Building Wealth Through Value Investing | Money Mindset

Summary

Highlights

• Understanding the disparity between tech advancements and stock market investments. 📊
• Gurmeet emphasizes starting small with SIPs in individual stocks to gradually build wealth. 📈
• The importance of a diversified portfolio and the role of SIPs and index funds. 💹
• Investing isn't just about quick wins, but consistent effort and learning. 📚
• Insights on the evolution of warfare and opportunities in defense investments. 🚀
• Emphasis on innovation within companies as a marker for investment. 💡
• The role of market leaders and value-driven fund managers in guiding successful investments. 🎯
• Considering the global and domestic market trends to inform investment decisions. 🌍

Key Takeaways

• Hard work and dedication are essential for successful investing. 💪
• You don't need a formal finance background to thrive in the stock market; common sense and strategic thinking are key. 🧠
• SIP in stocks is like buying a share in a company—be ready to behave like a promoter and track your investments. 📈
• Investing in index funds and SIPs can complement a well-rounded portfolio. 💹
• Sectors like energy and telecom hold promising potential for future investments. ⚡📞
• Adopting ethical practices in investment decisions is crucial for sustainable success. 🌱
• The Miles strategy (Margins, Innovation, Learning, Ethics, Scale) guides successful stock picking. 🏃‍♂️
• Zomato and Nykaa have potential, but keeping an eye on competition is essential. 📊

Overview

Chapters

• 00:00 - 00:30: Opening Thoughts on SIP Book In the chapter titled 'Opening Thoughts on SIP Book', the speaker reflects on earlier skepticism faced when predicting the growth of SIP (Systematic Investment Plan) from $1 billion to $3 billion, which is now at a value of 26,000 crore. The optimism highlights a future with 50 crore accounts. The discussion draws parallels to the evolution in various sectors, noting how modern warfare now relies on advanced technology such as drones and surveillance. However, there is criticism directed at the tech sector for lacking in innovation, although some companies in IT services focusing on software might emerge victorious.
• 01:00 - 02:00: Gurmi Cheddar and Complete Circle Introduction The chapter introduces the concept of IP-driven work and its resilience. It transitions into a discussion about investment philosophy, emphasizing the importance of hard work in stocks and investing. A Punjabi saying from the narrator's father illustrates the belief that without effort, one cannot gain rewards or success. Furthermore, the narrative touches upon the nature of maintaining stocks, contrasting the idea of buying and forgetting with the necessity of continuous effort and engagement. A brief mention of 'Teddy clients' adds humor to the discussion, though the context is not fully expanded.
• 02:00 - 03:00: Entrepreneurial Journey and Background The chapter titled 'Entrepreneurial Journey and Background' discusses the significance of long-term investment, emphasized by the annual gathering in Omaha where 50,000 people listen to the wisdom of a 93-year-old man. The speaker shares their excitement about partnering with Zerodha's media network to deliver straightforward and influential financial news and insights from top financial experts.
• 03:00 - 05:00: Investment Philosophy and Early Experiences The chapter features an introduction to the guest, Gurmi Cheddar, a renowned stock picker known for accurately predicting market trends. Hosted by Sonia on 'The Money Mindset', the discussion aims to delve into Cheddar's investment philosophy and early experiences in the field of investing. Both Sonia and Gurmi share mutual admiration, setting a positive tone for an insightful conversation.
• 05:00 - 07:00: Continued Investment Strategies In this chapter titled 'Continued Investment Strategies,' the conversation revolves around stock investment and personal growth in the field. The discussion highlights the host's past experiences with successful stock selection, referring to a previous show, 'Smart Money,' where these insights were shared. It also touches on the guest's career transition from working at City Bank to becoming an entrepreneur, noting the rewarding nature of this shift. The chapter sets the stage for further discussions on valuable investment strategies and personal journeys in financial markets.
• 08:00 - 10:00: Discussing Mutual Funds and Index Funds The speaker discusses their career transition, leaving a well-paying job at CNBC to pursue their passion. Despite having no formal finance background or qualifications like CA or CFA, they have embarked on a new journey in entrepreneurship and are enjoying this phase of their career. The narrative highlights the unpredictability of life paths, emphasizing personal calling over traditional career trajectories.
• 10:00 - 13:00: Stock SIPs vs Index Funds The narrator shares his background of coming from a small town in Madhya Pradesh, with a family business that distributed various products. They enjoyed managing money but recognized a family mistake of not managing cash flows well, especially during offseasons, due to reliance on cash sales.
• 12:00 - 16:00: Criteria for Stock Selection (MILES) The chapter discusses the realization of the importance of investing and creating assets from income, particularly in the context of living in an agrarian economy prone to drought. It reflects on personal experiences of feeling envious of friends in urban settings with better language skills and educational opportunities.
• 18:00 - 22:00: Opportunities in Defense and Solar Industries The speaker discusses their educational journey, highlighting the transition from a small town education to pursuing an MBA in marketing in a metropolitan area. They aim to dispel the myth that a finance background is essential, emphasizing that understanding finance is more about common sense rather than in-depth knowledge of balance sheets or formulas. This chapter sets the stage for exploring opportunities in the defense and solar industries, focusing on the speaker's transition and educational aspirations.
• 24:00 - 28:00: Innovation in Tech and IT Services The chapter discusses the professional journey of an individual around the early 2000s, particularly focusing on the year 2002, which was significantly affected by the dot-com bubble burst. The person's career plans were disrupted due to limited job opportunities, leading them to accept an offer from ACC Cement, which was not their initial choice as they had aspirations to join the banking and stock market sectors. The company assigned them to work in Delhi and Punjab, under the assumption related to their Punjabi background.
• 28:00 - 32:00: Failures and Growth in Various Sectors The chapter outlines the speaker's professional journey beginning in Saga and moving through postings in Delhi and Chandigarh. After a year, the markets recovered, leading the speaker to join HDFC Bank. Here, their journey in the financial market commenced, notably due to receiving employee stock options that were offered as early as the assistant manager level, reflecting a significant opportunity for growth and advancement in their career.
• 34:00 - 39:00: Digital Economy and New Age Companies In this chapter, the speaker discusses their early experiences with the digital economy, focusing on their first encounters with major companies and stock ownership. They recount how senior positions like Vice President (VP) and above were rewarded, sharing examples of long-serving employees who retired with substantial shares from companies like HDFC Bank. The narrative highlights the shift in compensation and incentives in new-age companies compared to earlier practices.
• 41:00 - 47:00: Wealth Creation in Wealth Management Sector The chapter explores the concept of wealth creation within the wealth management sector. It begins by discussing the allure of the stock market and personal experiences with investment. The narrator reflects on a career decision they made early on, leaving a job at SDFC Bank due to a tempting offer with a 30% salary hike. However, they soon realized the importance of Employee Stock Ownership Plans (ESOPs), as these shares need to be vested over three years. The story highlights the potential financial benefits of long-term investments and the necessity of thoughtful financial planning.
• 48:00 - 56:00: Real Estate and Automobile Industry Insights The speaker reflects on a missed opportunity in investment after hearing from others who profited significantly. In 2006, they began purchasing 10 shares of HDFC Bank every month as their initial investment strategy, along with starting some Systematic Investment Plans (SIPs) in an attempt to catch up with the missed opportunities. Despite these efforts, the speaker admits that they still haven't fully caught up.
• 58:00 - 61:00: Children's Investment Strategy This chapter discusses a personal investment strategy focused on systematic investment in shares. The speaker started by purchasing 10 HDFC shares every month since 2010, creating a significant accumulation by the present day. Additionally, the investor set specific quantity goals for multiple stocks, including HDFC, Reliance, and ITC, reflecting a clear, long-term financial strategy.
• 62:00 - 68:00: Parenting and Financial Education The chapter discusses the early stages of investing in mutual funds, emphasizing a strategy of starting small with investments due to a lower starting salary. Initially, progress may seem slow, as the accumulated amount may not appear to grow significantly in the first three to four years. However, the narrative highlights that once an investment portfolio reaches a threshold of 15 to 20 lakhs, noticeable growth and movements in value become apparent, signalling the effectiveness of long-term financial planning and incremental investment contributions.
• 72:00 - 75:00: Predictions on Big Themes: Energy and Telecom The chapter discusses the importance of the initial period in investments, indicating that the first few years or the first substantial investment amount is crucial. The speaker emphasizes a strategy of buying a small number of shares in large-scale companies regularly, similar to a Systematic Investment Plan (SIP) in stocks, and contrasts it with investing in index funds. They note that investing in individual stocks and index funds are not mutually exclusive choices, suggesting that each has its place in a diversified investment strategy.
