Rudra portfolio


(PRASAD V. K.) #61

Hi rudra,

Look at P & G healthcare and hygene. The brand whisper (sanitory napkins) is really huge and commands 50% of market share. Other brands like stayfree etc have very poor quality

compared to this and mostly compete on price and not on comfort.Growing income,educational levels,changing aspirations and increasing awareness of hygene in

semi urban rural India really suits very well for this brand.The product is a monthly must have thing for women folk. The max target users could be almost 20 -40 crs over a period of next decade. For me this looks very huge opportunity and is a fit replacement for page ind in TED dominated portfolio.(On a lighter note TEDIES will hang me for this replacement).

Valuations are high but so is the opportunity. This stock has potential to occupy stalwart’s position for next decade.

Regards


(Vivek Gautam) #62

Why not a banking name like Yes Bank or Indusind or even a cheap PSB like BOB?

As long as banking remains a licensed industry it will ensure good growth to all licensee holders even the worst also due to huge demand in India. Pick some quality names n ride on it. Yes bank has been my 10 bagger one of the few ones in last 7 years.


(Rudra Chowdhury) #63

Thanks Vivekji & V.K. Prasad for your suggestions :slight_smile: Will look into those.

From Peter Lynch, [http://www.valuewalk.com/2010/02/a-good-place-to-befrom-globes-co-il/]

_âThe average person can get to know 5-10 companies very well, and once every few years he will come across an opportunity to make a good investment. In principle, you need 3-4 good companies to invest in over ten years. You donât need 3-4 good stocks every week, if you are a private investor." _

Need to follow in-depth about the companies I own so that I am more confident on the downsides to add more, rather than looking for new opportunities. Recently missed a chance to add Ajanta at 340-350 levels, later added more at 380-390 levels.

Looking to add more of Amara Raja, Mayur, Astral and of course Hawkins.


(hemant gupta) #64

Hi rudra,

Mayur is reaching the technical buy zone again. During this year’s uptrend, it has always run-up followed by consolidation to touch 50 dma and kick off again. Currently 50 dma is around 450. Any pullback to that should be used to add to it. I am waiting for that too. Same is true for amara raja. 50 dma is at 235-240. Would be adding there. Astral and Hawkins may have more work to do. Please remember that stocks in strong up trends like these may give you entry points like these occasionally but this is not necessary. Sometimes they kick off earlier than that due to buying pressure.

:))

_ Peter Lynch, [http://www.valuewalk.com/2010/02/a-good-place-to-befrom-globes-co-il/ Link: http://www.valuewalk.com/2010/02/a-good-place-to-befrom-globes-co-il/ ]aThe _

** You donat investor." **


(Rudra Chowdhury) #65

Thanks a lot Hemant :slight_smile: Much appreciated


(Rudra Chowdhury) #66

Added Hawkins.


(Rudra Chowdhury) #67

Need to develop more conviction, feels like kicking myself for the missed chance in Natco Pharma, already up 25% from 400 levels :frowning:

https://www.edelweiss.in/market/compfundcomp.aspx?co_code=4684,5031,16996,24759

I still believe this is the best bet in the Oncology space from the available four (Natco, Shilpa, Strides, Fresenius)


(PRASAD V. K.) #68

Hi rudra,

U S sports market is actually bigger than auto market.In India sports market and companies catering to sports are very few,not well researched,illiquid,non transparent. But compared to media/digitalisation game changer theme this one looks ignored and opportunity is really scalable. I tried to find companies which have something to do with sports and the list is

1)Page ind

2)Cravatex

3)Talwalkar

4)Cosco India

Top three are well known but cosco is still not well known. I went to different sports shops in pune (both organised chains and standalone) and found a lot of COSCO merchandise like footballs,tennis balls,cricket balls and so many.But for a company with

so much product visibility the numbers and financial ratios do not look encouraging at all.

Have you tracked this company? If not who will be proper person on our forum to throw some light on this one.

Thanks


(Rudra Chowdhury) #69

Of the given four, I do have certain idea and past investments in Page Industries. Apart from the usual jockey one, what came out from a discussion with a friend was the huge opportunity in the swimwear and related space with Speedo. For the residents in the new plush malls, with state of the art swimming pools, price is definitely not a concern, choice of products is.

