LESSONS FROM

Presentation HISTORY
Flow
CFA Society – New Delhi

December 07, 2018

 Presentation
Mistakes Flow
: Great Teacher
2

The only real mistake is the one from which,

we learn nothing – John Powell
 Presentation
What Counts Flow
Most
3

MANAGEMENT

SELF

BUSINESS PRICE
 Presentation
How Markets ValueFlow
Managements
4

ABC Ltd. PQR Ltd. XYZ Ltd.

Enterprise
Value

Management Premium / Discount

Replacement Value of Assets

The NECK of bottle is always at the TOP

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TRUST Flow
5

JUST 4 leaders in 50 years!

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CULTURE Flow
6

63 lakh home loans disbursed…

and lot more
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FOCUS Flow
7

1986: 43,000 vehicles

2018: 75,00,000 vehicles

Going Strong… Even after Breakup

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SCALABILITY Flow
8

2 lakh plus Employees …

Receives more than a million job applications each year
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DELEGATION Flow
9

230 Plants in 37 Countries

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INTEGRITY Flow
And PASSION
10

E. Sreedharan AMUL
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Digesting SuccessFlow
– Not Easy
11

Beware of the ‘HALO EFFECT’

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Common CausesFlow
of Downfall
12

Arrogance
Bureaucracy
Complacency
Debt
Envy
 Presentation
Men Among Flow
Boys
13

$100mn PBT Club

No. of Cos Owners 100 Baggers
59 Individuals 39
46 Groups (16) 20
35 PSUs 03
16 MNCs 12
19 Others 04
175 Total 78
 Presentation Flow
100 Baggers
14

Vision To See Them ... Courage To Buy Them and

Patience To Hold Them
Patience Being The Rarest Of The 3 – Thomas Phelps

Conviction Cannot Be Borrowed

 Presentation Flow
Sector Matters
15

Dr. Reddy Lupin

Period Mcap PAT P/E Period Mcap PAT P/E

Mar'97 472 38 12 Jun'03 755 81 9

Oct'15 74,782 2,351 32 Oct'15 95,768 2,389 40

Nov’18 45,036 1,523 30 Nov’18 40,033 1,373 29

Ajanta Pharma
Period Mcap PAT P/E

Mar'10 171 34 5

Oct'16 19,017 405 47

Nov’18 10,304 470 22

Amounts in Rs.crs – Nov’18 data is on TTM basis & Rest is latest FY Data as on date
Growth Presentation
at the cost Flow
of PSU Banks
16

BANK NIFTY CONSTITUENTS Weightages %

HDFC BANK 36.8

ICICI BANK 18.4
KOTAK MAHINDRA BANK 13.3
AXIS BANK 8.9
STATE BANK 8.6
INDUSIND 6.7
YES BANK 2.5
RBL BANK 1.7
FEDERAL BANK 1.4
BANK OF BARODA 0.8
PUNJAB NATIONAL BANK 0.5
IDFC BANK 0.4
Total 100

PVT Banks = 88% PSU Banks = 12%

 Presentation
CEMENT Flow
17

Returns – over last 3 decades

BSE Ramco Shree
100x 2300+x 2800+x
68
59

44
37

12 12 15
6 8 5
3 3

1988-1992 1993 to 2000 2001 to 2008 2009 to 2018

Returns (times) based on change from Low in Base Year and High End Year
 Presentation
TWO Flow
WHEELERS
18

Returns – over last 3 decades

BSE Hero Moto Eicher 175
100x 3200+x 7100+x

34
22 26
12 11 8 8
5 3 5 5

1988-1992 1993 to 2000 2001 to 2008 2009 to 2018

Returns (times) based on change from Low in Base Year and High End Year
 Most Presentation
Valued – ThenFlow and Now
19

Only 3 companies after 26 years

S.No. Cos. as on Apr’92 M.Cap PAT S.No. Cos. as on Nov’18 M.Cap PAT

1 TISCO 159 2.1 1 RELIANCE INDUSTRIES 7,721 309

2 RELIANCE INDUSTRIES 140 1.6 2 TCS (*) 7,505 254
3 ITC 105 1.2 3 HDFC BANK (*) 5,811 176
4 LARSEN & TOUBRO (^) 92 0.9 4 HINDUSTAN UNILEVER 3,889 50
5 ICICI (^) 77 2.6 5 ITC 3,552 99
6 TELCO 70 1.4 6 HDFC 3,425 123
7 HIND LEVER 70 0.8 7 INFOSYS (*) 3,031 159
8 ACC 59 1.1 8 STATE BANK OF INDIA 2,676 (176)
9 GRASIM INDUSTRIES 47 1.0 9 ICICI BANK (^) 2,416 9
10 CENTURY TEXTILES 43 0.8 10 KOTAK MAHINDRA (*) 2,365 51

(^) Cos. Merged/De-merged Amounts in INR Bn

Mcap is on Mentioned Dates
(*) Cos. listed post 1992 PAT is excluding extraordinary items
 Presentation
The SacredFlow
Seven
20

1992 – Mcap* 2000 – Mcap* 2008 – Mcap* 2018 – Mcap*

Rs.1.1 trn Rs.3.5 trn Rs.30.3 trn Rs.70.6 trn

Only 7 companies have been a part of SENSEX throughout

Hindustan Unilever
ITC Limited
Larsen & Toubro
Mahindra & Mahindra
Reliance Industries
Tata Motors
Tata Steel
* Aggr.Mcap of SENSEX 30 companies for mentioned year high date
 Presentation
125 Flow
Years of Monopoly
21

Collapsed in One Year

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Right Time … Flow
Great Price
22

