Vijay Kedia’s investing journey began not with success but with survival. A young trader in Kolkata, he racked up losses year after year, so severe that his family had to pawn assets just to keep him afloat. But instead of walking away from the market, Kedia changed how he approached it. He stopped trading and started thinking like a business owner. He focused on small, underappreciated companies with clear market opportunities, trustworthy promoters, and room to scale. Then he held them with quiet conviction, not for quarters but for decades. Over time, Kedia built one of India’s most admired long-term investing track records, compounding wealth through concentrated bets on companies like Atul Auto, Cera Sanitaryware, and Sudarshan Chemical. But here’s what makes his story even more instructive: not every stock worked out. When his investment failed to deliver, Kedia did what disciplined investors do: he exited. For every multibagger he’s held through years of market silence, there’s also a business he’s walked away from when the thesis broke. This balance of conviction to stay and clarity to cut defines his style. This article dives into how Vijay Kedia thinks: How does he identify businesses worth holding for a decade? What patterns guide his entry and, more importantly, his exit? How does he evaluate risk in companies that look cheap but may not be scalable? Atul Auto: The 100-bagger that defined Kedia’s investing identity To understand how serious wealth is built in Indian markets, it's worth studying not what moved, but why it moved and who had the foresight to act before the movement began. Among Kedia’s most iconic investments, Atul Auto stands out not just for the return it delivered but also for how invisible the opportunity was when he first found it. The setup: A business that looked too small to matter In the early 2000s, Atul Auto was a sub-Rs 50 crore market cap company manufacturing three-wheelers in Rajkot. It had no analyst coverage, minimal institutional interest, and was largely confined to the Saurashtra region of Gujarat. On the face of it, it was a legacy regional auto manufacturer in a segment dominated by Bajaj Auto and Piaggio. But this is where most investors stopped thinking. Kedia didn’t. He saw a company that had quietly built a high-quality product, a deeply loyal rural and semi-urban customer base, and a brand trusted by transporters, traders, and small entrepreneurs, especially in towns and villages where national brands had little presence. More importantly, the company was running at just 30-40% capacity utilisation. That’s where Kedia’s insight kicked in. Insight #1: Operating leverage is the most underappreciated engine of wealth. When capacity utilisation is low, every rupee of additional sales flows disproportionately to the bottom line. Why? Because the fixed costs, such as labour, depreciation, and overheads, have already been absorbed. Marginal sales come with disproportionately high margins. Kedia realised that Atul Auto didn’t need to double sales to double profits. Even a modest improvement in utilisation could dramatically expand earnings. The macro context: Rural India was about to break out While urban investors were obsessing over metros and luxury consumption, rural India was silently undergoing structural change: Better road connectivity was enabling small transport businesses to thrive Self-employment in logistics was rising Agricultural produce, small goods, milk, and construction material needed hyperlocal movement, exactly what three-wheelers served And GST (though years away) would eventually create a pan-India goods movement ecosystem that would lift all light transport operators Atul Auto was positioned at the intersection of utility, affordability, and aspiration in India’s Tier 2-4 economy. Insight #2: Real wealth in Indian equities is often created outside the visibility of institutional radar. The biggest money is rarely made in sectors that are already institutional favourites. Kedia understood this. By the time a small company becomes “discoverable,” the asymmetry is gone. He was betting not on what Atul Auto was, but on what it could become once it reached national scale. The time factor: Why nothing happened for years From 2005 to 2010, Atul Auto’s stock did very little. This is the phase when most investors give up, especially in a world obsessed with quarterly results and momentum. But during these years, three invisible things were happening: The company was entering new states, slowly building dealer networks in Rajasthan, Madhya Pradesh, and Bihar. The product quality was improving, especially in terms of fuel efficiency and maintenance cost, which are crucial in low-income markets. Most critically, capacity utilisation moved from ~35% to over 70%. This one shift transformed the company’s profit and return metrics. Insight #3: In Indian small caps, valuation is not the trigger, capacity utilisation often is. Investors typically ask: Is the stock cheap? But the more useful question in small-cap manufacturing is: Is capacity about to inflect? In Atul Auto’s case, Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) margins expanded dramatically once the tipping point was crossed, and net profit exploded. The market woke up. And in 3-4 years, the stock went up more than 40x. Why it worked: Business model fit + strategic optionality The deeper insight into Atul Auto’s success lies in its business model alignment with the market it served: Single product focus kept complexity low Cash-heavy customer base meant receivables were well-managed No overextension into exports or fancy verticals that could break the balance sheet And a high-trust brand in low-trust, rural markets, which is an intangible moat Atul Auto also had low leverage, which allowed it to reinvest free cash flows into capacity