Hey, I don’t have much experience like others. But for me multibagger is mix of 2 things only.
Everyone say FCF and all but I believe if management is good and has vision then Balance Sheets things can be easily taken care of.
The 2 things are Power of Execution and ROIIC i.e. Return on Incremental Invested Capital and how company execute them.

Look at most popular multibagger stock Deepak Nitrate.

Company has Fixed Asset of 580cr in FY17 and they done big capex which is shown in CWIP 350cr.
Company is made roughly 100cr on Sales of 1370cr in FY17 and they done 350cr Capex. This shows vision of the Promoter.
And in FY18, they done Capex of 955cr again. And thereafter company has never looked back. Promoter has executed Capex well.
Many companies do capex but they not able to generate sales as the Deepak Nitrite did.

From FY17 to FY22, PAT has been increased from 96cr to 1067cr
PAT Margins has been increased from 7% to 15.7%
Share Price has gone to 3000 from 135rs in 5 years i.e. 86% CAGR growth or 22 times.

Then why mostly people fail to hold stocks like this ?
Answer is easy.

• They do over analysis on the company.
• They don’t have patience to hold company.
• They listen to everyone rather then company management.

That’s all from my side. I may be wrong also. Please correct if I’m wrong at any place.

Has anyone studied the tax implications arising out of conversion from DVR to Ordinary shares? As per the detailed email sent by the company the implications cut across 3 categories – deemed dividend, short term capital gains and long term capital gains…please note that all 3 may become applicable as part of conversion journey (without you selling any of the shares).

Biggest cause of worry for me is Deemed Dividend amount of Rs. 194 per share that they have indicated in the sample calculation under annexure 1 of the detailed email. Tax liability on deemed dividend itself can go very high for those in higher tax brackets. And depending on your original cost of acquisition of DVRs and timeline, long term may also kick in. Minor short term capital gains will also kick as company has to deduct TDS. Company will sell TDS amount worth equivalent shares in open market and credit the rest.

As per current calculations it looks like a losing scenario for those retail investors with significant DVR holdings. Not to talk about the additional downside of acquistion date of new shares getting reset to when they are issued (as against original acquisition of date of DVR shares). So selling in next 12 months could attract Short Term gains instead of long term.

Please note whatever I have written above is my understanding of the situation. I can be completely wrong here. Hence want to check with others on the forum who have independently done any study and calculations on tax implications to compare notes and take a decision.

Any inputs will be helpful.

Conference notes. Check on the screener website.

Thank you for sharing your thoughts.

Our discussion has boiled down to this:
Gufic had extra boost in the top and bottom line in FY21 and FY22. Hence FY23 didn’t look nice. FY24 has good topline growth but bottomline suffered due to margin contraction by ~200bps.
1 year which is FY24 has not lived upto our expectations and that too only in the bottomline.

Is 1 year enough to take a call on a company? Does ~16-17% growth in this 1 ‘bad’ year mean nothing and we start calling a 1 year patience a bad virtue?

I am a fan of the likes of Abbott, but I understand it is a business in action not my excel sheet. I choose to give it time. I guess this is why we call investing an art and not a science.

Either of our opinions can go wrong – that is why we are all learners of the market.

I find it difficult that 90% occupancy is sustainable and even if it is – growth opportunity in occupancy rate is near difficult.