy some direct Equity positions and you know become really rich really quickly uh as all of us you know think when we when we start out and uh yeah the first couple of years were very interesting uh there were a couple of uh positions that I took which worked out very well in hindsight I realized that uh they had nothing to do with my picking skills they were just pure luck uh these were again you know tips that I had received from somebody I knew who told me this looks interesting I don’t to check it out and I did just a very cursory reading spent about 30 minutes and decided to take the positions and uh couple of them worked out three or four of them did not work out at all uh in fact you know I look back now and I feel you know quite embarrassed about it but I think I had positions in almost every company that went completely bankrupt in the 2016 to 2019 phase at some stage or the other so I held shares of dhfl yes Bank uh luckily I’m you know didn’t touch IL NFS uh so all of those uh you know things happening All In Parallel meant that while I gained in one place I lost in the other place and I could never really understand what is it that makes that makes stock prices move in a particular and you know while it’s fairly intuitive that you want earnings growth and uh uh you know you want sustainability and all of those things but that low of trying to find those disproportionate opportunities was always there and that always led me to making pretty big mistakes uh along the way as well uh and so by about 2018 end of 2019 is when I thought that you know this is not helping because I’m taking two steps forward three steps back then three steps forward two steps back and I’m really not going anywhere uh and so then I decided to just you know buckle down and try and create some sort of a framework and then refine that framework as it goes forward uh and then obviously Co happened so we had a lot of more time uh so you have time from your job uh to you know sit down and actually look at your investing process uh and when I started doing that and this was about the time when uh I think a lot of these YouTube communities had began to form as well with ismo and uh Saga and many of these guys Shashank is well doing uh you know a lot of uh videos on YouTube on businesses and uh when I watched some of those I started to understand that uh you know there are a lot of intricacies uh in uh the world of business and I uh you know being in the fortunate position of being trained in business and working uh you know for uh the tataa group I should be able to do a much better job and so then I started refining that process and it began uh full-fledged uh in about 2019 2020 uh and yeah I think over the last four years the learnings have been tremendous uh the process I think has been improving and I think that’s what my goal has been to try and refine the process get it to improve as much as possible try and identify what my skills are what uh you know my uh my biases are how I can overcome them uh and uh yeah in about I think I started actively sharing information uh on Twitter as well sometime in 22 if I’m not wrong uh but I really got properly active in 23 and you know I figured that Twitter might be a good place to uh just document a lot of the thought process that I had and also seek feedback from uh you know a lot of folks who are looking at similar businesses and industries uh as I am and uh I think that’s the best decision that I took because I’ve uh met such amazing people uh virtually as well as uh you know in the real world over the last year year and a half or so through Twitter largely uh and yeah I think the Network that has been built out has been amazing and you know people like you people like Ravi all of you have uh you know we’ve been able to connect through this wonderful platform uh and yeah I think last four years the you know the the money compounding is fine but I think the knowledge compounding is what’s uh you know really stayed with me uh and uh yeah hopefully uh things can just keep getting better from you great so we need coming to the process which you were like touching upon so from like starting point to your due diligence and finally investing in any company so how the process goes and how you define yourself are you a value investor are you a growth investor or maybe momentum or what kind of investing you believe in h so that that’s an interesting question and I asked myself this question a lot of times I don’t think I’m any of those uh and at the same time I think I’m all of those to a certain extent uh so uh I think uh you know the simplest way in which I can Define my Approach is to try and I try and position myself for you know the highest probability of asymmetric upside but at the same time at the lowest possible downside risk and if possible in the shortest time frame now what does this mean right now there are four parts to this there is highest probability there is potential for asymmetric upside there is lowest possible risk and then there is the time frame uh component uh so I try and break each of these four down individually and and analyze opportunities against each of these four uh parts to my my broad framework and uh when things fit all four I go ahead and take big positions when things fit two or three of the four I start out with small positions and I you know take it from there uh I’ve also realized that it’s uh you know not good to Brand yourself as a particular type of investor and honestly the type of investor that you are will change over a period of time so when I started out uh and when when I actually started spending more time in the markets in 2019 2020 I viewed myself as a out and out value investor and my hypothesis was try and buy you know something that’s extremely beaten down as cheap as possible don’t lose money you know the the uh traditional Buffet rules of uh rule number one never lose money and Rule Number Two never forget rule number one uh which I think broadly apply but they’re very contextual uh and I think uh me like a lot of other young investors at the time tend to take these rules extremely rigidly uh and literally uh and I think we we don’t exactly appreciate uh what what one might lose out on in terms of opportunities if uh you view the market in a particular rigid format uh so I started out as a value deep value investor tried to buy a lot of asset plays uh tried to find things at below Book value uh you know didn’t really focus on uh opportunities or growth potential of a lot of the businesses that that I used to buy uh some of them would just work out by sheer luck because things would revert to mean a lot of other times things would just remain stagnant and I’d be in a value trap for a very long time uh so over a period of time I’ve realized that uh uh I want value in the sense that anything that I buy must come with a significant potential for growth otherwise I’m not interested in that play by and large leave for some situations where there is something in particular happening in a short time frame where I think something can revert to mean and then I might play that as a Time bound opportunity uh as a trade but by and large that will be less often uh more often I will try and focus on uh the asymmetric upside piece of the equation and I can get into the details of uh you know how I think about it and what are the things that I look at of course if if that’s of Interest so process in four pointers so any any example through which you can like explain how all four parameters are covered in that and then we can proceed sure uh so I mean I can speak of particular names if you like or sectors uh if that’s yeah yeah we can speak with proper disclaimer and so not a problem sure so you know absolutely you know the the disclaimers are completely valid and uh I think you know everybody must know that all of us are learning and uh none of what uh is spoken about today is you know any form of advice please do your own research all of this is just based my understanding and my view uh of the markets uh so okay so I’ll I’ll you know break this down into the four parts that I spoke to with a with an example uh so when we speak of asymmetric upside what is asymmetric upside right why does a stock price go up a stock price goes up largely because of two things stock price essentially is valuation which in you know most cases is defined as PE but may not be the the right metric for every industry but for the for the sake of Simplicity like say p uh multiplied by E which is the earnings right so P by E multiplied by E is equal to p uh so there are two parts to this there’s growth in earnings and there is potential for reating where does growth in earnings come from and what does growth of earnings in mean to me growth of earnings means speed and quality of growth in cash flows and this could happen because of you know multiple reasons right you could have Tailwinds coming into a particular sector uh I want to make sure that anything that I’m betting on has a large and increasing total addressable Market it should have a capable and aggressive management uh the business as far as possible should intrinsically be high return on Equity uh and the unit the basic unit economics of the business for me are very important because that’s what determines then the longevity of uh the growth because if you’re investing 100 rupees in the business and the business is giving you back 25 rupees which you can then find Opportunities to reinvest in your business and then earn another 25% on the 25 rupees that you’ve uh reinvested that’s when that entire growth flywheel uh kicks in uh I also look for then potential opportunities for margin expansion uh and these could be you know business specific factors they could be industry Leed Factor something could be changing for the entire industry or something could be changing for that business uh in particular in terms of uh you know it’s its product makes changes in uh its supply chain uh you know prices of uh raw materials Etc could be coming down finished product prices could be rising there could be multiple reasons just operational efficiencies could be happening as well I look for option alties as far as possible uh so there are things that the company has worked on which the market knows there are a lot of things that they’re doing which the market knows but is not accounting for uh because these seem to be low probability uh events but if any of those events work out then the kind of cash flows that the company can make from those events is really large uh I try and find companies which have relative ly concentrated profit pools uh and I think this is a very underappreciated Point uh you know while it’s a very important to look for Tailwinds it’s also important that those Tailwinds then translate into an individual company actually making profits if you’re in an industry where there are 100 players and once the industry starts experiencing Tailwinds in a very short time the 100 players is going to go to 500 players then none of the 500 players are going to make money even though the industry itself will grow really fast uh and so then positioning in any of those 500 players is probably suboptimal uh and at the same time if the companies that you have invested in have some kind of a mo or a right to succeed uh that obviously helps and if there are any regulatory triggers uh that’s the growth side of the equation but at the same time many of these things can be true but if you’re buying the thing at prices where all of these or many of these factors are already discounted by the market then your reating component will not happen and uh for reating uh to happen you I mean I I I’m a firm believer that you should have low starting valuations and many of the other same things right Tailwinds uh if there’s a new business opportunity uh if there’s something that’s changing in the company which is going to increase its return on Equity uh or is going to result in the formation of a mo as the company scales uh and if the cash conversion is improving if the quality of the cash flows is going to get better if there’s good Capital allocation uh so one example where many of these factors worked out was Newland Labs uh which you know I had been tracking for some time uh in 2021 22 when you know things were going ballistic and uh uh there was that phase where uh they had a sudden spike in earnings and the whole Market was rushing into to buy uh the company and I saw that uh saw this you know play out in a way and I was not invested at the time uh so I I saw it go all the way from about 400 450 rupees all the way to 27 2800 or even more I don’t even actually remember what those numbers were uh and I found that many of these factors on growth as well as reating were there in the business at the early stages uh so you know this uh you know obviously was in uh uh I mean the part of the businesses I was most excited was the CNS component uh of the business which I thought had a lot of option alties uh I thought the management was pretty capable and aggressive I you know the Tam was really large there was a Tailwind coming in with all of these you know biotech companies in the west looking for uh capable manufacturers uh here in India uh you could see that the The Profit pools would be fairly concentrated because not a lot of companies are capable of taking on that kind of business from a technical standpoint from an FDA compliance uh standpoint as well uh but by the time I figured this out uh the price had already gone to about 2, 2,500 or so in in an up cycle and I realized that that entire low starting valuation piece which I was you know stuck to was not being met and