How to identify winners like Bharat Shah

A healthy earnings growth is not enough to guarantee good returns. The business should also have a track record of using its resources efficiently. No, you don't have to take our word for it. The above forms the crux of the 2013 book 'Of Long-Term Value & Wealth Creation from Equity Investing: Observations, Ideas & Reflections' by Bharat Shah, Executive Director at ASK Group and one of the most renowned Indian investors. Why earnings growth is not enough In the book, Shah explains how a business's earnings growth does not accurately represent its growth potential. Why? Suppose you and your friend both run a dairy business. Business is booming, and you decide to invest Rs 10 lakh and expand. Everything works out, and your earnings shoot up by 5 per cent. Your friend is impressed and decides to follow suit. He invests Rs 20 lakh to expand, and his earnings increases by 5 per

This article was originally published on January 12, 2023.