Kanv Portfolio for Review


(kanvgarg123) #1

8K MILES SOFTWARE SERVICES LIM 1.27
ALLCARGO LOGISTICS LTD 1.37
APL APOLLO TUBES LIMITED 1.91
ARVIND LIMITED 1.19
ASHIANA HOUSING LIMITED 1.08
ASSOCIATED STONE IND (KOTAH) 1.08
AVANTI FEEDS LTD 6.57
CENTUM ELECTRONICS LIMITED 2.27
CENTURY PLYBOARDS (INDIA) LTD 3.62
CHEVIOT COLTD 1.07
CONTROL PRINT (INDIA) LTD 2.98
D-LINK (INDIA) LIMITED 2.82
DECCAN GOLD MINES LTD. 3.11
EDELWEISS FINANCIAL SERVICES L 2.64

ESSEL PROPACK LIMITED 1.36
GOODLUCK STEEL TUBES LTD 1.94
GRANULES INDIA LIMITED 1.36
GRUH FINANCE LIMITED 3.19
GULSHAN POLYOLS LTD 2.02
INDIABULLS HOUSING FINANCE LTD 3.43
INSECTICIDES INDIA LTD 1.85
JINDAL STEEL & POWER LIMITED 0.88

KESAR TERMINALS & INFRASTRUCTU 2.18
KITEX GARMENTS LTD 2.89
LYCOS INTERNET LIMITED 1.51
MANGALAM DRUGS AND ORGANICS LT 1.54
MAYUR UNIQUOTERS LTD 1.85
NANDAN DENIM LIMITED 2.08
NCL INDUSTRIES LIMITED 1.11

NITIN SPINNERS LTD 5.88
POKARNA LTD 1.02

SHAKTI PUMPS (INDIA) LTD 1.59
SKS MICROFINANCE LIMITED 1.12
STATE BANK OF INDIA 2.93
SYMPHONY LIMITED 0.93
SYNGENE INTERNATIONAL LTD 8.8
TAKE SOLUTIONS LTD 1.23
TREE HOUSE EDUCATION & ACCESSO 1.79
V2 RETAIL LIMITED 1.69
VIDHI DYESTUFFS MANUFACTURING 4.3
ZENSAR TECHNOLOGIES LIMITED 3.83

Hi all. I know it is a highly diluted portfolio but most of the companies here are growing companies with some or the other tailwinds. Please bear my portfolio and give your insights. Please do not lay emphasis on dilution of portfolio. There are some companies like Jindal Steel (last buy was around 300 levels), Century Ply , SBI, Kitex, Gruh Finance, Ashiana which use to constitute a big amount of my portfolio but their price decline has reduced their percentage.
Kindly suggest something in pharma sector apart from Syngene I should add. I don’t understand pharma sector so I have not added much in that
Thanks in advance


Hitesh portfolio
(Hitesh Patel) #2

I can see a few familiar names like gruh, granules, avanti etc among the whole lot of stocks.

But what kind of overall performance it could give and what kind of comment I could make is a difficult question to answer.

With so many companies few of them would outperform and few would disappoint so I guess things would even out. Difficult to envisage which would be which.


(Ravindra Mutyala) #3

Since how long you are holding this portfolio. Are you able to asses the returns of your portfolio. I feel its very difficult.


(KAUSHIK) #4

Dear Kanv,

Your portfolio list is very long. How can you manage them?? How can you track them? I feel it’s difficult to track even if I hold even 10 stock. Tracking means I mean to say about all happenings within the companies, I am not saying about their day to day price movement.


