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    Lapis Compounders Contest 13.05.2019

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    Yash Nyati
    Lapis India Capital Advisors is holding a contest for ISB students to identify an Indian stock that could provide a 20% annualized return over 10 years. Students may form teams of up to 3 members to submit investment theses, which will be evaluated in 3 rounds. The top team will receive a Rs. 100,000 cash prize to be shared among members. The contest aims to identify high-quality "compounder" stocks capable of sustainably growing earnings and compounding value over the long run.

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    Lapis Compounders Contest 13.05.2019

    Uploaded by

    Yash Nyati
    96 views2 pages
    Lapis India Capital Advisors is holding a contest for ISB students to identify an Indian stock that could provide a 20% annualized return over 10 years. Students may form teams of up to 3 members to submit investment theses, which will be evaluated in 3 rounds. The top team will receive a Rs. 100,000 cash prize to be shared among members. The contest aims to identify high-quality "compounder" stocks capable of sustainably growing earnings and compounding value over the long run.

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    Business school Lapis case study

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    Lapis India Capital Advisors is holding a contest for ISB students to identify an Indian stock that could provide a 20% annualized return over 10 years. Students may form teams of up to 3 members to submit investment theses, which will be evaluated in 3 rounds. The top team will receive a Rs. 100,000 cash prize to be shared among members. The contest aims to identify high-quality "compounder" stocks capable of sustainably growing earnings and compounding value over the long run.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    96 views2 pages

    Lapis Compounders Contest 13.05.2019

    Uploaded by

    Yash Nyati
    Lapis India Capital Advisors is holding a contest for ISB students to identify an Indian stock that could provide a 20% annualized return over 10 years. Students may form teams of up to 3 members to submit investment theses, which will be evaluated in 3 rounds. The top team will receive a Rs. 100,000 cash prize to be shared among members. The contest aims to identify high-quality "compounder" stocks capable of sustainably growing earnings and compounding value over the long run.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Lapis Compounders Contest

    ISB May 2019

    Lapis Background
    • Lapis India Capital Advisors Private Limited (Lapis), founded by the former senior management
    of SUN-Apollo Real Estate Advisors Private Limited, is a privately held investment
    advisor/portfolio manager in India, with offices in Mumbai (www.lapisindiacapital.com).
    • Lapis has two main businesses
    o Real Estate – providing non-binding real estate investment advisory services to global
    institutional investors, club/commingled, discretionary funds with respect to
    opportunistic investments in India real estate. Lapis is the advisor to the manager of
    SUN-Apollo India Real Estate Fund LLC, one of the earliest India-focused real estate
    funds, which raised US$630 million in 2006/07.
    o Public Equity – providing portfolio management services to domestic clients seeking
    to invest in public equity in India. Lapis is registered with SEBI as a Portfolio Manager.

    Lapis Compounders Contest


    Objective:
    • To identify one stock investment (business listed on BSE/NSE) that would provide a 20% return
    CAGR over the next 10 years
    • Parameters that must be considered
    o The business must be a ‘Compounder’ or have potential to become a ‘Compounder’
    –businesses that compound earnings and cashflows with high returns on capital over
    long periods of time
    o The company selected should NOT be in the business of lending money i.e. no banks,
    NBFCs or other types of lending businesses
    o Market capitalization of the company must be between Rs 500 Cr and Rs 10,000 Cr as
    of 31st March 2019

    Useful Pointers
    • We believe the fair value of a business is a function of the earnings power of the business
    • Over time, Compounders are able to not only grow their earnings at a healthy rate but also
    sustain earnings at the higher levels, resulting in a structural increase in earnings power of the
    business, and consequently a sustained increase in fair value of the business
    • Stock returns from compounders are a function of 2 variables: 1) sustained increase in
    earnings power of the business 2) Valuation re-rating / de-rating (some examples of
    businesses compounding from 2010-18 are shown below). Contestants would be expected to
    provide their views on both variables for the stock they have selected. We would prefer
    contest entries where the larger part of the return expectation is earnings driven.
    Lapis Compounders Contest
    ISB May 2019

    Contest Rules
    • Students may form a team of up to 3 members for this contest
    • Contest Start date: 13th May 2019
    • Round 1: Investment thesis (submission by 15th June 2019)
    o Write-up: 5-7 pages explaining the investment thesis. This should include (but may
    not be limited to):
    ▪ Company’s competitive advantage
    ▪ 10-year growth opportunity for the business
    ▪ Assessment of management quality
    ▪ Potential risks to investment thesis
    o Financial analysis:
    ▪ Historic financials for last 2 years of the company
    ▪ Projections for next 2 years (FY20 and FY21)
    ▪ Financial analysis for the business – should include cash generation potential
    of the business, view on profit margins and RoE for the business
    ▪ Expected return based on earnings compounding and potential valuation re-
    rating / de-rating

    Shortlist for Round 2: 10 teams with the best entries would be selected to move on to round 2

    • Round 2: Addressing Lapis questions (22nd June to 30th June 2019)


    o Lapis team will pose a set of questions in relation to Round 1 submissions of the
    selected teams
    o Contestants would be asked to respond to the questions in writing within a week, this
    could be a 2-3 page additional write-up

    Shortlist for Final Round: 5 teams would be selected to move on to the Final Round

    • Final Round: Presentation to Lapis senior team (around 1st week of July 2019)
    o Senior management from Lapis would travel to ISB
    o Teams would present their stock ideas to Lapis management

    1 team would be selected as the winner of the contest

    Contest Prizes
    ▪ Each member of Teams 6 - 10 would receive a Merit Certificate from Lapis
    ▪ Each member of Teams 2 – 5 would receive a Merit Certificate and a gift from Lapis
    ▪ The winning team would receive a Rs 100,000/- cash prize, which would be shared by team
    members. In addition, each member of the winning team would receive a Merit Certificate
    and a gift from Lapis.

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