It’s good to see words of caution getting injected. It was necessary.
Thanks @diffsoft
Those new to VP and the Industry will do well to heed these, and not jump in at any price. At least NOT the bulk of the buying.
Those who are regular VP members and to Investing will know that all they have to do is MARK this business out as a special business - that might be very very hard to displace from the perch it occupies, and keep working on developing the conviction. And remind themselves that Mr Market gives us multiple opportunities every year - IF our BUY list is clear. It’s only when this is NOT CLEAR, that we wind up confused and unable to take advantage of Mr Markets whim’s & fancy’s. Why, one should easily recall the other tearaway in recent times Gujarat Fluorochemicals was available at ~2200 in May 2022, just 3-4 months back. How many then latched on? How many were clear about the BUY list?? That’s actually a more pertinent question to ask for businesses like these which STAND OUT from the rest.
And also ask of ourselves the question - are we excited by super “Undervaluation” or super “Competitive Strength and Runway” of a business? If it is the former, it is time to break some comfort zones in some businesses. GFL was expensive for most at 1000, 2000, 3500 levels. But does that mean folks in GFL or Shivalik did not average up when the signs were clear/understanding got incrementally better? Many did. We did! And that is what also we have to learn.
What is the right Valuation is a deeply individual quest.
As for me, I keep it simple. After doing the full round of Ramayan on Valuations for over 8+years, I presented this to Prof Bakshi @Sanjay_Bakshi in 2016.
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Valuations depend on ONLY one thing - Future Cashflows (No one will debate you on that
, thankfully) - Future Cashflows depend on ONLY 2 things - Industry Tailwinds, Competitive Position of the Business in that Industry (anyone who has pondered a bit on these aspects, will agree with you if you pose the above)
What was Prof Bakshi’s reply?
He said Yes Donald, but then that’s the difficult part, it’s NOT easy to know if the competitive position is getting better or worse. True that!
My experience has been when you are mostly invested in businesses that stand out, its NOT that difficult to keep on top of (think Bajaj Finance, think PI industries and other emerging uniquely-different businesses) - if you are persistent and keep engaging with industry folks, look at data discerningly, its sometimes the opposite - quite easy to keep on top of.
What has incrementally changed (sometimes hugely) for the Business/Competitive Position/Industry Tailwinds - far more difficult to come to grips with and pinpoint, but worth working on - difficult to put pen-to-paper - and transfer to everyone around. That’s the hard work that everyone tracking/interested/invested in Shivalik should get their heads down to.
We are working on that for the Shivalik Stock Story that we will put out soon.
That will take us all down that journey, in a much more structured manner.
If you ask me, I will stick my neck out again and even hazard - that actually the real journey has just begun for this business! Calling all @automotive domain experts, BMS experts, energy metering domain professionals to help establish this strongly - either way!
Disclosure: Invested form 2018 levels. Had big periods of doubts when story was NOT properly understood and there was a glut in industry, but held through; and as the understanding got incrementally better, averaged up
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