(kanvgarg123) #5

My strategy is this

  1. I take initial positions in company which I feel is undervalued i.e. high growth rate and low p/e without looking into corporate governance much.
  2. After holding studying the company for some time i.e. over a quarter or so I start building up the position. Like today I bought more of Allcargo, Century Plyboard, Take Solutions and initiated a position in Sanghvi Movers as I like rental services and they have done most of their CapEx during last downtrend. Their capacity utilization is 70% and they are hoping that in the on-going quarter they can reach to 85%.
  3. I like to keep my invested amount to 15k per stock stock exceptions being Avanti and Century.
  4. I like to gamble a little with micro cap companies which doesn’t have a proven track record like Assoc stone, Lycos (sadly I did bottom averaging there :/),Ashiana Housing etc.
  5. I do buy highly growing and high valued companies but only if I trust them like I have Gruh, Syngene and 8k miles.
  6. I invest after finding logic in all the companies though I do not do scrutiny to the level at which most of the boarders do because some or the other factors always crop up. For example I did not buy Sanghvi Movers at 100 because I could not find the profit in previous years although I had a firm believe that being such a big company in crane leasing space it should benefit from the recovery on India

(saras) #6

Hi Kanv,

Regarding Sanghvi Movers – it is creditable that company is clocking a revenue run rate of Rs 100+ crore per quarter. In my view, two key monitorables for this company will be (a) Capacity utilization level and whether they can perk it up from 70% to 85% levels as you mentioned and (b) what they do on debt reduction front. Can be interesting business when industrial recovery theme broadens.
Long term borrowings inched up to Rs 271 crore as at 31/03/2015. In Q1-FY 2016, their finance cost was Rs 11 crore slightly higher than previous quarter.


(kanvgarg123) #7

Recently management has decided to do the Capex and the management has said that because of the incremental capex, year end utilization would be around 82-85%. They are expecting cash flow of 150-200 cr this year and their increase in debt would be around 250 cr this year (380 cr Capex), which will help them generating 220-250cr of cash flows next year. These all assumptions would be valid if growth in Indian economy accelerates.
One key thing we need to see is the amount of Capex company does in future because leasing businesses takes some time for break-even. So even if company does break-even in say 3 years (I need to check from balance sheet) they have to manage their capex such that they don’t fall in the window of t-3 years where t is the year of slowdown.


(kanvgarg123) #8

I have come a long way since I started learning from ValuePicker and investing in stock market. Here is my updated Portfolio. I am trying to add it in a tabular form but I am unable to.

Hi all, Below is my 10X in 10 years Portfolio. I would love to hear your comments on it.

Stock_Name Allocation Avg_Price( For Allocation) Avg_Buying_Price Allocation_Done
DMART 10% 720 732 60%
Titan 10% 500 345 47.5%
Thyrocare 10% 700 690 86%
Narayana 10% 330 240 20%
Page 5% 13000 14200 100%
Pokarna 5% 1300 1050 50%
Tasty Bite 5% 4200 - 0
Syngene 5% 500 276 75%
Can Fin 10% 2040 1300 100%
Bajaj Finance 10% 1250 960 100%
PNB Housing 10% 1320 1320 80%
Indusind Bank 5% 1400 1100 58%
Motilal Oswal 5% 900 860 45%

Rest I have a satellite Portfolio which is opportunistic one. It has the following stocks.

  1. Auro Pharma at 710
  2. Amara Raja at 880
  3. Granules at 125
  4. Take at 143
  5. Heritage at 500
  6. Asian Paints at 970
  7. Century Ply at 200
  8. HDFC Bank at 1100
  9. Shaily at 520

I am holding above ones from last 2+ years and the avg returns have been really bad. I am still adding Amara Raja and it is now 10% of my overall portfolio. The allocation will come down once I am done with my 10X portfolio.

Very small holdings(with money invested <= 5K)

  1. Caplin at 270
  2. FCEL at 21
  3. V Guard at 116
  4. NCL at 100
  5. India Cem at 90
  6. Insecticides at 450
  7. Shilpa Med at 500

Of all the above mentioned stocks. I am facing my biggest actual and opportunity losses in Aurobindo Pharma and it has dented my PF returns big time. Amara Raja, Take and Granules have not given any returns in last 2 years but I am adding Amara Raja as mentioned above.

Rationale for 10X in 10 year portfolio.
DMART - Huge opportunity, expensive valuations but I see them growing at 40% for next 2 years (they have recently expanded in Punjab also, saw 2 soon to be opened stores there), then 30% for next 3 years and 25% Plus for next 5 years. Because they are the most efficient players, I think they will kill other organized retail players also. Little debt makes me feel comfortable. I am assuming exit multiple of 60 since all 20% growing, cash throwing businesses are getting valued at this level. Demographic business can give it a kicker

Titan - Secular unorganized to organized story of Jewellery business. Margin are at historic low for Watch and Jewellery which may expand in future as per management interviews. New segments like marriage lehangas and all should give it a kicker. I am assuming 20% kind of growth story here.

