My Portfolio_Homemaker

Hi,
Was wondering what have you been buying/selling in 2019.Thanks!

Portfolio construct is unchanged and no buy sell since last post. The prices of few stocks have moved extremes, some beyond comprehension. Esp Maruti, ALL, Gruh and now Sterliteā€¦ Overall portfolio is negative 1 %

1 Like

Thanks for the reply. Donā€™t let the extreme market movements affect ur energy level (if thats the case!)
Hitesh Sir has something nice to say in JK Paper thread. Also safalniweshak has recently posted an article on 20-point checklist. Thought like sharing!

5 Likes

@homemaker Would you add more to Ashok Leyland, esp now that itā€™s gone to 80s

If I see my top 5 losers, they are 15 to 30 % down like gruh, all, page, sterlite, avanti etcā€¦

Now they are all quality names, may be cyclical or suffering from recent slow down or sudden black swan mergers.

Ideally I should load up thus average down so that when upmove happens, gains are more absolute and in %. Ashok Leyland, I am sure is worth it at this level.

Having said that, overall market is quite volatile, directionless and random IMHO.

I would rather wait for bottom out stage, which although is a techno funda stuff, but will try to wait out as per my comfort level.

Hope I am able to explain properly :grinning:

1 Like

How do you see promoter pledge in Sterlite Tech? Stock getting beaten after good quarterly results is not a good sign. Usually market is anticipating a future negative development. I am holding it with major loss but considering an exit.

Surely high promoter pledge is a concern. I donā€™t like it, but more important is market hates it like anything.

Having said that, you wonā€™t find a better company who can ride the 5G boom and fiberisation of India. With stellar quarterly nos, huge order pipelineā€¦ I would continue to back Sterlite.

Have you looked at the cheaper, smaller, faster-growing (small base) birla cable?

2 Likes

Thanks @homemaker for your inputs. As things are currently, I would be more risk averse. Usually corporate actions disliked by markets, donā€™t end well.

Here is Hitesh sir views on Sterliteā€¦

Yes, the recent developments in Zee Entertainment, DHFL,etc,have given reason to view promoter pledging and high-leveraged balance sheets,with justifiable suspicion.So to that extent, Hiteshbhaiā€™s comments are pertinent.
But @Homemaker has given cogent reasons for sticking to Sterlite Tech even after taking these factors into account. Ultimately,a question of courage of conviction in a stock.
And @phreakv6 has suggested a look at Birla Cable. I viewed itā€™s financials on Screener.in , and these stats do bear out what he says, so we can examine those financials also. One stat about Market cap & Debt gives an indication.
Market Cap
Sterlite Tech Rs 10,000 crores. Debt Rs 1,178 crores
Birla Cable Rs 521 crores. Debt Rs 44 crores

So,there is apparently a larger runway for growth for Birla Cable,compared to Sterlite Tech.
But of course, other parameters also need to be taken into account,as suggested by @ramanhp. Management quality and corporate governance are critical for Portfolio selection,and Birla Cable has a cleaner slate,so far.

2 Likes

It is good to be back. I promise to behave myself.
I have a question regarding a few of your portfolio companies.

1)3M India. How do you justify the valuation?

  1. Maruti Suzuki. Do you think that the company can double its volumes over the next 5-10 years? Are you averaging at current levels? What is your view on the valuations here?

  2. How do you rationalise the valuations of LTTS?

2 Likes

Welcome back.
The questions are out of syllabus for me :thinking:

I donā€™t go deep into valuation analysis. I believe high quality and high growth commands high valuation. 3M is high quality, recent margin improvement and has US backed R&D, product portfolio. LTTS is a fast growing company, even mildly exceeding management commentaries. Also its not plain vanilla IT service. So I am comfortable with high valuations.

Maruti I am not averaging as my buying price is still lower than current price. As far as doubling of volumes is concerned, I doubt has car sales is slowing down and ola uber has saturated. However, if you see the top selling car in india, from 800 to alto to swift is an upwardly price migration. I am confidant maruti will maintain leadership position and continue steady growth.

1 Like

A new thread has been opened on 3M India, you can check it if you have not already.

2 Likes

Q3 Results are mostly out. individual stock prices are oscillating like a pendulum since last 2-3 months. Quite a no of stocks have moved down significantly, however portfolio is relatively steady, thanks to focus on diversification and quality. I welcome thoughts of fellow boarders on averaging down opportunities in beaten down stocks. Sharing latest portfolio update- feedback most welcome !

