Divyansh jain portfolio


(divyansh ) #1

HIII All i am new to the world of investing and have been investing in the indian equity markets from 2009. As most of the freshers i started investing on tips from friends and relatives , and learnt my lessons over a period of time . My friend ranvir introduced me to value and growth investing and since then i have started reading buffett,…munger …fischer (father son duo…)…

M posting my current portfolio for comments from fellow valuepickrs::

1). Yes bank 250 24%

2). Astral polytechnik 185 29%

3). Supreme industries 280 12.7%

4). polymedicure 455 8%

5). greenply industries 400 7%

6). cash 25 %

MY Recent exits include

bajaj corp (bought at 135 sold at 235)

ajanta pharma (bought at 370 sold at 660)

amara raja (bought at 200 sold at 265)

m&m fin services (bought at 600 sold at 1050)


(divyansh ) #2

I have conviction in growth stories and business of yes bank, astral, supreme industries and ajanta pharma .

Exited Ajanta pharma cause of sudden run up and very keenly waiting it to correct to levels of 550 to 500 .

reentered polymedicure as the forex losses issue is resolved and the company from march quarter onwards may surprise on the positive side . also it is a good high margin business with strong moats of its own . if things work out and they keep posting 20-25% growth then expect a price tgt of 1000+ in a 2 year horizon.

also after following the thread of greenply industries : found a decent margin of safety in the valuations as well as a good chance of re-rating . with the mdf plant working well now and promoters being efficient (read increased npm with increased sales ) can deliver above average returns over a period of 2 years .

m looking now for a good correction in the markets anytime in fy14 and have been accumulating cash and restricting myself to be fully invested .

tracking currently : kajaria,somany , cera


(Hitesh Patel) #3

divyansh,

You have a good collection of stocks which should give you excellent returns.

Coming to deploying cash, I think I would prefer cera among all the stocks listed under track due to low levels of debt and consistent growth.

greenply was an undervaluation play which seems to have played out. I wouldnt bet too much on it giving consistent returns bcos company will have to keep expanding to drive growth. Personally I have exited it having got good returns in a very short time.

regards

hitesh.


(divyansh ) #4

hitesh bhai

thanks for your valuable inputs . indeed cera is a nice bet of all the rest. i used to own it once at levels of 180 but somehow exited it . now i tend to find it over priced ( which is wrong ) . However will definitely buy it once valuations become more comforting.

i m also expecting this year to be volatile cause of certain reasons (some of them being elections ,…populist measures ) and in general profit booking cause of long run up in prices for more than a year. this correction might be either price wise or time wise but i ll be waiting patiently.

regards

divyansh


(divyansh ) #5

updates on my portfoli:

1). polymedicure has reported a net eps of 7.5 ,…seems the forex issues is over for sometime and for better. full year eps now stands at 22 ,…but the sales growth is not much encouraging . need to dig in more about the capex and growth plans of the company .now becomes a value buy at price of 350-375.

2). astral has reportedly got the bis approval for blazemaster . seems the new development will be eps accretive in a big way and with the growth continued . now needs to be accumulated at every dip.

initiated position in finolex cables (classical example of cloning here:: copies hitesh bhai)

however the charts do suggest some big deals and smart money accumulating the stock.will hold for few quarters and then take a further call.

regards

divyansh


(Ramakrishna) #6

1).

i though the 9 mth eps is 13.42 where did u get the figure of 22.


(divyansh ) #7

Ramakrishna

Sorry ., what I meant was that with the latest quarter the full eps for fy 13 will be atleast 22.

Regards

Divyansh


(divyansh ) #8

Vivek

I do agree with your view point that fy 14 may be a year of whipsaws but I do have a strategy which has high probability of working out . I ll be buying most of the dips and only dips durin the year all the above mentioned stocks for a time horizon of 3-5 years .

Stocks/business which are placed in growth sectors with relative less debt and ethical and visionary promoters will eventually outperform the markets by a huge margin .

Happy investing

Divyansh


(divyansh ) #9

Latest portfolio

Ptc india financial : 30 %

Muthoot capital services : 20 %

Shilpa : 18 %

Fiem industries : 12 %

Care : 12 %

Rest cash

Two good performing nbfc/ financials make half of the portfolio. Both of them fared well in tough times and are now well poised to enjoy the tail winds as and when it comes.

New found interest in fiem cause of efficient and smart promoters. Simple business easy to understand and growing at a good pace.

CARE : lynch kind of stock again where in this sector oligopoly exists. Good opm and npm as only work force contributes to expenses. Professionally managed company which gets more work in growth and industrial revival.


