High Inflation Helps the Strong Get Stronger
Across the world, supply vs demand mismatches are fuelling inflationary pressure. In such circumstances, contrary to the popular notion of high-quality stocks taking a beating, history shows that such companies have outperformed the broader market even more strongly (when CPI inflation exceeds 6%) on revenue growth, profit margins and shareholder returns. This construct bodes well […]
Staying on the Top of Everest is Harder than Getting There
In every decade, typically 50% of Nifty companies are ejected from the benchmark index leaving in their wake disappointed shareholders. Jim Collins’ bestseller “How the mighty fall…” provides a framework for assessing how companies get dislodged from their market leadership positions. We twin this framework with our proprietary ‘Lethargy’ & ‘Succession Planning’ frameworks to improve […]
Three Distinct Layers of Polarization in the Indian Stock Market…
Three Distinct Layers of Polarization in the Indian Stock Market… …is resulting in wealth creation being concentrated into the hands of 15-20 companies and this dynamic has nothing to do with the global monetary easing. A handful of companies – no more than 10 – are taking home more than 90% of the profits generated […]
Is India Really a Flailing State? Let’s Review the Data
If like us, you too are battling to deal with “recency bias” resulting from the steady negative news flow through the pandemic, you should know that a review of India’s progress across a battery of metrics across thirty years shows that relative to six other prominent developing countries, India has made steady progress. Clearly, more […]
Competition Demystified in India’s Small-ticket Consumption
High market share does not necessarily indicate high pricing power in Indian small-ticket consumption. Pricing power arises from the existence of barriers to entry. We have used Bruce Greenwald’s ‘Competition Demystified’ framework and applied it to India’s small-ticket consumption space to illustrate how Indian franchises consistently deepen existing competitive advantages and build new ones even as technology […]
Four Economics Books for Building Mental Muscle
“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”– John Maynard Keynes, […]
How Portfolio Management Services in India Rediscovered its Mojo
Positive regulatory intervention and the ‘financialisation’ of savings in India has galvanised the Portfolio Management Services (PMS) industry in India. Once seen as a niche corner of the asset management sector, the PMS sector industry is increasingly at the vanguard of dynamic innovation in the Indian asset management sector. The year was 2017 and the […]
A Sixty-Year-Old Tool to Assess Capital Allocation Decisions
Capital allocation refers to the decisions about how a company should spend the money it has earned. If capital is invested in a way that does not generate returns that are higher than the cost of this capital, it obviously hurts the future business value of a company and in turn, hurts investors and shareholders. […]
India’s Top 20 Leviathans’ Awe-inspiring Dominance
The top 20 profit generators in India (“the Leviathans”) now account for 90% of the country’s corporate profits. Beyond dominating the country’s profit pool, the Leviathans also reinvest these profits far more efficiently back into their businesses. By doing this over the last 25 years, the Leviathans have also widened the RoE gap between them […]
COVID-19 and the Proliferation of Junk Science
Over the past year a plethora of strategies to combat COVID-19 were put into action. However very few of these strategies were backed by publicly available credible data. In fact, even as COVID-19 cases per 100 tests dropped sharply through spring 2020, alarmists published misleading studies and governments took policy action basis these studies. These […]
What Investors Can Learn From Rahul Dravid
More than any other cricketer, Rahul Dravid’s career has plenty of lessons for the rest of us regarding the power of mental conditioning and psychological training techniques. “By any meaningful reckoning…he was India’s greatest match-winning batsman, with 24 away wins (Sachin Tendulkar has 20) where he averaged nearly 70. When imponderables are introduced into the […]
The Best of 2020
The Best of 2020 2020 has been such a remarkable year that it is now considered cliched to use the word ‘unprecedented’ to describe it. All of us have had different ways of dealing with increased stress levels from concerns about the safety of our loved ones, coping with working from home and from managing […]
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