Has India decoupled
We have put together a brief note explaining our views on whether India has decoupled.
Read MoreWhat I learned from Rakesh Jhunjhunwala
Rakesh Jhunjhunwala, India’s favourite investor, passed away yesterday at the young age of 62. The world knows him for his wealth, his passion for investing and for his wit. I am privileged to share a side of him not many knew by virtue of my association at his family office “RARE” between 2006 to 2014 and the mentoring I benefited from till his last days.
Rakesh “Bhaiya,” as he was affectionately referred to, was perhaps the strongest believer in the India growth story that I have known. His reasoning was India’s democratic roots and consensus-based approach meant growth would be more long lasting and gain momentum with reforms.
Read MoreINVESTMENT THESIS ON MAYUR UNIQUOTERS
The lack of Earnings growth for Mayur in the last few years coupled with no immediate triggers has resulted in a reasonable valuation today.
We continue to own Mayur despite a few years of no operating earnings growth because its poor financial performance can be principally explained by the environment. The business is evolving well on operating metrics and its valuations are attractive. We also have a variance perception on key person risk. While Mr Poddar is the visionary and face of the firm, the business growth and resilience are not as dependent on the promoter as the market believes.
The stock market is not being irrational
In our last communication on 5 May, we had shared that we need to be realistic in return expectations as monetary policy is reversing which will have an impact on multiples. We are seeing this play out as the market reprices risk. There is a higher probability vs the last few months that inflation will stay elevated and that developed world Central Banks will need to raise rates aggressively and that could push their economies into recession.
Read MoreNeed for realism in return expectations
Conversations with partners over the past few days suggest some partners are not appreciating the change in monetary policy underway and what that means for future returns.
Hence, some points we have made earlier merit repetition.
Read MoreWhy do we not own commodities
We have put together a brief note explaining why we don’t own commodities.
Read MorePerspective on Life Insurance companies
We are investors in the Life Insurance space with ~20% allocation. These names have seen a steep price correction over the last 6 months with some leading large caps down over 25%.
We take this opportunity to explain
- Some basics of the Life Insurance industry and its economics.
- Why we like Life Insurance as a long-term compounding story.
- What could explain the share price correction.
- Our views on LIC and whether we will participate in the IPO.
- Our investment stance basis current valuations at present.
Consequences of Putin’s war in Ukraine
Dear Partners:
In order that we can share our thinking on the current situation in Ukraine with all partners, we have put together a brief note that summarizes trends we see, their implications, and how we intend to act. I hope you find it useful.
A caveat. The situation is evolving and we typically see first order effects at present, but there will be second and third order effects which only become clearer with time. Hence, this note is “work in process”.
Investing during a crisis
It is now clear that a macro risk (Russia/Ukraine) has become a known event. Not surprisingly the markets are selling off as new information is factored into prices.
No one knows how this will end or its short term implications. If anyone tells you they do, it tells you more about them than their forecasting abilities.
Read MoreINVESTMENT THESIS ON SOLARA ACTIVE PHARMA
Solara has a strong Pharma API 1 and an emerging CRAMS 2business. It has recently announced a merger with Aurore, a privately owned company in the API/CRAMS space. Pharma API is a USD 180B industry globally of which India has ~ USD 4B share. The developed world has been outsourcing manufacturing and India now has the additional tail wind of the developed world wanting to de risk from China (USD 35B).
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