Vijay Kedia - Journey from 35K to 500 Crores

 

He was born and brought up in Kolkata to a Marwadi family. The family was in the business of stockbroking. His luck in education didn’t favor him and he was brought to fads and fancies of the stock market. He started his journey as a trader in the stock market at the age of 19. This was not only out of sheer passion but because of compulsion when his father passed away. He said that he was left with no choice but to join the family business of stockbroking. He has been seen saying that the stock market is the only place where one can try his luck without much education, experience, capital, and savings at any time.

Beginner’s luck played its part and for the first six months, he flared at his work. In no time he learned the trick of the trade. However, soon his beginner’s luck started falling out and his losing trades outpaced his winning trades. Naive Kedia was also brought to a point where his mother was about to sell ornaments to do away his dues. Somehow Mr. Kedia was able to dodge the situation but the memories repeatedly flash when he shares this part, he said. And at this point in life, he learned that nobody is invincible. It is truly said that lessons which lasts, comes with a cost, a great one. Similarly, Mr. Kedia learned his biggest lesson to place a stop-loss while trading. He says without stop loss a trader cannot survive in the market.

After a few years reclining on odd jobs, he was desperate to come to Mumbai, then Bombay to try his luck at the stock market and left Kolkata. Twice, he tried his luck in Bombay, but that did not paved way to be a member of the stock exchange. He came back to Kolkata and started supplying materials to tea gardens and quit dreaming to be a member of the stock exchange. He, again, decided to give a shot for the third time and stayed in Bombay for a year and a half which turned out to be a blessing in disguise. This gave him an opportunity to join the Bull Run fabricated by Harshad Mehta of the decade. He was quick enough to acquire knowledge about the stock and investing process. He also started following successful investors and read about different companies. He believes that ‘Passion is a greater force than luck.’ During the Bull Run, he decided to sell off his portfolio worth of Rs. 35,000 and invest in only ONE company. The investment shot up 10 times in a year. This was the start of a series of multibagger lined up which made Mr. Kedia an awestruck Indian investor of the time.

Investment Philosophies

Mr. Kedia made his career by investing in mid-cap stocks. He has never invested in large-cap companies and his love for mid-cap businesses is beyond one’s imagination. He lives by an investment mantra which he has coined as ‘SMILE’ approach to investing. In the acronym ‘SMILE’,

S stands for a company small in size. He says that this should not be misunderstood as a small-cap company. Small in size should be accentuated in terms of the Company’s market share vis-à-vis the total market size of the industry.

M stands for management with medium in experience. He adds that the management should have a clean track record with fire in the belly to grow the company for the next 15-20 years.

L stands for management with large aspirations. This is the most important yardstick to be looked at in a management, says Mr. Kedia. He adds that for a company to reach from a small size to medium size, the management should aspire large enough.

E stands for extra large in market potential. He says that for a company to grow its size from small size to medium and so on, the market should have that potential to pan these out.

Given the above concept, it would be shocking to know that Mr. Kedia does not give much importance to return on equity, return on capital employed and other financial ratios. He tactfully adds that one cannot get a small company which is cheap and has prime return ratios too. Damn, that’s true! And given the illiquid nature of these companies, it helps Mr. Kedia to calm his reflexes and remain invested through thick and thin of the business cycle. His philosophy of investing hits a perfect cord into mid-caps as they are comparatively cheaper. Probability of multiplication is higher!

Kedia says it’s very difficult to find stocks which are neglected and investors won’t find too many hidden gems. Patience will help in generating alpha, he said. And that’s important because he expects 2018 may be a tough year for Indian markets due to the possibility of an earlier election.

"To believe in the story, to stick to the story and sail through the tough times will be the alpha."