Hitesh portfolio


(Samir P H) #2161

@hitesh2710
Hiteshjee,

Do you still hold repco? How do you compare the sharp fall in stock price specifically for repco in comparison with Canfin or Gruh (which seem to be doing reasonably okay).


(ricky_) #2163

@hitesh2710

Hiteshjee,

Talking of long term investment spanning across years, the stock remains in a consolidated/flat phase for several years before making the breakout which is then followed by the exponential growth in the price chart.

There are instances where people bought several years before the actual breakout took place. Is there any way to avoid this? Is there any way to enter just when the breakout is about to happen?

Thanks


(Hitesh Patel) #2164

@tbhavesh, I dont track fiberweb or intense tech.

@samir, I think the fall in repco is more due to the multiple factors like questions on management integrity (cbi raids), impact on asset quality due to demonetisation (higher exposure to non salaried class clientele) and question marks about maintaining growth in loan book. (again due to shorterm term headwinds due to demonetisation). Personally I feel that if one is convinced about the story and has done enough homework taking into consideration various scenarios (after considering the concerns addressed earlier and their actual impact versus the feared impact) it can make an interesting investment bet. I personally dont hold repco as I had sold out on the day of the announcement of cbi raids. When I hold something perceived to be tainted (which actually might or might not be tainted) I dont want to pay too much for it and at around 770 odd levels I felt repco was not too cheap for me to take the risk. At current levels its under my watchlist.


(Hitesh Patel) #2165

ricky,

Yours is an interesting observation. There are two approaches to it. Either be pro active and find out ways of overcoming the problem of overholding. Or else be patient and keep holding for long periods of time. There is no holy grail to attain correct outcomes in either approaches.

My observation is that one can look at what is coined as business momentum. Here one looks at the growth shown by a high quality company after a few lacklustre quarters. Once a quarter or two of good growth is visible markets tend to sit up and take notice and this can be observed in range breakouts especially with higher volumes. Say a stock after posting an all time high or 120 is stuck in a range of 65-85 for a year or two (esp in view of lacklustre growth in an earlier fast growing company) and then suddenly spurts beyond 85-90 levels with huge spurt in volumes. This is the time to start working on the company by reading/listening to concalls, scuttlebutt, attending AGM or trying to contact management if possible and find out if things have really turned out for the bettter.

If after all the above efforts one is convinced about the prospects then the 85-90 plus levels is a great level to get in. Because once a lot of market participants recognise or re recognise the growth potential in the company in question the stock price can shoot up real quick and take out the earlier high of 120 and go much beyond it.

The other approach is to wait for the earlier high to be taken out and see it the price sustains those levels and then take a position.

I used the first method to build up a position in Allsec Tech and continue to ride it. Even after reporting decent results for two quarters in a row inspite of slight run up in price the stock was available at reasonable forward PE of around 6-7 for a long time. The all time high of 370 odd levels was taken out recently and now the stock price is consolidating near to that region. How it pans out needs to be seen but since my purchase price was low I can afford to be patient to see how the scenario plays out.


(Rajarshi) #2166

Hitesh Bhai

Do you feel that demonetization has changed the business dynamics for MFIs? My understanding is if anything the organized market leaders in MFIs will gain…Just like with euphoria on the upside the valuations were looking stretched currently they are looking attractive…i think the situation is not as bad as it is made out to be in the currently and will be back to pre demonetization era by Q2 FY 18 i.e in another 6 months time.Your thoughts.

Thanks


(Hitesh Patel) #2167

rajarshi

I feel the main aspect of MFI lending affected by demonetisation would be the impact on asset quality. I think most of the lending of MFIs can be termed as unsecured. (although the companies claim about joint liability group lending etc. ) And hence I would be watching for a quarter or two to see how the companies are affected in terms of asset quality by DM.

Regarding companies getting attractive after the recent fall its all about relative attractiveness. If a stock falls from 200 to 120-130, there’s no reason to assume it cant fall to 100 or below. Its like catching a falling knife. (with not too sharp blades but some edge which can atleast cause minor grazes). I would like to watch the prices of these companies to stabilise before taking a call.


(Neeraj) #2168

Hitesh Sir,

What is your view on Piramal Ent post demonetization. do you still have it


(Vamsi Krishna) #2169

Hitesh,

happy new year!

Post abilify noting seems to fall significantly in place for Torrent Pharma. How do you view the development? In view of poor results over the last year.


