What I could make out from your write up is that a great company is not always a great investment. There is that little matter of valuations to be considered while buying great companies.
There are times when markets are excited by high quality companies and these times return in markets more frequently than other themes. Currently it seems markets are disillusioned with the high quality buy at any price kind of investment philosophy.
Coming specifically to companies you have discussed, I think the ones that stand out in terms of competitive advantage are the likes of Page Inds, Pidilite, Asian Paints, Bata in that order. I would even throw in HDFC Bank into the mix. But some of these had run up to crazy valuation levels and needed an excuse to correct and correct they did. My guess is these will undergo time/price correction till the time valuations catch up with earnings potential and then move up.
My problem with all these type of companies has always been the valuation factor and that stops me from buying these. In an environment where there is a lot of pessimism, economy is in the dumps and no one knows what to buy, these are the kind of stocks preferred.
Another thing I observe is that the fabric of the market has changed somewhat. And I am not too sure whether this change is only temporary or permanent. Buy high quality, high ROE, high cash generating businesses was always the easy thing to do and there was a reasonable chance of making decent returns. But since past few months, this style has taken a drubbing and a lot of these type of companies have corrected and have failed to start moving up again quickly as was the norm earlier. I have mentioned earlier in another thread also that sectoral preferences in this market change thick and fast and one has to be nimble to latch on to the fancied sectors. The high quality basket has undergone correction only since a few months and hence I think if they were to make a comeback, more time will be needed. So patience might be the need of the hour in these names.
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