Ashish Dhawan’s Bet Successfully Outperformed

Ashish Dhawan is a prominent figure in the world of finance, known for his astute investment strategies and significant contributions to the Indian investment landscape. In this blog, we will delve into the life and achievements of Ashish Dhawan, explore his investment holdings, uncover his investment strategies, and analyze one of the stocks in his portfolio.

Who is Ashish Dhawan?

Ashish Dhawan's journey in finance began after completing his education at prestigious institutions like Yale University and Harvard Business School. He gained valuable experience on Wall Street, working at Wasserstein Perella and Company before joining the ranks of Goldman Sachs in New York. In 1999, he returned to India and co-founded ChrysCapital, a pioneering private equity firm that would go on to manage an impressive AUM of US$1 billion.

Dhawan's dedication and acumen have made him one of India's wealthiest investors, with a net worth exceeding ₹ 2,920 crore. His investment portfolio reflects his commitment to quality investments. Let's take a closer look at Ashish Dhawan's shareholdings in various companies.

Ashish Dhawan's Investment Holdings

As of the latest data available, Ashish Dhawan publicly holds shares in 13 different companies. A significant change in his portfolio occurred from December 2022 to March 2023. While seven of his stocks experienced negative returns during this period, six others generated substantial double-digit profits. Notable performers in his portfolio include Zensar Technologies, Glenmark Pharma, Equitas Small Finance Bank, AGI Greenpac, Mahindra & Mahindra Financial Services, and IDFC.

During this quarter, Dhawan made a substantial acquisition by investing ₹ 355.9 crore in Equitas Small Finance Bank, securing a 3.6% stake in the bank. Additionally, he increased his stake by 0.1% in Glenmark Pharmaceuticals Ltd in March 2023, likely influenced by the company's improving financial metrics.

Investment Strategies/Lessons from Ashish Dhawan

1. Diversify Your Portfolio: Dhawan emphasizes the importance of diversification in investment. Spreading investments across different asset classes and sectors not only mitigates risk but also enhances the potential for long-term returns.
2. Thorough Research: Dhawan advocates thorough research before making investments. Understanding a company's fundamentals, market conditions, and competitive landscape is crucial for making informed investment decisions.
3. Think Long-Term: Successful investing requires a long-term perspective. Dhawan advises against attempting to time the market or chase short-term gains, instead emphasizing patience and a focus on long-term value creation.
4. Effective Risk Management: Managing risk effectively involves setting realistic expectations, regularly monitoring portfolios, and having a well-defined exit strategy in case investments underperform.
5. Discipline: Staying disciplined in investment decisions is essential. Emotional reactions to short-term market fluctuations can derail long-term wealth creation goals.

Ashish Dhawan Portfolio’s bet’s Analysis

Let's now take a closer look at one of the stocks in Ashish Dhawan's portfolio, Greenlam Industries.

Greenlam Industries recently reported impressive Q4 and FY23 results, showcasing a 15.2% YoY growth in consolidated net revenues during Q4FY23. The company's strong performance extended to its consolidated net profit, which increased by an impressive 79.7% YoY in the same quarter.

Key Operation Highlights:

1. Capex Expansion: Greenlam Industries has successfully initiated production at its third plant in Prantij, Gujarat, which has expanded its laminate capacity to 21 million sheets and boards annually. Additionally, commercial production has commenced at the plywood factory in Tamil Nadu, with a capacity of 18.9 million square meters.
2. Business Growth: The domestic business saw a robust 12-13% growth in Q1, while the export business also expanded by 5-6%. Some revenue was deferred to Q2 due to cyclone-related issues and shipping disruptions.
3. Product Diversification: Greenlam Industries introduced plywood, and the initial response has been positive. The company aims to tap further into the unorganized market in India and enhance its market share globally.

Financial Performance:

1. Margin Improvement: Greenlam Industries displayed strong margin growth, with a 730 basis point increase in gross margins to 52.3% in Q1. EBITDA margins also rose by 180 basis points to 12.5%.
2. Revenue Growth: Net revenue grew by 9.5% YoY, reaching INR 515 crores in Q1. Notable YoY growth was observed in laminate revenue, with domestic and international segments growing by 13% and 6.4%, respectively.
3. Debt and Working Capital: The company reported a net debt of INR 522 crores, while net working capital stood at 72 days in Q1.

Key Risks:

1. Project Implementation Risk: Greenlam's ongoing greenfield projects, including plywood, laminates, and particle board units, have experienced delays and cost overruns. These challenges pose risks to the company's profitability.
2. Raw Material Price Fluctuation: The company is susceptible to fluctuations in raw material prices, particularly paper and chemicals, which constitute a significant portion of its costs. These volatile prices impact operating margins.
3. Foreign Exchange Exposure: Being a net exporter with significant imports, Greenlam Industries faces foreign exchange rate fluctuations. It manages this risk through natural hedging and derivative contracts.
4. Working Capital Intensive Operations: Greenlam's operations require substantial working capital due to a wide range of product variants and imported raw materials. Managing working capital efficiently is crucial to maintain financial stability.

Outlook:

1. Capacity Expansion: With ongoing and upcoming plant expansions, Greenlam Industries is poised for growth, aiming to capture more market share both domestically and internationally.
2. Stable Margins: The company anticipates stable raw material costs and EBITDA margins in Q2, which bodes well for its financial performance.
3. Top-Line Growth: Greenlam Industries sets an optimistic tone with expectations of 20-25% top-line growth for the year.
4. Diversified Product Portfolio: The company's efforts to diversify its product profile, moving from decorative surfacing to integrated wood panel solutions, could enhance its competitiveness and market presence.
    

Conclusion

In conclusion, Greenlam Industries has demonstrated resilience and potential for growth despite facing challenges such as project delays and raw material price fluctuations. With its expansion plans, focus on product diversification, and strong distribution network, the company appears well-positioned for future success. However, it must effectively manage the identified risks to ensure continued profitability and sustainable growth.