Musings on the Mahatma, Markets & Moguldom by Ramesh S. Damani

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http://valuexindia.com - On day 1 of VALUEx India 2011, the group welcomed Ramesh Damani to share his thoughts about the current market environment in India. Damani is a proponent of value investing and has a brilliant track record when it comes to picking stocks. Damani is one of India’s most rational voices on investing. Damani is a member of the Bombay Stock Exchange and has hosted shows on CNBC-TV18 conducting interviews with the legends of investing in India and abroad.

During his presentation, Damani spoke about the electronic media space and identified specific catalysts which should unlock valuations for select companies in the space.

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Musings on the Mahatma, Markets & Moguldom by Ramesh S. Damani

  1. 1. Ramesh S. Damani Nov 7, 2011
  2. 2. News Item: Mahatma Gandhi’s items on auction. “The personal items to be auctioned are Gandhis metal‐rimmed glasses, pocket watch, a pair of sandals and a plate and bowl. The collection has a reserve price and a plate and bowl The collection has a reserve price of between 20,000 dollars and 30,000 dollars.” 
  3. 3. CNN IBN NEWS FLASH: CNN‐IBN NEWS FLASH:Vijay Mallya buys Gandhis items for $1.8 million.f $1 8 illi
  4. 4. Value Investing FAQ: Value Investing FAQ:Q1) Why is September 19, 2007 considered an Q1) Why is September 19 2007 considered an important day in cricket history ?Q2) What does it have in common with Value  investing? i i ?
  5. 5. India s Yuvraj smashes six sixes!Indias Yuvraj smashes six sixes! Yuvraj Singh  became the first  became the first player in Twenty20  history to hit six  sixes in an over in  Indias match  I di t h against England in  a world cup match  in Durban, SA. The devastating  barrage from Yuvraj,  25, helped him  25 helped him reach his half‐ century off just 12  balls ‐ the fastest 50  ever in international  cricket. 
  6. 6. The Indian Bull Markets Intellectual  Hypothesis: h• The bird of gold: The  bird of gold : • The rise of Indias consumer market As India  transitions to become the worlds fifth largest  g consumer market by 2025, its middle class will swell  by over ten times its current size of 50 million to 583  million people. – Mckinsey Survey 2007
  7. 7. Jewels in the crown Fantasy Five:Name Mcap Jan 2003 Mcap Jan 2008 X  times SectorPantaloon 90 7450 80 RetailUnited Spirits 225 16000 70 BeveragesAxis BankAxis Bank 800 32577 40 40* BankingBharti 4188 145549 35* TelecomTitan 300 4617 14* JewelryTotals 5603 206193 40 (Mcap is Rs crs)
  8. 8. The Important Questions? The Important Questions?• A $150 million investment becomes $6 billion A $150 million investment becomes $6 billion  in 5 years! • You would have leadership positions in a You would have leadership positions in a  variety of industries !• A Are such opportunities still there ? h ii ill h ?• What about global factors?• Where are the opportunities ?
  9. 9. Electronic Media Industry Case Study:Electronic Media Industry Case Study:• Pathetic Market capitalization Pathetic Market capitalization• Sector plagued by losses and unbridled  competition  competition• Distribution concentrated in unorganized  sector• Content owners, other than cricket, bollywood and high premium properties getting stiffed. g g• Believe “Content will be King.” Again.
  10. 10. What is the Game Changer for the  Electronic Media Sector? l d• Cab e g t at o Cable Digitization Bill is passed. (Finally!!!) s passed. ( a y!!!)• India to go from Analog to Digital over 3 years.• Carriage costs to go down for Broadcasters. Carriage costs to go down for Broadcasters.• Subscription revenue to improve; pay models to  be introduced.• Media consumption to move from news papers  to online and electronic.• Ad spend to GDP ratio will improve as  consumption boom keeps rolling.
  11. 11. Select Snapshot of Electronic Media: Select Snapshot of Electronic Media:Name Cur Market Cap in Rs  Genre crsTV Today 360 NewsNDTV 300 NewsSun TV 11300 GECZee TV 12106 GECTV 18 Broadcast 1587 GEC, BusinessDen 991 Cable MSOHathaway 1730 Cable MSO
  12. 12. Finally:“ If a man looks sharply and attentively, he shall see fortune for though she is blind fortune, she is not invisible.” ---Francis Bacon F i B

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