Knowingly/unknowingly, I have built a portfolio based on ancillaries/ proxies. I hold the following:
Motilal Oswal Fin Services (proxy to Indian stock market as a whole) - Been holding for more than 1.5 years; primary motive to invest was the fact that they use operating earnings to invest in treasury book. While this can make it volatile as seen in most recent quarterly result, the upside is great too
SJS Enterprises (proxy to auto sector) - Invested recently around 1.5 months back. No other listed peer offers that many SKUs catering to 2W, PV, CV and consumer durables segment. 3-yr sales and profit growth > 25%, 3-yr ROE @ 18%. Long-term debt is nil; net profit 3-yr CAGR around 29%, 3-yr CAGR of CFO around 38%. Have made accretive EPS acquisitions in the past such as Walter Pack
SBFC Fin (essentially proxy to economy as a whole, being a secured lender NBFC) - Main reason here is largely a promoter bet. Aseem Dhru seems to know what he’s doing. Mgmt has been guiding 5-7% QoQ growth since last 8 quarters and has delivered too. Targeting ROE 15% this FY. Almost entire loan book is secured w/ properly or loan against gold. No exposure to microfinance sector. 5-30 lakh segment is their tgt market. Also holding for more than 1.5 yrs
LOOKING TO ADD NEXT:
TCPL Packaging (proxy to consumer segment) - It manufactures paperboard-based packaging materials and flexible packaging products. Customer base includes largest of consumer facing brands. Reason to invest is due to consumer slowdown – once it picks up TCPL should be beneficiary. Relatively small market cap of less than 4000 crores. Annual sales are already inching closer to 2000 crores
Action Construction Ltd (proxy to construction industry) - Largest mkt share in tower cranes. Slightly higher PE than I would like, but one can say its justified by the growth they’re doing. Fundamentally looks very strong, no debt. India is 3rd largest construction equipment in the world
Please critique this portfolio, also other proxy recommendations or any other comments will be great !