Manohar's Portfolio

Q&A: Questions & Answers Portfolio Q&A
1

Hello, I have put together below portfolio over past 3 yrs with my limited knowledge of businesses. Suggestions from knowledgeable boarders would be highly appreciated to further improve it.

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Stock Latest Price Inv. Price Overall Gain % % of current Portfolio Rational for Investing
Srikalahasthi 370.7 215.27 72.2 12% “capacity expansion, attractive valuation
started buying when it was 85”
Aurobindo Pharm 725.3 462.28 56.9 11% “Bought 3 yrs. ago. With premise of pharma growth story.
Not sure about holding it for longer term given pricing
pressure on pharma ind. & rupee appreciation”
MCX India 1,118.75 479.81 133.17 10% Scalable business without proportionate increase in cost
NBCC 216.7 75.36 187.55 10% Monopoly business with high order book visibility
Edelweiss 225.15 58.11 287.45 9% Multiple streams of revenue growth in growing economy. Excellent management
Va Tech Wabag 623.15 584.08 6.69 8% Unique infra play and related to basic needs of human kind. Multi country business.
NOCIL 139.05 75.87 83.27 7% “Acquired about 8 months ago seeing good consistent growth in past quarters and
attractive valuations that time”
Rel Capital 744.1 385.07 93.24 7% Again a great financial services growth story in India with anticipation for value unlocking to reduce debt. Promising Mutual fund growth especially in coming years in India
Minda Ind 770.75 104.8 635.45 7% Just bought this without much thought on some recommendation. Unfortunately sold half the holding at 30% gain in 15 days time. In 2 yrs time is 6 bagger.
Advanced Enzyme 315.75 342.46 -7.8 6% business with moat, promoters increasing stakes. Less competition
Supreme Ind 1,106.10 644.4 71.65 4% “Bought this 2 yrs. ago on lower input cost due to soft crude oil prices, Potential
growth story if synthetic material LPG cylinder becomes a norm in India”
CARE 1,613.10 1247.05 29.35 3% High margin business with good dividend percentage. Given the growth in growing economy going towards organized sectors
HFCL 16.9 17.6 -3.98 2% Optic Fibre demand due to 5G in next 5 yrs. in india and across the globe
Fortis Health 166.35 174.9 -4.89 2% When I grow old, to cover my hospital expenses
CDSL 311.7 376 -17.1 1% “Scalable business without proportionate increase in cost. Under penetration in
stock market and mutual funds by Indians would drive growth”
ICICI Bank 296.25 248.18 19.37 1% Excellent subsidiary businesses and excellent digital foot prints
SBI 305.25 267 14.33 1% “The bank trusted by every common indian with spread in Bharat economy. Ability to
get deposits from large number of middle lower class customers”

2

Fortis will suck all you profits and then some :stuck_out_tongue_winking_eye: Don’t depend on your stock portfolio for your old age health. Instead, eat healthy, exercise regularly and sleep well.

Your Portfolio looks healthy though…Congrats!

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3

Made modifications to the portfolio. This is as on 8/12(% allocation & Rationale). Experts thoughts/feedback pls.

Vikas Ecotech - 15% - Potential big opportunity size with less competition
NBCC (India) - 10% - HDFC of construction space
Edelweiss - 9% - Very good management. Multiple segments doing well
Aurobindo Pharm - 8% - Reasonable valuation and growth story
Minda Ind - 8% - HDFC of Auto Ancilliary space
NOCIL - 7% - Positioned to benefit from automobile explosion in India
MCX India - 6% - Moat & scalable without proportionate cost
Va Tech Wabag - 6% - Water Infrastructure, Need of hr. business segment
Manappuram Fin - 5% - Good outlook basis learnings from VPF
Reliance Nippon - 5% - Tremendous opportunity size, MF underpenetration, IPO was subscribed in a min.
HFCL - 4% - Optic Fibre demand for 5G and digital initiatives
Cochin Shipyard - 3% - Another Bharat Electronics
Srikalahasthi - 3% - Efficiency gain thru many initiatives, Good Demand for prod.
Advanced Enzyme - 3% - Moat and uniqueness. reduced exposure due to poor performance of late
AB Capital -2% - Promising combination of finance segment for 5 yrs. perspective
Fortis Health -2% - To benefit from increased health care spendings
Petronet LNG -1% - Want to increase exposure. Expansions done in past and planned. Uniqueness
ICICI Bank -1% - Well managed core business. Promising subsidiaries.
Reliance Home F - 1% - relatively undervalued home finance, good growth expected

