Sarthakreturns

  Strongly recommend the book The Outsiders : Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William Thorndike If the company wants to be successful in the long run the, CEO has to do two things well. A.Optimize the profits of the company b.Invest/Allocate the profits well There are only three ways the companies can raise money. a. Internal Accruals b. Equity c. Debt Only Six things you can do with capital well. A. Invest in the capacity expansion-organic growth B.  M&A C. Pay back the debt D. Pay as dividends E. Repurchase of the share- BuyBack F. Investing in strategic partnerships or establishing cross-shareholdings. Two things to evaluate a CEO’s greatness: 1. The compound annual return to shareholders during his or her tenure and  2. The return over the same period for peer companies and for the broader market (usually measured by the S&P 500). What counts in the long run is the increase in per-share value, not overall growth ...

-They have a 40 % plus EBITDA margin quartz business have the exclusive right to Bretonstone plant in India coming up with a new plant with 500 cr plus Capex - will increase their quartz capacity by 130 %  -Management is confident of utilizing the new plant as well the quartz industry is growing by more than 30 % in the USA.  -Company has 99 % of its revenues from here its product is at a premium to the Chinese players- doesn't compete with them -Due to the new plant company has borrowed more than 400 cr on the balance sheet this number will only go down from here as the CAPEX has been put in place. this high Capex machine and the exclusivity of Breton stone technology shows the entry barrier of the business -The company can easily generate 25 cr cash flows from the existing quartz plant every quarter. with the new plant, we can expect an additional 30- 35 cr cash flow at peak utilization. we will be looking at around 250 cr cash flows from its quartz business every year. -Eve...

-Identify companies with clean accounts -Identify companies with a track record of superior capital allocation -Amongst companies that pass steps 1 & 2 identify those with high barriers to entry