This time wont be different. If such high fund flows are into small cap, they will go down heavily with slight market correction. Howard Mark’s book about Market cycles indicate this very clearly. We are currently at peak of small cap funds rally. We need to exit small cap funs to save our profits and when picture becomes gloomy, then we need to re-enter. Small cap funds works like that only 2-3 years rally and then 1-2 years gloomy period. Small cap funds dont work like flexicap funds – secular growth. After watching this PPFAS funds , i redeemed my small cap funds investmemts partially and will go into flexicap at this juncture. That way this presentation was good for me. But i have not lost faith in small cap funds, only that i will return in gloomy period again.
Posts in category Value Pickr
IDFC First Bank Limited (02-10-2023)
If we go from BV side, then there is approx. 3% increase in last few quarters (except one outlier of 6.8% in Mar-23). Reverse merger will enhance it by 5% and QIP would probably offset it in equal weightage, so almost net zero impact from these two events. From that calculation as well, the BV goes to around 48-49 by Dec-24. Considering 3xBV, price again comes close to 150.
RIL: Is the ‘Reliance” on ‘Jio’ Justified? (02-10-2023)
What is the capacity of Adani Solar…???
Adani Solar is India’s first and largest vertically integrated solar company. It has a 4 GW manufacturing capacity for solar PV cells and modules. Adani Solar is one of the fastest-growing solar manufacturing companies in terms of capacity expansion.
Adani Solar’s manufacturing capacity has increased more than threefold in less than six years. The company plans to increase its cell and module capacity to 10 GW by 2025.
Will Reliance also manufacture Solar cells also???
PPFAS Financial Opportunities Forum (02-10-2023)
Interesting perspective.
I wonder if the flood of money pouring into smallcap funds will have its consequences. Historically such episodes have indeed ended up in not so pleasant experiences for investors.
Are you seeing anything now that suggests this time is different?
Discl: never invested anything of significance in any smallcap fund, ever.
IDFC First Bank Limited (02-10-2023)
In HDFC times, their main competition was lazy PSU banks, hence they were having an easy market to capture. Now its very competitive. But I think, if we want a fast growing bank and still conservative approach, then this is good option. And I dont understand the selling part. We are in India. And indian market is 25% financials. If we want our money to be invested in market, then we have to be invested in this bank. Otherwise by selling this bank, where will we go? Do we plan to invest in chinese banks, on a lighter note…
Rategain – Fast Growing SaaS Leader (02-10-2023)
Provides good insights in company’s business model
Rategain Travel Technologies Share Analysis | Rategain Stock Analysis
IDFC First Bank Limited (02-10-2023)
the best banks are trading at 3x BV approx, why IDFC bank would trade at say 4-4.5x ? just keep excel away while counting future returns.
Its already 3.5x for me and holding and I would expect 20% cagr over next 4-5 years . if it reached 150 in next 12 months I would exit .
PPFAS Financial Opportunities Forum (02-10-2023)
First of all, what they are saying about over valuation of small cap funds and too much fund flow into small cap is worrisome. 30% funds are going to small cap while their market cap as well as profit pool is just 9% .So it means, 21% extra funds are getting pumped in small cap stocks. And they are not even counting the Smallcase as well as PMS of small cap.
BUT,
We also need to see the commercial angle behind all this. They dont have a small cap fund. And their main competitors are not other flexicap funds but other small cap funds which are taking away their fund flows. So they have to find excuses to badmouth about small cap funds and small cap stocks.
Secondly we cannot ignore the awesome performance given by most small cap.funds, around 22-24% returns over a long period of 10 years. And this period includes all downturns and volatility. Still these funds gave very good returns. We cant take away this success from them. PPFAS are giving lame excuses for this.
If in future, they launch small cap.fund, they will have to eat all these words.
Also some points were good. I came to know why even after being multibagger , alkyl amines, Mold tek etc remain small cap only…Because their business model doesnot.permit them to become mid cap.or large cap.
IDFC First Bank Limited (02-10-2023)
My only reason for holding is the potential growth in coming years. Near term, I’m looking at about 150-200 by Dec-24. I don’t have a long term price target, as I want to keep holding it forever, with the hope that bank starts giving some dividend in next couple of years.
Even if we take a pessimistic view of just 8% QoQ growth in Net Profit (half of average 17% for last 6 quarters), it easily translates to minimum 1 rupee increase in EPS every year, and thus minimum 20 rupees per year increase in price (assuming long term PE range of 18-20). Obviously, one has to always remember the famous saying that market can remain irrational for an extended period of time. Having said that, I feel that the bank surely seems to be capable of giving numbers much bigger than my assumptions.
Looking forward to hear critical thoughts about this calculation from experts in this forum. Thanks!
Ugro Capital – Opportunity To Invest in a Fintech-like Company Below Book Value (02-10-2023)
The only thing unique/special/moat in this business can be the credit scoring model and their risk management. Jury is still out on that and we will only know the verdict in few years, specially after a down turn. The one thing going for Ugro is the massive and ever increasing TAM as MSME’s are (gradually) realizing that there is benefit in formalization rather than staying informal and saving taxes. As OCEN, ONDC etc matures there will be many more MSME’s will opt for formalization and look for credit. My belief is that lending firms which can keep the Risk in control, will reap huge benefits is the MSME lending space. An investor can wait for the definitive verdict to be out in few years or can invest now with a close eye on whether the Management is walking the talk and get out if they are not.
Disc: Invested