How to Pick Quality Stocks? Lesson from Buffet on “MOAT” – Part 3 : Indian Stock Market


Hi, in the last video we discussed the
difference between Buffet and Graham style of Investing. Let’s go further and
find how we can use this principle to ripen the benefits of stock market. In the the last video we have seen
the Buffet Quote “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price. Buffet gives more importance to management
style whereas Ben Graham gives more importance to valuation. Let’s check what a good company means to Buffet Let’s hear this video In Berkshire hathaway we have all kinds of businesses. We owns 73 businesses now In businesses we are looking for an entity
that has durable competitive advantage somebody that not only is doing well now
but will do well 10 or 20 years from now and and capitalism when you have a
wonderful business it’s like having an economic castle and the nature of
capitalism is that people want to come in and take your castle perfectly
understandable i mean if I’m solving television sets or something there’s
going to be 10 other people who can try and sell the better television set if I
have a restaurant here in Omaha people are going to try and copy my menu and
get more parking and take my chef and so So capitalism’s all about somebody
coming in trying to take the castle now what you need is you need a castle that
has some durable competitive advantage some castle that has a “MOAT” around and that MOAT that’s one of the best moats in many respects is to be a low-cost
producer but sometimes the moat’s just having more talent I mean if you’re the
heavyweight champion of the world and keep knocking out people you’ve got a
competitive advantage suppose you can keep doing it and it’s very profitable
if you’re the one that happens to be able to do it if you can turn out great
motion pictures have been on Steven Spielberg i mean he felt about on
and and it has enormous economic value what we’re looking for that
institutionalized we’re not looking for the best brain surgeon in town we’re
looking for the Mayo Clinic so we want an institution that regardless of the
person in charge will be maintained that competitive advantage over the decades
and and we hope we find that in some businesses and then we try to get the
best person that we can to run them usually it’s the person who’s been
running. Now know we learnt what’s a good company is. A Good company should have
a competitive advantage it’s called as MOAT. Regardless of the
person in charge it should carry the competitive advantage through decades let’s explain it with some examples, take the case of TTK prestige. Founded in the year 1955, it operates in the kitchen appliance
segment. The competitive advantage would include manufacturing and innovations, strong
brand Equity “Prestige” brand “& Mantra” strong distribution network, Leadership position, After-sales service. In 1951, it introduced pressure-cooker to india. In 1994 it introduced nonstick cookware. In 2001, Gas stoves and Electronic appliances were introduced. In 2005 smart range of innovation cooking and kitchen products were introduced by Prestige. In 2006, total kitchen solutions were introduced and in 2008, modular kitchen solutions and prestige smart kitchen stores were introduced . We identified it at Rs.200 in 2009. The most important thing of prestige is that when price war happened, it moved from pressure cooker to total kitchen solutions. That’s the prime advantage of prestige. The most important thing is Competition is good for the consumers but it is not good for the Share holders. Prestige realized this and then went on innovating several products from time to time Let’s take another example “Astral Poly”. Founded in 1999, Astral poly is a manufacturer of piping and plumbing
solutions for home and industrial applications. It enjoys a marketer share
of more than forty percent in domestic CPVC and PVC piping industry . It has a strong network of 750 distributors and 22,000 dealers across india and also available
in more than 32 countries. The competitive advantage “First mover advantage in CPVC pipes and lead free PVC pressure pipes in India. Its latest products
are ike PVC borewell pipes, CPC fire sprinkler systems, PVC drainage system and CPVC pro. Trained more than 70,000 plumbers per year in India. We divided it at Rs.15 adjusted to split in the year 20009. Lets take more examples. You can do it yourself and find out the MOAT of the following companies Pidilite, V-Guard Eicher Motors, Maruti Suzuki, Tata Elxsi, Apple. “Don’t forget to subscribe to our channel” We will be uploading more interesting
videos, which contains a lot of information so that you can learn and earn from the market.

6 Replies to “How to Pick Quality Stocks? Lesson from Buffet on “MOAT” – Part 3 : Indian Stock Market”

  1. Sir I appreciate your efforts increasing our knowledge in investing in stock market. I have one question, as its shown in the video TTK prestige was trading at 200 in 2009 and in 2017 it almost 5400. My question is what are the things made these types of stock to zoom almost 20 times to 30 times with in short time. There are many stocks which trade on normal scale but something happens and zooms at rocket speed. Please shed some light on this. Thank you..

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