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About twelve years ago, I got to know about nine companies and made a list of their names. I know that is hardly a memory worth sharing but let me build up my case. Had I invested ₹1,000 in each of them (₹9,000) what would have been the worth of that sum today even if you were to indulge in a wild guess?
I'll prick your curiosity a little more. If I had invested that money in the Sensex, it would have grown to ₹96,298 (including dividends), a compounded yield of 21.84 per cent. But hold your breath for those stocks' value today: a mind-boggling ₹5,22,100 - a whopping 43 per cent compounded return!
You must be desperate about the criteria and method by which I found these nine stocks. Well, at that time I wasn't an analyst and knew nothing of the stock market. I just chanced upon these stocks due to the fact that the construction of our family house was underway and a lot of work related to the construction got alloted to me. All I did was pick up the best available stuff. For example, I bought submersible pump from KSB Pumps; ACC was chosen as the cement brand which was used after mixing Dr Fixit, a brand from Pidilite's stable, for water proofing and roof-sealing. Havells took care of the wiring needs and electrical fittings came from Bajaj Electronics. The cupboard and furniture from Greenply; bathroom fittings from Hindware, a brand of HSIL; and Kajaria tiles for kitchen and bathrooms. Finally, my house stood tall and shining courtesy Asian Paints.
| Holding | Price 12 year ago (₹) | Current Price (₹) | Current Value of ₹1000 (₹) | Annualised return* (%) |
| ACC | 134.55 | 1411.1 | 10,487 | 25.03 |
| Asian Paints | 32.32 | 858.80 | 26,571 | 30.62 |
| Bajaj Electricals | 1.80 | 223.70 | 1,24,278 | 59.73 |
| Greenply Inds. | 1.39 | 202.10 | 1,453,96 | 58.15 |
| Havells India | 11.07 | 341.75 | 30,870 | 31.61 |
| HSIL | 4.80 | 302.00 | 62,917 | 56.89 |
| Kajaria Ceramics | 21.35 | 1053.20 | 49,330 | 36.74 |
| KSB Pumps | 30.05 | 615.05 | 20,468 | 29.76 |
| Pidilite Industries | 11.41 | 591.00 | 51,783 | 37.66 |
| Total: Portfolio | 5,22,100 | 42.85 | ||
| *Includes dividends | ||||
Now time for the sad news. I missed out on the riches because I never thought about investing in these companies that time. All these nine stocks have proved to be multi-baggers in the past 12 years. The simple reason being that they appeal to the very basic desire of owning a house.
This is just one example. All of us indulge in some sort of research at some point or the other in our lives but ignore the fact that such research can have an investing implication as well. Legendary fund manager Peter Lynch also followed this approach. I know many people who knew very little about investing but made money in equity using skills in their respective fields, which no amount of expert guidance can teach.
(The analyst owns Greenply Industries in his family portfolio)
This article first appeared in October 2012.
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