Bikaji IPO Analysis

PE of 100+ is too high in the current market scenario

But the QSR segment, as a whole, is priced at a premium 

Biggest issue with Bikaji is growth - Not able to find the same

Frugal Valuation and Conservative Investment

 I have been personally very frugal in doing valuations and risk averse, kind of very conservative approach

Found some similar gyan worth sharing

Some good Screener 

Credit - @coolfundoo

What's next ? Fed delivered 75 bps as expected but terminal value will be higher

 A very important thing markets are ignoring is that Fed has clearly told that terminal value will definitely be higher even if the incremental increases in the interest rates are lower. 

What does this mean

1. There will be increments

2. Individual increments will be lower

3. Terminal Value will be higher than previously expected

The current inflation is sticky and its not going to go away very soon. Even if we assume that 50bps will continue for only 2-3 months from next month, there is a high probability that 25bps may continue for a bit longer. 

There are high chances that the 1-year Treasury rates will be greater than 7%. This will be a dangerous scenario for the market. 

For India, this will be a scenario where FIIs will find it hard to stay in India with such attractive returns at home. 

Safir Anand Twitter Space - 31.08.2022

Market Lookout

1. FED will squeeze liquidity for sure for controlling inflation
2. Recession will be there but it might be short lived
3. NIFTY will never go to 12k and people wasting time 
4. Opportunity for investment is always there irrespective of NIFTY levels

Will money move to FD/Real Estate if interest rate decrease  - - Inflation will come down and money might stay with equities only

Sectors that can perform well - 

1. Infrastructure
2. Defence
3. Real estate

Infra companies like DLF are bullish on growth

Signs of Growth of Infra - Dams, Roads

Don't follow people, who keep on changing their statement every now and then 

PSU Banks can overperform 

1. Technology is substituting for lazy staff and inefficiency
2. Many are trading below book value
3. Drastic Change in Fundamental
4. Good Amount of Reserves

Sold Big Caps in IT and buy small caps

Oil is a very complex sector and very difficult to predict and stakeholders have conflicting interests. Hidden sides with WTO and global geopolitics, so almost all oil Pundits end up making mistakes. 

The stock market is a slave to earnings in long term. Earnings will keep on diverging and converging for sectors. 

In the extremely short term, the market is decided by the emotional quotient 

LIC has historically bailed out the market to support the government but now it is independent. 

TARAJU = Price / Value

Zamato demand is coming from long-term money on institutions and it seems that there is there from Institutional Investors

Institutional Money is a good tracker for checking the long-term outlook

Interest and Experience in evaluating the individual company matters. Evaluation takes time and patience. 

Keep tracking the company and stay with some cash when the market looks costly. Always look for what to sell from your portfolio. Keep the portfolio updated as per research. 

Don't connect research with the market. Markets are mad in the short term

1/3 will always outperform 2/3 companies

Select your sector of expertise and gain insights

Even big funds find it tough to evaluate many companies

Don't follow anyone's portfolio as the time of entries are different for different people. 

Even RJ and WF failed multiple times, but they keep on refreshing their portfolio

It is like a chess board, at every move, the chess board will change

MNC Manufacturing was a trend in the past

Smartest Investors - They put their foot in the door with minuscule shareholding. They start with a 1000 increase to 10000 and then to 100000 of these extremely cheap stocks.

Bogey Model - will force you to read more and analyze more, 

Check the growth of market share, market share will need a lot of time to analyze - Don'tThe best get dazzled by the Hype around new technology or project (3D Printing Example)

Best target company will have no direct news - It will have only indirect news

Reliance acquisition of Campacola will force them to acquire more brands and put pricing pressure on the commercial space

Reliance will make new private labels and fight with big brands by buying small brands

Gurdutt - no one likes him, goes to Wahida Rehman, 

Going away from the crowd - analyze in peace, 

Fund 

1. don't buy very small companes
2. No exit
3. Premium has to be paid if big fund buys
4. Retail Investors have some advantage over these funds in terms of buying at reasonable prices without increasing the prices

Example - Aerospace, Industrial Safety .......invested and forget and then it started increasing, analysed in depth, invested more........Rs 50 Rs..........Rs 700 ............Rs 2000.........DII..........Rs 

Past Examples - Avanti Fields, Unique Hotels, Apollo

We should not be fazed by the lack of buzz around the small company. Dilemma is when it starts to increase, we may make a mistake as things and fundamentals may change at that point of time.

phoenix resorts in Goa - I invested .......market cap 12 Cr.......partnership (3cr+3cr) 50%......news came....more land, south India......promoter mentality was not changing and increasing growth........Rs 24.......today 46

tomorrow - management may change..........has to be revisited again

So, it is again the chess board scenario, keep on evaluating the chess board again and again

Source

1. Brokerage Reports - 
2. Individual Investors

Same data can be interpreted by different people differently 

Telecom is not a wealth creator - there are different questions and opportunity interpretation may differ

Zuric Axiom - there should be something for the next guy on the table, else the stock is bound to fail

Many pockets of efficiency - mispricing

Nitin 

FII has returned back but the structural return is not very clear. Outflows of FII show worse of selling is over but the knee-jerk reaction is possible due to US. FIIs looking for growth economies but the flow will be sector-specific and not in a broad manner. Every bull run has a flavor and we have to identify those sectors. 

