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Cash as part of portfolio is not a fixed thing for me. But sometimes if I dont find anything worthwhile buying I can sit on cash for few weeks or months and that amount ranges from 20-30%. During most of last year I had sat on cash to the tune of 50-80% of portfolio as the correction raged on. But this high level of cash tends to cut both ways. Because of relentless correction there is often a sort of paralysis induced which prevents buying when it should be done. Plus the ILFS fiasco reduced the options of deploying funds in debt funds for fear of overnight write offs and dips in NAVs.
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Regarding not chasing stocks and mastering the fear of missing out, I have of late begun to use the staggered approach to buying. If I want to allocate 10% to any stock I usually begin buying only 2-3% and gradually add to the position. This at times helps in cost averaging esp for companies where I intend to buy for longer term.
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Having a stock specific limit regarding allocation is a very individual thing. But broadly if one is holding 10 stocks (in my case) the limit would be 15%. 10 stocks equally distributed would occupy 10% each but not all companies are such that they can occupy same weights. So if some occupy 5-6% in others where I am very bullish because of a combination of reasons, I would go up to a max of 15%. But there is no rule etched in stone for these things. One has to keep learning and getting comfortable from experiences.
I dont track any of the 3 stocks u mentioned. Solar Inds I had looked many years back and has been a big wealth creator and looks interesting. Would need to look more into it before commenting.
Rest of the two I dont track much.
Hello Hiteshji,
Need your opinion on Piramal Enterprises. I know street is worried about their loans to Lodha and few other developers including exposure to Essel Infra. Looking at the consistent performance of the company for last 26+ years, I feel its a good company in bad sector and all bad news maybe already in the price.
I know you had invested in Piramal maybe last year post rights issue, as techno funda bet. As the stock price has gone down below rights issue price, wanted to know what you think about it now…
Hi @hitesh2710
Do you track AU Small finance bank?. I am surprised to see that this is the 2nd most expensive financial stock in India after Bajaj Finance. ( Not considering Gruh since it wont be a separate company anymore). Their track record is very impressive. Of course they have a lot of marquee investors. Just wondering why is the market giving a very high valuation to this. Any views?
I had stopped tracking Piramal post the NBFC fiasco last year. I had bought it as a techno funda bet but had exited with marginal gains some time later.
I am being prodded to look at it again by a very savvy investor friend of mine so will have a look at it. He has been impressed by latest concall so I need to listen to it before taking a call.
Technically it looks weak and the region of 1700-1800 needs to be watched closely.
I dont track AU small finance bank but have been impressed by its price resilience. Would need to look at it deeper. I have been tracking MAS Financial and impressed by its business model. But no positions in either. MAS too has been expensive on a P/B basis but since this company doesnt dilute equity or even need to dilute because of the typical business model it will remain expensive to an extent.
Hello @hitesh2710 ji, want to know your view on a topic. Recently few days back Trident declared its splitting plan and reasoning behind it is quite weird - ‘to make share price more retail investor friendly’. Ratio of split is directly 10 to 1 face value.
1.How do you see this penny stock conversion of a company, which I feel has some good potential to grow.
2. Your any past experiance of this kind of weird split plan and after split price movement history.
Would be helpful to know your experience and view.
Thanks
I too was surprised by the stock split announcement made by trident and that too in the ratio of 10 to 1. I would be okay if a company with stock price in few thousands decides to go for stock split and gives the reason as making it affordable to retail investors.
Here where the stock price is in 60s I dont know what is gained by going for a stock split except to play to the galleries of speculators.
- It would not be too logical to extent the previous experiences to this current situation. Things have gone either way when companies have gone for stock split in such ratios. I would focus more on the business and see how it pans out.
@hitesh2710 sir if I may ask you, what is the best source/book/material to learn abcd of technicals/charts for beginners, in a very simple but very effective manner; something like one up on wall street to understand markets 
I was on the call and I must say it gave some confidence. The leadership team looked very confident, they mentioned the action taken for lowering their exposure in Lodha, the process they have in recovering some of the slippages which have happen in the past and the focus they have on Risk Management practices.
