Prasad portfolio


(Ayush Mittal) #21

@Prasad: I think there are several styles towards successful investing, the only important thing is that one needs to be clear of his objectives andcontinuouslykeep developing his models toachievethe same and develop comfort. Styles keep evolving as the experience increases.We have had diversified portfolio and yet have done well in past. So its a lot about individual comfort and thought process.

Cheers,
Ayush


(PRASAD V. K.) #22

andcontinuouslykeep toachievethe increases.We

Thanks Ayush for reply. You and hiteshji have a midas touch and can virtually make returns from any company simply by identifying valuation lows and high. Especially you have (reading from dalal-streeet) unparallel understanding of chemical,petrochemical,fertiliser,speciality chemicals, API,leather and tannery business,tyre companies,CRAMS,midcap pharma. This is a huge opportunity and you have large choice of stocks to chhose from.In my case as I have already explained in previous posts very few companies qualify after my filters.

My investment style has developed by studying spending patterns of my wife and her friends. There are about one crore urban independent earning women armed with about two lakh ruppes to spend annualy(discritionary) and their spending decisions are not affected by global macros. There are about same amount of women in rural/semiurban markets who infuence a lot of spending. I am trying to inderstand pattern of their spending and beneficiary companies.

1)Women spend a lot of money on house decorations,interiors,curtains and furnishings. But they stay away from big furniture spending.

2)Women spend a lot on gold jwellary. Five years ago they moved from local jwellers to titan and present trend is towards stylish designer brands like TBZ

3)Cookware remains evergreen buying preference.

4)Branded clothes in middle sector like westside (trent) or max retail.In higher range global desi or ritu kumar/Anita Dongre

5)Jim memberships like gold (talwarkar is not fashionable),salsa classes,cooking classes,dance classes ,hobby classes like painting etc

6)Women spend a lot of money on kids clothes,games.

8)Women spend a lot of money on school fees and force husbands for good schools.

school chains like tree house would be benefited.

  1. Increasing spending on hygene products like quality sanitary napkins,undergarments etc.

10)Casual and fine dining (especially chisese and Italian)

11)Beauty parlors/lifestyle beauty clinics

If one were to draw any conclusion out of this present consumer bull run in not broad based but actually driven by women.Two lakh crore of targeted spending per anum which infact is going to grow is a huge opportunity and still a lot of steam is left in

companies like hawkins/Tbz /Speciality/tree house/P& G etc.

These are basically B2C companies which are able to pass on price rises to their buyers without much complaint.

Coming back to B2B companies here the customers are more educated, powerful than seller and constantly looking for cheaper alternatives.Hence long term business at good margins is very difficult to predict and maintain. These companies bear risks associated with capex and do not get rewarded sufficiently at the end. Hence I have stayed away from these businesses so far.

But learning from seniors from here will slowly allow me develope conviction on these companies also and in future and I would love to have some exposure to them.

regards, it feels great when we talk directly to you or hiteshji and helps us to develope our own investment style with conviction with constant learning from seniors like you.

Regards and please do raise a question about my investment style if Iam making any drastic investment blunder.


(PRASAD V. K.) #23

Booked some profits in gruh to meet some liquidity need. Cost of holding in gruh came down to 80 for remaining portion.

Gruh finance 37% buying price 80

Hawkins 63% buying price 1700


(Rudra Chowdhury) #24

thanks Prasad for sharing your investment ideas and assigning a base objectivity to it.

What has evolved from discussions with Ayush and other stalwarts in the forum is that there are no fixed one way to investing success. While on one side there are persons like Ayush, Hitesh ( dropping the ‘ji’ on his request) who have shown that money can be made across a larger basket of stocks and a diversified portfolio.

On the other hand there are persons like Jagbir, Krishna who have a done very well with a 4-5 stock portfolio as well. So in a nutshell, one needs to figure out his comfort zone and need to stick to the particular style which has worked for him in investing.

One thing I have learnt over the years, that CONVICTION CANNOT BE BORROWED. One needs to develop your own style and way to work, there may be 100 good ideas floating around, but without a specific style in place one cannot zero in on the stocks to invest in. Only with conviction, you can take meaningful positions that would make a difference to your returns.