4

hi,

Whenever you construct a portfolio, make sure you know a lot about the companies with top allocation. In your case I see that vikas ecotech has the highest allocation. I dont know anything about the company so no views about it but one needs to be very very careful about allocating a high proportion of capital to small caps. If markets were to tank these kind of stocks can be decimated. Just to give you an idea the stock price of this particular company went from 33 on 16/09/2014 (adjusted for prior split) to 15.45 on 14/10/2014 in a matter of a few trading sessions. Now of course stock is quoting at its all time high so something obviously is going very right with the company or atleast it appears so.

Rest of the portfolio seems okay. Barring companies like hfcl, and fortis kind of companies. HFCL is one company which is a barometer of investor froth. :grinning: In most bull markets it tends to go up pretty late in the party for one reason or the other.

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5

I am holding a decent number of Vikas ecotech after good due diligence. Could give very good returns- but one needs to keep a close watch for surprises. One can never take small caps for granted- especially in a bull run when management could float very sweet tales about future prospects.

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6

I have invested in Vikas Ecotech in my frequent trades portfolio with a small amount, as per me stock intrinsic value was 36 rs got out most qty at 34 rs Though story is very good and demerger may unlock further value, need to keep a close eye on management, execution and finanicials. Also need to check if pricing of crudes affect the margins as well as competitors from China.

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7

I have made quite a few changes to the earlier portfolio. Exited on - Vikas Ecotech, Cochin Shipyard, Srikalahasti, Advanced Enzyme, AB Capital, Fortis Health, Petronet LNG, ICICI Bank and Reliance Home; Added mostly the Commodity stocks - Prakash Ind, Hind Copper; Carbon Products Stocks - Rain, Himadri; Special Situation - Graphite India

Would be grateful to know your thoughts as always!

Stock Percentages
Prakash Ind 11%
NOCIL 8%
Himandri Chem 8%
NBCC (India) 8%
Minda Ind 8%
Manappuram Fin 6%
Edelweiss 6%
Aurobindo Pharm 6%
Reliance Nippon 5%
Graphite India 5%
KCP 5%
RAIN 5%
Hind Copper 4%
HFCL 4%
Va Tech Wabag 4%
RCI 4%
National Aluminium 4%
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Just curious about Prakash Ind as your highest allocation. I know you have your reasons. How do you view the commodity cycle plays, especially steel? There are various views on where the current steel cycle is.

9

Just my thoughts,
Investing in commodity stocks is fraught with danger. Few people can successfully exit before the upcycle ends. I don’t possess the ability to do so. I’ve seen some acquaintances stuck with commodity stocks purchased at cycle tops. It has a tremendous opportunity cost. And, I think that most positive inflows about these commodities are priced in, already discounted by the market. If the conditions worsen these stocks crack like a house of cards. High risk high reward play.
I wish you the best for your commodity stocks foray but also request you to exercise tremendous caution.

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10

In my humble opinion, for Prakash Industries, I think it’s fairly priced. The steel cycle will end. No one knows when but it will.At a valuation of around 2650 crores, as of today, I’m not sure I see any margin of safety if things were to go south. One major buoy has been the massive bull run which led to quintipling of its market cap in 2 years. Market has to a reasonable extent discounted the glorious steel up cycle. Please be careful with commodities.

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@ramanhp, My knowledge about commodity cycles is quite limited. My point of view is - With global recovery stabilizing, US plans to invest on Infra and demand from electric vehicles sector is likely to provide support to commodity prices for next few years.

