Will We Sell Motor Cycles to Unemployed Youth? - Views on News from Equitymaster

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The Equitymaster Research Digest

Will We Sell Motor Cycles to Unemployed Youth?
Sep 30, 2016

  • Bajaj Auto is seeing something others aren't
  • Promoters basking in bull market glory
  • Dividend blue chips

You will not see us on CNBC.

They wouldn't have us because speculating on where the market will be in a few days or weeks is not our beat. And it wouldn't help you even if it were...

As a research house, our job is to project earnings patterns. We're most comfortable with a three-to-four-year timeframe. This allows us to form a solid basis for our assumptions.

For instance, we assume a certain rate of demand growth for products like consumer durables and services like IT. We assume certain growth in bank credit based on capex requirements and household consumption. We also have our macro assumptions about GDP, inflation, interest rates, oil prices, and exchange rates.

Regulatory and policy changes do impact our assumptions from time to time. But we are by and far confident of most of our assumptions.

We are making some assumptions when we speak of the possibility of Sensex 40,000 in three to four years. And instead of tracking every quarter's EPS, we are just trying to make sure that the direction of our earnings assumption is right.

What keeps us worried though is the direction of our assumptions beyond five years. Say the demand, consumption, and capex in about ten years.

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