Coffee and Investing with Saurabh Mukherjea
7 “Boring” Companies That Beat the Market for 10 Years Saurabh Mukherjea x Salil Desai
Invest with Marcellus: https://invest.marcellus.in/ How do you tell a genuinely great company from one that has simply had a good decade? In this episode of Coffee & Investing, Saurabh Mukherjea speaks with Salil Desai — his co-author on The Art of Enduring: How Great Companies Turn Crisis into Opportunity, and Marcellus' Head of Research — about the brutal filter the two of them built to answer that question.Ten years ago, The Unusual Billionaires screened India's listed universe on a decade of data, 15% return on capital employed and 10% revenue growth. The Art of Enduring goes harder. The reference period stretches to 15 years — a stretch that took in demonetisation, GST, Donald Trump's presidency, supply chains going berserk and Covid — and every threshold moves up with it.The funnel starts with the BSE 500. Companies younger than 25 years are removed, leaving 392. Non-financial firms must then clear 15% return on capital employed in every single year of the 15 — not on average — which cuts 332 names down to 78. Median revenue growth must beat India's nominal GDP growth of roughly 12%, taking the list to about 38. Profits must grow faster than revenues, which removes six more. Financial companies face the equivalent tests on return on equity. From 500 companies, 51 survive. Saurabh and Salil discuss why Martina Navratilova rather than Djokovic is their template for greatness, why the share price is an outcome and never a filter, why five of the original seven Unusual Billionaires cleared the harder screen a decade later, and the fresh five examined in the new book — Bajaj Finance, Dr Lal PathLabs, Tata Elxsi, Titan and Divi's Laboratories.---- Key Takeaways⮞ Greatness Is Longevity: Navratilova won more singles and more doubles titles than any player, male or female, across a 32-year career — the first Grand Slam at 17 or 18, the last two months before her 50th birthday. Reaching the top is common; staying there is not.⮞ Time Is the Examiner: Wooden rackets to graphite, harmonium to synthesiser — a long career forces a performer through conditions they never trained for. That variety of tests is what separates skill from luck.⮞ Every Single Year, Not On Average: The 15% return on capital employed test must be met in each of the 15 years. Averages hide the bad years, and this is the filter that kills the most names.⮞ The Bar Is India Itself: Revenue growth is benchmarked to India's nominal GDP growth of about 12% over the period, on the logic that the least a business can do is grow as fast as the economy it operates in.⮞ Growth Has To Be Profitable: The final screen asks for profits growing faster than revenues, because growth alone can be bought by dumping capital into a business.⮞ Share Price Is an Outcome: Screening on stock returns selects on the result rather than the process. The companies that cleared these filters went on to beat the market handsomely — but that was the consequence, not the criterion.⮞ What the Survivors Share: Knowing their core strengths and doubling down instead of copying others; investing heavily in people through their 20s and 30s; and facing hard problems head-on, as Murali Divi did when he flew to Germany himself for raw materials and put a sample in front of big pharma within 48 hours.----Chapters 00:00:00 Coming Up 00:00:58 The Art of Enduring: The Brutal Filter 00:02:00 What Makes a Company Great? 00:05:45 Why Longevity Matters 00:08:22 Identifying Enduring Greatness in Companies 00:09:50 The 15-Year Filter 00:12:45 From 500 Companies to 50 00:14:30 Why Share Prices Are an Outcome 00:18:00 What Enduring Companies Do Differently