(divyansh ) #10

Updating my latest portfolio

Ptc india financial : 25 % ( booked some profits as the stocks weight had gone beyond 40% cause of run up)

Muthoot capital services : 20 % ( though the stock has given decent returns i balanced the weight by increased allotment elsewhere)

Shilpa : 17 % ( sticking with shilpa keeping a lookout for next two quarters )

Fiem : 15% ( increased conviction in the story , strong sectoral tailwinds , upcoming festive season and low crude prices are.one of the few reasons ) # stock thread avb on valuepickr

Torrent pharma : 18% ( new entry , trusted pharma major , last two quarters showing increased growth and synergy with elder abt to be done , also is avb at cheap valuation on a year forward basis ) # on conviction will increase to 30% to bell weather market uncertainity

Care : 5 % ( booked half profits as stock price doubled and also found better opp in fiem and torrent pharma)

Views are invited from fellow boarders

Regards

Divyansh


(Harshad Ratilal Shah) #11

FIEM IND : JBM Auto has similar parameters. It has traveled from 43 to 955/= (Sept13 to

Sept.14). Fiam is 196 to 655/+. Some parameters are better in FIAM. During this Bull

phase can it go to 1000 by March 2014?

Harshad.


(divyansh ) #12

My latest portfolio

Have initiated position in torrent pharma at 840. And bought ipca @ 660.

Sold off Muthoot capital as their is no earnings growth even with sectoral tail winds being there.

Sold of Care ratings as the percentage of allocation in portfolio was very minuscule.

Current portfolio

PTC Financial : 25 %

Ipca lab 30%

Torrent pharma 20%

Fiem industries 10%

Shilpa 15 %

M excited about ipca Will accumulate ipca at corrections.

Suggestions and inputs from fellow boarders are welcome


(vaibhav) #13

Hi Divyansh,

would like to know your analysis of ipca coz rest of the stocks you have look very good. found following on moneycontrol message board (point1,2 and 3 were my analysis of ipca too)-

"Lets try to understand why this stock is bound to destroy value for investors…My analysis is purely based on the various facts which I have observed:

  1. Management has not been transparent about whats happening inside the company. I am saying this because of the following reasons:

(a) They have not intimated to the market when the inspection of plant started & when it got over. The recent Indore plant Form 483 observation was never intimated to the exchange by the management. However, the management informed the same to research firms like Credit Suisse who downgraded the stock. Not only this along with the downgrade a block deal happened in the first 15 minutes of the trade where volumes were 15 times of normal. That means that the management is pretty opaque.

(b) Management has been easily ignoring the data manipulation going in the plants and turning a blind eye to it. This indicates that either the management does not have sufficient control on processes or it was purposely trying to bypass the FDA regulations.

Hence, there are serious corporate governance issues about the company. Such issues destroy shareholder value in the long term. Glaring examples are Unitech, DLF, Satyam, Kingfisher, Bhushan Steel etc.

  1. All FDA regulations are more or less based on the integrity of data which is questionable here. This means sooner or later EMEA (the European regulator), US FDA, Canadian will block import from Indore and Ratlam plants and audit will be done at other plants also. This invites serious uncertainty and delay in the improvement of situation. 24 months is the minimum timeframe. EU will definitely follow USFDA and audit and ban the imports too because Europe is facing lot of competition from emerging markets like India and their own economy is in shambles. They are focussed on reducing competition from firms like IPCA for their own pharma cos which is required for their own economic benefit.

  2. Loss of sales has been around 18% till now with US/Canada ban. It will go upto 40-45% once EU audit and ban commences. That means a 25-30% fall in the EPS and hence the stock price is pretty evident. With CS ascribing a fair value of 600 at the current situation a further downside of 150-200 rs is very much possible…450-500 is very much in sight in such a situation.

  3. Very minimal (not even 1%) of the promoter shareholding is pledged. Hence, the promtoers do not have incentive to keep the share price afloat contrary to what is happening in DLF, Bhushan and JSPL.

  4. The daily traded volumes of the stock are low but around 36% of the total shares are held by FIIs and DIIs. So, that means when they sell the stock via block deals not many buyers will emerge and that means the stock can fall 15-20% easily any given day.

Suggestions are welcome."


(ranvir dehal) #14

The stock can fall for sure. But the point is weather it can recover and start to do well in future or not.

The thing is that the problem that IPCA is in right now can happen to any Indian generic pharma company. Can such USFDA observations not happen in a plant of say Sun pharma or Lupin or Ajanta??? I think it can happen to anyone. Is USFDA behind indian generic pharma and will not let them sell in US??? If yes…then most Indian pharma bluechips are not worth investing. But that i m afraid is not the case.

But USFDA and regulators of other countries are strict for sure. But that is a business reality…everyone must live with it.

I am not trying to undermine the problem. I would say that this is a serious problem…but serious problems happen with every company. Real winners are the companies that come out of these problems. The Management’s track record wrt business operations has been nothing short of superb. If management is truly great… they will come out of this hole.

Since the management holds 45% stake…they have all the incentives to bring the company out of this hole.

Will it take time??? Yes it should take time. But such problems are generally great buying opportunities. When to buy? when will it stop falling? I do not think anybody can answer that.


(ranvir dehal) #15

The stock can fall for sure. But the point is weather it can recover and start to do well in future or not.

The thing is that the problem that IPCA is in right now can happen to any Indian generic pharma company. Can such USFDA observations not happen in a plant of say Sun pharma or Lupin or Ajanta??? I think it can happen to anyone. Is USFDA behind indian generic pharma and will not let them sell in US??? If yes…then most Indian pharma bluechips are not worth investing. But that i m afraid is not the case.

