So the last 16 years have been satisfactory for Indian investors and the Indian market, and what will the next three years look like?
Maducera: But that’s the overall point that people who have really believed in India’s longer range are people who can actually do well and are constantly taking advantage of the false prices of the market and the substantial declines in the market. So I’m sure three years will be fine next, but I’m very bullish from the perspective of India for the next 10-20 years, things are really really falling.
Looking at all the macro parameters, it’s the lowest bond spread I’ve seen between America and India since I visited this, and if I’ve seen it probably over the last 30 years. That means they are not telling us that bonds are spreading between the 10-year bond yields in the US and India.
So, I feel that more and more people are now aware of the Indian story and that more and more money will come. And I’m very pleased that the retailer masses are finally taking part, at least after Covid, as they’re actually profiting. So three years is good.
But please tell me what good means. Let’s branch out the entire market first. So we are around $5 trillion, 48% of the market is owned by founders, about 25-27% are owned by domestic institutions, about 16-17% are owned by foreign institutional investors, and the balance is essentially owned by the public.
This total market capitalization includes 580 companies with market capitalizations of over $1 billion. However, of these 580 companies, it is roughly a third, and these are roughly a third trades on multiples on a trailing basis, with about a third trading on more than 50 multiples. So a balanced market is where I find a lot of appeal.
So, when you say India is going well, if you just invest on a whim, this is what happened in the last three years you still made like a 14-15% CAGR. So, if you invest in Nifty and really stick to Largecap, I hope you will continue to get a return of 12% to 15%. Where people like me think there is an opportunity in a selected sector, select stock and mispricing in the market that sometimes happens. So, when we last visited your channel, I remember January to March, but there was literally a lot of panic. So if you buy India at that point and buy stock-specific stocks that are alpha remaining on the market. So I will just believe that.
Essentially focusing on bottom-up ideas, separating research time and execution times. I once again separate your research and execution times very clearly. I didn’t come up with any ideas today, so I’ll have to buy it tomorrow. The market is unstable and something continues to happen. The past six months have been extremely eventful, whether it’s Trump, tariffs, global wars, or oil prices. Again, today people are talking about Iran and Israel. These things go back and forth. But if you keep your homework ready and you are a truly good stock picker and stock investor, these volatility will give you time and opportunity to invest.
But I think you will come someday during this year. Because all the geopolitical tensions and everything that’s happening all over the world is actually very resilient. In fact, for the last 28 days it’s just been bound by range and did nothing at the index level.
Maducera: Even if the market is there, look at what happened to the NBFC sector, for example, and see the returns this sector has given over the past three months, even in a stable market. The market is not anywhere. In fact, Nifty has only increased by 6% over the past year. SmallCap is down. Midcap has only increased by 4% over the past year. But you see the selected story. Even within the NBFC sector, something has increased by 30%, something has increased by 50%, something has increased by 100% across this sector. So that’s exactly what I’m saying. If you think the market is bound by range, it’s the best time to do stock picking.
So there’s a list of multi-baggers. The headline for this graphic is not a multi-bagger stock, but many of the stocks that Madhus Dankela has identified about his career. Some of them are 10x, 20x, 50x, and even 100x. It starts with your legendary investment, JSPL, INOX group company, Radico Khaitan and more. However, the last part is blank. This is what the next new theme or idea, Madus Danquera, is waiting for, and we call this a Madus Danquera’s birthday present for viewers.
Maducera: So I don’t have all of these multibuggers. When investing, you don’t know which ones will be 10 times higher and which ones will be 100 times higher. It’s only been a period of time that we’ll begin tracking and deliver these companies, and we’re increasingly confident. For example, let’s say that Gujarat Fluoro bought stocks for 400-500 rupees five years and six years ago. At the time I didn’t know it would be ten times more, but I was sure this company would work.
So I don’t feel like it’s not that many returns are being made, so there’s no multi-bagger in the coming era. Forget the Indian market, and even the American market has offered so many multi-baggers over the past four years. Therefore, the market always gives it the opportunity. Obviously, I’m seeing the opportunity, I’m not sure if it’s 5x or 10x, but it remains very positive in certain NBFC companies as the overall regulatory framework in the NBFC sector has improved dramatically over the past three months.
Rate reductions increased, and liquidity availability in the market increased. With the decline in deposits, we see that a lot of liquidity is available for these companies, and many of these companies have been significantly tightened over the past three years with extremely strict regulatory regimes. So this may just be the beginning of this sector that hasn’t done much in the last three years.
