Hitesh portfolio


(Hitesh Patel) #3379

@vardhmanchhajed

Sterlite Tech seems well placed to ride the data boom that is going on and will continue in near future. And since its the biggest player its likely to benefit. Plus it has capex lined up to cater to increasing incremental demand. I had a look at it and liked most things about the company except the pledging of shares. Valuations are not too cheap but then in companies with clear visibility of growth thats usually the case.

Along with Sterlite Tech I looked at KEI Inds and really liked the company. It also seems to be well placed to ride the capex goods revival boom and can be an ancillary play to that theme. Results since 2014 have been great with topline growing from 1600 crores to current 3800 crores (likely to cross 4000 crores in FY 19 as per management commentary) and net profits growing from 12 crores to 145 crores in FY 19 and likely to grow another 20-30% in FY 19. Balance sheet seems okay in line with ongoing capex. The higher contribution from extra high voltage cables and retail sales are likely to sustain or improve margins going forward. So instead of Sterlite Tech I invested in KEI Inds. For a company with market cap under 3000 crores the opportunity size seems good looking at its business segments. (I am not a sebi registered advisor and above should not be construed as a recommendation).


(Hitesh Patel) #3380

@ap_21

I dont track Caplin fundamentally but technically it seems interestingly poised to breakout from a triangular consolidation. No positions.

@arpitjain512

Most of MNC pharma companies have delivered great returns over the past year and more. There could still be more juice left but it seems the domestic based pharma companies are also in the phase of base formation which may last a few months but once they start their upmoves, there could be good returns. Some like Torrent pharma, Divis have already started posting all time highs. Currently I am in an observation mode only.


(RadheyShyam Aggarwal) #3381

Sir, what is your view on the following , have already pasted it in your thread of Gold Loan companies.

Really respect your views a lot, it would be really helpful if you can spare some time to guide.

Investing in Gold via equity.


(debesht) #3382

Hi @hitesh2710 Bhai
What type of competitive advantage does KEI / Sterlite so that it can protect its earning growth from other competitor ? Is this sector Secular or Cyclical ?


(Hitesh Patel) #3383

@RadheyShyam_Aggarwal

Gold does seem interestingly poised currently. The gold loan companies have started moving with muthoot finance hitting all time highs. Buying gold loan companies could be one way of playing a boom in gold prices. But its not very accurate way of doing so. These companies will grow to the tune of demand in gold loans and higher gold prices will provide comfort on the NPA front. Benefit these companies have now is that a lot of small fly by night operators type NBFC companies which were also lending against gold now seem to have folded up with drying up of liquidity and hence these companies will have lesser competition from that front. But there are other players like iifl, some banks etc which are there in the field.

Another way to play the theme more accurately is to buy gold etfs listed on the exchanges. Like kotak gold, reliance gold etf etc. One needs to look at entry exit loads in these cases and expense ratios to find out the best options in these etf.


(Hitesh Patel) #3384

@debesht

As such there are no competitive advantages the companies like kei, sterlite possess which can be termed as moats. But these companies have big running capacities besides established clients and the necessary certification from their clients.

Its not easy for a new player to get access to clients if they dont have necessary certifications from clients.

One needs to go through the annual reports and listen to concalls before taking a call on these companies whether these are commodity companies or something more than that.


(A shah) #3385

Hitesh bhai, i am a novice investor and have a learnt a lot from your post and other seniors. Thanks so much for sharing your wisdom.
1 Can companies like Eicher said to possess an impenetrable moat ? What could be examples of a moat very difficult to break ?
2 How to determine that path to growth for a company is for the long run ? As current updates we can get from concalls and annual reports but how to project scalability and growth stickiness ?
3 is it better for beginner investor to concentrate his portfolio given that he has less capital to start with ? By concentrate i mean in about 8 different stocks .


(sarthak kumar) #3386

Dear Hitesh Ji,

I wanted to ask a few questions

  1. If promoters are not participating in a buyback, would that increase the acceptance ratio of retail shareholders or would it remain unaffected.

Also, when does a buyback have to be approved by shareholders.

  1. I want to know from where we can download audio of conference calls. One source I am aware of is stockadda. But shouldn’t they also be available on the company websites or some official source also.

Thanks and regards


(arpitjain512) #3387

Thanks Hitesh Ji for your views on Gold. Does Equity market has a correlation with Gold prices ?
Are they inversely related ?


(Jayatu) #3388

Hitesh ji do you track Jenburkt Pharmaceuticals Ltd. The Co is in dermatology segment and Free cash to Market Cap is quite attractive with debt free balance sheet. Net profit CAGR is also decent …only issue seems unable to scale their revenue…The business is going through adaptation of new regulatory norms which are disruptive at times…do you have any idea regarding performance of their portfolio in coming times …


(Hitesh Patel) #3389

@A_shah

Moats can be in the form of

Brand moats – examples are eicher, FMCG brands, consumer durables brands like AC, fans, other stuff like mixers, grinders, so on and so forth, cigarettes, alcohol brands, etc. There are different brands in different segments that dominate the segments. Brands moat mean anything only if the company is able to monetise that brand into higher sales and profits. e.g Hawkins has not gone anywhere inspite of a strong brand partially due to lacklustre sleepy management.