But USFDA and regulators of other countries are strict for sure. But that is a business reality…everyone must live with it.

I am not trying to undermine the problem. I would say that this is a serious problem…but serious problems happen with every company. Real winners are the companies that come out of these problems. The Management’s track record wrt business operations has been nothing short of superb. If management is truly great… they will come out of this hole.

Since the management holds 45% stake…they have all the incentives to bring the company out of this hole.

Will it take time??? Yes it should take time. But such problems are generally great buying opportunities. When to buy? when will it stop falling? I do not think anybody can answer that.


(divyansh ) #16

Appears that credit suisse is not that smart after all. They upgraded the stock then. And as per the alleged link between them and managemt should have sold all holding back then.


(HG) #17

Divyansh,

The link you have posted is from Feb. Here is a recent link about the downgrade -

(not invested)


(Gurjot) #18

Here is HDFC Securities’ research report after FY15Q2 results:-

"Concerns ahead

IPCA Labs (IPCA) reported below estimatedrevenues as well as PAT for 2Q. Revenues at Rs7.7bn were down ~7% YoY. EBIDTA margins dipped1004/740bps YoY/QoQ led by a sharp decline inoperating leverage due to lower revenues. Grossmargins, however, remained strong (down only100bps YoY and up 200bps QoQ) due to lower APIrevenues in the quarter.

IPCA missed the estimates on revenues due to anunexpected ~65% decline in tender revenues (led bydelay in shipments due to batch by batch inspectionby WHO). IPCA has also indicated a ~20% priceerosion in the malaria tender supplies which wouldimpact the 2HFY15 revenues from the segment.

Moreover, IPCA also faced a blip in export APIrevenues (down 40% YoY) due to implementation ofautomation at the plants. The miss on revenues andlower operating leverage led to the lowest EBIDTAmargins in the last 15 quarters at 17.3% in 2QFY15.

IPCA has been facing issues on the regulatory frontstarting with the API plant at Ratlam, which hasnow extended to the Indore plant. Moreover, theinspection of the Silvassa plant is a cause of concernin the near term.

ï Concerns beyond US

Though IPCA has been facingconcerns over the US plants on the regulatory front(which may lead to nil US revenues in FY16E as well),we believe the concerns are much beyond that. Themalaria tender business, which has started seeingpricing pressure (down 15-20% in 2QFY15), may feelthe stress going ahead with funding bodies gettingcautious on pricing. Moreover, apart from theregulatory issues, IPCA also faces concerns on USrevenues led by the Ranbaxy-Sun deal, as Ranbaxy isthe front end partner for IPCA. Hence, we turncautious on the company and await clarity on theregulatory and business outlook.

ï Outlook and Valuation

Factoring the revisedguidance and lower revenues from high marginsegments like US and tender supplies, we revise ourEBIDTA margin estimates lower by 82/308bps forFY15E/16E. Our revised EPS stands at Rs 33.7/38.7from Rs 36.75/50.1. We downgrade IPCA toNEUTRAL (earlier BUY) with a TP of Rs 620 (earlier Rs****850) at 16x (earlier 17x) FY16E EPS."

My personal view is that the stock has reacted quite well to the below par results in Q2. However, there is the lingering threat of imminent weakness due to such poor results. It might react sharply & negatively to any sort of market correction, regulatory concerns, etc.

Still trying to figure out the way forward in this. The obvious question is how long will the expected turnaround take?

Disclosure : Invested at avg price 670 with a long term view


(divyansh ) #19

major rejig in the portfolio done.
sold all my ipca at loss , understood the value of oppurtunity cost and diving too soon.
this market crash gave me the oppurtunity to enter into better names like piramal enterprises , bajaj finance , manappuram finance and cera sanitaryware. planning to deploy more funds in cera and exide industries.

regards
divyansh


(divyansh ) #20

investing in times of high uncertainty but low risk has always reaped good returns for investors. while during the demonetization there was lot of discussion on how things will pan out and what the overall effects might be, i was more or less convinced that panic selling coupled with a high uncertainty and low risk environment will provide good entry points for good businesses.
over a period of time i have realized that a good management with a visionary promoter at the helm of things leads to long term asset creation. this might be my circle of competence as i m yet to develop conviction on turnaround businesses.
my current portfolio major holdings replicates this above theory of mine , also imp is to look for such opportunities in a sector with visible long term growth ( in a asset light business model coupled with less or nil regulatory environment).

  1. piramal enterprises : 20%
  2. shilpa medicare : 10 %
  3. bajaj finance : 10%
  4. manappuram finance : 7%
  5. cera sanitaryware : 6%
  6. suzlon energy : : 8 %
  7. pokarna : 7 %
  8. poddar pigments :6%
  9. ruchira papers : 5%
  10. suven life sciences : 4%
  11. tata metaliks : 4%

most of the stocks above have a thread on valuepickr and to be frank my portfolio is highly influenced by this forum.
views are invited on the same. i gen do not hold much cash but i m contemplating a strategy to execute as and when i find the markets entering frothy territory. as of now i m not finding any new place or stock to invest and hence no fresh allocation.