S.No Company Name Unrealized Profit/Loss % Weightage %
1 STERLITE TECHNOLOGIES LIMITED -33% 3%
2 ASHOK LEYLAND LTD -27% 3%
3 GRUH FINANCE LIMITED -17% 3%
4 AVANTI FEEDS LTD -14% 3%
5 GMM PFAUDLER LTD -13% 2%
6 PAGE INDUSTRIES LTD -13% 7%
7 YES BANK LIMITED -12% 4%
8 HDFC LIFE INSURANCE COM LTD -8% 4%
9 ABBOTT INDIA LIMITED -4% 4%
10 KENNAMETAL INDIA LIMTIED -3% 3%
11 L&T TECHNOLOGIES LIMITED -3% 8%
12 INDUSIND BANK LIMITED -2% 4%
13 3M INDIA LIMITED -1% 6%
14 HDFC BANK LIMITED 1% 3%
15 GLAXOSMITHKLINE CONSUMER HEALT 3% 4%
16 BRITANNIA INDUSTRIES LTD 3% 3%
17 MARUTI SUZUKI INDIA LTD 4% 8%
18 PIDILITE INDUSTRIES LTD 9% 6%
19 MERCK LIMITED 9% 3%
20 HOUSING DEVELOPMENT FINANCE CO 11% 4%
21 INFOSYS LTD 15% 9%
22 BAJAJ FINANCE LIMITED 28% 5%
OVERALL PORTFOLIO -2% 100%
1 Like

I will ask you queries on few positions. This is to help you please dont take it the wrong way. Do leave your comments.

  1. GSK consumer- They have sold their great brand in horlicks. The parent clearly just found the best way to raise cash for its Novartis job. They happily went after the Indian Subsidiary and sold of the Horlicks brand. In addition to selling the brand, they had never truly pushed the horlicks brand. It had much more potential. They dont seem like a great bet and perhaps may underpeform the index in the coming years. You have also paid premium valutions for them.

  2. Britannia Inds- It does not make sense to pay 65x for such companies, you may again underpeform for a long time. Besides ITC are quite aggressive in the biscuits space. If you really wanted to own britannia the BBTC route is better. Think about the valuations you are paying and the growth that you are getting. Instead of a britannia you are better off owning an ITC which has far more cash to burn and has a trigger in the turn around of the entire fmcg business that they seem to have big plans for. You also 4x the div yield as compared with Britannia.

  3. Maruti Suzuki- Can Maruti meaningfully increase their volumes in the next 3-5 years? Or can hyundai come out with a great car and take away market share? Can Maruti grow their market share further from hereon? Can the company really deliver market beating returns over the next 5 years?

  4. Abbott India- Why have you bet on Abbott India? Its not cheap. Its a pharma company, a space and product that not many of us understand. What is your outlook on this investment?

9 Likes

4.39 of HUL shares will be received for every share of GSK Consumer. It is factored in the price of GSK Consumer. Going forward itā€™s a bet on HUL.

2 Likes

GSK- As already replied will get converted to HUL shares.

Britannia- I agree. All good aspects priced in the price. Should look at value picks instead like ITC

Maruti- I dont find any better PV company other than Maruti.

Abbott- New product launches, management commentary and MNC parentage. So views biased.

Having said that, in the last 3 months my activity is close to Nill. I am currently enjoying Coffee Can Approach, not that I strongly understand the merit of this, but found the market, portfolio, individual scrips extremely volatile. Activity and/or No Activity seems to deliver similar resultā€¦lets see how things shape up in Q4.

It is not about finding a better PV company. Why have you invested in maruti in this industry in the first place. Can Maruti grow from hereon meaningfully in the next 5 years? Maruti is not at all cheap. Two wheelers have more scope in India than cars. The valuation you are paying for maruti today, you are expecting them to garner 70-90% of the market. Just see what happened with royal enfield. You can only go so far after which things slow down and all the high valuations fizzle out.

Again it is not about ā€œthere is no better PV companyā€ no one is forcing you to buy a PV company so you dont really have to buy Maruti.

I really want to understand why you or other investors are bullish on Maruti. To be honest it may not even be a 12% cagr investment right?

5 Likes