Conviction | Patience's Threads

Infra vs Compounder. Get poor fast vs Get rich slowly (unless you buy at the bottom and "luckily" survive the bankruptcy/mortality risk to ride the subsequent fast recovery and then turn "lucky" again to exit in good times resisting your irresistible greed).

Sajal Kapoor
@unseenvalue

Journey from deep-hatred (नफ़रत) to deep-love (इश्क़) creates massive valuations re-rating from below 1x sales and 1x book value to anything from 5x to 20x sales and a multiple of book value.

Sajal Kapoor
@unseenvalue

@rwind78 @sahil_vi @AdityaKhemka5 @soicfinance #SeQuent is investing in enhancing the terminal value of the business. This should provide better valuations fresh entry next year. Given the fact that it was 40+ in 2018, even a 400+ by 2028 would mean a very healthy 25-26% CAGR ex dividends.

D: Invested. Add more next year.

Sajal Kapoor
@unseenvalue

Mr. Rakesh Jhunjhunwala asked great questions on CDMO. Made me Jubilant on Zooming😉

Sajal Kapoor
@unseenvalue

Attended #Rallis AGM last week. Not seen a better AGM in the Chemicals sector. Went for nearly 3 hrs and Mr Bhaskar Bhat (Chairman) and Mr Sanjiv Lal (CEO) answered every question raised in detail.

Extract from Annual Report of #RallisIndia

Emphasis on Biotechnology in Crop Nutrition & Seeds business

Capex Plans \u20b9800 Cr next 5 yrs. \u20b9200 Cr approx in FY22, largely be funded from internal accrual

Thanks to @unseenvalue @ishmohit1 for their Webinar on Biotechnology

(1/2) pic.twitter.com/CCAS72KlN2
— Soumen Chatterjee (@Aries_Martian) June 27, 2021

Sajal Kapoor
@unseenvalue

There's more to disclose!

Waiting for business to perform before i share more as too much talking is deemed 'pump and dump' by the elite Twitter activists (who have to pay their advisory staff's salary and bills - so free knowledge sharing hurts their interests)

#Biotechnology

@unseenvalue mentioned this in his seminar https://t.co/kGS9jHuBYx
— Sishya of Highly Respected Sunaka (@JpackJack) June 19, 2021

Sajal Kapoor
@unseenvalue

Research in CDMO/APIs is never a slam dunk. It may take ages to yield results. CEP filings can be lumpy as a result. As I wrote last year (link below), Hikal has been consistently sacrificing operating profits for a sustainable future. Best is ahead 🎥 🍿

https://t.co/hItmOud8Pm

#Hikal has stepped up R&D in recent years. Next few years (capex & launches) should yield superior earnings. Wish them all the luck \U0001f44d

D: invested and biased view for sure, but it was below 1x price to sales vs 12x price to sales for many chemicals and generic players. No reco!! pic.twitter.com/aqPUKbziHK
— Sajal Kapoor (@unseenvalue) September 26, 2020

Sajal Kapoor
@unseenvalue

I did share this interview back in January. Reiterate my high conviction on #CDMO #APIs despite negative chatter and several obituaries 🥱

Exactly the reason we (including @punitbansal14) were bearish on players with heavy dependency on formulations

Sajal Kapoor
@unseenvalue

@pushkat @LaurusLabs I don’t deserve any credit. It was your hard earned capital. You took the risk.

Business has performed due to best in class management, capabilities, capacities, patents and scientific talent that Laurus has accumulated over the years. Best is ahead 🤞🤞

Conviction | Patience
@unseenvalue

When we put a high multiple to sales, the most important thing to worry about is - what could disrupt those cash flows. A lower multiple to sales (like a 1x or 2x) justifies Yo-Yo cyclicality and 10x sales implies relatively stable gross margins, cash flow and business economics.

It's amazing \U0001f60a 25% NP

$8b revenue
$2b Profit
$92b MCap

At 11 times revenue, it seems to be cheap compared to\U0001f609
— Avinash (@Aviral_Bharat) February 17, 2022

Conviction | Patience
@unseenvalue

@shuchi_nahar @AnyBodyCanFly Created this thread in 2018, as saw this coming. Covid actually accelerated the trend … next disruption will be lead by biosciences. Unseen today be seen few years out

Technology is enabling new ways of credibly accessing medical knowledge via smart phones / tablets.

Android, iOS have > 5k health / fitness apps like @Medscape, pointing to a future where the Tech. drives a part of medical knowledge and therapeutic guidance instead of a Doctor!
— Conviction | Patience (@unseenvalue) November 8, 2018

Sajal Kapoor
@unseenvalue

@suru27 The number of pets that we spot while morning and evening walks have noticeably increased over the last few months. These companions are great in emotional support, and a natural therapy for 🧠

Sajal Kapoor
@unseenvalue

Avoid low quality assets in a sector where price discovery has been relentless over many years. Stay with tier 1 players. Margin of safety is in business first and not the entry price. This is not valid for short term positional trades. Those are managed via strict stop losses.

Speciality vs Commodity Chemicals

Speciality - typically bespoke solutions as per customer's requirements. High complexity. This makes continous R&D and product innovation a key success factor!

Go to 2 hr 21 mins for my views on #Chemicals sector \U0001f447https://t.co/Zzx6AwHZLH
— Sajal Kapoor (@unseenvalue) June 15, 2020

Sajal Kapoor
@unseenvalue

@BhavaniprasadP Listen to @AdityaKhemka5

Sajal Kapoor
@unseenvalue

18-19% ROE wale being bought by institutions at anywhere b/w 12 and 20x price to sales. Not many liked this space in 2013. Not many hate it today. Social validation in investing is a big curse ...

Ghor ChemYug 😆

#DeepakNitrite valuation is most attractive in the space...

growth will be most explosive in the space... pic.twitter.com/8VYdWwFApY
— jeevan patwa (@jeevanpatwa) June 30, 2021

Authors Conviction | Patience