Vijay Kedia’s portfolio has a number of multi-baggers like Cera Sanitaryware and Liberty Shoes. Even his latest stock pick, Premier Explosives (also one of Dolly Khanna’s favourite stock), is firing on all cylinders.
This consistent success tells you that Vijay Kedia does have a formula for finding winning stocks.
Atul Auto is one of Vijay Kedia’s most spectacular successes. He bought a truck load of the stock as far back as in 2005 at Rs. 9 (adjusted for split). At the CMP of Rs. 525, Kedia is looking at gains of 5700% in 9 years, which means his money has compounded at an astonishing CAGR of 57.11%.
In an interview to ETNow, Vijay Kedia has given important pointers of his investment strategy:
(i) Know the business and the promoters:
Vijay Kedia’s conviction to buy and hold Atul Auto for such a long period comes from his deep understanding of the potential for the sector and the company. There are only a handful of 3-wheeler manufacturers in the Country and there is great demand. Also, he knows that the promoters are honest, god-fearing and hardworking and do their best for the Company.
(ii) The worst time for the market is the best time for investments:
This is timeless wisdom which we somehow always manage to forget. In his personal blog, Vijay Kedia writes “the worst situation in market is the best situation to invest”. During the great sub-prime crises of 2008, Vijay Kedia faced the dreadful prospect of seeing his investment in Atul Auto melt into nothingness. However, instead of despairing and panicking, Vijay bought more and more of the stock. His conviction in the potential of the stock and the credibility of the management helped him to do so.
(iii) Vision 20-20 – Buy & Hold for a minimum of 4-5 years for compounding to work its magic:
Vijay Kedia’s incredible gain of 5700% took 9 years to come by. In the interview, Vijay made it clear that his advice is to buy stocks today with the intention to hold at least till the year 2020, if not for longer.
(iv) Buy stocks in the doldrums today, but which the potential to shine tomorrow:
Vijay Kedia revealed that he preferred stocks like Sudarshan Chemical, Apar Industries and Repro which are not so hot today but which have a great potential in the next few years. He explained that these companies (esp. Sudarshan & Apar) had completed their capex and that they would now reap the benefits of operating leverage.
(v) Team up with other savvy investors. If you get them interested in the stock, the stock gets re-rated:
This is Vijay Kedia’s master stroke. He sold small chunks of his shareholding in Atul Auto to master stock pickers like Raamdeo Agrawal, Prashant Jain’s HDFC Mutual Fund, Birla Mutual Fund and, now, Goldman Sachs. The result is that Atul Auto has got re-rated and Kedia has reaped the biggest benefit of that.