10 Secrets To Find Great Businesses - Learnings from Bharat Shah

Bharat Shah is a highly respected Indian investor and the Executive Director of ASK Group, a leading wealth and investment management firm. He is well-known for his ability to identify quality businesses and is also the author of the book Of Long-Term Investing & Wealth Creation from Equity Markets, a must-read for every investor. After studying numerous interviews and writings, I have picked out some key lessons from his insights.

Transform your perspective on investing in less than half an hour and identifying the best businesses for long-term portfolio.

1. The Size of Opportunities: The Foundation for Continual Growth

The foundation of continual growth, especially in profit and long-term value creation, rests on the size of the opportunity. It's not just about the current scale, but the potential for future expansion. This principle, echoing Warren Buffett's wisdom, emphasizes that investors profit from future earnings, not past successes. A large fish in a small pond has limited growth potential, regardless of past triumphs.

Imagine a small fish in a big pond. It has plenty of room to grow, right? Now, picture that same fish in a tiny bowl. No matter how much it eats, it's never going to get very big. That's the core idea behind understanding opportunity size in investing.

It's not enough for a company to be doing well now. What matters is how much bigger it can become in the future. As the legendary investor Warren Buffett wisely said, we profit from future earnings, not past glories.

"You don't make money investing based on what a company did last year. You make money based on what it's going to do in the years to come." - Warren Buffett

Think of it like this: a company might be a "big fish" today, but if it's stuck in a "small pond" (a limited market), its growth is capped.

The Idea of power of compounding works at 2 level -

1. Basic Value Creation: A huge size of opportunity is essential for any value creation. It gives the company room to operate and generate profits.

2. Explosive Growth: For truly explosive growth, you need a massive opportunity. It's not about how big the company is today, but how big it can be tomorrow.

The key is the change (Delta) , the difference between where a company is now and where it could be in the future.

"Investing is about the difference between where a company is and where it's going, not just where it currently stands."

Big, sustained growth only happens when there's a huge, untapped market waiting to be explored. This is where growth investing comes in. Sometimes, a company's stock price might seem high compared to its current earnings. But if the potential future market is enormous, that higher price might be justified.

• Avoiding Common Pitfalls: Two Contradictions

Here are two situations that can confuse investors:

1. The Hidden Gem: A company might be profitable, growing steadily, and have great financials, yet its stock price might be surprisingly low. This can happen if the market believes the company's future growth is limited. It's like a stable bond, not a high-growth stock. Also known as Value traps.

2. The Future Star: On the other hand, a company might have modest current earnings but a very high stock price. This often happens when investors foresee huge future potential, like in emerging technologies or disruptive industries.

"Sometimes, a company's current numbers don't tell the whole story. The real value lies in the future potential."

Avoid companies that are stuck in tiny niche markets or lack the resources to expand.

• Character: The Secret Ingredient

While size provides the potential for growth, character unlocks the actual value. A company's character is defined by:

• Smart Money Management: How effectively the company uses its money to generate profits.

• Toughness: Its ability to withstand competition.

• The Moat: A special advantage that protects the company from competitors, like a strong brand or unique technology. This gives them pricing power and resilience.

  "Size creates the playing field, but character determines the winner."

It's not just about being a big company (large-cap) or a medium-sized company (mid-cap). It's about quality. It's about future size, not just present size.

To find winning investments, look for these ingredients:

• Growing Earnings: Increasing profits over time.

• Consistent Earnings: Reliable and predictable profits.

• Great Management: A skilled and trustworthy leadership team.

• A Good Deal: Buying the stock at a price lower than its true value (a margin of safety).

When you find a company with a strong combination of these factors, you've found a potential winner. It's about finding the right opportunity, understanding its potential, and recognizing the character of the business.

2. Quality is a very serious aspect of investment

Quality in investing is vital for long-term business resilience.

