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Archives for March 2014

Value Investing Contest Winning Entry #3: Munjal Auto

This report was prepared by Sudhanshu Jain, as part of the Safal Niveshak Value Investing Contest. None of the facts herein have been validated by Safal Niveshak. Also, please DO NOT treat this report as a “recommendation” from either the author or Safal Niveshak. Do your own homework.


Business Description and History
Munjal Auto Industries Limited (Munjal) operates as an auto component manufacturing company in India. The company provides exhaust systems, steel wheel rims, and spoke wheel rims for two-three wheelers; and fuel tank assemblies, seat structure systems, and side step assemblies for four-wheelers.

It also offers assemblies, including BIW parts, pillars, cross bars, control arms, tie end bars, accelerators, and brake and clutch pedal assemblies; and sheet metal components comprising mild steel parts, stainless steel parts, welded components, tri-nickel chrome plated components, liquid painted oven baked parts, heat resistant painted parts, tubular components, and roll formed parts.

The company was incorporated in 1985 and is based in Gurgaon, India. The company is a subsidiary of Thakurdevi Investments Pvt. Ltd. It is part of the Munjal group of companies. Its manufacturing plants are located in Gujarat, Haryana and Uttarakhand.

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10 Lessons from the 2008 Crisis

Seth Klarman is not an investor you would read about much in business media. He is one of the more reclusive kinds out there. He rarely speaks in public or grants interviews.

Klarman is known for his very deep value investing style and willingness to pursue value where others get very nervous. Some people, in fact call him Warren Buffett of his generation.

Late last year, he returned US$ 4 billion cash to his clients (from a fund size of around US$ 30 billion). In fact, Klarman has had about 30% of his fund’s assets in cash over the past two years as he has long been concerned about the state of the financial markets and typically looks for deeply-discounted situations.

In a recent letter to his clients, Klarman has warned that the QE (quantitative easing) stimulus bubble has become unsustainable and will burst at some point in time.

He has noted that “most” investors are downplaying risk and this “never turns out well,” noting that most people are not prepared for anything bad to happen. He wrote in his letter (emphasis is mine)…

No one can know what the future holds, but any year in which the S&P 500 jumps 32% and the NASDAQ Composite 40% while corporate earnings barely increase should be cause for concern, not further exuberance.

It might not look like it now, but markets don’t exist simply to enrich people.

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Value Investing Contest Winning Entry #2: V-Mart Retail

This report was prepared by JK, as part of the Safal Niveshak Value Investing Contest. None of the facts herein have been validated by Safal Niveshak. Also, please DO NOT treat this report as a “recommendation” from either the author or Safal Niveshak. Do your own homework.


The Big Picture
Understanding the big picture, foreseeing the structural trends and sector tailwinds play a critical role in identifying and developing conviction on ideas that go on to become multi-baggers creating huge wealth for investors in the long run.

So what are the current structural trends going on in the Indian economy?

I can clearly identify two –

1. Switch from Unorganized players to Organized players: Organized players are gaining market share from the unorganized players. This structural shift is happening in every consumer facing sector, be it jewellery, bathroom solutions, plumbing solutions, kitchen appliances, shoes, apparels and inner-wears, restaurants, or retail.

Why this switch? Because of rising income levels, customers’ aspirations are increasing and organized players are considered to be providing higher quality products.

Social proof, advertisements, Pavlovian association (to associate ‘I have heard of this product’ to ‘I like this product’) are the psychological reasons which are making sure that this switch is here to stay.

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Value Investing Contest Winning Entry #1: Balkrishna Industries Ltd.

This report was prepared by Ankit K, as part of the Safal Niveshak Value Investing Contest. None of the facts herein have been validated by Safal Niveshak. Also, please DO NOT treat this report as a “recommendation” from either the author or Safal Niveshak. Do your own homework.


Company History and Business
BIL is a Siyaram Group Company with its history dated back to 1962. From setting up its first manufacturing unit in 1988, it has come a long way in becoming India’s leading exporter of “Off-Highway Tires”. It is an export oriented company with 90% of sales moving to different countries worldwide.

