Why Vijay Kedia likes to buy 'sick' companies and watch them recover

Vijay Kedia believes that while the NSE, BSE and SEBI are doing their share to educate investors, a lot more can be done.

“Jab hrisht-pusht aadmi ya purana athlete jisne apna record prove kiya hain beemar padta hain, toh main uska wait karta hoon ki who kab wapas apne glory pe aayega (when a healthy person or a veteran athlete with a proven record takes ill, I wait for them to recover and return to their former glory)”

This is how veteran investor, Vijay Kedia, described his strategy while investing in stocks. Speaking to Moneycontrol, Kedia said that he has used this philosophy during most of his previous bets – from Patel Engineering to Sudarshan Chemicals.”

Patel Engineering, a tiny industry with a revenue of Rs 38.2 crore in FY24 had a great run in the market with its share price soaring to an all-time high of Rs 707 in 2008 when there was huge run up in infrastructure stocks buoyed by sentiment and a boom in infra spend. But in the downturn that followed, the company saw a steep fall giving up 80 percent of its gains by 2009. Thereafter, the stock languished for 14 years before rising again, once again driven by higher infra spends. The stock hit a low of Rs 8 in 2020 and has since gradually grown on the back of strong revenue growth and orderbook. Currently, the stock trades at Rs 56.

Also watch: Dream Run For Small & Mid Caps: How Can You Find Them In This Market? Ace Investor Vijay Kedia

According to Kedia, his focus is on identifying the themes first and then the stocks. Further describing how he recognises that a stocks is going to recover, Kedia says, “When wind and ship both move in the same direction, then the ship speeds up. If a ship goes against the wind, it will slow down. So I try to identify the theme and then the company. I see what the government wants.  But things take time to play out. It's not a pressure cooker. It is like dum cooking.”

According to Kedia, his focus is on identifying the themes first and then the stocks. Further describing how he recognizes that a stocks is going to recover, Kedia says, “When wind and ship both move in the same direction, then the ship speeds up. If a ship goes against the wind, it will slow down. So I try to identify the theme and then the company. I see what the government wants.  But things take time to play out. It's not a pressure cooker. It is like dum cooking.”

Ultimately Kedia says it is about looking at the bigger picture. Currently, he is bullish on the electric vehicle theme and says he is on look-out for interesting plays across the EV ecosystem. The other theme he is bullish on is infrastructure and capital goods, wherein he feels the market will see a boom similar to that seen between 2003-2007.

He says that the market rewards you as per your perception. “It is like the sea. You are coming to pick up pearls, or minerals or just to get your feet wet. So the person who is just coming to get his feet wet misses the big picture. My attention is on the big picture,” he says.

Talking about stocks he avoids completely, Kedia says it is companies where the management is not credible… no matter how popular the stock or theme is.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.