Start of a new era at MCX

The recent appointment of two new board members of MCX is beginning of a new phase of growth at MCX. Both board members, Mr. Amit Goela and Ms. Madhu Vadera Jayakumar, are representing superinvestors, Rakesh Jhunjhunwala and Radhakishan Damani. This development has come at a right time just before SEBI starts regulating commodity markets. All we can say is that the MCX story is very much intact and will take time to pan out but is moving in the right direction. We continue to support our thesis of investing in MCX for long term.

On the other hand, CME will provide technical and strategic support to MCX from time to time. It is a no-brainer that some time in the future, CME will either buy 15% from Kotak or from some other investor that would like to exit MCX.

Finally, the fear of competition from BSE and NSE is overblown. Maruti returned more money to its investors when its market share hit 45% as compared when its market share was 80% before new entrants. Again, as pie gets bigger, the size of a single slice will be way bigger than the original pie. MCX will definitely lose market share in next 10 years but it will have 50% market share of a 10 lakh crore market (transaction volume) as compared to 87% share of a 1 lakh crore market. Think big!

 

Alibaba Jack Ma hit back!

Below are some highlights from Jack Ma’s recent interview on current state of Chinese’s economy and how US is obssessed with it. Jack Ma sounded usual confident and there is lot of truth in his words.

“People say ‘Well you know the economy’s bad, so China consumption will be low.’ No, totally different, You Americans love to spend tomorrow’s money, and other people’s money maybe. … We Chinese love to save money.”

“We’ve been poor for so many years: When we made money we put it in the banks because someday we know that disaster is coming so we can spend the money. When the economy is bad, we still have the money to spend — you guys probably don’t, you worry.”

“China’s government is so strong on investment, so strong on exporting, but they’re too weak on domestic consumption. In the past 20 years, government is so strong, now they’re getting weak: It’s our opportunity, it’s our showtime to see … how we can develop real consumption here.”

“When we export we have a terrible sky, we have terrible water, we have a terrible environment — when we start to import we’re going to be better. So that’s all a great opportunity, guys, be happy about that.”

Insights from the ultimate wealth and jobs creator

“My favorite things in life don’t cost any money. It’s really clear that the most precious resource we all have is time.”

“I’m as proud of many of the things we haven’t done as the things we have done. Innovation is saying no to a thousand things.”

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”

“Have the courage to follow your heart and intuition. They somehow know what you truly want to become.” 

“I think if you do something and it turns out pretty good, then you should go do something else wonderful, not dwell on it for too long. Just figure out what’s next.”

“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.”

“When you’re a carpenter making a beautiful chest of drawers, you’re not going to use a piece of plywood on the back, even though it faces the wall and nobody will see it. You’ll know it’s there, so you’re going to use a beautiful piece of wood on the back. For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through.”

“That’s been one of my mantras—focus and simplicity. Simple can be harder than complex; you have to work hard to get your thinking clean to make it simple.”

“Quality is more important than quantity. One home run is much better than two doubles.”

“Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful…that’s what matters to me.”

“The people who are crazy enough to think they can change the world are the ones who do.”

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition.”

“We’re just enthusiastic about what we do.”

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

“Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.”

“For the past 33 years, I have looked in the mirror every morning and asked myself: ‘If today were the last day of my life, would I want to do what I am about to do today?’ And whenever the answer has been ‘No’ for too many days in a row, I know I need to change something.”

“I’m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance.”

“What is Apple, after all? Apple is about people who think ‘outside the box,’ people who want to use computers to help them change the world, to help them create things that make a difference, and not just to get a job done.”

“Things don’t have to change the world to be important.”

“Technology is nothing. What’s important is that you have a faith in people, that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.”

“I’ve always been attracted to the more revolutionary changes. I don’t know why. Because they’re harder. They’re much more stressful emotionally. And you usually go through a period where everybody tells you that you’ve completely failed.”