Highlights of the company’s business and financial strength are as follows:

  • Widest and comprehensive product portfolio of over 2,000 SKUs and develop 100 to 120 incrementally per year.
  • Current achievable production capacity is 166,000 MTPA (metric tonne per annum). It is to be enhanced to 276,000 MT by FY15.
  • Market presence in more than 120 countries all over the world.
  • Manufacturing facility at: Aurangabad, Maharashtra; Bhiwandi, Rajasthan; Chopanki, Rajasthan; Bhuj, Gujarat; Dombivali, Maharashtra
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Value Investing, the Sanjay Bakshi Way 2.0 – Part 2

Image Source: Outlook India

After talking about the important concept of economic moats in the first part of his interview, in this second and concluding part, Prof. Bakshi talks about his thoughts on valuations, mental models, diversification, checklists, and why you must buy great businesses for the long term.

Safal Niveshak: One of the problems that new or small investors have is that they can’t really get their heads around valuation. It seems so complex. A lot of the terminology is complex, the concepts are, and there is a lot of contrary thinking needed to effectively value businesses.

How can valuations be made easier? How have you made it easier? Or can it not be made easier?

Prof. Bakshi: Vishal, that particular problem is equally applicable to large investors!

Anyway, over the years I have dealt with the problem in many ways. As a disciple of Ben Graham, when working on any business and not necessarily moats, I developed my own ways of thinking about valuation.

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Value Investing, the Sanjay Bakshi Way 2.0 – Part 1

Image Source: Outlook India

After much delay owing to issues in getting mutually convenient dates, I have finally finished my interview of Prof. Sanjay Bakshi. 🙂

Here is the first part of the interview. As you will find below, it’s amazing the way Prof. Bakshi has explained critical concepts in investing in a highly comprehensive yet simplified manner.

Enjoy the wisdom!

Safal Niveshak: Let me start with a question I have been waiting to ask you for some time now. Through a comment on a link I shared on FB and through a few of your posts over the past few months, you have suggested that your investment philosophy has moved further towards high quality businesses, and great managements. Can you please elaborate on the same? What has been this transition all about? And why?

Prof. Bakshi: I started my career as a value investor in 1994. Over the last twenty years, I have practiced most styles of value investing including as Graham-and-Dodd style of investing in statistical bargains, risk arbitrage, activist investing, bankruptcy workouts, and Warren Buffett style of investing in moats. There have been times when I have owned 40 stocks and times when I have owned just 10.

I teach all these value investing styles in my course at MDI. I tell my students that they need to pick a style which suits their personality.

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Results: The Safal Niveshak Value Investing Contest 2014

First, I wish you a very happy Holi!

May you have the most blessed Holi festival than you ever had. May it be full of fun and love. May you be as colourful as the festival itself or even more.

And may you use the least amount of water while playing and washing off your colours. 🙂

Now, after a tremendous response to the first edition of Safal Niveshak’s Value Investing Contest, I feel happy to announce the winners of the same.

I received 23 entries in total and found it extremely tough to rank them in terms of quality and simplicity of analysis.

Thus, I have chosen two winners for each of the first three positions.

While my choice of winners does not devalue the quality of analyses sent by others, it’s just that I had to pick the best very few, and here they are –

1st Prize

  • Ankit K – Balkrishna Industries
  • JK – V-Mart Retail

2nd Prize

  • Sudhanshu Jain – Munjal Auto
  • Venkat Sivagnanam – Gabriel India

3rd Prize

  • Maheswar Reddy – Tree House Education
  • Nishanth Muralidhar – Swaraj Engines

Here are the prizes winners have won –

  • 1st Prize – Books of choice, worth Rs 2,500/- each
  • 2nd Prize – Books of choice, worth Rs 1,500/- each
  • 3rd Prize – Books of choice, worth Rs 1,000/- each

Congratulations to all the winners, and thanks to all who participated!

I will publish the reports of winners on the website very soon.

A Fundoo Professor Called Sanjay Bakshi

In my preparation for the upcoming interview of Prof. Sanjay Bakshi (this Sunday), I was reading through a few of his past articles and lectures, when a thought struck my mind.

A lot of Safal Niveshak tribesmen still do not know much about Prof. Bakshi and his vast investment insights, except for his interview that I carried in 2012.

As such, I have created a special page on the website dedicated to Prof (after due permission from him), who is one of the best minds in India in the fields of Value Investing and Behavioral Finance.

This page is a collection of my best picks from among his vast writings that are available on his blog as well.

Start by reading about Prof. Bakshi’s life story. Then read through some of his best posts (as per me) I have listed on the page.

I’m sure you will benefit a lot from them in your efforts of becoming a sensible, long-term investor.

Reading Prof. Bakshi has been an important step in my work-in-progress of becoming what Charlie Munger calls a ‘learning machine’. I’m sure it won’t be any different for you.

P.S. This page has been created after due permission from Prof. Bakshi.