The Ashiana Housing Lecture Revisited

I had earlier blogged about Ashiana Housing and this lecture on 21 December, 2013.

Varun Gupta, who is Wholetime Director at Ashiana Housing delivered this lecture to my students at MDI on 31 December, 2013.

Finally I got the time today to upload the edited lecture video on YouTube. I have spliced the lecture video into 25 segments. You can view the playlist here.

Before Varun delivered the lecture, students saw two videos. These were:

The lecture was organized with the help of my ex-student and colleague, Arpit Ranka. Thanks Arpit!

Note: I am long Ashiana Housing and hence you should assume I am positively biased in its favor.


10 thoughts on “The Ashiana Housing Lecture Revisited

  1. Professor,

    Thanks for the upload. A selfish request: Is it possible to have less youtube segments in the future? I download and convert youtube videos (lectures, talks, etc) to mp3’s so I can listen to them on the move (e.g. when driving). That’s better “return on time spent” than watching videos! A 30-minute chunk size will be good.

    Another thing is, I’ve recently read your thought-provoking piece, “What happens when you don’t buy quality”. I thought through your reasonings and came up with some interesting corollaries. But it looks like I can no longer post comments on that blog post. Could I post them here or email you?

  2. anil1820 says:

    Superb lecture by Varun Gupta. Amazing Clarity…. Thanks a lot Prof for posting this video…

  3. hitrohit says:

    Sir ,

    Thanks for all the insights and learnings ,Videos are too good -this and previous -please keep on posting , I am learning from you from last 3 years

    sir one question I have especally on Ashiana -means this is not a consumer company like -Nestle , Britannia …where we can predict the demand for repeat consumption -as they are basic raw commodities -no matter what they any how will be consumed -maggi , bread..

    but in case of ashiana- the consumption is a heavy ticket item and availability also depends upon the land bank , right prices , labour and others-so means we can have a visibility for every 3 yrs but not more than that -so at what operating cash flow multiple this become too expensive to enter –
    this query is generic for all expensive items stocks evaluation-like Titan one more ex

    ( I am holding ashiana for last 2 yrs )

    • To evaluate the long-term prospects of any business, you should be able to estimate its range of earnings a decade or so from now. For some businesses those earnings would come from repeat customers. In other businesses, they would come from infrequent purchases. I recall Peter Lynch describing in one of his books funeral homes as a great business with predictable earnings (everyone dies in the end). But you get to be a customer only once. Think about that…

      In markets that are far from being saturated (and affordable housing in India is one such market), its easy to say that even after ten years there will be huge demand, even though that demand would come from new customers. In markets which are saturated (where everyone who needs one already has one e.g. mobile phones in USA), demand comes from replacement.

      The multiple you’d apply to owner earnings a decade from now would depend on whether the business would still be growing a decade from now or not, whether the business would still be generating a high return on capital or not, and also if the balance sheet quality would be pristine or not.

      Having said that, the very long term growth prospects of businesses which sell things that you have to keep on buying are better than those where you sell something that people buy only once or infrequently. Which reminds of this:

      “I would rather invest in a company that makes drugs, soft drinks, razor blades, or cigarettes than in a company that makes toys. In the toy industry somebody can make a wonderful doll that every child has to have, but every child gets only one each. Eight months later that product is taken off the shelves to make room for the newest doll children have to have – manufactured by somebody else. Why take chances on fickle purchases when there is so much steady business around?” – Peter Lynch writes in “One Up on Wall Street.”

  4. Too many red flags in results announced for Dec 2013 quarter—

    1. Loss before interest and taxes in standalone ops; very sharp fall in consolidated EBIT from 12 crores in Sept qtr to 3 crores in Dec qtr.

    2. What is with negative LT investments in latest qtr (of 19 crores)

    3. In last one year, advances have doubled, inventories have doubled but sales have more than halved…

    Sanjay Sir, please shed some light.

  5. […] Housing: Prof. Sanjay Bakshi has written some excellent blog posts related to Ashiana Housing. The posts help us understand the reasons for the superior business […]

  6. Akshay Jain says:

    Hi SIr

    Thanks for the great videos. .I have a general question which applies to many businesses (not real estate though) …Asking you on this forum since there may not be a dedicated place for asking general questions…….SIr what would be your opinion on businesses whose moat has been distribution thus far…..From many reports I read, seems to me that a larger and larger percent of sales are coming from e-commerce websites..SIr what impact does this have in the long term on businesses such as organised retail and even evolving brands like relaxo, killer etc…..For example, If i was to log in to Flipkart/myntra etc and filter shoes for a certain price range I will get a list of options ranging from discounted international brands, brand extensions of players not prominent in this category, to local indian brands all competing for the same category in terms of price. Previously players like Bata had the best distribution but dont you think distribution game is changing looking at the growth numbers of these websites and also percent of sales numbers of brands themselves. I understand internet penetration is low so far, but it is rapidly increasing right…. Factor in the smaller families who will just not have enough time to shop in person for all their needs…. Where do you see this going?

  7. Krishnaraj V says:

    Thanks a ton, but have to admit got carried away by Amol Palekar ( and his past hit songs) and forgot Ashiana!

    But companies like Ashiana make me open to analysis of real estate firms, which I shy away from elsewhere.

    Warm regards,

  8. hitrohit says:

    Sir thanks for answering my questions asked above
    Sir please share your more ideas and learning to us ,
    Thanks again for all the insights and teaching how to catch a fish


  9. hitrohit says:


    I need your guidance , as doing basic company analysis – i am able to identify broad lever (mota mota hisab kitab )-cash flow statement , Balance sheet , income statement
    but where I feel helpless is in terms of identifying , the nitty gritty of accounting basic -what get charged where , means like i cant double check the accuracy of statements /claim made by a company
    If you have any book /article recommendations -please recommend
    I don’t want /aspire to be an expert , but need to move up the learning cover a little bit more
    I try that quality of earnings .. -but they are above my IQ of accounting🙂
    I feel at present like as per Charlie Munger ” a single legged person in an ass kicking contest ”


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