A couple of in-depth session for understanding GSS Sheet Moats more clearly:
Resources for finding moats: Moneycontrol, Screener.in, trendlyne.com
Hack for GSS Sheet:
1. Take two prominent products of the company. If they have a reach to every nook and corner/ nook industry, then they have these moats- Loyalty, cost-efficiency.
2. If the company is on the top 2 positions in the list of
https://www.screener.in of the segment having more than 5-6 companies then they have a brand, shifting and efficiency advantage.
3. If people use other products of the same company then webbing is also there. Webbing is enticing the customer of one type of product with multiple products. Like HDFC provides financial services, insurance and is a broker too. Multiple types of products is the key.
In case of Nestle it is limited to food items or FMCG precisely.
Explanation of the Risks:
GR Risk: To determine whether a business or a company has a Govt. Regulation, you need to search if there is any government rule in the segment which can affect the production or distribution of the product/services it delivers.
For example, coal mining and distribution is governed by govt., thus Coal India or any similar company will have GR Risk.
Same is with Pharma, as the regulations govern the manufacture and distribution of drugs, and a simple notification from govt. can adversely affect the sales of a certain kind of company/ies drug.
KP Risk: If the main head of the company is one of a kind or
special, then the moment they gets replaced, company’s share may have an
adverse effect. The new head qualities don’t matter in that case; hence Key
Person Risk is bad, as the head should not beam out in the company like Tata or
Reliance. Thus the statement “a fool should be able to run the business”.
RnD Risk: The biggest issue with RnD risk, is that if the
other company comes with a product/service which may revolutionize the whole
sector. The other companies will be severely affected. Thus RnD risk is a risk.
Herding: It means that say if Reliance is the news and recommendations for buying Reliance are coming out, it means that retail will be running after them. Doing what retail is doing is herding.
GSS Sheet Faqs:
When is YES for EPS? / When is a Yes for Dividend?
YES: When the EPS for 5 years is positive. If the trend is increasing, it is the best. If the trend is decreasing, try finding out the reason- Is it a sectoral or overall market factor or company-specific? If company specific then there might be chances of it having bad fundamentals.
No: If the EPS is negative or zero in one or more years in the last 5 years, it will be counted as No.
The same applies to Dividends.
Example for Webbing Advantage or Cost of Shifting Products
Webbing Advantage:
Apart from wearable Titan is into jewellery (Tanishq, Zoya, Mia & Caratlane), fragrance and eyewear segments too. Thus if somebody is purchasing jewels and they get offers on eyewear, which Titan does from its membership, then it's a webbing advantage as the person will try out the products. Not implying but generally.
Cost of Shifting Products:
Similarly, when someone buys jewels from Tanishq or wearable from Titan they are very much likely to stick to the products and not shift.