• 76:00 - 82:00: Travel and Consumption Trends This chapter discusses personal investment strategies, exemplified by a story of an individual's experience with Systematic Investment Plans (SIPs). The individual shares details of their initial investment in the Reliance Growth Fund, which began in 2007 with a monthly SIP of 3,000 rupees. They discontinued it during the market crash of 2008 but later resumed it. Despite the interruption, this consistent investment approach has grown significantly in value over 15 years, currently amounting to 31 lakhs. This story highlights the potential for long-term financial growth through regular, disciplined investments even amid market volatility.
• 86:00 - 93:00: Final Thoughts and Personal Aspirations In the final chapter titled 'Final Thoughts and Personal Aspirations,' the narrator reflects on financial decisions and the importance of prudent investment. A discussion is centered around the narrator's personal experience of needing to buy a house and how this necessitated planning where to extract funds from. The narrator emphasizes avoiding the mistake of engaging in competition with others when it comes to financial decisions. They laud the advantages of mutual funds, particularly highlighting respected fund managers like Narin, Maduka, and Parak who manage funds with reasonable fees, suggesting that investing small amounts like 3, 4, or 5,000 rupees monthly in such mutual funds can be a wise choice. This chapter encapsulates the narrator's acknowledgment of the value of strategic financial planning and investment.

Building Wealth Through Value Investing | Money Mindset Transcription

• 00:00 - 00:30 I remember I was trolled when I said SIP book will become from $1 billion to $3 billion. We are at 26,000 cr SIP book and I'm telling you we'll have 50 crat accounts in a matter of time. We have 22 cr people playing Dream 11. So the nature of warfare has changed. It's more modern, it's more technical, it's more drones, it's more surveillance, it's high-tech. One sector that's failing really badly in innovation is tech. I agree with you. So there will be some winners, there'll be some losers in IT services which are doing more software,
• 00:30 - 01:00 more IPdriven work I think will survive. So tell us a little more about your investment you know philosophy. My dad used to say in Punjabi used to say right. So if you don't work hard you will not get his blessings and I'm a I'm a firm believer in that on stocks you have to work hard. You can't buy and forget. Teddy clients are very funny. Huh? And they he told me he
• 01:00 - 01:30 said I go to Omaha every year just to listen to the old man. 50,000 people coming to listen to a guy who's 93 year old and saying long-term investment. So what do you think will be the big theme over the next 5 to 10 years? Hey guys, I'm happy to be a part of Zerodha's media network. Together, Zerodha and I plan to bring to you simple yet effective and impactful news and views from the best minds in the financial
• 01:30 - 02:00 world. Hey guys, welcome to the money mindset. Today on the show I have someone with me who I've known for like over 10 years maybe and someone who is an ace stock picker who's always called the market trends right. Gurmi Cheddar of Complete Circle is here with us. Di thank you so much for being on the money mindset. Thank you. Thank you for having me Sonia and I I admire the call you have taken and being an entrepreneur now you know and so you know had to be here. I was just waiting for you to call you
• 02:00 - 02:30 know I was waiting to have you on the show because I remember we've been discussing stocks since maybe well beyond before 2020 and you know we used to have that show smart money in my earlier channel and since then your stock picking has been bang on. So today I have so much to learn from you and yes thank you for your you know wishes because you've had the similar journey right? Yes. You were with City Bank and then you kind of moved to entrepreneurship. How was that for you? Yeah I mean it's it's a great experience. Initially you know it's
• 02:30 - 03:00 always uh unnerving to leave a well-paying job. You left CNBC after being there for so long. Uh but then I think it's your calling right? Uh everybody should pursue their calling and I told you earlier that you know love and entrepreneurship happens to you. So, so it has happened and now I'm really enjoying this part of the career. So, a lot of people know you from your complete circle journey but not too many people know that you are from a very small town. You have no finance background. You are not a CA, CFA, nothing. So, how did you stumble upon
• 03:00 - 03:30 the stock markets? See, so I come from a small place called Saga in Madhya Pradesh and my father was a journal merchant. We were distributors for Dhabber, Colgate, Pilite and uh you know I always was you know I always loved managing money because when you are from a business background uh but one mistake we did as a family was we never took care of our cash flows. So those days you were doing more cash sales right so we had couple of offseasons uh because we used to do a lot of seasonal stuff etc. So there was
• 03:30 - 04:00 drought and MP is a very agrarian economy and we had to suffer huge losses and that's when I realized that you know putting cash to work so you know creating asset out of income is important and then that there's some sometimes you have a natural flare for it uh and being from a small town you know I always used to envy lot of my friends who were in Delhi you know who used to you know speak well English I I was doing MP board till about 8th
• 04:00 - 04:30 standard uh CBSC actually came in ninth standard when I was there. So I always wanted to catch up with some of my friends cousins who were in metros you know and that attracted me towards pursuing education outside Shagar and that's when I did my MBA and and and and you're right I'm I'm MBA in marketing so so one myth is no finance background no finance background so there's a myth that you need to be a finance guy you need to know balance sheets very well you need to know formulas very well I think it is all common sensical wow so from Saga a small town in MP to Delhi
• 04:30 - 05:00 when did that uh journey happened when did you go to Delhi? Uh so 2002 I uh was a bad year.com bubble. Uh so campus was a wash out. Uh so on day zero ACC cement came to campus. I jo wanted to join a bank or an investment because I wanted to get into banking and stock market. Uh but I I took the offer because there was none. So ACC thought that since I'm a Punjabi they should give me Delhi and Punjab. So they didn't realize that you know I'm
• 05:00 - 05:30 from I'm from Saga. So I got my first posting Delhi and then I was posted to Chandigar. Okay. Uh uh but after a year or so the markets recovered and then I joined SDFC bank. From there my financial market journey started because in 2004 we used to get ESOPS in those days. SDFC actually used to give employee stock options even at assistant manager grade at the entry grade. Wow. Right. Right. So they used to give you,000 2,000 shares depending upon your grade uh performance grade. Not bad.
• 05:30 - 06:00 Yeah. That days and uh it doesn't happen anymore though. Now they give but they at a certain grade like VP VP and above and so they are there are uh you know personal banker tellers who are still with SDFC who have retired with 20 30 40 crores of uh SDFC bank shares. Wow. Uh so that was my first uh you know you can call it encounter. That was your first job. Uh first job was ACC simmit HDFC is where first first encounter with stock
• 06:00 - 06:30 market options stock market. And in what year did you start your own investment journey when I realized I made a mistake quitting SDFC bank? Uh so somebody offered me a 30% hike. Uh and shares are supposed to be vested in three years. ESOPs have to be vested in 3 years. But I thought you know I was earning 25,000 a month. Somebody offered me 35,000 you know I was young hardly 24 25 at that point of time I took the offer I let go of the shares and in couple of years
• 06:30 - 07:00 people who stayed back told me that you know they have made x laks just by so I realized what did I leave and uh from 2006 I started buying so I wanted to cover up uh whatever shomo so I started buying 10 shares of SDFC bank every month so that was my first uh uh you know uh you can call it investment and then I started some SIPs also just to catch up with that uh but to tell you I still still haven't caught up
• 07:00 - 07:30 had I just continued getting those esos probably would have made more money no but you started in 2010 buying 10 HDFC shares every month so you do that till today still today yeah you must it must be like a for worth a fortune right now no it's it's it's it's it's pretty good uh so I have done some backward calculations on so I thought So I said I need to have for example 10,000 HDFC bank shares. I need to have 5,000 Reliance. I need to have 10,000 ITC. So I made some quantity goals that this is
• 07:30 - 08:00 I want to have. Then I said okay this much units I want to have for mutual fund. And then I did a reverse calculation how how do I need to do? So initially your salary is less. So you start with a small amount and you then you keep uh you know stepping up and first few years you realize it's not doing much. It's not adding up. you know first three four years because the amount invested is so small but once you cross that I think 15 20 lakh on your portfolio value that's when the reality sets in that's when you see movements
• 08:00 - 08:30 happening in lakhs right so I always it's not the first it's the first 10 20 lakhs actually which which gets you a hook so that's why the first three four years are very important but then um I mean how is this so you've always told me right or taught me rather that you know you should buy five 10 shares every month of a big company of a large scare company like I can do an SIP in stocks. Yeah. But how is that different from buying say an index fund? It's pretty much the same thing, right? No. So, so it's not one against the other. A lot of
• 08:30 - 09:00 people you know in social media also I made this competition about I still do SIPs. So I have my first SIP Reliance Growth Fund. Okay. Which I started in 20067. I stopped it in 2008. I made that mistake when the market crashed. But I again restarted. So that 3,000 SIP is still continuing up. by the way 3,000 rupees per month that I didn't stop because you know it was my first SIP right okay uh that value is today 31 lakhs so 3,000 a month done 15 years back is
• 09:00 - 09:30 31 lakhs why do I know because I just you know I had to buy a house so I was taking note of where to pull out money from so you know uh the first mistake we do is we start doing this competition I always say if you can get that thing Maduka used to be the fund manager if you can get a narin or a Maduka or a parak par or those guys at 1 and a half% fees in a mutual fund and that too by giving 3 4 5,000 rupees a month might as well take it right geniuses. Yeah.