45,000

PHASE 5
40,000 2009

PHASE 4
35,000 2001

30,000
PHASE 3
25,000 1993

20,000
PHASE 2
1988
15,000

PHASE 1
10,000
1984

5,000

BSE Sensex
-
Jan'85 Oct'88 Jul'92 Apr'96 Jan'00 Oct'03 Jul'07 Apr'11 Jan'15 Oct'18
 Presentation
Phase Flow
1: 1984 – 1988
23

700
665

600

Assassination
Oct’84
500

400
390

300
Bhopal Gas Tragedy
Dec’84
260
200

Sensex Monthly High Low

 Presentation
Phase Flow
2: 1988 – 1993
24

5,000
12x in 4 years 4,547

4,000

3,000 Assassination
May’91
Mandal Commission
Sep’90
2,000
Babri Masjid 1,980
Dec’92

1,000

390
-

Sensex Monthly High Low

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Phase Flow
3: 1993 – 2001
25

7,000
3x in 7 years
6,151
6,000

5,000 Nuclear Tests

Fall of Vajpai Govt May’98
May & Jun’96

4,000

3,000
Bombay Blasts Kargil War
Mar’93 May’99
2,597
2,000
1,980
1,000
Apr-93 Jan-94 Oct-94 Jul-95 Apr-96 Jan-97 Oct-97 Jul-98 Apr-99 Jan-00 Oct-00 Jul-01

Sensex Monthly High Low

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Phase Flow
4: 2001 – 2009
26

25,000
8x in 7 years
21,207
20,000

15,000

BJP Losses Elections

May’04
10,000
Communal Riots
Feb-May’02
8,047
5,000
26/11 Attacks
2,597 Nov’08
-

Sensex Monthly High Low

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Phase Flow
5: 2009 – 2018
27

42,000
38,990

GST
33,000 Apr’17
Demonetization
Nov’16

24,000
RERA
May’17

15,000

5x in 9 years
8,047
6,000
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Sensex Monthly High Low

 Presentation
PendulumFlow
Fear
 World will come to an end
 Total pessimism all around
 Forget profits the assets
also don’t get any value
 Yield is also ignored by
the sellers of equity
28
Greed
 Trees grow to the sky
 Great growth means a
feel good factor
 All weakness of
company, economy etc.
is overlooked
 Valuations go berserk
 Presentation
Blue Chips Flow
also Underperform
29

Indexed Closing Price Chart

600
450
3000
2 Years 11 Years 8 Years 21 Years 560
414
2536
HUL 4X Flat 6X 25X 376
SENSEX Flat 4X 2X 8X
450
300
2000

300

150
1000
150 176
841
150
127
109
100
100
100

100
0
0
 Presentation
Predicting Rating Flow
Is Tougher ...
30

... Than Forecasting Earning

Astral Poly La Opala
Period Mcap PAT P/E Period Mcap PAT P/E

May'09 71 11 6 Jan'10 34 3 11
Apr'15 6,323 74 85 Feb'16 3,717 42 89
Nov’18 12,513 194 65 Nov’18 2,516 73 34

Relaxo Footwear Symphony

Period Mcap PAT P/E Period Mcap PAT P/E

Jul'09 54 15 4 Dec'09 87 22 4
Jul'15 7,375 103 71 Apr'15 11,445 99 116
Nov’18 8,991 177 51 Nov’18 6,914 159 43

Amounts in Rs.crs – Nov’18 data is on TTM basis & Rest is latest FY Data as on date
 Presentation
Simple Flow
to Understand …
31

In 2000 Sales PBT Market Value

Bharat Electronics 1,457 195 477

Visual Soft 68 30 4,978
Amounts in INR Cr

… Not Easy to Implement

Visual Soft
22 x After 6 Years 95%
BEL
Presentation
Meteors FlowLast
Don’t
32

Mazda Ind & Lease Himachal Futuristic

High Rs 1650 (04/1992) High Rs 2553 (03/2000)
Low Rs 5 (02/1991) Low Rs. 6 (10/2008)

Unitech Ltd Vakrangee Ltd

High Rs 547 (01/2008) High Rs 515 (01/2018)
Low Rs 0.18 (06/1990) Low Rs 0.01 (04/1998)
 Presentation
How High isFlow
High?
33

At peak of 1980s Japanese property bubble,

Palace grounds were valued by some to be more than
All the real estate in the state of California

Tokyo Imperial Palace

Total area including the 3rd biggest state in US with

gardens of 2.86 sq mi area of 1,63,696 sq mi.
Source: Wikipedia
 Presentation of
Importance Flow
Selling
34

Wipro Ltd.
Feb’2000
PAT: Rs.3 bn M.Cap : Rs.2246 bn

100x in 24
Months

Mar’2018
PAT: Rs.74 bn M.Cap : Rs.1425 bn

PAT up 25x M.Cap. still down a third from peak

 Presentation
Worst Mistakes inFlow
Best of Times
35
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RecencyFlow
Bias
36

CEMENT ENGINEERING

ATUO COMPONENT
Presentation
Errors Flow
of Omission
37
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Confucius’s MethodsFlow
to Gain Wisdom
38

Reflection Imitation Experience

is Noblest is Easiest is Bitterest
We all arePresentation
Victims of Flow
our Own Image
39

Some are less fortunate

 Presentation
Unlearning FlowDifficult…
is More
40

A Mind and a
Parachute are useful
only if they are
OPEN

… than Learning
What wePresentation
have we may Flownot Deserve
41

SKILL AND LUCK

LARGE GAINS … BEFORE PAIN … HURTS MORE

 Presentation
Why Humility Flow
Matters
42

Humility leads to ... Listening… which leads to… Learning

 Presentation Flow
Strive For …
43
www.dhamma.org

Awareness Equanimity

In Markets and in Life

 Presentation Flow
Questions?
44

"He who knows all the

answers has not been
asked all the questions."
– Confucius