Looking out for Future Infys !

Hello,

Just read in a thread a quote about how if one had invested 10,000/- in infy 15 years back it would have turned into 1.98 cr (i know members will say, not again!).

softtouch, had a wonderful suggestion, why not look out for future infys rather than harping on the past.

I thought, this deserves a seperate thread.

The idea is to make list 10-20 companies that can be Multibaggers.

I wish I could but I am unable to contribute to the list, but i hope we will get contributions from members and who knows, after 10-15 years, you may refer to this thread and claim "I Told You So...."

Looking forward to suggestions

Regards
Sanjay

Hey Sanjay,

I think this is a Great exercise, and can really help all of us identify stocks which can be looked at for "Really Long Term" (10-15 Years Time Frame) Investing.

But rather than directly narrowing onto stocks, i think we should adopt a Top-Down Approach, by which we can first identify a sector (or sectors) which are capable of delivering that kind of growth over the next 10-15 years.

Because once we are able to identify the right sector, and then, even if we go wrong on the stock that we pick, I think even then we would make a very very decent return

For Example: Any Stock that had anything to do with Information Technology multiplied anything between 10-100 times during the 1997-2000 period

Similarly look at the appreciation of all the shares that have anything to do with REAL ESTATE these days.

So i think its very important to pick up the right sector for investment, coz once that sector comes to limelight, no matter what stock u r holding u r bound to get great returns

So may be lets start looking at sectors

What do u say??

Disclaimer: This thread was started by u and if u think i am taking the discussion in a wrong direction, do let me know, will edit my post accordingly

Regards,
Jamil

Hello Jamil,

I do not claim ownership of this thread, so let’s take the discussion where ever it goes.... Hopefully we all will gain from it.

You have a good idea there, about taking a top down approach.

In fact there is one more thing we all can do, before we embark on short listing stocks or sectors.

Can we come up with Rules to filter the choices we will make, like as they say process of selection starts with elimination.

For example, if our approach was that 'we are not buying a share but are investing in a company' what should be the company like, what all do we look at?

Can we come up with some basic rules based on objective, quantifiable criteria’s to apply fundamental analysis?

Can we also come up with rules based exit strategies again based on fundamentals?

I think, it’s worth giving a shot.

Regards
Sanjay

Hello Friends,
It's a great idea.This thread can be a really good thread by continuing this kind of discussion.Top down approach in this regard is the best one.Well right now three sectors coming in my mind.One is Healthcare sector(internal demand as well as medical tourism),Unconventional energy sector( all of us know the reason) and another one is Food Processing industry(the percentage of vegetables,fruits etc wasted in our country is very big.So this sector can also be a sunrise sector).Also Nanotechnology sector could be another one.
I have given my humble opinion.It would be great if all the seniors join and give their views regularly.
Let's hope for the best.
God Bless You.
Disciple.

Hello Jamil and Disciple

So we decide to go for 'Top down approach'

Sectors suggested by Disciple

1. Healthcare sector
2. Unconventional energy sector
3. Food Processing industry

Plus
4. Sunshine industries as nano technology maybe biotechnology and or/ higtech agro

And Jamils suggestion

5. REAL ESTATE (Infrastructure / Construction)

I would suggest also to keep looking at

6. Information technology

and the next big thing

7. Retail


Regards
Sanjay

Hey Sanjay

I used REAL ESTATE as just an example and dont suggest it as a MULTIBAGGER from here on

OK someone pointed about having some Ground Rules for Identification of such Stocks

Well here are a 10 Pointer told to me by a person ( dont ask me about who, why, how etc etc, wont be able to reveal) who currently has a portfolio of around Rs 200 Crore (as a conservative estimate), he started in 1983 with around Rs 2 lacs

So i guess this is the best that we can get at this point of time

1)Promoter Quality - In terms of Capability, Integrity, Ambition

2)Does he have a Stake (which means how much of his personal fortunes depends on this particular Business/Company also indirectly the quantum of his stake in the company.........can he wash off his hand off this company easily)

3)Scalability of both Business (and Share Price)
Upcoming business ideas such as "Facility Management Services" etc fail on this criteria
Also Scalability of Share Price
For eg - Bharti Televentures today is selling at a MCap of Rs 75000 Crores
The GDP of our country is approx Rs 35 lac crores
Now if ppl expect Bharti to be a 10 bagger from here on it will command a MCap of Rs 7.5 lac Crores, even assuming a GDP of Rs 50 Lac Crore, it will mean valuing a Telecom company at 15 % of India's GDP, which i think is too good a valuation to be given to a telecom company in the near future
(i mite be wrong here .........comments always invited )