• 09:30 - 10:00 Yeah. And and and stock SIP is is is complementing your mutual fund SIPs or an index fund SIP. I still do 50/50. So despite being an active portfolio manager myself, my 50% savings still goes towards SIPs in mutual funds and index funds. Wow, that's interesting. So you said you do SIPs in individual stocks as well and you buy mutual funds also. So um if you had to build a portfolio, right, for people who are say starting now to do an SIP in say five or
• 10:00 - 10:30 six stocks, how would you do it? What kind of profile would you look at? Yeah. So uh you know first thing you should do is that if you don't have the time you don't have the flare you can't devote I say stock picking is becoming a promoter you're buying a share of the company you have to behave like what the promoter does be involved track the company and everything if you can't do any of that stick to mutual funds a lot of people have done a great job there are 10 mutual funds Sonia where the NAV is more than 1,000 so there are 100 baggers so a
• 10:30 - 11:00 lot of people think stocks are 100 baggers there are 10 mutual funds where the NABs have gone up more than 100x. Nepon growth fund the NAB is 3,300 this is 330X in last 30 years right so stick to MF if you don't you know you don't understand much stock you should start if you want to generate a little alpha over what it may not come but and to have some passive income because shares also give you dividends right over a period of time there'll be bonus and buybacks so it gives you some more cash
• 11:00 - 11:30 flows than your normal mutual funds so five things very simple things First choose your circle of competence. I was a banker. I started with SDSC bank, Bajach Finance. My friends were there and you know I used to understand banks how they work. What is internet interest income? What is NPA and all that? So the bulk of the portfolio is still financial probably 40 50% nifty 33%. Second uh build three you know over a period of time you learn you make
• 11:30 - 12:00 mistakes right? So I we developed this formula okay which I'll share with you. We call this miles miles. Miles, right? My partner is a marathon runner. I used to also that's Yeah, she did. So that's that's miles. So M is for margin expansion and sales growth. So for example, we picked up Uno Minda in our portfolio as a stock. Last I'm just giving an example and I've been invested in 2016 since UNO Minda uh and he was he was a client. So I used to manage his money during my city bank days. So I saw
• 12:00 - 12:30 Minda. Yeah. Yeah. the Pari and Nirmal you know the entire family we used to converse with uh so we uh the pad growth if you see for Minda it's it's it's about 23%. The sales growth is around 19%. So if your margin is expanding with revenue every 100 rupees rupees more in sales is more than 100 rupees in profit because the margins are growing. So first is M miles you know which is margin and sales right? Second is
• 12:30 - 13:00 innovation. I mean what is the company doing and innovation can be anything. It doesn't have to be technology alone. So Uno Minda again coming back to the same example did so many tech tires. They did not have all the technology. They did some 2030 JVS started as a switch company noise making alloy wheels infotainment systems for EVs and whatn not you know. So second is innovation in your DNA. There's another company we kept talking which was solar industry. This has been one of my my you know 20
• 13:00 - 13:30 30 bagger. I don't have any 100 baggers. I mean a lot of people boost that but I have some 10 20 baggers. No listen 2030 baggers. I remember we discussed solar industries when it was I think 800 rupees and today's stock is 13,000. 13,000 new high today actually and new highs every every year every month it's making new highs. So okay so solar industries is another case in point where margin profile has gone up and the second you said so they were making explosives. So they moved from product
• 13:30 - 14:00 to platforms. Today they are making explosive systems. Paka multiarrel rocket system, drones, UAVs, you know. I mean I mean whenever you get time, I'm sure you will just go to Nagpur and and just visit the site, you know. I I was fortunate to visit their site. I went with the SBI folks and uh they were actually doing a live testing of a hand grenade they had made. Wow. You know, and Mr. Lal you know my father-in-law is from Nagpura so he used to in ' 80s '90s
• 14:00 - 14:30 come on a scooter to take orders of explosives so he's that grounded that the owner huh the owner of solar yeah today it's a 1.3 lakh cr market cap company and any customer company he used to himself come on telephone and try and so so so but I remember you had very high conviction in solar even before the entire market kind of discovered that stock so how do you have conviction I mean you you've telling me your your methodology but go ahead for something like a solar how did you have the conviction so you know so once you see
• 14:30 - 15:00 uh which is third aspect which is learning you know in miles right all the guys who have made wealth I found them great learning machines look at Elon Musk we say he's from a different planet look at Steve Jobs unfortunately no longer with us uh you know shri cement promoter Mr. Banga used to give CAT exams with his son just to keep his mind sharp. Wow. Right. So what I've seen the best of the guys are great learning machines you know. So I met Jonty roads
• 15:00 - 15:30 you know last week and he was saying I used to tell everyone just save one run in the match just save one run do one extra effort during your day. So I keep telling investors that you know as an investor as a promoter you're doing learning one extra thing you know every time you're trying to do something. I think that reflects in in the culture eventually in the balance sheet also. So L is you know the learning uh uh is ethics extremely important. Son in our country unfortunately uh this is one
• 15:30 - 16:00 area which probably needs more attention by regulator and good thing with India is you know who are good promoters and bad promoters you know. So India especially in this day and age of social media. So for example you know Murugapa group great promoter right SDFC bank very good promoter Infosys great promoter right Asian paint so you exactly know Tata group you know great promoter you also know what is not so good promoter without taking names I don't want to get into controversy so don't as a retail investor I should I'm
• 16:00 - 16:30 not here to give a chance that this guy's heart is turned around right let go with what has worked you know in the past so E stands for uh ethics S is for scale I think this is where you at a multiback you know so can this 100 rupees profit become 1,000 2,000 3,000 what is the size of the uh opportunity for example let's say CDSL you know it's it's a capital market play right we have been one of your favorite years no I'm a
• 16:30 - 17:00 finance guy know so typically I told you you know that's my area so you know do what works for you it's I mean so we were two 2 cr demat accounts uh CDSL hacked before co today it is 15 crores, right? And I'm telling you on your show um I remember I was trolled when I said SIP book will become from $1 billion to $3 billion. You know this is two years back and people said you know he's saying we are at 26,000 book right and
• 17:00 - 17:30 I'm telling you we'll have 50 crat accounts in a matter of time we have 22 cr people playing dream 11 I know I mean such a discrepancy people rather like gamble you know that urge of making quick money plus maybe the love for cricket you want to be involved every day. So I think this this is a this is a clear place. What is the size? The size is you know the the you know your your based baking
• 17:30 - 18:00 in 5x and for your CD CDSL is 11x inside right so people keep talking of BSC and and NSE something like a depository and depository the best part it makes money everything you do you I call it network effect once you make a network then you create effect around it. So you do transaction uh account maintenance charges KYC uh you know e voting you do anything they will make money you know and jokingly I used to call it a toll naka
• 18:00 - 18:30 stock you know it takes toll from you you know when you are in the financial market you know doing in size you know scale when solar you know you know I saw defense as a huge opportunity I thought these guys the way they were innovating making new products I mean today for example a paka rocket is 450 kores Now if if you do an export order and they chances are we'll get a lot of export orders you know one uh missile uh and the system is worth 450 500 but you
• 18:30 - 19:00 think the story has played out in solar I don't think so no no I don't think so because huge run already no I mean see I'm see I look at 2030 I don't look at 25 26 you know so I mean obviously it will have its uh ups and down it was 8,000 2 months back it's 13 right see The look at this way we are doing a arms reset in this new Trump 2.0 zero right who would have thought Germany will do $500 billion of defense and infra spending they've actually done this after World War II so every country will
• 19:00 - 19:30 look after themselves now and every country would try to build capabilities and see all large countries may do it from US you know solar is getting orders from countries like Armenia Philippines wow Vietna you will not go to US for a 500 cr order 1,000 cr order so I think the opportunity to rearm uh with the new I mean people call it World War II, economic warfare 3 I think is huge. So uh anything else in defense that you like? See I used to like HL but
• 19:30 - 20:00 I think there I think there are a lot of it. See the nature of warfare has changed. So you if you send a pilot today for the war Ainand got trapped in the last war such human cry who would risk sending a thousand cr Rafal with your fighter pilot. Correct. You might as well fire missiles sitting at home surface. So the nature of warfare has changed. It's more modern. It's more technical. So it's more drones. It's more surveillance. It's high-tech. And I think H to that extent is is is it will
• 20:00 - 20:30 be still steady because you know we need more aircrafts. And HL makes 60% through maintenance. But I think the opportunity is in high-tech in defense. Somebody who's really you know disrupting. So for example, we don't have an iron dome like Israel. Uh Solar is developing one. It's called a micro missile system. Right? We have a 1400 kilometer border in north which we need to cover properly which LC itself is very difficult you know we say you give as many soldiers to the mountain the mountain will take all
• 20:30 - 21:00 of them it's very difficult to guard a mountain you know we have very and we have such good neighbors right so you need a surveillance so if you want to build a surveillance per kilometer cost is some 13 14 crores in terms of monitoring it now imagine uh if you have to just secure the order border all three ways We have Bangladesh, we have China, we have Pakistan. We unfortunately are blessed with not so good neighbors. So I I just think the the the the focus would work is very large and security in terms. So then why
• 21:00 - 21:30 did the stock fall so much went to 8,000 because of the market correction. Yeah. Yeah. So you know the the stock went up from 600 to you know so it's you know high beta stocks will fall also it's an expensive stock and it trades at 60 70 earning multiple. So wherever you make money you pull out the most. So at what point do you decide that you know okay now now it's falling now I should exit or did you write this entire rally and you stuck on till 13,000? No I made mistakes I had my fair share of mistakes where I did not exit at the right time. I think deep nitrate was one. I didn't
• 21:30 - 22:00 see the chemical cycle turning. I made a mistake with Sun Farmer. Uh it was 1400 in 2014. It's still there almost you know. So I've had my fair share of but that's you see even something like HDFC Bank I mean 3 years it did nothing. It was in that 14500 range frustrating investors for the longest time it started to perform. But with HDFC and Baj Finance now the EPS was still doubling every 3 four years with Sun Pharma the margins came down to 6%. So that's why I said M Miles starts with M.
