The FANG of India

Have you heard the story of FANG ? Those tech giants which have changed the world making life easier? Oh I am sure you have! They are otherwise known as Facebook, Amazon, Netflix and Google. They are the stocks which have shown historic growth. We know that these companies are barely a decade or 2 old. Facebook for instance was listed in the year 2012, became a part of S&P 500 in the year 2013 and ever since there has been no turning back for the stock. FANG have added trillions in Market Cap in the S&P 500’s Market Cap. If you have been in the U.S market scene and not invested in these stocks, it would be very difficult for you to beat the market.

So what are the characteristics that makes these companies so special that they could beat the market returns? What allows them to grow? What makes everyone rush to buy these companies? Lets try to answer that.

  • Scaling Success.
    It is a general belief in the stock market that the bigger you get the more unsustainable it is for you to maintain that growth. These companies defied this belief of the market and have continuously managed to successfully maintain their growth rates.
  • Bigger Slice of a Bigger Pie.
    Whatever business mammoths are into, they expanded their markets and captured a big portion of these markets. While attracting customers and also changing the way their businesses are run.
  • Profitability.
    These companies are some of the biggest money-making machines. Facebook and Google are enormously profitable. Amazon and Netflix have lower margins now but they are continuously expand margins and will be bigger in the future.
  • Captain of the Pirate Ship.
    All these companies are headed towards Glory by their Founders. Facebook has Mark Zuckerberg, Google has Larry Page, Amazon has Jeff Bezos and Netflix has Reed Hastings. their founders passion and vision is what drove these businesses to such heights.

So these are the factors that are common in all of these companies which they share. Now comes the interesting part. Why analyse these companies in the first place? What good is the analysis if you could not apply it to another market? My market!

So what i tried was to run these characteristics of FANG to the Indian Markets. A lot of companies would fit the bar. But my assumption is one company which strongly fits the bar. Any Guesses? Its Avenue Supermarts Ltd. Avenues, as per what i feel fits the bar in the following ways.

  • Scaling Success.
    The numbers of Avenues is pretty solid. The company has been growing on a continuous basis in double digits since inception from close to 500 crores 10 years back to over 14000 crores in revenues TTM FY-18. The profit growth for 5 years has been more than 50% CAGR, and still is able to achieve the same with ease.
  • Bigger Slice of Bigger Pie.
    Avenues operate with their retail brand called D-Mart. D-Mark is a superstore which changed the face of Brick and Mortar Superstores. D-Mart Strategically expands in cities with huge population with growing incomes. They offer various discounts to the customers to lure them. They are cheaper than most other stores and quality better than most others. D-Mart has changed the face of Supermarts in India and is easily the most well-known brand wherever they are established.
  • Profitability.
    Avenues unlike the whole E-tailing business does not intend to attract the customer  only by offering massive discounts and taking losses in their books. They have built strategic partnership and focus solely on making profits at the same time offering discounts which cannot hamper their books.
  • The Captain of the Pirate Ship.
    Avenue was started by the legendary Radhakrishna Damani. Many might not know him but everyone who is in the D-street scene and business world knows him. He is the Ben Graham to the Warren Buffett of India (Rakesh Jhunjhunwala). His vision and his brilliant sense of business has driven Avenues to heights which one could only imagine.

This was my idea of the closest resemblance to the FANG. I am pretty sure that there are many more emerging FANG’s in India, so go ahead and apply these characteristics to filter companies and find another FANG.

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Happy Investing.