About Prakash and Steel, Prakash has exposure only to Indian market. I am quite bullish on steel demand in India on the back of spendings on infrastructure, ports, defense (domestic production), scrapping policy for commercial vehicles etc. I do foresee good demand for Steel for next at least couple of years which will support prices. This is my personal view and rationale behind the investment. :slight_smile:

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12

Assuming I inherit this portfolio from you, :smiling_face: and also I remember your above words, I will sell all the commodity stocks from this portfolio as the first action. Because I also don’t understand commodity companies.

Of the remaining stocks, carefully think over which other are worth to hold and then take an appropriate decision. Hope you get the message. :smiling_face:

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13

Posting my portfolio updates after a long gap. @praveen_potnuru thanks for asking about posting the portfolio. that indeed challenged the procrastinating cells in my body. :slight_smile:

Company Current Price Average Buy Price % at Portfolio level Profit %
Neuland Laboratories Ltd. 6,385 3,754 10% 70%
Caplin Point Laboratories Ltd. 1,269 815 7% 56%
Time Technoplast Ltd. 220 138 6% 60%
Krsnaa Diagnostics Ltd. 630 650 6% -3%
Sunteck Realty Ltd. 402 456 5% -12%
Strides Pharma Science Ltd. 777 432 5% 80%
Va Tech Wabag Ltd. 737 528 5% 40%
Balu Forge Industries Ltd. 199 239 4% -17%
Ugro Capital Ltd. 224 237 3% -6%
PDS Ltd. 479 537 3% -11%
Jindal Saw Ltd. 435 433 3% 1%
3B BlackBio Dx Ltd. 741 633 3% 17%
Mrs. Bectors Food Specialities Ltd. 1,051 1,144 2% -8%
Laurus Labs Ltd. 398 401 2% -1%
Eris Lifesciences Ltd. 843 874 2% -4%
Godawari Power & Ispat Ltd. 682 745 2% -8%
Inflame Appliances Ltd. 484 491 2% -1%
Glenmark Life Sciences Ltd. 754 805 2% -6%
Sandhar Technologies Ltd. 498 488 2% 2%

The allocation here sums around 75%. There remaining 25% is the “kachara” which I need to sort out. Either roll it to one of the stocks mentioned above or replace the stock in this list with the better stock in that 25%.

At the beginning of 2024, I felt the need to orient the portfolio to those sectors where there is a good visibility for growth and valuations are not very high/run up during 2023 have not been terribly disproportionate to the current/near team earnings. Keeping that in considering - I am targeting for 40-50% allocation to pharma followed by 15% to real estate. Strong cycle shift is quite visible in real estate.

I will try to post monthly updates. I think that will be a good inspiration to bring my house in better order.

Rationale behind each of the stocks that I have in portfolio as mentioned above.

  1. Neuland - Big Market Size in CDMO space, Proven execution by competent and honest management in complex business. There is at least three years run way despite FY 2025 will have moderate growth as per management. I expect Neuland to be at the minimum a decent compounder at 25-30% for next three years.

  2. Caplin Point - Consistent growth in the past many years. Sound strategy to penetrate in the US market. Sizeable capex done over last 18 months or so will bear fruits in coming couple of years.

  3. Time technoplast - The change in management and their strategy to pay off the debt and focus on value added products. Q3’24 results further strengthen the belief that Time can show better performance in next years.

  4. Krsnaa Diagnostics - Big TAM. Company bas been able to execute on Govt contracts. I feel they have a huge runway with optionality to eat market share from other established B2C companies e.g. Dr. Lal path etc.

  5. Sunteck Reality - The reality demand high cycle play with disproportionate cash flow expected in coming times.

  6. Stride Pharma - Turnaround story well lead by the CEO. Walking the talk. Decent guidance.Demerging the CDMO arm to unlock more value

  7. Va Tech Wabag - Good sector. Hydrogen based infrastructure to open additional opportunity. Large TAM. Management focus on keeping the asset light model and learnings from previous years about receivables. The current management want to position Wabag as a technology company.

  8. Balu Forge - Expansion in defence. Good guidance for Q4. Management looking to maintain margins. Capex happening across sectors to provide tailwinds.

