Amudha's portfolio

Q&A: Questions & Answers Portfolio Q&A
1

Hi,
Im a homemaker and I started investing towards the end of 2013.
The main things that I look for while selecting companies are the opportunity size and management competency. The checks that I do to assess management competency are to see if the mgmt. has followed up on their plans from the past annual reports,profitability ratios of the company and basic checks about promoters from publicly available information.
I don’t prefer to churn my portfolio a lot. My top 6 holdings except Natco have been holding for last 4-5 yrs averaging up on some occasions.

Last october, I did some clean up, and now this is how my portfolio looks like.

Company Average buy price %of portfolio

HDFC Bank 810 20%
Tata Elxsi 307 13%
Astral Polytechnik 379 9%
Natco Pharma 868 8%
Godrej cons. prod 460 8%
Jyothy labs 94 7%
Gruh Finance 142 7%
IDFC First bank 41 5%
Reliance 488 5%
Deepak Nitrite 240 3%
Repco Home fin 497 3%

Other than these I have 1-2% tracking positions in Mayur, CCL prod and vinati organics and remaining in cash

Rationale for investment:

HDFC Bank- most reliable and safe in banking industry and has still a long runway for about 20% growth

Tata Elxsi - Operates in niche area and huge opportunity size. Negatives are that merger with TCS is a possibility and dependence on JLR

Astral - High growth, they have been growing profits at 20% when the real estate sector is down. My expectation is that things will get even better for them when real estate picksup.

Natcopharma - This is one company that has been dragging down my portfolio’s performance. But I have faith in the management and Im willing to hold it for another year to see where it goes.

Godrej consumer products - very innovative company with high appetite for growth. Their Indian business is doing really well. Their international business is not doing so well in latin america and Africa. Everything depends on how quickly they can turnaround and become profitable in these geographies.

Jyothy Labs:This is one company that understands the indian consumer mindset very well. Their products Ujala, Exo and Pril are doing very well against HULs Robin blue, vim etc.
Im betting on them coming up with a few more blockbuster products. They have plans to acquire some regional brands and take it national .

Gruh Finance:
I have been holding this since 2014 and it has been a steady compounder for me. Now the merger with Bandhan Bank came out of blue. Im continuing to hold it since I believe that it is not a bad deal for Gruh finance share holders and Bandhan has good operating metrics.

IDFC Bank.
The only reason Im invested in this bank as of now is my faith in Mr.Vaidyanathan’s leadership.
I strongly believe that he can turn things around at IDFC bank.

Reliance- for adding stability to the portfolio.

Deepak Nitrite - The new phenolics plant is expected to double the revenues and company has plans to produce downsteam products from phenol and Acetone.

My risk taking ability is moderate. Portfolio is down about 18% from the highs of mid 2018, but im not too much worried about it. I’m expecting 20-25% returns from this portfolio.

I request feedback from seniors and fellow Value Pickers on my portfolio

16 Likes
2

I feel you have choosen stocks better than any other. No need to look back.

3

Good picks! Couple of feedback:

  1. One stock (HDFC bank) @20% portfolio looks high
  2. Tata Elxsi might face headwinds due to JLR exposure and there is also news around merger with TCS. You might want to reconsider the allocation %.
4

A simple yet effective portfolio! I wish more folks think like you and construct a portfolio that can be held with confidence for a long term without need for unnecessary churn.

You may want to rethink on Reliance. If you are not confident, it may not add any stability to your portfolio.

5

Thanks for your feedback!

HDFC bank wasn’t planned to have high allocation. It has increased allocation now as others have shrunk. Hopefully my other stocks will perform well in future so that HDFC bank will come to around 15% :slightly_smiling_face:

I agree, Tata Elxsi has to be watched more closely due to the issues at JLR. The management doesn’t seem to be too worried about it in the conf call. They have brought down the revenue from JLR from 24 to 20% in the last 2 yrs, by growing other accounts. Still, I would not hesitate to reallocate a part of Elxsi, if a better opportunity presents.

6

Thanks for your feedback!

I have had my duds too(jhs svengard and ongc)…I was lucky to get out of them early without major losses.

Do you think Reliance may not have a smooth ride? May I know why?

7

If you feel they can grow bottom line for a long time, it may be a good pick. However I am skeptical on their sustainability to grow bottom line. Capex heavy business may pull the cash from oil and I don’t know how these new ventures will pan out. Telecom to retail is one big diversification and only time will tell us if it is diversification or diworsification.

1 Like
8

The rationale behind buying reliance is pointless. If you want to add stability to your PF instead of buying reliance or any other equity make that a fixed income or liquid component. That will add stability in times of negative market returns.

Rethink the logic behind Reliance.