Dear Hiteshbhai,
I have identified a few consumption stocks and have compiled some data along with reason / remarks. Request your valuable feedback on how you value these companies (in case you track any of these). You had already mentioned that PE is not the only criterion. So how to make a buy or sell decision ?? Would love to hear your views please @hitesh2710
| Sr No | Company Name | 3 yrs Sales growth | ROE | ROCE | PE | Dividend yield | Market Cap | Remarks |
|---|---|---|---|---|---|---|---|---|
| 1 | Whirlpool of India | 14.14 | 21.41 | 33.29 | 44 | 0.29 | 17444 | A long runway of increasing market size of home appliances. Well established brands with goods ROE and ROCE, although valued richly. |
| 2 | Johnson Hitachi Air | 11.59 | 20.56 | 29.31 | 59 | 0.08 | 4832 | – do – |
| 3 | ITC Ltd | 3.64 | 22.65 | 34.21 | 31 | 1.7 | 356052 | Needs no introduction, valued attractively amongst all the FMCG companies. |
| 4 | Godfrey Phillips | -3.66 | 8.87 | 12.64 | 21 | 0.78 | 5353 | Own established brands + contract mfg of the world’s largest and best know brand - Marlboro. Add to that the confectionery & Pan Vilas |
| 5 | United Spirits | 0.76 | 21.66 | 16.72 | 54 | 0 | 39816 | Increasing premiumization + Debt reduction + Largest established brands |
| 6 | Associated Alcohols | 2.78 | 23.54 | 32.48 | 14 | 0.45 | 410 | Expansion in ENA mfg, contract mfg for USL & Pernod as well as Franchise business of USL’s premium brands for MP |
Beneficial factors towards ever increasing consumption of Alcoholic Beverages and Cigarettes :
1. Favourable (young) demographics : with 50% of population below 25 years and 65% of population below the age of 35 years.
2. Cultural change : Social drinking has already been accepted in our society. Forget a friends get together, your office party is no longer complete without a booze. Even participation of working ladies has gone up considerably.
3. Lower consumption : The per capita consumption (PCC) of Alcohol in India in 2018 was 5.1 Lit, which is considerably lower than regional average of 20.9 Lit PCC amongst other Asian countries. As for Beer, India’s PCC is 2 liter as compared to 21 liters for other asian countries.
Regards,
Advait.
From among your ideas, I like and am tracking Whirlpool. With the new chimney business likely to contribute to growth going forward it can be an interesting company to watch.
Air conditioning is a tough business with all the competition. Atleast that is the idea I got while listening to the industry leader Voltas concall recently. And none of these companies have any chances of rerating as almost all of them quote at near fair valuations and hence returns will be in line with growth shown.
Cigarette companies both ITC and Godfrey Philips probably would not catch too much market fancy as the Modi govt has never been too sympathetic to the tobacco industry. (and I think rightly so). ITC if it can meaningfully turnaround its FMCG business can be a surprise package. Its a long time coming but still meaningful contribution from that business to profitability is awaited.
United spirits looks interesting esp with the ongoing time correction it is suffering. Associated alcohols is not in the same class as USL. Better add United breweries.
Among the rest I think some FMCG companies which have corrected due to lacklustre numbers and which I feel is a passing phase for them in their long runway look interesting. Godrej consumer concall was interesting in that aspect. The management expresses its intent to reinvent itself and bring the company on the growth path soon. I feel it offers good chance for gradual accumulation.
But with the overhang of a hung parliament out of the way with a decisive mandate to PM Modi, there could be resurgence of risk on behaviour which has been missing since Jan 2018. (with the ocassional short term unsustainable bumps) . This could lead to strong appetite for good quality small and midcaps over next few quarters and that could be a place to be atleast for a part of the portfolio.
Hi Hitesh bhai,
Whats your view on Equitas , Ujjivan, AU small finance bank and MAS ? Which one has more growth and resilience ? Many thanks
I have already shared my views on all these NBFCs earlier. While the business seems attractive for most of them, once a sector loses market fancy it takes a long time for the same sector to make a comeback. The better ones among the sector may move based on the perception reality mismatch but overall the base rate of making good returns from such sectors remain low.
Among these companies, I like MAS fin the most but still on my watchlist. No positions in any of them.
Bajaj Finance has been posting stellar results even in the current NBFC crisis and stock price is making new 52wk high. Also it’s more focused towards Retail loans and we see a healthy growth. Why its not in ut watchlist or portfolio I was wondering?
Bajaj Finance is always on watchlist and buylist anytime it corrects significantly.
Currently it seems priced to perfection.
@hitesh2710
Very poor number from almost all consumer facing names. (earning season almost over) . Only a few companies in Banks/NBFC showing consistent high growth. I wonder how these financials companies are able to grow so well in this environment. ( Even the disbursement growth is healthy). Can we attribute the high growth of these financials companies to low penetration?. I am really confused. How can they do so well when the economy is in a bad shape. Would love to hear your views.
Good morning Hiteshbhai.
1 Asian paints is the best paints company in India (with emphasis on decorative paints and hence more consumer facing) with more than 50% market share while Berger paints is having approx 20% market share (with more focus on industrial) . Companywise asian paints is market leader however growth wise and financial performance wise from investment point of view, Berger has given better results since last few years . Which one according to you would make a better investment ?
2 Both are at similar valuations surprisingly . Does that mean Berger is valued at same levels for growth given that it has much lesser market share than asian paints ?
3 Hitesh bhai , Request your view on Prataap Snacks and newgen
Many thanks
Hiteshji, I read someone in this forum mentioning about the balance sheet/accounting of Whirlpool to be questionable. Although I could not get any details from my research which questions the promoters and balance sheet/accounting or cashflow details. Pls let us know if you find all that fine with the company or see any red flags? Thanks
Hi Sir. Are you still invested in Multibase India ? Thanks.