There are a handful of companies that fit into the coffee can basket of investment universe. These usually quote at high PE and often undergo periods of gross underperformance as compared to the then prevalent themes in the market.
The current times in market are representative of the above phenomenon. Companies like Asian Paints, Page Inds, Nestle, Bata, Bajaj Finance, Pidilite, HUL, Colgate, 3M, a lot of FMCG companies, consumer durable companies etc fit into these kind of candidates. Some other names like Dmart, PI inds etc also can make the cut. If you look at the returns provided by these kind of companies post the Covid rally of 2020, they pale in comparision to those provided by the sectoral fancy poster boys (sector leaders) and the other sector companies.
However if someone is inclined to stick to coffee can kind of investing, then it makes sense to have a 5-10 year view and invest in an SIP mode. The most important caveat here is that one has to differentiate between the genuine coffee can companies and the pretenders that come off and on. One such example of a pretender was GMM Pfaudler, where the logic put forward was that it was a proxy play to growth and capex in chemical, agrochem and pharma sector. While part of the argument might be true, it does not compare in business quality to the likes of the list put up above.
The last line of your post is very important, “we are certain that they will grow”…
@Investor_No_1 Thanks for the kind words. I think the discussion related to new age companies and preference for Zomato was discussed in richdreamz portfolio thread. Zomato has indeed been a star performer over the past few months. Blinkit which was at the time of its acquisition considered a drag is now considered the feather in the cap for Zomato. That’s how markets work. Perceptions change from time to time and if we are able to catch these changes, there is a lot of money to be made.
@PawanKumar I don’t track Kopran, Religare.
@rahulbhardwaj19 I don’t track Max India.
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