(Raj Panda) #25

That’s very well said Rudra.


(Ayush Mittal) #26

@prasad: Nice to read about your observations n they are quite right :slight_smile:

@rudra: very true!


(narendra ) #27

I personally feel that for a concentrated long term Buffet style portfolio one needs to be invested in regulated companies (like banks, liquor , cigarette etc.,) or Indian companies(or India listed companies like Nestle , Colgate etc.,) which can be leaders globally( Some of our companies are in that direction) .

Sooner or later if there is no regulation Indian companies will be subject tocompetition and market hatescompetition(Ex: VIP vs Samsonite.Though I feel VIP is not a great company even with outcompetition) .

In US this style is successfullas they are many US companies which are leaders globally ( from Buffets portfolio – Coca cola ,Johnson & Johnson ,Procter & Gamble etc., ).


(PRASAD V. K.) #28

tocompetition and market hatescompetition(Ex: outcompetition) successfullas ,Johnson & Johnson ,Procter

Hi narendra

I do admire WB but I am not following his investing style. WB’s success mostly lies in identifying successful buseness model and buy any parrallel business and mould it in the intended directions. I basically follow peter lynch way of investing because it is simple,easier to understand and more retail investor oriented. Peter Lynch’s analysis of his stock selection in US markets twenty years back infact started being relevant in Indian context three to four years back. Lynch enjoyed very successful investing with his style for nearly fifteen years. Similar macro situations are happening in India from last few years. Hence atleast for next decade we can safely fall back on Lynch style and continue to ride same till macros change.


(Vivek Gautam) #29

As u hv studied GrUH n housing finance sector deeply pl post your valuable comments on Canfin homes, GIC housing finance n DHFL as the mortgage GDP ratio is still very low in India. Please also tell how GRuH is behaving differently n why other mentioned cos can or cannot become another GRUH?


(PRASAD V. K.) #30

Hi vivek I am still studying this housing finance sector and my coments are really not be taken seriously. But I will try to give my honest opinion which may not correct at all.

1)You have correctly mentioned that mortgage to GDP ratio is very low in India and still can expand ten times before reaching dangerous/saturation levels hence we are right in identifying the sector.

2)What ever housing finance has happened that has happened mostly

A)Urban areas

B)To people who are employed in corporate/PSU/GOVT employed sectors who file income tax returns and whoes credit score can be easily determined.

That means the rural/self employed/semourban housing market with low average loan size is yet to be exploted. Now because of RBI regulations main banks cannot lend to this sectors and this sector has been left to the mercy of NBFC.So again we are successful in narrowing this sector to purely housing based NBFC.

3)Now comes the real test. Here we are talking about some company who will lend money to a person without any job security/no fear of loosing social status on default

working in rural or urban fringe areas and carrying huge risk. Can fin home and GIC have a parent in PSU and mostly happy serving drop in customers.Now the creditworthy amongst noncreditworthy need to be identified and are just not going to drop in gruh and DHFL score very high on this front and hence search narrowed further. Coming back to gic/can fin as leaders like gruh advance there will be period of relative undervaluation where these stocks will advance. But this again will be driven buy performance of leaders .

4)Now gruh and DHFC if you just compare the credibility of management DHFL is no where near gruh managed by HDFC.Hence search narrows down to gruh.

5)Now we go to screener.in and look at various ratios of gruh and we find it trading at 30+ PE and P/B value in double digits.All the alarm bells start ringing and we begin our search for next cheap stock in this sector.

Same thing happened to me few years back(that time also this stock was expensive) when I first bought gruh but because of TED influence I decided to go with quality growth managed by prudent management rather than playing undervaluation and waiting for valuation to catch up.

Hence for me I would still go with gruh wait for correction and enter the stock slowly.


