Betting on good R&D! Vijay Kedia exhibits the way in which & makes a killing


NEW DELHI: If an organization is investing closely on R&D again and again, does it make sense to purchase its inventory?

Seasoned investor Vijay Kedia entered Tejas Networks final yr, and the scrip has since grow to be certainly one of his prime three fairness bets.

Explaining his investing thesis for the inventory, the Dalal Street veteran says Tejas is amongst a couple of firms, which spend about 10 per cent of their revenues on analysis and growth.

“Inform me one firm in India you understand that spends say 10 per cent of its income yearly, yr on yr in R&D. Tejas is certainly one of such firms,” Kedia informed ETNOW throughout an interview. He hastened so as to add his view will not be a suggestion to purchase the inventory.

Kedia purchased the inventory within the Rs 40-60 vary.

On Friday, the scrip traded at Rs 137 on BSE, up 246 per cent from the worth at which Kedia began shopping for the inventory. Even at Rs 60 apiece, his funding made him 130 per cent returns.

Can one nonetheless purchase it? “I can not say if you should buy Tejas at Rs 110 or Rs 120 or Rs 130. Please do your homework,” Kedia mentioned.

Tejas has been spending 10 per cent of its income on R&D and has thus far invested greater than Rs 1,200-1,300 crore on it this far.

In June-July, the inventory was out there at a market-cap of Rs 400-500 crore and the corporate had Rs 300 crore money within the financial institution.

“They’ve developed a product — it takes time – which you can’t construct in a rush if it’s important to compete with Nokia or Ericsson or Huawei. That is what Tejas is doing. It takes time, as a result of in India R&D spends are very low. They’re nothing in contrast with what worldwide firms are doing,” Kedia mentioned.

He mentioned the product that Tejas has developed is utilized in fibre-to-home and 3G, 4G and 5G companies. “They’ve good technical data and are competing with all Fortune 500 and Fortune 50 firms on the planet. Due to Atmanirbhar, Mr Modi’s imaginative and prescient of India, the time has come to take a look at such firms. That’s the reason I’ve purchased the inventory. I could go incorrect, I have no idea,” he mentioned.

Information confirmed shares of Tejas Networks have risen 385 per cent from their 52-week low of Rs 28.50 hit in Could, 2020.

Kedia was first seen getting into Tejas within the June quarter with a 1.52 per cent stake buy. By the top of September quarter, he elevated his holding to 4.21 per cent. The corporate is but to report December quarter shareholding knowledge.

“In April and Could, I many sleepless nights and I assumed the world had come to an finish. I had simply 5-6 per cent in liquid money. I bought some shares at no matter worth. After that I didn’t purchase something significant in amount. I purchased possibly Ramco Systems and Tejas and a few NIIT. However that was at very low costs. Mind Design, once more, was one other inventory I purchased at a really low worth. Now, they’ve gone up from my shopping for costs. So, please watch out and don’t purchase together with your eyes shut. Do your homework,” he informed ETNOW.

Tejas will not be a extensively tracked inventory and had only one ‘outperform’ ranking as per publicly out there Reuters Eikon database as of Wednesday, January 6.