Page might very well do a 26% CAGR from here on ( 10X returns in 10 years) but expanded P/E is a dampener. If I am able to spot a similar grower at a lower P/E will love that, else I donât find any reason to look beyond Page. The size of opportunity is huge and growing.


(PRASAD V. K.) #70

Infact I had gone to TOTAL SPORTS shop in phoenix mall in pune to bring speedo goggle and swimming trunk for may son.That is the time cosco caught my eye.The shop was full of cosco items. I went to three to four other shops also and found cosco stocked to the roof. I went to screener.in and foud ROE IN excess of 110 only nestle could think of such ROE.Net free cash generation also looks ok. Marketcap is just around 20 cr. If the management is ok this one has better days ahead.

Actually taking cue from ayush and others I am trying to find some alternatives to page,titan,ttk,hawkins etc. Even RJ in his latest interview on ET now with all the bullishness he could muster said- these stocks may see PE contraction to some extent but will continue to grow at the rate of earnings growth. So if PE were to contract 15 to 20 even with 20% growth in earnings( very few companies in world have managed this over 10 to 15 years) it would become 4 to 4.5 bagger that is about 15% CAGR.


(Rudra Chowdhury) #71

Yes, PE contraction is a bigger concern rather than growth in names like Page, Titan, Prestige even Hawkins to a large extent (although lower earning base will support this one).

We need companies with

Honest & Able management and

a) sustained broad based demand

b) not too capital intensive; returns lot of cash generated through dividends

c) scope of P/E expansion

d) scope of robust earnings growth

e) growth mostly funded from internal accruals without much debt or equity dilution.


(PRASAD V. K.) #72

Titan seems to be most dangerously valued with presence of large leveraged investors.Company trying to venture out in a lot of different businesses is an indicator of maturing core business. New businesses would act as drag on high ROE,ROCE and free cash flow generations. Some times I even think about shorting this one.


(Raj Panda) #73

Hi Prasad,

“Titan seems to be most dangerously valued with presence of large leveraged investors.”

How do we find out if the current investors are leveraged or not ?


(ranvir dehal) #74

EROS INTERNATIONAL,…VA TECH WABAG: are one of the few names where i think the business moat will survive even after a decade ( they have been in business for decades now) …eros has relatively simpler business to understand although i have not done much research about the same . further digging is required .

VA tech is a foreign firm in water management and purification with a long sustaining technological moat : hence good margins with hugeopportunitysize .

regards

ranvir


(Rudra Chowdhury) #75

Hi Prasad,

Continuing the discussion here. Don’t want to clutter Hiteshji’s thread.

The organized jewellery market is still in a nascent stage for us to envision Titan loosing market share to players like TBZ. They will both rise at the cost of small unbranded jewellery shops across India.

As people have more and more disposable income, they will aspire for better products and higher brands. I think that time (of loosing market share) will come much later. Titan is not only a jewellery play, it is a branded fashion retail play. (Jewellery/Watches/Apparels/Eyewear/…)

5 years ago, when Titan was at 6,000 Cr market cap, everybody thought it is too much. And now that it is at 25K Cr market cap people still feel the same way. This can a stalwart, with very very slow accumulation. And large buys on dips. This one still has a long way to go.

The main concern are of course valuations and P/E contraction which I highlighted earlier too. Hence one needs to be very patient.

Hi rudra titan marketcap 25000 cr now if we are expecting a CAGR of 25% it would be 250000 cr after ten years.Do you think it is possible.I feel that if one were to invest in jwellery sector TBZ is a clear winner. Titan has reached such a position that from here it can only loose market share to higher end players like TBZ in jwellary.


(PRASAD V. K.) #76

Hi rudra

point taken that titan still has long way to go but going forward would be very steady and slow.

All growth stocks follow J type price pattern. They go up very fast upon listing,then fall below listing price and again rise almost vertically after that. Titan has passed that phase while TBZ has just began its journey downwards.Hence this one would be fast grower.

Talking only from jwellary point of view titan designs are nowhere near TBZ and I have personally confirmed by buying from titan as well as TBZ and interviewing a lot of women. Hence we can safely assume that atleast in design savy higher end market TBZ would eat into titan.

