Amoul Portfolio

Hi All,

I have been following valuepickr for long and have learned so much from the community. I would like to get feedback on my portfolio and investing hypothesis behind the companies.

I am 31 years old and have been in the market since I started doing my first job in 2014. Until 2 years back I used to invest via Mutual Funds but recently I have started doing my research and picking stocks. So far I have been able to get good returns but I want to make sure my Investing hypothesis is correct hence asking help from the community.

Here is what my stock portfolio looks like:

Stock Profit % Protfolio %
Anand Rathi 241% 47%
Zomato 138% 11%
NPST Ltd 51% 8%
Angel One 40% 7%
DP Abhushan 60% 13%
Dreamfolks Serices -4% 4%
LT Foods -3% 10%

*all holdings are less than 1.5 years

Anand Rathi

  • Wealth management is picking like crazy in India, as average per capita Income increases there will be more and more folks looking for wealth management services. Affluence Indian numbers have increased more than 20% YoY and is expected to grow at same rate
  • The company has delivered a compounded annual profit growth of 31% for the last 5 years.
  • Highly experienced and trustworthy management with 48% holding
  • Trading at PE of 77 which is the only thing I am worried about

Zomato

  • Zomato I feel is a turnaround story and with strong growth prospects. They have generated revenue growth of more than 70% for the last 5 years. I think they have the potential to grow at 30-40% CAGR for the next 3-5 years.
  • I do believe that the grocery delivery model will generate more revenue in 3 years than the food delivery business. I have a really close friend in Swiggy and the growth Swiggy and Zomato are going to deliver in the next 2-3 years will beat everyone’s expectations.
  • This is
    a bull run stock and I plan to hold it as long as the bull run continues. Although PE is quite high

NPST Ltd

  • Their core expertise is to build tech solutions for fintechs and banks. Every bank is designing a strategy to increase their digital penetration and they don’t have the tech to build it on their own. That is where NPST comes in.
  • Digital payments growth is on steroids and NPST is well placed to take advantage of that. Well-experienced promoters and holding around 68% of the company
  • Czary growth in last 2 years, they are growing at around 100% for the last 2 years so I am okay with a current PE of 114.

Angel One

  • The number of folks entering markets is on an upswing and again with an increase in per capita income this is expected to increase. There is a potential for good secular growth for next 2-5 years.
  • EPS has grown at around 65% CAGR for the last 5 years with a PE of 21. There is a scope for PE expansion as well. With EPS growth and PE expansion, this can deliver good results.
  • Company market share from 10% in 2022 to 15% at end of 2024

DP Abhushan

  • This is based on “buy what you see”. I am from MP and DP Jewellers is the most trusted Jewellery brand in the region.
  • It has 8 operational stores as of now and planning to open 2-3 stores every year and enter Gujrat and Chhattisgarh
  • Has one of the highest footfall conversation ratio and repeat rate in the Industry.
  • Delivered an EPS growth of over 40% for the last 5 years and management guidance is also good. Its PE of 45 is high for a Jewellery business but as long as there is a bull run high PE should not be an issue.

Dreamfolks Services

  • This is a bet on the increasing affluent class in India and the growth of the aviation sector. India has placed highest orders of planes for 2024 in the world.
    The company has a monopoly on the airport lounge business. It is also trying to enter railway lounge services which played well and can have a high growth potential.
  • EPS growth of more than 40% for the last 5 years and trading at a PE of 35. At this valuation looks a good buy

LT Foods

  • Trading at a PE of 12 which I feel is very low for a company growing at a rate of 25% every year.
  • Company I entering into the superfoods and ready-to-cook segment which can help the company grow.
  • The majority of revenue is coming from the Speciality Rice segment which is more of a crowded segment. So this is a concern

Would love your thoughts on the portfolio.

TIA!!

5 Likes

Nice Amoul ,Dreamfolks Services seems interesting to study… Could you provide more insight into it if you have gone through their concalls or annual reports?

