Newrb Portfolio

(newrb) #1

This forum has been immensely helpful in building my understanding about equities.

I am in my mid 40s in a full time job. Equities form big part of my overall assets. I don’t need to dip in to equities portfolio for regular expenses.

I don’t trade. Positions are for long term investments. Target is to generate 20-25% CAGR over long term.

Below is my portfolio. Would like to hear views from fellow boarders and seniors. Thanks in advance!

PI Industries - 11%
Debt free company focusing on end products rather than commodity chemicals. Honest and capable management. Good allocator of capital. Positive management projection on the future of agro-chem and prospects of turnaround.

Risk - Top line growth which has been elusive for last few years. Dilution in product margins.

Bharat Financial Inclusion - 16%
One of the fastest growing MFI. Now mirror for Indusind as merger should go through in a few months. Indusind is one of the industry leaders. Capable management. Regardless of government efforts, shift to private banks will continue for long time to come and Indusind is well placed to capture it.

Risk - Slow down in economy, IL&FS or similar exposure (which I think is more systemic), need to watch NPA, succession to Sobti

Ujjivan - 8%
SFBs have a long runway, but one needs to be patient as the business model hasn’t gone through many cycles. Ujjivan’s disclosures were quite prompt during demon. Management is transparent and seems very process oriented (important in a financial business). At current P/B or P/E is quite attractive. Once the bank conversion costs are behind, operating leverage should kick in.

Risks - Susceptible to shocks much easily than commercial banks. Potential deterioration of credit culture in it’s customer base due to competitive politics. Ghosh’s succession. If growth does not return in H2, then management isn’t walking the talk. Does not have the advantages of Bandhan which is a micro lender with commercial bank status.

RBL -13%
One of the fastest growing private bank, still small base. Good management that has shown it’s capabilities since taking over. Improving ratios. I believe good private banks will continue to take share from PSBs.

Risks - Economic slowdown, still low CASA, growth may be hiding things which will come out once it slows down

PNB Housing -17%
One of the fastest growing HFCs. I believe HF has a long runway though competition has increased. The nimble will survive. Sanjaya Gupta has proven to be a good leader. Once there is clarity on sake sale, should get higher P/B. I will probably bring it down about 12% of portfolio over time.

Risks - RE Developer exposure, growth hiding problems in BS

TCI Express -13%
Growing faster than peers in a non-cyclical industry and valuation lower than peers. Will grow in tandem with GDP as express logistics demands will increase in a growing economy. Low debt and decent ROE.

Risks - Gung-ho management (which makes me a bit worried), hasn’t been around as an independent company for long. No customer stickiness in this business, competition from un-organised sector.

Dmart -11%
Has been discussed enough! My view - still has a very long runway, works well in Indian context. As more Indians move in to middle class this will benefit.

Risks - Valuation. Perhaps will undergo time correction. Next two years growth is built in the price.

Cash - 11%
Waiting for opportunities. Hopefully over the next 6 months leading up to elections.

(Karthik) #2

I think its a very concentrated portfolio towards financials with only 7 stocks and 4 of them towards financials.I would suggest reducing certain allocation from financials and holding more cash to diversify into other sector when opportunity arises if you dont find anything currently.I would be at 60-65%% allocation in 7 stocks not more than that.

(mylu) #3

I have a company for you viz-a-viz TCI Express… I agree with your assessment on it …we surely need to see how they transform the un-organised sector competition to business…

(Dev_Kerala) #4

54% in Financial Services space! Unless you have strong insights in the industry, this is too much.

If you wish to keep this high allocation in Fin Services, I would suggest you to consider moving some funds to large caps like HDFC Bank and Bajaj Finance.

Bharat Financial, Ujjjivan, RBL all good picks but allocation can be lower.

PNB HF, I think you are thinking right about bringing down allocation. Pure play Housing Finance Cos, in my view, have to share the beating taken by real estate sector at some point in time for sure. Better to hold diversified players in lending space.

(newrb) #5

Thanks Karthik and Dev_Kerala. I would like to trim holdings in PNB Housing and BFIL/Indusind. I am comfortable at 8-12% allocation with 12% being for higher conviction bets. I am waiting to see how the stake sale plays out in PNB Housing which I feel has suppressed the price at the moment. It may prove to be a costly wait, which only future can tell.

Mylu, I feel TCI express is a type of company for which we have to watch every quarter results carefully (I would not do the same for Indusind for example). We also have to see how the next level leadership comes up - right now, it is only Chander Agarwal, pretty much a one man show or so it appears.

(RadheyShyam Aggarwal) #6

If you’re bullish on Housing Finance, why not some investment in real estate. Think PNB housing can be trimmed and that money can be put in Godrej Property or Kolte Patil.