Axis Mutual Fund conducted a study of how investors behaved and the returns they made between

2003 and 2022, the infamous behaviour gap showed up loud and clear. For the uninitiated, the
behaviour gap is a term made popular by a financial planner named Carl Richards to show that poor
investment behaviour means that investors typically underperform the market.
And the study showed that
in equity mutual funds,
investors make 5% lower
returns every year.
Switching constantly eats
away the returns.
And our behaviour
extends beyond this.
Forget trying to switch
between funds. We
believe we know exactly
how the market is going to
behave. We try to
perfectly time the market
always. If it falls by 10%,
we believe it’ll fall some
more. We might pull out
some money to invest
when it heads lower. We
wait. Only to find the
market rising.

Just think back to April

2022. The Sensex (a benchmark index that tracks the 30 biggest companies in India) climbed to
60,000. People whispered that it was on its way to hit 70,000 soon. But just a couple of months later,
it dropped quickly to 51,000.
How many of us took some money off the table at the high and later ‘bought the dip’? Probably no
one.

Imagine you started investing in

the Sensex in 2000. Over the past
2 decades, you would’ve lived
through the dot-com crisis,
surprise changes in governments,
the global financial crisis, the
European debt crisis, the taper
tantrum, demonetisation, and the
pandemic. That’s not even an
exhaustive list.
But what if you decided to time the
market during this period? You
tried exiting and entering at
various periods. And you stupidly
missed some of the best
performing days in the market in
this quest to catch the bottom?
The end result?

If you’d stayed invested, ₹1 lakh

worth of your investment would’ve
grown to ₹11.67 lakhs. But if you’d missed just 10 of the best days in these 22 years, you would be
left with just ₹5.21 lakhs. That’s a huge difference.
So remember, doing nothing is a choice as well. And often, it’s the best choice.
Source : https://finshots.in/markets/dear-investor-stay-still/
Starting from the stats, a tyre without carbon black runs for only around 8,000km. But, infuse a little of
the miracle material into it and a tyre can easily survive for 50,000km. But an average tyre contains
around 3 kg of carbon black. That means, tyre manufacturers consume the carbon black in bulk. And
such is the demand that over 70% of carbon black’s demand comes from the tyre industry.
Only 30–40% of the demand for tyres comes from auto manufacturers. The rest of the demand is
generated by the replacement market.
Now there are a few carbon black manufacturers out there. Not too many but a fair number. And
there’s one in particular that stands out — PCBL (earlier known as Phillips Carbon Black). Part of the
RP-Sanjiv Goenka Group, this 60-year-old company commands nearly a 50% market share in India.
It’s even the seventh largest carbon black player in the world.
It pretty much dominates the
industry.
And PCBL has some
tailwinds that could work in
its favour.
For starters, carmakers are
seeing strong sales as
disposable incomes rise and
loans become even more
easily accessible. That
means tyre companies are
also turning bullish and on
track to spend more than
₹24,000 crores over the
next 3 years to set up new
manufacturing.

But the big picture is that

two key exporters of carbon
black — Russia and China
are facing their own
challenges.

Russia, for instance, is facing sanctions from most of the world. And since over half of Europe’s
carbon black supply comes from Russia, it’s a great time for PCBL to step up and fill the void. Also,
China is seeing a supply constraint. Their wage costs are rising, the government is keeping a tab on
pollution and carbon black manufacturers are consolidating. It may not be able to easily offer the low
prices it once did.
It seems like it’s the perfect storm for PCBL.
And it’s not sitting idly. It’s gearing up to expand its capacity too. It’s building out a new manufacturing
plant in Chennai. It’s also expanding its current capacity in anticipation of rising demand. Both
domestically and globally.
But at the end of the day, there’s a big risk — its fate is deeply intertwined with the tyre industry. So, if
people decide to tighten their purses, they won’t buy cars, bikes, trucks and tractors. They may even
postpone replacing their tyres. All this could hurt the demand for carbon black.
And while its on course to diversify a bit, it could still take a bit of time. Its speciality grade carbon
which is used in plastic pipes, food trays etc still only makes up 7% of its sales. And that’s where the
money actually lies — and you can see that slowly playing out in PCBL’s EBITDA (earnings before
interest, tax, depreciation and amortisation) per ton which has risen from ₹5,300 in FY16 to ₹14,400
in FY22.
 Then there’s the matter of price
fluctuations for its raw materials — Carbon
Black Feedstock (CBFS), that’s derived
from oil and natural gas. High crude
prices can stay elevated for extended
periods and hurt the margins of the
company. Sure, PCBL has deals with tyre
makers that incorporates a raw material
based pricing formula. But, it may not be
able to pass on the full extent of its input
cost inflation all the time.
And not to forget — PCBL imports nearly
80% of its raw materials, but, despite
being a major global player, its exports
are still only 30% of its sales. That
means, currency fluctuations can also
hurt the prospects of the company.
Put all this together and you could see why the stock has only risen by 3% over the past year.
Investors still seem to be on the fence when it comes to dealing with its cyclicality.