Thyrocare - Preventive healthcare is increasing. They are the cheapest players with 40% kind of margins. I don’t see why they shouldn’t grow more than 25% for next 10 years. Their radiology business will also start firing from all cylinder in from next 3 years or so.

Narayana - Most efficient hospital player. I have high chances of going wrong here I think.

Page - Same old story but I expect women wear to drive the story forward.

Pokarna - Quartz is way better than any other counter top. After US market gets exhausted, they can even do a Kajaria in quartz in India. I am super bullish on this but higher debt levels have forced me to allocate only 5 %. This can even be a big multibagger if they execute perfectly.

Tasty Bite - QSR story. I personally loved their products and my friends too like it. They have been growing nicely. I am waiting for valuations to cool off a little and then it should be 20% plus growth story. Europe provides a big serviceable market.

Syngene - Impeccable Track record with US FDA and companies which hand them contracts. Cheap provider of research services as compared to developed world. I expect it to be a Infy kind of story but with the research services. Their upcoming facility in 2020 should be a kicker as it will enable them to manufacture complex molecules in a big number

Can Fin - When I bought it, it was undervalued. Now the valuations are on a tad higher side but I think the company can grow NII at 25%+ rate for next 10 years. Affordable housing should act as a kicker. For FY18, there should be an earnings jump of closer 50% because Can fin was provisioning NHB tax in the P&L statement whereas other companies were taking it out of reserves. I verified this after looking tax rates for Can Fin, Gruh and Repco. Since its ROE will should move to 26% or so this year, they should not dilute equity to go grow loan book at 25% but who knows.

Bajaj Finance - It is an Indian Consumer story for me. There is no big LED company and mobile phone company listed though we do have AC and WM companies. To play everything in one go, I decided to buy Bajaj Finance.

PNB housing - Bought this simply because they were growing at 50% or so rate. I was talking to my colleagues and found that everyone wants to take a housing loan from a state bank since they don’t take any hidden charges. Can fin also falls in the same bracket. Their NPAs are contained. It is more of a bull market ride case for me. Sadly it rose after Sohn conference and I could not finish my allocation since I was short on funds at that time.

Indusind bank - One of the fastest growing retail bank with little NPAs and higher return ratios. Mr Ramesh Sobti tends to have clear cut 3 year plans and he achieves them. It is more of a bet on Jockey since Yes Bank is considered to have a shady balance sheet. Also, their equity dilution is as prudent as HDFC bank. I did not buy RBL because as per my analysis, even if it grows at 35% for next 5 years, the equity dilution would result in 25% or so EPS growth. Their equity dilution of only ESOPS would be more than 10% plus they will have to dilute equity to raise funds as their return ratios are still quite bad though improving.

Motilal Oswal - It is a play on 3 segments. a) Wealth Management b) trading service provider c) Home Loan business. Their home loan business is growing at 100%. I trust Ramdeo Agarwal because I have always liked his understanding of businesses. It is more of a Jockey play and hence it has less weightage in my portfolio. It has run up a lot and will add only if market correct.

Note - The only reason to sell something in my 10X portfolio would be a business change, not valuations. I will add more than 100% of the allocation if there is a 20% or so correction in stock price with business prospects remaining intact.

I am maintaining 5% or so cash, which I will deploy only in sharp corrections.
Kindly provide your views on my portfolio and I would request senior members for their comments (any suggestion for stock additions or removals are highly appreciated with rationale’s).

Requesting @hitesh2710 @sajijohn @vivek_mashrani @Vivek_6954 @dd1474 @desaidhwanil to give their reviews.

