Godrej Industries: Realty Unit gave it a Growth

Godrej Industries Limited: Reality Unit gave it a Growth

Recently, I was reading in the news paper Headlines about Godrej Industries.

“Shares of Godrej Industries (GIL) have outperformed the market over the past 6 months by a wide margin.

The Script is now trading at a price-to-earnings (P/E) multiples of 44.4.

The Company is being values mainly for its asset pool – primarily due to THE LAND BANK – rather than its EARNINGS.”

The above was the news headlines. Well, I like this idea in the Business. Well, see, What the smart business owners (Promoters) do is, in the good times of the company, they re-invest their money to acquire Assets. And they increase the asset size of the company during its good times. So during the bad times, their share prices don’t go down much even though the earnings of the Business falls. Because the Company owns a large pool of Asset.

McDonald’s is also applying the same strategy in his Business Model. It acquires the real estate wherever in the world it opens its new franchisee. And thus, even during the bear market, its stocks don’t Hit hard even though the earnings go down because it still owns a large amount of Assets – The Real Estate.

So here, the key to make your Business recession proof is, You acquire assets on the Company’s Balance sheet during the good time. You can invest in any Assets such as Stocks of the other Companies, Businesses, Real Estate, Art, Gold or anything else. But here the key is to acquire more and more assets on the balance sheet of the company.

So even if your company profits hit hard during the down time, your company’s valuation still don’t hit hard.

This is my favourite Business Strategy…!!!