  9. Ugro Capital - Growing NBFC with focus on MSME. Will benefit with high growth happening across manufacturing. Good management, Leverage technology.

  10. PDS Ltd - Platform for sourcing the textile mercendise. Hugh growth opportunity. Unique approach to manage the business. Moat in terms of having relations with existing retailers in the US and EU. US will particularly be driver for growth in next few yeras.

  11. Jindal saw - Oil sector making big investments. Good order book for next 6 months. Confident management.

  12. 3B Blackbio - HIgh growth company with innovative approach

  13. Mrs. Bector - Expanding the reach to maximum points of sales via improved supply chain. Good management. Big addressable market.

  14. Laurus Labs - Big investment in creating the capabilities. Getting ready for the strong growth with number of optionality’s. Want to at least double the allocation to this stock

  15. Eris Lifescience - Good portfolio of branded products in domestic market. Ability to improve margins of the acquisitions. Management seems capable of integrating and streamlining the acquired businesses well.

  16. GPIL - Huge capacity expansion being lined up for iron ore. Having the long term lease for mines going to work as a moat. Good management

  17. Inflame - EMS of appliances. Strong growth ahead. Good management.

  18. Glenmark Life science - Decent valuation given the good growth outlook. To double CDMO in three years.

  19. Sandhar Technologies - Operating leverage is expected to play out in next couple of years. Opportunity to rerate.

Apart from the above, have smaller positions, tracking position or trading position in - Reality (Ajmera reality, Kolte Patil), Pharma (Supriya Lifescience, Jubilant Pharmova, Suven LifeScience, RPG Lifescience), Hospitality and discretionary spend (Samhi Hotel, Rategain, Senco, Carysil, Globus Spirit, AGI, Som Disti.), Metals(Prakash, NMDC), Others(WPIL, Craftsman, SKM Eggs, Technoelectric, Balaji Amines, Archean Chem)

Will appreciate any inputs/feedback. There is tremendous to learn from different folks on valuepickr. Thanks a lot!

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14

Update as on 12-May

Company Current Price Average Buy Price % at Portfolio level Profit percent
Neuland Laboratories Ltd. 7140 3754 10% 90%
Caplin Point Laboratories Ltd. 1281 815 6% 57%
Time Technoplast Ltd. 265 138 6% 91%
Sunteck Realty Ltd. 413 453 5% -9%
Krsnaa Diagnostics Ltd. 575 646 5% -11%
Balu Forge Industries Ltd. 298 239 5% 24%
Va Tech Wabag Ltd. 866 573 5% 51%
Strides Pharma Science Ltd. 843 432 4% 95%
Ugro Capital Ltd. 259 238 3% 9%
Godawari Power & Ispat Ltd. 909 751 3% 21%
PDS Ltd. 439 526 3% -16%
Laurus Labs Ltd. 438 404 3% 8%
Mrs. Bectors Food Specialities Ltd. 1233 1143 2% 8%
3B BlackBio Dx Ltd. 712 633 2% 12%
Eris Lifesciences Ltd. 856 872 2% -2%
Aegis Logistics Ltd. 599 421 2% 42%
Hindustan Oil Exploration Company Ltd. 190 188 2% 1%
Inflame Appliances Ltd. 464 491 2% -6%
Sandhar Technologies Ltd. 486 488 2% 0%
Som Distilleries & Breweries Ltd. 296 295 2% 0%

I am adding gradually to - Aegis, HOEC, Sandhar, Laurus, PDS(this has corrected a lot from my initial buy). Wabag and Ugro. Not much change in the top-5 holdings. Also added a bit on WPIL, Rategain and Carysil. They might reflect in top-20 in coming months

Sold out GLS as road ahead for them looks difficult and Q4 results have not been as heart warming. Have initiated a position with small quantity in Piramal pharma. Will add to position based on good pricing opportunity.

