Hitesh portfolio


(Hitesh Patel) #3358

@Tauqeer

If a company is supposed to grow its AUM at 15% CAGR, then profit growth cannot be taken for granted. It seems you are looking only at one parameter in evaluating the business in question. One has to take into account all the factors affecting the profitability like NIM, cost of funds, cost to income ratio (and possible operating leverage due to growth), provisions depending upon quality of loan book etc.


(Hitesh Patel) #3359

@shyamutty

Indian hotels had some time back given its vision for the next few years. If it can deliver according to the vision document, it can be a decent bet. I am waiting for some kind of consistent improvement in numbers before taking a call.

Technically it looks resilient with good support between 130-135 which seems like a good level to accumulate.


(Tauqeer) #3360

@hitesh2710 … Thank you for your reply and guidance.

Assuming everything is taken care of then what does this signal?

I was hearing management on media saying that we are looking to grow our AUM by 15% this year… What does the management want to say by this … Obviously there is a message …

Please give your perspective …


(Hitesh Patel) #3361

@Tauqeer

There are some things in business which are under management control and others are not. So one cannot predict what kind of profit growth will happen if AUM grows 15% cagr.

Maybe you should drop a line of query to the management to get your answers. You seem to be sure there is a message in what they say and I cant find out what the message is. :slight_smile:


(riddhi) #3362

@hitesh2710 Sir,
It is indeed very enlightening to know the priority that drives stock selection. Can you also share some good investment books which like Pat Dorsey book, easy to digest and deals with the science part of stock selection but for growth stocks, or in other word complements the Pat Dorsey book.

~Riddhi


(abhishkjain2626) #3363

Sir, have you been tracking Micro-finance institutions of late? cost of funds have risen by 0.5-1%(as per HP Singh of SATIN) but as they maintain a large spread, wont affect their profitability much? MFIs(Ujjivan and Satin) have been on a strong upward trajectory since Q3 of last year… How do you see this part of the NBFC sector going forward?


(Hitesh Patel) #3364

@riddhi

Pat Dorsey book itself is full of science and merits multiple readings so that the full concept of the book can be digested properly and can be easily implemented.

You can also go through Ralph Vanger’s Zebra in a Lion country. There are some Motley Fools books which you can google and find out the details.

But after reading and rereading these books there is no alternative to getting down to doing things ourselves and applying knowledge directly.

Ideal thing is to go through these books and develop one’s own methodology which works practically, and is easily applicable.


(Hitesh Patel) #3365

I track ujjivan and equitas though not too closely. I like the concept of MFI which have turned into small finance banks. There the liability side of the equation is partly taken care of due to deposits and CASA and this is reflected in the relevant numbers of both equitas and ujjivan.

But if you go through the history of MFIs every few years they end up with some unforeseen problems and it seems its difficult to consider them as really long term investments.

Instead of them some of the good private banks like DCB bank etc seem interesting. Though as of now I am not too excited by the financials space to allocate big chunks of portfolio to it.

When a sector which has given stellar returns previously goes out of favour the usual story is a sharp correction in stock prices followed by prolonged range bound/downward moves. During all this time the valuations of these stocks keep appearing attractive and become more so as the stock prices correct. There are the infrequent rallies to keep the investor interest going but the multibagger kind of returns remain distant.

After a few months and quarters once these stocks dont go anywhere the investor interest also wanes and very few people talk about them. If u want to see definite example of the same then go through the fate of pharma sector stocks. You can even see the same kind of story playing out in the threads (on VP) of stocks of pharma sector if u want any validation.

In financials space we are only a few months into the financials going out of favour. If at all the stocks from the sector make a comeback it will be in some specific niche segment out of the whole sector.


(bmsingh76) #3366

Sir,
How you see amalgamation of gruh & bandhan?


(thecroc) #3367

Hi @hitesh2710 ,
As far as my brain signals - Financials have been in a perpetual bull run. When was a time when you couldn’t find financials for your portfolio. Only thing is you have to be selective. So an HDFC Bank vs Karnataka Bank Or Satin Credit vs Bajaj Finance is hell and heaven difference in management. And as they say we should buy companies with “best” management only- leads to one conclusion for me - Financials with great management are highly scalable , and will remain in a perpetual bull run. Don’t you feel they are more scalable than other businesses and only tech and consumer are similar in terms of scalability?


(ASPN) #3368

Dear Hiteshbhai,

Do you track Godfrey Phillips India Ltd? It has got own established brands + contract mfg of the world’s largest and best know brand - Marlboro. Add to that the confectionery & Pan Vilas business coupled with recent expansion of 24SEVEN retail stores. The risks are negligble growth in past 3-4 years and usual risks associated with Tobacco business.

