A very good thread!

I have been struggling with capital allocation over last 2 years. This thread helped a great deal to put some structure to capital allocation. And then an idea appeared to me after discussion with friends. The idea is to look at Annual Sales of companies and use that in capital allocation.

e.g. something like this:

The simple idea is once you become big - you are going to run into hurdles for next phase of growth and upside may be limited. There will always be exceptions to this. Opportunity size is one factor in above discussion that covers above topic well but still when you grow above a certain size (2000 Cr is my threshold, it may be different for you or even based on industry), you have to work extra hard to get to maintain same % of growth.

Current rule I follow is, once company crosses 2000 cr, mark, I stop adding the new positions (but continue to hold previous position).

Within these categories, I follow excellent VP model which ranks stocks based on CR and VR. i.e. these categories are after we are convinced about Business Quality, Management Quality, Valuation etc.

Views invited.

Thanks,
Rupesh

Gujarat and Maharashtra are worst affected areas in this monsoon. So I think this year will be tough for gruh in growth with respect to Repco.

but still gruh has long history of performance and has weathered all weathers, so it will keep enjoying the current premium valuations.

Disc - Invested in gruh

I exited this counter because of following issues:

1) Even after several mails there is no reply from management to clarify the concerns.

2) Even after several years of profits, none of the promoter companies arrow textiles, delta magnets, delta corp will declare dividend and they are not promoter friendly.

3) When i spoke with them in last fy Q4, management told me that they had taken 4cr for capacity expansion and the profits will be reflected in Q1. But Q1 results are not good.

4) To surprise in the current AR, they invested the same 4Cr in mutual funds which is not good for small cap company.

Disclosure: i exited it completely after holding for more than a year.

Some points supporting buy:

1) The Trailing EPS shows 30% growth.

2) PE & PEG ratios are very good

3) Promoters Increasing Holdings

4) New product segments entry
http://www.arrowtextiles.com/Annual%20Report%20of%20the%20Company%20for%20the%20Financial%20Year%202014-2015.pdf

5) The ace investors are chasing textile industry, due to USD advantage, replacement of the MFA

Is it a good buy now in current bearish-scenario Or wait?