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5 GREAT stocks for long term! #Smallcase - YouTube
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so let me start today's video by talking
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about a very important but fundamentally
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missed point about indian stock markets
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now indian stock markets are one of the
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hardest markets to make money in why
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because if you take a look at apple or
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if you take a look at amazon or if you
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take a look at microsoft then the data
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is very transparent and it is very easy
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to parse through that data right so the
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market efficiency in the u.s market is
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very high now i am not trying to tell
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you that indian markets are inefficient
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or there is something fundamentally
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wrong with indian markets no it is just
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that the u.s markets are much more
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mature the data is more reliable and the
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quality of data is very high right now
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if you compare that to the indian market
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what happens in the indian market is
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that indian markets are mostly family
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based businesses they have been in
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generation for the last two generations
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three generations many of the businesses
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in india are family based businesses
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unlike the us businesses they engage in
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a lot of weird stuff right i'll not name
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it here what type of stuff but
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essentially the management of the
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companies in india it can be really
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shady right and as retail investors we
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do not have access to this type of
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management related information unless
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the news is completely out and we have
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taken a hit on our stock portfolio we
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would not know what is happening and
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what is going on in the management
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now this is a very important point for
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us to understand as retail investors and
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accordingly make our investments
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many of you asked me that ayaksha can
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you name some multibaggers akshat can't
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do it no one can do it okay even mr
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rakesh indian while i can't do it but
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what they can do is that they can figure
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out or they can bet their money on good
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management that's a and they can bet
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their money on potential industry
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leaders now a combination of these two
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factors is what makes a company
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multibagger now here is a chart for you
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that shows the returns that have been
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given by some of the top stocks in india
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and you can take a look at bajaj finance
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bajaj pinserv you can take a look at
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something like havels right which has
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grown from a very small company to a
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relatively big company now you can take
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a look at pedilite industries again
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grown from a small company to a very big
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company now you can take a look at
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co-tech mahindra bank which has been
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able to expand and grow with india's
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growth now what are two very important
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common feature in all these industries
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number one the management of all these
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company has been great literally great
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for example bajaj finance is known to
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have one of the best management
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practices in the industry that's one
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even kotek bank has shown very strong
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management related abilities that is
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factor one factor two is that these
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businesses are almost like monopolies
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for example bajaj finance is a dominant
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company it has massive market share when
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it comes to giving loans to white collar
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employees massive massive market
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potential for a company like bajaj
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finance it is literally a monopoly there
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when it comes to something like asian
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paints excessive market share if you
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take a look at pedalite industry which
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makes fevicol fevicol in itself is a
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monopoly and i'll be surprised if any of
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you would not have heard of that company
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now the lesson for us is that if we
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identify companies which have very
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strong management that's one second
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which have the potential to become
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monopoly either in their own product
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segments or monopoly as a company
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altogether these are the type of
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companies that eventually become
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multibaggers so on today's video i am
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going to name a few companies that i am
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adding from a long term perspective i
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feel that these companies have excellent
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management and they can become
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monopolies going forward in their
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product segment or company as a whole so
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let's get this video started i'm going
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to create my own small case and from
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time to time i'll keep adding and
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deleting companies as per how the
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businesses evolve
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this is not an investment advice this is
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a research that i myself am doing and
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this research is evolving right because
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sitting now we can say that you know
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what fidelite has the best management
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practice but something weird might come
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up after two years so we have to
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rationalize that so please keep a track
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of these small case and keep a close
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look at these stocks these are super
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long term stocks so i'm giving a window
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of five to ten years these are not short
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term so please don't comment that here
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you're buying this stock at such a high
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price i don't care right i mean after 10
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years if this company will become 3x
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even if i'm buying the stock at a high
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price it's completely okay because if
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this business becomes monopoly guess
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what my money will at least become five
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times from there so let's get this video
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started now the first key stock that i'm
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buying for super long term is called as
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relax so right so relax so now why am i
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buying relax so now i can show you like
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a lot of data around relax so and you
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know try to convince you around
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fundamentals but i'll convince you about
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someone called as ramesh kumar dua right
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so he is the main promoter of the
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company his entire family is involved in
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relaxo's business so very quickly let us
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look at the promoter holding for relax
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so and you can see that you know
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promoter holding has hardly changed
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and if you take a look at mr ramesh
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mardua he has maintained its holding he
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mr mukund
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probably his brother
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you know lot of his family members hold
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massive stocks in this company they are
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betting on on this business as a family
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right that's point one now this is not
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the reason why you know you should go
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and bit big on a company because the
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entire family is running it but you
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should bet on a person who is running it
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right so this is a very interesting
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article that i was able to dig up on mr
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ramesh kumar
