Views on Life & on Equity Investing

Wonder, Wealth & Abundance

20 Year Investment as envisaged in 2013

with 55 comments

Maybe this post should be on my notebook as a  mind-map instead of a post.

I have been trying to replay the scenario in my mind over and over, at-least few thousand times in the past 1-2 months as to what should be one’s biggest financial investment, all debt free and leaders for over 25 years in their region. 

Unilever Nepal (9% div yield, 10 PE), GSK Bangladesh (2-3% Div Yield, 25PE), Crown Paints Kenya (3% Div Yield, 10 PE), Steamships Trading (4% Yield, 17 PE). There is Gillette Pakistan where it is hard to open SCRA (Special Convertible Rupee Account) for non-institutions. Akzo Nobel (Worlds largest Paint Company is selling for a song at just 10 times earnings in Pakistan too.

Based on adjusted population I feel the maximum potential to expand is with GSK Bangladesh followed by Akzo Nobel Pakistan. Chances of lowest loss are with Unilever Nepal and GSK Bangladesh.

Many random probabilities run through the mind making final choice harder. Bangladesh has a precarious balance with sea level but 2.5% of worlds population offering a global 130 Billion USD company at 800 Crores INR. This is cheap on global average by about 31 times. Seemingly cheap Unilever Nepal is only 7 times undervalued. If Bangladesh merely reaches mid point/average of world price appreciation can be 31 fold over next 20 years. Nepal has no such issues with rising sea level snowballed by global warming but is home to only 0.5% of worlds population. (Am I the the brutal Capitalist silently praying for increased fertility rate ?)

130 Billion USD (GSK) * 2.5% Bangladesh population =  25,000 crores. (Current market cap 800 Crores INR) (Remember we are not expecting Bangladesh, Nepal, Pakistan, India to become economic equivalent of West but just world average). 31 times undervalued

Some companies may have exhausted their easy potential. eg: Unilever India.

120 Billion USD (Global Unilever) * 17% India population = 122,000 crores (Current market cap 122,000 Crores INR), i.e. already at world average. Not undervalued

206 Billion USD (Global Nestle)  * 17% India population = 210,000 crores ( Current market cap of 52,000 crores INR). 4 times undervalued

One would tend to think that at this rate Nestle globally at 206 Billion USD is relatively cheaper (in India at 52,000 Crores) to Unilever in terms of its potential.

120 Billion USD (Global Unilever) * 0.5% Nepal population = 3600 Crores (Current market cap 500 Crores INR). 7 times undervalued

Some companies may quite look expensive at 45 times earnings but need not necessarily be. eg: RECKITT BENCKISER Bangladesh is undervalued on population adjusted metric by 30 times as well. I believe it to have greater latent potential but not much growth as yet . I prefer consumer brands to prescription pharma – natural tendency to consume for a life time vs fickleness of regulator and lawsuits. GSK has made it clear that it would operate only 6-7 large brands whereas RECKITT is building more muscle in consumer category with 19 power brands. Interesting interview

RECKITT is actually growing much rapidly in rest of the world relative to GSK but Bangladesh is not yet its focus. 

Number of times undervalued is only one part of the equation. Others are:

Absence of other leaders that have not yet entered the market

Seriousness of company to expand

Dividend Yield, prefer 70-100% payout ratio, small countries should be marketing outlets

Royalty (In India Unilever extracts profit in two ways, by dividend and royalty, not so in Nepal, all profits are extracted via Dividends !! Hence if you become a co-owner you get Royalty + Dividends in Dividend Payout, hence the 21% NPM of Unilever Nepal more than anywhere else)

Nestle or Agro Tech like food companies do not translate into like for like comparison due to varying foods habits of India vs West.