1. Quality is a fundamental attribute that enables a business to sustain itself over time and replicate success.

2. Investors should prioritize quality management and operational durability to withstand market fluctuations. Stock which has more durability for longer time has greater value.

Root to preservation of long term wealth solely resides in quality i.e Quality of business (ROCE) and Quality of Management (ROE).

Quality of Business and management is like an insurance, the Extra price or premium you pay for the company is for Long term protection of your Capital.

“The chief losses to investor come from the purchase of low quality securities a time of favourable business condition" ~ Ben Graham

"Only when the tide goes out do you discover who’s been swimming naked" ~ Warren buffett

What I want to convey through these quotes of Graham and Buffett is that, during hot or booming markets, inferior firms—often referred to as high-beta companies—tend to capture the market's attention and deliver impressive short-term returns. However, this phase often masks deeper issues, such as poor management quality and fundamental business problems, which can resurface when the market conditions shift.

Growth of earning also has a way of covering valuation mistake and thus helping the cause of avoiding permanent loss of capital even if one has overpaid growth overtime will help in overweighting this error of commission.

But Bharat shah advise is that during overpaying a stock , one has to ensure that the Earning must have to grow continuously with high rate otherwise massive wealth destruction may happen.

3. Quality Of Business (ROCE): Resilience of the business

Superiority of the business is inferred from the the superiority of the ROCE. We will show you how ?

The quality or "character," of a business hinges on two key factors:

1. Capital Intensity: This refers to how much money a business needs to operate. It comes from two sources:

   • Fixed Assets: It refers to a long-term tangible property or equipment, a company uses to operate its business. Fixed assets include buildings, computer equipment, plant and machinery etc. It requires large amount of upfront capital .

   • Working Capital: The money needed for day-to-day operations, like inventory, accounts payables and accounts receivable.

A business with high capital needs in both fixed assets and working capital has an unfavorable profile. Ideally, a value-creating business needs low capital intensity in both areas.

If a business must have high capital intensity in one area, it's generally better if it's due to working capital rather than fixed assets. Why? Because heavy upfront spending on fixed assets (capex), especially if funded by debt, can lead to significant losses if the business falters. It's preferable to invest in companies that expand with minimal capex – this is what we call an "asset-light" business model, which often translates to superior ROCE (Return on Capital Employed).

2. Capital Efficiency (Superior ROCE > Cost of capital): This measures how well a business uses its capital to generate profits. A persistently superior ROCE (above the cost of capital) is a strong indicator of quality and shows the ability of the company to create value on its incremental growth, which converts into increased profits and, consequently, higher free cash flow. In contrast, if growth is high but ROE is low (or below the cost of equity), the company might require excessive external capital, leading to value destruction.

"Persistent and superior capital efficiency is the single most important evidence of quality."

Hygiene of ROCE gets reflected much more vividly in balance sheet (greater internality) rather than profits and loss statement (greater externality). This is because balance sheet has more structural fixedness element while P/L has more dynamic fludility.

"Investment in a bad business is dependent on good timing, while a good business, like good wine, gets more valuable with the passage of time."

4. Management Quality (ROE): Traits, Character, and Caliber

Bharat shah believes that "Holy grail of a good management is good ROE over a period of time".

He says that consistent superior and predictable ROE over a long period of time, is without doubt, one of the most important indicator of quality of management

• Two critical tests reveal management quality:

1. Capital allocation

2. Capital distribution

   Capital Allocation: This is most important and most crucial for a company's success. Misallocating capital can ruin even the best businesses. When a company owns multiple businesses of varying quality, there's a risk that the weaker businesses will drain resources from the stronger ones, leading to suboptimal overall performance.

"When we control a company we get to allocate capital… This point can be important because the heads of many companies are not skilled in capital allocation… Most bosses rise to the top because they have excelled in an area such as marketing, production, engineering, administration – or, sometimes, institutional politics.” - Warren Buffett

2. Capital Distribution: During Management analysis, an investor should check that "Does management have the wisdom to not hoard unnecessary cash? As Holding Excess amount cash in the Balance sheet can lead to:

   • Dilution of ROCE and ROE: Lower returns on capital and equity.

