My learning and portfolio review - Saurabh


(Saurabh) #1

Hi All

This is my first thread on this wonderful forum. I would like to brief about my investment journey and would like all the members to review my existing portfolio.

Introduction

I am in my early thirties and mostly worked in software product development organizations. Even though opened demat and trading account in 2007 with my first job, but did not invest much due to lack of money.

Father is actively involved in stock markets, has a very good knack of picking good quality stocks but generally sells too early leaving a chance of creating wealth.

Taking lessons, I have started with long term investing from last 3 years.

2009-2012

Nothing much to talk about, was complete rookie in stock markets. Investing meant CNBC, moneycontrol, etc. and used to buy shares which were traded in the range of 50-60 rs. Luckily, did not lose money and did not make anything as well.

2013-2014

A big sin but started with 100% allocation only in one stock.

Bought Yes Bank @ 300 and sold with around 20% profit in 1 year.

2014 Onwards

Started reading about long term investing. Followed some quality blogs and came across valuepickr somewhere in 2015 end. Read one up on wall street, pat dorsey - 5 rules of successful stock investing and current reading Basant Maheshwari’s book.

Got lucky and first stock I bought was Can Fin Homes around 400. Sold the entire quantity around 2000 with 5x returns in 2 years.

Current Portfolio

CMI @ 125, CMP - 216 (15% Allocation)

Government initiative on railways. Infrastructure development in coming years to aid speciality cables company.

Cosmo Films @ 428, CMP - 432 (23% Allocation)

Packaging industry and a leading player in that. Low PE ratio.

Hudco @ 73, CMP - 69 (17% Allocation)

Betting on urban infrastructure push by the government, smart city projects, etc.

Minda Corporation @ 100, CMP - 118 (9% Allocation)

Good sales and profits in last 5 years, less D/E ratio and good ROE.

Nandan Denim @ 95, CMP - 151 (4% Allocation)

2nd largest denim manufacturer in India, good promoter holding. Good profit growth, improved ROE and ROCE for last 5 years. Capacity expansion to contribute to both top line and bottom line growth in future.

Suven Life Sciences @ 190, CMP - 172 (25% Allocation)

I consider this as a very big opportunity cost as holding this for last 3 years. Got good chances to sell during run up but did not sell considering good future growth. Currently pharma sector is down, so that makes it a laggard in the last 3 years bull market.

Suzlon Energy @ 21, CMP - 18.5 (7% Allocation)

Holding a small quantity considering the turn around bet and reduced debt as well as good performance in the last 2 quarters.

Cash Position

My cash position is currently equal to the amount I have invested in the equity portfolio. Waiting to invest as and when market corrects. This gives me a cushion on the downside and even I can average down in case of high conviction bets.

Tracking list
Century ply, kajaria, Asian paints, britannia, IndusInd.

Kindly provide your valuable suggestions on the current portfolio and future actions.


(Saurabh) #2

Any comments / feedback, anyone ?


#3

Just my 2c. Cosmo films - although they seem to be moving up the value chain off late, their return metrics are not great, BOPP is still a cap intensive, commodity kind of business. You may want relook at your allocation here.
Suven - again I feel the allocation is quite high at 25%. The income from their alzheimer’s molecule is a high impact but low probability kind of bet. As an investor we want the number of steps required for a business to succeed to be lower/more predictable. I am not aware of their growth plans for the crams division.
Again this is only to give you a different perspective…good luck!


(Saurabh) #4

@vinkash : Thanks for your inputs.

I am aware that the allocation is high in Cosmo films currently. It would be automatically reduced since I have close to 1.2x of cash which I am planning to deploy in case of new stock opportunities and some market correction.

I sold my entire holding in Nandan denim since it was very less quantity (4% allocation). Sold it at around 60% profit from the purchase price.

Also trimmed my position in Suven and sold 1/3rd of the shares today.


(Saurabh) #5

From the time of first posting, the portfolio value has been increased to 1.5x as compared to July 2017. This is more to do with fresh deployment rather than gains on the existing folio.

The cash position is still equal to the current portfolio value. Following are the new additions in the portfolio:

1. Aditya Birla Money @ 80
Futuristic investment, equity and wealth management domain. Part of Aditya Birla group and subsidiary of ABCL.

2. Himadri Speciality Chemical @ 85
Leaders in coal tar pitch, betting on advance carbon material used for Li-ion batteries. Electric vehicles focus of the government.

3. Sintex Plastics @ 105
Demerger from capital intensive sintex industries, infrastructure push by the government, GST to add to bottom line.

All of the above are well researched stock on VP forum except AB Money.


(Saurabh) #6

The new addition to the portfolio has been “Chemcrux Enterprises”. They are dealing in manufacturing of intermediates for bulk drugs, dyes and pigments. It started trading in BSE SME segment last year.

Purchase Price: 30
Current Price: 35

Minimum lot to buy is 4000, earlier it was 8000.

Tracking Closely:

  1. Hikal Ltd.
  2. Prakash Industries

Both have a separate thread of its own on VP.

Results so far
Cosmo films and sintex plastics have been under performers.
Himadri has performed well and given good gains in terms of stock price also.
Suven is stuck at the same place. Planning to give it another couple of years.

Thinking of getting rid of Cosmo and Sintex plastics and deploying the same amount in the trackers. Still needs to decide.


(Saurabh) #7

Latest portfolio holding and result analysis:

1. Chemcrux Enterprises:
Excellent results by SME
Revenue: +14%
EBITDA: +32%
PAT: +57%
Dividend: 0.25 / share

This too despite factory shutdown for 2 months and increased raw material prices (crude).
Company plans to expand its capacity and grow based on acquisitions as well.
Target revenue growth is 30% for FY2018-2019

Status: Holding this for at least next 2 years.

2. HCL Info:

Distribution business revenue increased by 22% YOY.
Out of this, enterprise distribution saw 30% increase whereas consumer distribution saw 15% increase.

Divestment of services business might improve the balance sheet in near future.

The enterprise division is focusing on cloud, security, etc. related technologies which is a good sign seeing the growing revenues.

Enterprise Distribution also signed a strategic partnership with Alibaba Cloud Services for the market in the country.

Not sure how much beneficial this would be. Alibaba contributes very less to cloud space where the leaders are Amazon, Google and Microsoft.

Status: Holding as a turnaround

3. Hikal Ltd:
Good revenue and EBITDA growth, marginal PAT growth due to deferred tax payment.
Company has recommended 1:2 bonus as well as 0.50 / share dividend.

Status: Holding for long term.

4. Piramal Enterprises:
Revenue: +24%
PAT: +24%
Dividend: 25 / share
Good and consistent performance in housing as well as Pharma sector.
Proven past track record, not much tracking required. Will monitor quarterly only.

Status: Holding as core portfolio for very long term.

5. Suven Life Sciences:
Again good numbers, revenue and PAT increased in high double digit.

Status: Holding for next 1 year based on previous years commentary of management regarding good future prospects FY19 onwards.
Chances of success of SUVN-502 are pretty low, though it can be a dark horse.