I usually don’t listen to concalls, investor presentation provides most of the information I am looking for. Some of the highlights from investor presentation are:

  • Their revenue growth for 9M2023 is 49% but profit growth is 14.7 due to higher cost of services. I am still not sure why so
  • Company is investing in market expansion via entering into new segments (pathology, gits, luxury hotels etc) and new markets (Russia, Malaysia).
    Anything specific you are looking for?

I’m trying to understand Dreamfolks Services’ business model. From what I’ve gathered by reading their overview on Screener, it seems they primarily act as an aggregator between shops and lounges at airports…Right?

Their primary business is to tie up airport services and bundle them together in a package, and partner with banks to offer these bundled services to bank customers. They are coming with their own card-based loyalty program as well.
Motilal Oswal Initiated coverage recently you can read more about it here: https://ftp.motilaloswal.com/emailer/Research/DREAMFOL-20240227-MOSL-IC-PG032.pdf

1 Like

What made you choose AR over Nuvama?

I bought it when both AR over Nuvama were trading at a PE of around 30 and AR had a higher ROE and ROCE and also had a dividend yield.

AR grew to 4x in the last 1 year and looks overvalued now, I am thinking of switching to Nuvama.

1 Like

I have just one thing to ask you, brother: Do airport lounges pay a fixed annual charge to DFS, or do they pay per passenger?

Not sure about this. Tried googling but could not find anything on this.

I have also gone through their concalls and AR, and I also googled it but could not find anything. I am not sure, but it seems they aren’t giving them anything, as they haven’t mentioned their names in their client list.

Lounges dont pay anything to DFS. DFS collects gross amount per passenger from the credit card companies or anyone else sponsoring the passenger, retain a small amount and pay the rest to the lounge.

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Thanks, Subhadeep, but I feel that they are providing customers access to the lounge, so they have the right to charge an amount per pax or AMC for their services. Its quite surprising

Portfolio Update:

Sold my entire holding of Anand Rathi. (sold price: 3868, made a good 200% gains)

  • With the election results and the new govt I am not confident about how well wealth management will grow in the short term.
  • It was already trading at PE of 70+ and I was thinking about moving to some other place for a few days
  • This will still be on my radar, might buy again if things go well in future.

Sold my entire holding of Dreamfolks. (sold price: 451, made a loss of 15%)

  • Dreamfolks will grow if no of airports and lounges will grow and with the new government now sure how much infra push will be there
  • Railway lounges which I was counting on might not grow at the rate which was expected with full BJP govt.

Also thinking of increasing my allocation in Angle One and NPST.

  • Angle One is trading at PE of 20 which I feel is a good bargain given its growing at a pace of 30%+
  • NPST is showing more than 100% YoY growth, which is expected to continue. This is also a kind of govt policy agnostic stock.

My hypothesis is that whoever forms the new govt it will have to focus more on social uplifting and consumer stocks will do well in the near term as compared to defence/infra stocks.

I have doubled down on Angel One and NPST. This is how the new allocation looks like.

Stock Profit % Protfolio %
NTSP 27% 31%
DP Abhushan 98% 21%
Angel One 18% 16%
LT Foods 17% 16%
Zomato 160% 15%

I have some cash to deploy but I am confused about whether to add more positions now. I have Dr. Agarwal Eye Hospital, Bajaj Finance and CDSL on my list. At this point, Bajaj Finance and CDSL look like a safe bet as I believe markets will be volatile for the next few months.

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I have been trying to change my portfolio over the last month. Identified 3 new opportunities and increased the stake in some of the stocks bought before.

Here is the snapshot of the new allocation.

Stock Profit % Protfolio %
Zomato 82% 15%
NTSP 37% 21%
Angel One 9% 19%
DP Abhushan 95% 13%
LT Foods 29% 11%
TPCL Packaging 18% 5%
Creative Newtech 6% 4%
Bajaj Finance 0% 13%

New Additions:

  • TCPL Packaging and Creative Newtech are a part of the secondary portfolio (allocation <5%0 if they do good would invest more.