expansion without equity dilution, a rare advantage in small-cap auto names. And Kedia’s style worked here because he wasn’t betting on the story going viral but on a linear execution plan with embedded optionality, the kind that’s invisible until it happens. Insight #4: Compounding in small-caps doesn’t come from product innovation but from distribution scale. Atul Auto’s product didn’t change much. What changed was how many people it reached. That’s often true for the best small-cap stories in India: they win not by inventing something new, but by expanding something familiar into underpenetrated geographies. After the rise: Slowdown, reinvention, and a second act By 2016-17, the story plateaued. Growth slowed, competition increased, and valuations outpaced fundamentals. The stock corrected sharply. But unlike many investors who exited, Kedia kept watching. In 2023, when the company announced a foray into electric three-wheelers, raising capital to build a new electric vehicle (EV) portfolio, Kedia returned, this time as a strategic investor, acquiring over 20% of the stake and joining the board. This isn’t just a trade. It’s a vote of confidence in a company reinventing itself for the next cycle, while staying true to its roots. Cera Sanitaryware: How Kedia bet on India’s bathrooms before India did If Atul Auto was about identifying rural transport as an underserved opportunity, Cera Sanitaryware was about recognising that India was not just growing but upgrading. In the early 2000s, India was still a “tiles and taps” market. Most bathrooms were functional spaces built for necessity, not for experience. But consumer aspirations were shifting. Middle-class homeowners no longer just wanted a house but a modern one. And with that came the rise of the branded bathroom. It was in this quiet cultural shift that Kedia saw the next big opportunity. The pattern others missed: Bathrooms as status symbols At the time Kedia entered, around 2004, Cera Sanitaryware was a second-tier brand. The segment was dominated by Hindware, Parryware, and imported players. Cera had limited distribution, modest brand equity, and was viewed as just another manufacturer in a commoditised space. But Kedia thought differently. He saw three things: Branded sanitaryware was about to become aspirational: As incomes rose and home loans became more accessible, families began seeing their homes as a reflection of status. This wasn't just about plumbing as it was about identity. Cera was already investing quietly in capacity, branding, and SKU expansion: While others spent heavily on showrooms and celebrity endorsements, Cera focused on reaching smaller cities, building dealer loyalty, and improving margins through design-led products. Organised players would gain market share from the unorganised segment, which still made up over 60% of sanitaryware sales at that time. Insight #1: The brand that scales without burning cash wins in the long run in consumer durables. Cera was building quietly, without recklessly chasing top-line growth. It wasn’t flashy, but it was profitable, operationally efficient, and expanding smartly into Tier 2/3 cities, places where branded bathrooms were becoming a first-time purchase. Why the business was structurally sound Cera didn’t just make toilets and washbasins, it integrated into the entire bathroom ecosystem, with faucets, tiles, shower enclosures, and wellness products like jacuzzis and steam cabins. This expansion created a powerful network effect. A dealer who stocked one Cera product line soon had reason to stock others. This improved inventory turns, margins, and placement, all without the deep discounting that plagued larger competitors. Insight #2: The real moat wasn’t product but channel control. Cera built long-term relationships with dealers, architects, and builders. It invested in service, support, and incentives, creating an ecosystem that resisted substitution. Its return ratios improved, and free cash flow stayed positive. Yet, for years, the stock didn’t move. Between 2005 and 2009, it traded in a tight band. But underneath the surface, the business was compounding: Revenues grew steadily Gross margins expanded from ~30% to ~40% And capacity utilisation moved closer to optimal levels The breakout and the compounding From 2010 to 2017, Cera entered what can only be called a textbook phase of institutional discovery and business scaling. Revenues grew 5x, profits nearly 6x, and the stock price followed, rising over 100x from Kedia’s original entry point. The company began winning large contracts from real estate developers, entering hotel chains, and dominating premium housing projects. What was once a regional player had become a national brand with top-of-mind recall. But what’s striking isn’t just the return, it’s the quality of the compounding: Low debt Consistent dividend payout High return on capital employed (ROCE) and return on equity (ROE) Clean governance and promoter alignment Insight #3: The market eventually rewards not speed but sustainability. While many peers grew aggressively and then faltered under debt or brand dilution, Cera kept its eye on execution. It didn’t try to be everything to everyone. It grew where it had earned the right to grow. Kedia’s role: Why he stayed so long Kedia held Cera for nearly 18 years. That’s an eternity in public markets. But it reflects a deeper principle in his style: Once the business begins compounding on its own, the best thing you can do as an investor is get out of its way. He wasn’t distracted by macro noise or quarterly slowdowns. He stayed because the core engine of the business, aspiration + execution, remained intact. Even as the stock ran up, he continued to hold, only gradually reducing his stake in the 2020s when the valuation had caught up with fundamentals. Insight #4: Long-term