Thanks
Kanv Garg


(Saji John) #9

Kanv, You have indeed done a good job in organizing your thought process. I am actually not an expert. I can only mention what I would have done in your situation. When we have to track too many stocks, we often miss good stories. In your case, you sold Avanti, Century, Edelweiss, Shakti pumps and Gruh early, may be due to inadequate monitoring? So we must bring down the no of stocks to what is comfortable for us as well as it should have at least 3% share of the portfolio to have any meaningful impact to the pf. Go through this thread which will further enable you to focus on the [email protected] Portfolio Re-Structuring/25% CAGR quality-growth for next 2-3 years . Since you are planning for 10x in 10years, I think you must have some quality large caps to give stability for the pf. I realized this and added large caps like HDFC bank, Asian paints and PEL. It is a misconception that large caps cannot be multibaggers. PEL has already multiplied 8x in last 7 to 8 years! I am holding Dmart and Pokarna from your list. Quality stocks like Dmart may not give much opportunities for us to buy. I had Syngene and I sold it off when I saw better opportunities. Syngene also may get affected due to Trump’s policies on out sourcing?? Keeping very small holdings will not have much impact on the pf. Among that Shilpa Med Iam holding and I am bullish on it. The themes that are going to do well in near to medium term are financials, especially HFC’s, Infra and Agrochemicals. I didn’t have any infra themes until I added Sanghvi movers. Please go through this thread by Donald Portfolio Re-Structuring/25% CAGR quality-growth for next 2-3 years
All the best in your investing journey!!


(kanvgarg123) #10

Thanks for reply Saji. My 10X portfolio will change only at business risk hence it will be more on auto pilot mode with quarterly result updates.

a)Earlier I decided to go for HDFC Bank but then changed my mind to IIB since NII growth of HDFC bank is 18-20% and IIB is closer to 27-28% with impeccable NPA quality and industry highest ROEs(after HDFC bank)

b) Instead of playing housing theme via AP or PEL or any other construction company including builders, I decided to go with HFCs especially with PSU branding. PEL doesn’t give me comfort since they are into project lending. For me retail businesses are easy to understand and to also get the feel of business. Those PSUs are growing faster than any other HFC barring PEL and MOFL (Reliance Home is good but I don’t trust AA. Rel Cap holds immense value but still it is owned by AA).

c) I sold Avanti at 1350 recently and Edelweiss at 160. I changed Gruh with Can fin homes so I did not lose anything there. Shakti pumps gave me a big loss. I sold it at 120 by buying at 230. I did not understand the cyclity of business and bought it simply because of consistent 5yr CAGR growth at that time. Since then, I have never invested in any cyclical business. Burnt fingers in every one of them. Sold Avanti because historically Avanti has not traded at more than 20 PE and soya cost is at its bottom. In
FY16, rise in Soya cost made a big role in denting profitability(I am still thinking to reverse my decision especially after looking at April sale data but I know I won’t).

d) Pharma is a black box for me. In Shilpa, I just invested 5K. Less than 5K investment stocks are just to buy the companies which everyone like and I am not sure about or the valuations are very high. I invested in Aurobindo because of their routine business and significant discount to peers. Was not expecting it to trade below 15 PE but market is king.

e) Amara Raja is a big play for me and I will keep it till lead prices cool off or stay at the current level for next 3 yrs. I was tracking it from last 3 years and started adding significantly in last 6 months. I am buying a 10% volume growth company with a brand, at the peak of their Raw Mat cycle and pessimism regarding their industrial business.

f) I still hold Century.

g) Management doesn’t think there will be any effect as they don’t have H1B kind of guys. Project sourcing will go on as Trump can’t control IP.

Please help me identify any Agro or Infra theme. It is incorrect from my part but I would like to prod on your idea instead of looking anything since I don’t understand them.

Lastly, I looked at that portfolio restructuring article and made my portfolio. I don’t feel comfortable making ultra concentrated bet. That is why I decided to divide my portfolio in

  1. Core growth and secular compounders with maximum allocation (10X portfolio).
  2. Opportunistic or Satellite portfolio is to satisfy my hunger for spotting opportunities
  3. I don’t have cash plus etc but my 5K investment idea is more of a gamble on cyclical themes or ultra fast growing business where I can only hypothesize growth. Apart from Vguard, I will keep selling my 5K investments periodically to invest 5K in different risky bets. (No increase in allocation)

Thanks again
Kanv


(Saji John) #11

@sanketkulkarni1987 has expressed the most important factors for long term investing very nicely. Portfolio for next 5-10 years


(Dhiraj Dave) #12

I am not an expert to give any advise. However, since you have asked my view, find enclosed same whatver it worth:

  1. I would suggest against giving name of 10X in 10 years. Market can give positive and negative surprise all the time. What you expect in 10 years may happen in 3 years ! What to do then? Hence, focus on strong comapny with conformtable valuation and monitor them closely.

