@Tar , @Worldlywiseinvestors , Very interesting discussion. Putting up something I read in The Next Apple book. He has beautifully listed various stages and reasons for buying…

Stocks are just like products – just like there are different buyers in the different stages of a
product cycle, there are different people buying at every stage of a typical growth stock’s price
cycle. There are innovators, early adopters, early majority, late majority and laggards. There are
various market participants with different philosophies and reasons to buy:

A) Some buy early, long before the crowd, because they understand or speculate about
the potential impact a company or an industry will have. Some buy when a company is
still losing money, but it has great potential, a great story behind it.

B) Some buy when a company breaks out to a new 52-week high from a proper base.
This could happen well before a company reports any earnings or an improvement in
growth. There are market participants who don’t care whether the company is making
plush bears or space rockets. As long as its stock price is making new highs, they ride it.

C) Some buy when there’s fear of missing out. Institutions have to put money to work,
and they have to choose assets to allocate to. At any given time, there are only a few great
growth stories in the market and thousands of institutions that want to own them. In this
case, P/E ratios often don’t matter. It is all about catching the next big thing. Trends
persist because supply is limited – early buyers are not eager to sell, and there are plenty
of new buyers that would like to participate. There’s a scarcity of great growth stories,
and Wall Street loves growth.

D) Some buy when the company reports its first profitable quarter.

E) Some buy when a company has had several quarters of high growth and has a group
of analysts that follow it.

F) Some buy when a company reaches a certain size.

G) Some buy because they are forced to cover their early/wrong short position. Every
trend needs doubters and skeptics. Otherwise, there wouldn’t be anyone left to buy. The
existence of large short interest has fueled not or one or two big trends.

H) Some buy when a certain market cap is reached – some large funds cannot participate
in companies with market caps under $5 billion because they cannot accumulate a
position that is big enough to make a difference in their returns. When a company gets
from $1 to 5 billion and it continues to deliver solid growth numbers, it will find a whole
new set of buyers

Whether we need to show LTCG which is less than 1 Lakh in ITR?

Notes from JB Chemicals AR for FY 21-22 –

1. JBC was the fastest growing Pharma company among top 30 companies in the Indian Pharma market in FY 21-22. Company has 07 manufacturing facilities in India. 05 of its power brands feature in India’s top 300 brands. These are –

Rantac ( to treat heartburn, indigestion ), Rank- 45
Cilacar ( to treat high BP ), Rank- 52
Cilacar-T ( to treat high BP ), Rank – 203
Metrogyl ( to treat bacterial infections ), Rank- 194
Nicardia ( to treat high BP ), Rank – 240

2. Key growth initiatives during the year –
   (a) New go to market model focusing on increasing MR productivity and renewed focus on domestic business
   (b) Increased focus on chronic segments. Acquired Azmarda ( Scaubitril + Valsartan ) from Novartis – used to treat heart failure, a fast growing category.
   (c) Launched 15 products in domestic market. Contribution from new launches stands at 4pc, up from 1.4 pc last yr.
   (d) Acquired 06 brands from Sanzyme. These are –

Sporlac ( probiotic used to treat gas and diarrhoea )
Lobun ( prebiotic used to treat chronic kidney disease)
Oxalo ( probiotic to treat constipation, diarrhoea )
Nano-Leo ( capsules to improve male sexual health )
Pubergen ( Injectable hormone to support pregnancy )
Gynogen ( Injection to treat infertility )

(e) Beyond India, SA and Russia are company’s strong markets. JBC was the fastest growing company in SA last yr. Company is ranked 15 in SA. Russian demand remains stable despite geo-political headwinds.
(f) In US, company to focus on low volume, high value products with own APIs as backward integration.
(g) Company’s CMO business, specially Lozenges represents an area of excellence with company being among top 5 companies globally. Aims to maintain the same. Also aims to focus on immunity based products here, beyond cold and cough products to improve growth rates.

3. Last 5 yr data –

Sales – 1413, 1643, 1775, 2043, 2424 cr
EBITDA – 217, 305,378, 560,543 cr
EBITDA margins – 15pc, 19pc, 21pc, 27pc, 22pc

Disc: invested, biased

I attended the Investor call today. Arun Jain continued with his storytelling fluency.
New things: The presentation broke out the traction by Geos this time, and the Last 12 months run rates.

Prabal Basu (Advisor to Arun) did a nice Summary of the company focus and plan ahead

1. IP led company- Monetization of that takes time. Focus on spread right now, margins later.

2. Calibrated growth, in selected markets, with predictable profitability.
   

3. Growth is expected to be market leading- ahead of competitors
   

4. Needs continuous investments - have to come from current cashflows. 
   

Revenues & Margins
1. Revenue traction is good.New products are doing well. Healthy demand continues.
2. Margins are under pressure, EBITDA margin was 21.6% compared to 24.5 a year ago.
3. Margin guidance is now expected to be 20-25 % and not 25-30 % that they had projected earlier.
4. Reinvesting 5 % , instead of raising capital. Margins will be flat. There will be costs on POC, new pursuits etc.
5. Q2 will see salary hikes, plus new headcount. Q3/4 costs should flatten. This should set up for 90 Mn run rate.
6. 100 Mn run rate should be achievable in next few years, ad margins should be 30-35 % at that level.
7. In 2024 margins are expected to go up.

Products & Platforms

1. Looking at growth coming from Platforms now.GEM Platform- has grown to good size, now the growth will be closer to 40-50 % annually.Exponent Platform- gaining traction

2. Platform revenues -  B1(Licence - One time ) +B2 (Annual subscription) + B3 (Transaction revenue eg GEM)
   

3. Licence Linked Revenue: Licence + Platform + AMC 
   

4. Annual recurring revenue: Platform( B2  + B3)  +AMC
   

5. R&D Cost - 70 % is expensed, and 30 % is capitalized
   

6. Competing with Temenos and OFSS on Core banking. And Temenos and Thought Machine.
   

Geos:
1. Curated calibrated growth across geos.
2. North America- 50 % growth expected. Canada is established now across multiple products.US is very small base, mostly iGTB and iSEEC.
3. Europe- Core Banking -Legacy replacement opportunity is big. Germany is main market.
4. Mid East UAE 7 of 9 banks and Saudi 5 Banks are customers already , expand there.
5. Africa- Inbound requests coming in, pull is working due to reputation.
6. Asia- Smaller countries like Vietnam, Malaysia, Indonesia etc well penetrated, now looking to deepen the presence. office in Vietnam.

People: Attrition/Salaries
1. Attrition is now dropping since May.
2. Senior level attrition is managed, no concern there.
3. Add about 800-900 net headcount, similar to last year.
4. Salary increases are mostly in Q1/Q2, but it is a continuous rotation cycle.
5. Salary Hikes are higher than last year.

Investor PPT https://archives.nseindia.com/corporate/INTELLECT_28072022161142_IntimationtoSE_InvestorDeck_Final.pdf

Disc: Invested since a long time and adding on dips

Sorry to butt in here,

One simple framework that you can use- relative strength vs the sectoral index or the broader index to filter stocks.

Filtered Gujarat Fluorochem this way last year, bought and sold (couldn’t ride the entire thing, but still did well)

Filtered bearing companies both ways- Rs+Fundamentally every Q was a banger. Bought Rolex rings using second order thinking. It’s a proxy.

Rs+Quarterly acceleration and just observation can lead to discoveries which we didn’t even think existed sometime ago in the markets.