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Highlights from second Sohn India Conference today-
The Conference opened with opening remarks by Nitin Saigal,Founder &CIO, Kora Management
He explained the format of the Conference:
Every speaker will be allotted 15 minutes
The speaker have to give their best idea
No Q&A
The first speaker was Raamdeo Agarwal of Motilal Oswal:
Raamdeo Agarwal's best pick was PNB Housing Finance. He termed it a 'Lakh Crore Ki Kahani'
In India, there are only 27 Companies which have a market cap of more than 1L Crores.For a company to break into this elite club, there must be strong tailwinds and a long runway in place.Some such megatrends that he has seen in his career are IT Services,Private Banks,Pharma etc
He analyzed the Company using his QGLP model.
Its a business with secular growth drivers.India's Mortgage to GDP is very low (9%) and level of urbanization is only 33%.Both these figures can only go up.
The Gross NPAs in this business is only 0.8%
For all practical purposes, it is Carlyle which owns 38% of the company is running the business.They have put in top class processes and practices.
Raamdeo Agarwal quipped -'I own a housing finance business myself and hence can judge the high quality and scalability of PNB's processes'
The management plans to double assets by 2020. Modi's 'Housing For All' can create a 50L Crores Mortgage Market.
The Company has grown at 52% CAGR in the last 4 years and increased its market share
He expects the stock to break into the 1 Lakh Crore Club by 2024...a CAGR of 24%
The second speaker was Sunil Singhania of Reliance Mutual Fund
Being from Mutual Fund Industry,compliance demands he can’t give stock picks but can speak on sectors
His pick was the Cement Sector
Felt while the current demand is low,the sector will benefit from the Govt's infrastructure and housing boost
The problem is that cement stocks have significantly increased in price
He presented an interesting way to play this sector
Said the most significant wealth creation in Shree Cements happened when capacity when from 15 Million Tonnes to 25 Million Tonnes--stock price went up by 3x/4x
He suggested to buy two companies-one North/Central India and the other South India-which have around 15 Million Tonnes each and are ramping up capacity
Enjoyed the clear thinking and analysis of Sunil Singhania
The third speaker was a doctor from the Tata Memorial Hospital
Explained about pediatric cancer
Explained that cancer cure in India should not only be effective but also affordable
Appealed to participants to contribute to the Tata Memorial Trust
Here would like to take a time-out and request readers to help the cause of cancer cure by contributing to Tata Memorial
The fourth speaker was Shankar Sharma,from First Global
Explained that he liked companies with high leverage because when debt gets paid off, correspondingly market value increases
Recommended MEP Infrastructure Developers Ltd
Basically, a toll operator with 19 Toll Plazas including Mumbai entry points,Bandra sea link etc
For the first time since inception it has made a profit now
Expects debt leveraging to happen
The fifth speaker was Saurabh Mukherjea of Ambit
Recommended Garware Wall Ropes
Top manufacturer of nets and ropes in the world
Exports 3000 SKUs to 80 countries
Its expertise in blending high end polymer chemistry with high labor intensity is unmatched
His Primary checks tell him customers are very satisfied with the Company products
Growth will come from Defense,Agri,Infra etc
Management is prudent in their capital allocation, had bought back their own shares in the past
The sixth speaker was Navneet Munot of SBI Mutual Fund
Being from Mutual Fund Industry,compliance demands he can’t give stock picks but can speak on sectors
His sector pick was Telcos
There will be a bloodbath in the sector for next 2-3 quarters
The Telcos which survive will make a lot of money as
Data addiction now is a bigger addiction than alcohol,tobacco etc
Push by the Govt-show a Modi video clip
Consolidation-->Pricing Power--->ROCE
The seventh speaker was Aanand Chouhan, a 2nd Year student
The Conference opened with opening remarks by Nitin Saigal,Founder &CIO, Kora Management
He explained the format of the Conference:
Every speaker will be allotted 15 minutes
The speaker have to give their best idea
No Q&A
The first speaker was Raamdeo Agarwal of Motilal Oswal:
Raamdeo Agarwal's best pick was PNB Housing Finance. He termed it a 'Lakh Crore Ki Kahani'
In India, there are only 27 Companies which have a market cap of more than 1L Crores.For a company to break into this elite club, there must be strong tailwinds and a long runway in place.Some such megatrends that he has seen in his career are IT Services,Private Banks,Pharma etc
He analyzed the Company using his QGLP model.