while there were tail winds uh and the margins had already expanded and I did not see at that point in time a significant upside in margins from there and so then when the business was trading at about uh you know three to four four to five times sales almost at the time and about 30 times earnings I thought that uh you know from here at best if the earnings compounded 20% I’m going to get 20% but is there a merit in taking that kind of risk for a 20 to 25% uh upswing when this is an industry which has a lot of moving parts right there are many things that need to go right uh and so then I decided to sit out of that but I kept tracking the company till uh you know the operating D leverage kick in prices start uh the profit started falling the stock price collapsed it came and formed a nice base uh you know in the 1, to 1200 rupee range and stayed there for a while and that’s when I realized that okay this now is back at the stage where the reating component of my equation is is back on the table and from here because the business has gone gone through a temporary down cycle and the management kept explaining how uh you know the cash flows will continue to be lumpy uh but that said uh by then I had already I think read up enough about the business to know that there are four or five different possible optionality they have you know a lot of drugs in phase three trials the likelihood the probability of any of these working out at that stage was reasonably High especially when it was almost like within that same company your bet was spread across four uh four options and the likelihood of one or two of them working out at at the time was high uh the valuations were you know pretty much Rock Bottom I think it was close to 1 Point 1.2 1.3 time sales 1.5 time sales if I’m not wrong uh and trailing that to not not even forward uh and so then I decided to take that bet uh at that stage and uh uh you know as things would have it uh margin started improving sales started coming back uh growth kicked in and you know the the stock price movement obviously has followed and in fact the reported results yesterday which were very nice as well uh and I think they’re still in that phase of growth uh the reating part of it is questionable and you know the the reating itself also right the value that the market assigns to a business depends on uh how sustainable and how strong the market thinks that business is and I think it’s just the psychology of the markets that it tends to uh overshoot on valuations on the upside as well as on the downside uh so uh that that’s the volatility uh in perception of the business that one could potentially take uh advantage of uh and I’ve used Newland as an example there are obviously many other cases where it has worked there are many other cases where it has has not worked as well which is where portfolio construction becomes important and that’s why you know I said that I try to position for asymmetric upside what that means is there’s no way that you can say with 100% certainty that the bet you take while it looks great on paper is going to work out uh and so it becomes very important to make similar bets across you know potentially different sectors uh different types of companies uh and uh if half or more of them work out you’re going to land up doing very well uh and yeah just in terms of portfolio construction it’s you know equally important to realize when the beted that you’ve made has not worked out to then be able to get out in time and uh move your money to other opportunities and over a period of time what you’re left with is I mean the goal is uh to be left only with winners uh and keep cutting the losers out so I think uh you know my portfolio is public like you mentioned earlier right uh anybody can go to my Twitter uh sorry X profile uh and see all of my Holdings you see that all of these like the top six or seven Holdings I have about 15 16 stocks in the portfolio I try to keep it at a minimum the top six to seven Holdings are all Holdings which I’ve held now for almost two years uh and uh I obviously tried to trade around the volatility wherever I could and did add a little bit to each of those positions over a period of time as well uh but that’s not to say that these were the only seven six or seven stocks that I bought in the time I bought many more many of the ones that did not work out I was able to get rid of uh in the process obviously you’ll end up making a few mistakes as well where you sell stuff early uh but yeah that’s I think a part of the game so the message that you know essentially want to drill down is that it’s important to identify where you can get these asymmetric upsides and then place bets in 8 10 15 such opportunities and if half of them work out and the reason you’ve bet on eight you know 10 15 opportunities because you think each of them has a reasonably high probability of working out uh so just you know mathematically speaking if you have if you think if your assessment is that there’s a higher probability of 15 things working out uh and if your analysis is not horribly wrong uh at least nine or 10 of those things should work out and that you know tends to keep your portfolio in pretty good health right we am I audible yeah yeah so so vit before coming to the sector specific and Market Outlook and opportunities in current market so let me throw a question in the sense like uh site us one example which which you think like all these parameters were ticked but again that didn’t work well and in such cases wherein like your theory goes wrong how you go about selling those position do you like give them some a quarter or two time or it’s it’s like uh how much of time you give to your investment before making a decision they’re working fine or not h no that’s a very good question and that’s something that I’m trying to answer myself in terms of you know how much time do you give a business and when is it that you decide I think it depends it’s very contextual and it depends on the kind of Market that you are in as well uh so like right now when we are in a Raging Bull Market uh just the sheer opportunity cost of your money is very high uh and so I think in this kind of a market it’s important to uh be you know fairly ruthless uh with with with churning out non-performers if you may call it that in a in a different kind of Market in in the kind of Market that we had let’s let’s say exactly a year back right between say February uh of last year February of 23 till about June of 23 when the markets were sluggish and things were uh you know not seeming to go uh anywhere and obvious that only lasted for four months but you know anybody who’s been in the market for long enough will know that these kind of Cycles come from time to time and sometimes things go nowhere for a year so in those kind of markets it becomes important I think to give good businesses a bit of leeway uh especially if you can in your mind quantify whether whatever you know downturn the business is facing or headwinds firstly they need to be temporary and how quickly can those things turn around uh and uh uh you know it’s it’s essentially like uh you know thinking like uh uh you know sain basically is the greatest because of his versatility right and because of his longevity so it’s it’s almost like you know there are different conditions in different parts of the world and he can go and make runs everywhere uh similarly the markets will go through very very different phases they will behave very differently at different points in time it’s important for us as investors to try and identify what kind of a market phase we are in and then adapt our style uh accordingly uh so an example where it didn’t work out and again you know it’s too early to say that it didn’t work out uh but I exited the position anyway was uh uh this company called giti uh which recently became uh all cargo GTI and again this is you know for everyone’s uh uh reference not advice and you know please don’t you know treat this as a bio cell recommendation it’s completely possible that the company does excellently well and goes ahead and makes a lot of money and I might go ahead and buy a position at some stage as well if I things things have changed uh but yeah the bet there was when you know Mr Pera sarari came in and became uh the CEO of GTI uh and uh you know I looked at the business for a while uh it seemed poised for for good things you know there was clearly in a reasonable Tailwind in the express Logistics sector the sector itself was growing at you know 10 15% very large time India is a huge country uh it’s going to just keep getting better very capable management Pera sari is pretty much a legend in the logistics space right he’s been great things uh in the past and came in uh to GTI all cargo group had taken over uh ownership uh by then and uh you know then GTI by extension had access to the entire all cargo uh ecosystem the margins were fairly suppressed because they had a lot of unrelated businesses which they were in the process of getting rid of so the thesis was that as they keep getting rid of these unrelated businesses and focus on their Core Business the margins uh will expand because of operational efficiencies uh and uh uh you know there were essentially scale benefits right in this kind of a business the bigger you get the more efficient you get the lower cost structure the higher uh the cash flows that that you can throw out and they had a pretty decent Mo at least in my reading at the time in the sense that they delivered to 97 98% of PIN codes in India and uh you know that kind of distribution network is not easy to build uh at the same time uh I thought that you know the downside risk was low because the starting valuations were low it was trading at about 1.5 less than 1.5 times sales uh and uh uh you know because of that and you know because of all of these factors and if if margins would increase and profits would come in the Roes would expand and if Roes would expand then my sense was that there’s a pretty good chance that the business can get significantly rated because the closest competitor at the time which is TCI Express was trading at about four or four and a half time sales so I could see that if GTI is able to achieve what TCI has done in terms of operational efficiency then they should be able to go from 1.3 1.5 four times sales to if not 4.5 time sales at least three or 3.5 times sales and at the same time the sales themselves would rise because of uh you know operational efficiencies and just Sher expansion and the weight of the all cargo group uh and so I thought there’s a reasonable asymmetric upside here available and I went ahead and took the bet I wrote about it on Twitter as well I think I done a thread uh highlighting all of these factors uh of why I think uh you know things will work out uh and it could give you an asymmetric upside now what I realized in about two to three quarters of tracking the business and every time I heard the management speak there was always something or the other that would go wrong uh you know for example in one quarter they realized that well not shouldn’t say realized but they disclosed that there was something wrong with you know couple of Legacy contracts and there were pricing uh challenges uh in another quarter there was uh you know General Industry slow down and the overall uh you know economic activity in that quarter was lower than anticipated and uh the business obviously suffered uh accordingly uh in another quarter there was something else so that’s when you know I got a very important learning in my process that any business which has a lot of moving Parts uh just inherently creates execu risk uh and especially if you’re trying to play a turnaround story turnarounds are very difficult in Industries where there are a lot of things that that move there are multiple factors that affect your operations and at the same time I also and you know I could be completely could be proven completely wrong here in the future but my sense is that in this kind of an industry there’s a lot of competition and it’s I mean it’s it’s diff it’s difficult if you’re if you’re the Challenger to try and gain efficiencies and protect your profit tools at the same time you can do one of the two you can either gain efficiencies and scale or you can protect your profit pools and if you protect your profit pools you can’t scale with efficiency so all of these factors happening together is very difficult so which is why I think when Iz this finally and decided to move out luckily I didn’t lose too much money on this trade I bought it in fact I think I made like 45% but I held it for over a year uh so I was lucky in that sense that at least uh you know when I bought it I bought it fairly low so that uh you know downside at least was protected uh but yeah that was I think a very big learning that if there are too many moving Parts it creates inherent execution risk and one of 10 things going wrong uh if you’re betting on 10 things going right at the same time then it’s unlikely that all 10 will go right one or two of them will go wrong and they’ll just keep holding you back so that’s one example I can speak of other examples as well if you like from different IND indries right so coming to position sizing and the portfolio construction thing you talked about that there are various sectors you invest in so how you go about on both these aspect and uh going forward like when it comes to investing say if you have constructed your portfolio and there is an incremental cash with you and so so would you be adding to your existing positions or if you have to add new position you’ll cut down on the