ValuePickr Forum

Renjit's Portfolio

Hi VP Members,

So, finally am posting my portfolio . My target is to achieve 14 - 16 % CAGR returns over the long term . Feel free to give your constructive feedback and suggestions .

Can you please provide your at least one liner thesis against each pick.

Also if possible please share further information about your investment hypothesis, capital allocation, process, temperament etc.

Its scary to see so much allocation in Reliance. I hope that is RIL, & not an ADAG stock (except the AMC).

I think there is sector concentration risk, your portfolio has Weightage of 58% towards financials

RELIANCE INDUS . >> I see a lot of runway especially in retail and telecom . Reliance should do at least at least RS 700 billion [ 500 billion from petrochem , 100 billion each from retail and telecom ] OF PAT by FY2023 . AT 20 times earnings we are talking about M CAP OF rs .14000 billion , which is around 2x - 1.85x from current M CAP . Reliance will literally wipe out alll the other competitors in the telecom industry and will evole as a virtual monoploy in retail as well .

Can RIL will create monopoly in retail?

I don’t think so.

While comparing to telecom, retail is very different business.
Not everyone can start mobile business. (you need money to buy spectrum, then backend operation, towers and managing billing etc)

But that’s not the case with retail.
Mobile is PAN India business while retail is city centric business.

Entry barrier are close to none in retail.

Also, retail is local dependent business and it can not be standardized like mobile.
Eg one taste or one brand is not suitable for all over India.

Even in retail, barring branded FMCG, volume doesn’t affect price very much.

SO, I don’t see how RIL can become a monopoly.

Disclaimer - I am a retailer (apparel) and I compete with Reliance Trends in my city.

2 Likes

RIL might not become a monopoly in retail , but , will definitely be taking a big chunk of the profits created in the retail industry by 2022 - 23 . If they can stay away from 5km radius of dmart , RIL will make a lot of money .

Exactly how one can be so sure about this?

With Dmart, yes they have executed perfectly and got the right team.
It’s difficult for local retailer to compete with them.

With Reliance, they are just pouring money and that is showing sales growth.
What about SSG and other traditional retail metrics of Reliance Retail? We don’t know that because they don’t give detailed figure similar to Dmart.

What will happen in 2022 - 23? RIL has already opened 10000 stores and almost reached 70% of tier - IV towns.
If they want to go deeper / rural, then their current model is not suitable.