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and this paragraph literally impressed
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me a lot right for example
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he joined the company a very small
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enterprise back in 1976
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at the behest of his father while
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preparing for mbbs he was 17 when he
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started helping his older brother run
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the manufacturing business of hawaii
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chappal i am sure that many of you would
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have heard of hawaii chapel from blue
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and white slippers in 1976 to 10 casual
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and semi-formal footwear brands relaxo
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has emerged as one of the largest
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manufacturer of footwear in the country
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with a production capacity of 600 000
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pairs a day across its eight factories
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now two three very important points for
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you to understand right number one he is
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a person who has been running this
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business for decades that's one second
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is that he's someone who has seen things
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on ground he has built multiple brands
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within the footwear industry he knows
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how to build and scale up brands he has
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done it multiple multiple times
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third and very important number wise
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data that you can take a look at relax
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was eight factories okay which means
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that this is a very small company so to
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speak just purely based on number you
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don't need to do any data analysis on
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this number eight literally indicates
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that there is scope for them to
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undertake fixed capacity expansion and
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whenever the demand picks up they are
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going to expand massively and add more
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money to their profit margin and let's
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take a look at how the company has been
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performing for the last decade
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now there has been a consistent rise
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consistent rise in the profits there has
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been consistent rise in sales almost
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consistent rise if you discount this
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corona period right the operating profit
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have been great and this is what excites
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me the most that the profit margin is
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improving it means what it means that
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their return on capital will be
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improving as companies make more roc it
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means that they will have more cash
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flows coming in to undertake more
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business expansion and make their roc
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even more prominent so this is the type
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of a business that i get really excited
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about there is no unnecessary tech
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libraries there is a great guy running
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the business entire family is behind him
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they have shown consistent history of
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growth there is absolutely no reason at
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least now for us to believe that these
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sales number right which are standing at
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2300 crores will not become like 5000
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crores in another three or four years
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right there is absolutely no reason why
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that should not be happening it can
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easily do it now more to the point about
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the fixed asset expansion now if you
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take a look at on how the fixed asset of
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this company has been going up you can
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clearly see that you know the fixed
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asset expansion has become almost four
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times in the last 10 years which is a
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good sign it means that the company is
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able to generate free cash flows and
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reinvesting that money in their business
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which is a good sign because this shows
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that these promoters are in it in their
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business for the long term they are not
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just here to trick people and just sell
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them stuff and go away no they are here
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to stay for decades and generations to
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come mr ramesh kumar dua is probably not
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just building this company just for him
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he's building this company for
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generations to come so this is a super
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stable business i see absolutely no
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problem in it and i am willing to put a
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lot of money behind it now there is
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another very interesting thing that i
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will show you and this is something that
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we can see from the chart that there is
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a pattern of consolidation and then
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growth right so for example you will see
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that the stock consolidated in this time
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period right then it consolidated in
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this time period now it's consolidating
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again so every time the stock is
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consolidated it has taken an upturn
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right and it has been doing it right
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because it's such a stable business and
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we are like pretty much in this
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consolidation cycle for the last several
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months so whenever it moves up it will
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be a good time and this is the reason
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why i am making an investment in this
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stock now the second stock that i am
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bullish about is called as alkyl amines
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it is a specialty chemical stock in
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india so first and foremost this is a
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report by invest india which is a very
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credible government agency and this is
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what it says that these specialty
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chemicals constitute 18 of the total
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chemicals and petrochemical market in
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india as of 2019 the market size is 32
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billion the demand is expected to grow
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at 12
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right so this is a very important point
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that market is going to grow at a 12
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percent
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right now the specialty chemicals
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contribution is only 18 to the total
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petrochemical industry so this also is
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likely to improve so overall the
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industry trend look to be good from this
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single data point now why am i very keen
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on buying alkala means chemicals the
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reason is very simple that look at the
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roc right roc is 55.8 right this is one
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of the highest rocs that you will see on
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any company and this is massive right it
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simply shows that the profit margin will
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be very high this we can check by going
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into the quarterly results now you can
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see that the profit margin has been high
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and it's growing now these type of
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companies have the potential to become
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multi vagus for the simple sense that
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their roc is so high so high that they
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are getting free cash flows they have
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money to plow it back into their
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business and grow it further that is how
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companies become monopolies and that is
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how stocks become multi-values now let
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us look at promoter holdings also so
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promoters have not sold their holdings
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at all right for years so which is a
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great sign it shows that the company
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promoters believe in what they are doing
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and honestly they don't need to sell
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their state for a simple reason why
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because they're already getting enough
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free cash flows to finance their
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operations so they don't need to do any
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pledging they don't need to do any of
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that stuff because the profit margins
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are so high now i don't have enough
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information about the lead promoter mr