4) No Need for an Exit -

5) Either Ability to Dominate or Ability to hold on to its Niche against strong competition

6) ROC should be high - typical for industries involving more of Intellectual property and less of Phsical property (eg IT)

7) Grassroot understanding of the Business should be very high
Something that u can credit the RELIANCE group with as against say a WADIA's

8) Awareness should be LOW + Visibility should be HIGH (something that consumers see/observe a lot but really dont know who is behind it)

9) Control on Prices (on both end in terms of controlling Input prices as well as raising product prices and the scope for both)

10) INNOVATION - Probably the most important point and this need not be only in terms of Innovative Products but can be Innovative Distribution setups, Innovative Processses, Innovative Marketing etc etc

Now a disclaimer again
I am trying to reproduce these from a 2 year old NOTEBOOK which just has the 10 points, I have tried to give explanations to the extent that i can recollect, so if others have counter views do come up and those can be discussed


Now Sanjay i spent most of yesterday and today trying to identify sectors as we discussed, by i think most of them failed on Point 3 (Scalability of Share Price from here on) as almost every positive about all companies seems to be discounted at this point of time

Also i think for the kind of exercise that we are trying to follow TIMING will be of PRIME importance

and i mite be grossly wrong, but personally i think TIMING mite not be on our side at this point of time

I can think of only one Sector (or subsector as u may call)

1)Companies involved in Defense Sector (especially the one's helping to modernise it)
Companies Eg -
ZEN Technologies
Avantel Softech

Thats probably all that i can think at this point of time

And definitely not REAL ESTATE

Regards,
Jamil

Hello,

Thanks Jamil for your detailed post.

I agree with you that the 'Promoter Quality' would be the most important aspect. The willingness to share the spoils with other stake holders is not a very common quality, although lot of lip service is given to to creating wealth for shareholders.

As you point out the criteria of 'More of Intellectual property and less of Phsical property' will leave us with a very narrow choice (IT/BT/CT/NT... ), and by the very nature of the technology businesses, theywould be high risk ventures. Another risk that will have to be taken, is of investing in the nacsent stage of the business.

Your 10 points, are excellent place to start with ..

Regards
Sanjay

Hey all!
I like this thread! Seems like a treasure hunt and the thrill lies as much in the hunt as in the find. Only hitch - we'll know if it's really a treasure only after a decade or so!

Hello Jamilzz!
It's good to read your post.Well,defence sector is a good one. Good choice.More specifically I would like to mention let us try to find companies which are into defence electronics.Today's warfare and future warfare will be most hitech one.And our ever increasing defence budget will always try to get good "DESI" companies.Slowly our defence sector is opening up to our private companies.Lots of companies are doing work in defence sector like TATAPOWER/VSNL/L&T/M&M. BUt none of them is truly in defence electronics company.It would be better if other senior members throw some light in this regards.
Anyway,great discussion is going on.
God Bless You.
Disciple.

but where are the companies or as a matter of fact the sectors at large from which people like you and me could put in their money.

2500 scripts are traded on the bse on a daily basis. but 80-90% of them are jumrutalaya & co. well known companies have willingly kept them out of the market because of the basic manipulative structure of the Indian markets. abroad football clubs like Manchester united, or men's magazine like playboy are listed entities. even exchanges like london stock exchange are listed. it may surprise you but one of the most popular indices in the world FOOTSIE 100 is owned by a newspaper company, namely Financial Times.

do we have many choice? lets take defense for an example. it is one of the booming sectors in the world. but name a single listed entity which deals in this sector. well i am not talking about the suppliers like bhel or tata motor or some software companies. but the hard core ones. like LOCKHEED MARTIN in the US. like Hindustan aeronautics here in India. we would prefer to import even basic defense material from Russia, US or any other country but not let our own people to build them, here in India.

as it has already been discussed the future lies in knowledge. and one sector where India has gone places is in software. India may be doing great in IT, but just name one PRODUCT made by any Indian software company thats truly global. just go to Start>Program on your computer and you will know what i mean.

the very manipulative nature of our markets make our decision more difficult. here helms of operators rules more than fundamental. the valuation of real estate stocks speaks of that fact. the lack of depth is still haunting and thats make the hunt for future Infys even more challenging.