Each word of HiteshBhai is worth gold. A beacon light for lesser mortals like us.

Hiteshbhai,

What an articulation! The way you have laid out why & how of switching from Ajanta to Torrent (which we may extend to many such opportunities), without an iota of exaggeration, I feel anybody else on VP could not have articulted in such a simple yet effective manner... Thanks for sharing your thought process for people like us who continue to learn from you time and again

gautham1,

I have been tracking ajanta now for a long time and of late had been feeling that while the company's growth esp the topline was likely to be lower than the earlier heady days mainly bcos of higher base effect, the valuations accorded to the company when it went up to 1600 plus levels were very high.

As I said before ajanta is a predictable business where one can put in a figure which one is comfortable with and then come out with expected figures. Though this might not be too accurate one can broadly get a ball park estimate.

I did not expect ajanta to grow its earnings more than 35% for fy 16 and putting that figure into context, I felt it was difficult for ajanta to sustain at above 1600 levels. And at the same time Torrent Pharma had the abilify opportunity and stock price was not going anywhere (still is going nowhere ) and I felt that there was a better opportunity in torrent. I follow a concentrated approach and so it had to be an allout switch.

Till now the fundamentals of both companies have played out as I had expected and I remain hopeful in torrent. Till now I have been positively surprised by its results and the kind of juice they have squeezed out of their opportunity.

Even Peter Lynch in his book One Up mentions about some stocks taking time for their earnings to catch up. Ajanta seems to be doing exactly that.

Sitting on cash is still difficult for me.

Regarding bearing the pain and sitting tight with ajanta, let me tell you that at the current prices I am inclined to re enter ajanta but since I dont find a favorable switch, I am still in wait mode.

But if one reads Phil Fisher, he used to remain invested for decades and if one has his kind of mindset I dont see any harm in sticking around with ajanta.

Its always a tricky call of when to switch and what to switch into and you often get things right and sometimes wrong. If it doesnt cause too much regret and heartburn, one can try these switches. For those who keep pinching themselves when things dont work out, its better to buy and remain invested and sit tight even in obvious situations of overvaluations.

@gyansr That's a lot of work and not remunerative . I shared the analysis I carried out for my own work for VP members' benefit.

As for doing it from 2003 - 2004, I also did not do it because TCS, India's largest company by MCap was not listed (it was listed only on Aug 25 2004) and included in the index on 25 Feb 2005. For a rough figure for FY 04 you may look up the NSE website and look at their PE ratios and derive earnings growth.

PAT numbers were carried out on aggregate without individual break-ups; my own experience is that the top 5% will account for about 75% of PAT so I did not see any merit digging further once the question is answered.

I can give you the raw data of my analysis if you desire.

@richdreamz

Very nice write up and explanation on the sector.

how about shriram cityunion finance.
Somewhat it is also in the some sort of micro finance and Mr Piramal has bought stake in it.