No, I am not getting into delusions. I am so confident about these six companies mentioned in the table that I am placing bets on these stocks. Some of my friends first laughed off, and now even they are investing in them and benefiting from my stock picking skills. But, why am I so confident to the extent of sounding arrogant?
The topmost reason for my assurance is the glorious history and proven track record that these companies have. These companies have got it right to achieve sustainable growth. Which means one can consistently make money by investing in these. Not just that as an analyst I looked at four broad aspects of these stocks before getting my self belief: Financials, Business, Management and Valuation; all of them have been impeccable performers.
Let me explain; check their financials, you will be astounded by their extraordinary growth and efficiency for the past ten years. Mind you the past decade witnessed extreme swings in the markets, so to come clean in such a phase is remarkable a feat.
Next, the business in which these companies operate happens to be lucrative, sustainable, somewhat recession proof and these companies are leader in their respective business area giving them a moat. Take Asian Paints, whatever be the economic climate, people don't stop painting their homes. Or for that matter, Fevicol from the Pidilite stable is a carpenter's friend. Or Titan, which irrespective of the swings in gold price did not witness a demand fall in jewellery. Gruh Finance has a similar story and so has Nestle. I am a consumer of the 2-minute miracle and there are many like me who swear by the wholesomeness of a maggi meal, which makes its sales rarely dip.
The only exception; ITC. ITC is not just dependent on cigarettes, which makes it a diverse player with interests in paper, stationary, hotels and FMCG. While the diversification does help when one business vertical pales, as the other does well.
Next on the list is management. All these companies are well managed and have great goodwill. Titan has repeatedly entered unorganised sections of the markets and created a unique space for itself.
Lastly, its always about valuation. Agreed, the PBV and PE currently are on the higher side, but that was not the case when I started investing in these companies. My advice; wait for opportunities when these stocks go down a bit, which could be the case for short intervals. Going by past history, you would find small window of an opportunity, but like all windows, its too small to miss out because they stocks recover their loss pretty fast. I got my last chance with Titan in 2013, may be following my approach, you will find opportunities in the rest sometime in the future.
10 Year Snapshot
|Particular||Asian Paints||Gruh Finance||ITC||Nestle India||Pidilite Ind.||Titan Co.|
|Price to book||12.09||10.61||9.36||19.66||8.08||9.15|
|Price to earnings||43.38||36.41||32.15||41.69||36.08||31.76|