Dhwanil's Portfolio


(Dhwanil Desai) #21

Hi Rebalanced my portfolio to make it little more concentrated and to reflect my increasing conviction on ARBL and Atul Auto. I am also indicating the average buy price.

**Long Term Plays **

Company name % Allocation Average Buy price

Piramal Healthcare12%450

Mayur Uniquoter10% 165 (adjusted for bonus)

Cera Sanitaryware 12%170

Amara Raja Batteries 15%350

Atul Auto 10% 85 (adjusted for rights/bonus)

Swaraj Engines 5%380

Shriram Transport Finance 5%450

Gujarat Reclaim 8%1300

Hindustan Zinc 6% 900

Value Buy

JB Chemicals 7%61

Cash10%


(Dhwanil Desai) #22

Hi Rebalanced my portfolio to make it little more concentrated and to reflect my increasing conviction on ARBL and Atul Auto. I am also indicating the average buy price.

**Long Term Plays **

Company name % Allocation Average Buy price

Piramal Healthcare12%450

Mayur Uniquoter10% 165 (adjusted for bonus)

Cera Sanitaryware 12%170

Amara Raja Batteries 15%350

Atul Auto 10% 85 (adjusted for rights/bonus)

Swaraj Engines 5%380

Shriram Transport Finance 5%450

Gujarat Reclaim 8%1300

Hindustan Zinc 6% 900

Value Buy

JB Chemicals 7%61

Cash10%


(saurabh shankar) #23

Hi,

Any specific reason for exiting Mazda or is it just better opportunities ?

Regards,

Saurabh


(Dhwanil Desai) #24

Hi Saurabh,

No it is just better opportunities only and nothing else. Moreover, I am in the process of consolidating the portfolio so trying to examine relative merits and investment attractiveness and based on that, I exited Mazda to increase my position in ARBL.

Best Regards

Dhwanil Desai


(Ayush Mittal) #25

Hi Dhwanil,

First of all congratulations for having such a good clarity and value investing framework in a timeframe of just 1 year! Its just marvelous.

Your portfolio is pretty good as you are pursuing some high quality businesses bought at reasonable prices and with a clear objective of steady compounding. So I think this is a good portfolio and should be able to serve your purpose.

In ref to discussion on Cera, my thoughts - the co has surely done pretty well and all the positives have been discussed. On the negatives - I think the untimely death of Mr. Somany is very sad and a big negative. I’m also told that at a recent Analyst meet, the co has talked about venturing into tiles and pipes etc which I think can be a negative move if they are serious and are trying to pursue growth for the sake of growth. The stock has got its due recognition and the valuations are not cheap - so anyunder-performance will be punished.

I think this is a good time when one may consider switching to Astral from Cera.

As you are in initial stage of learning curve, I would recommend you to keep trying on new ideas (which appeal to you). This will really help you in practical learning. I have a diversified portfolio and yet we have done quite well and it has helped us in being open and learning different ways of investing.

Would also like to know your reasons for exit from Mazda.

Regards,

Ayush


(PATURI BAPAIAH CHOUDARY) #26

hiDhwanil Dhouesai,

happy to know about yourportfolioand your average buying price of each scrip and % of allocation. It gives clear picture of your portfolio to novice investors. I really appreciate your effort in disclosing your buy price. I am expecting others will follow you

warm regards,

paturi


(Dhwanil Desai) #27

anyunder-performance

Hi Ayush,

Thanks for your inputs indeed. I think it is great to have inputs from more experienced people like you as it will help one clear up lot of dogmas one may have got from “bookish” knowledge.

With respect to Cera, Sure, I too see Cera venturing into unrelated areas as a significant risk. In my opinion, Cera still has lot of headroom to grow within sanitaryware itself. I don’t understand, why a company growing its sales at 30-40% while maintaining its margin (may be in a range) wants to venture into a completely new area? and they have opened a new front in terms of faucetware as well which needs to be scaled up. Unfortunately, there must be some void created by untimely and sad demise of MR.Vidush Somany. So, yes, if Cera decides to walk the talk andventure out into two more new areas, I will surely reconsider my allocation. However, somehow, I feel that Mr.Vikram somany, who has built the company from scratch and put it onto a growth path and now assisted by long term veteran of Cera, management bandwidth is notan issue for the time being. I also see a distinct possibility of Cera being more open to foreign firm buing some strategic stake in the company as well which may be a catalyst for value realization.

For Astral, I am still researching the story but I feel that their relationship with Lubrizon which is considered a key strength may also prove to be Achille’s hill too! I feel somehow that it is a key risk and paying 16 times TTM is slightly pricey considering risk profile.

For Mazda, Frankly, it was more a capital allocation decision and for a better longer tem opportunity. Mazda for me is a value play. Not something that I would love to own for a long period of time (like ARBL/Shriram/Cera/may be Mayur) if the valuation gap closes. Over a period of time I am getting a feel that for a part time investor like me, sticking to finding a great business (or at least good enough to moving towards that) and paying reasonable price than identifying great value plays but reasonable businesses. So, As I said again, I am experimenting here to find out my comfort zone.

Best Regards

Dhwanil Desai


(HG) #28

Hi Dhwanil,

Just noticed that you are invested in JB Chemicals. I also read the comprehensive post on your blog - great stuff. What is the price you have in mind when you mention the intrinsic value for this stock?