Also would like to know if you track Associated Alcohols & Breweries. There also a story seems to be building up in terms of expansion in ENA mfg, contract mfg for USL & Pernod as well as Franchise business of USL’s premium brands for MP.

Would love to know your views please.


(Hitesh Patel) #3369

@bmsingh76

Gruh-Bandhan marriage seems like an event where both the bride and groom’s families seem to be unhappy if one were to go by price moves.:grinning:

With the merger HDFC would be holding some stake in Bandhan Bank. It cannot hold more than 5% according to rules so if its stake exceeds 5% then there would be overhang of hdfc selling on the bandhan counter. Plus bandhan promoters themselves have to find a way to reduce their stake as per regulatory requirement.

I dont know who gains out of the whole situation but shareholders of gruh seem to be the losers. They are losing a great business which now becomes a small part of a bigger bank. I think the selling in gruh is also probably due to the long term holders of gruh who were holding gruh as a core part of their portfolio since many years and now dont want to be holders of bandhan as they may not see the same business and or management quality in bandhan.


(Hitesh Patel) #3370

@Advait_6270

I dont track godfrey or associated alcohols so not much idea about it. I am watching united spirits itself as I feel if new management can bring the business on track it can be a good core long term holding.


(Ankur Lakhia) #3372

Hitesh bhai,

You conveyed sentiments of many like me in very clear manner. Gruh Finance was buy & forget kind of stock for me due to long runway in their business, steady growth, great management quality, a balance sheet with no equity dilutions, high ROE etc etc. It was a rare gem. No longer…I am out… Rest In Peace, Gruh Finance.


(Investor_No_1) #3373

Agree to ur comments just a thought…Pharma faced issue of FDA etc and could not deal with it over long term. Financials have to show which ones able to deal with liability challenge…FDA challenge was majorly out of a company Control while liability challenge is very much real since inception of any lender and management can control it…what r ur thoughts ?


(Hitesh Patel) #3374

@Investor_No_1

Regarding pharma problems coming to the fore and not being in a company’s control, well passing USFDA audits is by and large in a company’s own hands. If u look at companies like torrent pharma, alembic, barring a few observations, these companies have hardly any problems with usfda.

Regarding problems arising in financial companies, the oft repeated argument is that in a credit hungry country like India there will always be demand for credit and business would continue at good growth clip. While some companies might grow at fast clip, the valuations accorded to these companies (which previously were market darlings) may not be the same as most of the smart and momentum money has moved out of the sector and into some other sector where people see a rising sun like situation.

One needs to see the history of sectoral bull runs to get an idea about how these things pan out. And the tell tale signs of froth in the sector and the subsequent bursting of the bubble. Most of the times in the early phase when the bull run starts there is often disbelief and the early investors are often laughed at and ridiculed. People dont believe the story/theme. Once the price momentum starts people start boarding the train and in the last phase there are the tell tale signs of froth. These stocks are the most talked about on various media and investor meets, and are market favorites. Valuations reach sky high levels esp for sector leaders and there is an aura of invincibility about them and investors also start feeling that the growth shown in the past will keep going on for a long time or for ever. And then suddenly the whole story gets punctured initially with a couple of reasons and then as time goes more and more reasons come to the fore later on. And even if there are rallies they are short lived and usually there is a long time before stock prices go above their previous highs.

I think financial companies have had their dose of bad news and there could be more going forward. Even if nothing else happens these stocks are likely to remain sideways with intermittent rallies and/or corrections. The usual behaviour of most investors is to chase these stocks on deep corrections thinking that the bull run in the sector would continue but its very rare to see such an event happen. (there can be exceptions but they are exceptions only and the rule is always different.)


(Venkat.Anna) #3375

Amazing Sir, the way you have sensed the market behavior & articulated it.


(vchhajed) #3376

Hi @hitesh2710 sir, what are your views about Sterlite Technologies? There’s a lot of talk about data boom and rise of 5G, and the company is guiding towards a solid growth in the next 3-4 years with a strong order book and decent global market share. The stock has corrected ~25% in the recent past and looks like it is in a consolidation mode. Although one striking point is that promoters have pledged almost 97% of their holdings which makes me a bit uncomfortable about thinking of this as an investment.

Would like to know your comments on this, thank you!


(ap_21) #3377

Hi @hitesh2710, do you track Caplin Point Laboratories? whats your view on it. Growth worries have brought down the stock by almost 50%.


(arpitjain512) #3378

Considering Pharma space MNC pharma companies have been substantially good returns in last 1 year. Merck, Abbot, Astrazeneca, Pfizer etc have given excellent returns out of which Merck is topping with 150% jump. Any views on the stocks mentioned above ?