(Hitesh Patel) #2170

@neeraj, Piramal is exposed to real estate lending and one needs to see how it fares in terms of asset quality. Ajay Piramal comes across as a very savvy guy and hence he might guide the company through troubled times. I had exited PEL some time back because of sharp run up which later seemed like a very frothy unsustainable upmove.

@Vamsi,

Torrent Pharma will have a couple of lacklustre quarters because of lack of filings during fy 16. I think real growth will kick in post fy 17 by early fy 18. Full utilisation of Dahej facility will provide the capacity to meet any surprise upsurge in demand from regulated markets. Overall it seems like a company with limited downside, but currently it also lacks any trigger for sudden upmoves.


(jainaj) #2171

Hitesh
I am invested in shilpa medicare for year now. What I like about shilpa is they think about future and start verticals which has potential. thereby derisking business. now they have started work in bio and nano similars. Can it be core portfolio pick and how do u see it progressing 5 years from now?
Thanks in advance


(Peabody) #2172

Hitesh

Any views on Granules at the current juncture. Due to its investment cycle currently it has not moved for the last 1 year -rather declined 20% odd YOY.

disc invested


(Hitesh Patel) #2173

@jainaj, For me Shilpa has remained as a high conviction portfolio bet because of the developments happening in the co and the approvals it has been getting.

@peabody, Granules seems like a good story but the triggers lined up would probably take a long time to play out. Currently it seems around 100 odd levels valuations look attractive.


(Aksh) #2174

Hiteshbhai @hitesh2710,

I recall you emphasizing two major elements while evaluating the risks of investing in pharma companies facing some sort of regulatory issues like FDA import alert, ban etc.

  1. Downside on price
  2. Opportunity Cost

You also mentioned some examples wherein such companies rebounded strongly in 2-3-4 years once the issue got resolved.

I’m looking for some disconfirming evidence and in that context, do you recall any instances wherein any good pharma company didn’t go back to its past good old days or rather became just another ordinary pharma companies post such issues?

I can think of just Ranbaxy…any more instances?

Thank You,
Aksh


(Hitesh Patel) #2175

aksh

The immediate examples that come to mind of companies not quickly coming out of USFDA issues are Ipca Wockhardt and Sun Pharma. Other smaller players include Smruthi Organics.

I think the key while investing in these kind of situations is to keep a fairly long time horizon and buy only on extreme pessimism.


(Aksh) #2176

Thanks a lot Hiteshbhai. This helps.

I believe Ranbaxy was far more serious than just long delays, almost bordering on scandal, forgery unlike cases of Ipca, Wockhardt, Sun Pharma wherein it seems, at least as of now, to be cases of genuine inordinate delays which is expected.

Can’t agree more on this. I think Pricing it right is very important as it will help one wait more for the turnaround. Extreme pessimism should reflect in the price but the same is not happening fully I think due to excess liquidity. I know it’s tricky but do you have any handle/pointers on this in terms of absolute valuation? I think assets seem to be a good measure to value the same as sales/earnings would swing wildly. is 2x Assets/Book safe price to pay with limited downside or it’s too conservative as many are quoting at far better multiples?


(gaurang_99) #2177

Hitesh bhai,

Divis lab @ 673 looks very reasonable with all this usfda issue.

what’s your view on that counter.


(Hitesh Patel) #2178

gaurang

I earlier too mentioned about investing in situations where companies are stuck with USFDA issues.

There are two aspects to think about

potential downside and

opportunity costs.

If u can get answers to above then one can invest in divis kind of situation. Looking at examples like Sun, Ipca, Wockhardt etc which havent cleared USFDA issues inspite of a lot of time having gone by, I feel one can afford to wait in case of divis. Atleast that i what I am doing.


(jshah17umd) #2179

Hiteshbhai,

What are your views on BHEL?

Last three years the sales have declined and it looks like market participants have written off BHEL. When you look at the Market cap of a biscuit company being more than a market leader (though in a different segment) like BHEL, it appears to be grossly undervalued.


(Rohit Kotewale) #2180

Hitesh bhai, what are your thoughts on AllSec? On charts it looks set for a multi year bottom formation which could potentially double the stock.

Disc: 8% of PF in Allsec


(Hitesh Patel) #2181

@jshah, I dont track BHEL so not much idea about it.

@rohit, Allsec has taken out its all time of 377 posted in 2007 and hence seems to be in free zone. Business momentum is strong and we need to see how the results of next few quarters pan out. Based on past examples once a stock takes out its previous multi year high it can easily move up by 50-100% from those levels. I too am invested in allsec so lets see how it plays out.