I am new to this forum. I am a professional investment manager and trader. I would like your opinion on this portfolio which is heavily concenteated in financials. I am trying to exploit the current market opportunities.
- Liquidity squeeze is short term.
- Upward interest rate pressure is going to decline in India.
- Global trade war rhetoric will subside in coming months.
- There is no imminent global recession.
Yes Bank : 20%
Tata Motors : 17%
Sun Pharma: 15%
Indiabulls Housing : 13%
Repco home finance : 11%
DHFL : 11%
I believe current turmoil in markets because of IL&FS default and DHFL CP sales is short term in nature. Periods of liquidity squeeze in Fed taper tantrum in 2013 and demonstisation in 2016 didn’t last long. I believe with dovish Fed and low inflationary pressure in India, liquidity will be normal within next 3 months
Yes Bank : Board room tussle. Everything should be clear by 31st Jan. Stock trades very cheap compared to peers. Growth rate impeccable and foray into retail banking should support growth.
Concerns : Cooked books, unethical practices
Tata Motors : Deep discount to book value, domestic business turning around , street is expecting worse out of trade war, Brexit and global auto sales peaking out
Risk: With FCF negative, if demand continues to slow in China and Europe, global turn around would be challenging
Sun Pharma: Dealing with corporate governance issues. With more focus on speciality, revenue and margins should increase
Risk: SEBI re opening insider trading case which at best would provide opportunity to re-enter
Ujjivan: Impressed by management track record. Near term ROA and ROE under pressure because of branch expansion. With healthy NIM and solid execution, it provides a multi bagger opportunity
Risk : Loan waivers, liquidity squeeze
Indiabulls Housing: Numbers on paper are so impressive. ROA of 3% and ROE of 27%… almost twice of peers. The company should gain market shares and grow above industry
Risk : Cooked books , liquidity squeeze
Repco Home Finance : With high NIMs in its niche segment, the company should withstand any upward interest rate and credit pressure. NPAs are improving and regional diversification should minimise concentration risk.
Risks: Tepid growth rate
DHFL: Trading at steep discount to book. Unless something is very wrong with the company, it should do well. Low ROA are a concern. However, with a benign interest rate scenario, it should benefit and grow well.
Risk : Cooked books, liquidity squeeze
I will like to know your views and any suggestions. Time period for investment is 2-5 years.