Hitesh portfolio


(Abhishek Jain) #3292

Please go thru this


#3293

@Hitesh ji, is it a good time to enter LT foods which is available at a P/E of 8?
http://ws.karvyonline.com/viewdocument.aspx?DocumentID=22734


(Hitesh Patel) #3294

@shyamutty

LT foods has been a laggard in terms of posting good growth. If you look at quarterly net profit numbers since Dec 2016 which is by now 8 quarters, net profit has remained in the range of 33-40 crores with minor variations during quarters. While topline has grown at a steady rate, it is not reflecting into concurrent growth in net profits. For any business to create value, there has to be growth and it has to be profitable.

Maximum money is made when there is strong sales growth with even stronger margin improvement. This is usually the underlying theme for most multibaggers. The more enduring multibaggers continue this phenomenon for long periods of time whereas the cyclicals or cyclical companies which are every now and then confused with long term wealth creators tend to show this phenomenon for short periods of time and stocks go up 2x-4x or even 10x in a short duration of time say 2-5 years and then growth falters and stock prices crash more than 50% from top.

Once these types of crashes occur it takes a long long time for the stock to make a comeback. In between there could be rallies of 30-50% or even more but these would not immediately go on to regain their lost glory.

One of the most important lessons in investing I think is to learn how to differentiate genuine long term buy and hold companies from the cyclicals and mediocre companies having a good time.


#3295

This is a killer statement… You nailed it sir.

I think kitex, mayur, avanti etc would be such examples from past and may be heg, graphite and some speciality chem co at present.

Having said that, make hay till the sun shines is also very much applicable…


(Abhishek Jain) #3296

Doctor,

Would you please guide us which are your 1 or 2 picks in specialty chemicals segment?
I am a novice to understand the businesses since there are multiple sub categories…have gone thru Valuepickr PPT on chemicals space, found aarti industries exciting but its too high valuation.
Please advise with your picks


(Hitesh Patel) #3297

@abhijain

The whole chemicals space esp the speciality chemicals space is revving up especially due to the Chinese disruption in chemicals space due to strict pollution control norms. Most chemicals companies have posted very good numbers continuing the results trend since past quarter.

You can have a look at Nocil in rubber chemicals (q2 presentation and q2 concall available on researchbytes gives a good idea about the business), deepak nitrite (phenol plant has started production since 1 nov 2018 and shouldl reflect in strong numbers for 5 months of fy 19 beginning nov.) Besides these aarti has posted quite good results and stock price has gone up in tandem with that.

Another alternate safer way to play the theme I think is to go for an ancillary play GMM Pfaudler. It supplies glass lined vessels to pharma, speciality chem and agrochem and has its order book filled to the brim. (again q2 concall gives an idea about their order book status) While individual chemicals prices may be difficult to track and predict the capex going on in the sector due to strong sectoral tailwind would benefit GMM atleast for next 2 years or more. I attended the fy 18 AGM and was quite impressed with the management. I have invested in it during past few months and it features in my buy list on declines.

The speciality chemicals space is a sector having a good time due to various factors and it should not be construed as a buy and forget kind of space. If and when China makes a comeback in the space, some amount of fancy in the sector can ebb away. Besides that we seem to be on a weak wicket in terms of overall market scenario as I have been re iterating time and again. So one has to be careful about making too many bullish projections in any sector and chasing prices.


(zulfiqar) #3298

Hitesh sir what your views on Pi one it came out with good nos and not seems very confident on future


(Abhishek Jain) #3299

Thanks a lot sir.
That was very insightful as always.


#3300

I came across the presentation of this company engaged in speciality chemicals.


Seems to be a good bet.
Is it a case of too good to be true.
Your views please.


(kris2727) #3301

Hitesh sir,

What is your view on V2 Retail?

Thanks


(Hitesh Patel) #3302

@kris2727

I dont have much idea about V2 retail and hence cant comment on it.


(Hitesh Patel) #3303

@zulfi

PI Inds has reported decent topline growth for q2 fy 19. But looking at overall markets and the valuations, it seems most of the numbers seem to be priced in currently. There might be some minor moves up or down but overall I expect the stock to remain largely range bound.

Valuation wise I cant see too much re rating happening in PI. So from here on returns can mirror earnings growth and one should position oneself accordingly.

A good company to compare with PI could be Bharat Rasayan which too seems to be posting decent numbers of late. I dont hold either of them. (I hold very little these days :grinning: so that would be standard disclosure to lot of companies. )


(Abhishek Jain) #3304

Sir curious to know how much cash % you have now, of your overall equity portfolio?