Picking Stocks in Market - Already illustrated by oil example that pick up only what you understand

ICICI Bank outperformed HDFC

Market rise yesterday was not justified, 1600 points is absurd, Fed comments have real effect, SENSEX has not fallen enough, 

Like Prashant Says - (Psychology + Temperament) matters 

Nitin - Volatility is a friend of investors, buy long-term targets, take out money from the market in squirrel cash, only use it when the world is worried, and keep on taking out money from the market

 

Markets zooming back

 What's driving the market? Long term head winds still remain there but markets have zoomed back to 21 PE

Advise 

1. Staples

2. High Yield bonds

3. 2 wheeler 

Researching Zomato a lot, hope to see the level of 35 for me to jump in 

Where are we right now in terms of market cycle?

Globally - The last quarter of the US is negative GDP growth  

US is about to enter into a technical recession as last quarter was negative GDP growth and this quarter may again be negative

Is India decoupled significantly - Yes to a large extent but some sectors are strongly coupled such as IT

1. Young population
2. Consumption-driven economy
3. Large RBI chest - If RBI doesn't defend INR

So, everything depends on how fast the mop-up of liquidity happens by regulators? The froth of liquidity is still very high. So, what are good indicators of this speed? 

Leading indicators, not lagging indicators - -Keep a tab on Fed Balance Sheet as well as other important global peers

Which sectors will be bad to enter into ?

Discretionary (high beta) - Banking, IT, 4 wheeler

Good to enter

1. Consumption - 2-wheeler, staples 
2. Value-Oriented sectors - Pharma, Energy, 

If inflation still remains out of control - Gold is good insurance against global turmoil

Demand for real estate will definitely go down with the recession but part of this will be countered with the inflation froth

When will redemptions of SIP start happening?

 Retail investors have been holding hard by continuously pumping in money when the FIIs have been withdrawing in FY 21-22.

FII flows started a negative trend started on Oct 21 but the DIIs were on an upward trend. Hence, the market has not gone down substantially. 

But the cracks in the DII story has started, 

 

The first to be impacted will be the Non-MF DII Inflows. These are basically retail investors, who are directly investing in the stock market by buying shares.

 

These are basically inexperienced people catching a falling knife

 

They have done buying at very high valuations. They have already burnt their fingers. They will basically start evaluating their returns and perhaps will start panic selling about 1 year from the highs of say Oct 21. So, that panic selling may start say around Aug-Sep.

 

But the real question is when the redemptions in SIPs will happen. Experts say – Never.

But the cracks already started in the SIP story as the May 22 inflows are lower than April -22.

Update - FII are again net sellers this week

https://www.indiainfoline.com/article/news-top-story/weekly-round-up-of-indian-equity-markets-122062400140_1.html

Keep a tab on the volume of transactions in market - Especially ratio of Retail / Institutional transactions

Nifty PE at 18.92 - just moments away from my Aha moment

 

 I have been sleeping and yawning for a long time, but have become very busy for the last 1 month. 

All my triggers are now sending me emails and alerts - WAKE UP LUCKY, IT's TIME TO WAKE UP

 

Yes, PE has gone closer to my target range for long-awaited market entry. 

2013 – I was out of India and busy with hectic international travels across Asia. My only engagement outside the family in India was AAP moment and supporting the volunteers on the ground

 

2016 – I shifted to India and was busy with the hustle

 

2020 – It happened so fast that I could not make my Hypothesis for investment

 

This time around I am totally free and eager to get my hands dirty

Questions - How long it will take the US to mop up the money back? Interest rates are required to be significantly higher than the inflation rates. 

If the interest rates are increased significantly 

Debt - Huge MTM losses (long-term debt will be loss-making as interest rates will go up)

Gold - If inflation cools down then it may go down but for the moment, it seems unlikely that inflation will decrease soon, so gold may remain inflated for some period

Real Estate - May stay inflated for a longer period as mop-up is not so easy 

Excess liquidity has to settle somehow - The question is speed and speed is decided by regulators not the markets, so bottle cap tightening is out of market scope

Portfolio Plan with PE at 20

 PE = 20, https://primeinvestor.in/nifty-pe-ratio/

market may have a trailing effect 

My threshold is 18-19 to touch equity, but I have to start somewhere, 

so I will begin my build-up game

Where to start? 

Index-linked direct plans, as I don't have time

Debt 

Indian Railway Finance Ltd                          7.61%

National Savings Certificate (VIII Issue) 6.80%

SBI Regular Income Corporate Bond            6.34%

5 Year Time Deposit on Indian Post          6.70%

Kisan Vikas Patra​​                  6.90%

Indian Oil                                                        6.14%

Source - Bondskart.com