Session on Ranking Business Models by Ashish Kila

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Contributed by : Vaibhav Jain, CFA

CFA Society India, Mumbai Chapter hosted Ashish Kila on Thursday, 10th October. Ashish shared his thoughts on “Ranking of Business Model framework to select and allocate to great businesses”. Key takeaways of the session are as follows:

He presented the 4 C’s of investing – Cloning, Checklist, Capital Allocation and Checkout and elaborated on each one of them

  • Cloning – creating a universe of business to then further study. He suggested reading and following the domestic and global legendary investors and see the current themes going around globally, like QSR, food delivery, staffing
  • Checklist – selection of a stock based on 5 essential qualities (in the order of preference). All criteria need to be satisfied
    • Management
    • Longevity
    • No structural headwind / long term tailwind
    • Scalability
    • Favorable industry structure
  • Capital Allocation – Select on the basis of upside (using checklist) and then size them on the potential downside. Position sizing is the primary driver of portfolio returns. For this, he focused on 6 desirables
    • Valuation
    • Annuity
    • Switching cost
    • Optionality
    • Side Car Investing
    • Ability to capture dominant market share
  • Checkout

Ashish made the session extremely interesting by giving various examples in Indian context with each of the above points. He made a framework of ranking businesses on X-Y chart where X-axis showed Annuity and Y-axis for Switching cost.

The session ended with few questions from the participants and followed by the networking dinner.

VJ

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