Tendency of company to acquire smaller companies and build assets

Market  Cap / Sales (GSK Pharma India 9 times, GSK Consumer India 6 times, GSK Global 4 times, GSK Bangladesh 1.5 times)

Then, there are googlies like Press Corp Malawi with a very diversified portfolio but dividend payout ratio is only 10%

Although Malawi Kawach has depreciated 50% against USD in the last one year,results are astounding

They have tripled this year alone, still available at 10 times earnings. Inflation has reached 20%

Only 11 banks have a licence to operate in Malawi opposed to 100s of them in similar sized countries

Nice to have a problem of plenty for a change. Mind yearns for what isn’t yet owned. I want Akzo Nobel just because account has not yet opened in Pakistan. A story comes to mind. Its about a young boy’s interest for an ugly dog belonging to a neighbour. He kept  demanding for it despite offers of other pets with better appearance from his parents. Moral in his own words: ’Attachment is blinding. It lends an imaginary halo of attractiveness to the object of desire’ 

Written by amitdipsite

December 24, 2013 at 10:37 pm

Posted in Uncategorized

55 Responses

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  1. Bought Acrysil at 100 Rs, mentioned on 24th of September at

    Expected it to take 2-3 years to double but it doubled in 3 months flat. Market is going crazy ride. Holding on for now..

    Amit Arora

    December 26, 2013 at 9:57 am

  2. Do you think we could enter now? It's climbed up way too much and way too fast. Have I missed the bus?


    December 26, 2013 at 12:33 pm

  3. Hi Amit,
    What do you think about Cravatex, why margins are declining? Would you still suggest holding it?

    Michael W.

    December 30, 2013 at 1:52 am

  4. Hi Amit,
    Could you please elaborate the reason for shifting to Manappuram. I can understand shifting from Vikas WSP but what about to….


    December 30, 2013 at 4:29 am

  5. I am not sure Michael. Manufacturing companies have an edge over trading companies IMO, negative for Cravatex, Rs depreciation another negative for import intensive company. Its an insignificant position for me now, holding primarily due to various biases. FILA has failed to take off, poor quality product. WILSON may provide succour. Balance sheet is also weak now, not sure why I am holding on.

    I would encourage investing in some of MNCs I mentioned in under developed countries.

    Amit Arora

    December 30, 2013 at 5:37 am

  6. Superhouse Ltd mentioned 1.5 months back has doubled now. Needless to say even my family members bought Relaxo, my powers of persuasion are an absolute failure. I still prefer Bata Banglades etc.

    Amit Arora

    December 30, 2013 at 6:14 am

  7. Hi Amit,
    Waiting for your reply as I would like to take a call keeping in view your suggestion !!!


    December 30, 2013 at 10:56 am

  8. Another comment on Superhouse from September, looks better than relaxo even now

    Amit Arora

    December 31, 2013 at 11:30 am

  9. Dear Amit,
    What do you think about CERA launching Cerenity toilet spray for women? Looks like huge potential for business here.

    Pratul Lobo

    January 1, 2014 at 5:31 pm

  10. Hope they don't blow much money on it. This category is un-exploited in India but has some very powerful companies in it. RENTOKIL INITIAL and RECKITT BENCKISER

    Reckitt has many products including dettol and lysol

    Rentokil too is a globally successful company with a very very big presence in NZ

    In India however, they are only into pest control

    Branding building and target category (women) is on right track. Answer also is in – how clean are public toilets in India ?

    In offices, hotels, institutions different set of products will be required, wall mounted spray, disposal boxes etc. Its a new category but competition is also quite low as yet in India.

    New startups in India

    Amit Arora

    January 1, 2014 at 9:06 pm

  11. SC Johnson a 12 BILLION USD company is also quite respectable global company in similar sector

    Just requires constant brand building in this segment

    Amit Arora

    January 1, 2014 at 9:39 pm

  12. Reckitt Benckiser clinches third spot ahead of Godrej Consumer, Marico in home & personal care market

    Godrej Consumer selling at 9 times revenues, 57 times profits

    Amit Arora

    January 2, 2014 at 5:23 am

  13. Relaxo vs Superhouse

    Both companies earned 11 Crores net profit in September 2013 Quarter.

    One company is available for 1500 Crores

    Other company is available for 130 Crores

    Which one's share price will grow faster over next 4-5 years? Both have completely different business models and customers.

