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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 inaugural 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:

  • His best stock Idea was Interglobe Aviation i.e Indigo
  • He called it “A terrific investment in a terrible business”
  • He said it had all the aspects of a terrific business
    • Growing rapidly
    • Insignificant capex
    • Very very profitable
  • He then explained the company with the help of his Q-G-L-P framework (i.e. Quality-Growth-Longevity-Price)
  • Really enjoyed the clear thinking and analysis of Raamdeoji

The second speaker was Sunil Singhani of Reliance Mutual Fund:

  • Being from Mutual Fund Industry,compliance demands he can’t give stock picks but can speak on sectors
  • He started his presentation in a very unusual fashion-by showing two Bollywood scenes
  • One scene was 20 years back where the Villain was drinking whiskey.The second scene was where superstar Deepika Padukone is drinking
  • He explained that earlier Villains used to drink and now heros/heroines drink.Drinking has become socially acceptable
  • He mentioned a startling fact-“One third of all people born after year 2000 are Indians”
  • The young demography of India,the low per capita consumption,the social acceptability makes India Alcohol story a compelling one
  • He said globally liquor companies were large value creators for shareholders and India shouldn’t be any different

Next was a video clip from Jeff Gundlach, the biggest Bond Fund Manager in the world.He mentioned that he is v bullish about India and has invested in Indian equities which he “plans to hold for a generation “ !

The third speaker was S Naren of ICICI Prudential Asset Management:

  • Being from Mutual Fund Industry,compliance demands he can’t give stock picks but can speak on sectors
  • His favorite sector was the “Hospital” Sector
  • He feels that growing medical tourism and growing coverage of domestic Medical Insurance augurs well for the Sector
  • He calls his sectoral view a “Multi Decade” view
  • He made an interesting observation about the current state of the markets “Anything that is cheap is poor quality and anything that is high quality is expensive”

The fourth speaker was Kenneth Andrade,former Head of Investments,IDFC Asset Management:

  • His favorite stock pick was Coromandel International
  • He feels that the fertilizer subsidy regime is going away and the Direct Benefit Transfer scheme will put 11.5 Billion $ straight in the hands of farmers
  • This should augur well for makers of complex fertilizers like Coromandel International

The fifth speaker was Shiv Puri of TVF Capital Advisors:

  • His favorite stock pick was Repco Home Finance
  • He feels this company is where HDFC was in 1995 and is capable of giving 45x returns in the next 20 years
  • The external opportunity in semi-urban and rural is around 400 Billion $ which Repco is in a good position to exploit

Then there was a short tea break.Amused to see Rakesh Jhunjhunwala smoking in the Taj Ball Room during the break.Guess no smoking rules don’t apply to Billionaires

The sixth speaker was Rukshad Shroff of J.P.Morgan Asset Management:

  • His first idea was a large private bank famed for its low NPAs
  • He felt it could deliver 3x returns by 2026
  • He felt that even at current valuations,it was a good buy because “Good Businesses overcome Valuations”.I thought that was a great line
  • His next idea was a international fast food franchise.He did a top down approach and came to an estimate where if the business does well,the company’s market cap should be 7x the current market cap

The seventh speaker was S Naganath of DSP Blackrock:

  • He first gave his view on global markets..said by Sept/Oct he expects them to have a significant correction of atleast 20%
  • He said even Indian markets will get impacted by this…this would offer the “last opportunity to buy Indian Equities Cheap”
  • His sectoral pick was PSU Banks.He said everyone hates them now but they should do well from a 3 year perspective
  • Then he explained an idea he had called “TRICEPS”-Tax Rate Insurance for Creating Employment in Public Services
  • As per this idea,Govt collects premium from individuals/corporates and promises not to raises taxes.It then uses the money to create jobs
  • I found this idea bizarre and envy Naganath for the seriously awesome stuff that he must be smoking to think of such crap

The eight speaker was Shanker Sharma of First Global:

  • He said his style of investing was to look for companies with problems
  • He especially likes companies with D/E ratio of greater than 5
  • His first stock was Kiri Industries
  • This is a niche chemicals player which is growing its business,paring down debt and owns a significant stake in Dystar,one of world’s largest Dyes Companies
  • The next stock idea he had A2Z Infra
  • He said they are reducing debt and have a product called Magic Genie which ought to do well

The ninth speaker was Akash Prakash of Amansa:

  • His stock pick was Federal Bank
  • He said that it’s book was better than “ICICI Bank or Axis Bank.Nobody knows what’s in them !” Ouch !
  • He explained why the Bank under-performed for the last 3 years
  • He said the Bank should do well going forward as its corporate loan book/Gold loan book should grow and the cost cutting measures they are undertaking

The last speaker was Rakesh Jhunjhunwala:

  • Surprised to see that he had to be helped to get on stage
  • His first stock idea was Tata Motors
  • He expected JLR to grow by 18% and domestic sales to grow by 20%
  • Said he expects it to be in the top 3 companies in India in terms of revenues and profits
  • His next stock pick was DLF
  • Said its debt reduction efforts,lease income and land bank made it a buy
  • He remarked that the entire real estate industry in India has a market cap of less than one pharma company-Lupin
  • He admitted DLF is a “dog” in terms of investor perception .But “he had learned in life that’s where the opportunities lie”

The conference ended with a video clip of Stanley Druckenmiller’s famous “The Fed has no endgame” presentation.

On the way out,I was surprised to see that most of the Conference participants had come via Uber/Ola.I guess a mega trend is playing out right before our eyes.