SMILE. It’s Vijay Kedia’s philosophy for spotting stocks. It’s an acronym for companies that are small in size (S), medium in experience (M), large in aspiration (L) and extra-large market potential (E). That’s what led him to buy Sudarshan Chemical — which has vaulted 8x to 378, since January 2014.
He bet on this chemical and pigment manufacturing company after learning that the Indian speciality chemical industry is on the cusp of a turnaround. The Chinese government was cracking down on this sector, and Sudarshan Chemical was quick to respond, deciding to expand its capacity. Kedia swooped in and reaped phenomenal gains. This is perhaps why he loves equities and remains undaunted by the news of an economic slowdown.
The well-known investor, also a yoga enthusiast, says, “When the sentiment is worse, it's time to enter the market and make money.” We should listen, he speaks from three decades of experience. Kedia is deeply invested in stocks. “Equity is in my blood, sweat and tears. I won’t be able to sleep if I don’t have equity,” he says, sitting in his plush office in Andheri. He admits that though this play is not easy, the return can’t be matched by any other investment. While 85% of his wealth is in this asset class, he also earns rental income from his real estate holdings, which make up for 15% of his investments.
Kedia is given to hyperbole — calling himself an enemy of cash — but that does not influence his temperament as an investor. “I don’t buy or sell shares easily. I do a lot of research and only when I am convinced about the prospect of a company, do I buy the stock,” he says. Kedia, who stays invested for 10-15 years in a stock, draws an analogy to cricket. “When you play a test match, sustainability on the pitch is more important than scoring on every ball. I don’t churn my portfolio, and think from the perspective of management,” he says.
Investors must have patience, courage and knowledge to mint money, feels Kedia. “My mantra for long-term investing: invest like a bull, sit like a bear and watch like an eagle.” Despite every preparation and care, he knows he is not immune to the vagaries of the market. However, it's clear where his loyalty lies.