(PRASAD V. K.) #31

Following stocks should do well in next year.(These are the stocks which I feel should do well and are on my radar)

1)Gruh finanace

2)Hawkins

3)Trent

4)Indusind

5)cholamandalam investment and finance

6)Butterfly gandhimathi

7)EID parry

8)Arvind ltd

9)Tree house education

10)Speciality Restaurants

11)P &G healthcare and hygene

12)Alstom projeccts India

13)Clarient chemicals

14)TBZ

15)IL &FS transportation network


(Srinivas) #32

Hi Prasad ,

Thank you posting good shares. Will TBZ do well with this highvaluation(I mean in 1 year time frame)? May be sector is too hot but it look likebubblefrom here (At CMP 231)


(PRASAD V. K.) #33

highvaluation(I likebubblefrom

Hi marketlearner it not the price but the kind of people holding TBZ makes me nervous. Hence let this froth go out and then TBZ can again be bought.Had tbz price been trippled because of presence of strong long term institutions I would not have sold my shares.


(HG) #34

Hi Prasad,

Since stock holding patterns are usually updated on a quarterly basis, how do you figure out on a week-to-week or month-to-month basis whether any long term institution is accumulating a stock (unless there is a bulk deal etc.)?


(Rudra Chowdhury) #35

Hi Prasad,

read a nice article on Gruh,

http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4712


(PRASAD V. K.) #36

Link: http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4712

Thanks rudra for link

Excatly this is what I am trying to get across to vivek gautam regarding housing finance sector but so far not been successful.

Begining of 2000 a huge opportunity was there in housing loans for salaried/urban bankable population. HDFC capitalised on this for entire decade and gave almost 25% compounding for decade.Come 2010 and similar opportunity is there in unbankable space and mark my words gruh will give similar returns for next decade. But somehow

people are concentrating on present overvaluation of gruh more rather than long term earning opportunity.Hope vivek reads this one.


(PRASAD V. K.) #37

Hi HG,

whenever a stake is bought in a small company by a established institution this news is readily available on net.Besides I felt that TBZ was being jacked up so that PC issue sails through. Hence I wanted to watch how TBZ performs ,say after six months from PC listing.


(PRASAD V. K.) #38

Hitbhai has flashed light on one very interesting idea last month. I think everybody has missed it.(murudeshwar ceramics).Hitbhai has infact picked this from charts and not from fundamentals or any news. But this looks like a kind of undervalued,potential turnaround

takeover case run by decent promoters.This is a south based tiles company with very good market share and very likely and easy takeover target for leading tile makers who want to serve south market and want to reduce transport costs from gujrat to south.

Some positives

1)The plant machinery is imported and capable of making quality tiles.

2)Company has captive raw material reserves located close to plant and can serve almost

entire present manufacturing capacity.

3)One plant located in karnataka and other in TN can strategically serve entire south India

4)Companies products are used by most of the builders and commercial establishments hence this suits very well for someone who is a high end retail oriented playerand want to cater to mass (cost saving) market.

5)Company is available very cheap for about 70 cr market cap.

  1. Company is owned by RN shetty group which is a 2000cr group. Off late this group has lost interest in construction and tile business and concentrating more on hotel/tourism business hence it suits them also to get rid of this one.

7)Once out of RNS group this one will be rerated and a sure shot multibagger


(PRASAD V. K.) #39

Titan is correcting in line with our discussion on rudra porfolio thread. What I read into this is that this is not price but a PE correction. Institutions are watchful about companies foray in other fields and would like to watch it from sidelines and likely to jump again only after some meaninful corrections or some clarity on diversification. I hope people will not jump in hurryin bottomfishing.The core jwellary market has become very competative now and company is unlikely to repeat the past glory in future.

Those who want to be in similar business Trent offers similar opportunity what was Titan in 2009


(Hitesh Patel) #40

thanks for the views on murudeshwar prasad. I never thought in terms of it being sold off to someone.

Nice to hear your views on titan. I too think it was a stock which getting a bit stretched in terms of valuations closer to 300 odd levels. But when there is almost universal consensus about a stock it takes a lot of effort for the stock to correct meaningfully. I still feel there will be a lot of guys wanting to jump on to the bandwagon. I have written earlier also that jewellery sector stocks seem to be hot stocks in a hotter sector. There seem to be too many jewellery shops mushrooming even in a small city like mine and I find it difficult to digest how all of them are going to make tons of money.