   • Operational Slack: Reduced efficiency and focus.

   • Poor Investments: Ventures into areas where management lacks expertise.

All of these can harm value creation. Even good managers sometimes fail to realize that holding onto unneeded cash actually reduces economic value.

"The liquidity comes at expense of dilution of ROCE leads to degradation of economic value"

Management that wisely distributes excess cash through dividends demonstrates a strong understanding of value creation. A high dividend payout ratio also builds trust, showing that profits are real and turning into tangible cash for investors. While qualitative aspects are important, ROE (Return on Equity) is a vital quantitative measure of management quality.

The Conglomerate Conundrum:

Complex conglo merates often create less value, even with good businesses and management. When a company owns many diverse businesses, it becomes difficult for the market to accurately value the overall entity. Even high-quality businesses within a conglomerate can suffer from the mediocrity of others. It's often better for businesses to be more focused and independent.

"Conglomerate complexity is one of the important enemies against the unlocking of value."

The Importance of Integrity:

Corporate governance isn't just a buzzword. Honest mistakes are often more easily forgiven by the market than deliberate violations of ethical principles.

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently." - Warren Buffett

Ultimately, Management quality has a far greater impact on investment returns than many investors realize.

5. Emphasise the quantitative over the qualitative

"Good Business is typically seems to attract good management and vice versa good business and good management comes as a combo deal buy one get one free"

It's often said that good businesses and good management go hand-in-hand, like a "buy one, get one free" deal. A strong business naturally attracts capable leaders, and likewise, good management can thrive within a well-structured business. This highlights the importance of focusing on high-quality businesses; you're more likely to get good management as part of the package. Conversely, it's equally important to avoid weak businesses, as you're also likely inheriting poor management.

Initially, for Bharat, the quality of management was paramount. He explains:

"There was a point in time when I would not touch a company if it had a management that I was not completely comfortable with. I would completely shun the company if the management test did not measure up to the desired level. Over a period of time, however, I have become a bit skeptical, if not critical, about how much I believe in what management says, regardless of how large or successful is the company."

This shift in perspective led him to prioritize the underlying earning power of a business – the quantifiable financial data – over qualitative assessments of management. He now believes that strong cash flows and earning power will be recognized and valued by the market.

"It means that I have come to pay relatively higher premium on the underlying earning power (quantitative evaluation) than on the qualitative evaluation of the management, compared to what I would have done at one point of time. In that regard, my priorities have changed; I have come to believe that if there are strong cash flows and earning power in the business, then the market would pay a value for it just as it does for any other financial asset.”

Trying to excessively debate on management can only lead to frustration and missed opportunities

However, that is not to say that you will be willing to buy into any management. You still remain very selective but, eventually, it is the business quality that transcends management quality. In other words, if the business is superior, it would be fair to put a higher valuation on the business than on the management.

The quality of the business (ROCE) is more fundamental than the quality of management (ROE). While both are important for outstanding value creation, value creation is more closely linked to ROCE, as ROE is largely derived from it.

"The quality of business (ROCE) precedes the quality of management (ROE). For outstanding value creation both the superior business quality and good management are essential. But of the two, value creation is more intimately co related to ROCE than ROE. That is easy to see when it realise that ROE substantially, emanates and derived from ROCE"

One of the most fascinating thought of Bharat Shah, which has change my perspective towards working ROCE -

“Bharat shah says that once you understand ROCE you understand what is margin, capital turnover and other related aspects as well. When you say capital turnover, it is not only for fixed assets but also for working capital. All these data are provided in pieces and if you are able to connect them, you will be able to draw the right conclusion”

6. Steady Growth vs Big Numbers

The focus here is on the importance of quality of earnings over simply the quantity.