previous one how exactly like you do it for yourself sure V can I add on another question to that and if you’re answering that give us the time perspective you know the shortterm medium-term longterm when you answer that question absolutely absolutely so again portfolio construction has evolved over time I think what my process is today is that I try and keep the total number of positions that I have uh longterm as well as shortterm uh to under 20 definitely if possible close to 15 uh and uh you know like I said sometime back that it’s not that I will buy something from the intention of keeping it or making it a core position uh well I’ll buy it with the intention of making it a core position but it doesn’t mean I will stick with it uh forever I’m very happy to sell out of ideas that are not working out and so by extension it just so happens that you know things that work out I tend to keep them uh and you know apart from some minor trades around volatility uh I don’t touch them uh if I think that that the price of my core positions have fallen because of factors outside of uh the business because the General market Falls or because of something that I think the market has misunderstood or something that is misrepresented or something that is extremely shortterm and temporary in nature I do go ahead and top up some of those positions as well uh so at the moment about I think the top seven positions in my portfolio are 65% of the portfolio uh and uh you know the bottom eight or nine positions are the balance uh 35% and in hindsight uh you know I think it’s very important uh even from a just a psychological point of view actually uh to have a you know a longish tail where you’ve planted a few ideas uh which you think uh you know can germinate into plants and as they keep germinating into plants you keep adding more and more water to them so you know I’m happy to average up so long as the ideas are working but that said every time I commit fresh money I always looking at uh you know those two factors for of a symmetric upset for every incremental rupe added that from those levels when I’m adding to a position or buying a fresh position do I see growth in earnings and do I see reating I think that’s very important I will rarely add money to a position which I think has already rated to 70 80% of what I think the fair valuation multiple should be not fair value but valuation multiple uh and uh yeah the bottom half of my portfolio I’ve been churning quite a bit because again you know this is the kind of Market that we are in uh where you have a bull market there are so many opportunities a lot of sectors getting rated uh and when that’s happening uh one you know obviously you want to try and position for uh you know for any quick upsides that you see in different uh different sectors uh but at the same time I think it just helps you you know be sane uh in a market like this because at least you feel a part of the action you know uh so I did not have any positions for example unfortunately in uh the power sector for a very long time in the railway sector for the longest time as well till I found an opportunity in each of them and then I went ahead and allocated some amount of money purely from the point of view of this is money that uh you know has been allocated because I see that this sector is in the process of getting rated and while it might these positions might not fill my uh you know criteria of buying extremely cheap but even from these prices I do see they’re being reating just because of the sheer strength of the Tailwinds uh in these businesses uh and so yeah I’m happy to go ahead and uh you know allocate at least small sums of money bottom tail uh into such ideas with a uh with a quick reating short-term time frame but that said so long as the businesses keep delivering and earnings growth keeps happening and when earnings growth happens the valuation itself automatically if the price has not gone up becomes more reasonable uh and so from there if I continue to see reating I continue to hold the moment I think uh uh the reating process is completed uh then you know once the reating process is completed then there’s only the growth side of the equation and growth will be 20 to 25% maybe 30% in some cases if at that stage I find better value in something else where I can also get reating along with growth then I’m happy to shift the money uh to those positions not sure if that answers the question I can you know get into details if you like talk about the mental models you use in your framework basis which your investment decisions are like uh I mean you you can uh make sound investing decisions oh sure uh so look there are many mental models uh maybe I’ll uh you know I think one of the things that a lot of people don’t appreciate is that investing is very fluid and you’ll keep getting better the more you do and you’ll keep learning and uh you know mistakes mistakes actually are very important in my view and I’m happy that I made all of the mistakes that I made uh you know because I think in the markets more than anything else learning by doing is a lot more important than learning by reading you know you can read as many investing books as you want everything is fine you can you listen to million interviews and you know know about how uh bare markets are br and last forever and you know how you shouldn’t get sucked into Euphoria in Bull markets it’s a cost or a price that most of us and all of us should pay at least early in our investing careers I feel and I’m very glad and hindsight that I made those mistakes of investing in dhfl and yes bank because the capital that I had at the time was not very large obviously and the amount of money while you know in term percentage terms at the time seem very large uh but in hindsight it was uh you know money that would not make a difference to my life today at all but the lessons that I learned from there I think is something that I’ve you know carried uh which has helped me do a lot better uh so I think that’s that’s important that you must learn by doing uh you know while it’s good to read investment books and develop a framework but do know that you should be as fluid as possible and learn to and be prepared to change your mind when uh when your understanding improves and when facts uh change uh I think another very important mental model is uh you know try and look for as look for Simplicity in terms of business models uh so less is more you know less moving Parts uh less variables is likely to yield better outcomes that probability part of the equation I think goes significantly higher if the number of variables that you’re trying to control are are lesser uh and uh yeah you know a lot of times uh uh you know we we try and as investors get uh you know overly cheeky uh of trying to uh you know predict a lot of things I think prediction beyond the point doesn’t help uh and uh you know hoping for certain things to pan out the way you you think that they should pan out doesn’t make sense as well so I try and you know rely on data as much as possible and try and make as intuitive macro calls uh as as possible so you know while I might have a feeling that something might work out in a particular way uh I will not usually allocate money to that theme unless I can see some sort of data of money flowing into that theme or some tangible change in uh you know in in in behaviors uh you know for example and I’ll just use a very general example and this is nothing to do with anything uh like a theme like neutral for example and there is uh you know believe that neutral will do very well and you know as people get richer people will allocate uh you know part of their savings to neutral sure it might happen um and it can completely happen but this in my view right now is something that is a prediction and something that we’ve projected we don’t know uh and there’s no proof yet to show comprehensively that this is going to happen in a very big wi even if it does uh how quickly can it happen What percentage of India’s population can you know a theme like this actually touch uh you know we’re still at you know just a little over 2,000 uh dollars uh uh per capita uh GDP so uh so I don’t know if this is going to work out and it may completely work out but when will I allocate money to to to an industry like this is when I start seeing something tangible actually happening as opposed to uh you know industry like power where you know that there is factual evidence that the government has allocated a significant amount of money or infrastructure or Railways uh and you can clearly see that there is money that is being put behind the narrative so you have to always chase the money uh you know if there is if there is capital flowing into a particular industry either from the private sector or from the government then that industry is likely to give you bigger V uh so so that’s the you know one of the things that I read follow follow the money follow follow the data and less The Narrative more the data uh and uh you know I think another very important uh you know mental model is it’s it’s always about risk reward right uh and in the risk reward the Quantum of the payoff but at the same time the probability of that happening are equally important uh you know so you should be in a reasonable position to make an educated guess of How likely some of the things that you think will happen are to happen and if those things happen how much money can you make uh on that on that trade uh so I keep coming back to uh that asymmetric upside being both growth as well as reating uh if you can invest just for growth uh then your upside is capped because you know no company in the world is going to grow at ridiculous rates for long periods of time uh at the same time uh it’s very rare that a company will continue to trade at elevated multiples for a long period of time and there’s no way of knowing when the market will decide to uh drate it and you know move on to the next fanciest thing uh that’s available so if you can optimize for both then your likelihood of success I think increase uh significantly uh and that you know comes down to positioning uh in a in a big way as well you try and uh you know position for for luck in a way because you know luck plays a very important factor but if you’ve positioned yourself across a bunch of businesses where uh where you have a reasonable understanding of things working out in a way then the chances of uh at least some of them working out are pretty high yeah yeah so any questions on your part yeah Prince I have a lot of questions but I’ll come towards the end because we’ll take the discussion to another area which we and I’m very fond of on green growth investing so let’s let’s get some other speakers and maybe towards the end I can ask sure so so we the very interesting part of the session is to talk about like how you are seeing the market currently and what sectors you find uh I mean you are looking from investment point of view and going forward also like uh what what big themes you think can do well so specifically you can take example but we ensure that the company should not be that small that uh we should not be naming them if they are too small right yeah no no absolutely uh absolutely look my my like I said my uh and You’ mentioned that as well my portfolio is public anyway and and uh it’s none of this is advice anything that I say please you know take it with a bucket load of salt I could be completely wrong as well uh so look India is at such a beautiful time right now right it’s a Confluence of factors so many things are happening at the same time uh that uh I think in everybody’s mind it’s almost fairly certain that we’re going to do very well and we’re going to grow rapidly uh there are you know I think any theme that’s related to building India will do very well uh as a theme and look when I say a theme I mean the sector as a whole will do well there will be money that will flow into the sector a lot of companies will service demand in that sector as Investments it’s not necessary that everything in those sectors will do well and I think that’s very important to understand because like let’s take the example of you know the power sector the energy in general renewable energy as a space or infrastructure or uh you know Railways defense uh shipping uh all of these industries as a whole will do very well there will be a lot of capital allocated to each of them the and in the short term you know while the market is just digesting the fact that there’s so much Capital being allocated to all of them the market assumes that this Capital will be you know reasonably uniformly spread across multiple players and everybody uh you know small or big will do well in the space I think it’s important to realize that that is not necessarily true uh you know just like the gy example that I that I you know gave earlier uh while the macro Trend exists it’s not necessary that every company will do equally well and there’s a say that one of my old bosses used to say that you know I will try and treat everyone fairly but not equally and I think that’s what the market will do to a lot of of players uh the ones that will outperform will get significantly higher multiples the ones that and when I say outperform I mean business wise outperform uh and the ones that will not will get derated as quickly as they have gotten rated uh now uh well I don’t know if I should take names of companies here because you know most of the companies that I like are fairly small and you like you said it’s it’s not not right to you know business sense you can discuss or maybe it’s it’s up to you yeah you had so maybe