    Amit Arora

    January 3, 2014 at 5:17 am

  14. Amit, do you have a view on Liberty Shoes? It has show wonderful turnaround in last one year and is growing pretty fast. Also, the stock price recently broke out after 4-5 yrs of consolidation, which obviously is extremely bullish sign.


    January 5, 2014 at 9:20 am

  15. Known/Institutionally owned market leaders are not going to give you 20 baggers in 4-5 years.. Either small cap market leaders or number two player could compound money.
    Relaxo 23 times in 5 years. Others that have done the job are also leaders or #2, Symphony, TTK, Cera, Hawkins, Kitex Garments, Mayur Uniquoters. All the money in most industries is made by top 2 players (GE followed it to heart), in some industries everyone makes money (Housing Finance), in some nobody makes money or hardly anyone (commodity industry)

    So, I am following the principle of owning the leader myself, I couldn't recommend anyone to own #4 player. Footwear is very interesting because after 40 years of investing prowess Buffett lost 2.3 billion on Dexter Shoes

    My focus has changed to buy only leaders, as they are available at reasonable price, if not in India then elsewhere. Market cap / Sales does work, Relaxo was 0.2 times market cap / sales in 2008, just as Superhouse was 0.1 times when I mentioned, even now after doubling it is 0.2 times.

    Today Relaxo is 1.5 times, Bata India is 2.5 times. But Bata Bangladesh with 40% market share is only 1 times.

    Amit Arora

    January 7, 2014 at 8:08 am

  16. On 9th of Jan, both Manappuram and Muthoot are up 20% on LTV change from 60% to 75%, own both Manappuram recently and Muthoot for a while

    Muthoot was bought for market leadership status. Manapurram for Housing Finance

    Amit Arora

    January 9, 2014 at 6:03 am

  17. Hi Amit,

    Very interesting blog. Keep up the good work!

    I am a NRI and have been out of India since I was 17 living in the States and Singapore. I am a full time investor.

    As I study the Indian market for investments what confounds me is that local brands such as Relaxo and even licensees of mediocre brands such as Jockey (Page Industries) are making mind boggling profits simply not possible anywhere in the world. This in my view is mainly due to the still closed nature of the Indian economy.

    What will happen when International brands come in full steam like they have in SE Asian countries. Can Relaxo compete with hush puppies, Haviannas and scores of much better international brands? Can VIP suitcases compete with Samsonite, Delsey, Tumi etc?

    As long term investors would we not be making the mistake of investing in these local ” market leaders” as the world is getting more global and trade barriers come off?

    Appreciate your thoughts.


    January 9, 2014 at 6:15 am

  18. Dear Ricky

    Interesting question !

    Thanks for the encouraging remarks.

    I was a fan of Relaxo at 0.2 times sales and cash flows at 40% of market cap, and started myself a thread of discussion
    on Relaxo here.

    Also, started discussion on Symphony

    No significant western company make air coolers, so second was safer bet.

    Per Capital Income in India is quite low, 1000 $ per capita vs 35 – 50,000 $, so the comparison is chalk and cheese. Jewellery is also another example with no foreign competition to local companies, same for hair oil, pressure cookers etc.

    I am skeptical of buying anything generally that western companies with great corporate governance can also make but there are few exceptions. Many large MNCs are not serious about India, so there is a lot of room. All said and done in about a few years, maybe 5-10, it will not be possible to make over 10-12% cagr in stocks in India. There will be way too much capital and competition.

    Time for few examples. Singer in India is 100 Crores market cap but is 10 times bigger in Pakistan, Bangladesh and Sri Lanka, so effectively 70-100 times bigger is adjusted for population. That is bewildering, isn't it !

    Check their 1980s website

    There are many markets in India, so there is room. BUT its harder to win with them and spot them, OK to own as part of 40 stock portfolio, so a few casualties in stride, on still does fine. My inclination is to own no more than 10 – 12 stocks hence preference to own a company that is leader in 100 countries.