Consistent, reasonable growth is far superior to sporadic bursts followed by stagnation. Predictable earnings hold more value than high earnings growth alone.

Imagine two businesses with identical ROCE (Return on Capital Employed) and growth rates. The one with more predictable earnings will naturally command a higher valuation. This is because valuation involves discounting future cash flows. Greater predictability allows for a lower discount rate, boosting the present value of those future cash flows. This explains why Indian consumer goods companies, known for stable earnings, often have premium valuations.

This aligns with Warren Buffett's investment philosophy:

" We see change as enemy of investments. So we look for the absence of change. We don’t like to lose money.Capitalism is pretty brutal. We look for mundane products that everyone needs."

Buffett prefers simple, unchanging businesses because their future is more predictable. However, in rapidly changing industries, the predictability of cash flows becomes a critical question.

Ultimately, One has to always remember that, Investing is all about the future. Strong ROCE and consistent earnings, combined with positive future growth expectations, drive market cap growth. Once those expectations wane, market cap growth suffers.

"Only a rare view mirror is a poor guide for driving ahead"

If the future looks brighter than the past, even modest profit growth can lead to excellent stock performance. But if the past is perceived as superior, the business becomes a "treadmill," with limited price appreciation. (Future > Past). This is the major reason why most people not able to find potential multibagger is that, they only consider past performence as prominent factor to judge a company rather than the future.

Growth only creates value if it's value-adding – meaning cash inflows exceed outflows, considering the time value of money. A business with consistent 15% earnings growth and 50% ROCE is far more valuable than one with higher growth but lower ROCE. The former offers greater certainty, less volatility, and smoother growth.

The Quality of earnings depends on this 3 key factors :

• Predictability: How reliably can the company generate profits?

• Consistency: How consistently does profit increase over time?

• Superiority or inferiority of ROCE: How effectively is capital used to generate profits?

And two qualitative factors further define Earnings growth:

• Capital Efficiency: Capital efficiency is a description of the character of a business and capital payout would represent an important test for a management.This can be seen from the Exceptional ROCE

• Dividend Payout: Similarly a greater payout ratio also adds another character or dimension to the earning growth.

  This is because dividends would come by only if profits convert into cash flows and they would be paid out if the management has the wisdom not to keep excess cash on its balance sheet and distribute all the cash that is not required in the business.

" A good payout over time is a clear indication of a good business."

• Payout receives strongly and positively co related to ROCE.

• Consistency of returns has been the highest with exceptional payout firms and lowest with the low payout firms.

• Superior payout has been accompanied by superior compounding multiplier. (Here is the table which shows lower payout firms posted the lowest return for period FY2007-2012, compared to the higher payout groups).

This Research shows a strong positive link between Payout ratios and Returns. High payout companies tend to have the most consistent returns, while low payout companies have the least. Higher payouts often accompany superior compounding. Studies show that lower payout firms have posted the lowest return.

"So it is fair to believe that the companies which have better and consistent dividend payout policy have a character of a business to so afford as well as it provides higher clarity and certainty of the financial statements than otherwise."

However, a lower payout can mean more retained earnings for reinvestment, driving long-term growth if reinvestment returns are high. A very low payout combined with low reinvestment returns (low capital efficiency) is a serious warning sign.

"ROCE provides sails or wings to the ship while earnings growth provides the wind… ROCE provides the sails or backbone to the ship to fight with vicissitudes faced by it and survive and earnings growth provide the momentum and progress to the ship."

ROCE provides the business's fundamental strength and resilience, while earnings growth provides momentum. A high ROCE allows the business to weather difficulties, while consistent earnings growth propels it forward.

7. Valuing a business, buying with a margin of safety, and being patient.

What is the Value of Company ?

