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