“Bottom line is, I didn’t return to Apple to make a fortune. I’ve been very lucky in my life and already have one. When I was 25, my net worth was $100 million or so. I decided then that I wasn’t going to let it ruin my life. There’s no way you could ever spend it all, and I don’t view wealth as something that validates my intelligence.”

“My model for business is The Beatles: They were four guys that kept each others’ negative tendencies in check; they balanced each other. And the total was greater than the sum of the parts.”

“Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”

“Getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again. It freed me to enter one of the most creative periods of my life.”

The reinvention of MCX

Warren Buffett once said that you should invest in a business so simple and durable that even a fool can run and still make money,  because someday a fool will. And the live example of this is MCX. At one point of time it was run by a fool or a crook, Jignesh Shah and did exceedingly well and now no one is running it and it is still doing well and will continue to do well. The recent article in Forbes India is a good indication of the strength of MCX’s business and the importance of its relationship with CME. Read more here

Another research report backing Talbros

After Edelweiss Research, Karvy has come out with its latest coverage report on Talbros Automotive. Karvy has started its coverage with a Buy rating on Talbros stock and a 12-month price target of Rs.144, which assumes conservative P/E of 6.5 for FY17 EPS. Read more here about Karvy’s take on Talbros here.

TalbrosAutomotive_Karvy_090915

MCX 2.0 by Motilal Oswal

MCX is going to surpass its previous revenue records in next 2 years and launch itself into wide array of risk management and hedging products. This is what the latest research report from Motilal Oswal has to say about MCX. Read the report HERE MCX_Motilal_250815

MCX – CME MOU just made MCX’s moat stronger

Chicago based Chicago Mercantile Exchange (CME) is a $30 billion giant offering global commodity trading platform. CME is known for innovating new financial products such as weather based options, interest rate contracts etc.

CME has a long standing relationship with MCX since 2006 which just got strengthened with the license renewal and a memorandum of understanding (MOU). The MOU will provide MCX with more options to create Options market.

MCX can now enter currency derivates (a huge market potential) as well as expand upon commodity derivatives using CME’s expertise. All these advantages add up to provide a stronger moat for MCX investors.

MCX and CME will also work together to leverage advantages of India’s international finance center called GIFT City in Gujarat.

Long term investors looking to build wealth over the next decade therefore cannot ignore MCX.

Happy investing!

Printing has just started at Ruchira Papers

Just because a stock is up 100% in 10 months does not warrant a sell. What if the stock was dormant for 10 years before that even though the underlying business fundamentals kept improving.

That is the story of Ruchira Papers which clocked highest ever quarterly revenue of Rs.92 crores at the end of June’15. The debt is down 30% in last 12 months and the book value is up 20% in the same time. As on today, the stock is trading at par with its book value of Rs.48, up 100% since October’14, when we first discussed. Don’t forget to add 3% dividend yield to the price returns.

With reduced debt and interest expenses, if Ruchira can do quarterly average sales of Rs.90 crores then we are looking at annual sales of Rs.360 crores. And the kind of debt profile, profit margins and business fundamentals Ruchira have, we believe it to trade at least 0.8 times its annual sales in next 12 to 18 months. That implies market cap of Rs. 288 crores, which is almost three times of its current market cap of Rs.107 crores.

Good luck!

The new pharos, India.

If you have any doubt if Indian markets will give you stellar returns in next 3 to 5 years then look below. This chart is encouraging and prophetical.

Read more here -> Who is at the top? India

Bolster to our MCX Thesis

Prakash Diwan, director at Altamount Capital Management told CNBC-TV18, ” Multi Commodity Exchange of India (MCX) is a brilliant company, unique company on the listed space. It hasn’t gone up either that it could fall down much but it has corrected in the recent past that we have seen, come below Rs 1,000 mark. My sense is that given the kind of focus that the RBI and the government have on food inflation particularly, it is going to be important that agro commodities, the entire supply chain is focused upon and MCX will play a critical role in that.”

“It is a great business, decent valuations, great pedigree now. Buy into this company and keep it in the portfolio for the next three-five years and it could be a multibagger,” he said.

Read more here.