Kenneth Andrade of IDFC MF and Prof. Sanjay Bakshi appear to thinking alike. They are buying the same stocks.
We saw this in Ambika Cotton. After Kenneth Andrade’s IDFC MF bought a chunk of stock, Prof. Sanjay Bakshi’s ValueQuest India Moat Fund joined in by buying 120,801 shares.
Poddar Developers is the other stock which has attracted both ace stock pickers.
I reported in January 2015 that ValueQuest India Moat Fund had bought a chunk of 65,322 shares of Poddar Developers.
Now the good news is that the Moat Fund has bought a further chunk of 15732 shares in the March 2015 quarter. The total holding of the Moat Fund in Poddar Developers stands at 81054 shares. The investment is worth Rs. 11.23 crore at the CMP of Rs. 1380.
The better news is that Kenneth Andrade’s IDFC Premier Equity Moat Fund has bought 4,44,237 shares of Poddar Developers in the March 2015 quarter. This investment is worth Rs. 61.30 crore.
In his latest interview, Prof. Bakshi described the stocks held by the ValueQuest India Moat Fund as follows:
(i) Very high quality of earnings: The aggregate pre-tax ROE of the portfolio is 37% a year;
(ii) Exceptionally strong balance sheet quality: Of the 11 businesses, 8 have no net debt and the most leveraged business has interest cover of more than 3x;
(iii) Highly Scalable Businesses.
Poddar Developers qualifies on all counts. It is a very profitable business with very low debt. Also, it is a micro-cap with a market capitalisation of only Rs. 875 crore. So, you can imagine the extent of scalability that it has. The management, headed by Rohit Poddar, is very dynamic and clear-headed about the future path for the company.
To understand Poddar Developers’ business model, we have to look at four resources:
(i) Article in Forbes India which analyzes the prospects of the company and calls it “the next big realty thing given a 24.7 million unit shortage”. Rohit Poddar, the CEO, is quoted as saying “My business, in the years to come, won’t be judged as a realty business. It will be like any consumer business with a steady growth in top line and profits. The next year’s numbers will always be better than the previous”.
(ii) Feature on CNBC TV18 which explains the economics of low cost housing projects;
(iii) Advertorial which provides details of the mega township project in Badlapur;
(iv) Investors’ presentation dated May 2015 which sets out the “key strengths and differentiators” of Poddar Housing and provides details of the “Strong project pipeline providing near term cash flow visibility”.
Having read the information, we have to compliment Prof. Sanjay Bakshi and Kenneth Andrade for yet another brilliant stock pick.