Tata Elxsi should be reconsidered. It is not a great company in terms of wanting to grow. Their peer is a better bet. Since they are a big weight I would reconsider them.

9

Thanks @Uservijay and @dumboinvestor !

@dumboinvestor - I will take a look at LTTS. Thanks!
This portfolio is only for my equity investment and it is about 20% of networth. My thoughts regarding Reliance is this-during last October when most stocks, even high quality stocks crashed by 30 -50%. Reliance and HDFC bank were the only ones (among the ones I own) that withstood the carnage.
If I were to replace Reliance with something else, what would you suggest?

10

@Amudha Dont look at market movements and make decisions on things. Just because they did not fall does not mean that they will rise as well. If the objective is to not lose money then look at debt options.
I cannot give you a suggestion on HDFC Bank obviously. But RIL you need to ask yourself is JIO priced in. And are the profits from JIO going to significantly move the PAT. Jio and consumer business. See both will have to do around 10-15000cr in PAT to meaningfully move the RIL bottom line. Can they do that? ask yourself. And how much of JIO is already priced in if any?
If you look at stocks that have not fallen or moved in the correction there are so many. That should not be criteria. And any % of networth is still money if thought in terms of long term cagr. Discount whatever networth you have by 12-15% cagr for the next decade and see the amount you are foregoing to conduct this experiment of active investing.
I would say look beyond simple ideas. Try and clone some of the VP veterans they post their research here as well. Look for research of reputed investors. Read more. I would say spending money on that would be far more productive than actively investing with no real rationale…
If learning is the objective use 5% and spend the rest on learning material. If returns is the objective invest in MF.

1 Like
11

Keep things almost the same, but do Asset Allocation now. Sophisticated portfolios make adjustments into sectors that you favor for the next 1 to 3 years, move money into undervalued sectors, and move money out of overvalued sectors or stocks that become over-valued.

I am the worst enemy to this above advice since I find myself in love with some of the holdings and cannot sell DRL or RIL or HUL even though they are more than 10% of my portfolio. So, if you cannot sell your HDFC for example since it has been good to you and has good potential, carry on, but watch for the top in the stock (like ICICI Bank got last year) and if you see some rocks in the road for HDFC, start selling in SIP mode. I have done selective selling like this in RIL, HUL and DRL at the highest high prices and moved the money into other diversified stocks similar to those.

Besides that, just make sure that you have diversified sectors also and these sectors have to be the best of best over the next 1 to 3 years. When I say best it is not best today, but will become best in the future. Markets are a gamble, and you have to make your own decision about that from VP site, or WA groups or analysts opinions and then create a composite of it to make it your own convincing viewpoint.

Good luck - Great job.

KKP

1 Like
12

I would advice against cloning anyone’s portfolio. Just because reliance was static when other stocks fell does not mean it is safe. Look at companies you understand and invest in them. Don’t ever clone a stock without understanding completely. Read lots of books and invest slowly. Use mutual funds with diversified multicap or index fund while you gain your experience. Most folks here giving advice have not seen 1 single business cycle of 10 to 15 years. So take all the advice with a pinch of salt.

The stock which is hot and famous here may be the most dangerous. Boring stocks earn returns in the long run (borrowed it from Peter Lynch) . As a consumer, you may have insights that are better than FII living abroad. So make use of it.

2 Likes
13

I have learnt a lot from this forum and appreciate the efforts being put by all to keep the discussions of very high qualty.

My latest portfolio is as follows:
image

Exited: Jyothy labs, Tata Elxsi, Deepak Nitrite
Also partially booked profits in HDFC bank, since there would be lot of headwinds in the near future
New additions:

  1. ITC - Dividends in the short term. Also, in another 10 years, this company will be completely different with FMCG playing the dominant role
  2. Divis Lab - Sector with tailwinds. Debt free company . They have market leadership in many of their APIs. Management has good strategic thinking.
  3. Alembic for medium term(2-3 yrs)- Sector with tailwinds. In the next few years their R&D investments should start paying off.
  4. Added Britannia as part of core portfolio during the market meltdown.
  5. Aarti industries: plan to add more in the coming days. They have diversified products and long term contracts which make it a long term growth story.

Was also looking to add another API player. But most of them have run up quite steeply and do not offer any valuation comfort.

Requesting feedback on my portfolio from seniors and fellow members. TIA.

1 Like
14

Hi. any particular reason for exiting Deepak Nitrite?

15

Nothing specific. I booked profits in Deepak nitrite as it had doubled from my buy price and moved some of it to Aarti industries.
Aarti is more diversified and is a secular growth story as compared to Deepak nitrite.

1 Like
16

any specific reason on exiting jyothi labs?

17

It is a slow grower and there weren’t any immediate triggers for growth. There were better opportunities elsewhere, hence exited.