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15

Update as on 03-Aug-24

Company current price avg buy price % of Portfolio
Neuland Laboratories Ltd. 11,078 3962 10%
Va Tech Wabag Ltd. 1,321 839 8%
Sunteck Realty Ltd. 583 454 7%
Caplin Point Laboratories Ltd. 1,639 815 6%
Krsnaa Diagnostics Ltd. 680 660 6%
Sandhar Technologies Ltd. 661 544 5%
Strides Pharma Science Ltd. 1,081 432 4%
Hindustan Oil Exploration Company Ltd. 286 227 4%
Prakash Industries Ltd. 190 178 4%
Dollar Industries Ltd. 502 530 4%
Sanstar Ltd. 120 109 3%
Eris Lifesciences Ltd. 1,121 903 3%
Time Technoplast Ltd. 332 198 3%
India Pesticides Ltd. 221 219 3%
Deepak Fertilisers & Petrochemicals Corporation Ltd. 962 719 3%
Techno Electric & Engineering Company Ltd. 1,710 1296 2%
Senco Gold Ltd. 987 806 2%
Aegis Logistics Ltd. 735 442 2%
Housing and Urban Development Corporation Ltd. 306 254 2%

Remaining 17% are 14 other stocks with smaller quantity.

Quite a few changes since last update during May. Election results caused huge turbulence in portfolio.

  • Sold out Balu (regrettable :)), Godawari(I still want to re-enter), Laurus, Bector, 3B BlackBio
  • Reduced holding in Time;
  • Increased holding in Wabag, Sandhar, HOEC and Dollar. Sanstar was bought on listing day.(tactical buy)

My thoughts - I am keen to build the portfolio around pharma, oil & gas, water treatment, textile and agrochem. To me these pockets have not run up too much and provide relative comfort on valuation front for next 6-12 months.

Please feel to share thoughts/suggestions.

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16

Can you please explain your thesis behind buying Sanstar on listing day?

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That was a tactical play. The company’s valuation at listing seems reasonable. The downside is well protected. I was intending to make quick 10-15%. Hope this helps!

18

Why did you sell 3b blackbio?

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Few reasons

  1. Growth was not reflecting on QoQ number until last Quarter’s results
  2. Was not very optimistic about the agrochem business
  3. was finding it expensive on Marketcap/Sales ratio.

Having said that the things seem to be turning around with Q1’25 results.

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20

Update as on 04-Dec-24.

Company Current Price Average Buy Price % of Portfolio
Neuland Laboratories Ltd. 17791 4040 12%
Va Tech Wabag Ltd. 1861 894 9%
Caplin Point Laboratories Ltd. 2363 823 7%
Deepak Fertilisers & Petrochemicals Corporation Ltd. 1348 861 6%
Krsnaa Diagnostics Ltd. 1007 661 5%
Strides Pharma Science Ltd. 1498 432 5%
Aegis Logistics Ltd. 852 587 4%
Time Technoplast Ltd. 446 207 4%
Eris Lifesciences Ltd. 1471 916 4%
Sandhar Technologies Ltd. 594 543 4%
India Pesticides Ltd. 192 211 4%
Sunteck Realty Ltd. 531 456 4%
Genus Power Infrastructures Ltd. 463 387 2%
Laurus Labs Ltd. 583 453 2%
Solara Active Pharma Sciences Ltd. 814 797 2%
Kopran Ltd. 215 297 2%
Deep Industries Ltd. 566 447 2%
Syngene International Ltd. 928 877 2%
Hikal Ltd. 441 366 2%
Kitex Garments Ltd. 743 505 2%
Samhi Hotels Ltd. 195 200 2%

Remaining 13% are distributed across 13 other shares.

Some highlights -

  1. Entered TARIL and Shilchar, based on their result and commentry from mgmt. Sold Shilchar with 30% gain in very short time. have similar gain in TARIL.
  2. Top holdings except Sunteck did really well in past few months, taking portfolio to life time high.
  3. Happy with the entry in Deepak Fertilizers. Its huge expansion with moving into more value add products.
  4. Also taken positions in CDMO players such as Solara, Hikal, Jubilant Pharmova, Syngene.
  5. Just to de-risk from downside, have taken position to agrochem such as IPL which is probably lowest in the cycle and hoping things will improve for it from 2025.
  6. Reduced holding in HOEC owing to the crude price moderation

Please feel free to share your thoughts/suggestions.

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