Its a business with secular growth drivers.India's Mortgage to GDP is very low (9%) and level of urbanization is only 33%.Both these figures can only go up.
The Gross NPAs in this business is only 0.8%
For all practical purposes, it is Carlyle which owns 38% of the company is running the business.They have put in top class processes and practices.
Raamdeo Agarwal quipped -'I own a housing finance business myself and hence can judge the high quality and scalability of PNB's processes'
The management plans to double assets by 2020. Modi's 'Housing For All' can create a 50L Crores Mortgage Market.
The Company has grown at 52% CAGR in the last 4 years and increased its market share
He expects the stock to break into the 1 Lakh Crore Club by 2024...a CAGR of 24%
The second speaker was Sunil Singhania of Reliance Mutual Fund
Being from Mutual Fund Industry,compliance demands he can’t give stock picks but can speak on sectors
His pick was the Cement Sector
Felt while the current demand is low,the sector will benefit from the Govt's infrastructure and housing boost
The problem is that cement stocks have significantly increased in price
He presented an interesting way to play this sector
Said the most significant wealth creation in Shree Cements happened when capacity when from 15 Million Tonnes to 25 Million Tonnes--stock price went up by 3x/4x
He suggested to buy two companies-one North/Central India and the other South India-which have around 15 Million Tonnes each and are ramping up capacity
Enjoyed the clear thinking and analysis of Sunil Singhania
The third speaker was a doctor from the Tata Memorial Hospital
Explained about pediatric cancer
Explained that cancer cure in India should not only be effective but also affordable
Appealed to participants to contribute to the Tata Memorial Trust
Here would like to take a time-out and request readers to help the cause of cancer cure by contributing to Tata Memorial
The fourth speaker was Shankar Sharma,from First Global
Explained that he liked companies with high leverage because when debt gets paid off, correspondingly market value increases
Recommended MEP Infrastructure Developers Ltd
Basically, a toll operator with 19 Toll Plazas including Mumbai entry points,Bandra sea link etc
For the first time since inception it has made a profit now
Expects debt leveraging to happen
The fifth speaker was Saurabh Mukherjea of Ambit
Recommended Garware Wall Ropes
Top manufacturer of nets and ropes in the world
Exports 3000 SKUs to 80 countries
Its expertise in blending high end polymer chemistry with high labor intensity is unmatched
His Primary checks tell him customers are very satisfied with the Company products
Growth will come from Defense,Agri,Infra etc
Management is prudent in their capital allocation, had bought back their own shares in the past
The sixth speaker was Navneet Munot of SBI Mutual Fund
Being from Mutual Fund Industry,compliance demands he can’t give stock picks but can speak on sectors
His sector pick was Telcos
There will be a bloodbath in the sector for next 2-3 quarters
The Telcos which survive will make a lot of money as
Data addiction now is a bigger addiction than alcohol,tobacco etc
Push by the Govt-show a Modi video clip
Consolidation-->Pricing Power--->ROCE
The seventh speaker was Aanand Chouhan, a 2nd Year student
from IIM Bangalore
Aanand had won a stock picking competition organized by Sohn and hence was given opportunity to present his idea
His stock pick was Infoedge
Felt the company's core business (Naukri), Internet Portfolio (99acres,Jeevansathi etc) and VC Investments (Zomato,PolicyBazaar etc) were valuable and could grow well
Gave a target price of 1570 Rs/share over the next 3 years
Next was a video clip by Jeff Gundlach of Doubleline:
He said there is no such thing as passive investing as the index constituents are decided by a Committee
Said to go long EM and short US 500
This was followed by a tea break where I met the redoubtable Samir Arora. He was amused the Munot was recommending the sector he was short on !
