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Notes from the Sohn India Conference

(Disclaimer: The stocks mentioned in this post are for informational purpose only and not a recommendation to buy/sell)

Attended the second Sohn India Conference today.

The Conference opened with opening remarks by Nitin Saigal,Founder &CIO, Kora Management

He explained the format of the Conference:

  1. Every speaker will be allotted 15 minutes
  2. The speaker have to give their best idea
  3. No Q&A

The first speaker was Raamdeo Agarwal of Motilal Oswal:

  • Raamdeo Agarwal’s best pick was PNB Housing Finance. He termed it a ‘Lakh Crore Ki Kahani’
  • In India, there are only 27 Companies which have a market cap of more than 1L Crores.For a company to break into this elite club, there must be strong tailwinds and a long runway in place.Some such megatrends that he has seen in his career are IT Services,Private Banks,Pharma etc
  • He analyzed the Company using his QGLP model.
  • Its a business with secular growth drivers.India’s Mortgage to GDP is very low (9%) and level of urbanization is only 33%.Both these figures can only go up.
  • The Gross NPAs in this business is only 0.8%
  • For all practical purposes, it is Carlyle which owns 38% of the company is running the business.They have put in top class processes and practices.
  • Raamdeo Agarwal quipped –‘I own a housing finance business myself and hence can judge the high quality and scalability of PNB’s processes’
  • The management plans to double assets by 2020. Modi’s ‘Housing For All’ can create a 50L Crores Mortgage Market.
  • The Company has grown at 52% CAGR in the last 4 years and increased its market share
  • He expects the stock to break into the 1 Lakh Crore Club by 2024…a CAGR of 24%

The second speaker was Sunil Singhania of Reliance Mutual Fund

  • Being from Mutual Fund Industry,compliance demands he can’t give stock picks but can speak on sectors
  • His pick was the  Cement Sector
  • Felt while the current demand is low,the sector will benefit from the Govt’s infrastructure and housing boost
  • The problem is that cement stocks have significantly increased in price
  • He presented an interesting way to play this sector
  • Said the most significant wealth creation in Shree Cements happened when capacity when from 15 Million Tonnes to 25 Million Tonnes–stock price went up by 3x/4x
  • He suggested to buy two companies-one North/Central India and the other South India-which have around 15 Million Tonnes each and are ramping up capacity
  • Enjoyed the clear thinking and analysis of Sunil Singhania

The third speaker was a doctor from the Tata Memorial Hospital

  • Explained about pediatric cancer
  • Explained that cancer cure in India should not only be effective but also affordable
  • Appealed to participants to contribute to the Tata Memorial Trust

Here would like to take a time-out and request readers to help the cause of cancer cure by contributing to Tata Memorial

The fourth speaker was Shankar Sharma,from First Global

  • Explained that he liked companies with high leverage because when debt gets paid off, correspondingly market value increases
  • Recommended MEP Infrastructure Developers Ltd
  • Basically, a toll operator with 19 Toll Plazas including Mumbai entry points,Bandra sea link etc
  • For the first time since inception it has made a profit now
  • Expects debt leveraging to happen

The fifth speaker was Saurabh Mukherjea of Ambit

  • Recommended Garware Wall Ropes
  • Top manufacturer of nets and ropes in the world
  • Exports 3000 SKUs to 80 countries
  • Its expertise in blending high end polymer chemistry with high labor intensity is unmatched
  • His Primary checks tell him customers are very satisfied with the Company products
  • Growth will come from Defense,Agri,Infra etc
  • Management is prudent in their capital allocation, had bought back their own shares in the past

The sixth speaker was Navneet Munot of SBI Mutual Fund

  • Being from Mutual Fund Industry,compliance demands he can’t give stock picks but can speak on sectors
  • His sector pick was Telcos
  • There will be a bloodbath in the sector for next 2-3 quarters
  • The Telcos which survive will make a lot of money as
    • Data addiction now is a bigger addiction than alcohol,tobacco etc
    • Push by the Govt-show a Modi video clip
    • Consolidation–>Pricing Power—>ROCE