Read full article : https://finshots.in/markets/why-are-tyres-black/

With the increase in number of travelling and destination weddings, luggage industry in India is having
one of its best times.
And there’s one company in particular that’s poised to benefit from these tailwinds. We’re talking
about VIP Industries, a name that’s synonymous with luggage in India. And a brand that dominates
the organised luggage market with a 45% market share. In just the first 9 months of FY23, it has
clocked the highest net profits in at least the past decade.
But getting here hasn’t really been
an easy journey for VIP.
It all began in the 1970s. VIP
started its journey with a capital of
₹1 crore and made briefcases
priced at ₹50–100 for the office
goer. The unorganized market
mushroomed in a big way and
started creating soft luggage with
fabric. VIP specialised in hard
luggage back then and didn’t
foresee customer preferences
changing. And while it launched a
sub-brand called Skybags for soft
luggage in the 1980s, it didn’t pump
in enough money to build a brand
and ward off competition.
Its market share began to drop.
Then came the liberalisation wave of the 1990s and it swept the rug from under VIP’s feet. Samsonite,
a global brand, stepped into the Indian market. Its market share dropped further.
VIP’s market share tumbled from the 80% it once used to command to below 50%.
So, in 2008, when Radhika Piramal, the daughter of VIP’s chairman finally took the reins, she had her
work cut out. She revamped the VIP image and positioned each brand distinctly. A brand called
Carlton which VIP acquired in 2004
became the premium offering.
Aristocrat was slotted into the mass
market. She even brought back
Skybags in 2011 but concentrated
on design and vibrancy for the
youth.
Currently, the VIP brand contributes
to 24% of the revenues, Aristocrat
has a 32% share, and Skybags
grabs the lion’s share with 33%

And you could argue that the

runway is long for the company.
Despite the introduction of GST, the
unorganized market still holds a
60% share of the market. As India’s
economy formalises even further, you could see unorganised vendors shrink and VIP will be in a
sweet spot to pounce on their business.
The other thing is that the unorganised sector is known for churning out soft luggage variants. And
there seems to be an increasing preference for hard luggage these days. Its market share is expected
to rise from just 30% today to over 55% in the next few years. So even if GST isn’t the death knell,
customer preferences can alter the landscape in favour of VIP quite quickly.
We’re not just talking about Samsonite which has a 90% share in the premium segment. Or its sub-
brand American Tourister which has captured people’s imagination in the mid-segment. The mass
market features Safari Industries which has been around since the 1980s. While it doesn’t probably
have as much brand recall as VIP, it doesn’t seem to matter in the mass market category. Safari
seems to hit the sweet spot for India’s brand affinity and value pricing. And in the past couple of years,
its market share in the mass market segment has risen from 19% to 26%.
Investors seem excited about Safari too. So in the past year, while VIP’s stock has risen only by 30%,
Safari has returned a whopping 100%.
The other thing is that VIP’s bets on expansion haven’t played out as expected.
For starters, there’s the women’s handbag brand called Caprese. It was launched nearly a decade
ago and it even roped in Bollywood star Alia Bhatt as its brand ambassador. But it contributes a
measly 4% to VIP’s revenues. And while the management is certain that it’s a segment that they’re
going to put all their efforts into over the next 5 years, the past experience doesn’t inspire a lot of
confidence.
VIP’s international plans have also fallen flat. Back in 2017, it said that it planned to increase its
exports to make up 25% of revenues, it is still stuck at a measly 5%. And while VIP is making noise
about its intention to produce white-label luggage for retailers in the US and UK (which they can
stamp with their own brand name), it’s too early to say how this will play out.

Read full article at : https://finshots.in/markets/the-ups-and-downs-of-being-vip/