• 22:00 - 22:30 I think key here is margin and sales growth. If if that is sustaining and the price is not moving it's an opportunity. Okay. So in miles you said innovation right? One sector that's failing really badly in innovation is tech. Yeah. Right. your emphasis you mentioned great company amazing management all of that but innovation is is they're just not able to crack it the entire sector I guess I think somewhere uh we'll have to see I think I agree with you there will be some winners there'll be some losers
• 22:30 - 23:00 in IT services I still think that I don't see that I don't write off the entire sector just because AI will come jobs will disappear I think efficiency goes up and I think GCC is another opportunity which is coming and and there are some niche players in tech you know look at for example persistent in this environment it's still growing four five% quarter on quarter with 20% kind of a profile look at a KPI numbers came today morning right and despite the slowdown in auto and it's largely an
• 23:00 - 23:30 auto software company I think I I was looking at one of its software called Aldo 405 which is autonomous driving that's 10 times better than what some of the leading players have made so a lot of it is IP so So companies which are doing more software more IPdriven work I think will survive. companies who are just doing labor arbitrage in IT services will so I think to me at Cclit persistent you should watch out never write off you know what one thing
• 23:30 - 24:00 I've learned is that never write off you know said you know people said PSU banks will finish you know Prashan kept buying PSU banks in 2021 and today HDC flexi capab is the best performing fund because he was buying PSUs those time because you were getting them at 2.3 price to book so maybe it stocks if you get it but There's also an opportunity cost that he had to bear right for so many years his fund was not performing. See that is why I said you know it's it's like it's like a team know uh every player will not score a 50 or a century.
• 24:00 - 24:30 See as long as the team does well which is your portfolio sometimes your MF will do well. Sometimes the index will outperform sometimes some stocks will take the cake. As long as overall you are in the right direction in the winning direction it's okay. which underperformance it also means you are fully diversified I always tell people that if some this underperformance means somebody's thinking differently right and if the guy has seen few cycles give him that give him that time right so this very nice philosophy you shared with us miles
• 24:30 - 25:00 uh margins uh innovation um L for learning L for learning E for ethics ethics and S for scale S for scale okay so can you identify some four five companies which fit this entire uh framework work. So I think uh all five one one thing I uh which I got lucky was Tata consumer and uh very simple call uh you know I'm a big coffee lover so when Starbucks came to India although Starbucks is still not profitable so and it's not doing well anymore it's not
• 25:00 - 25:30 doing well anymore so we we I figured out so I asked Chesh and my team that where does this Tata global beverage Starbucks come there's a company called Tata Global Beverage I think that time it was some 120 130 rupees or something. What is it today? I think it's 1,200 roughly about 1200 right. So FMCG basically giving a 10x right in in about 7 7 8 years. So we started drilling into what does it do? So tea coffee is they make right so tea coffee will grow at 5 10%. It's not a
• 25:30 - 26:00 business where tea can give you 15% return but they were gaining market share. They got into a product called Tata Saman right? So I was I was zapped when I looked at Tata Saman. We consume Sonia 1.8 lakh Kes of pulses in a year which is dal, chana, rajma, udat of which 85% is unorganized, right? So which means 1.5 lakh crores is unorganized out of 1.8 lakh cr and tata consumer is 10% of
• 26:00 - 26:30 organized. So, so, so there was a great opportunity in margin in sales scaling up, ethics, no issues with kata consumer and then uh we had a leadership change uh you know Sunil Duza joined the guy who turned I mean he's no he's a he's considered as one of the finest leaders FMC and he kept adding more products he said everything we'll consume will get branded breakfast cereals so what has happened to a tea coffee will happen to
• 26:30 - 27:00 everything you know in your kitchen shelf And then covid happened. Then people started buying more and more branded and hygienic and so I think this was just a perfect uh you know mile simple you know common sensical business doesn't need any uh you know tech and all but they kept kept innovating kept coming up with new products new new new products on the kitchen shelf but what do you do when like inner tata consumer something like a Starbucks is seeing intense competition now from local homegrown brands right coffee brands and
• 27:00 - 27:30 the future is not looking that bright for them So as a stock investor in Tata consumer do you sort of back off or do you uh expect that some of the other divisions will do better? So you you actually answered it yourself. It's on the growth levers. So Starbucks are less in single digit in terms of EIT contribution. It's a negative contribution right now. So it doesn't impact the I think the growth the stability comes from tea uh where they are the market leader and the growth comes from san and now they're also
• 27:30 - 28:00 trying to get into outer phone consumption water so you have the Himalaya water and they have another so the water is another segment I'm very bullish on water I think the next world war will be on water we're already see same same there's always water shortage in Bombay at least and in our buildings all ask us ask us in Delhi and everyone everyone is f it's a huge opportunity huge opportunity So it it just ticks all boxes. But let's say if there is a business which is contributing 20 30%. And that comes under pressure like startup then obviously it's a red flag. But for now I think it's okay. I mean
• 28:00 - 28:30 it's not too much in terms of moving the needle. But if it turns around it will incrementally add to the scen. So that that fit in uh probably I think solar also in miles fit in uh you know and any more check boxes that you have in the sense how do you deal with say a company that's growing fast but has debt or a company that's trending like for example quick commerce right great business all of us are used to it but I was having this conversation with Rajiv Takar on this show a couple of weeks ago and he said that yes people will use it yes it
• 28:30 - 29:00 will be a trending product for years but it's kind of like a winner takes all situation so out Out of 10 people, nine will be lossmaking and one will only survive. Always happens. No look at Amazon for example. So Amazon you have lost so many stores in US J Penney and look at some of the so you know uh so I think this new age definition needs a bit of a correction. I think we just get into only e-commerce when we discuss new age. To me for example a CDSL is as new age a geo the
• 29:00 - 29:30 kind of lending they are doing now I mean you should you know you should interact with the geo team on the kind of stuff they are doing on innovative lending products on supply chain I mean you'll be amazed with the kind of work which is happening bajance to me is one of the best new age companies you know you used to enter vij sales or chroma and used to have so many offers you know moment you select a product you know to me that was that was like so I think I think it's You know I don't believe in that spray and pray and hope that something does well.
