A great session from Aditya Khemka(Fund Manager, InCred AMC)
Counter Cylical Investing: https://www.youtube.com/watch?v=O9EQGCKWh_Y
Look for Sectoral Mean Reversion in terms of Price/Book
Case Study 1:
Maruti Suzuki : P/B bottoming out in FY14 and mean reversion by FY18 doing 6X in 4 years.
Case Study 2:
Ipca Labs: EPS drop and P/B bottoming in FY16 and mean reversion by FY21 returning 6X
Critical ratios to check:
P/B - As it accumulates all historical profitability across a 10-12 year cycle
EV/OCF - Ignore reported PAT and compare EV (including debt) and OCF( with realized tax payments)
ignore P/E - Accounting issues, short term fluctuations, child to parent entity tax/ESOP issues etc.
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