(1.5cr) #3305

@hitesh2710 Hi Hiteshji,

I would like your views on the following companies from a 7-10 year perspective. Along with your views on valuations taking into account the long time horizon:) and of course assuming no black swan occurs with regards to the businesses.

  1. WABCO India
  2. Havells
  3. Cera

Thank you Hiteshji!!


(maheshkumar) #3306

Hi Hitesh ji
What are your views on manappuram finance
It doesn’t have asset liability issue
It showed good growth in last quarter
It’s microfinace has turned around
It’s available at single digit Pe of 9
Management is expecting 20% growth
Good dividend yield
Good management track record

But market is not ready to give higher valuations
Am i missing anything
I am holding it since 1 year with loss of 15%
It’s 18% of my portfolio
I would highly appreciate your views
Thanks a lot


(Bharat) #3307

@maheshkumar This thread is full of Wisdom. I personally have read almost every post of this thread. Many of our answers are already there. Though possibility of change in opinion with respect to time. Here is @hitesh2710 Sir recent post on Manappuram ! Hope it may help !


(Hitesh Patel) #3308

@1.5cr

All the three companies listed namely wabco, havells and cera have created tremendous wealth over the past few years and remain great companies. Coming to the query about 7-10 years I think there is a high probability of them surviving for more than these many years and thats all I can say about them.:grinning:

Looking so much into the distant future is beyond me especially in such disruptive times.

Of the 3, Havells seems to be the best placed looking at the B2C business and management smarts in introducing newer range of products and making them suceed.

Cera and all other tiles manufacturers are suffering from increased input prices which a lot of them are not able to pass on to end customers. And to top it all, there is a real slump in real estate which could get even worse with the funding issues going on and the huge unsold inventory everywhere.

Wabco I dont track too closely so not much idea about it.

Regarding valuations and prospects I think beauty lies in the eyes of the beholders especially if one has a horizon of next 7-10 years. I dont track the fundamentals of any of these too closely but have always admired the way Havells has grown its business after a brief misadventure in the form of Sylvannia acquisition.


(Hitesh Patel) #3309

@maheshkumar

I had earlier too given my views on Mannapuram. With better results and microfinance turning around maybe its time I should have a relook. If facts change I change my views and stance. There is no place for an investor to be too rigid in his views.

At the current juncture my preference in financials is for well managed private banks which I think would benefit from the current imbroglio in the NBFC sector. But there too I feel its no use being too hasty. I am in observation mode only currently and keeping tabs on few banks where I feel there is a possibility of rerating and earnings growth both. DCB bank looks quite good but again as said before its only in my watchlist. The recent concall and the consistent results over the past few quarters and years provide some confidence in the bank’s prospects. disc: no holding in any banks.


(vishaltuniki) #3310

@hitesh2710 Sir, your views on Galaxy Surfactants Ltd. Made a huge buzz at the time of subscription and listing. From there on it has seen downhill and trading sideways ~1150-1200.
I couldn’t find a topic on this stock to have a discussion. Hence asking here


(maheshkumar) #3311

Thanks Hiteshi for your opinion.My current plan is to give one more year to manappuram as I think next few quarters will be better and it may go back to its initial high .And thereafter it will depend on the growth .Recently I visited few small towns in Maharashtra for family function and was surprised to see manappuram stores there .I asked local farmers and they mentioned that they are always in need of money before the crop is ready
Most of them take gold loans from manappuran or local gold lenders .The rate of interest from local non branded lenders is high but most of them don’t understand much about the interest rate complexity and they prefer the lender who can give more money for their gold .
Also they don’t like much paper work and wants quick money .I guess gold loan in India has a place unlike western countries.
The recent turmoil in nbfc has taught me that any business model can be disrupted and fear intensifies multifold in BEAR market .But on positive note this creates lot of opportunities as good companies also crashes with bad ones.
I learnt a lot of lessons in my short period in equities.I started in bull run and thought equities always go up .In just around one year I saw both bear and bull run .
We are lucky to have u all experienced and intelligent guys who are guiding us in the learning process and giving us a neutral unbiased opinions and views .
No one has a crystal ball view and no one knows all the pieces of jigsaw puzzle
Hence this forum helps in joining those pieces and make an attempt to solve the jigsaw with teamwork
Thanks again
U r a legend