  2. Please reduce number of companies to 15. Anyway beyond 20 companies there is no benefit of diverisification.

  3. Dmart/ Titan/ Thyricate/Tasty Bite/Bajaj Finance/Page are all trading at very high valuation level. Although business strong, do tone down exepctation of return. For instnace, Page has been range bound between 13K-16K for last 2 years once growth rate decline from 25% to 20%. Having said that most of the companies mentioned are excellent business but not sure whether they are excellent investment for wealth creation at current price.

  4. You have not suggested break up between core and satelite portfolio. If i assume 10% allocation with spread in 9 name, no point to give any view as none would matter on portfolio movement. Personally,I noramlly avoid high leverage company including Banks/ NBFC. It is my style and not necessarily the best style.

Wish you all the best for the future !!!


(kanvgarg123) #13

Thanks Dhiraj. I know market can give positive or negative surprise but my assumption was that any bear cycle doesn’t last for more than 5-7 yrs and for B2C companies, earning growth generally remain strong. Obviously I will be looking at quarterly results (Jio killed telecom sector’s compounding story). I am expecting most of my companies to grow at 20% + for 10 yrs and for which I was willing to give premium. I like to hold only B2C businesses since I don’t get the jest of B2B ones. The ones with visible moat are either not growing or growing at less than 10% with similar to my holding valuations (like Bosch, Wabco, 3M, FAG).
Also, would you feel comfortable in sharing your portfolio or any stocks to look at? I do know that you like Aarti Ind since I saw your disclosure there :slight_smile:

Thanks
Kanv


(kanvgarg123) #14

My portfolio has undergone some change in last 1 year and I am updating the same. Some allocations have changed since the stock prices of the stock went up.
Exited - DMART (at 1500 because of too high valuations), Titan (at 860 because of too high valuations), Pokarna (Management didn’t walk the talk), Tasty Bite (5500 because of too high a valuations), Narayana (Too much accumulation of debt), Can Fin (Growth slowing down and management not walking the talk), Syngene (At 600 because found better B2B opportunities), PNB housing (Housing defaults in a lot of cities) and motilal oswal (Sold at 1400 some time back after looking at deteriorating Aspire numbers)
Current Portfolio
Name %PF Average Buying Price
HDFC Bank 8% 1300 (Averaged up from 850 levels)
Indusind Bank 6% 1300 (Averaged up from 850 levels)
Bajaj Finance 13% 1200 (Averaged up from 760 levels)
RBL Bank 4% 520 (Fresh Entry)
Chola FIn 4% 1327 (Averaged up from 1200 levels to 1400 levels)
Motherson Sumi 6% 310 (Averaged down from 350 to 300)
Minda Industries 5% 1150 (Averaged up from 1000 to 1300 levels)
Crompton Cons 4% 225 (Fresh Entry)
Havells 4% 543 (Fresh Entry)
Page Inds 6% 15200 (Reduced some at 24500)
Thyrocare 4% 720 (Allocation got reduced automatically)
Borosil Glass works 9% 920 (Averaged down from 1020 levels till now)
Sreeleathers 5% 240 (Averaged down from 300 levels till 220 levels)
Apollo Hospitals 3% 962 (Currently in accumulation mode)
Lumax Industries 4% 2030 (Bought in 2 tranches but at the same valuations)
Tail Stocks 15% This my playing basket where I keep trying out new stuff

Previously I tried to have a concentrated PF with 9-10 stocks. I lost closer to 9% of my PF in PC Jewellers fiasco (had 13% my PF there I have exited some time back even though nothing is proven as yet) which dented my PF returns. I have vowed never to invest more than 7% of the money in any company though I have given Borosil Glassworks some leeway as management is doing everything right in my opinion.

Opinions invited
Thanks
Kanv