Last week, we say what Mr Bajaj wanted to live a happy and contented life. Now, this week lets look at what he really needs. Often what you want and what you need to be successful are completely different. If we are able to crack Mr Bajaj's wants and needs we can be successful stock pickers.
India is a country which is woefully inadequate in terms of infrastructure. We takes ages to build good roads, flyovers and sea-links. India needs a lot of new roads and highways. The Golden Quadrilateral was just a start. As Kamal Nath, our Roads Ministers puts it, 20 kms to be added every day. L&T, Gammon, GMR Infra all build roads.
India needs new airports and the existing ones need to be upgraded. The GVK group handles the Mumbai airport and are well on their way in taking a major stake in the Bangalore airport. GMR Infra has Delhi and the Hyderabad airport. The airports have a unique business model as explained in 1 of my older posts.
Next we come to the ports.The Mundhra port has a very unique business model of Container terminals. Maruti uses this port for most of its exports.
India is a power deficient country. The companies which are the power equipment manufacturing companies like BHEL, Siemens and L&T are my favorite companies. The Power generators like Reliance Power, Adani Power all have 1 problem. When by 2012-2013, the supply demand mismatch is sorted out, the power they sell will not have that big margins.
Power and Infrastructure are the sectors to watch out for.
HCC is into construction, nuclear power and they are building a city of their own called Lavasa. Lavasa is what excites me the most about HCC.
If India wants to keep clocking higher GDP growth rates, its infrastructure has to be in place. Already the high base effect will kick in. The low lying fruits of GDP growth will be soon taken away.
What I look i a company is that it has to be in a right sector and the right management. Always in any sector the best and the worst company does well. (The worst does well while the going is good ad then tanks).
Any portfolio covering India has to have Larsen, HCC, (GMR infra or GVK power).
Ideal portfolio will cover Mr Bajaj's wants and his needs. Over the next few months, lets try to get into Mr Bajaj's mind and see what he wants.