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yugesh kothari i tried finding
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information on him he seems like a very
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reclusive person so not much information
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about him this is one missing piece that
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is making me little bit uncomfortable i
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would have loved to learn more about his
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business philosophy how he thinks i'm
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keeping a track of this i will hopefully
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be able to uncover more information in
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days to come and then i will make a
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final call and make a lump sum
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investment in this company but what i
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simply want to point out is that it is a
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massive monopolistic type of a business
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in a growing industry 10 years from now
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if it continues with the progress at a
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rate at which it is currently growing
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then you are betting on a winning horse
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now the third stock that i am quite
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bullish about is hdfc bank now this
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might look super counter intuitive
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because hdfc bank was started somewhere
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in mid 90s so it's a fairly older bank
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but here are a couple of key changes
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that are happening in the banking
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industry i've done a complete analysis
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you can check my overview of the banking
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industry here but what i simply wanted
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to tell you about the banking industry
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is that banking industry in my opinion
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and this is where i am taking a bet that
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especially when it comes to banks like
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hdfc kotech mahindra icici the top three
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or four banks will become highly
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monopolized so to save right it will
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exist as two three top players why
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because even now you would have observed
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that there are many new banks that are
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coming up rbi is giving more licenses
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what does this indicate it simply
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indicates that there is a lot of pent-up
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demand for banking products in india and
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there are a lot of customers that are
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underserved now banks like hdfc icici
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bank o tech bank what are they doing
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number one they are expanding at a plan
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india level they don't care whether they
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are going to villages they don't care
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whether they are going to cities three
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or three towns they are literally going
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everywhere that's one second banking is
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a trust based business especially when
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you move to tier 2 tier 3 cities
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villages people would want to put money
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in banks that are older that is the
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reason why despite psu banks being so
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inefficient and literally burning down
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their capital they still survive still
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people line up outside which bank sbi
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bank yet another poor joke on sbi they
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line outside sbi bank to open their bank
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accounts and undertake transactions
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third and finally what is happening in
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the banking industry is truly phenomenal
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what is happening here is that c you
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open your bank account that is done
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right that is what used to happen that
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open our bank account our salary comes
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into the bank account and we are done
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but now what is happening is that there
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are lot of new banks that are coming up
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these neo banks or new age banks allow
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you to manage your money properly for
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example if you are getting 20 000 then
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you will automate a system that hey send
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10 000 to mutual fund send two and a
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half thousand for this pay two and a
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half thousand on this so you can
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automate your finance so that type of
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functionality is now being offered by
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neo banks for which they are partnering
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up with traditional banks like hdfc so
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your frequency of interaction with your
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bank will also go up so why does
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something like hdfc or icici has a very
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clear growth plan why because number one
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they are expanding all across india okay
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fine after a while they will not be able
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to expand at a massive rate but you will
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engage with your bank more and more for
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every single thing right from insurance
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to managing your money and incorporating
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different functionalities on it
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therefore these banks will continue to
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be massively profitable for decades to
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come so here is my investment in hdfc
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bank i'll keep on adding more money to
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it because i believe in this growth
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story in passing the final point about
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hdfc bank is that their management has
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always been really good yes mr adity
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held the realms of hdfc and grew it to a
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certain point even their current
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management is very capable and they will
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be able to grow this man now another
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couple of notable mentions before i
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close out this video are the following
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number one i am betting on nika i
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believe that it's a good firm with good
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management i have done a separate case
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study on my car the way that they have
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handled the corona irs 2020 pandemic
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falguni nair who is the ceo of nykaa she
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is very capable in terms of pivoting her
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businesses she literally pivoted the
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business of nika during the pandemic and
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opened new revenue streams for the
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company their family is again involved
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in terms of running the entire business
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they are launching their ipo soon so i
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might not bet on the ipo but that is a
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company that i am keeping a close track
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of because i believe that in the next 10
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years it can actually become really big
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final mention is dmart we all know that
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mr radhakrishnamani is a fabulous
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investor he has grown dmart
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now the headache with dmart is that the
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price never comes down i've been waiting
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for the price to come down but it does
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not come down where i can make massive
[880]
bets on dmart so i'm finally giving up
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and i'm going to make an investment on
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dmart because i am not bidding on demar
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i am rather betting on mr
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radhakrishnamani he understands he's a
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person who is attached to the ground he
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understands how businesses are built and
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run he's an ace investor and have full
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faith in his capabilities and i feel
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that he will be able to navigate this
[900]
complexity of retail space that the
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entire industry is growing so these are
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a few key points that you need to make
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and this is how you need to analyze
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companies before you start betting big
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on them i am making these investments
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for literally a decade so i am in no
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hurry in terms of buying it at an
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absolute low price below 200 day moving
[917]
average something like that i am going
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to bet big on these companies you could
[921]
consider investing in this small case i
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will continue to rework this as and when
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i get new information so i hope you
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enjoyed the video give it a thumbs up
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and i will see you next time
[941]
you
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