Vin can you hear me yeah I can hear you yeah so I have a I have a question you know really on this two scenar here in in the US now so there is a lot of kind of sentiment moving towards a market correction in the Wall Street we see some signs of it here can’t with PM crisis Etc so one question is you know when you talk about India being bullish we’ve been looking at the infra opportunity the digital opportunity the ftech ETC biotech is a very big area without taking any specific names so you know why is it important to look at this market and will the move from Hong Kong to not only for India but for the world I just sped a very interesting tweet about the cycle of the market if you could speak to your own perspective uh you know on your experience because you have a very big experience in this area so just wanted to get some cons sure so uh if I heard that correctly you mean uh you want to get a get my sense on how uh you know if there is some sort of a correction on Wall Street that’s being spoken about how that could impact money flow into emerging economies like India is that that what the question is okay yeah maybe maybe that’s what you meant Prince I’m not sure if if you heard clearly okay he’s given a thumbs thumbs yeah from a macro point of view I think we’re at that stage now in the US at least where uh you know everybody’s assuming that rate cuts are coming sooner than they probably are uh my sense is that uh it’s it’s unlikely that rate Cuts will come till the end of this year and I’ll tell you why there are two three reasons and not just rate Cuts but uh growth in general in the US could be you know a little strapped I think in the short term uh the reasons are toold us fiscal deficit was about 6 and a half to 7% in 2023 that is extremely high uh and you know most of the growth numbers that we’ve seen for the us us grow at about three three and a half% in the last year a lot of this growth has been funded by fiscal spending and this fiscal spending has been a result of the fiscal deficit you know going up to almost $2 trillion uh now 6 and a half% of uh the GDP I think it’s unsustainable that the government will continue to pump that kind of money in or any at least any additional money above the $2 trillion uh number in 2024 I I mean I know it’s an election year and uh you know it’s imperative that the government tries to maintain growth but in in in this kind of a scenario uh they can and it’s unlikely that they’ll reduce the fiscal deficit since it’s in in election year right that means then that’s an additional outlay to the tune of a deficit of $2 trillion in this year which means if there is significant that kind of government uh funding which uh you know trickles down to uh to other Industries then uh the pressure pressure on inflation is likely to persist for longer than I think a lot of Market participants are uh you know uh projecting uh and if that’s the case if interest rates stay elevated uh for uh longer then uh a lot of companies that depend on uh Capital raising uh you know especially in in sectors which may not be yielding profits or significant profits at the moment might continue to be under pressure that’s that’s my sense uh how all of these things impact India I think India’s uh you know the the budget speech for example uh I found it very heartening that we stuck our necks out and said that we will come down to a 5.1% fiscal deficit number I think that was very brave of the of the government and I think it showed the world and this is actually something that this government has been doing for some time and they did it during Co beautifully as well when every government around the world was you know stimulating the economy like crazy by just pumping in fiscal dollars uh the government in India was very measured uh and uh you know they didn’t go out and uh you know do out monies in people’s bank accounts and I remember a lot of us and I myself at the time was very skeptical about approach because I thought this is the time when uh you know the economy needs uh you know massive infusion of liquidity and the government spending uh and you know government dos uh similar to what happened in the US with you know the government sending ,200 $1,500 at everybody’s bank accounts I thought that kind of an approach would have been followed in India but because we didn’t follow that approach is because we were able to maintain such a healthy governmental balance sheet that today the whole world is looking at India not just because we are the largest uh you know most populated country now and the economy is growing fast but the reason people are willing to now start allocating money to India in a bigger way is also because they see that there is a lot of macro stability and when the government then goes out and says that we were at 5.5% last year we’re going to go down to 5.1% this year and they’re going to have a nice Glide path to 4% fiscal deficit I think gives a lot of foreign capital A lot of confidence to then be able to allocate uh more money to India because now you have you always had the demographic factors you always had the large size of Market you always had a talented Workforce uh very good entrepreneurs all of those things were always there but now the biggest kicker is that the government is getting serious about making sure that the uh fiscal situation remains robust and at the same time big investments in themes uh like infrastructure uh defense uh energy uh so and you know I think all of these factors put together uh you know Place India in a very sweet spot and I think this entire reating that has happened of the Indian market with trading at what 24 times trading earnings now is sustainable in my view I don’t see a major downside for the Indian markets uh in in the near future obviously there could be short-term Corrections and there should be short-term corrections to keep the market healthy uh but I am a buyer on any major dip uh uh at least over the next uh you know three to four years great so thought one speaker will take his question I’ll come back with my questions after that so Wall Street you can ask your question hey thank you Prince uh I think U Vin what I understand from this question is related to the FX Market currently as you know like Iran and China they have put ban on non-governmental Forex Market on buying and selling and transferring foreign currencies especially dollar what is the impact on Indian and what uh from Indian uh what what is your opinion what where do you see what is happening in Market uh so look I’m I’m not an expert on uh on FX currencies uh per se I think I can speak to the impact that everything in the world will probably have on the exchange rate for India and I think where I think the rupee might be headed in the medium to long term uh I think you know short-term fluctuations aside and many of these uh you know uh bilateral disagreements with countries like Iran China uh Etc all of these things will keep happening and you know there was this entire thing where we uh were trying to uh coordinate with uh you know a bunch of countries especially Russia and some other countries as well where we were trying to uh have a rupy to Rubble exchange and uh you know the bricks countries coming together and trying to see if they can uh you know break the hemony of the dollar as the reserve currency I think in the long-term things being the way they are I don’t see the dollar not being being the reserve currency of the world anymore uh you know at least for the foreseeable future couple of decades at least uh and uh at the same time I think uh India’s exports will increase uh significantly and I think uh we will over a period of time as we get more and more competitive and more uh foreign dollars flow into India as direct Investments uh and at the same time as our exports increase and we start earning more dollars I think we could be at a stage where the the the rupe might be relatively stable as compared to the dollar dare I say over the medium term even slightly appreciate potentially and I will not be surprised if that starts happening that said these are very early days right now right we’re still uh you know significant net importer uh but uh you know there there will come a point of time in the next uh 10 years or so when maybe sooner when that situation will will change and we will become a net exporter and I think that will be the and once we get closer to that moment is you know which will be the next aha moment for uh for the world in general to look at India is not just this country with potential and the you know the next big thing but uh you know the fact that India has arrived now I think we’re we’re very close to that we’re within touching distance uh any major global uh you know geopolitical events apart uh I think we’re yeah we’re well on track to to get there okay sorry on the t+ Zero uh vinit because this uh March that they already they announced right on the t plus Z in the market and then I think next from 2024 to 2025 March uh they’re going for the instant settlement correct what what Ro what what do you see it brings opportunity for the Indian market diaspora I mean I’m sorry I don’t have a view on that uh T well I mean t plus Z is it’ll be very good if you know the I think what the biggest impact that it will have from my view at this stage uh is just the you know the liquidity in the markets I think get get better because you know money rotes f s I can so yeah people have more money to trade in and trade out of position so that just signals to you know healthier Market broadly uh and at the same time I think it gives more confidence to uh you know foreign investors as well to uh to put money in but apart from that I’m sorry I don’t have a specific view on uh how instant settlements uh will have have a major so you you cover the real estate sector in the equity Market very closely so I would request you to like uh tell us all about how you seeing the sector at this point in time and what are the uh I mean pointers or maybe say uh data points you see before making any investment in the sector and even the ancillary space also looks C so any any any sense yeah no absolutely I’m I’m I’m a big fan of the real estate sector like you know and look real estate real estate is one of those sectors where I think uh most Market participants have no idea how to value a real estate company uh I think most people that I speak to and when I pitch them ideas uh in real estate they tend to look at the the numbers on screener and you know the pnls will invariably look average things will look over over extended and expensive and people will pass it I think it’s important to uh and you know maybe I’ll spend a couple of minutes on just explaining how the accounting for Real Estate works and uh what in my view is the best way to value a real estate company uh so real estate Works largely most players do now on a project completion accounting method which means I launch a project today so let’s say I have land I’ve paid some money I’ve got into some jda I’m a real estate developer I got a land allocated I decided that on this land I want to build a tower I will put out advertisements that you know I’m launching so and so Tower and it’ll take about 3 years uh to completion and I will start uh inviting people to come and buy uh lot of buyers will come in we’ll you know have negotiations and sales will be made and typically how the payment Cycle Works is people will pay you know small amount of money on booking uh and then they’ll pay different amounts of money as uh you know certain Milestones are reached uh and it could vary on a case on case basis obviously right so when I have launched the project today the project is going to get complete only after 3 years so while I might have sold all apartments let’s say I 100 apartments and I was going to sell each apartment for 1 rupes for example let’s say I’ve managed to sell the entire building of 30 before the building has even started getting constructed or has begun to get constructed that’s fine right so technically have sold Apartments worth 100 Apartments but can you be a little closer to your phone sorry is it better now much better much better yeah yeah so this 100 crores of sales though will not reflect on my pnl today this 100 cres of sales will come on my pnl after 3 years when I have delivered the project so this is because of this uh project completion method of accounting so when you’re looking at the pnl of a real estate company today the numbers that you see in the sales column those are not the sales that the company has made in this quarter or this year even those are sales that the company actually made 3 four years back but has completed those projects today so looking at the pnl for a real estate company in my opinion is useless it’s a waste of time nobody should do it you shouldn’t look at the pnl at all what the important factors in my view to consider in in real estate investment obviously it’s a very cyclical business right so you must make sure that you’re on the right side of the cycle and if you’re in the wrong side of the cycle then no matter what you do you’re going to lose money in real estate so it’s very important to make sure that you only only invest in real estate when that cycle is clear and these are long gestation cycles and they go on for many years as well so we are I think now at the in the maybe first or second year of maybe third year as well of an upcycle in real estate we had many years of you know fairly stagnant real estate uh growth uh over the last decade we had demonetization which pretty much wiped out the uh you know the small uh real estate players who depended on cash uh