1) Which types of companies does the study suggest are more likely to deliver Hockey-Stick
Returns?
Ans : Mid and small caps are favourably placed to deliver Hockey-Stick returns. Companies like
SRF, Tata ELxsi , Bajaj finance , Tvs motor , KRBL , Trent , Voltas , Adani enterprises
2) What is defined as Hockey-Stick Returns in the study?
Ans : Hockey-Stick returns refers to a sharp and sustained rise in the price of a stock. This leads to
a hockey-stick formation of the price chart, translating into handsome returns for the
stockholders.
3) What is the primary metric used to evaluate a company's profitability in the study?
Ans : Economic Profit is a superior metric to Accounting Profit to understand true profitability of
a company.
4) What is the significance of "Hockey-Stick" in investing terms?
Ans :
5) What aspects do "Endowment" encompass in the TEM strategy?
Ans : Corporate-parent i.e. owner group , Quality of management ,Size of revenue, Production
capacity, Competitive edge, Market share, Brand, Distribution network, Debt-raising capacity,
Investment in R&D, and so on.
6) According to the study, what are some examples of "Moves" a company can take?
Ans : Programmatic M&A, Dynamic reallocation of resources, Strong capital expenditure,
Strength of productivity program, Improvement in differentiation.
7) Why are mid and small caps more favourable for high returns according to the study?
Ans :
8) What broader economic trend does the study mention regarding PSU stocks?
9) What is the TEM strategy and how does it help companies improve their Economic Profit?
Ans : ∙ Trends – factors external to a company, mostly stemming from the sector; and ∙
Endowment & Moves – factors internal to a company.
10 key variables driving Economic Profit
Endowment Trend Moves
∙ Company size ∙ Industry trend ∙ Programmatic M&A ∙ Debt level ∙ Geographic trend ∙
Dynamic reallocation of resources ∙ Past investment in R&D ∙ Strong capital expenditure ∙
Strength of productivity program ∙ Improvement in differentiation
10) According to the study, which types of companies—mid and small caps or large caps—are
better positioned to deliver Hockey-Stick Returns, and why?
Ans :
11) Define "Bruised Blue Chips" as discussed in the report. What are the key characteristics that
differentiate them from other types of investments?
Ans : Bruised Blue Chip as one whose stock price, at any time over the next 10 years, has fallen by
50% or more from its 5-year high.
1. Golden opportunity to build large positions in Blue Chips
2. Attractive returns and
3. Asymmetric payoff
4. Very low mortality.
12) Identify and briefly describe the top three wealth creators listed in the report. What factors
contributed to their success?
Ans : - Reliance emerges as the biggest Wealth Creator for the 6th time in a row
- Adani Green has emerged the Fastest Wealth Creator
- Linde India is the Most Consistent Wealth Creator
- Adani Enterprises is the Best All-round Wealth Creator for the third time in a row
13) Outline the recommended investment strategy for Bruised Blue Chips as mentioned in the
report. What guidelines should investors follow?
Ans : The key to profit from Bruised Blue Chips is to buy them close to the lows, post the bruise. This
necessitates the following steps –
- Create a watchlist of Bruised Blue Chips
At any given point in time, there will be Blue Chips which are bruised i.e. significantly down from
their recent highs. We need to create a watchlist of such Bruised Blue Chips for investigation and
further action at the appropriate time.
- Clearly understand the reasons for the bruising
As discussed earlier, there are a wide variety of reasons for Blue Chips to get bruised. We need
to clearly understand the reasons for the bruising. This is because, as also discussed earlier,
Bruised Blue Chips heal only when what went wrong gets rectified.
- Await healing triggers
Having understood the reasons for the bruising, we next need to await healing triggers. The most
important ones to look for are sector tailwind (external) and change of management (internal).
- Buy only if the company’s prospects are bright and valuation is attractive
Bruising alone cannot be the sole reason for buying into a Blue Chip. Its prospects of profit and
profitability need to be bright. Else, the Bruised Blue Chip will end up as a value trap.
14) Discuss the risks associated with investing in Bruised Blue Chips. How does the report
suggest mitigating these risks?
15) Examine the sectors that have shown the most promise for Bruised Blue Chips. Which
sectors are highlighted, and what are the reasons for their potential?
16) Select one example of a Bruised Blue Chip company provided in the report. Analyze its
journey and the key events that impacted its stock value?
17) How does investor sentiment play a role in the performance of Bruised Blue Chips according
to the study? Provide examples from the report.
18) Based on the findings in the report, what are the projections for Bruised Blue Chips in the
next 1-2 years? What factors could influence these projections?
19) Summarize the key takeaways from the report regarding Bruised Blue Chips. What final
recommendations does the report offer to potential investors?