TCPL Packaging

  • Consistently growing at a CAGR of around 48% for the last 3 years, they have also increased their operating profit margin to around 17% from 14 in the last 3-4 years.
  • They have also successfully commissioned a new advanced offset printing line in Haridwar which should increase their top-line growth
  • Their client list is quite good and with the increase in consumer demand and per capita income the demand for packaged goods will increase. So looks like a good industry to be in.

Creating Newtech

  • The company’s profit is growing at a rate of more than 50% and is available at a PE of 21 which looks like a bargain.
  • Their sales were down 25% but margins were up 3X because of a change in product mix. Due to this stock has corrected from PE of 37 to around 22. Revenue should pick up again as they have partnered with Cyberpower in the brand licencing business which is a higher margin play. Also their Honeywell licencing partnership is growing well.

Bajaj Finance

  • This needs to introduction, Bajaj Finance has been through a consolidation cycle for more than 2 years and their PE is down to 30 which I felt is a great buy at this point.

Also increased my allocation in Zomato and Angel One. I had some cash, deployed more than 70% of it.

@singhi08 How do you identify new opportunities, do you have any pre-defined screens?

what do you think about LT FOOD’s future growth>? it seems like it is facing headwinds concerning over all growth >

There are a few pre-screens that I have, here are a few things I look for

  • EPS should be More than 20
  • Top-line growth should be more than 25% for the last 3 years
  • Promotor should have skin in the game (good percentage of holding and this should be the only holding they have)
  • PE ratio: High PE is okay as long as PE < 2-time profit growth
  • The company should have a market cap between 300Cr to 30000 Cr
  • There are other indicators like asset turnover, OPM, and PB ratio which vary from industry to industry

Once I have a basic prescreen then do a business model evaluation. I typically like stocks from the consumer, banking and IT sectors which are more secular.

LT Foods has grown at around 30% for the last 3 years which is good considering the nature of the business. Even if they grow at 25% stock should do well considering it is trading at a low PE. If there is PE expansion it will be icing on the cake.

3 Likes

Thanks for the insightful comment. I am interested in LTFOODs and want to add, what could be the best time to enter? it’s already in a negative trend now. should I wait till it touches 240 ?

@Sanjay_Khan I usually don’t look at technicals and it’s difficult to say if it will touch 240 or not. It would be best to look at businesses that can grow at 25%+ over the next couple of years, share price should mimic the business growth. If you buy 5% here and there it will not matter in the long term.

If you are looking for short term gains now sure how will this play out.

1 Like

Portfolio Update:

Stock Profit % Protfolio %
Zomato 102% 16%
NTSP 88% 26%
Angel One -10% 15%
DP Abhushan 104% 12%
LT Foods 39% 11%
TPCL Packaging 19% 4%
Bajaj Finance -5% 11%
Gravita India 1% 5%

Overall portfolio is up by 38%

Sold my entire holding of Creative Newtech. Due to some reason, I was unable to gain confidence in the growth of the business. I want to be confident that the companies I invest in can show continuous growth.

TPCL Packaging has been doing good, might add more after this quarter’s results.

Added Gravita India in my secondary portfolio (allocation <5%)

  • Good RoE of 335.5 and ROCE of around 27. The company has grown profit at a rate of more than 60% in the last three years.
  • Share of international revenue is increasing which should lead to an increase in PAT. Share of Value-added products is increasing and is expected to reach 50% by 2027 which should also increase the PAT margin.
  • Most importantly company is in the business which is expected to grow rapidly. Recycling is only going to increase in future. Also planning a capacity expansion to 1.8x of FY24 by 2027.
  • Promotor is very ambitious and is aiming to be in the top 5 recycling companies by 2026

Angel One

  • My hypothesis that Angel One will be able to offset revenue FnO revenue decline in some other ways is yet to be proven. I might be wrong on this one. Still holding tight, for now, will see the results for 1-2 quarters more before taking a call.