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

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

Seasoned investor Vijay Kedia entered Tejas Networks final 12 months, and the scrip has since grow to be certainly one of his high three fairness bets.

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

“Tell me one company in India you know that spends say 10 per cent of its revenue every year, year on year in R&D. Tejas is one of such companies,” Kedia advised ETNOW throughout an interview. He hastened so as to add his view is just not a advice 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 value 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 cannot say if you can buy Tejas at Rs 110 or Rs 120 or Rs 130. Please do your homework,” Kedia stated.

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 accessible at a market-cap of Rs 400-500 crore and the corporate had Rs 300 crore money within the financial institution.

“They have developed a product — it takes time – which you can not construct in a rush if you must compete with Nokia or Ericsson or Huawei. This is what Tejas is doing. It takes time, as a result of in India R&D spends are very low. They are nothing in contrast with what worldwide firms are doing,” Kedia stated.

He stated the product that Tejas has developed is utilized in fibre-to-home and 3G, 4G and 5G providers. “They have good technical knowledge and are competing with all Fortune 500 and Fortune 50 companies in the world. Because of Atmanirbhar, Mr Modi’s vision of India, the time has come to look at such companies. That is why I have bought the stock. I may go wrong, I do not know,” he stated.

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

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

“In April and May, I many sleepless nights and I thought the world had come to an end. I had just 5-6 per cent in liquid cash. I sold some shares at whatever price. After that I did not buy anything meaningful in quantity. I bought maybe Ramco Systems and Tejas and some NIIT. But that was at very low prices. Intellect Design, again, was another stock I bought at a very low price. Now, they have gone up from my buying prices. So, please be careful and do not buy with your eyes shut. Do your homework,” he advised ETNOW.

Tejas is just not a extensively tracked inventory and had only one ‘outperform’ score as per publicly accessible Reuters Eikon database as of Wednesday, January 6.

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