There has not been much change in the Stock Market outlook since I wrote last time. So I just thought that I will write some snippets which I found interesting.
Today started and ended as an interesting day. I was to travel to Hyderabad for some company meetings and booked an UBER for the same. Normally I do not have too much of conversation with the drivers, however this guy was talkative and started talking of his own. The story he told me reflects the inherent abilities of entrepreneurship among Indians. He started with talking about how hard he needs to work. When I asked him how much he makes he told me that he was infact an employee of a person by the name of Mr X who evaluated the opportunities presented by UBER and decided to leverage the opportunity. Mr X was a driver himself earlier calculated that if someone makes 16 or more trips under the UBER network then the gross earnings per vehicle are in the range of Rs 100000-120000 per month. He took financing and bought 7 taxis and hired drivers for these vehicles. He kept a base salary of Rs 10000 per month and then incentives depending on the number of trips that the driver makes per day with a minimum average of 12 trips being required to get the incentive. If the driver satisfies the criteria and works all days in a month then the net earning to the driver would be between Rs 25000-30000 per month. Thus taking into account Rs 15000 for fuel and maintenance and Rs 30000 payout to the driver (at the upper end) Mr X makes Rs 55000-60000 net per vehicle. He gets paid weekly by UBER and pays monthly to the drivers. This way the payback period for Mr X per vehicle is just one year assuming an average vehicle cost of Rs 700000. Given the success of the model Mr X is looking to double the fleet size at the end of the year when he has recovered the cost of all the cars. Everyone thought that UBER is giving opportunities to single drivers; however this example shows that just by leveraging the idea Mr X is minting money and also generating employment and economic activity.
Next came the airport. I had boarded the bus for the takeoff and it was taking a lot of time for people to fill into the bus. Everyone was entering a stage of sheer boredom when suddenly there was a huge buzz and everyone started looking outside and a lot of people became excited and started looking outside the bus. I was intrigued and looked out to see Sonam Kapoor in her normal stylish avatar. People started crazily clicking her pictures and requesting her for selfies which she was generally obliging. She seemed pretty pleased with the attention she was getting. After all she had just given her first hit (I guess) with Prem Ratan Dhan Payo and was enjoying the stardom.
The Hyderabad visit was good with clear indications of economic activity picking up and companies starting to do well. This is something that I have been talking of for some time and now more and more people seems to be recognizing the same. However the traffic in Hyderabad was crazy & the infrastructure seems to be collapsing like most Indian cities. Some mid cap multibaggers seem ripe for picking now. Today I also read about a positive outlook on Emerging Markets by Goldman Sachs, which for once puts me on the same page as them although I still think that they are hedging their bets while I am unequivocally bullish.
I am sure people will not be satisfied unless I write something on the markets so here goes. We are again entering into the FED FEAR season as December unfolds in a week’s time. My guess is that December is going to be a good month for the markets given the prevailing pessimism. The other two recent happenings have been the flop of the Governments Gold Schemes which I had predicted and the strong bounce back in global markets which also I had written about. Bullion i.e. Gold and Silver prices have fallen to year lows but could fall further. Indian markets continue to lag as people are unduly worried on reported earnings of the second quarter instead of focussing on the “Real Recovery” play in India. Foreign investor portfolio flows into India have plummeted from $ 39 billion last year to $12 billion YTD. Flows should substantially pick up next year as growth picks up sustainably and FED HIKE BOGEY plays out. Will write more on this later, signing off now as I reach back to Mumbai.