Going back to marketshare, I have been told by some people in this business that total

share of organised players is about 10% of total market.But unlike ordinary retail these so called 90% unorganised players are infact big,strong local city oriented businesses running for over 50 years.Hence ind insiders believe that penetration from organised to unorganised would be very slow process and initially new entrants would eat into each other’s market share.Only at the higher end (high cost diamand and gold jwellary) people would switch to organised players first and for mid/economical jwellary they would stick to local brands. Hence brands like TBZ would benefit most. Brand TBZ has tremendous brand pull in western India and has been successful in denting my pockets heavily in past. Infact I truely experience and understand the meaning of BLACK SWAN EVENT when I visit them with my wife.

Hence take my words,very soon they will drive women in other parts of India also crazy.

Peter Lynch while analysing retail business has said that -generally what succeeds in one part of country has very good chance to succeeding in other parts also because these people have caught the nerve of consumers.

Any way this is personal decision. I must disclose that I had bought TBZ at 110 and sold at 280.But I will enter again at steep corrections.


(Raj) #77

Hi Prasad,

Titan is like HDFC twins which will grow consistently at a decent rate for long long time. It’s a company which has built a huge brand and first time challenged the local Jewelers by putting the quality manipulations by them on the dock. Although jewellery is the main business, they are creating new brands and product lines at a rapid pace. **This seems to be only Indian company who has created big brands and continuing on the same path. **This is brand story and one need to watch out as it is unfolding.

If one believes in India’s growth story there is no way Titan will not grow.The so called J curve of Indian consumption is yet to come in play and that will be huge boost for Titan.How much market cap it would have after 10 years is yet to be seen.

Though TBZ is known for it’s design it is too early for them to even think of capturing market share from Titan. Players like TBZ has yet to prove their execution capability which Titan has already proven. They seriously lack management depth at this juncture.

As far as the price movement is concerned the returns in TBZ could be better than Titan till the sector remains hot. As soon as the sector goes into a downturn the leader will have less impact while the smaller ones will be severly affected.

Finally, I found some contradiction in your investment approach. Pardon me if I am wrong. On one hand you couldn’t find many companies beyond Gruh and Hawkins to invest, but you found TBZ better than Titan…that really surprized me somewhat.

Regards,

Raj


(PRASAD V. K.) #78

Hi raj

TBZ is from a place where I live,we were buying from them and were aware of the brand recall amongst higher end buyers in mumbai. Few years back we had seen them almost sinking and then came lot of policy changes and the results showed. TBZ has the potential of doing 5 rs EPS from mumbai and pune region alone.Hence at 110 the share was very cheap and bought it. But after that share went in the hands of speculators and I cashed out at 2.7 times return.But this remains a solid theme once corrected. This fits very well in aspirational buying of urban women.

This was small % of portfolio and initial position. Similarly I had bought Talwalkar since I knew their business model very well and cashed out at some gains. But these are trading picks and profits are again invested in gruh and hawkins.

Regarding titan I still feel companies like titan/asian paints have overrun their business potential and even though the earnings would grow the share price will not follow.Success of titan as a stock is purely because of jwellary and that is why stock became multibagger.Hence I am really not reading too much in other businesses where they are fighting with likes of rayban,prada,armani etc.Again this is my personal feeling and maynot be correct but clearly atleast in theory I do not see a 10x opprtunity in titan from here on.


(Raj) #79

@ Rudara, sorry for hijacking your thread. I was trying to understand Prasad’s perspective for his comments on Titan vs TBZ.

@Prasad, I agree TBZ is known for their design and they have an edge there. The era of under valuation for TBZ is over now. The challenge for them is to scale up their business now which they have yet to prove.

I personally feel Titan can easily be 3x or more in next 5 years. They are building other businesses which will help them reduce their too much dependency on Jewellery. India is being urbanized very fast and hence the scale of opportunity is huge.


(Rudra Chowdhury) #80

Added Unichem @185.

Amara Raja - was looking to add more at 235 levels, it jumped again.

Kajaria is looking nice for making an entry. And small amounts of Titan now that it has corrected to 270 levels again.