investing isn't about being right, it’s about being early and staying rational. Cera didn’t explode in value due to a sudden innovation or market hype. It grew because Kedia was willing to give time to a company that was scaling thoughtfully, within a growing category, with a promoter who knew exactly what kind of business they wanted to build. What Cera teaches: Aspirational India is a business theme, not a buzzword This investment was unique because it wasn’t based on a hard macro theme like commodities or manufacturing; it was based on sociological intuition. Kedia sensed that: The Indian bathroom was about to get an upgrade Cera could deliver that upgrade profitably And the market would eventually pay for predictability and brand equity That combination — low institutional visibility, growing tailwinds, and consistent delivery — is what separates a 3x return from a 100x return. When the thesis breaks: The Panasonic Energy bet that didn’t deliver In the early 2010s, Kedia took a meaningful position in Panasonic Energy India (then known as Panasonic Battery India), a subsidiary of the global Panasonic group. On the surface, it made sense: A well-known global parent A near-debt-free balance sheet Dominant position in the dry cell battery market (AA, AAA, 9V) Long-established distribution across rural and semi-urban India The company had brand trust, recurring demand, and a steady if unspectacular financial profile. For a value-conscious investor, it seemed like a safe, scalable business. But over the years, the thesis quietly broke down. And what followed is a textbook example of why some businesses just don’t scale, even with a strong balance sheet and good brand equity. Where the investment thesis faltered 1. Structural decline of the core product The biggest headwind Panasonic Energy faced was technological obsolescence. Dry cell batteries, once ubiquitous in radios, remotes, flashlights, and toys, began losing relevance rapidly: USB-powered devices became the norm Lithium-ion and built-in rechargeable batteries replaced disposables Smartphones cannibalised dozens of battery-powered devices Even though demand in rural areas persisted for a while, the more significant trend was irreversible. This wasn't a cyclical slowdown but a secular, permanent decline. Lesson #1: A business in structural decline cannot be rescued by brand strength or capital efficiency. This was a classic sunset industry, the kind Kedia usually avoids. Once that becomes clear, even perfect execution only delays the outcome. 2. Inability to innovate or pivot While the global Panasonic group was moving into lithium-ion batteries and energy solutions, Panasonic Energy India remained tethered to its legacy product line. It lacked strategic autonomy. As a subsidiary, it had limited freedom to allocate capital into new verticals or drive independent innovation, stunting its ability to reposition itself for future relevance. Lesson #2: Promoter quality matters, but so does promoter flexibility. Even the best management is boxed in if a company can’t steer its direction. In contrast to Kedia’s other holdings, like Cera or Sudarshan, which were innovating or expanding into adjacent verticals, Panasonic stayed where it was. 3. No operating leverage or visibility on growth Unlike Atul Auto or Cera, which benefited from capacity expansion and margin gains, Panasonic Energy had no natural operating leverage left. Volumes were flat, and margins were already thin due to pricing pressure and rising input costs. With no room to scale, no new product lines, and no breakout demand, the company became a value trap — cheap on paper, but with no real catalyst for growth. Lesson #3: A stagnant business in a declining industry is not value, it’s inertia. The stock saw brief rallies in hopes of restructuring or capital infusion, but none changed the core trajectory. What Kedia did and what it teaches us Over time, Kedia reduced his stake and eventually exited. He didn’t double down, didn’t average down endlessly, and didn’t try to force a turnaround narrative. That’s a subtle but important aspect of his investing discipline. He doesn’t just hold blindly. He exits if the original thesis breaks, not temporarily, but fundamentally. Unlike many investors, who treat every exit as a mistake, Kedia views it as a cost of the process. Panasonic Energy didn’t destroy capital, it just didn’t create enough of it, which is a failure in a different form for Kedia. What retail investors can learn from Kedia Kedia’s story isn’t just about picking the right stocks. It’s about thinking clearly, acting early, and holding long enough for business fundamentals to play out. Four key lessons stand out: Great stocks don’t look great at the start. Atul Auto and Cera weren’t obvious choices, they became obvious later. Conviction matters more than timing. It’s not about catching the bottom, as it’s about knowing why you’re invested. The biggest returns come from patience, not prediction. Kedia stayed for years, when nothing moved until everything did. Know when a story is over. Exiting Panasonic Energy wasn’t a failure, it was discipline. In the end, the edge isn’t speed or complexity. It’s clarity, restraint, and the ability to sit still while compounding does its work. That’s the real Kedia formula. And it’s one every investor can learn from. Note: This article relies on data from the annual report and industry reports. We have used our assumptions for forecasting. Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He has a keen interest in Indian and global stocks and holds an FRM Charter along with an MBA in Finance from Narsee Monjee Institute of Management Studies. Previously, he held research positions at various companies. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. 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