Secrets, patents moats – examples are products like Coca Cola, products of companies like 3M, some company products of companies like Dow Chemicals etc. These secrets when protected by patents are strong moats. Even new drug entities like products (NCE new chemical entities) from pharma companies are secrets enjoying patent advantages but these last for few years and in countries where patents are not followed strictly they dont amount to much.

Toll bridge moat – If there is only one way to reach destination then that way or bridge enjoys a moat. e.g Noida toll bridge till a new bridge came up and destroyed the moat. A pipeline which can be used only exclusively and where no other pipeline is allowed to be laid by govt direction or economic considerations.

Switching moat where cost of switching from one supplier or product to another is quite high. e.g exchanges like NSE, BSE etc, softwares like microsoft, products like iphones (with the whole environment of apple products and services, but it is not so strong as others like microsoft or exchanges).

Price moat where a company is one of the lowest cost or the lowest cost producer of a product. If the product is a non cyclical and is a consummable and needs regular buying then it becomes a strong moat.

Among all these moats, the secrets moats protected by strong enforcable patents seems to be strong moat. Lowest cost producer in a non commodity product also could be a strong moat. Brand moats are gradually succumbing to disruptive marketing and sometimes there is what is coined as brand fatigue. e.g the older models of brand eicher gradually lose their hold over the people and company has to launch new improved versions of the same products to keep the buyer interest intact.

Ideal company to invest in is a company having multiple moats. Companies like coca cola with strong brands assisted by very good distribution and trade secrets become very strong moats.

Coming to second query, I think figuring out path for growth of a company and scalability and growth stickiness comes out of studying successful companies and finding out how they have suceeded over time.

Regarding new investors having a concentrated portfolio, there is no definite right or wrong answer. It all depends upon one’s investing style. Some people like me are comfortable with concentrated investing and others are more comfortable with diversified investing and each style has lot of successful investors who have followed it.


(Hitesh Patel) #3390

@sarthakkumar19_

Promoters not participating in a buyback obviously increases the acceptance ratio because if promoter part of buyback is not tendered others have a higher chance of acceptance. Regarding buyback approval I think it requires only board approval. (not too sure about this)

Regarding downloads of audio of conf calls, nowadays we have an app of researchbytes which can be downloaded on mobile and its easy to hear the concalls. Not much idea about stockadda. Some good companies do provide recordings as well as transcripts of concalls.


(MD Razi G Haider) #3391

Hitesh Bhai , Can you give a company example of Low Cost producer in Non commodity products?


(Naveen George) #3392

Hi Hitesh Bhai,
I am a novice investor investing since 2009. But mostly passive.

In my portfolio, my holdings are becoming very concentrated in finance sector now due to the corrections of the other sector company holdings. I hold Bajaj finance, Cholamandalam finance, Gruh finance and IDFC first bank (was holding capital first).

My investment horizon is 10+ years and I am convinced in the above stocks increasing their earnings by 5-10 times. Do you track these companies?

I would also want to apply some technical analysis to improve my returns when purchasing more quantity of the above companies? I have investable surplus come in every month, which I am currently putting into liquid funds as I feel that the market lacks strength to rise from current levels until elections are over.


(A shah) #3393

Thank you so much hitesh bhai for your very simple, detailed and crystal reply that cleared my confusion .its an excellent practical primer on moats .


(Rudra Chowdhury) #3394

@hitesh2710 Bhai,

Have been reading your great posts over last 12 odd years now since TED days. I must say the clarity and maturity has now reached a peak.

I would sincerely request you to consider writing an Indian version of “One Up…”. There is no Indian investment literature which introduces these topics for first time investors in such lucid yet effective manner.

Thanks in advance on behalf of everyone.


(Raj) #3395

I totally agree with @Prdnt_investor . Hitesh ji, you have a knack of simplyfying complex topics. A book from you is an excellent idea you need to think about.
Regards
Raj


(EL) #3396

Hi Hitesh
Another long time lurker of your posts :slight_smile:

I was curious to know do you keep mental or system stop losses when you enter a position?
Have they ever been triggered or you usually just ride out the one off bad investments ?

Thanks for all your wonderful and insightful posts


(Prasad India) #3397

@hitesh2710 Bhai,
What’s your long term outlook say for 5 to 10 years. I know it’s difficult to predict for sure.
The reason behind this is, electric vehicles are coming in a big way. Added to that there is a hell of a research on batteries and renewables like solar and wind. The power prices will decrease and may come down to less than 3rs.
With a decrease in energy costs the import bill due to petro products will reduce.
The BOP may turn positive as lakhs of crores may get saved. With decreasing petro product cost the inflation also will decrease and optimistically interest rates may come down decreasing cost of equity. With BOP in check the INR may increase and hold an advantage with dollar. The imports may get cheaper.
I don’t wish to paint a Rosy picture but the amount of research in EV and batteries is forcing me to believe.
If this is true which sectors you may look at or think of. Somehow I feel there are good times ahead for Indian market.
Please share your thoughts


(Hashims) #3398

I do like the idea of Rudra’s suggestion.
I do believe you have all the capabilities and ingredients ingrained in you.

the flow of easy and same time apt narration of english language and the quality in expression of ideas, thoughts
Practical and crisp way of reaching to the point
and so many to mention …Hitesh Bhai.