    Check that Brands of Reckitt Benckiser, a 50 Billion USD FMCG company, its not cheap, about 30 times earnings in Bangladesh, in my opinion potential to grow 30-50 times, but management is not yet serious in bangladesh. Glaxo BD is a steal, growing at 30% cage for 10 years, yet at 20 times

    Several brands are about 30% of global market share like Dettol, Neurofen, DUREX, MORTEIN.

    RB is available for 400 Crores BDT. And a rubbish FMCG company again with 1990s technology and systems is also available for 500 Crores, so the question is KEYA or RECKITT ?


    Similarly Bata has a lot of respect in India similarly but I think in New Zealand it may have 2-4% market share.

    Amit Arora

    January 9, 2014 at 7:17 am

  19. Thanks Amit, I am with you on choosing sectors with limited potential foreign competition that is why despite the fantastic track record of Page Industries, I am a bit hesitant to dive in at today's nose bleed valuations. Think Mahindr and Mahindra with strong dominance in tractors could be a long term winner. Deere the world leader is already in India but won't be able to outcompete Mahindra on price or dealer network.

    You seem to be really into frontier market investing, was wondering whether it would be easy to open a Bangladesh trading account with a Singapore passport, would you know of any brokerage?

    Also, not sure what your return expectations are but global leaders such as Nike, Visa, Inditex, Richemont etc deliver good long term risk adjusted returns.

    What do you think of Fonterra, the Kiwi milk company?


    January 9, 2014 at 2:03 pm

  20. Page is quite interesting, I did own and sell it. Does 3000 Crores INR turnover in the world but 1000 Crores in India. India's GDP accounts for 2% of Gross World Product (GWP) yet 33% for Jockey International, its an anomaly.

    Its very easy to invest in Bangladesh and Srilanka, hard in Pakistan and Nepal.

    You can download list of brokers from

    BRAC is quite big and so is Lanka Bangla, both are about 1500 Crores in size and 100 crores in profits. You can also have custodian account with HSBC or Citibank if you don't trust local companies, to keep Demat copy of your shares and money. I am invested through Lanka Bangla and Combank of Ceylon. If you don't get a reply in few days, let me know. Whole process can take a month, but worth it.

    Taken aback and amazed by Visa share performance, IPO at 44$ in 2008, now 222$, I wouldn't have imagined 40% compounding by such a large company

    Fonterra is legendary and invincible pretty much like New Zealand, not militarily but food, flora, rain and agricultural security. We're only 4 million people in NZ with 110 Billion$ GDP, Fonterra is worth 10 Billion NZ$ with 20 Billion NZ$ revenues.

    NZ is 0.06% of world population, yet Fonterra accounts for 30% of world's Milk Exports. They're building dairy farms in China as well. Never studied seriously, but with generations of experience, can't go wrong with this company.

    Amit Arora

    January 9, 2014 at 6:35 pm

  21. Thanks on the a/c opening process info mate, will get it started.

    In regards to growth rates of companies one of my learnings has been to look at it in the context of the market size, that explains why Visa continues to grow despite its size, more than 80% of Asia still uses cash transactions not to speak of Africa, Eastern Europe etc. so plenty of growth ahead, the only risk is lawsuits given the oligopolistic nature of the industry


    January 10, 2014 at 1:25 am

  22. Hello Sir,

    I have bought INDIABULLS Finance shares in Dec 2012 around 300rs in large quantity and have been holding them till date. Over these last 5 quarters company has seen tremendous improvement in its balance sheet and has churned out very good dividends without compromising on its Growth. It is still projected to grow above 20% for the next two years. Despite all the above factors its share price is languishing at mere 230 rs which is 5 times FY14E earnings.

    Whereas Dewan housing finance has seen a lot of re-rating offlate ( though it is still available 5-6 times FY14E ). May be due to the fact that its growing at higher pace and also because of the entry of RAKESH Junjunwala. Technically now it is in free zone.

    My question to you is .. how should i face this market's weird behavior. Should i keep holding on to my conviction buy Indiabulls and wait for the sectoral headwinds to improve ? or should i shift to Dewan housing which is in same sector at similar PE but less P/BV and technically in free zone ? Or should i shift my holding partially into Dewan and hold both of them in my portfolio ?

