Prasad portfolio


(PRASAD V. K.) #41

Hitbhai Infact we all must thank you for noticing this potential multibagger. Hats off to you. Once you high lighted this it was very easy way going forward. I went to local builders and tile retailers/small manufacturer’s and found out that transport cost and breakage during transport is eating into profits of gujrat based tile makers and given chance they would just latch on asset heavy company like murudeshwar. Infact their brand navin (named after younger son of promoter) is also a good brand in western maharashtra and karnataka amongst builders. Seven to eight years back promoters were very focused on tile business and navin was first tile brand to have exclusive outlets.But after that RNS group got interested in hotels/education/tourism/auto retailing and focus on this business fell apart. Because of this a sound company with 30% margin (more than kajaria) and with sound financials went down to such low levels.

But the key strenghts like modern manufacturing capacity,strategic location,captive raw

material mines,established dealer network,good brand pull in institutional clients remain intact.

I belive that smart group like RNS is aware of this and will try and make out most by taking advantage of overall bullishness in tiles sector and may sale this to bigger and more focused player. Atleast people in this business are expecting this and probably this is the reason that you noticed some activity on charts. But again hats off to you for throwing brilliant ideas time and again.


(Ayush Mittal) #42

Yes, thejewelrysector has quite heated up. I’m also seeing every other co trying to open new shops, do more advertising etc etc. With the biggies raising money by IPO, gold prices going down, I think this sector will face tough times.

Ayush


(Hitesh Patel) #43

prasad seems to be adding fuel to the fire in murudeshwar. stock up 13% today on strong volumes.


(PRASAD V. K.) #44

Hitesh bhai sub ap ka hi karishma hai,it is your followers latching up to guru’s pick.

I just reminded this to our forum members that this lottery ticket is infact assured gift voucher from hiteshji to his followers as new year’s gift.Again hats off to you.

I have seen people identifying stocks,buying solid positions and in later part of growth disclosing it to others. But here you are educating forum members in very early stages of growth.It is really amazing.

Even in case of techno electric I was not happy about your exit because only the wind power business of company (simran wind farms) is infact has market value more than 1.5 times the present market cap of company and has a potential of growing 3 times in next three four years.(To day official news is out regarding this) That is why I had****questioned your logic behind exit without meaningful gains when there remains huge upside. I was knowing this all way along as some of my friends being invested in IDFC funds but still do not have the guts and conviction to buy it.


(Hitesh Patel) #45

prasad,

you mention --“today official news is out regarding this” in ref to techno. I dont get what news is out regarding what? You mean that company market cap has potential of growing 3 times in next 3-4 years??

can u put in more details?

regards

hitesh.


(PRASAD V. K.) #46

Hiteshbhai lot of PE were thinking of taking exposure in wind power subsidiary of techno

electric. Today I watched news on television that IDFC PE has been finalised and they will be taking 20% stake in wind power business valuing it at over 1300 cr. Entire marketcap of the company is 1000 cr. IDFC IS planing to ramp up the wind power business by atleast three to five times in next few years.Given track record of IDFC it looks very lokely that they will atleast make 3X return from this investment. You had identified this so early and checked out very early with marginal gains. This could be a core portfolio pick for next few years and a new bluechip in making in renewable energy sector run by management of high predegree.

Regards and cheers again for wonderful pick


(hemant gupta) #47

hi prasad,

where did you see this news? can you please post a link to this?


(PRASAD V. K.) #48

Hi hemant,

today afternoon while channel surfing I think I watched it on ET NOW.Any how details would be available on dealcurry.com ot vccircle.com shortly. The fact is that talks were on in PE circles but the valuations is what surprised me.


(PRASAD V. K.) #49

HI hemant,

another thing to add next big themes always come from most unexpected sectors,infact

history has always shown this.This is a beaten down sector with lots of frauds,debt ridden crook managements,leveraged owners flying in jets and partying with bollywood actressses,spending shareholder’s money on charity work,spending crores of company money on daughetr’s wedding and all kinds of imaginable ways of robbing a investor.

But this management is good and given background of other companies in this sector.this one stands out even taller.Hence I feel that this one has all the right masala’s to become the next big theme.But we are saying this once this was endorsed by IDFC PE

we need to find out what made hiteshji think on similar manner much before this? Was

he aware that such an deal in in the making? Or he just went by IIM credentials of senior management?


(Hitesh Patel) #50

prasad,

In july 11, ifc picked up 3.38% stake in simran for 5 million usd valuing simran at 148 million USD. So even at that time I guess the wind energy business was valued at close to 750-800 crores.

regarding spotting techno, the best thing that appealed to me about the company was the logical thinking of the management from the annual reports and concalls. they clearly mentioned that the EPC business was a cash cow and they wanted to build wind energy assets out of this cash in addition to reasonable debt. they have walked the talk since past 2-3 years and kept on adding to the wind energy assets.

another potential growth opportunity is their entry into transmission segment. there also if u see their investment is minimal and still they are guaranteed fixed returns for a period of 20-25 yrs plus maintenance work of around 5 cr per year.

I guess sometimes we are too early into a stock and often get frustrated by price gyrations.


(Atul Garg) #51

Wonderful discussion. Each and every post is so enriching.


(Hitesh Patel) #52

links to the earlier deal in fy 11 wherein ifc washington invested in simran wind farm which is subsidiary of techno electric.

but cant find details of the recent deal mentioned by prasad.

I think once details are out there could be interesting moves in the stock price.