• 29:30 - 30:00 I think one red flag to me is continuously cash flows not being there right and we saw that with Jensol. Yes. I mean paper profit not translating into cash flow uh you know is a it's a scary situation you know is a very scary situation and if that is leading to more inventory build up more it happened with Z paper profit no cash flows uh so that to me is a red flag. Second, you're spending more and more to generate the same dollar of revenue, same rupee of revenue. So if you're spending less
• 30:00 - 30:30 incrementally, then probably that model is scaling up. So for example, Zumato and Swiggy burnt about 12 14,000 crores in setting a food delivery ecosystem, right? Today we we become so used to it, right? Quickcommerce took only 6,000 crores 7,000 crores. Right? So once you have you know once you make a network I call this network effect once you have the platform you've cracked the code you have x number of unique users it's easy to pivot and set up more revenue streams
• 30:30 - 31:00 now look at district app you know which is you know call it as an experience economy ticketing you know diljit dosan show was sold out IP tickets I tried getting an RCB versus Delhi capital ticket uh uh you know I could not get it sold out in like 10 15 minutes so you are suddenly building you know different models and you will incrementally spend less money. So the difference between burn and spend is opening a dark store is not burning money. M see HL opens a plant you call it keex they opening a
• 31:00 - 31:30 dark store how is it a cash at some point of time that store will contribute to the correct correct and I have a feeling Sonia this change of ownership where they're trying to become an Indian company 49% thing you know where they are so that will have a short-term impact in terms of weightage getting reduced the holding has to be brought up I think there is something coming in retail at a policy level that's my sense you know okay so hypothetically I am a Zumato shareholder Zomato and Swiggy. Yeah. You think in the next 5 years, 10
• 31:30 - 32:00 years, these are companies that will be profit making machines? I think odds are uh better for Zumato. Uh reason being I think on on quickcommerce they are leaving and anybody who gets to 60 65. So I think in food delivery it's 58%. If last number is correct and quickcommerce I think blink is edging a little ahead and then you have Zeppto and Swiggy Martin and others. I think uh Zumato has a chance but there could be you know a twist to the tail if Zepto
• 32:00 - 32:30 does what it does you know I think Zepto is being a little more aggressive than are you a shareholder in quickcommerce yeah I have Zumat in the portfolio I have Zumat in the portfolio you're biased in that thing I have policy bazar in the portfolio uh we are evaluating now okay right see I I just think that look at this way you know a 40 or 50 year old business of demart was disrupted in two years by blink So that's what that's what I'm saying like what makes you so bullish on Zomato because in a way if you look at it right
• 32:30 - 33:00 like I I was a blinket user if my product is not available on blinket I go on to zeppto if it's not available on zeppto I go on to zomato there's no loyalty at all whichever platform gives me the cheapest rate I will go there sure there's no brand loyalty there's no stickiness there's so much competition sure but what do you what is the first you go to it depends what I choose like category right if I if I want something which is say uh more beauty oriented then I will try perhaps blinket if it's groceries I will try BB now if it is
• 33:00 - 33:30 yeah if it's ice go to that store so I'm aware so loyalty I think the first app you go to is the loyalty so if you don't get there you're going to the it's like the first kirana store you go to which you're hold to uh so also you know what I think is that look at this way we are today 8 hours uh screen time average and see I always tell if you're not related to Gen Z in terms of
• 33:30 - 34:00 tracking their consumption your portfolio will miss out returns I'm a firm believer in that you know I I believe I believe in what Peter Lynn said he said business is where the consumer is consumer is oneird of the day online so we will have some of our own Amazons and Netflix and and others so you have to build some part of your portfolio towards it look at us for example I mean all eight companies are essentially technology digital companies right so whether it is Tesla it's an auto company but a tech company Amazon
• 34:00 - 34:30 is an e-commerce company tech company Netflix Netflix is has higher market cap than reliance I was watching yesterday webhub survivi 14y old guy scoring a century go hot star had 21 cr views I mean if Netflix could be $300 billion I mean a jio hot star can be hundred billion right we have 150 cr people uh as as customers right as audience. So some part of your portfolio has to be digital. You can diversify. So don't
• 34:30 - 35:00 take more than 2 3% in one but whatever will become big it will not be fight and better. So in the digital landscape ecosystem right now where do you see the leaders? So I think I think I think Zumat over a period of time will do very well. I think they will keep pivoting. I mean tomorrow they can get into logistics. They can do 10 things right. I think uh policy bazar if it does well I you know I was a little concerned on the decision to go to healthcare you know it's you know sometimes when capital allocation changes you have to
• 35:00 - 35:30 wait and watch so we seeing what how it how it pans out right I still want people to stick to core but that's my that's my belief we we're looking at Nika now because now they've become flexible they've gone both digital right they're opening stores and they are and fashion women fashion is one of the fastest growing segment and with more women workforce but Nika also has competition from quick commerce because recently I was talking to a beauty brand who said that 13% or 15% of their business comes from blinket from quickcommerce so women are now because
• 35:30 - 36:00 of posity of time women are ordering more on blinket than on nik yeah absolutely so I I think it will work so what I'm saying is that you know as as you rightly said what purpose you are right so so you have to build so you buy both Zumato and nika so you hedge yourself yeah yeah yeah exactly so I I that's why I said make a digital portfolio be let it be 10 15% % with like five six ideas instead of you know one big idea at 6 7%. and high conviction ideas are others where you are more conviction disruption. I think every business can have disruption. So it's not that these
• 36:00 - 36:30 guys can have disruption. I mean tomorrow reliance can have disruption on oil and gas for all we say right. So make that and then gradually you know hope that so I think what what will do well will be 50 100x it will not be 3 4 5x okay so you can't afford to miss that out. So solar industries was a big uh pick of yours. What else? Where else did you create a lot of wealth? Just trying to understand what was the you know investment philosophy behind it. See uh we uh we also got lucky uh uh in in the entire uh this wealth management uh uh
• 36:30 - 37:00 space. Now look at this way. Look at a mutual fund for example. HFC mutual fund authorized capital I think is 50 crores. They make 2,000 crores almost a year. Now which business gives you 2,000 crores with 50 cr capital to make a 2,000 cr a solar will have to have an order book of 20,000 crores of pinak right so in asset management business the cost and all these financial
• 37:00 - 37:30 intermediaries once you create the platform the revenue goes up the cost doesn't go up to that so for example to manage a 5 lakh crum and a 50,000 cr the cost will probably only go up 10%. So I call it hockey stick jump in the in the revenue. So once you cross a scale the rise in profitability is geometric. It is not linear right and most of these businesses only are dual poly. You have two exchanges. There are two depositories. Then there is camps and ki
• 37:30 - 38:00 basically again split between two um asset management. Now obviously more companies are are coming. So I think you know uh just to figure out how much is needed to generate an X amount of money you know simple equation can yield you. That's one space we made a lot of money. I made lot of money in ICS bank and Eminem you know looking at just the leadership chain because there the size I went very big in terms of see we always say 10 bagger 20 bagger 50 but you know I I met somebody who said I
• 38:00 - 38:30 made 20x on this talk I said what's the point right so so what happens is that how much you put in nobody discusses so I think when anish came and when Eminem started cutting its loss making JVS Yeah right and one of my client is the largest distributor of Eminem inadu right uh turnover is 1200 crores so he told me the new engine M& Eminem has made the diesel engine I think it was
• 38:30 - 39:00 1.6 6 liter or something there some technical word for it. He's not seen that engine in any SUV and it's going to be a game changer. And just look at it. XUV 500, Tar, Scorpio, I mean they had all top five, six bestselling SUVs uh were Eminem. I mean the new EV now see they caught that. See Mardi got that 1.3 liter engine right. They got Swift, they got Balino, they got Breza in 2012 13 right and and Miy made a killing in that
• 39:00 - 39:30 four year the share became 10,000. I think Eminem got this SUV thing right but in Maruti what's your view now because the management is has been very cautious and a lot of people are complaining that Maruti has not been able to kind of keep up with the changing technology and all of that see I don't want to be politically correct I don't want to be politically correct I think people who are only interested in royalty and less on innovation will eventually lose out and that's what goes with Korean guys uh you know you're not investing here as much I think they were so late on SUVs and they still haven't
• 39:30 - 40:00 got their SUV behave right the EV took them so long to to finally admit that EV is catching up. They actually were in denial initially that it won't change. It still may not change. I'm saying but fortunately for them EVs has not picked up in a big way right. So see you know Marauti has a great reach and all it's very difficult to dislodge that because of the price point. See top 10 selling cars in India only one car is above 15 lakhs. Aa that
• 40:00 - 40:30 is corporate. So India as a market is still and that is why that 47 market is still in I think this will change you know see as the per capita goes up and I don't think so marauti is ready for it see you will not pay 30 lakhs for a marauti car see so a genz will not buy a wagon a balo sorry I mean with no with full respect to marauti okay the new generation will want an SUV or a slightly smarter hatchback the bigger problem is the new generation will not
• 40:30 - 41:00 buy a car that is What the feedback that I get agree they'd rather take you know ride hearing services and not want to anyway there's too many issues right there's traffic there's pollution there is taxation I mean taxation on cars is no I just think right now because Maruti is already 50% market share 46 uh even if they migrate they will still be at 40 50%. Somebody like a new player like Eminem which has now gone up to 20. So here it is not volume growth. It is somebody gaining market share and
