What are Rising Giants?

 Note: the stocks mentioned in example are not for investment recommendation. They are strictly provided to better understand the concept. Blog writer own only few stocks mentioned in examples in personal investment account. 

Update on Jan, 2022:

We guessed every 12+1 stock correctly. The missing two are 

(1) Endurance Technologies Ltd and

(2) Info Edge (India) Ltd

Endurance Technologies is engaged in the business of manufacturing and selling of aluminium die casting (including alloy wheel), suspension, transmission and braking products with operations spread across India. 

The company was started by Anurag Jain with the help of his uncle Rahul Bajaj (The chairman of Bajaj group of companies) in 1985. Initially the company did only Aluminum die casting work for Bajaj Auto and Bajaj auto was their sole client till 2004 and the company ventured into various segments only after 2004.

Leading Auto ancillary company

Endurance is the largest Aluminum die casting company in India and they are also the largest 2&3W auto component manufacturer.

The two wheeler segment contributed 56% of the revenue for the company followed by the four-wheeler segment contributing 33% and the three -wheeler segment contributing 11% of the revenue.

Manufacturing facilities

Endurance has a total of 27 manufacturing facilities of which 17 are in India and 7 in Italy and 3 in Germany. It derives 71% of the revenue from India and the remaining 29% from the Europe market.

Product offerings

Apart from the Die – casting business (56% of the revenue), the company also manufactures Suspensions (26% of the revenue), Braking system and Transmissions (7% of the revenue). Their Aftermarket services contributed 4% of the revenue.

Growth via Inorganic route

The company has done more than 7 acquisitions since 2004 [5] and in the FY20, the company has made one significant move by acquiring the leading Italian Brake company Grimeca for 23 Cr [6].

The company reiterated that it is constantly in look out for acquiring companies which might add value to its value chain.

R&D

The company has 4[7] DISR approved R&D facilities and the R&D expenses stood at 23.6 crores[8] for FY20. Endurance has received 11 patents and 7 design registration. The company is also waiting for the approval of its 65 patent applications.

Test track facility

The company has recently developed a world class test proving ground spread across 26 acres near its Aurangabad plant and this enables the company to undertake comprehensive testing of its brake products and they also allow leading OEM’s to test their product in the facility which allows the company to maintain a stable relationship with its customers.

Strong clientele base

The company is one of the leading supplier to the OEM’s in India and abroad and the client list include Heromoto Corp , Royal Enfield, Bajaj Auto, TVS motors, Tata motors and many more. Their abroad client includes Volkswagen, Fiat Chrysler, KTM, etc..

However, Bajaj Auto remains as one of the most dominant client of the company accounting of 39% of the overall revenue in FY 20 [4]. In its overseas operations, its top three client contributed 70% of the revenue from the European operations.

Healthy backward integration

The company has forayed into the Aluminum forging business and they will be manufacturing their own clamps which were imported earlier. This will enable the company to grow its aluminum forging proprietary business for other usage in 2-wheelers, 3-wheelers, 4-wheelers, and electric vehicles.

Expansion of Aftermarket sales

The company has been expanding its aftermarket solutions by providing a wide range of Value-added products. Currently, the company has a network of 335 distributors and the company has planned to expand in the Tier2 & Tier3 cities.

Growth strategy:

1.The company has started trading 2W & 3W auto parts not manufactured by the company

2. They have also laid down plans for entering new countries every year in line with OEMs.

3.On account of higher demand of disc and brake system the company plans to expand its manufacturing capacity by 90%.

Info Edge (India) Ltd

Info Edge is India’s premier online classifieds company with a portfolio of brands. It owns various brands in different fields like naukri.com (online recruitment), 99acres.com (online real estate), jeevansathi.com (online matrimonial) as well as shiksha.com (online education information services). It also acts as an investor and has invested in many start-ups in the online space and is actively growing its investment portfolio.

Recruitment Vertical (70% of revenues)

The company's largest business is online recruitment run under naukri.com. It is a long-standing and profitable enterprise and also is the principal generator of cash flows for the company. It has further extended its offering with niche segment products like iimjobs.com, bigshyft.com, jobhai.com, Naukri fastforward services and ambitionbox.com. It is the largest player in its field and accounts for ~90% of traffic share among competition. It also accounts for more than 100% profits of the industry due to its dominance. 