The value of a business is simply just the present worth of its expected future cash flows. A careful assessment of factors like opportunity size, earnings growth, quality of growth (ROCE and ROE), and the predictability/sustainability of that growth helps create a reasonable forecast of future cash flows over the business's lifespan.

This combines the "soft art" of investing with more concrete financial analysis.

A decent, but not exceptional, ROCE can still lead to excellent compounding if the initial margin of safety (the difference between the intrinsic value and the purchase price) is very high. An advantageous entry price can compensate for some mediocrity in the business.

In other words, a very high entry price advantage can allow even an average business to generate good returns for a while. However, the business's mediocrity will eventually limit long-term performance, as ROCE is the primary driver of sustainable wealth creation. A low ROCE will hinder long-term wealth creation.

Fundamentally, superior ROCE is the foundation of value creation. Subsequent returns depend on the amount, consistency, and durability of growth, management quality, and valuation.

In certain situations, even a business with an inferior ROCE can generate exceptional returns due to:

a) Highly favorable industry conditions (e.g., Coal India)

b) Sector leadership (e.g., Hindalco)

c) Unusual favorable circumstances (e.g., Tata Steel)

d) Low execution costs (e.g., Reliance Jio)

However, when these favorable conditions fade, investment returns for such businesses can deteriorate rapidly.

"It’s far better to buy a wonderful company at a fair price rather fair company at a wonderful price" - Warren Buffet

In simpler terms, “Sasti cheez or achhi cheez mein Faraq hota Hai.”

Arithmetic cheapness (simply looking for low prices or P/E ratios) can be a trap. Avoid businesses that destroy value. Often, a "cheap" stock is cheap for a reason: limited growth opportunities or a poor business character that hinders predictable, consistent earnings growth. It's often better to avoid these "cigar-butt" situations unless the circumstances are exceptional.

A stock with a P/E of 5 might be overvalued, while a stock with a P/E of 15 could be a good buy. Arithmetic cheapness is a flawed idea. True cheapness comes from opportunity size, quality growth, and sustainability. Cheapness doesn't always mean poor quality; it means the market undervalues the business's future.

"Cheapness is derived from the Quality, Not from price to earnings."

The P/E ratio, while simple, can be misleading. It can distort reality, presenting a better or worse picture than the actual situation. A low P/E can mask underlying problems, while a high P/E can obscure opportunities.

Valuation is more complex than simply equating low P/E with high returns and vice versa. It involves judging the amount, durability, and consistency of earnings growth, the quality of earnings, and how sustainable this performance is.

Bharat Shah suggests an inverse approach to P/E: instead of using it to judge value, check if the current P/E aligns with the company's intrinsic value (future cash flows) and fundamental

"The P/E ratio is not the determinant of value but it is the outcome of value."

Focus on businesses with superior and sustainable ROCE, not just low P/E.

Bharat shah uses metrics like ROI, ROE, EV/Sales, and EV/EBITDA to find the reasonable value of business.

Value creation is closely tied to cash flows generated over the business's lifespan. While consistent free cash flow (FCF) every single year isn't always necessary (due to capex or other factors), a business must generate FCF over reasonable periods and significant FCF over its lifetime to create value. Generating operational cash flow (CFO) in virtually every period is essential.

Businesses that generate superior cash flow and meaningful FCF can grow sustainably without excessive capital dilution, fund growth, sustain higher dividends, and create real value. These businesses often see P/E expansion.

"While considering an investment the basic trick is not to look at valuation as the first filter. Quality invariably be the 1st filter

– Bharat Shah"

Here Bharat shah doesn't mean, that you have buy any good quality at any price demanded by the markets, One thing you have remember the supreme principal of Benjamin Graham - Margin of Safety

Bharat Shah himself said that - The Biggest risk control is not overpaying, Buy with margin of safety

Don’t be confuse between the premium you are paying is overpaying to a company because quality Business will surely demand a premium but thought Bharat shah wanted to convey is that don t pay whatever the Short term market (voting machine) is demanding for that particular stock. Be disciple to not to carried way by the trends, hype and sentiments of the market.

