Dinesh Sairam's Portfolio: Requesting Feedback


(Dinesh Sairam) #143

Sure, why not. My Portfolio looks like this now:

I’m not sure what you mean by ‘qualitative analysis’, but you can follow my blog where I talk more about valuations and the markets in general (The link is in my VP profile page).


(Dinesh Sairam) #144

Nobody can put a finger on the growth of NBFCs at this point. A lot hinges on them, including Regulatory action and Market’s reaction. At the end of my post, I did stress-test my own assumptions, simulating Growth between 13% (The SSGR) and 25% (The normal, historical average Growth Rate of DHFL). This is what I ended up with:

If you want to value DHFL using your own inputs, feel free to do so. In fact, I encourage it. Here is the model: https://www.dropbox.com/s/ute6l7t1h602wyu/Money%20and%20the%20Myth.xlsx?dl=0

Again, this is quite related to what you asked earlier. All I’m saying is, assuming that a large default does happen in DHFL, it does not justify the current price. Of course, if there are skeletons in the closet that the investors are not aware of, that would be disastrous.

Of course, that’s why DHFL has historically quoted at a lower P/B than most HFCs. But all that plays into value. In 2005-2007, they had a RoE even lesser than 14% if I recall correctly. All I’m worried about is the divide between Price and Value. RoE or whatever other metric you can imagine are simply a part of Value.

That’s why Margin of Safety exists. I already warned in the blog post that a DDM isn’t as good as a DCF, so one should exercise caution. If you think that there are too many random elements at play, you should use a higher Margin of Safety. IIRC, at the current price level. my valuation of DHFL offers a almost 70% Margin of Safety. I don’t understand what you mean by a ‘negative value’ in this instance.

I hope I answered all of your questions.


(mak2569) #145

Can I please know why cera sanitaryware and not Kajaria?.

Just curious to know.

Disclosure- Tracking Kajaria.


(Dinesh Sairam) #146

Cera caters to several parts of the home styling needs, whereas Kajaria’s is limited to only tiles (Not saying the company isn’t bad or anything, though). So this way, Cera’s Competitive Advantage can last longer. I also adore Cera’s management, the way they built the business from the ground up. As an example, you could listen to this interview:

I think the key is their understanding of consumer preferences. Listen to the part where they talk about changing consumer preferences. Long back when they started, their competitors at the time were offering limited number of colors. Cera introduced sanitaryware in 21 different designs and it was a big hit. Coming back to today, the CMD notes that their customers have started liking sleek and simple designs with white/whitish colors. In line with this, Cera has started selling more of these types of sanitaryware.

The rising RM prices do pose a threat in the short to medium term (As the management itself has warned the investors about in their concalls). But in the long run, I think Cera should do well indeed.


(Abhishek) #147

Atleast there is one thing we agree on! :stuck_out_tongue:


(mak2569) #148

Would definitely take a look.
BTW kajaria’s results came out good today. So it seems they were not affected much from demand factors as much as someone like Asian Paints were.

What do you think?

Regards


(Anupam) #149

Seems the 7% jump is due to results only. Can be a value pick if future growth visibility is clear.


(Dinesh Sairam) #150

I don’t ‘think’ anything about a quarter’s result or short term price movement. I could try to value it though. I’m busy with some work or the other until next week. Maybe I’ll attempt to value Kajaria post that.


(ramdhawad) #151

Does the recent correction makes valuations attractive for Heritage? Can you please share your narrative and valuations scenario for Heritage ? Thank you in advance.


(Mahendra243) #152

Just a random thought…why is it not prudent to stay away from politically linked companies? market discounting that CBN will lose in coming elections…pure speculation though


(ramdhawad) #153

Yes, one should stay away from such business however In case of Heritage, Company have demonstrated that business and politics don’t interfere. Nara Brahmini is independently running the business.

Disc - invested since 2015 levels and views may be baised.


(Dinesh Sairam) #154

I invested after the recent correction, not before. So yes, I think Heritage has a lot of value to offer.


(Dinesh Sairam) #155

Mr. Naidu has very little intervention in the actual business of Heritage, is what I understood. He appears in award ceremonies and other official gatherings though.

If you’re worried about the opposing party playing folly, I think that’s unwarranted fear. CBN was not in power for a majority of the last decade. Look at how Heritage grew their business over this time. I honestly don’t think the market cares about who’s in power (And if it does, and sells into the doubt, I’d personally just buy more).


(mak2569) #156

Would be really great to see what your excel model says.

Thanks and Regards


#157

would like to know your view on max india - kkr has acquired the stake in max health care valuing the company at 4300cr. Max india has 50% stake in max health care - means 2100cr which is more than max india’s current market cap of 2000cr. Looks good at current price. have you have considered max India while adding KMCH ?