Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Two Microcaps – India – 2014

with 12 comments

Poddar Developers


Amongst a few microcaps that I was invested in, I acquired two in the past 1 month in my personal account, but could not buy enough of either opportunity and would it be advisable to keep below 2% of small portfolio and 1% of large portfolio. 

 – Orient Beverages @ 24 INR 
– Poddar Developers (PD) @ 200 INR, still want to accumulate.

 Spent over a week researching PD. Poddar Developers has a phenomenal MD, Rohit Poddar and business model who has been heaped praise even by HDFC Chairman Deepak Parekh who says, “Unfortunately Deepak Poddar has only one son, Rohit”. “We support them and have viewed their title deeds, their legal documents”.

Management looks quite clean but real-estate sector in India involves crummy deals and palm greasing not only to local mafias but also to the biggest bandit  of India, Govt. of India, not only by small real estate developer but all and sundry including Tatas.

Rahejas, Lodhas, DLF, Unitech will not be able to crack low housing or at-least have not yet been able to so far. 10 Lac INR apartment for DLF is like producing an Atul Auto scooter for a company that make Porsche. Only Tata appears to be serious about affordable housing/low income housing. Market potential is 500 times the market cap of affordable housing industry, the sector that is driving GRUH and REPCO loan books. 

 HDFC Chairman – Deepak Parekh, who never visits real estate developers and applauds them publicly, is paying tribute to Poddar Developers and Rohit Poddar in this video.










Jam with Sam – Rohit Poddar 



Orient Beverages  

B/S looks okay with rental income. Company sells market leader Bisleri (36% market share in India) in West Bengal and is venturing into soft drinks. Has strong links with Parle. Did not expect price to go to 100-150  bucks, but in this cuckoo market everything is possible.

As usual feel free to go nutty as a fruitcake or mad as a hatter with your research. Market definitely seems to have gone given the price movement.

Disclosure: Invested. Views are personal notions and do not represent any organisation or company. I am not an investment adviser. Investment in stock market can (and many a times do) result in loss of principal capital.


http://www.elevendimension-funds.com/

Written by amitdipsite

September 10, 2014 at 8:29 am

Posted in Uncategorized

12 Responses

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  1. Hi Amit,

    Very interesting picks. Would be great to share how you landed on them. Will do more research and get back with questions/thoughts.

    Rohit Balakrishnan

    September 10, 2014 at 6:23 pm

  2. Hi Amit,

    What is the screening criteria you use to find ideas, especially in microcaps and smallcaps? Or are there other ways you find such ideas?

    Thanks!

    Sams

    September 11, 2014 at 4:00 am

  3. Dear Rohit and Sams

    I have answered this question in one of my previous posts. Listed companies are available here

    http://www.bseindia.com/corporates/List_Scrips.aspx?expandable=1

    One by one, 10 a day, and in a year or two you can have a list of all interesting companies.

    I am no longer much interested in microcaps, because the ones I thought would do well ( Photoquip and Omnitex) did not do well, and the large number of them that I ignored like DHP India, Premco Global did return decently. So, I am content now with 15-20% CAGR with market leaders in developing countries.

    I have a list that I used to follow and I am following above two since 2010 but never bought a single share until 1.5 months back.

    Regards

    Amit Arora

    September 11, 2014 at 4:53 am

  4. Thanks, Amit! Could you point us to that earlier post of yours?

    How can one definitively know if analysts are following a stock or not? Can a screener filter stocks based on this criteria?

    Sams

    September 11, 2014 at 9:44 am

  5. sir previously u have mentione rakesh jhujhunwala used to hold shares in ttk prestige but at the time rally starts he is not holding is the same applicable to u in photoquip

    Gudibanda Krishna

    September 11, 2014 at 12:14 pm

  6. RJ also sold Relaxo Footwear at 10Rs, Symphony at 5 Rs, Hawkins @ 80 Rs and also got -95% returns (i.e reduced capital to 5% of principal) in over a dozen companies. Mistakes of omission and commission are inevitable. The game of stock market is not the game to get rich fastest, or beat competition, for me the game is to be IN THE MARKET ALWAYS. RJ has 6 Billion USD despite these mistakes, he is not a role model I look up to at all.

    Amit Arora

    September 11, 2014 at 10:34 pm

  7. We cannot know if Analyst is following a stock easily. Market Cap below 50 Crores or 100 Crores INR is sufficient to prove the analysts/institutions are not tracking.

    You can look at institutional holding. Stock is ownership of company and will do well if the underlying companies does well Institution or No institution. Wim Plast is up 25 times in past four years without help from Institutions.

    http://money.rediff.com/companies/Wim-Plast-Ltd/17020249/share-holding?src=comp_research

    Low or No Institutional holding is good enough criteria.

    All the best

    Amit Arora

    September 11, 2014 at 11:56 pm

  8. Thanks, Amit.

    Sams

    September 12, 2014 at 8:19 am

  9. On 7th July I wrote at

    http://multibaggersindia.blogspot.com/2014/07/cargills-ceylon-cic-holdings-sri-lanka.html?showComment=1404768544890#c709483516056241942

    Nothing significant has happened to the companies like Superhouse, Wim Plast, Gulshan Polyols, Muthoot Capital, Kovai, Canfin Homes etc. yet all have tripled.

    Above stocks further up 20%-30% in past three months, Kovai another 100% in past three months. Kovai could be four digits next year if debt is managed or QIP above 500 Rs. Still cheap at 70 crores of cash flows.

    Amit Arora

    September 15, 2014 at 8:53 am

  10. Thanks Amit, I thoroughly enjoyed Rohit's Poddar's long interview. It reaffirmed some of my thoughts.

    Actually, many developers have tried budget housing in past but the margins were very low since their land costs were high (in and around city limits). But Rohit's approach is different and will be a successful one for many reasons.

    Vikas

    Vikas Rana

    September 16, 2014 at 5:59 am


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