If a company is too expensive, be patient and wait for a better entry point. A high-quality company at a reasonable valuation with a margin of safety provides both downside protection and upside potential over the long term.

8. Risk versus Return

Risk lies in not knowing what you are doing.

Here are three key aspects of risk:

1. Market-Perceived Risk (Price Volatility): The market often equates price volatility (measured by beta) with risk. However, value is intrinsic to a business, while price volatility is external. Volatility in a good business presents an opportunity, while in a bad business, it's dangerous.

Price volatility creates the perception of risk. But true risk arises when we react to that volatility without a solid understanding of the underlying business.

For example, if a business's true value is 100 and its price is 80 (a 20% margin of safety and implied 25% return), and the price then drops to 60, the margin of safety actually improves to 40%, and the implied return increases to 67%. However, many investors would perceive the price drop as increased risk, when in reality, the risk has decreased, and the potential return has increased. This is especially true if you plan to buy more shares.

Unfortunately, market psychology often overrides rational analysis, as people react more to price changes than to changes in the risk-return profile.

2. Lousy Profits (Accidental Success): Risk also exists when you're wrong but become accidentally right. This leads to what are called "lousy profits"—profits you didn't deserve to earn.

"It is dangerous to be right when it is wrong"

What is Lousy profit? Lousy profit is an unearned profit that one doesn’t deserve to earn."

Profiting from a mediocre business, making gains despite associating with dishonest management, or making money despite a negative margin of safety are all examples of lousy profits.

In short, the market can make you look right in the short term even when your investment thesis is flawed. These "lousy profits" often set the stage for significant future losses.

3. Lack of Independent Thinking: Risk also stems from not having an independent mind. (Very Important)

"Don’t follow any advice no matter how good until you feel as deeply in your spirit as you think in your mind that the counsel is wise. Capital Preservation and large gains are the fruits of independent mind."

Blindly following advice, no matter how reputable the source, is dangerous. Capital preservation and substantial gains come from independent analysis and conviction.

This brings up the concept of low-beta stocks. Low beta simply means less price volatility. Empirically, low-beta stocks (with predictable and durable, albeit potentially lower, earnings growth) have historically delivered superior risk-adjusted returns. These stocks are often undervalued, presenting excellent opportunities for patient investors.

Furthermore, returns from low-beta stocks can be enhanced through appropriate leverage. This leverage should be long-term and at a low cost relative to the expected returns from the low-beta portfolio. This essentially improves ROCE to create greater ROE through strategic use of debt.

9. Sustainable Success vs. Quick Multi-Baggers

"High quality business getting even better quality coupled with superior earning growth will lead to disproportionate returns or good to great business superior earnings will lead to disproportionate return"

A good business gets better with time (much like a good wine) when a business with which is already good is turning great it is potentially unless a situation which is conducive to creating multi beggars.

The problem with some of the investor is having obsession of finding the multi baggers, which has a deleterious impact on the investing style and possibly cause way a long-term damage.

A more straightforward way to get similar result would be to aim to find true blue blooded compounding machines, This approach has less risk, similar productivity and success is more replicable and sustainable.When a multi bagger happens in very short , then chances of it so sustaining for a prolonged period are rather poor.

• Permanent multi baggers are combination of three things -

1) Exceptional ROCE

2) High Earnings Growth

3) Long Runway

• Another way would be when Good to great type of situation happen i;e when an already good business keeps getting better over a period of time. In other word a business which has already generating a superior ROCE, but which further improves overtime and coupled with superior earning growth rate (or a good growth rate accelerating further), is another conducive condition which may produce outstanding results.

10. BELIEVE IN LONG TERM INVESTING - (Very Important)

Most of the people who has created a massive amount of wealth are those who has survived in the stock market for Long term (15-20 years).

