ValuePickr Forum

Amrita's portfolio

1.Caplin point laboratories (great sales growth,good valuations,increasing debtors day a concern)
2.Lincoln pharma (Was a good company 3 years back.Now sales growth have slowed down.However it has great operating margins with cheap valuations,FCF good)
3.HCL technology (good sales and profit growth)
4.Sonata software (Good fundamentals with decent valuations)
5.Kei Industries (Good fundamentals but affected by the coronavirus pandemic, volatile stock
6.Polycab(same as above)
7.Alembic pharma (Excellent sales and profit growth at decent valuations.Lack of FCF a concern.)
8.Chamanlal sethia(Undervalued growth stock)
9.Vinati organics( Good stock but priced at a premium)

2 Likes

Hi,

Just a suggestion, it’ll help if u can provide the %wise portfolio allocation details as well.
Also, the rationale mentioned for some cos. is too brief and not quite shows wat tilts your conviction towards the stock… case in point : - HCL tech u mentioned - good sales and profit growth - thr are lots of other cos. reporting good sales and profit growth so why only HCL and not them…

1 Like

I generally give emphasis on the quantitative aspect of stock selection and do not deal with qualitative aspect of a stock.I have read The little book that makes you rich.It is so that the book emphasis the quantitative aspect.My stock picking criteria is based on the above parameter.

1 Like

Okay. If u r goin quantitative route, then the only suggestion frm my side is diversify more. Things are cheap comparatively and quantitatively only because there’s some reason\issue that the company faces of going wrong. So, quantitative investors should generally have more diversification say arnd 15-25 stocks.

1 Like

You haven’t mentioned your background and experience so providing general thoughts that comes to my mind when looking at these names.

Chamanlal sethia - Commodity business so mind the cyclical nature of the business during allocation if you are planning to hold for long time.

Caplin point - There are concerns around the credibility of book which you must be aware of. As pharma is rallying, you need to be more cautious as once the rally ends, stocks with potential red flags have more chance to fall.

3 Likes

It’s very hard to offer comments as no average price & weightage. But I m also invested in caplin lab. There is exposure to auto, banking, financial services stocks in your portfolio so better reduce pharma weightage.

I understand that a portfolio must be diversified across sectors.For me it becomes practically impossible to continue to have specialised knowledge in banks,pharma,IT etc.So I depend on quantitative aspects.

Good Portfolio.

But No financial stocks ( banks, nbfc, insurance)
Any specific reason

All mutual funds have emphasis on the financial sector

Yes . As India is a growing economy, financial sector will grow with it .

Quality financial stocks will perform well

The portfolio has heavy weightage to Pharma and IT. Polycab and HCL are excellent companies and have been on my watchlist for sometime.

I agree that a lot of MFs are heavily skewed towards financial sector, however their preference is usually for the well known names like HDFC, ICICI, Axis, Kotak, Bajaj Finance etc. There are a lot of smaller players which are slowly and steadily making their mark, am tracking Federal Bank, Bank of Maharashtra and IIFL Securities.

Rest of the portfolio looks good with the exception of Caplin, which I chose to avoid given the reasons mentioned earlier in the thread.

Check balmer Laurie too since you prefer growth stock

Adding chemcon,saksoft, infobeans tech as undervalued growth stocks

An update of my one year old portfolio

1.Berger paints-I bought at 528 CMP 809.It gave a return of 58% compared to 51% of the sensex and 115% of bse basic material.Asian paints returned 78%.
2.Vinati organics-Bought at 860 CMP. 1856.A return of 88% compared to bse midcap 69%.Bse basic material 113%.Its peers Aarati industries performed better while alkyl amines alkyl amines and Deepak nitrite outperformed by huge margin.
3.Deepak nitrite -It gave 250% return.
4.Lincoln pharma Bought at 161 CMP 316.Bse healthcare gave 52% vs 84% of Lincoln pharma.Bse small cap gave 98%g
5.Sonata software-Buy at 317 CMP 712 Bse It 98% vs sonata 214% return.Bse small cap 98%.
6.Polycab India- Bse infra and midcap both gave 70% return.polycab gave 150% return
7.Kei industries gave 103% returns.
8.Jk paper.it gave 96.5% return compared to bse smallcap 98% return.Bse fmgc gave 20% return…The stock outperformed it’s peers by large margin.
9.Alembic pharma-CMP 981.Invested at 975.
10HCL bought at 712 CMP 989.

Will gave more updates later.Please share your thoughts

1 Like

A theoritical portfolio of RS 25000 will be valued as follows
Sensex next 50- 39400
Sensex-36847
Portfolio-47203

1 Like

Too many cyclicals for my liking. As long as you understand them and know when to exit shouldn’t be a problem.

Which stocks are cyclic?

I personally don’t think it makes much sense to do BAAP for quality companies (predictable reliable concentrated cash flows protected by some durable competitive advantages). I’d be surprised if Berger paints like companies give return higher than index in next 5-10 year horizon. Specially as the premium on these quality companies comes down due to rise of newer equally concentrated higher durable competitive advantage cash flows from pharma and chemical industries. Would suggest watching Jeevan Patwa sirs videos as well he provides some views too.

Like most chemical companies. Vinati is a story of commoditized to specialty chemicals. At 70 p/e and 20 p/s one has to evaluate how much sense it makes as an investment for incremental capital. In my personal case since I need to deploy incremental capital every month I can’t hold such cos because the incremental capital would be deployed at Very high valuations and not enough margin of safety. In a general investors case if buying price was significantly lower than cmp, or if one dowsnt have incremental capital deployment requirements then might make sense.

I used to own Lincoln. Sold off for 2 reasons : couldn’t find any durable competitive advantages in the business, seemed commoditized. Second, promoters were promising very high growth in short term and unable to deliver. I always prefer promoters who underpromise and over deliver.

Did not own due to low growth rates. Had evaluated some months ago.

Good company. The only reason I don’t own it is because I didn’t study it when it was available cheaply. Now it is not cheap imo.

Good company. My only point would be that building a fmeg brand is challenging with strong incumbents. We need to evaluate biz from pov of probability of success in building a brand for fmeg which has pricing power (last time I had evaluated they relied on discounts to drive market share gains).

When you own polycab, why own kei? I think polycab is the better value migration play.

Cyclical and low value add. Thus have not studied it.

Good company imo but can test investors patience. Investors should read all investor presentation and listen to all concalls to get better idea of the short term pains as well as long term plans.

2 Likes

Paper is commodity/cyclical. Chemical is structural or cyclical depending on who you ask.

2 Likes

Berger paints.It still has strong fundamentals and strong balance sheet.Two quarters are lost due to covid.Last two quarters have been good.Last one year the pe has not changed much.Maybe a good buying opportunity.