If politicians were stocks ?
With political season simmering, I was wondering what if Modi, Kejriwal and Rahul were stocks – What would be there attributes ? And would you invest in them ? Let us look at the each one of them with an investment lens
Kejriwal – is a young start-up (1+ year) which has done remarkably well in highly competitive market (Indian politics). It’s gaining mind share and market share in this competitive market. It’s key assets are it’s alternative political ideology & connect with middle class populace. It is a brain child of a non-political movement and there are only few handful cases where a non-political movement has led to creation of a successful political outfit. Putting Kejriwal to test here is what I feel
Growth – Anyone looking to do a stock analysis for a company is probably attracted to it because of its growth. The attraction of growth has probably led more investors into temptation than anything else. Kejriwal is a young start up hence growth opportunities are huge, the company has right set of product mix to capitalize on the opportunity. It has fared well up until now, however it’s USP is suited to upscale market would they be able to tailor product to suit mass consumption ? That is what is going to bring enormous value to shareholders
Profitability – Profitability is never a priority for a start-up company their key focus is to gain market share. A lot of investors have burnt their money buying companies that are chasing market share than profitability. Investors should be wary on this and keep a close watch.
The Management – Excellent Management can make the difference between a mediocre business and an outstanding one, and poor management can run even a great business into the ground. The start-up has yet not proven its management prowess but in general they have been good till date.
Rahul – is a diversified conglomerate that has interests spanning across industries (Panchayat, Municipal ,Legislative, Assembly etc) . It is the oldest player in market with a relatively unchallenged access to resources. They have a proven product and that has worked for 60 years. However the large conglomerate is plagued by red tape and bureaucracy. Here is how Rahul is doing
Growth – The advantage of operating in multiple markets is that you can tap other markets if your market share is decreasing in one. However these independent industries (Panchayat, Municipal ,Legislative, Assembly etc) are highly correlated wherein performance in one can influence market share in other. The growth opportunities are limited as it is already a market leader in many markets. To retain and advance its leadership it has to change product matrix to match the market dynamics.
Profitability – Historically very high profitable returns, if it is able to maintain its market leadership which looks difficult in near term .The company is likely to face head winds in near term which would result in periods of very low profitability in future.
The Management – Smart Management that has done good capital allocation over years, this has led to paternalistic style of management which is increasing bureaucracy. The management would be rated on how is able to change to make itself relevant is changing market dynamics.
Modi – is also a diversified conglomerate that has interests spanning across industries, however it has very different product matrix riding on developmental political ideology and has a very strong association with a fundamentalist outfit. In past success in various markets have been on account on astute tie ups and strong leadership. Here is how Modi fares
Growth – In many a markets that company has not been doing well in past, however the renewed developmental oriented product had found favor in recent times. There is a lot of incumbent market on offer, if the tactical and strategic directions of company go well there is huge market potential
Profitability – Historically indifferent profitable returns, but the inability of other market participants to satisfy customer needs and favorable feedback on recent developmental ideology could lead to massive market gains and profitability
The Management – Smart Management that has articulated its strategy very well outside, However possible infighting could lead to draining energy on unproductive tasks. The management has to continue to showcase that both its allocation and governance are top notch that will instil investor faith.
So which one would you buy ? Leave a comment here or visit our Facebook page. What are real life companies that match over description ?
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PS – An apolitical article