3 Borrowed Ideas with a SOBO Connection
3 Borrowed Ideas with a SOBO Connection
No Microcaps, All Special Situations with High Growth Potential
In public markets, ideas often come from conversations, communities, and shared knowledge. While analysis and research are paramount, many of the best insights originate from being part of groups where first-hand experiences and information are exchanged.
In this post, we will highlight three companies whose stories we've heard from different communities, demonstrating how collective insights can shape investment strategies. These are not buy recommendations but interesting observations about companies making waves in their respective fields.
1. A Family Legacy in Electronics
This Bombay-based family has a long-standing legacy in the electronics space, having established a well-known brand during the license raj era. However, post liberalization like many others, they faced intense competition, mounting losses, and increasing debt. The stock has taken a beating over time, but there’s something brewing within this company.
Recently, they announced a rights issue, sparking market rumors and renewed interest. With strong sector tailwinds—rising disposable income in India, driving demand for electronics—the company’s fortunes could see a turnaround. Known for good corporate governance, the promoters have a track record of doing what’s needed when times get tough. The current valuation, just under $100 million, is compelling, given that the company generates $100+ million in revenue, despite its debt. It is a family-run business with solid experience, manufacturing capability, and now, with the rights issue, it seems there could be more to come.
I got this idea from Mission Smile Services, a community that I’m glad to be part of, where such discussions provide valuable insights.
2. The Printer and Cartridge Business
The second idea is another South Bombay-based company that operates in the capital goods sector, specifically in a model similar to the printer and cartridge business—low margins on capital goods, high margins on accessories. Recently, they merged two of their entities, streamlining operations and setting the stage for growth.
With a monopoly-like position in their segment, the more capital goods they sell, the more high-margin accessories follow. The business is fairly valued, and with sector tailwinds supporting further sales, this is another company to watch. There is significant growth potential as the accessories business continues to outperform.
This idea was first shared with me by a member of a community I love called Regulation - 30
3. The South Bombay Giant’s De-Merger
The third company, also South Bombay-based, recently underwent a de-merger, which has led to some selling pressure in the market. However, on closer inspection, it’s evident that this business is fairly valued compared to its peers and has the backing of a strong, well-known brand.
With a solid promoter background and the de-merger creating an opportunity for investors to re-evaluate its potential, this is another interesting story to follow. The company’s financials and market positioning remain strong, despite the recent selling pressure, and there’s every reason to believe it will continue to perform well. I came across this idea on multiple forums
Conclusion: Communities Fuel Ideas
These three ideas, all from different people and communities, highlight how stock market opportunities often come from shared discussions. While none of these are recommendations (I am invested in all) they represent interesting observations in today’s market. All three are backed by wealthy South Bombay families, have experienced promoters, and enjoy sector tailwinds that could drive future growth.
The stock market is a place where ideas are shared, borrowed, and refined through communities. It’s through these conversations that we often find the most intriguing opportunities.
Disclaimer:
We want to emphasize that this communication should not be misconstrued as a recommendation, as we are not SEBI RIAs. Readers must conduct their due diligence and exercise caution. Therefore, we urge all readers to approach this opportunity with prudence and carefully consider the potential risks involved. While the prospects appear promising, it is essential to maintain a cautious approach and stay informed of the inherent dynamics of the industry.
Happy to chat and discuss this in detail
About Us -
Govind Shorewala - Entrepreneur (Mining, Textiles) & Investor (Private & Public Markets) → Reach out at: govind.shorewala@gmail.com
Aaroah Mittal - Early Stage VC → Reach out at: aaroah.m@people-group.com