March 28, 2006

The warren buffett of India

Chandrakant sampat is rightly called the warren buffett of india. See his profile here

I just read this
interview with him where he has given his thoughts on the market. It’s a must read

A few excerpts from the interview

A few months back, I was looking at a table of 100 Indian companies ranked by return on capital employed (RoCE). At some point, these stocks were quoting at eight-year lows, which is strange. Look at Siemens. It did an eight-year low and now it’s quoting at Rs 5,000. Tata Steel was down at Rs 40-50 and now, after adjusting for bonus, it’s Rs 700-800. Of this set of companies, if investors pick up something quoting at a 10-year low, it appreciates 10 times.
Pick up good companies with good managements when their share prices are at an eight-year or 10-year low. Alternatively, if you still want to do something, buy good companies that are 40 per cent lower than their 52-week high. I will buy only those companies that…


• Are in a business that even fools can understand

• Have very little debt
• Have free cash flows
• Don’t have much capital expenditure, which is nothing but deferred cost

So, the companies you say are growing, are they really growing? The answer is ‘no’. They have to keep all deferred costs aside, they can’t declare hefty dividends, as the future costs. So, that’s another lesson — buy stocks that have minimal capital expenditure.

I have put a few more articles and interviews with chandrakant sampat below

Indiainfoline interview

Businessline interview

Rediff interview

4 comments:

Prasanth said...

Thanks for compiling these interviews in one place. Great stuff. I have always admired Mr Sampat. BTW, did you read his open letter to Wyeth? It was on capitalideasonline.com

Regards,

Prasanth

Rohit said...

yes , i did. It was a very polite and honest letter to a nasty trick which the company has pulled on their shareholders. and wyeth is not the first company to do that ...P&G, RCI, castrol and some other MNC have shortchanged their indian shareholders in the past

abhi said...

ROCE=ROIC? OR is it different?

Rohit said...

yes it is the same