V.P. Rajesh and Anish Jobalia of Banyan Capital Advisors presented their in-depth investment thesis on Greaves Cotton (India: GREAVESCOT) (GC) at Asian Investing Summit 2019.
Greaves Cotton (GC), a 158-year-old industrial company, has been a dominant player in the niche diesel three-wheeler engines market and enjoyed a quasi-monopoly for a long time. Over the last few years, GC’s market position has been threatened by the shift in the diesel three-wheeler market towards alternate fuels like Petrol, CNG, and LPG. In response to these headwinds, GC has been working with a US-based technology partner on developing a low-cost ownership CNG engine model and enabling OEM customers to capture market share from the incumbent.
The new management team, led by Mr. Basavanhalli, is diversifying the risk by increasing its focus on the existing Aftermarket and Other (Gensets and Agri-Equipments) segments and entering into new high-growth segments like electric two-wheelers. GC will likely become a fuel-agnostic mobility solutions provider and a diversified player, without compromising margins and the capital intensity of the business model. GC shares recently traded at trailing multiples of 11x EV/EBITDA and 18x P/E, with a 4% dividend yield. GC meets most of the criteria of the enterprising investor checklist highlighted in Ben Graham’s The Intelligent Investor.
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About the instructors:
V.P. Rajesh has been in the capital markets since 1991, first as an IT consultant (at Citicorp Overseas Software) and then as an Investment Banker for over 10 years specializing in mergers and acquisitions. During his banking career with J.P. Morgan Chase, Deutsche Bank, Piper Jaffray and Thomas Weisel Partners in New York and San Francisco, he focused on technology, media, telecom and healthcare sectors and completed transactions worth over $27 billion. V.P. relocated to India in July 2007 and started re-investing in the Indian stock market from March 2008 onward. He started Banyan Capital Advisors in New Delhi in November 2011 to manage outside capital using investment principles espoused by likes of Graham, Buffett, Munger, Klarman and Lynch. V.P. is an MBA from the University of Michigan’s Ross Business School with a distinction and has a B.E. (Hons.) degree from BITS, Pilani, India. He is also a Chartered Financial Analyst(CFA) from The CFA Institute, US.
Anish Jobalia has close to seven years of buy-side research experience in the portfolio management industry. In the past, Anish has worked at Jeetay Investments Pvt Ltd and is currently associated as a Senior Research Analyst at Banyan Capital Advisors LLP. He has developed an integrated framework for analyzing companies with a singular focus on dissecting the business model and financials of the company. Anish regularly interacts with CXO level management of listed companies to assess investment opportunities and keeps updated with the progress of the companies. He believes in challenging his own thesis by consistently looking for anecdotal evidence through primary research. His approach towards portfolio management is in making concentrated bets on his best investment long-only ideas, with a minimum horizon of 3-5 years.