• 41:00 - 41:30 somebody gain and that is I look at him I mean it's a four five a large guy giving you four five in four years. Yeah I mean you don't need that uh you know for a I mean so we so you sometimes basic observation I think you would have got that call right but auto industry in general in India has been lagging behind in a big way. I don't know for what reason compared to global counterpart I mean China may like BYD there are like
• 41:30 - 42:00 10 BYDs in Dubai if you go to Dubai you'll see like all around you right I think we protected a little bit more than we should have I think we we have this fear and ambassador moment again we protected them for too long before Marauti came and other models came and then Hyundai came and others came I think it's good whatever is happening at least from an auto point of view uh see if you go with BY and the battery ecosystem they created in EV I mean if you read about it about cartel which is the largest battery maker actually first you have to make an EV ecosystem so
• 42:00 - 42:30 India is a very different market but I think players being on the edge I think Tata Motors and Eminem on innovation are not far behind I have a lot of friends I have a lot of friends working in R&D and everybody will be positively surprised see we were selling the same number of cars as China in '90s today China sells 2 cr cars a year we sell 40 lakhs why why is that I'm just affordability I mean see it will gradually you know as you see once you transition from this 3 trillion to 10 trillion as an economy
• 42:30 - 43:00 house and car are the biggest discretionary things so it will pick up you what you're seeing with luxury housing right now also will happen to car at the slightly upper end as the economy picks up as as things get back you will see that number see it's also the wealth also has to be shown I also need to show I've made it in life right how do you show that You show that with a house with a car with the like India like somewhere I read that India is an aspirational economy right if you
• 43:00 - 43:30 have the money you will not buy a Maroti car that's what I told you so I'm saying so there's a differentiation in stocks also Eminem over I think the new guys will take I would obviously peg Eminem because of just the sheer leadership and innovation they're doing I will not write off Tatas I think I have lot of respect for Chandraas I mean just look at what Tata was and what he's done in last 5 years and see back of the mind he's a he's a tech techie right he's he has that digital mindset so I think I think you'll see a lot of changes even
• 43:30 - 44:00 in Tata Motors it's 9P by the way right now so what whatever you are saying probably is in the price yeah I'm sure I'm sure but uh interesting so tell us a little more about your investment you know philosophy like how do you going forward what are the big themes that you're looking at how are you going to if you had to advise people how to you know structure their portfolio what would it be see I think uh one advice I have for everyone And I've learned it the hard way is there's nobody here to make money for you. Uh you know this
• 44:00 - 44:30 entire expectation of uh making quick money getting tips joining a WhatsApp group listening to on television with any of us for that matter I think is a bad way of making money. Uh you know my dari my dad used to say in Punjabi used to say right. So if you don't work hard, you will not get his blessings. And I'm a I'm a firm believer in that. And I think the only way to make wealth is
• 44:30 - 45:00 hard work. So a lot of people I know quit their jobs, started doing trading. I used to tell them put them on a terminal and make money. I mean somebody like him is putting up capeex, spending billions of dollars in setting up data centers, gigafactories to aspire for 15% roe. Mhm. I mean you and me listening you know to people here and there how can you make money there right? So I think this this there's a there's a I tweeted
• 45:00 - 45:30 about this and this went quite viral client clients are very funny and they he told me he said right? So if you are in a hurry to make money the market will tell you this is not the right way to make money. So the first thing you have to understand this is a slow grind. It is a test match. Second, the basics are still same. You have to work hard on stocks. You have to work hard. You can't buy and
• 45:30 - 46:00 forget management reported. It's not going to happen. Right? So it's a grind and you have to go through that grind for 15 20 years to make wealth. Number two, what I learned was that uh observe things around you. Don't get carried away by the latest facts. In fact, I have made one contra indicator now
• 46:00 - 46:30 fund and few people micro caps and micro caps giving 100% said I think right now the most crowded trade is US tech. I think that's the most crowded. Look at this. Why should an economy which is 30
• 46:30 - 47:00 trillion which is 26% of the world be 65 70% of the world market cap. This has to you know normalize right and this normalizing is trillions of dollars. So I have a feeling and I know I'm just telling this as an advice is textbook investing stocks just go back to the traditional things again. I think we we've seen too much of this 105 years of high tech new tech you know
• 47:00 - 47:30 giving 100 to 100. feel like old economies and Asian pain because you know they have realized that look at they're talking main street not Wall Street you know Trump is talking about blue collar workers right every government is now talking of with job growth not jobless growth forget about look at Russell 2000 index in US for 5 years you'll get the answer it's not even 8 n% tagger and you look at the big tech which is the mega tech so I think this this disparity in in in you know
• 47:30 - 48:00 big becoming bigger and I think this will get so I think you know traditional sectors manufacturing energy power power you know all of that will make a comeback so do the get back to textbook investing again read up a Peter Lynch there is a Warren Buffett letter you know in 2008 9 great good gruesome companies right and Rami G I think in Modilan has spoken about it there's a video I think on I'll try and share that with you where he said what are great companies what are good companies What
• 48:00 - 48:30 are gruesome companies? I think to me that's the best thing I've read in my career. I would encourage everyone through this to maybe read those uh you know I go to Omaha every year uh just to listen to the old man you know you going this year uh this year I I'll miss last year I I went before that I did that online and once you go there now so I mean 6:00 people queue up it's a stadium and home
• 48:30 - 49:00 movie people keep their seats there are people coming on crutches and we There's 50,000 people coming to listen to a guy who's 93 year old and saying long-term investing know just look at it you know and so you know and 93 is telling you to be long-term right and you know we want to make quick money so that's that's the only limited point I wanted to make that no look around you look around you what the wise people are doing sometimes you're confused no so much of information just see what the wise people are doing Warren Buffett is on
• 49:00 - 49:30 cash us large cash narin has been warning you now for last 3 months for last 6 months September 25 30%. M right and sitting on% look at the wise men around you. I mean if they're saying something pay some heat to it right just just be a little more so you're also cautious now over nearm yes one to two near but I'm I'm I'm very I'm I'm a bull on India
• 49:30 - 50:00 always I I also I think it's in your personality you're eternal optimist see I there's a quote no the pessimist will sound intelligent the optimist will make money so so I think so top 100 wealth creators entrepreneor and entrepreneurs are risking but I think for next few months just be a little careful it's just that see
• 50:00 - 50:30 25% starting point you know then it's better to just stick to mutual funds and if you don't have the time and the expertise to do stock picking as a young investor you should avoid that yeah I as I said It's nothing. So I get lot of dividend. So I what I did was I did a calculation portfolio and I bought some reads also to boost that and diving stock so that I'm not I
• 50:30 - 51:00 left city bank then that's why I started doing stocks and RES and all that. I mean happy to share I'm almost there now. So, you know, because I know I'll get my cash flow. I have also built some rental income. So, I get my cash flows and I always look forward. I know I'm sounding like this, but if you're young, if you're young and
• 51:00 - 51:30 market is falling, you know, I mean, because you're getting to accumulate more, accumulate more stock. So I mean be happy for I can look forward to bare markets. I'm like teachers market sideways. I'm not I'm not wishing that don't get me wrong but for a youngster it's a great thing you can accumulate more because you will get a bit bigger so okay I wanted to ask you I am a mother and we always you know
• 51:30 - 52:00 I mean raising kids today let's be honest is a very expensive affair. So as an investment strategy what do you recommend to parents? See I have this bias towards a fund because one of my friend and mentor runs it. Uh there's a very good fund although I'm not supposed to recommend but I'll tell you what I do. There's a category of mutual fund called children fund. Okay. So there's SVI there is SDFC children fund. What this does is it buys a lot of small caps. See what has unfortunately happens when the small cap funds have become very big. SGFC
• 52:00 - 52:30 30,000 35,000 35,000% 700 my ability to buy and outperform his stock outer so they become 180 200 stock portfolios right still doing well I don't stock but still so children fund is a category where they only allow children and minors to invest
• 52:30 - 53:00 18 my bad and on 18 the units the gets transferred to the major so by by design you don't look at that performance because you have airked that for your ch children that this children fund will be there for 18 so you create a separate account for your child and say you keep children fund I have a daughter so I've done that I think that that I think children fund SBI HDFC fund How is it different from other mutual funds? So 80% is equity and that largely small micro cash
• 53:00 - 53:30 because it's a smaller fund. 20% bonds were a so whenever the market falls you know you you have the ability and India you know bonds give you 8 9%. So India is staying on cash is not really bad you know in a in a bad cycle. Last one year nifty return is 4%. Bond fund is giving you a 10%. Last one year I'm just giving you a right. So I like this philosophy of this 8020 you know my broadly asset allocation 802085 equity I'm a little more aggressive and it matches my philosophy plus now I know I will not look at this
• 53:30 - 54:00 fund till 18 and it's simple formula at least for higher education by the turn 18 formula 15 15,000 15 years 15% is 1 cr 30,000 15 years 15% is two crores. Correct? So and you know see the all economic models are saying markets are efficient and humans are rational.
