Market Guru in talk with RJ Salil Acharya of Radio City: People can invest in companies with good business model & excellent management

Anil Singhvi, Managing Editor, Zee Business, says, people should check the quality of the business and its management/promoter while choosing the stocks. During a candid radio chat with RJ Salil Acharya, Radio City, 91.1 FM, Mumbai, Mr Singhvi said it is time to look towards the primary market, i.e. the IPO market and good quality IPOs with attractive valuation are likely to be out in the next two to three months.

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Starting the radio chat, RJ Salil said, I think, whether there is a corona, a lockdown or there is nothing, it doesn’t really matter, and the market keeps running like a horse. There was a danger when you said be careful about how much you want to keep while reinvesting. But today I want to ask about a tip from you, as many people ask me about the thing that should be checked in any share. However, my friends used to suggest that you can freely invest in a company that does not have any debt. But as an analyst what is the couple of things that you would suggest that one should check while choosing a stock? To which, Mr Singhvi said, the two biggest things are (i) the business should be good and (ii) the promoter or the management should be good. If the business is bad but the man is good then it is of no use. Similarly, if the business is good but the man is bad, then he will withdraw the money from the good business and will not let the investors earn. So, the first and most important thing is that the company in which you want to invest should have a good business model and the promoters and management team who runs them should be excellent. If you have done these two things then it doesn’t matter that at what price you buying those – whether you are taking it at a Nifty of 16,000 or 7,500. It makes a difference but not that much because a good business will make money for you in a long term. But if the business is bad and its promoter is bad, it means that your investment is sure to be zero. 

In his new question, RJ Salil asked, people, have a question that are the companies that provide dividend are secure as share prices are rising and at the same time, they also provide a dividend, which makes them happy. To which Mr Singhvi said, generally, there are two good things with the companies that provide dividend on a regular basis and they are (i) they are considered investor-friendly because they are distributing the money they earn among its investors and (ii) it is distributing when it earning, which means they are earning continuously. So, it shows the strength of the company’s balance sheet. Therefore, in general, the companies that provide dividend on a regular basis are considered good. And, especially, when the market is very bad and you feel that there is nothing to take then you should buy the companies with high dividend yield, i.e. the companies in which the dividend are very high in comparison to their price in the stock markets 

After this, RJ Salil asked about the shares that should be looked upon to which Mr Singhvi said, we always – every time, every day and every week - have an eye on good stocks but this is a time to have a look at the primary market, the IPO market. Four IPOs opened this week and I think many more IPOs will come where a lot of action will be seen. Shyam Metalics and Dodla Dairy were good IPOs. Even now, there is a huge pipeline of IPOs and in the next two to three months, good quality IPOs of big size with attractive valuations will be out, which will make good money on listing as well as in long term. Keep an eye on it.