Birth of a Hidden Champion: Kajaria Ceramics & Ashok Kajaria

Dear Clients and Valued Partners,

Birth of a Hidden Champion (Issue 5): Kajaria Ceramics & Ashok Kajaria, & Invitation to HCF Investor’s Presentation

We would like to wish our Chinese friends a Happy Chinese New Year! And for those who do not celebrate Chinese New Year, have an enjoyable and well-deserved break for this holiday occasion! Here’s wishing everyone prosperity, joy and success! In alignment with this prosperous occasion, we are pleased to announce that we are organising an investor’s presentation, and would like to invite you to join us on the on 26 February 2018 (Monday), as well as on 5th March (Monday), 7.30pm @ Goldbell Towers.Please register your interest* at this link:, or email us directly at

For the “Birth of a Hidden Champion” tribute series, we highlight inspirational stories on the listing birth of Hidden Champions creating and compounding value in the Asian capital markets.

On the 13th of February 1995, a Hidden Champion was born in the Indian capital markets. Kajaria Ceramics (BSE:500233), led by the innovative founder Ashok Kajariai, went on to grow and compoundher business, resulting in an astounding  4350% share price appreciation to a market value of over US$1.5 billion today.
We utilise our thorough three-step process in screening and identifying Hidden Champions as follows:

  1. Step 1 Eliminating companies with potential accounting tunneling FRAUD based on our proprietary fact-based forward-looking fraud detection system
  2. Step 2 Analyzing the business model for QUALITY, including its resiliency to maintain profitability and protect market positions through up/downturns in the economy and to allow the companies to better manage rapid, sometimes disruptive, technological change;

We have incorporated Step 3, of selecting entrepreneurs and owner-operators with VALUES & PASSION for their business, seen through their thought leadership and value-add to the community whilst serving with integrity, and the corporate culture they build. We find that companies that Love, Serve and Care with a Purpose larger than themselves – tend to perform better. So just who exactly are these Asian businesses that possesses such traits?

Consider Kajaria Ceramics (NSE: KARARIACER). Kajaria is the #1 ceramic tiles company in India with a 20% market share in the organized segment of the tiles industry. The company has been able to successfully create a ‘pull’ for its products and currently enjoys the highest brand equity in the industry in quality, innovation, availability. Kajaria is backed by sound management credibility, comprehensive product range, superior design capability, high brand recall, loyal and widespread dealer network, strong marketing capabilities, business policies, giving it a distinct competitive edge over its peers. It has been conferred the ‘Superbrand’ status for consecutive years since 2004, giving Kajaria a price premium and pricing power advantage. Kajaria’s founder Ashok Kajaria pioneered large-format wall tile segment when everyone is selling cheap small-format tiles as he believed in delivering “Tiles that touch your soul” at a value-for-money price point, rather than compete on price and giving consumers a quality they do not deserve. Kajaria care deeply about delivering Aspiration, Affordability, Availability to the Indian consumer, giving them “a house we can be proud of’ and giving them flooring that stamps the character of our home”. As a result, Kajaria “created a brand that would trigger a consumer pull. Over the last 25 years, the biggest transformation at Kajaria is that what started out as a tile manufacturing company is now an aesthetics-led organization.”
We realize that we sometimes commit the mistake in trying to fit what we see and learn about the competitiveness of the firm into the “model” of wide-moat characteristics such as “high switching cost”, “network effect”, “low cost advantage”, “efficient scale”, “intangible assets”. This descriptive approach into fitting observations into the model is categorization through analogy – and its #1 flaw is stocks are categorized into moats AFTER they are obvious. Until we go the distance and extra mile in Step 3, the story and validated committed actions of how they Love, Serve, and Care with a Purpose larger than themselves, we could fall into the dangerous trap of overpaying for the moat even if the valuation metrics appear cheaper with seemingly lower downside risks.

Warm regards,

The HCF team

Under MAS regulation for RFMC, the Hidden Champions Fund is currently only available to Accredited Investors*.

*An accredited investor is defined as either an individual whose net personal assets exceed SS2 million or whose income in the preceding 12 months is not less than S$300,000; or a corporation with net assets (based on its most recent audited balance sheet) exceeding SS10 million.

The Fund is also available to qualified offshore investors.