My portfolio:
Stock Allocation current year profits
ING Vysya bank 23% -12%
GRUH finance 27% 37%
Repco Home finance 19% 34%
Kajaria ceramics 21% 31%
Atul Auto 10% 43%
I am carefully maintaining a portfolio which can grow at 30% rate. My basic strategy is to pick on basis of observation (Peter Lynch Style.).
Few things I have learnt in five years over Peter Lynch style:
1). Certain sectors in the market may get a higher liquidity share which bubbles up earnings. This is currently happening in consumers, housing, healthcare sectors.
2). It’s always better to pick market favourites
(not necessarily leaders) among such sectors.
3). Stock prices don’t fall just becuase the prices are high.
4). Stock prices can move from high to higher (Jesse Livermore.)
5). Stocks quoting at less than 10 PE
and greater than 40 PE very rarely move very fast.
A stock quoting at less than 10 PE with 10 yrs history is definitely not a market favourite. Very Rarely such stocks become multibaggers.
On the existing portfolio, On Atul Auto I am a bit lucky to find a stock that is capturing market share.
And I believe Atul Auto sells more at a rural level and baja auto sells at metro level. Since **at rural level GDP is 2% higher than national level **
there is bit of movement in Atul Auto.
But I think Atul Auto is slowly becoming market favourite. But I could not imagine Atul Auto selling at more than 20 PE. I personally feel that any auto stock is dangerous above 20 PE ratio.
The only exception in today’s market is Eicher Motors because of Royal Enfield. Unbelievable Auto Stock.
On ING VYSYA bank, This is a market favourite. The possibility of sale keeps the price stable under bad conditions.
But here, I preffered it over IndusInd, actually I sold off **IndusInd **(a five-bagger for me
) favouring ING VYSYA.
ING VYSYA is very much placed to get ratings of HDFC and Kotak in recent future I believe. In 5-6 quarters I think the margins are ready to hit 4.
** And even now at 3.5% margins, The loan book is still having only 2% in higher margin loans like personal loans, Gold loans, CV loans etc. But currently all banks are facing headwinds.**
I bought and sold PVR for 50% profit. PVR is the market leader and favourite in multiplex space. The reason for selling it off is I realised that It is not highly scalable as people think it to be.
I am not worried about the PE ratio but the growth, I think it cannot grow beyond 25%. But I think The PE may not fall for next three years.
But once the number of screens crosses 1000 I think growth will further slow down. For next 3 years, as far as I remember from Ajay Bijli, PVR is planning to grow at 20% in number in screens.
Increasing margins in F&B and Advertising can keep profit growth at 25%.
** I am one of those happy happy investors in GRUH,Repco.**
Regarding Kajaria, The business is highly scalable. Market leader and favourite. The stock is up 40% this year and profits went up 18%. kajaria should be a multibagger for me.
ROE at 30 and PE at 20 seems to show a little scope in PE improvement. But this one may not get 45 PE like Page Industries.
I believe that future is in healthcare and agriculture. Agri, especially if Narendara Modi comes into power.
Healthcare should be the next biggest trend. I am looking for a proper business model. I have some in my mind. They may come up as IPO’s next year. Lets keep our fingers crossed.