(PRASAD V. K.) #53

Hitesh bhai the news reporter said that the deal would be completed in feb and details would be available soon. Infact IDFC was not the only company in the race and it is techno electric which has selected IDFC. Last year I had an opportunity to meat a very senior marketing guy in Alternative asset management co and at that time only they had hinted that they were chasing assets in wind energy sector. That was very high time for consumer themes like titan,page,ttk etc and I literally laughed him off. Never the less he succeeded in pursuing me to invest in their PE fund for retail investors (so far invested in trent and indusind bank). That is why I wrote that I was aware of the deal in the making. But I was surprised by the valuation quoted by news channel.

It is the quality of management that is what separates this from others. Also they have second mover advantage and can learn and avoid mistakes done by early movers in this sector.

Regarding transmission business I do not know anything as on


(PRASAD V. K.) #54

Hi raj let’s continue discussion here,

You are absolutely right that % allocation in the portfolio is important.For ex in my personal portfolio only hawkins and gruh feature in 62-38%. But this approch requires continuous monitoring of portfolio and overall macros.

In case of rudra’s brother we are designing a portfolio for a passive investor from a long term point of view without much monitoring and active churning.Hence inspite knowing gruh is priced to perfection and hawkins is undervalued I have kept equal allocation.Also

in case of gruh was always priced to perfection in the past also.People have been saying this for quite some time now but so far this stock has proved everybody wrong.It is a long term secular growth story and any longterm portfolio is incomplete without it.Hence exposure to gruh is must at some point of time.Even if he cannot make money in first year from there onwards he will start making money.

The idea is to identify five to six good themes, buy them without trying to time them and give them roughly equal allocation.I feel that this should be approch adopted by long term passive investor.

Having said this if he sells some stock because the stock runs up or down 20-30% in a quarter I don’t feel there is any necessity for rudra to have seperate portfolio for his brother.Replication of his portfolio should just serve the purpose.


(Rudra Chowdhury) #55

Great inputs, Prasad. That is the reason, I have kept out all short termopportunities (Dishman/CEEBCO/Kaveri etc) where intermittent buying and selling is warranted.

So in a nutshell, this portfolio would be a replica of my long term holdings part of the portfolio, without the active short term investment opportunities.

I believe the current set of stocks can be kept fairly for a 5 year horizon, with only laggards on a continued basis needing replacements.


(Raj) #56

Hi Prasad,

Active investors do not need to churn their portfolio often as the companies and their business do not change on day-to-day basis. I hardly have 10-15 trades in a year. Even so that at least 2-3 times in a year I get call from my broker on why am I not using my account. Once you have identified the stocks you can stay put for years and just keep watching the development. 2 hours a week is enough in my view.

In my opinion, % allocation is very important as it can improve your return definitely by few percentage points which matter a lot in the long run.

Finally I would say that everybody has a different style and one need to follow what is working for you. However, better to discuss and know how others are doing and pick up the things which seem suiting you well. That is what we are trying to do here…isn’t it? :slight_smile:

Regards,

Raj


(PRASAD V. K.) #57

Hi raj,

I must admit here that Iam not a active investor myself and move out of a stock only when liquidity need arises and I am happy with 25 to 30% CAGR.

My defination of ACTIVE is people who are not satisfied with ten times in ten years kind of returns and those who are looking for 100X opportunity in ten years.For ex (2X-1.8X-1.7X-1.6X -1.5x-1.5x-1.5X-1.5x-1.5x-1.3x).And believe me some people do make it happen.I have seen this happening (unfortunately not with me).

OK let’s see,some body sets his policy that he will make 100 X returns in ten years and be a active investor (as on now Indian laws do not provide capital punishment for this kind of crime.).For achieving this say he opts for five to six stock strategy.Now

we all know that over a longer time frame all above stocks (hawkins,gruh,poly,techno,indusind) can give 10x returns over ten years which comes to roughly 26% CAGR.Now all these stocks may not rise linearly and tandemly.Hence if one can rotate capital between these selected five buy playing period of undervaluation and overvaluation he can easily achieve above returns.

This clearly shows that buy quality stocks,rotate capital strictly between them and play undervaluation and overvaluation,reduce churning and slowly restore the first step as you near target can potentially generate much more returns than just by and hold.

You are already following this policy when you have dynamic % allocation additionally if Iam not wrong(from your previous posts) you go for leverages also (upto two years of annual income). This is a very advanced mode of investing and I am in a process of learning it.Hence even if you make only 5 to 10 trades a years since they are concentrated,synchronised and unidirectional they must have fetched you a great returns.

Please post information about your dynamic asset allocation strategy and intermitant leveraged top ups in detail so that we can learn something out of it.

Also the ten steps I have mentioned above may not be actually spread over 10 years they are just ten critical levels of trade and can actually be spread over five years also.

Let’s try and do a brainstorming here regarding this

regards


(PRASAD V. K.) #58

Bought international travel house.

Stock looking attractively valued now.As I had posted on hiteshbhai thread sooner or later ITC would provide this business major thrust.When they ventured in FMCG they took might of HUL,NESTLE & P&G head on and that too simultaniously. Here in travel business there is no major player to take on and fragmented nature of market would just make it easy for them.Patience looks key here and this is more of a setting a trap and wait for prey to land in it kind of play rather than taking a gun and go for actual hunting.


(rajeev shah) #59

The big worry is that even if this is sold, what will be the OFFICIAL realisation per share


(Soumya Kanta Panigrahi) #60

Prasad,

When ITC would intent to provide a thrust to this business we would know. Till then there are better opportunities to earn money in this market. For your kind of investment strategy, which currently I am influenced a lot with, and trying to follow, I think we do not need untested explosive stocks, what we need is a consistent compounder, and I think there are better bets out there than ITH.