(Dhwanil Desai) #29

Hi HG,

If company continues to grow in the range of 15% indicated by management and is able to deploy idle capital to grow little faster (may be by small acquisitions of agressive sales force expansion), one can easily look at valuation of 1200-1300 crores. So, may be price of 150-160 is a reasonable value. Another way of looking at the valuation is the private value of the business. I think,private value of a business will be far higher considering the number ofUSFDA and other regulatory approval plants spreadacross 4-5 locations, promoters will not even look at offer anythin less than 1800-2000 crores (just look at their Russia CIS business sale). So, one can expect reasonable value between 150-200 depending upon how growth pans out.

Best Regards

Dhwanil Desai


(HG) #30

Thanks for the reply. The more I interact with you all, the more I learn!


(Dhwanil Desai) #31

Hi Everyone,

I intiated position in Hyderabad Industries Ltd and Ashiana Housing and trimmed exposure to JB Chemicals (partially). Again,as a philosophy,I am trying to moveawayfrom pure value plays. Iam trying to focus more ongreat businesses available at reasonable price.

Best Regards

Dhwanil Desai


(Subash Nayak) #32

Charlie Munger has rightly said in “Poor Charlie’s Almanac” --> A great business at a fair price is far better than a fair business at a great price … :slight_smile:

Again,as a philosophy,I moveawayfrom Iam ongreat


(Dhwanil Desai) #33

Added HIL further as price corrected even after very decent results. I am not too sure about market reactions, but HIL around 490-500 seems good pick. As forQ2 results, revenues increased 29% while PAT increased 47%. Even if there is no growth in Q3/Q4, it will post EPS of 100 which means it is availabe at P/E of 5.

Also,Yesterday Itook position inNarmada Gelatines as I see good upside from current levels. Q2 results have been strongand barring unforseen circumstances, it islikely to post similar results in Q3/Q4 as well.

I am 100% invested at the moment and plan to raise some cash by booking partial profits in some of the positions.

Best Regards

Dhwanil Desai


(Subash Nayak) #34

Dhwanilji,

Do post your updated portfolio for us get some inspiration.


(Atul Garg) #35

Dhwanil,

I had a brief look at HIL.

Though the numbers in terms of ROCE and valuation look attractive, couldn’t see much growth coming in.

Below are some stats from latest AR:

HIL

mkt share HIL-Growth industry-growth Revenue share

Fibre cement sheets 20% 13% 5% 80%

AAC blocks 26% 100% ??

Aerocon panels 58% 21% 16%

Thermal insulation 65% 7% 5%

Risks:

Dependent on Rural income which in turn is dependent on monsoon.

Dependency on Govt housing schemes (low spending ).

Competetion.

Company being already market leader in most of its segments, capturing share from other players seems unlikely given the fact that management has again & again

expressed its concerns on competitive pressures.

So with <10% growth in the industry, growth seems to be minimal.

Please share what do you think are the key growth drivers ?

And how is the AAC blocks and panels business shaping up ?


(Dhwanil Desai) #36

Hi Atul,

Yes, you are right. market is according no-growth scenario to HIL as it is still seen as cement sheet company. However, post 2007-08, company has changed gears and is trying to become a building products company by focusing on green building products i.e. AAC blocks and Aerocon panels. Currently AAC/Aerocon panel business contributes roughly 16% of revenue. Now if you read AR and MD Abhaya shankar’s interview in Business India, it is evident that in next 3-4 years they want to change revenue mix from 80%-20% (cement sheet/green building products) to 50%-50%. Moreover over next 4 years, they have set target of revenue of 2000 crores i.e. 25% CAGR even if there is no margin expansion. Now if company grows at even 20% CAGR for 4 years, I am sure market will not assign it P/E of 4-5. Even if we take conservative P/E 10, we are talking about a 4 bagger.

Now look at the downside, what are the chances of losing money from here on? Even in no-growth scenario, you are buying business with pay back of 4-5 years which is not bad! Secondly, business generates good operating cash flow which means if they do not grow under pessimistic scenario, there is going to be increase in dividend as cash pile up. Currently also dividend yield is close to 4% and if cash piles up and management increases dividend , it will further improve.

From private investor’s perspective, company is available at enterprise valueof 450odd crores.will promoter sell a business having 12 factories across India (one located in prime area near hyderabad airport), large distribution network and strong brand, market leadership inmost of the categoriesand 70 crores of operating cash flow at just 450 crores odd?

So to me again it looks heads I win, tails i don’t lose much.

Best Regards

Dhwanil Desai


(kishor barhate) #37

How come av price of ARBL can be 350 its 52 week high is around 267. Is it not adjusted for bonus?

**Long Term Plays **

Healthcare12%450Mayur Uniquoter10%

12%170 15%350 5%380 5%450

Gujarat Reclaim 8%1300

Value Buy

JB Chemicals 7%61

Cash10%


(Dhwanil Desai) #38

How come av price of ARBL can be 350 its 52 week high is around 267. Is it not adjusted for bonus?

**Long Term Plays **

Piramal Healthcare12%450

Mayur Uniquoter10%

Cera Sanitaryware 12%170

15%350

Swaraj Engines 5%380

5%450

Gujarat Reclaim 8%1300

Value Buy

JB Chemicals 7%61

Cash10%

Hi Kishore,

Yes, the price is the bonus. So adjusted for the bonus, the price is 175.

Sorry for not responding to your mails as I am preoccupied with my relocation to Mumbai but will revert to you soon.

Best Regards

Dhwanil


(Excel Monkey) #39

Buddy your stock seems to be in demand


(Amey Desai) #40

Dhwanil - please re-look into Hyderabad industries at CMP 414