The key question is What type of businesses you hold for the long term and what their characteristics are.

"The debate is really not about long-term investing or opportunistic one it is more about whether one buys a quality position, understands the underlying valuation, buy at a realistic price value gap and whether one is prepared to dig in for the long haul and let the underlying returns come to the fore." - Bharat Shah

Investors minds are more volatile than the market itself. The real challenge isn't long-term investing as a concept, but the behavioral framework investors bring to the table.

It is true that, taking a 10-year view on any business is difficult, especially today. It's becoming increasingly challenging to predict a business's trajectory beyond the next few years. Therefore, it's crucial to focus on understanding the business for the foreseeable future, say the next three years, while still considering the longer-term potential.

"You would want to focus a little more strongly on the earning characteristics for the next three years, while keeping in mind the longer—term picture and potential."

Cash flows closer to the present contribute more to a business's intrinsic value than distant cash flows. Most of a company's valuation comes from near-term cash flows and the "terminal value," which represents all cash flows beyond the projection period in a single lump sum.

If you can't confidently predict a company's future beyond a certain timeframe, acknowledge it. Either i prefer to avoid investing in areas outside your "circle of competence" or be extra cautious about the price you pay. Prioritize a margin of safety by assuming the business is riskier or less predictable and using a conservative estimate of its intrinsic value.

"If you can’t confidently predict a company’s future beyond a certain time period, you have be honest in admitting it. Either avoid investing (outside the circle of competence) or be extra cautious about the price you’re willing to pay. Prioritize a margin of safety—assume the business is riskier or less predictable, and use a conservative estimate of its intrinsic value to guide your decision."

Warren Buffett famously said:

"The stock market is designed to transfer money from the active to the patient.”

This highlights the importance of patience in investing. In today's volatile market, patience is even more critical. It requires staying focused on paying a reasonable price (with a margin of safety) for a business worth more.

"All it means is that you need to be more patient than you used to be — that you need to move away from the craziness and the volatility and that you need to remain singularly focused on paying half a rupee for a business that is worth one rupee (Margin of safety)."

The only thing you truly control is the price you pay. Disciplined buying is what long-term investing is all about.

"You only have to pay for the hard solid cash flows which company can generate in future, which will reflect in its true intrinsic value, aligning with long term behaviour of the market (weighing machine)"

As Buffett also wisely stated:

"You don’t need to be smarter than the rest. You only need to be more discipline than the rest"

Well that was all about Bharat Shah's investment approach. I hope this article added value and you will apply this principals in your investing journey to build you long term wealth. Thank you for diving into this article. If this article resonated with you, you’ll love what’s next!.

Stay tuned as I bring you more fascinating stories and insightful investment approaches from some of the most successful Indian investors.

Frequently asked questions

Q2.How does Bharat Shah pick stocks?
Ans: He emphasizes evaluating businesses based on intrinsic value, quality of earnings, management capability, and the ability to generate long-term returns on capital employed (ROCE).

Q5.What are Bharat Shah’s views on the current Indian market?
Ans: He believes in the long-term growth potential of the Indian economy and emphasizes investing in businesses that can thrive in this growth environment despite short-term challenges.

Q3.Which books or resources does Bharat Shah recommend for investors?
Ans: Bharat Shah often highlights the teachings of investment legends like Warren Buffett and Charlie Munger. While he has authored books - Off long term investing and wealth creation and he also talks his investment approach in ,many of his interviews.

Q4.What can investors learn from Bharat Shah?
Ans: Investors can learn the importance of patience, long-term thinking, and focusing on fundamentals rather than short-term market movements. His disciplined approach to evaluating businesses is a valuable lesson for any investor.

Q1. Who is Bharat Shah?
Ans: Bharat Shah is a renowned Indian investor, fund manager, and one of the leading voices in value investing. He is known for his expertise in long-term wealth creation through disciplined investment strategies.