• 54:00 - 54:30 Markets are not efficient and humans are more rational. So mental bucketing both important. So in your mind now you should have okay this is my children. So once you bucket it now you know when to exit also. So for example you have to buy a house and it's it's let's say two years from now 3 years from now balance fund bonds and moment the
• 54:30 - 55:00 goal is reached you will start withdrawing. The best example of systematic withdrawal is FIS. Look at last 6 months. Okay. Have they withdrawn in one day? They were just doing a daily SWP of 4,000 crores. Correct. In 6 months they brought the exposure down and now they've gone back like got again they're adding. So I'm saying when you're accumulating systematically why are you withdrawing on certain news? You know have a plan in place right? Keep juggling a little bit. So I
• 55:00 - 55:30 think mental accounting to me is very underrated. Once you create buckets, I think the decision to add or exit becomes very clear. So for your kids, you do only a children's fund and for your daughter, you I also buy some unlisted shares for them, but that's a little aggressive. Not I mean, it's a little beyond. I don't want to, you know, make it too complicated, but I buy like NS3. I'm a cricket, you know, fan. My son plays cricket, so I bought CSK little bit. I do, you know, that's more to give you a bit of a it's like a tka on the dal. The
• 55:30 - 56:00 dal I want to keep as mutual fund hockey stick performance. So in my [Laughter] mind also I think the you know I think we don't make them grow enough on the
• 56:00 - 56:30 playground and I always suggest to people that you know you know because I mean that's very important another part of don't make them feel that they have you know already right even if you have done number one number two you know you know s time you know we are on the screen and you know sports has this beautiful thing and I read this somewhere and it teaches you how to lose you know you get you get out you'll still pat up and come the next day even
• 56:30 - 57:00 if you scored a zero you lose a match again they so you show up You show up despite setbacks and I think a lot of our kids today I think are so pampered that they can't take setbacks. They can't right. So I think to a strong banana is part of preparing them. Finance is one part. I think making them mentally strong is the second part. But what's your plan? I mean you will obviously by the time they are 18 20 you will have built a sizable corpus a good business. Do you plan to just provide for the education and then you know let
• 57:00 - 57:30 go or do you plan to support them in their entrepreneurial journey and how do you plan it? So I I mean I'm asking about personal because I just don't know like if my son has everything then he has nothing to work for you know you should not judge them and make them do what you want them to do. I think it was zur right uh so my son wanted to play cricket and in my heart I wasn't very sure it's very competitive and you know but he wants to play and somewhere I also had a personal
• 57:30 - 58:00 interest you know to but I so I I think let them let them express themselves but at the same time make them work hard I think if we make a good person I think finance is a very small part see I mean 10 15 years back but no but you're assuming you know you're assuming that I'm saying there could be some other trait
• 58:00 - 58:30 you know which which will come over a period of time and now there are so many actually privilege gives you a lot of access also network I always say return on network it's it's like ro you know network like I mean I always call it out that you know I was able to build aizable corpus because I had a house my family her home was there I didn't have to take an EMI I am from the city oh that's your lucky then huh that's what so it's you have to call it out right a lot of people cannot
• 58:30 - 59:00 build a sizable no these guys will not buy a house even if they don't have one I mean you have to study their consumption pattern and that's why I keep saying your portfolio should reflect that they will you give them 9% NFD they will not do NFD they will not buy gold a gold bar despite gold being at one lakh rupees today for A They will spend experience things digitally. They will do more mutual funds. They will do more shares. Unfortunately, they will do more Dream 11 and poker also and crypto also, you
• 59:00 - 59:30 know. And so, you have to keep that balance. See, I think this RBI uh guideline of allowing 10 years old to operate a bank account, I think it's a game changer. Really? Yeah. We have 43 cr minors in India of which 21 crores are above 10. And I think if you teach them right during the school how to run a bank account, see what you will do, you'll give them a token money in the bank account and then you'll ask them to save or invest. I think this will build huge savings culture. Yeah. And you know
• 59:30 - 60:00 one thing India has always done well in a crisis. Our saving rate is 18%. rest of the world you have foraries in US there is always cash we always believe in saving for the rainy days and that is why I'm so bullish on India we will never go below a certain rate of growth because that that thing is inherent and so look at this way $10
• 60:00 - 60:30 trillion 18% saving rate trillion saving I mean I mean I I just think you know we have the best face in ahead of us you know next 6 7 8 years are are the best phase and if you can educate them now same if if you're if you're making your children aware at 12 14 on savings and all that imagine where I mean imagine where he'll be at 30 35 right and plus you have given a
• 60:30 - 61:00 corpus huh right so assuming I have given I think other thing I tell people is you will you will live longer on your portfolio than you will work financially independent retirement everybody now wants to retire at 40 45 50 life expectancy is 80 30 40 years no but I don't think when people say they want to retire I don't think
• 61:00 - 61:30 they want to stop working I think they want to work on their own terms money I'm just saying that you are dependent on 20 30 40 years on your portfolio. Yeah. So if it's not growing at 15%, 12%. So I don't think so equity is a is a option. I think you will you have to do inflation beating. Yeah. Otherwise 40 years inflation problem. So you're saying you have to focus more on your work and your skill set rather
• 61:30 - 62:00 than keep building corpus and have more equity in your in your in your culture. Look at this way. I think Nesh Shasar gave me this number may equity from till 242 9 lakh cr was still in cash currency and bank account. So ab you know people are not farting bas 6 7% in equity participation and I'm
• 62:00 - 62:30 telling you this is good now fi are selling see promoters and fs were 75% 52 53% promoters retail look at us look at other markets we are not owning the best asset class but why do you think that is I mean there's so much awareness now mindset Ramis had told me his marriage got cancelceled because they came to know I'm a stock broker coninced in '90s to you know get so you know it is perceived as a as a
• 62:30 - 63:00 speculation I think and I think once that changes people realizes that this is the best investment class okay you name me one 100 richest people in the world tell me one real estate guy one gold guy all of them are equal so because this is a leverage now it's a leverage play So for example you make 1 cr profit market gives you 20 cr market cap 20 times. You make 2 cr profit market gives you 40 cr market cap. You
• 63:00 - 63:30 keep making it market gives you a 40. So every 1 cr you make market gives you 30 40. Which other asset class does that and I think the new generation is realizing this. The young promoters are realizing this. India profits are always there. I think gradually they realizing if I put more here you know I'll so I think this this culture is not only changing from investing it's also changing from the second generation entering the business they want cleaner
• 63:30 - 64:00 businesses more market cap more liquid assets and I think that is the biggest so what do you think will be the big theme over the next 5 to 10 years one big theme in which you know people should invest energy I think that's one there is no inconsistency earning there's complete secularity of earnings maybe energy demand people are still trying figuring out a way to work and I think I think you shared this with me that a chat GPT search and a Google search a chat GPT
• 64:00 - 64:30 search consumes 10 times more electricity yeah right so the bigger beneficiary of data center AI is is power and look at this way after so many years everybody's trying to even add thermal now clean now they're like energy Right. So gen energy generation is growing at 12%. I think energy transmission equipment value chain I think this will grow at 20 25%. So what are the like the main stock? So I think you have to get into grid lines. You
• 64:30 - 65:00 have to figure out transformer companies, conductor companies, insulators, HVDC stations. I think the complete value chain if you map I think they'll be transmission four years rightandi wrote about this energy is the new UPI. Yes. Yes. I mean that that says it right. I mean so I I think that's that's one other could be telecom but you're seeing in energy both renewable and fossil fuel. I'm seeing generation will grow at market returns 10 12 13%. So we
• 65:00 - 65:30 are at what 260 270 gawatt Delhi kalka power demand was the highest in last four years was 500 megawatt or something climate change. So I understand manufacturing picks up housing more electricity more data everything needs data and and power and the and the equipment needed the complete value chain I think this will be a uh so if you want to do one thematic fund it should be energy I'm against that but that's one you can do okay energy w you said
• 65:30 - 66:00 telecom also telecom also because you know look at this way telecom winner takes all sort of situation two and a [Music] half so I mean look at this way our ARPU of Bharti is 240 less than $3 Jio is 205 rupees DU I mean I'm just saying that I mean just look at it this way if I have to buy this for 5 years okay what if ARU is 500 still less than $10 world over it's