The eighth speaker was Kenneth Andrade of Old Bridge Capital Management
His top pick was ENI
Its the market leader in the Radio space with 30% market share and recognizable brand (Radio Mirchi)
It will have second frequency in 11 Metros
National footprint with 60 cities
Radio is an attractive space with 4% of Media spend and growing at a CAGR of 16.9%
ENI has already done significant capex and its time to reap the benefits
The ninth speaker was Shashank Singh of Apax Partners
His top pick was DCB Bank
His investment thesis was
Retail private banks with clear product/customer strategy will do well
DCB Bank reinvented itself after 2010 under current leadership
Suppressed earnings due to network rollout and hence attractive valuations
Felt the Bank has a conservative credit culture with the CEO himself doing surprise audits
Earnings will improve with time as the branch network gets more 'seasoned'
The tenth speaker was Hiren Ved of Alchemy Capital
His top pick was Varun Beverages
Said the Company is a good proxy for Pepsi in India
Not just a bottler but also a manufacturer,marketer and distributor
Felt one unanticipated impact of 24*7 electricity is more people consuming more beverages
Coming to valuations, he said Varun is cheap compared to other consumer plays like Jubilant Food/Page Industries.Found the comparison very funny
The eleventh speaker was Ashwini Agarwal of Ashmore
His top pick was Persistent Systems
Said the company was not a typical IT services provider as it is into outsourced product management
Three investment reasons
IBM-Watson tie up begins to pay off
Growth in Digital business -40% CAGR is possible
Core IT services revenue shows 6-8% CAGR
Two investment risks
Rupee Strengthening
Curbs/high fees on H1B Visas
The last speaker was Akash Prakash of Amansa
His top pick was Infoedge.
Second time the stock was discussed today
He felt it was the ultimate India Internet play
He also felt due to network effects the value of Naukri,99 acres,Zomato etc will keep growing
He feels the real estate classifieds space is 5x bigger than the recruitment space and the restaurant space is bigger than the real estate classifieds space
The companys VC fund also lets the investor bet on interesting Internet opportunities which otherwise one could not
He felt the downside risk was minimal while upside could be 3x/4x
The conference ended by a video clip of Social Capital's Chamath Palihapitiya who discussed Tesla and made a case for buying its convertibles.
Aanand had won a stock picking competition organized by Sohn and hence was given opportunity to present his idea
His stock pick was Infoedge
Felt the company's core business (Naukri), Internet Portfolio (99acres,Jeevansathi etc) and VC Investments (Zomato,PolicyBazaar etc) were valuable and could grow well
Gave a target price of 1570 Rs/share over the next 3 years
Next was a video clip by Jeff Gundlach of Doubleline:
He said there is no such thing as passive investing as the index constituents are decided by a Committee
Said to go long EM and short US 500
This was followed by a tea break where I met the redoubtable Samir Arora. He was amused the Munot was recommending the sector he was short on !
The eighth speaker was Kenneth Andrade of Old Bridge Capital Management
His top pick was ENI
Its the market leader in the Radio space with 30% market share and recognizable brand (Radio Mirchi)
It will have second frequency in 11 Metros
National footprint with 60 cities
Radio is an attractive space with 4% of Media spend and growing at a CAGR of 16.9%
ENI has already done significant capex and its time to reap the benefits
The ninth speaker was Shashank Singh of Apax Partners
His top pick was DCB Bank
His investment thesis was
Retail private banks with clear product/customer strategy will do well
DCB Bank reinvented itself after 2010 under current leadership
Suppressed earnings due to network rollout and hence attractive valuations
Felt the Bank has a conservative credit culture with the CEO himself doing surprise audits
Earnings will improve with time as the branch network gets more 'seasoned'
The tenth speaker was Hiren Ved of Alchemy Capital
His top pick was Varun Beverages
Said the Company is a good proxy for Pepsi in India
Not just a bottler but also a manufacturer,marketer and distributor
Felt one unanticipated impact of 24*7 electricity is more people consuming more beverages
Coming to valuations, he said Varun is cheap compared to other consumer plays like Jubilant Food/Page Industries.Found the comparison very funny
The eleventh speaker was Ashwini Agarwal of Ashmore
His top pick was Persistent Systems
Said the company was not a typical IT services provider as it is into outsourced product management
Three investment reasons
IBM-Watson tie up begins to pay off
Growth in Digital business -40% CAGR is possible
Core IT services revenue shows 6-8% CAGR
Two investment risks
Rupee Strengthening
Curbs/high fees on H1B Visas
The last speaker was Akash Prakash of Amansa
His top pick was Infoedge.
Second time the stock was discussed today
He felt it was the ultimate India Internet play
He also felt due to network effects the value of Naukri,99 acres,Zomato etc will keep growing
He feels the real estate classifieds space is 5x bigger than the recruitment space and the restaurant space is bigger than the real estate classifieds space
The companys VC fund also lets the investor bet on interesting Internet opportunities which otherwise one could not
He felt the downside risk was minimal while upside could be 3x/4x
The conference ended by a video clip of Social Capital's Chamath Palihapitiya who discussed Tesla and made a case for buying its convertibles.
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