My portfolio and rationale

(Investor_No_1) #22

I do see some risk, probably that’s why they go for equity dilution to fund growth? I see the risk a little less in L&T Finance as practicaly, its promoters are institutions and not any family or person. Institutions are governed by better processes. Also, Mr Naik had clearly mentioned that their reason to focus on L&T Infotech and Finance is to increase their income from services business and diversify. So, they have all the more reason to make sure these companies perform. If corporate governance is good then TCS has flourished even though rest of companies in Tata are in debt and peanuts compared to TCS…so I think we should think that why TCS minority shareholders flourished even though rest group needed finance badly. Food for thought for me. Let me know your views

(Investor_No_1) #23

I like two midcap IT - L&T Infotech and Mphasis…both because of inherent strength of promoters. Ability to talk and negotiate with contacts of parent, use the parentage to establish long term relationships, attract best talent and retain them etc. Also, better corporate governance (although I am still learning to identify this, if at all we can as minorities). Another…I have seen L&T management as very dynamic and aggressive. If aggression is accompanied by ethics, it is wonderful combination for me…
Regarding L&T Tech. I had it but sold it for wrong reasons. I may buy some again. It is a different business alltogether compared to Infotech. LTI is more a services company and will cater to more day to day needs of the customer, say earlier it used to by .NET/Java applications, ERPs etc and now growth is in digital day to day needs…LT Tech will be more R&D based, engineering company, cater to creating platforms, research for any disruptions say Electric Vehicle wirings, design (just example)…maybe somewhat comparable to Tata Elexi…and L&T parent has huge strength in engineering…it is also an excellent company to have…however, for it to grow extremely big, we need to have a research based education system and talent in India…sadly we are but simply services…so maybe it will end up as research BPO/services and its niche will fade because of lack of talent and enviornment in India…I wish these companies could transform India and do something big someday…and talent in India be more research based…

(Investor_No_1) #24

In recent midcap corrections last few months, I added some -

  1. Max India
  2. Max Financial
  3. Aditya Birla Capital. (I would have chosen L&T Fin over it but already have bulk of my port in L&T Fin so thought to diversify within NBFC)
  4. HDFC Life

Also, some small new position in IDFC Bank. I read about the Founder of Capital First. Really amazing the way he created Capital First and made it a success. (Although I can imagine plight of Capital First long term shareholders as well as it has fallen dramatically since news on IDFC merger)

(Investor_No_1) #25

In all this carnage my portfolio took severe beating. Some changes that happened

  1. Complete exit of LnT Info
  2. Added Hdfc Life
  3. Added small quantity of Godrej Consumer, Aditya Birla Capital, Max India, Max Ventures and Godrej Agrovet
  4. Rest remains same
  5. Nervous about LnT Finance as its my largest holdings. Ever since Jan 2018 i could sense some macro headwinds but never expected macros to impact so much…huge learning