12/28/2023 0 Comments Vallum cards![]() For instance, the company owns unique customers and can sell many value-added services (advertisement, data center, cyber security, cloud communication), thus diversifying possible revenue streams. Post-consolidation in the industry, the revenue per customer has increased due to more usage of data, thus improving smartphone penetration. For years, the asset-heavy players in the sector suffered due to deflationary pricing and high competition, while the asset-light businesses built on the foundation of telecom services have enjoyed manifold growth, with strong cash flows. Lastly, we have invested in the foremost telecom player which is gaining market share consistently and has the balance sheet strength to withstand the competitive landscape. The substantial increase in the company’s value, free cash flow building up as cash on our books, and the resulting decline in our return ratios motivated us to book partial profit of our stake. The earnings of the company accelerated due to the activation of new business lines like margin income from pledging/re-pledging, commodity repository, transaction fees from the revival of IPO markets, and lastly, the dematerialization of MFs. The company has 59% market share and is partner of choice for traditional and discount online brokers. These initiatives by the government are anticipated to help the company increase revenue generation.Īnother of our profitable investments is in a depository, an asset-light move, which gaining market share against its competitor. The government acknowledges the change required to reduce the cost of energy as a prerequisite for the revival of manufacturing in India. Moreover, the government has an unparalleled commitment to power sector reforms, diminishing the role of cash guzzling state DISCOMs. The company introduced many products such as Real-Time, Green Term Ahead Market, and Gas Exchange during the year, which has helped the company gain market share from other short-term market players. We are shareholders in India’s largest energy exchange, which at its core is a convergence of the perennially important power and technology sectors. Persistent efforts at annual general meetings and a gentle nudge to the group chairman changed the trajectory of disclosure levels and thereby attracted a newer set of long-term investors. Incidentally, the company had limited disclosures on its business activities till the last year. The renewed thrust on growth by the management team and the company’s ability to participate in growing areas of healthcare, OTT and communications has helped to change its growth trajectory. Our foremost holding, a design-led IT company has a unique business model of partnering with innovators for design, automation and IT services. ![]() Our portfolio of investments in digital platforms and companies has done well during the year. For your reference the portfolio performance has already been sent to you. ![]() The infrastructure-led revival plan proposed by the government also helped our portfolio which was tilted towards domestic cyclical stocks. Our strong belief in the thesis of depreciation of the US dollar, its positive implication on inflows into the emerging markets and careful selection of strong companies has helped us to weather this storm. This reminds me of a quote by the GMO viz., "The cruel logic of being a value manager is that at the very time when your opportunities are at their best, your credibility with clients is at its lowest ebb." The roller coaster ride of the market normalised in the first half of FY21. For example, during the first quarter of Fiscal Year 21 there was a huge divergence between the intrinsic worth of middle-market businesses and their quotation prices in the market. Nobody could have ever imagined the ripple effect caused by a pandemic like COVID-19. ![]() Moreover, one of the key lessons that I learned in 2020 was the futile ritual of market forecasting by the experts. “It was best and the worst of times.” Indeed COVID-19 was havoc for some and boon for others. “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” Charles Dickens, “A Tale of Two Cities” ![]()
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