ONGC & Daawat – LT Foods are 5x for me & thousands others who bought along with me.
Here are some of the lessons from both of these 5x:
- Both were available at single digit PE when we bought them. Valuations are important if you want to make multibagger returns.
- Both were commanding high market share in their respective fields & still are. High & growing market share is a bonus.
- Patience to hold is key to make multibagger returns. Business take time to grow, post earnings growth & eventually stock prices are slaves to earnings. From 2020, we saw enormous problems ranging from multiple c0vid waves, high inflation, geopolitical tensions, Russia Ukraine War, Israel Hamas conflict, crude shooting to $140/barrel, rising interest rates, etc, etc. If one panicked in sold in between any of these events he would have missed the rally. Those who Hold on to stocks irrespective of market conditions are the ones which would be rewarded abundantly.
- Both of these are still trading at reasonable valuations (PE, PS).
- Both of these had stellar earnings growth.
- Both of these were not ‘popular hot stocks’ when we bought & some even looked down to these businesses. ONGC as dead PSU & Daawat as another commodities play. Anyway, beauty (value) lies in the eyes of beholder (holder).
- Both are essential businesses. Without these businesses it would have massive impacts on lives of hundreds of millions of people.
Last but not the least, one needs to have guts to buy when nobody wants to & tolerance to hold on thru all the ups & downs. That’s what equity markets are all about.
