Asian Paints remains a high quality company in a segment that is less likely to be disrupted by product substitution. However the threat of competition from deep pocketed players like Grasim, and JSW group remains. But with the kind of brand strength and distribution might, it could be a long time and a difficult journey for new incumbents to dislodge this leader. Stock price has recovered from earlier levels of 2800 to 3500 kind of levels now. It is a company that can at best be a consistent compounder, and not a multibagger from here.
PVR Inox on the another hand is a business model that has been disrupted by the OTT onslaught. When people have access to high quality entertainment ( lots of options to choose from) from the comfort of their homes at comparatively negligible costs, who is going to go to the multiplexes , where one has to pay for all things like parking, popcorns, and tickets. And then if the movie turns out to be a dud, all the money goes down the drain. Personally speaking, I used to watch movies in a nearby good quality PVR multiplex before Covid almost once a month, but since Covid, have not been to the multiplex again at all and have not even felt the need to go. Most of the stuff that is shown in multiplexes comes to OTT platforms in next month or two.
ITC demerger was an even that was on the cards since long. I don’t think it makes any material difference to the company. ITC Has run up from levels of 200, when a lot of memes were doing the rounds, ridiculing the company related to non movement of its stock price. And now the pendulum has swung to the other extreme. Just read a headline that market cap of ITC is higher than Hind Unilever. Shows the kind of difference in headlines/sentiments towards the company in a matter of less than 2 years. ITC is a compounder type of stock and buying has to be done considering that. Usually while buying these type of companies, its always a good idea to buy extreme pessimism ( in case of ITC when those memes were doing the rounds) and then sit back and let markets do their stuff. Personally I don’t have any views on ITC, but one can use above mental models to invest in compounders if that is what one wants to buy.
| Subscribe To Our Free Newsletter |
