Greeker

Depending upon "The Kindness of Strangers" Warren Buffett coined the phrase. Prof. Sanjay Bakshi made it popular. "If a business could do that without recourse to outside capital markets – no dilution, no need for borrowing money, there’s preferably large positive free cash flow which is sufficient to fund all growth, then there is no need to depend on outside capital markets or, as what Buffett calls it." - Prof Bakshi Let us look at one Bank as an example. IDFC First Bank This is what Mr. Vaidyanathan shared on LinkedIn yesterday. Should we celebrate it or look at it with a "The Kindness of Strangers" lens? Yes, scaling up the banking and finance business is not easy. You need equity fundraising from time to time. But when you compare it with the banks that have done a phenomenal job over decades, you will see that while all good banks have diluted equity over the years, their rate of change in equity capital and their size of equity capital is very small compared to IDFC First Bank. And it shows up in the ROE. You can see how the ROE of IDFC First Bank is the lowest. Even though it increased from 3% (5-yr avg) to 10% in the last year, with this new giant fundraising, IDFC has further kicked the ROE can forward by at least 3-4 years. See, we have deep respect for MR. Vaidyanathan and other promoters. It is not a post to mock anyone. Also, we have deep respect for investors who identify and invest in stocks that are available at an attractive valuation and may experience a very high rate of positive change that will help them get high returns. Investing in IDFC Bank may qualify for the same. However, our view, at Zen Nivesh, is simple. IDFC First Bank is significantly exposed to the risk of "Depending Upon The Kindness of Strangers". "You Only Have To Get Unlucky Once"- Prof Sanjay Bakshi Thanks for reading🙏 If you find value in the post, just 2 steps can help us grow our new venture: 1. FOLLOW @ZenNivesh 2. REPOST this post That will help us to reach out to more investors.