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Goa
July 2018
@deepakvenkatesh
Disclaimer: Content provided in this presentation is only the personal views of the presenter. No affiliation to any organization be considered.
A Little Background
2012
1996
2009 Got Married
Discovered equity
markets through my Internship with Bulge Sold entire portfolio
father. First business Bracket I Bank Chanced upon
shortlists: HP & APC Not my cup of tea Intelligent Investor
It’s better to be out of the market and hope you were in that to be in the market and wish you were out
- Don’t recall who said this
Current Phase of Investing Journey: Capital Creation but not at the cost of increased risk of potential loss
Second syllable Ji means a point from where things can change from
Lesson 1: My Heisenberg’s Investment Uncertainty Principle
• Management has estimated for multiple years that growth in industry is ~3-4%
• But good quality IS demand has grown approx. 1.5-2.0x its statement
Companies Composition
Insoluble Sulphur Demand
Classifications Eastman OCCL Polymeric Sulphur Rhombic Sulphur Naphthenic Polymeric Binder Silica Eastman: Regions available
140.0%
Regular Oil Treated (OT) OT 10 OT 10 81-91 4-7 8-12 0 0 Europe, Middle East & Africa, North America
120.0%
Regular Oil Treated (OT) No Product OT 20
100.0% ROIC 70-77 4-7 18-22 0 0 OCCL: PE vs ROIC & Growth
Regular Oil
40% Treated (OT) OT 33 OT 33 65-69 4-7 31-35 45%0 0 Asia Pacific, Europe, Middle East & Africa, Latin America, North America 20.00
80.0%
Special Grade No Product 90 90-98 2-10 0 40%0 0 18.00
60.0% 30% 35% 16.00
OT High Stability (HS) OT 10 HS OT 10 HS 81-91 4-7 22% 8-12
30%
0 0 Probably global
40.0% 20% 21% 14.00
OT High Stability (HS) OT 20 HS OT 20 HS 70-77 4-7 15% 18-22 25%0 0 Probably global
20.0% 12.00
10% 10% 20%
OT High Stability (HS) No Product OT 33 HS 65-69 4-7 31-35 0 0 10.00
0.0% 15%
8.00
Special OT0% Global
with Binder OT 20 HD GoodOT
Quality
20 HD China
72-77 Amercia+Europe
4-6 19-22India 10%
1-2 0 Asia Pacific, Europe, Middle East & Africa, Latin America, North America
5% 6.00
-10%
Special OT with Silica No Product
2017 toOT 25 AS
2018 Growth 65-69Management Expected
4-7 Growth 23.5-26.5 0 6.5-9.5
0% 4.00
Special OT with Silica
-20% OT 33 AS No Product ~33 -5%0 Europe, Middle East & Africa 2.00
2011 2012 2013 2014 2015 2016 2017
-10% -
NOCIL 5% 6% 2% 5% 12% 18% 21% 2011 2012 2013 2014 2015 2016 2017
OCCL 38% 27% 19% 22% 21% 24% 22% ROIC 38% 27% 19% 22% 21% 24% 22%
PCarbon 12% 13% -4% -18% 0% 2% 10% Growth 31% -4% 6% 32% 2% 11% -1%
Apollo 18% 9% 12% 18% 19% 18% 15% PE 2.88 3.50 3.05 3.95 8.79 10.44 18.25
Lesson 2: What I know I can’t Do
o Gmax = R
o Find multibaggers at nascent stage - I don’t aim to be a ‘great’ stock picker either
o Be Rational
Lesson 4: How Long is Long?
Lesson 5: Dynamic Capital Allocation
Valuation Returns
Debt Equity
Equity High Valuations
50% 7%
Debt Risk Free Rate?
Debt
Low Valuations
Equity
Income Income