and then we had GST all of the uh you know just this the plumbing of money in the system uh and so there’s been massive consolidation of players in most major markets uh the big players the you know the the corporates in the sense uh the ones with relatively clean balance sheets are the ones that have come out Ando stronger and also the ones that had clean balance sheets at that phase when all of this deception was happening were able to get a lot of good deals on land in the time frame and uh now all of that land that they bought then in the 2016 to 2020 land or agreements that they got into in the 2016 to 2020 phase when the real estate cycle was at its burst and struggling that land is has is being used now for by them to develop projects in this sub cycle and deliveries have begun so what’s important in my view to look at a real estate company to Value it is is three things largely pre-sales pre-sales means in the example that I gave the 100 crores that I sell today that 100 crores forms a part of my pre-sales for this quarter it will come on my PL after three years when I deliver the project but it’s a part of my pre-sales today and what matters is the moment I sold the house I made the pre-sales obviously there can there can be you know some level of like let’s say couple of customers decide that they don’t want to buy the house anymore after some time and uh you know they they bought it today maybe one year later they Chang their mind I might have to refund the money that’s that’s okay you know leaving leaving that aside that doesn’t happen very often in an upcycle in real estate so that’s a tail risk which I will not assign too much importance uh secondly uh you must look at the collections that the company is making because now today when I’ve sold these 100 flats for one CR each and I only collected 10% of the money up front right only sorry to interrupt can you a bit closer it was fine previously but again I think the voice was oh I’m so sorry I’m very close to the mic actually uh yeah it’s it’s better now yeah go okay okay sorry uh so so yeah uh the I was come explaining the pre-sales bit right so when you when you sold these 100 apartments for one CR each you only collected 10 lakh Rupees today so while your pre-sales show those 100 crores your actual collection today from this project which you have launched today is only 10 crores and the remaining 90 crores you’re going to have to collect over a period of time correct but in this quarter you may have launched a project last year or another project year before that all of those projects are still as they keep getting constructed coming to different milestones and you’re collecting money from those projects as well so that’s a very important metric the ability of the company to collect money for the pre-sales that have already been made in the past uh and third and most important uh I think is the number of future launches that the company has spoken about so if they have said that they’re going to launch X number of projects in uh you know certain locations and uh if they’ve ideally if they’ve given you the total possible developmental value of those launches then that becomes uh it becomes much easier to model because you now know that this is the total amount of sales that the company can do over a specified period of time and most companies these days talk about uh you know what their fresh launches are likely to be and what the gross development value of those launches is likely to be and over what time frame as well so that gives you then uh Clarity on growth because you know exactly what’s getting launched uh and uh all this if you have a balance sheet this is all on the growth side right this is the on the asymmetric uh uh returns uh potential equation this is all on the side of growth on the side of risk [Music] management it’s very important to make sure that the players that you bet on are not heavily indebted because debt is the single biggest reason why real estate companies go down uh most real estate companies will put in some amount of equity then they will take uh you know significant amount of debt with all of that money they will build a project they will sell that’s how the business model Works they sell at a significant markup they’ll make about 30 35% ofit margins part of the money keeps getting uh obviously they keep servicing the interest and when all of the sales are done and all the money is collected they’ll pay the bank out and they’ll make massive return return on equities that’s the typical model of real estate in an IDE world but unfortunately this is not an Ideal World and Cycles turn on a dime and anything can happen which will flip the cycle completely so any player that has a lot of debt if they’re not able to sell the things that the apartments that they have made then their money gets stuck they can’t realize uh sales they have high inventories if they have high inventories and they can’t realize sales but they still have to service the debt so where are they going to service the debt from so then it gets into a debt trap kind of situation and this is the single biggest reason why many real estate players go bust and we’ve all seen multiple examples of real estate players going under there right so clean balance sheets and at least manageable levels of debt is extremely important uh and lastly to analyze a real estate company it’s also important to you know uh think of uh different micr markets that companies work in uh because real estate like unlike most other businesses is very region specific so if a particular company has operations in two suburbs of Mumbai uh you know there could be a builder in in in that area where you know a lot almost everybody in that locality or those two or three suburbs will know that Builder well and they will have a reputation but they will not have any reputation uh 20 kmers away even in Mumbai let alone you know in another city that’s completely different so uh what I have found is it’s best to try and bet on players that are concentrated that are focusing on specific micro markets which have developed a name for themselves in those micro markets uh and if they’ve you know given you information of what the pre-sales are what the collections are looking like what the launches are going forward and if the balance sheets are clean they make for uh I think very good uh investment potential and I can talk about companies if you would want to yeah that would be great like different companies in the sense like the market they are catering to be on the premium segment middle segment or whether it’s a new market or maybe refurbishing the uh the already uh I mean developed societies kind of thing and then we come to Bab for his question yeah go ahead sure so I’ll be really brief about this and uh you know you you spoke about a lot of interesting things actually depends uh so this this model of uh you know of of where do you build an apartment is very where you build a building is very important right uh there are two three models the the old traditional model is you buy land uh and then you use that land to build uh another recent uh last 8 10 years is this model of joint development where uh you get into an agreement with a landlord and uh the agreement says that the building will get constructed you you’re going to pay the landl either no money or a small upfront amount uh and when the apartments are sold and from the profits that are generated from the sales that are generated depending you know Case by case a certain percentage will go to uh the landlord there are other cases where the landlords don’t want a significant percentage of the sales but they want a certain number of apartments in the building that gets constructed and then lastly there are these Redevelopment projects uh like I said the entire real estate space is very micromarket dependent I am most uh I I track the Mumbai space uh uh the most because you know I’ve lived in Mumbai uh for the longest uh time till I moved recently to the US uh and uh so a company like I I can talk about it like I said because my portfolio is public and uh this is not an advice uh but a company like s realy for example is I own uh and uh you know they they’re trading at what a market cap of about 6,000 crores right give or take they’re doing pre-sales of somewhere in the range of 1,800 crores per year right now trailing and of that 18 16800 CR of prees that they’re doing they’re also against it they have a pretty good collection rate of about 6 70 80% so I think in the last 12 months they collected 1,200 or 1,300 crores if I’m not wrong somewhere in in that range but that’s not the exciting part because effectively are saying that they’re trading at four times s that they’re doing this year the what what’s interesting for me is the launch pipeline that they’ve given and the total amount of absolute value of development that they will do so uh till last quarter uh they had a road map to total gross development value of 30,000 cres across seven or eight different projects in different microm markets in the city uh and now in the last con call uh they’ve spoken about how they’ve got uh you know few more areas uh and more launches La lined up including one in nepen road which is among the most premium locations uh in the country and these guys have a history of uh creating premium real estate they started out as premium actually which is rare for most developers most developers start out as mass market and eventually move to real premium these guys started out as premium and they built uh uh you know uh projects in the bkc area they were among the first players to venture into bkc when bkc was you know basically a jungle it didn’t didn’t really it wasn’t the BC that we see today but uh it was a uh they Venture into that space clean luxury apartment uh and those apartments actually even today house the who who uh a lot of Bollywood actors uh corer honchos people like UD kotak a paman they all live there uh so their gross development value which was supposed to be 30,000 crores till a quarter a couple of quarters back has now over the next 8 to 10 years increased to 60,000 cres and their investor presentation is very good because in the investor presentation they break down what gross development value means and how that translates eventually into uh you know absolute Surplus cash Surplus uh by you know uh accounting for construction cost accounting for either land cost or the money that you must pay to jda partner as the case may be sales cost all of those costs are accounted for and against that they’ll give you a number of the total cash Surplus that they are expecting uh and look again all of this is contingent on the fact that execution happens and the real estate cycle stays up if the real estate cycle turns in any way then execution gets hampered sales don’t happen inventory gets stuck and then you get into a negative operating leverage uh kind of space but you know if one is bullish on real estate as a theme and one assumes that over the next few years sales will not be a problem uh then and if you’re able to assess that the brands that you’re betting on are strong in the respective micro markets then these kind of plays become very interesting because the upside can be disproportionate right you have a 6,000 CR market cap company that’s doing a gross development value of 30,000 crores with a cash surplus of about 15,000 crores to be achieved over the next five to six years so if this happens you know if if they actually manage to achieve this if they manage to achieve a cash surplus of 15,000 crores over the next let’s say six years or even that’s two that’s two and a half times the total market cap of the company today you’re getting in terms of surplus over six to 7% and there are many play like this in in in I’m just using sentech as one example uh there are a lot of other companies that do this as well the the reason I prefer uh you know uh this company over some others and there are a few other very good ones in Mumbai as well by the way uh but I don’t for example like not like like is a wrong one I like them a lot even now and I think they’ll do well but just in terms of uh you know the odds of making uh sustainable uh uh money the the bigger players like the the dlfs the loas of the world uh gold R properties Etc one they’re uh they’re very large already so the base is high and that you know comes with its own advantages uh because they have you know solid brand recall in different parts of the country but most of these companies work in multiple cities and multiple different microm markets and this then goes against my uh principle of trying to have less moving Parts uh because if you have you know projects in seven or eight different micr markets and real estate being the kind of business that is lots of things can go wrong you can your OCS can get delayed there can be some kind of an environmental drawback uh sales in one market might not keep up your money can get blocked in one project you’re not able to divert money to other projects a lot of things can go wrong so the moment you have five six seven different uh cities that you’re working with working in each of those five six cities are in almost independent businesses in themselves and then you’re banking on each of those businesses succeeding and even if one business doesn’t succeed it can pull down the good work of the other six businesses which I don’t enjoy uh that much uh and in terms of I think the markets that are doing doing well or the you know the the the segments of the markets uh the premium real estate like you know premium and luxury real estate I think it’s out there for everybody