Slow Compounding

Things you care the least! You are trying to build wealth. Long term basis. And you know very well...what is more important to build long term wealth. It's not not sprinter you need. You need marathoner. Most importantly, you need time. Long time. Simplify life. Make good habits. Eat healthy. Sleep well. Treat others the way you want to be treated. Lead a good and happy life. Give your portfolio to compound. Time is your friend. Embrace the slow compounding over longer time! Like it or not. This is the only way!

Navin Flourine Revenue up by 48% Expenses up by 51% Profit up by 58% (YoY) Operating Profit Margin improved to 29% (from 28% last year) At the first glance, the number may look nice. But, we have to check how is it valued today. This business is valued at 26% profit margin with 30% Revenue growth until 2032 (by market ). Very little margin. If any new developments/positive surprise comes up, valuation matrix will change. Business has all the orders. Street is looking its execution capabilities. Institutions can access the export data of these companies in advance of quarterly results. Retail investors cannot get that information in advance. But, retail investor can be more patience for such companies if the long term outlook remains strong. Something you must notice for Navin Flourine: Promoter holding is lower (29%). FII, DII and Public has good distribution in shareholding. FII holding is reducing and DII is increasing.

Divis Lab The results were out yesterday. I saw the results but I didn't want to post before listening to concall. Now, as I have heard the concall twice, I feel to write my view. Revenue down by 27% Expenses down by 6% Profit down by 66% (YoY) Operating profit margin is now historical low around 27% (normally it is around 40-42%). The business is going through headwind. It is same for the sector. Pain period is going to stay around another 1.5-2 years to recover the lost margin. They are working on lot of new development; and it has strong potential to grow the business sustainably maintaining ROCE and ROIIC. Good part of the quarter is that the long pending approval on Khakinada project is now approved. Development will be made on this, more capex will be going into the business. Night follows day, this is evitable. Patience will be tested. Nothing is free. That is the ultimate truth.

Relaxo Ltd. Revenue dropped by 9% Expenses down by 2% Profit dropped by 57% (YoY) Operation Profit Margin is now 11% (17% last year). Quarterly basis: Revenue and expenses are flat. 25% increment in Profit. I have sold this business from Slow Compounding portfolio. Reasons: 1. As the per capita GDP increase, preference will be shifted towards more premium doorwear. 2. Business is facing boudle side hit. One side raw material price hike. Another side, taxation hike in lower category of footware. Margins of Relaxo is now continuously compressing when other brands like Metro are improving. 3. Company is not having any effective strategy to mitigate the issue. I have been closely tracking this position and finally exited at around 880 price range. While I think that long term growth story will continue, margin and ROCE and ROIIC profile may not be favorable. Please accept that my judgement can be wrong as I have been wrong before. Falling in love with the business may be detrimental to portfolios. The idea is to create long term wealth with the business can grow sustainably maintaining ROCE and ROIIC. Please do not consider this as your investment advice. P.S. I wished to inform this through video. I will do the recording tomorrow and publish it soon. Group members should know it in advance...so, here was the post.

God knows why!

Adani-Hindenburg matter: LIC confident about Adani Enterprises FPO, spends $37 mn as anchor investor https://www.timesnownews.com/business-economy/companies/adani-hindenburg-matter-lic-confident-about-adani-enterprises-fpo-spends-37-mn-as-anchor-investor-article-97413539

Bajaj Finance Ltd Income grew by 26% Expenses grew by 19% Profit up by 40% Net NPA stands steller, 0.1% (0.11% last Year) AUM growth 27% , slower due to intense pricing pressure. Strong Customer acquisition continues.

Important snippet!

Pidilite Revenue up by 5% Expenses up by 9% Profit down by 13%

Gland Pharma Revenue down by 12% Profit down by 15% Capecx down by 3.5 times ROCE dropped to 20% (from 34%) Cash conversion cycle increased from 190 days yo 246 days Reasons: Headwind in US business, Supply chain disruption, reduction in inventory at customer side, normalisation of covid sales Starfall! Or normal rule of life (mean reversion) So much learning we can get by studying Gland Pharma. Disclosure: I don't own it but closely tracking it since its IPO

Kotak Mahindra Bank Income increased by 30% Expenses increased by 6% Profit up by 17% (YoY) Net Interest Margin 5.4% (vs. 4.6%) CASA dropped to 53% (from 60%) Net NPA reduced to 0.43% (vs. 0.79%) ROA improved to 2.76% (from 2.6%) Capital Adequacy ratio 20.7% (from 22.2%) Maximum growth was observed in Micro finance indicating that Banks are strongly focusing on this segments.

Asian Paints Revenue up by 2% (flat) Expenses up by 1% (flat) Profit up by 10% Operating Profit Margin improved to 20% (vs. 15% Last Q and vs 19% Last year) Quarterly improvement is visible but year-wise mostly flat.