• 66:00 - 66:30 $ 20 $30 but let's say 500 rupees so air 40 cr subscriber let's say 50 getting 300 bucks, 200 bucks every month extra. Just multiply this. It's a it's a mind-blowing number. See if you see I think AEL alone can generate and zero for that matter can generate about 1 lakh two crores of free cash flows going forward 30 40,000 cr that is coming
• 66:30 - 67:00 back. This number will just uh multiply and you need data. I mean the base actually I'm disappointed with Barti the PTM and for Pay and all should not have come in India they were the first to get the payment bank license they went to Africa instead of building the digital ecosystem here I think the model can be pivoted but now with stink and all coming on board that that's like $400 $500 uh $300 start competition seeing is like
• 67:00 - 67:30 Mercedes you sell 50,000 cars a Right. So I I think this is a very secular I don't see any unless the government does something tomorrow you know spectrum and all. So both and Jio are I think Jio will also unlock you know I have to study what all comes under Jio you know FMCG is also doing I think that's one brand I think there's one brand of India which can really go global is you so we
• 67:30 - 68:00 don't have really a very big global brand right I think this one brand if if they get it right I think this could be why do you say that u you know I just think uh they're trying to do too many things right now I think if they can just focus on Jio as a brand I I mean there's no point launching more colas and you know I think they should just focus on on Jio I mean on Jio in the sense telecom the entire ecosystem around Jio you know telecom retail payments ecosystem Jio in terms of data center Jio can be in semiconductor chips you
• 68:00 - 68:30 have a brand which is now known you know you have a quite hot start right which is a global OTT so you have a brand and I think if you can build around it I mean see end of the day you pay for the brand right that's I think that is the chance now let's see we should have our $1 trillion company at some point of time right are we highest is what Reliance and SDGFC bank is less than $200 billion trillion company so that's why I'm saying I mean
• 68:30 - 69:00 not in camp of I think you have to see the size of the opportunity so energy you said and telecom I think this is very secular risk I'm saying you can do a five year 10ear and be very happy about these stocks in terms [Music] of but you think that's a theme that has played out in entirely because now I
• 69:00 - 69:30 mean Indian weddings have become a huge thing travel has become huge how how does one capitalize on that see what got me excited about Indigo is when I read this book on Indigo I'm forgetting the author actually the credit goes to him. I mean he told me that they save 10 minutes in turning around a flight. So a Vistara or a Spice J flight takes about 35 minutes to turn around. Indigo turns it around in 25 minutes. So 10 minutes saved is some 700 flights extra in a
• 69:30 - 70:00 year. So they are they are frugal to the core. Yeah. as a consumer you realize that with every I told about that ovens they got they got rid of the ovens in the airline and that saved them few thousands on only on fuel so they think like that right so look at for so I think travel consump because that's again jenzi is spending more on travel on experiences experiences right so that's one I also think this this lower middle class moving a notch up is a great thing something like what trent
• 70:00 - 70:30 has done you know uh I was looking at some numbers you know they sell 90 t-shirts every Trent Trent you're talking about Zio I'm talking about Zio and they open two stores every every day so last one year they've opened practically one store every two two and a half days it's now a 7,000 cr brand so what they have done is they got this linking road in Bandra this fashion street in churchgate a srojnagar in Delhi into a mall everything is below thousand you see as
• 70:30 - 71:00 a normal poor person if you go to a mall a patri 400 mall you're feeling you know 50 people in India have never been to a mall see we feel entitled sitting here right to me I think somebody who's giving that lower middle class an aspiration and experience I mean I think they have done beautifully I think I mean credit to the to the management and they've kind of captured all aspects right there is a
• 71:00 - 71:30 zudio there is a westside there's a zara it started as a star bazar inside westside then it became zudo and now today zudo is like so many x bigger than westside so it was part of that and so I think this this this middle class of India uh if if it's becoming aspirational somebody who caters to it in terms of consumption trend is one example but the stock has fallen quite a bit also right 6x in three years see we never look at the starting point told me
• 71:30 - 72:00 you know, so you're still bullish on rent, huh? I think, see, I'm saying anything to do in that pocket. So, hotels, model has changed. People are now happy to pay 20,000 a night, 10,000, 15,000 a night. You know, I I was looking at OEO's profit, it's not listed, 1100 crores they have made last year. I mean, hotel business, those are profit and it was supposed to be cyclical. So, the entire model is is changing. People are willing to spend. I
• 72:00 - 72:30 also think something in hair transplant tomorrow hasn't come up yet. So when you what do you do when you become you spend on looking good, feeling good, wearing things better and I mean to start I mean Louis Vuitton became a $500 billion company. You basically appeal on the ego right? So so I think as we prosper as more so people who are catching to that aspiration I think will become big. That's that's my take on This has really been a an an amazing master class in
• 72:30 - 73:00 like understanding how to invest, how to pick stocks and you know we've run out of time but not out of questions. We're going to do another session very soon with you Gurit but I absolutely enjoyed this not so much for your stock picking ability but more for your enthusiasm your zeal about the markets and you know you I mean a lot of things stayed with me. I hope you continue to prosper and do everything that you always wanted to do. Okay. So we end every show asking people what money means to them. And I'm going to end with you. What does money
• 73:00 - 73:30 mean to you? Two things. Uh one is freedom. I think I I one thing I've started enjoying about entrepreneurial journey is that I don't get up early in the morning [Music] surprised. So I you know I work because I love working. I manage public money because I get a kick out of it. I'm not doing it for compulsion anymore and I I can play cricket on weekdays. I used to, you know, I missed doing that when I was
• 73:30 - 74:00 working in in different banks I worked in. So one is freedom. You don't get stressed about Mondays anymore. No, not at all. Not any day for that matter. Except see I feel bad when investors lose money because I'm the custodian. So everybody feels bad because somewhere you feel there is a sense of responsibility you have. Uh but it doesn't stress me out because I've seen cycles you know I know things will get better. Uh second thing is you know I I want to do something uh for my hometown. Uh uh I've been uh blessed you know we were in a joint family. I was the only
• 74:00 - 74:30 one who studied. Uh rest of them are still there in my hometown. uh and uh you know I want to do something you know my my my dad and my dari we there's no water in sag you know I I so we have a so in our house we have this you call it a pow in MP give free water so whenever you travel to sag you see a lot of line outside our house people just taking water from the house so I want to do something there you know for the people
• 74:30 - 75:00 because that's where I've grown up uh and had had my family not pushed me and put me into the business I would have not been here. So I want to do something there. And uh third my wife is very spiritual. So she always tells me to you know we have this uh something in our sik it's called daswant uh give 10% back. Make god your 10% partner in anything you do right. So if you make 100 rupees if you give 10 rupees back a lot of people make thirupati as a partner. Some people make rash dvi as a partner. Uh so I have not reached 10%. I
• 75:00 - 75:30 aspire to uh give back 10. I think it's mental. I think I can do more than 10 but you know what is it with money right so I want to be in that stage where I kind of happily part uh you know at least 10% because that's what you know our gurus and our teachings say and just give it back you know and that teaches you some detachment also money yeah she does that so that's that's that's what is to me so I think the second leg which is doing something for my hometown and getting to 10% is something I I think is work in progress okay I'm sure you'll get there very soon but uh you know it's
• 75:30 - 76:00 so inspirational to see your journey I've known you for so many years and uh we have you know kind of had a similar path. Yeah. Yeah. Know and I'm I'm very thankful to I mean the kind of break I got on CNBC uh 2018 2019 I think I remember that. Yeah. Great conversation and you know you in our you know this business is called trust if you are on good platforms uh like the business channels and I think now this channel which is podcasting I think this this will this will I think main
• 76:00 - 76:30 channels will become side channels. I think there's a new medium picking up and I think young people generate you know because there it is transactional you're talking you have to reply in 2 minutes right so you're also here it's more free flowing so and I people want to be understand I think storytelling is also kind of you know gaining a lot of ground but thank you so much and it was really fun talking to you hopefully we will meet again very very soon thank you for that thank you thank Peace.