to see it’s been doing very well for a very long time and we’ll probably continue to do so because we’ve seen this massive k-shaped recovery postco right that said uh I think we’re now getting into that phase where the mid segment and affordable segments will start picking up as well typically that’s how the cycle goes it starts at the top and then over a period of time as the cycle matures it gets to the middle and eventually gets to the bottom as well so this actually might be interesting time to start looking at uh both developers as well as financiers as well as auxiliary uh plays uh in the uh mid-income segment and uh eventually in the affordable housing segment uh as well uh and you know in terms of ancillaries for Real Estate you know there are uh your traditional uh you know construction material cement uh pipes electrical equipment the works right all of these things are there the one space that I like in in the ancillary space is actually the home decoration space the you know the ceramic players the bathware players those kind of players and I’ll tell you why think about how a house gets constructed right or a building you first build the foundation you then you know lay the structures you do all of the work over two to three years and then it’s right at the end that you do the tiling and you do the bath fittings and uh you know the bells and whistles uh in the apartment and uh the luxury apartments which have seen the highest uh sales in the last uh couple of years are now the ones that are in maybe a year’s time getting to the stage of completion and getting to that phase where they will then require all of these tiles bath fittings and uh you know uh embellishments uh in those apartments so I think this is one part of the cycle which is yet to play out in the numbers the the VP cement as well has been doing okay uh you know electricity the FM EG uh companies catering to uh you know household electricity systems are doing okay but this is one segment which has not yet done well in terms of numbers in terms of profits uh and I think that’s because of this kind of a cycle but over the next year maybe 18 months I think this SP could be quite interesting uh and can see significant amount of growth and the profit pools are fairly concentrated there are only three or four or five large organized players there’s still a pretty large unorganized Market but the organized players have been gaining share over the unorganized market for a while uh and there are some players that are not particularly expensive that have pretty good brand recall value uh that said it could take time to play out and it’s anybody’s guess whether that demand pick up happens in one quarter two quarters or three quarters or four quarters from now but I think it’s worth tracking the space uh and yeah one could get interesting opportunities here great V so broadly Sense on the valuation part across the the real estate and the naries so do you think like at current point in time also good value is available or you think some corrections going forward would be a good uh time to add positions to anything which our audience can study on their S I think it’s very company specific friend uh there are uh look how how I would view it is anything that is available at under three times pre-sales and has a clear launch pipeline where they can grow their pre-sales by 25% to 30% over the next 3 to four years is an interesting play even at these valuations because sorry there’s Echo Prince yeah sorry the moment it goes above three to three and a half times pre-sales then you need uh you know either disproportionate upside on uh on the launch pipeline uh which can lead to much faster growth uh so yeah that that’s from a developer uh standpoint I think on the uh auxiliary uh and you know ancillary part as well like I said the uh this space the ceramic Styles bath wear uh sanitary wear some of these spaces uh while they might look optically expensive uh I think just the sheer growth that can come through here can be quite High over the next uh couple of years it might start it might take some time to start and you know it’s not that it start happening immediately but that’s a space that’s very interesting I would you know definitely encourage every to track that space uh I think the the you know the vires pipes Etc they’ve been doing well for so long and we’ve all been waiting for correction which have never come so I mean I don’t know it’s difficult to say uh I would personally stay away from anything that seems to be fully priced on the reating aspect because it doesn’t fit my asymmetric rewards fair point of V thanks for that so babal G over to you yeah this real estate companies good even real estate companies and many other companies holding land assets and generally annual report is silent about the area they hold the amount actually paid and the date on which it is paid so it is very difficult to Value the company all right sir any any question on your part sir yeah this is a question how to Value such okay we need over to you yeah look I think land banks are optional actually so they will not mention in the annual report yes but uh there are you know there are other avenues of finding out so there are uh a lot of managements do interviews these days uh they all realize that they are you know in a real estate market right so they all do interviews from time to time many of them speak about it in their investor presentation sometimes these questions get asked on call calls as well uh so a lot of companies are happy to disclose that they’ve got landb now the question is not about whether you have the landbank the question is whether you’re going to do anything with the landbank so uh you know like there were so many companies some of the mill companies for example which have had land bank for a very long time and did nothing for the longest time till they decided to monetize that land so the market will not necessarily at least it should give you a valuation only because you have a land bank uh the market will definitely start giving you credit when you make it clear in terms of your intentions to use that Land Bank uh so if you can get details of the available land bank for a company all that tells you is that whenever they decide to use that land bank for development the likelihood of them making super margins on products because the biggest cost in estate project is the land cost so if the land cost is low and the land is already available then their odds of making significant margins on those projects increases a lot and you can factor that in as an optionality but I don’t look at that I mean it’s good to know but it’s not a core part of my uh thesis unless I know that that land bank is likely to get used over a short to medium term and that that’s equally important you must have a view on how the company going to hello hello vit hi hello uh actually my question is that in real estate companies uh or the land Banks what we that uh there is no constant uh numbers or constant cash flows sometimes you get lot of cash sometimes you are you are uh to you you don’t do not have any sale there is no continuity or Trend so how to identify the right Trend this year is going to be a very good after what one year what what we’ll do after two year three year four year five year down the line that we can do other we can estimate other business real estate business are very difficult to predict absolutely they’re very difficult to predict and and which is why looking at published numbers in real estate makes no sense only unfortunately the only way of of predicting cash flows in a real estate business is by going Company by company it’s a very company specific industry uh unfortunately but it’s important that if you’re if you’re in a if you’re going Company by company in a time where there is a general upcycle in the industry then the information that the compan is giving you the odds of them actually executing on that information become higher at any point in time the companies will always tell you what they intend on doing whether they will do it or not or be able to do it or not is what will eventually decide whether you know they get those cash flows or don’t get those cash flows uh so I value real estate companies purely on the basis of uh pre-sales to uh a market cap to pre-sales a beta margins per project that they are doing as well as the future launch pipeline these are the three things that that I you know want should be in place I want the market cap to pre-sales to be low I want them to be high abta margin project so I know that that abta margin is going to result into cash or another way of doing it is to also calculate by uh you know Market cap to forward cash flows that you’re expecting but calculating those exact forward cash flows will become very difficult so that’s why I found one one point you told just the future projects in the pipeline but actually with this I think we have to also calculate the timeline uh attached with the p with the future projects because it’s very difficult for Real Estate project to complete in one year or two year sometime it three to four five years also so what what component of cash the company will generate in say first year second third year fourth year or what date or what uh what stress they are going to put in the balance sheet of the company this also has to be concerned how do you address that absolutely so what I do typically is I will look at which is why I look at a company which has concentrated market so let’s say they have eight or nine projects so I’ll make a list of eight or nine projects which are currently on going as well as the on that they’ve said they will launch the ones that they said they will launch if they’ve given me details of when when those will be launched and approximately how long they will take to get completed and you know reach the market I’ll put of this finish sheet uh and then I will make assumptions around how quickly these projects can get turned around and obviously the assumption is it might take three years might take four years uh if this and again look this entire thesis is based on the fact that you in an upcycle and when a company says it’ll deliver something in three years they will deliver in three years so you’ll make that entire list project by project and calculate it purely as a sum of total cash flows and some of parts and on that if you are able to buy at a low valuation you’ve taken care of a little bit of the execution because that three years like you said you know something can go wrong at any point in time and the three years can become four years at any point in time which is why it become very important to buy it at a price which is low so that you know you’ve kind of taken care of that execution risk to uh one uh one uh from contrast to your your this thought of process so real estate business a complex business thousands of materials are involved right labor is there this market so many things are there rather we should look at the building material space I think that will make more money no the building material space is very good like I said there are aspects of the building material space which will do very well think of the profits here in pure play Real Estate development the kind of cash Sur is that you make if you able to execute a project on time and sell it is extremely high so building materials is very good the problem is building materials is discovered largely most of them are fully priced and from here you probably will get growth related uh gains in real estate in certain players I’m not saying across the board I’m not saying this is true in every company but in certain players I think the odds of making disproportionate money is quite High purely because of all the uncertainties that you because the market also knows all of these uncertainties and everybody a little afraid of the real estate can go but when in an uple like we are to the odds of something going wrong are slightly lower normal so that’s the that’s the last thesis that and and especially if you’re betting on a player with a clean balance sheet uh which already has a bunch of ongoing projects and you can reasonably estimate the kind of cash flows that that player will get over at least the next one to two years that adds a lot to your margin of safety so it’s very player specific it’s very company specific uh but yeah that said building materials is a great great space to be in uh the valuations in most parts of building material are are quite high but even in building materials like I said earlier ceramic space the sanitary wear the home wear those kind of spaces are still quite great thanks so Babu you can unmute and ask [Music] question Babu you can unmute and ask your question it was anurag which was asking question right yeah thank you thank you you you your questions there is a noise in the background like a noise man can you hear everybody Babu did you ask the question or it was anurag who was asking the question last it was anurag it was you go with your question please yes thank you thank you host and the co-host giving me speaker V if you can hear me okay clearly yes good thank you thank you thank you you see I am uh meeting you first time and actually I followed you my name is Babu I live in Canada in the western Canada and also the prince I followed as well Ravi and me known for each other for a while and my question is very simple but before I ask you a question I must appreciate you I must uh thank you on half of the space that you know you’re giving a lot of good information rightous information without any Prejudice and negativity of course India is a rising star everybody