ValuePickr Forum

My Portfolio_Homemaker

#236

Surely high promoter pledge is a concern. I don’t like it, but more important is market hates it like anything.

Having said that, you won’t find a better company who can ride the 5G boom and fiberisation of India. With stellar quarterly nos, huge order pipeline… I would continue to back Sterlite.

(phreak) #237

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

2 Likes
(ramanhp) #238

Thanks @homemaker for your inputs. As things are currently, I would be more risk averse. Usually corporate actions disliked by markets, don’t end well.

(arpitjain512) #239

Here is Hitesh sir views on Sterlite…

(wing777) #240

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, Hiteshbhai’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 it’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
(dumboinvestor) #241

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
#242

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

I don’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
#243

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

2 Likes
#244

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
(dumboinvestor) #245

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
(Bhaskar Jain) #246

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 it’s a bet on HUL.

2 Likes
#247

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 result…lets see how things shape up in Q4.

(dumboinvestor) #248

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 “there is no better PV company” 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
(Vijay) #249

Already at 50%+ market share and PV grows slowly in the long run (10 year period). Rather than looking only at the volume, why not look at the margins? It is clear that market is shifting towards B segment. First time buyers (50% of sales) are moving to B and C segments. The variants sold are usually mid variant in B and C segments while the A segments are dominated by base variants.
OPM has been slowly growing from 10% levels to 15% now. You could try forecasting it to see if the impact is substantial.

Coming back to volumes , it is clear that MSIL has to steal market share from other players. After BS6, cars and utility vehicles that are purchased for value for money tag will shift to petrol. Mahindra for example may possibly lose some more market share to MSIL. The cost advantage will play out and this may become a very tough oligopoly market with MSIL and Hyundai running the show at different segments. As someone rightly said, the one advantage that can last forever is cost efficiency. Hence it is possible to see some market share re-allignment after BS6 rolls out.

Disclosure: MSIL is 30% of portfolio

1 Like
(dumboinvestor) #250

@homemaker

What is your thesis behind LTTS? Arent you worried about the valuations on the same?

Would like to have your insights on the their products and services and what is your thesis on them? (brief one is enough you dont need to type out your entire thesis)

#251

My portfolio is behaving strange… I am sure experienced investors have seen such before as well. Its kind of an elastic rope, being pulled at both extremes, but the mid point remaining at same place. That means, half of stocks are doing good and rest half equally bad and portfolio is stuck at same place.

Should I buy more of losers is also a question in my mind?

Any thoughts on this will be of good help.

#252

I dont have detailed thesis. Its borrowed from LTTS thread in Value Pickr.

Specific to what I liked is its into 4-5 new tech areas like AI, Blockchain, IoT etc. Secondly its L&T parentage. Thirdly, the actual growth is exceeding management guidance or AR projection. Lastly, I had Infy, the standard IT large cap, I wanted a mid cap IT, bit non standard… Thus LTTS.

Valuation is a googly for me honestly. Page, ALL, LTTS etc I thought are fairly valued in comparison to growth or in consequence to correction. But market thinks otherwise and all are falling down even further.

On a lighter note ALL is falling as if there will be no trucks on highways and Page…:joy::joy:

1 Like
(anirband87) #253

In my opinion, one should check if the thesis based on which initial investment was done still stands good. Also stocks that have fallen might fall even more. So, have some kind of plan if there is further correction. Average down gradually.

Eg- You might have bought stock X expecting 20% growth for next 10 years. Say in recent few quarters it turned out to be 10%. Do you believe that it would rebound to 20% again or 10% is the new normal? If 10% is the new normal, you might expect that there is chance of further Y% correction. Think in terms of probability. Think of a range of outcome and their probability and what should be your plan of action in each case.

Disc: I am not a registered financial advisor. The above comment is based on my thought process while considering averaging down.

1 Like
(Divyanshu Bagga) #254

Learn to lose well. Scrutinise your losers for avoidable mistakes. In addition, when you were initiating the position, you need to decide what to do if stock falls x%, until where to add and where to start cutting your position. At present, you should be acting according to your plan, otherwise you will only react emotionally which will always lead to worst outcome.

1 Like
(vaibhav) #255
  1. Try to bring down the number of stocks.
  2. Be invested for long term (1-2 yrs). I think you would get very satisfying returns.
  3. If looking at mutual funds, try to look at small cap funds of ICICI Pru, reliance, Franklin, HDFC, Aditya Birla etc. Small caps funds would give better returns in next 2 yrs than large cap ones imho.

All the best.

1 Like