My Portfolio- Vikas


(vikas kukreja) #1

Hi All,
I have been following VP for many years now and have benefited immensely from this forum. Kudos to the VP team for taking scuttlebut to another level and showing us how knowing more than others early enough can be highly rewarding and a fun exercise.
I am sharing my existing portfolio for review and feedbacks. Please feel free to comment, criticize and poke holes in my investment rationale. I have intentionally kept my portfolio concentrated and I feel comfortable with it as I need to monitor few companies and can handle volatility.

Manappuram Finance - 15% @ 22.1
Oriental Carbon & Chemicals - 15% @ 440
Ambika Cotton Mills - 10% @ 850
Bajaj Corp - 7% @ 400
Control Print - 6% @ 137
MRF- 8% @ 31000
National Fittings - 10% @ 85
Cyient - 7% @ 480
Ganesh Benzoplast - 10% @ 42
AYM Syntex - 11% @ 78

Rationale for investments is as follows:

  1. Manappuram Finance: A play on NBFC space, with ethical management and diversified business portfolio. Their strength lies in huge branch network, changing gold loans tenure from more than 1 year to 3 months, using technology by providing digital lockers to keep gold and disburse loan through mobile app and in the process making whole process smooth. Yes their aim to grow faster in Microfinance and home loan can lead to higher NPAs and hence it needs to be monitored closely.

  2. OCCL: Its a niche company in oligopoly industry with 10% global market share in insoluble sulphur. Highly ethical management with focused business model, suppliers to major global tire manufacturers and increased radial tires will lead to decent growth ahead.

  3. Ambika Cotton Mills: A yarn manufacturer with best EBITDA/spindle in industry, conservative yet highly focused and ethical management. They have created a niche in a commodity industry and also growing at moderate pace.

  4. Bajaj Corp: Leader in light hair oil segment with strong distribution channel and customer mind share. Strong balance sheet and ethical management focused to expand overall base and grow in double digits. However, the company generates cash from single product and faces intense competition from Dabur, Patanjali and Marico. Would be interesting to watch how they cope up with current business scenario with low demand and high competition. Also promoter pledging is another negative and I am unable to make up my mind on how to take it.

  5. Control Print: Another company with focused product of industrial printers enjoying tailwind of increased consumer spending in pharma, FMCG etc. Company has recently modified its business model from product oriented to more of service oriented which shall lead to better margins, higher value addition and stronger competitive advantage. However, its leading to huge inventory on books making its business more capital intensive.

  6. MRF: Market leader in domestic tire industry with strong franchise, highly ethical management and enjoying benign macro environment yet facing some headwinds from Chinese imports. With subdued rubber prices, a probable anti-dumping duty on chinese imports and higher domestic automotive demand, MRF has huge addressable market to serve. They plan to add capacity in Gujarat plant leading to future growth.

  7. National Fittings: Its an export oriented company and manufacturer of Piping components while catering to various industries. Its an efficiently managed company with good return ratios, decent growth and generating huge free cashflows.

  8. Cyient: An IT company focused on engineering, networks and operations domain. Ethical management, strong balance sheet with huge amounts of cash on books, generating huge Free cash flows and have strong relationships with big clients like Pratt & Whitney, Boeing etc. It seems to be a differentiated IT company with promising growth ahead led by DLM (Design led Manufacturing).

  9. Ganesh Benzoplast: Its a tactical bet on business turnaround. It has storage business generating huge Free cash flows and a chemical business draining cash. Management seems to be turning around chemical business leading to debt reduction and increase in PAT. Not a long term bet for me, will exit once thesis play out well.

  10. AYM Syntex: Recently entered into another yarn manufacturer, which promises to be a differentiated player carving a niche for itself. Need to monitor closely margin expansion and changing business dynamics. Might have slow sales growth, but should be compensated by margin expansion. High debt is a risk to keep an eye on.

Views are invited.

Thanks
Vikas Kukreja


(vikas kukreja) #2

Have exited National fittings after holding it for 1.5 years. Rest of the portfolio remains same.


(distilled_feni) #3

Hi Vivek. I think you have good set of stocks in your portfolio. May I know the rational behind selling National Fittings ? Management commentary was quite positive in the AR (if u believe them)


(vikas kukreja) #4

Hi,

In this bull market, I am planning to slowly reduce my equity exposure by liquidating few stocks and get into cash selectively. I sold national fittings, considering it to be a bit expensive wrt its business model and relatively weak in comparison to other portfolio stocks. Having said that, I have track record wherein few stocks have gone up 2~3 times after I have sold them for eg indian toners, MRSS etc. Its possible that I am early in selling it and might miss on potential gains.

Cheers!


(Samir P H) #5

@vikskukreja - Compliments for picking up a portfolio which appears to have rendered good returns. I too hold Manappuram, OCCL and Ambika and they form 25% of my portfolio. My average buying price is much higher as I started building the portfolio only over the last one year.

I want to understand if you buy in desired quantities at one go or in tranches. Like the way I see for Manappuram you may not have averaged over the last couple of years. Is there any specific style you follow in terms of buying.


(vikas kukreja) #6

Hi Sameer,

Thanks for the compliments. Yes, you are right, I buy in one go and don’t average up or average down.
This is a limitation to my buying behavior and I acknowledge it, but I will take time to learn to average up.
All the holdings have been bought in one go.

Cheers