knows it even in the western world and it was a good information you shared and I was so overwhelmed with that depth of depth of us kind of a GDP which you mentioned like a 4 whatever 4% they are at current L and I was surprised and to know that it is basically going forward for like a $2 trillion kind of a debt because you know there were massive deficits before same goes with Canada Canada is not a bullish Market no more which we feel because uh we basically represent uh a Land Development consultant in Canada so we were positioning ourselves to read and understand our Indian market right because we born Indians but we are Canadians now my question is very specific looking into the uh the various states of India definitely we are not interested in uh Kolkata what is called West Bengal or Kerala because of the political mess and the viciousness they have and our Focus basically is uh to have some kind of large scale investment if at all in the sector of resorts Greenhouse projects on the back combining with the Ministry of Agriculture Canadian so that the technology transfer takes place for a automated greenhouse on the back and positioning into the senior home care in a resort style uh so that is something we are not interested for multi-story buildings you know the management and the Corruptions and all those things do happen because of unregulated real estate industry much about it in India unlike in Canada we are more uh regulated like Toronto real estate boards and you know like there are checks and balances in place so which are the states in India would be favorable in your opinion on a big picture uh yeah I hope you understood my question I understood the question it’s a very difficult question to answer uh uh in my view uh look there are uh it’s very difficult to take a state on state call uh that said I think it’s uh you know some of the uh the more business friendly states are known you know to all right uh you know the likes of Gujarat Maharashtra uh these states have been doing very well a lot of Southern States as well potentially uh Karnataka could be interested thing uh that said you know the political climate is a little dodgy uh utar Pradesh is a very exciting space uh these days it could be for you know for this kind of a sector especially with uh you know the rate of change that’s happening uh in uh in you uh I think that you know a lot of times defines investment opportunities and business opportunities as well where something is going from very bad to you know good to hopefully in the future very good uh and uh yeah I think just the the way that government has been uh laying down uh you know the the climate for Investments across Industries and uh you know also Hospitality I think that could be quite interesting and it’s so large right so those could be opportunities that you could look at but I’m sorry I’m not a uh you know I I don’t see that much of a differentiation in um most of the large states in India I think you can get the right kind of uh investment climate in most places uh but yeah these three four states seem to be the ones that you know over a period of time we do will do very well yeah thank you thank you and actually your summarization exactly belongs to what we and our eyes think about it it is very important as you rightly said because you do not like to have a project to set up in West Bengal and and any struggle because of this political you know like non-favorable climate and all then they move it to another it’s a big cost man so there are only few States as you rightly said and mostly they are like BJP ruled States and we are proud of it and there’s another which is coming about we and R were focused basically I was asking about lak which is coming up good so those are potential happenings in the in the India which is called the Bata but thank you for your explanation and and and the host and everybody thanks thanks for your and the appreciation thank you so much it means a lot so Jimmy is next in line Jimmy you can unmute and ask your quick questions we need yeah I have questions oh my God that’s not my feedback hello anyway um can you hear me please yeah uh in terms of so one one is for tourism one is for industry uh for tourism you know currently India gets one4 of the arrivals of like a city like Bangkok the whole country um there isn’t i’ I’ve heard many horror stories about visiting India you can see the YouTube videos especially female bloggers going to India being harassed um and so forth it just seems like a very unsafe country to go to the lack of policing and surveillance means it’s probably not a great destination to go to and the beaches uh that we’re referring to mes have nice Beach but it’s just cheaper to go to as well the lack of hospitality infrastructure is also a major issue for for industry the regulations I mean India really should have had the first gigafactory for from Tesla but because of the regulations and the bureaucracy they chose not to it’s one of the most uncompetitive countries to invest in because of how hard it is to build companies there fully owned and even Tesla would be required to have a partner a local partner um this is one of the reasons why there’s so few Indian companies that can even do Hardware manufacturing at the same level as China can and to bring a foreign company into the country like Tesla has not happened probably will never happen the next 10 years it’s very sad you know China has been able to ramp up its EVS Tesla even built a factory there what has India done not much thank you sure Jimmy thanks for your your your feedback I think you’re referring to the India from 10 years ago uh no I’m not don’t do this to me Tesla is not there today it’s not there 10 years ago no fair enough you’re entitled to your opinion that’s absolutely okay it’s not an opinion it’s a fact it’s not there okay sure if you made up your mind Jimmy I I would request you to be uh humble while you speak this is not a forum to uh shout you don’t care so you drop off you are not required over here I think Jimmy Jimmy has very strong views and which is which is fine he should keep them to himself there is no point in blurting out there there could be a difference of opinion but the way one speaks is that has to be sensible anyways V you go on yeah no [Music] issues you and I and many of us who uh who’ve lived in India for a very long time and have seen the change know that a lot of what Jimmy say was probably true till recently uh till not very long ago uh to a certain extent many of these things are still true right it’s not let’s not get ourselves that we you know suddenly the most perfect country in the world that’s not what anybody is saying and obviously there’s no way of comparing where China is today to where India is today that said I think uh from a uh I mean we’re going to stick to investing here from an investing standpoint you you bet on Improvement right uh and you bet where you can see that the trajectory of you going from not so good to good to Great the same thing that I spoke about up as well sometime back to you know babal G’s question uh I think that’s the same thing that’s happening in India as well we obviously have had a lot of problems in the past and still have a lot of problems which you’re trying to solve what’s important is that we’re making significant progress and they’re making that progress pretty quickly uh and to a large extent many of the and I’m not sure where Jimmy is from I don’t know if he’s uh I don’t know if he’s from India or from but uh one of the things that we as a community actually have to work on is making sure that the information that we put out about India as well and about you know the actual changes that are happening in India we we ramp that up to the best of our abilities and try and show people around the world the kind of positive changes that are happening because these are look honestly Notions that people have had for decades and it’s very difficult to change those Notions apart from cold hard facts and it is a fact that now we are seeing significant amount of interest from a lot of the large uh companies in India apple is going to come and set up a factory Tesla’s you know one if they don’t set up a giga Factory like they have in China because that’s obvious India’s one six of the economy of China it makes sense for them to set up a giga Factory in China because the number of Tesla sold in China very high India will get that I think what’s important is are we making progress towards that goal or not and uh in my opinion uh and strong opinion we are making significant progress and Rapid progress in that direction a lot of good things have happened in the in the past and uh people who uh have a fixated dogmatic opinion that uh you know India uh is is not the best place to go to not the best place to do business in has a lot of bureaucratic issues will miss the ride and will miss the upside and more power to them because uh if everybody starts making upside then how are you and I going to benefit right so it’s it’s good there always is nice to have just like in Market you know when it becomes when something becomes a consensus trade it’s not the best trade uh similarly uh you know it’s absolutely okay if some people have strong opinions I would urge them to uh you know to keep an open mind and try and absorb information uh on the ground maybe spend some time in the country speak to people who spend some time in the country to try and understand things uh better and and us as you know uh and of course I’m not in India anymore but uh everybody who is uh in India I think it’s uh uh important to keep working towards uh this Improvement and it’s not just the responsibility of the government or the state but everybody’s responsibility to participate in this big growth story and all of us should do the best that we can to be cheerleaders uh for this amazing story I think you know people are for example job of that and uh uh it’s important that more of us do that going forward so that we can change in mind totally agree on this V and even in the past there were many spaces where people had different opinion and uh they were uh not so positive I we totally respected their point of view and those were supported by the data points it is not about like what opinion be it strong or uh soft opinion somebody carries that is totally fine but nobody is allowed to blurt here for any reason right if somebody is provided a speaker he or she also has a responsibility so as to like uh follow at least he or she should be decent while the discussion anyways without getting into that it’s almost two hours we you have been uh continuously speaking and really love the thought process so before we close last uh question would be around the opportunities and especially there are few comments people asking about the chemical and Pharma space so any thoughts around that and any other sector apart from these two sectors you’re looking at wherein uh we can see value or maybe the opportunities uh if not today then in the upcoming correction maybe sure uh so I’ll take the second second part first I think the you know like anything that builds India is a big opportunity I have to a certain extent missed it actually except for a couple of plays which I was you know lucky to get into but I would definitely want a much higher allocation to spaces like uh you know energy plays uh infrastructure uh of All Sorts in my portfolio and I’m looking out for opportunities as in when they present themselves uh so I think that’s that’s definitely a space to keep an mind this is going to remain the same for many years and people will keep seeing the same thing over and over again because it’s true so I think money will be made here more uh obviously you know getting the trend right and the theme correct is important but money will be made here and picking the right businesses that can take advantage of these TRS so try and find profit pools where uh it’s not easy for somebody to come and compete away your margins over a long period of time uh and uh uh yeah so you know we can get into the details now or later we can decide that in terms of which sub segments of these sectors are have the most on can and Pharma chemicals look have had a half rough r and it was you know the writing was on the wall no the kind of margin expansion that most chemical and Pharma players saw on the back of uh you know stocking up of of inventories and uh raw material price fluctuations on the positive side from a operating leverage standpoint has turned completely and turned to operating operational D leverage over the last year or so uh I think there are you know sub segments of the chemical space that are getting interesting now are they getting into that interesting territory uh and uh even on the charts you can see many of them have started forming bases because uh you know the uh the average valuation multiples in the last three years may not necessarily be the valuations that which these companies will create going forward I think that’s important for people to realize I see a lot of people making a mistake that you know they they open the cleener chart they look at the average p and average FES multiples over the last five years for chemical companies and then they think that it’s going to that’s the multiple at which it should trade and right now it’s trading lower than that so let’s buy it I don’t think that’s necessarily true though because the last five year mles were distorted because of a you know once in a generation event like Co which had impacts on businesses uh you know disproportionate especially on Pharmaceuticals and certain chemical players as well because of the supply