Real-Estate Vertical (17% of revenues)

Company is the sole owner of real estate brand 99acres.com. The vertical continues to maintain its leadership position with an overall traffic share in excess of 40%. 

The number of paid listings grew from 3 million to 3.4 million in FY20 and the paid listings accounted for 64% of total listings on the website. [4] Presently, 82% of the customers are brokers & the rest 18% are the builders. However, Brokers accounts for only 52% of paying customers while Builders accounts for 42%. 

Others (13% of revenues)

The company owns a matrimonial website jeevansathi.com which is among the three principal players in the market. The vertical has reoriented its business with a focus on certain specific communities with a clear thrust in North & West India. More than 90% of the users access jeevansathi from their mobile & the mobile app continues to be best in the industry. 

Info Edge is also present in online education classifieds space with its brand shiksha.com. The website has been strategically positioned as a platform that helps students research and apply undergraduate and postgraduate programs, by providing useful information on careers, exams, colleges and courses.

Independence of operations

While the Company runs multiple brands, each of the brands are managed by independent teams with their respective management models that are well supported by the corporate functions like IT, Finance, Administration and Human Resource Management. 

Investee Companies

Info Edge has widened the scope of its business by investing as a financial investor in brands that have been conceptualised and developed by separate enterprises. These investments are into new ideas and products integrated with a sound and enterprising management teams. The company invests in these enterprises through its subsidiary ‘Startup Investments (Holding) Ltd’ & its newly set-up fund Info Edge Venture Fund. 

Details of some of these major brands in which company has invested in are:-

Zomato (19.3% stake)

It generates revenue from advertisements of restaurants and lead sales. Zomato is world’s leading restaurant search, discovery and transaction platform.

Policybazaar (15.1% stake)

It is India's online price comparison site for insurance. It is the leader in its category with huge potential market to exploit. Other key investors in the startup includes Softbank, Tamasek, Tencent & Tiger Global. 

NoPaperForms (48.1% stake)

The website Nopaperforms.com runs a business of providing a SaaS platform which has a suite of software products including lead management system, application management system, campaign management etc. 

HappilyUnmarried (Ustraa) (32.7% stake)

The business generates revenues from design and sale of fun creative products as also a men’s grooming range (“Ustraa”) and has a large addressable market. Shareholdings in all the investee companies can be checked here.

Alternative Investment Fund

The company launched its first scheme of trust, Info Edge Venture Fund with the objective to generate financial results for the contributors by investing in tech & tech-enabled entities that provide technology that benefit customers at large.

The total proposed corpus of the scheme is 750 crores and Company has committed an amount of 350 crores to scheme of which 150 crores has already been disbursed till date. The company is also in discussions with potential investors for raising upto 50% of total corpus for contribution of the scheme.

Update on December 2021,

Rising Giants focussed more on small and midcaps franchises which are dominant market leaders in specific segments but where the market cap is below Rs 70,000 crore. It is focussed on identifying master franchises -- diamonds in the dust -- in this sub $10 billion sub Rs 70,000 crore base because they reckon that there is good chance that these businesses will compound at 25% over the next four-five years.

There no publicly available information about it yet on Nov 2021.

However, based on the philosophy, few names we can select for our purpose. Few of them are from other portfolios and few of them are mentioned in different purposes in their interviews.

Update:  recent YouTube video of their channel showed some details about the rising giant holding. Out of 15, one can search and guess 12+1 stocks based on filter criteria. Although, they did not reveal all the holding, any educated guess will be sufficient here.

Possible Rising Giant.

1. Relaxo Footwears : Relaxo Footwears Limited is the largest footwear manufacturing company in India, which deals in non-leather products i.e. rubber/EVA slippers, canvas shoes, sport shoes, sandals, school shoes and other types of footwear. It is also the leader in 'value' segment footwear. It has a portfolio of renowned brands like Relaxo, Sparx, Flite and Bahamas. The company sells its products through retailers served through distributors, retail outlets, exports and e-commerce / modern trade. It was removed from Coffee can portfolio recently.

2. Grindwell Norton Ltd: Grindwell Norton in the business of Abrasives and Refractory Products. GNO offers the widest range of cutting-edge Abrasive products to the Indian market. While the vast majority of these products are made by GNO in India, some are sourced from other plants of Saint-Gobain or from third parties.