    Market is treating JK and Ceat also very differently. some times its very difficult to understand.


    January 24, 2014 at 1:03 am

  23. Hi Mads, you generally need to give 3-4 years for investment to work out unless the company has stopped growing altogether. 20-30% of stocks will be unpredictable, so diversification takes care of that. I am buying all housing finance companies Dewan, Canfin, Indiabulls, Gruh, even outside India, I don't see why one should super outperform the other. they should do 18-25%, all of them and I am not worried about extracting the last penny out.

    Amit Arora

    January 24, 2014 at 5:50 am

  24. Hi Amit,

    Agree that they should grow at similar pace but returns in the longer run will definitely vary given the fact that GRUH is trading at 25-26 times FY14E where as INDIABULLS at 5 FY14E. Another important factor is its ROE is higher at 25% to Dewan which is at 17.


    January 25, 2014 at 2:13 pm

  25. Muree Brewery which started 2013 at 100 Rs was found by me in November 2013. I mentioned it on 29th of November 2013 (price at the time 300 Rs), is up another 250% past 2 months (CMP 850 Rs)

    Effectively a 9 bagger in less than 14 months.

    Amit Arora

    January 27, 2014 at 7:09 am

  26. waiting for your new post and coverage on fresh opportunity in Indian markets as on date

    Kishor Barhate

    January 28, 2014 at 6:46 am

  27. Generally people used to talk about selling a stock to sleeping point. My goal is to invest for 4-5 years in a couple of opportunities only. Philosophy should be instead, “a great stock is one you can't sleep without owning it”. Those kind of opportunities do not come frequently. Have not invested more in India this year. Continue to accumulate MNCs in neighbouring countries in 2014.

    Amit Arora

    January 28, 2014 at 7:42 am

  28. Yes, u are right. And such opportunities may not come frequently. May please mention such opportunity as and when it come for Indian market,,

    Kishor Barhate

    January 30, 2014 at 3:06 am

  29. Dear Amit,

    Have u looked at Nestle India & GSK India any time.
    Their products are still not penetrated into rural india, opportunity size is still huge for these companies.Have u gone throgh profesor's write up on Nestle :

    Shanid V H


    February 1, 2014 at 6:07 am

  30. Dear Shanid

    Once you are retired and depend on shares for income, then it is hard to buy Relaxo as opposed to Nestle. Unilever and Nestle should continue to grow 15% for many more decades.

    At CMP it is 5-6 times annual revenues, I get excited if these type of companies trade at or below 2 times annual revenues.

    Best regards


    Amit Arora

    February 1, 2014 at 7:16 am

  31. Hi Amit

    Have you looked at Exide Pakistan available at a P/E of less than 5




    February 3, 2014 at 11:57 am

  32. Hi Amit,

    I've been trying to get in touch with the LankaBangla guys as you suggested, but haven't got a reply.
    Is there any specific person you contacted?
    Would really appreciate any help.



    February 4, 2014 at 5:27 pm

  33. Hey Amit

    Are you accumulating Manappuram on the Housing Finance entry news?



    February 5, 2014 at 9:03 am

  34. Can you please check your junk folder, otherwise leave you email id
    and I will get them to contact you.


    Amit Arora

    February 5, 2014 at 9:16 am

  35. Hello Nishant

    I have not looked at Exide Pakistan sorry. A large number of attractive MNCs there but have you been able to open account ? Please let me know


    Amit Arora

    February 12, 2014 at 8:11 am

  36. Like new star nurseries in the galaxy multibaggers appear to be forming in all unexpected places.

    Govt company in Bangladesh, 100 fold profits up in the decade

    Couple of local and still unsophisticated FMCG companies, profits up 60 times and 10 times in this decade

    Amit Arora

    February 12, 2014 at 8:50 am

  37. Hi Amit,

    I sent a mail to lankabangla at …….on 6th of february, but haven't got a response from them….can u tell me is there any direct contact..or they can contact me at


    February 15, 2014 at 10:16 am

  38. Methinks both were languishing because of the market's perception about the the promoter group.
    I think the Wadhawan's of Dewan Housing finally overcame this simply because of Rakesh Jhunjhunwalla's entry. Till then, they were unable to de-link from their cousins, the Wadhawans of HDIL.


