Health, Wealth & Leadership [31 March 2024]

Protein shakes are bad for you, 9 insights from Little Champs portfolio and India being home.

Mar 31, 2024

Every Sunday I share three lessons from the world of Health, Wealth and Leadership. This week we debunk the irresponsible statements of actor Ayushmann Khurrana that protein shakes are bad for you, 9 insights on Marcellus’s Little Champ Portfolio and India being home.

You can access previous editions of my weekly emails here.

(1) “Protein shakes are bad for you!”

"Protein shakes are really bad. It takes 3 years to digest one scoop of protein shake. It stays in your body. I used to take a lot of protein supplements but later I realized that they are not good for health.

So anything that is processed, which is manufactured, which is advertised, is not right!

I keep it all natural."
- Actor Ayushmann Khurrana on The Ranveer Show.

I found his statements completely irresponsible. It made me think of so many questions that I would like to ask him:

(1) Can you please define what, "healthy", "natural", "processed" and "manufactured" means? Even our Aata and the vegetables we eat go through some form of processing and manufacturing. Hell, even our water needs to go through some form of processing to ensure that it does not kill us.

(2) Can you please show me any research study that proves your claims?

Here are research studies that back the use of protein shakes:
(1) Whey protein may be more potent at stimulating MPS than other protein types. (https://pubmed.ncbi.nlm.nih.gov/9405716/)

(2) Older men should consume more protein than younger men to maintain muscle protein synthesis (https://pubmed.ncbi.nlm.nih.gov/25056502)

(3) Supplementing with whey may benefit blood pressure (https://pubmed.ncbi.nlm.nih.gov/37419751/), endothelial function,(https://pubmed.ncbi.nlm.nih.gov/34511143/) and appears to improve biomarkers of type 2 diabetes. (https://pubmed.ncbi.nlm.nih.gov/35605541/)

CONCLUSION: Stick to the research. If it is replicable and has its basis in science then trust it. Don't blindly go by what famous actors randomly state because they have no basis for making those claims.

(2) 9 Insights from Little Champs (Marcellus Small-cap Portfolio)

(1) The portfolio CAGR was in line with EPS growth till September 2022. Roughly 30%.

(2) Since September 2022, earnings of the portfolio companies have fallen and because of that the returns of the LCP portfolio has also fallen.

(3) Why didn't we (Marcellus) sell after companies like Tarsons and Alkyl Amines made supernormal profits in the Covid years? It is because we invest in companies who have a stellar track record of historical profit growth. In the case of these two companies for example, they both had a historical performance of 32% PAT compounding from FY 15-20 CAGR. We still believe that they will get back to their previous record despite the anomaly of Covid.

(4) We invest in small cap companies because they are able to generate profit numbers which at times exceed 50% in a year. But since they are small companies that are subject to global forces, they also fall by 20 - 30%. If the franchise is strong, they are holding up market share well, and their competitive advantages are in tact, we stay the course, take the pain, and good news is that once the earnings growth comes through, the prices and returns will do just fine.

(5) Some of the high revenue and profit numbers which generated supernormal profits in the Covid years (2021 - 2023) have provided these companies with considerable surpluses. These businesses reinvest their surpluses to grow further. Such reinvestments will bring profits in future years. We see future profits and revenue growth down the line for which we are willing to take this short term pain.

(6) We are expecting FY25 and FY26 to be good years in terms of earnings of our portfolio companies. We are seeing signs of earnings decline bottoming out, exports turning into positive zones, and the low base of earnings of FY24 will help show comparatively good numbers in the next two years.

(7) 10 new stocks have been added to the portfolio, all of which are moated plays. The new companies are - RHI Magnesita (will benefit from steel demand going through the roof), Rainbow Children's, PDS Limited, Cera Sanitaryware, Tega Industries (copper demand picking up in the world), Everest Industries (we bought it 4 months ago when it was loss making but has turned profitable since. Only institutional investor is Marcellus), Control Print, Ami Organics, Shanthi Gears (most technologically adept player in the gear industry), City Union Bank (loyalty is immense. It was trading at only 1.1x P/B when we bought it.)

(8) The screw ups for us happened on the ones we have exited.

The ones not related to China are Amrutanjan and V Mart. Reliance Retail and Trendz are taking market share away from V Mart; we should have exited sooner.
The China related exit has been Paushak. We misunderstood the moat. In Covid we were fine, but after Covid China flooded the market with price discounts as low as 70%.

(9) Going from 15 to 25 sticks will offer liquidity as well as more sector diversification.

- Marcellus Investment Managers: The Road Ahead for our Little Champs.

(3) For all the negatives of India, it is home!

Family, familiarity and history is one of the reasons I keep returning home.

And of course all my businesses are solving problems that are India specific - doing M&A in India (EthosData Virtual Data Rooms), want to eat a healthy diet (Happy Ratio Health Stations), want to become financially independent by making your money make money (Marcellus).

We are living through a unique time in India. The country is getting united like never before (road network, airports, GST, internet, women empowerment, UPI, Aadhar). The next 20 years will see the kind of boom that the United States saw in the late 1800s, when the States were Uniting into one nation.

An incredible time to live through! And incredible opportunities for all of us to participate in this once in a lifetime era.

Why do you live in India or away?

Harsh Batra

Discussion about this post