chain destructions that said uh the opportunity still exists I I I genuinely believe the India plus story on chemicals is here to stay longterm is just that the expectations that people have of making you know multibagger Returns the 5xs and the 10xs in one two years that happened two years back will probably not happen in space so I view now chemicals in most Pharma players as potential uh steady Compounders a certain reversion to mean but not the same mean that we’ve had in the last five years maybe a little lower uh lower than that and yeah it’s important to be as you know chemistry specific as possible within within chemicals as well so uh so yeah Florine spaces is quite interesting the hydrogen chemistry is quite interesting uh the Benzene chemistry is always I mean there are just a couple of players Benzene and phen oil players which uh which are doing uh good work many of these chemical companies have uh actually used this down down time to uh scale up capacities to a certain extent as well to prepare for the ensuing Good Times whenever they come uh but yeah chemical demand will uh depend you know to a large extent on uh changes in the global economy so i’ suggest you know one keep an eye out on uh a lot of those macro factors and uh you know specifically Subs segments like dice pigments Etc can be quite interesting if the macros turn uh because these are spaces which have been beaten down significantly uh even you know parts of the Agri chemical space uh could be quite interesting and I’m tracking quite a few players here uh I have only one investment in chemical is a small company so I won’t want to name it uh but that’s also you know in a significant downtrend so it’s more a value bu at the moment but I do see things turning around in the next 6 months or so uh in the space uh and we need the like uh even there was one article and I met a fund manager recently we were having a discussion so basically the the Kasa money the easy money which bank used to get has reduced uh having said that like people are more inclin inclined towards investing in the equities so coming to the banks and nbfc space uh what what what’s your uh evaluation at this point in time how these uh I mean Bank sector is doing and going forward if the uh deposit rate will decrease and the casa rate will decrease so definitely uh this is going to be challenging for the banks and the credit cycle the uptake of credit cycle or bases which other sectors were doing good might uh get hurt or maybe there could be a possibility and even the uh debt uh uh I mean investments in the debt are getting a skew going to more participation in the equities so any thoughts around that no I agree with the fin you spoken it I think that’s an important reason uh for why deposits have reduced I think there’s a bigger problem though in the deposit space and I did a thread on this recently about a month back after HDFC Banks results so so one is obviously the macro factor that the total you know deposit spy itself might not be growing as fast as it was growing in the past because people are converting money to Equity Investments and real estate Investments and other things fair enough that that has an impact uh I think there is now going to be a big war actually for deposits in the Indian banking landscape uh and and the the among other reasons the main reason for that is that uh after the HDFC and HDFC Bank merger hdfc’s Banks assets have gone up significantly the liability ratio which used to be uh higher in terms of deposits than what their total assets were I think their their ratio somewhere in the range of 85 to 90% that 80 80% for IC bank right now actually as we speak but because they got all of these additional assets which is loans but at the same time from HDFC they didn’t get any major deposits there were almost no deposits right so now hdfc’s total deposits are significantly lower than their total advances and this is the fundamental primary goal now for Bank going forward over the next two to three years they will try everything in their capacity to raise their deposit levels now think about the scenario where the largest bank in the country is throwing its entire weight behind one problem which is raising of deposits and in an environment where the overall deposit pie is not growing at the rate at which it used to grow in the past uh there was a report recently marceles puted out where they showed that uh you know HDFC bank’s share of total deposits in the country today is about 10% but in the 9 months from April 23 to December 23 the incremental deposits that happened in the entire banking system HDFC Bank accounted for 15% of those incremental deposits obviously a part of this is because of HDFC but that’s a very small part the point I’m trying to make is HDFC bank is pushing to eat up a larger share of a slower growing deposits Market which then will automatically put a significant amount of strain on all other banks for their deposits many of them will be forced to raise uh deposit rates uh this in the backdrop of continued High interest rates which I don’t see uh falling for the next six months or so at least uh I think this is a very you know interesting cycle of events which will me mean that the NIMS for banks will continue to St suppressed for some time uh now it’s an individual call to decide how important uh this is in my view the bank profits will remain Under Pressure they might not degrow but I don’t think there will be a significant amount of growth uh in the next six OD months at least for banks uh that said there are still enough and many opportunities where the reating part is happen so the growth multiplied by reating equation while the growth might be uh you know not as fast as uh we would want the reating is still happening in many names purely because of uh just you know Feer Improvement in their their lending capacities and the balance sheets uh and that reating could continue I don’t know I’m you know specifically referring to PSU banks for example which have reated significantly and continue to rate and many of them are still you know if you assume that the the the those banks are going to do okay and their NPS will be intact there’s no way of knowing what a fair Book value multiple for those Banks should be I think I missed that uh that uptrend so I will stay out of it because I don’t want to be in the game of predicting what the right multiple at which they should trade is when I know that the growth would be subdued so the only banking position that I had in my portfolio I sold out immediately after HDFC bank’s results after this deposit War became obvious to me that was equitas uh small Finance which you know I had held from uh much before the uh the reverse merger happened uh so I sold out of that uh about I don’t know what the price was 110 rupees or something that’s again not to not to say that this is a recommendation of any sorts and I actually like it equi Bank a lot even now and I think in the long term they will do very well uh it’s just that at this point in time I find slightly better risk reward in other opportunities uh but I’m very happy to revisit uh the banking space as a whole if things change and you know something in my analysis goes wrong or if the prices fall to extent or not even fall but you know stay at similar levels and the valuations become even more attractive I’m very happy to allocate Capital uh on the nbfc and lending other lenders I think these impacts that banks have will be very similar to the impacts that most lenders will have because eventually these are uh you know companies that borrow most of their money from Banks so if uh it all then will boil down their names will boil down to their ability to be able to reasonably increase their uh rates of lending without putting a strain on the eventual borrower borrower ability to be able to service that debt uh and so in this space I think lenders which are focusing on specific markets that are not being targeted by banks in a big way might stand to gain so if I was to be slightly specific here maybe lenders to infrastructure could do could do quite well lenders to energy could do quite well lenders to smmes could do quite well these are all spaces where Banks traditionally have not been very by traditionally I mean the last few years not been very aggressive uh and these are also you know Pockets where especially on the energy side well have tax FL and the serviceability of the Deb should be fine uh many of these places have rated significantly however so uh I think the valuation Comfort is definitely not there if there are any major dips then these could become interesting opportunities uh but yeah there are you know nbfcs and the the and msme spaces some of them are quite so we anything on the oil and gas companies in that space and even the f focus on the natural gas from our the present government so do you see opportunities in those yes absolutely I do uh so again these are spaces which here the valuation Comfort exists uh and because everybody’s written them off as a sunset industry and suddenly I think the world not just in India but all over the world it’s happening here in the US as well and everybody’s realizing that you know energy transition is great but uh meeting short-term energy demands through gas is is important uh I like the space I’m tracking it closely there are a couple of players uh which I like the only issue here is that I mean it’s unless there is a player that I me there is one player actually which has a particular asset I don’t want to name it as a small company but they have a particular asset which has been under some stress if that asset gets unlocked then the amount of growth that they can see from that asset is dispropor forunate and and that on the back of them trading at you know quite reasonable valuations can lead to an asymmetric upside and similar opportunities do exist in other oil and gas players I think the large play also pretty good in oil and gas like the likes ofc and also quite interestingly poised uh I’m you know still in the process of figuring out if I want to allocate money to that space and I guess then what percentage I might start out small in some small company uh and then raise it as things uh as numbers start coming in or as the rting becomes more clear great V so V will request you to conclude our discussion or maybe any last thoughts before we close the session for today and definitely there are many more sectors which are left with so we can have a subsequent session for that yeah over to you v no thanks a lot Prince this has been good fun this is the first time I’m doing a session like this for this long I don’t remember the last time uh you I spoke uh for this much time so I’m sorry if any things were unstructured or uh I’m happy to you know answer any questions offline as well if anybody has uh you know any thoughts or wants to discuss something ideas Etc I’m you know very open uh to chatting and in fact I actively you know encouraged trying to meet as many people as possible in network uh and I think that’s yeah something that I’ll tell everybody listening to the space there that uh network is your netw worth you know in the market uh the more people you speak with the more diverse opinions you listen to uh the better your thought process will be uh and the better your investing outcomes will be uh so don’t be rigid uh you know be prepared to change your minds if the facts change and uh be as open and receptive to new ideas as possible uh you know if you’re if you’re if you if you write off certain spaces in your head then you uh you will you know most certainly miss an opportunity and you don’t want to land up like like Jimmy who’s going to miss the entire India story uh so be open be humble uh let’s you know just keep uh keep learning and keep getting better every day and please do reach out to me uh my DMs are open you can you can DM me or we can speak offline uh happy to help in whatever way possible great thanks p and for our audience I would encourage you to connect to Vin so that we can push him more uh so has to come often or maybe share more insights on theas he’s working in he’s a very sharp mind and definitely a great value addition to everyone around and definitely anything which we discuss today by far far is not a buy sell or hold recommendation these are just starting points so as uh to I mean you guys can surely take that idea home but doing due diligence and Consulting your financial advisor before making any decision is your honest your money your responsibility we are here to educate you best in our capacity no hidden uh agendas and uh we we often say whatever we are speaking take that with a uh I mean not just a pinch of salt but uh a fist full of salt and you can also assume that somebody’s saying anything on public forum you you can always think that his or her views are biased so with that note uh uh I I I also ask you people to like uh subscribe to the YouTube channel which also goes by the same name accidental investor Prince wherein I’ll upload all the sessions all the spaces are uploaded so this SPAC is also if you join late to definitely you can get a hand hang off this session again over my YouTube channel Channel which I will be uploading in a day or two and tomorrow also 8:00 p.m. we have a great session and thanks a lot Ravi by you have been a consistent support and uh always always supporting by all the means and encouraging me to uh host more such valuable sessions Yi anything on your I think some some glitch R you there anyway so V let’s let’s call for a day and uh really love the interaction thank you so much we interact again good night take good night guys