My Value Picks

Balakrishnan R was one of the founding team members of CRISIL. He has been in business for over three decades.

Generally keep away from companies if there are some issues like:

– Promoter holding below 30%
– Continuous diversifications or acquisitions
– Professional managed with no owner and high ESOPs
– Accounting policies that are aggressive
– Lack of free cash flow – hard to find in a finance company
– Huge divergence from industry trend
– Rising debt levels
– Rising level of ‘other loans and advances’ or ‘inventory’ or ‘debtors’
– Any sectors or business I do not understand
– Too many subsidiaries and associates
– High level of pledging of promoter shares
– Low level of income tax payments
– Margin changes that seem too good to be true
– Frequent visits to capital markets – a true red signal
– Third generation family and multiple successors

Stories:
– Bartronics
– Raymonds
– Alembic
– First Leasing
– Arvind Mills
– Distilleries
– Plywood

Resources:
Making Sense out of Annual Reports:

Learn to Invest Safely in Stocks: