@ashwinidamani wrote:
@Donald Basically there are two types of companies. One that invest in capacities and another which invest in capabilities. Let me share with example of cement cos.
While some companies used good market to set up additional capacity (sometimes by taking debt), others first built an extra godown to store materials, invested in Waste Heat recovery, set up own Railway siding and controlled their opex. Only after they did all this, did they invest in new capacity. The other category may just have to resort to fire sale of inventory
Obviously the first category will do better now.
They will be able to say store extra material in godown, their balance sheet will allow them to take leverage to service temporary debt…they will be able to maintain relationships by being good with payment and commitments.
This is the time to just stay away and observe responses of companies. That will guide us which cos are gold standard and hence why they deserve extra PE.
In fact their Balance Sheet strength will allow them to pick up bargains. Imagine Dmart or Shree Cement last fund raise Is equAl to Future RetAil, India Cement market Cap.
Some desperate sellers will sell their stocks to these well managed guys.
I am sure that the companies with good balance sheet strength are the ones to back.
Maybe make a laundry list and invest into these cos in 5-6 tranches, say every Month.
Some companies which I believe are prime for picking and can only be picked during such crashes are
A. Shree Cement
B. United Spirits
C. ITC
D. Crisil
E. ICICI bank
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