The seventh speaker was Aanand Chouhan, a 2nd Year student from IIM Bangalore

  • Aanand had won a stock picking competition organized by Sohn and hence was given opportunity to present his idea
  • His stock pick was Infoedge
  • Felt the company’s core business (Naukri), Internet Portfolio (99acres,Jeevansathi etc) and VC Investments (Zomato,PolicyBazaar etc) were valuable and could grow well
  • Gave a target price of 1570 Rs/share over the next 3 years

Next was a video clip by Jeff Gundlach of Doubleline:

  • He said there is no such thing as passive investing as the index constituents are decided by a Committee
  • Said to go long EM and short US 500

This was followed by a tea break where I met the redoubtable Samir Arora. He was amused the Munot was recommending the sector he was short on !

The eighth speaker was Kenneth Andrade of Old Bridge Capital Management

  • His top pick was ENI
  • Its the market leader in the Radio space with 30% market share and recognizable brand (Radio Mirchi)
  • It will have second frequency in 11 Metros
  • National footprint with 60 cities
  • Radio is an attractive space with 4% of Media spend and growing at a CAGR of 16.9%
  • ENI has already done significant capex and its time to reap the benefits

The ninth speaker was Shashank Singh of Apax Partners

  • His top pick was DCB Bank
  • His investment thesis was
    • Retail private banks with clear product/customer strategy will do well
    • DCB Bank reinvented itself after 2010 under current leadership
    • Suppressed earnings due to network rollout and hence attractive valuations
    • Felt the Bank has a conservative credit culture with the CEO himself doing surprise audits
    • Earnings will improve with time as the branch network gets more ‘seasoned’

The tenth speaker was Hiren Ved of Alchemy Capital

  • His top pick was Varun Beverages
  • Said the Company is a good proxy for Pepsi in India
  • Not just a bottler but also a manufacturer,marketer and distributor
  • Felt one unanticipated impact of 24*7 electricity is more people consuming more beverages
  • Coming to valuations, he said Varun is cheap compared to other consumer plays like Jubilant Food/Page Industries.Found the comparison very funny

The eleventh speaker was Ashwini Agarwal of Ashmore

  • His top pick was Persistent Systems
  • Said the company was not a typical IT services provider as it is into outsourced product management
  • Three investment reasons
    • IBM-Watson tie up begins to pay off
    • Growth in Digital business -40% CAGR is possible
    • Core IT services revenue shows 6-8% CAGR
  • Two investment risks
    • Rupee Strengthening
    • Curbs/high fees on H1B Visas

The last speaker was Akash Prakash of Amansa

  • His top pick was Infoedge.
  • Second time the stock was discussed today
  • He felt it was the ultimate India Internet play
  • He also felt due to network effects the value of Naukri,99 acres,Zomato etc will keep growing
  • He feels the real estate classifieds space is 5x bigger than the recruitment space and the restaurant space is bigger than the real estate classifieds space
  • The companys VC fund also lets the investor bet on interesting Internet opportunities which otherwise one could not
  • He felt the downside risk was minimal while upside could be 3x/4x

The conference ended by a video clip of Social Capital’s Chamath Palihapitiya who discussed Tesla and made a case for buying its convertibles.

Met Ramesh Damani on the way out. Was blown away by his charm and humility.He was kind enough to indulge our request of a selfie !

 

 

 

22 replies on “Notes from the Sohn India Conference”

thanks for this informative article, feels good to not have attended yet got some benefit

Then you so much chief. Since I came across your blog, have only appreciated it more and more and grateful for the learnings.
Hope you got to enjoy the beer!

Anuroop

PS: Are you on the left or right of RD in the pic above.

Thank you Roaji for a concise summary of this important event. Really useful for long term investors. i cannot buy a beer for u for religious reasons….but can only give u blessings for doing a good work.

Nice, concise and to the point summary of the one of the great Indian investment event.

Thanks for the always insightful inspiring stuff u post.. keep up the good work!

Thanks for sharing..Hearing from the superstars of stock picking always teaches few lessons..

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