    February 18, 2014 at 5:38 am

  39. Hi Amit,

    Checked mail and junk folder, no reply from them. Could you plz put me in contact with them? my email id is:



    February 20, 2014 at 2:41 pm

  40. Hi Amit,
    Please share your view on Omnitex & Photoquip for long term?
    Do you hold them?



    February 21, 2014 at 4:03 pm

  41. Dear Raj

    My priorities have changed and I do not like to have a diversified portfolio of small caps, even though returns will be much greater in them. Focus is to be content with earning 20-25% cagr for decades. Above two names do not fit well. Photoquip is not a leader in LED, only in Studio lighting.

    Reckitt, Unilever, GSK, Akzo Nobel and few others in developing countries have 90%+ probability of returning 20% cagr for decades. Expecting mega-multi baggers from them and do not recommend investing in microcaps more than 1% of portfolio

    Also my focus and heart is not into investing full time nor will it ever be, hence do not have time to invest in research in small caps. If I can earn 20% cagr by investing 20 minutes a day into financial matters as opposed to 30% cagr by investing 8 hours a day I prefer former.

    All the best to you

    Amit Arora

    February 22, 2014 at 7:18 am

  42. Hi Amitji
    Do you like Nestle India at current price ? For long term investment


    March 5, 2014 at 6:38 am

  43. Amit looked at Cera ??
    Almost 8X from your initial purchase!!


    March 6, 2014 at 5:33 am

  44. Beginners luck perhaps 🙂

    Amit Arora

    March 6, 2014 at 5:44 am


    Looks like energy needs to be channeled in other productive vocations than analyzing companies, letters, Buffett, and words in them.

    There are more books published on investment now per annum than number of great opportunities.

    Amit Arora

    March 6, 2014 at 5:48 am

  46. Bata, Reckitt Benckiser, Glaxo 100%up Yoy, loooooong way to go

    Amit Arora

    March 6, 2014 at 5:50 am

  47. 50% up in the past 4 months alone, look inexpensive even now.

    Amit Arora

    March 6, 2014 at 5:55 am

  48. Hi Amit

    I have not even try doing that:)



    March 6, 2014 at 8:05 am

  49. Quotations:

    A truly rich man is one whose children run into his arms when his hands are empty. –Unknown

    The person who says it cannot be done should not interrupt the person who is doing it. –Chinese Proverb

    If you want your children to turn out well, spend twice as much time with them, and half as much money. –Abigail Van Buren

    Either write something worth reading or do something worth writing. –Benjamin Franklin

    Amit Arora

    March 7, 2014 at 11:37 pm

  50. Next 11:

    Pakistan, Bangladesh and Vietnam look promising, with 15-18% population that of India. Several Market Leaders in Next 11 are not even 2% of Market Cap of India's Market Leaders

    Amit Arora

    March 20, 2014 at 6:25 am

  51. Hi Amit,
    Have you invested in Sri Lanka. Chevron Lubricants looking very good and poised to go high after their new plant (oct 2014). it is like our Castrol.

    Karthikraja K

    April 6, 2014 at 10:21 am

  52. Hi Kathik

    Looks fantastic, I have yet to invest in Sri Lanka. Phenonemal organisation as well as stock for share market investors ! (not same)

    You can't go wrong with a company with 55% ROE, 60% market share in the country. Amazing opportunity. And guess what, 13 PE multiple only. Guess the multiple of Castrol India 60 PE. Guess the market share of Castrol in Lubricants, 12% in India!!

    Go ahead

    Amit Arora

    April 6, 2014 at 7:13 pm

  53. You are slightly incorrect Karthik, it is not same as Castrol, it is much much much better than Castrol.

    Amit Arora

    April 6, 2014 at 7:14 pm

  54. Unilever India going strong than Global MCAP 158717.46 crores ( Probable Dollar Appreciation Also).

    Karthikraja K

    September 6, 2014 at 5:58 pm

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