3. Astral Ltd: Astral Poly Technik Ltd was established in 1996, with the aim to manufacture pro-India plumbing and drainage systems in the country. It has also forayed into adhesive business over years. Piping Division (77% of revenues) : This is the main business of the company, it manufactures pipes and fittings for plumbing, sewerage, agriculture, industries, fire sprinklers. It also manufactures pipes for conduit & cable protection, ancillary products, urban infra and ducting.

4. L&T Technology Services Ltd: LTTS is an engineering services provider incorporated in 2012, offers engineering,, research and development (ER&D) and digitalization solutions to companies in the areas such as Transportation, Industrial Products, Telecom and Hi-Tech, Medical Devices and Plant Engineering. LTTS’ customer base includes 69 Fortune 500 companies and 53 of the world’s top ER&D companies.The business also provides digital engineering advisory services.The company went public on September 23, 2016. LTTS has 296 global clients in 25+ countries.

5. Alkyl Amines Chemicals Ltd: Incorporated in 1979 by Mr Yogesh Kothari, Alkyl Amines is a leading manufacturer of aliphatic amines in India. Aliphatic amines are products derived from Ammonia (NH3) by displacement of H2 in the Ammonia molecule by other radicals (R) such as Methyl, Ethyl and Propyl.

6. GMM Pfaudler Ltd: GMM Pfaudler manufactures corrosion resistant glass-lined equipments. It is a leading supplier of process equipments to the pharmaceutical and chemical industries. Over the years GMMP has diversified its product portfolio to include Mixing Systems, Filtration & Drying Equipment, Engineered Systems and Heavy Engineering Equipments. It is already part of their Little champ portfolio.

7. AAVAS Financiers Ltd: AAVAS Financiers Limited is primarily engaged in the business of providing housing loan to customers belonging to low and middle income segment in semi-urban and rural areas.

8. Cholamandalam Investment & Finance Company Ltd: Cholamandalam Investment & Finance Company is one of the premier diversified non-banking finance companies in India, engaged in providing vehicle finance, home loans and Loan against property.

9. Galaxy Surfactants Ltd : Galaxy Surfactants Ltd was Incorporated in 1986. It’s a leading manufacturer of Performance Surfactants and Specialty Care products with over 205 product grades. These products are used in consumer-centric Home and Personal care products like hair care, oral care, skin care, cosmetics, soap, shampoo, lotion, detergent, cleaning products, etc. Preferred suppliers to leading MNC’s, Regional and Local FMCG brands. The company is India’s Largest Manufacturer of Oleo chemical-based Surfactants and Specialty Care Products for Home Care and Personal Care Industries

10. ICICI Lombard General Insurance Company Ltd: ICICI Lombard GIC is one of the leading private sector general insurance companies in India with a Gross Written Premium (GWP) of Rs135.92 billion for the year ended March 31, 2020. The company issued over 26.2 million policies and settled over 1.86 million claims as on March 31, 2020.

11. Dr Lal Pathlabs Ltd: Dr. Lal PathLabs Limited is one of India’s leading consumer healthcare brand in diagnostic services. It has an integrated nationwide network, where patients and healthcare providers are offered a broad range of diagnostic and related healthcare tests and services for use in: core testing, patient diagnosis and the prevention, monitoring and treatment of disease and other health conditions. The services of DLPL are aimed at individual patients, hospitals and other healthcare providers and corporates.

12. Page Industries Ltd: Incorporated in 1995, Page Industries Limited is the exclusive licensee of JOCKEY International Inc. for manufacturing, distribution and marketing of the JOCKEY brand in India, Sri Lanka, Bangladesh, Nepal and the UAE. Page Industries is also the exclusive licensee of Speedo International Ltd. for the manufacturing, marketing and distribution of the Speedo brand in India. JOCKEY is the company’s flagship brand and a market leader in the innerwear category. Page Industries and Brand Jockey have pioneered the innerwear industry on many fronts. The company has established the premium segment in the innerwear category in India through brand Jockey. In 2011, Speedo International Limited appointed Page Industries as their sole licensee for the manufacturing, marketing and distribution of the Speedo brand in India. Within just six years of its operations, the brand is present in over 1286 stores in 86 cities and towns across the country.

12+1. Suprajit Engineering Ltd: Suprajit Engineering promoted by Mr Ajith Kumar Rai, started as a single-product (cables) to TVS Motor in 1985. Over the years, Suprajit has emerged as the largest supplier (market share of ~65%) of mechanical cables to the domestic 2W and passenger vehicle (PV) market with rising revenue share from aftermarket and exports.