While on equity research and equity valuation, there are certain things to remember. First, you will hear a lot, a lot, a lot of contradictions. Like here are two:
Public sector companies (obviously including banks) are poorly managed. There is a huge amount of governmental interference, corruption and this hurts the organisations.
Now before you quickly conclude that ‘therefore psu banks should be junked and NEVER bought’ read this also:
“the maximum money is made when the perception is ACTUALLY different from REALITY”.
Among the top Indian family in terms of richness is clearly the Birlas. However you have seen Ashok’s son Yash destroy shareholder value, have you not? Vittal Mallaya’s son destroyed value created by the father, did he not?
What about Kumaramangalam Birla? Under him all most all the companies are in a cashflow crisis, and Hindalco has not been the best investments by a long margin.
Multinational companies are good in terms of shareholder value creation – but wait a minute these days they are more interested in Royalty and less in profits….
Now what does one really do as an investor? Read. Read. Read and come to your own conclusions…CONTRADICTIONS is the essence of the markets….see what Akash Pakash has to say
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