Biplab's Portfolio -Feedback needed

Dear All,

Very new to ValuePickr and have been observing the topics under discussion for few months.
I had first invested in the market way back in 2007, but was quite novice and went by recommendations of friends and TV channels - wont say have lost much, but felt that it was not the right way.
ValuePickr has given me some indications on how to pick stocks based on fundamentals and valuations.
This new portfolio was created about six months back.
I would sincerely need feedback on the same - mostly in cases where I have gone wrong.
My aim is to make 10-12% on a yearly basis (compounded) and the time scale is around 5 - 7 years.
I have the option of adding another 2-3 lakhs on the portfolio and hence I need help from the giants in the forum.
Looking forward to your earnest feedback.
My Portfolio.pdf (180.4 KB)

Sr# Stock PP % Allocation
1 ASTEC LIFE 541.88 5.1%
2 BANK OF BARODA 153.34 4.9%
3 CANFIN HOME 486.84 7.3%
4 CUMMINS INDIA 838.17 6.7%
5 EXIDE IND 210.39 5.2%
6 FORCE MOTORS 3447.28 7.5%
7 GRANULES INDIA 128.63 6.7%
8 GRASIM 1137.43 5.1%
9 GREAVES COTTON 124.79 5.6%
10 GUJARAT ALKALI 395.86 2.4%
11 ICICI BANK 291 2.2%
12 ITC 265 4.0%
13 ION EXCHANGE 459 3.4%
14 KAVERI SEEDS 518 6.4%
15 KWALITY LTD 85 1.7%
16 LUPIN 882 3.5%
17 S H KELKAR 263 3.4%
18 SML ISUZU 905.58 7.9%
19 STRIDES SASUN 783.7 6.6%
20 TATA ELXSI 844.2 2.5%
21 UPL 747.58 7.1%

I have tried to put forward the investment rational as much as I can.

  1. Bank of Baroda
    οƒ˜ Improvement in Margins
    οƒ˜ Loan Book Growth
    οƒ˜ Value Unlocking – BoB willing to exit from non-core business
    οƒ˜ Asset Quality to accelerate
    οƒ˜ NPA resolution program

  2. Cummins India
    οƒ˜ Operating leverage to kick in with better capacity utilization
    οƒ˜ Steller Export business, albeit marginal dip in recent quarters
    οƒ˜ Superior distribution and spares franchise, strong balance sheet and best-in-class return ratios.

  3. Force Motors
    οƒ˜ Luxury car market in India is on the rise
    οƒ˜ Sub-contracting revenues are up by almost three times
    οƒ˜ Strong R&D with Benz for EV
    οƒ˜ LCV segment growth is a key driver

  4. Granules India
    οƒ˜ Augmented capacity o fuel growth
    οƒ˜ Focus on formulations to boost growth
    οƒ˜ JV with Onmichem to boost revenues

  5. Gujarat Alkali
    οƒ˜ Increase in prices of Caustic soda since Aug 2016 could last for some more quarters benefitting GACL’s margins
    οƒ˜ In-house R&D, plant and technology up- gradation could help to improve capacity utilization going forward
    οƒ˜ GACL’s capex plans could help to expand its business going forward
    οƒ˜ With sound financials, company is on track to significantly improve return ratios

  6. Greaves Cotton
    οƒ˜ Sustainable growth
    οƒ˜ Diversifying into new sectors – like aftermarket & Farm Equipment business
    οƒ˜ Collaboration with Altigreen propulsion for Hybrid technology to rope in green vehicles
    οƒ˜ Strong Balance Sheet & excellent management

  7. ICICI Bank
    οƒ˜ Focus on retail book augers well
    οƒ˜ Healthy operating performance and sustained margin
    οƒ˜ Capital Ratios higher than regulatory requirements
    οƒ˜ Robust CASA ratios

  8. ITC
    οƒ˜ ITC’s market leadership in cigarettes (~70% market share) provides it with strong pricing power
    οƒ˜ Non-cigarette businesses, led by FMCG are now set to be significantly value accretive
    οƒ˜ Excellent ROCE & EBITA margins
    οƒ˜ Paper & Stationary business on the rise

  9. ION Exchange
    οƒ˜ Largest one stop water solution provider in Asia, ventured into consumer product business:
    οƒ˜ Strong R&D, diversified marquee client base
    οƒ˜ Global footprint, robust industrial outlooks

  10. Kaveri Seeeds
    οƒ˜ Cultivation of Cotton has increased in kharif 2017 supported by better monsoon and farmers’ shifting from pulses and soya bean to cotton,
    οƒ˜ Diverse Product portfolio addressing crop rotation & reducing dependence on traditional crops,
    οƒ˜ Aggressive focus on R& D helps product development and sustainability in farm practices,
    οƒ˜ Investment in Biotechnology is accelerating the breeding program of cotton and rice,
    οƒ˜ Focus on new products could help to garner revenue going forward.

  11. S H kelkar
    οƒ˜ India’s largest F&F Company with 12% market share
    οƒ˜ Strong R&D team and working closely with customers to develop new molecules
    οƒ˜ Overseas acquisition to enhance portfolio

  12. SML Isuzu
    οƒ˜ Economic growth will drive growth in CV segment
    οƒ˜ Steady Growth rate
    οƒ˜ Capacity Expansion to focus on export market
    οƒ˜ Good management team
    οƒ˜ New and better product launches.

  13. Strides Shasun
    οƒ˜ Steady top line growth through organic & inorganic expansion.
    οƒ˜ The restructuring of Australian & US business to pay dividends
    οƒ˜ Excellent Management team

  14. Tata Elxsi
    οƒ˜ Opportunity from rising global ER&D spend, high growth in the EPD segment (82% of rev) and strong offshore delivery model
    οƒ˜ Strong competencies in the niche automotive vertical (50% of revenue), supported by scalability and non-linearity from the β€˜Autonomai’ platform (driverless car software)
    οƒ˜ Strategic vendor to group co JLR (top client and 22% of rev), with an increasing share
    οƒ˜ Growth prospects in its marquee client base, including JLR, Mercedes, BMW, Ford, Nissan, Isuzu and Subaru in the automotive segment

  15. UPL
    οƒ˜ Dominant player in a high MOAT business sector
    οƒ˜ Superior and innovative product with wider demographic range
    οƒ˜ Excellent in-house R&D facility
    οƒ˜ Strong Financials

While I am not invested in any of the companies in your portfolio, I have a comment about the PSU in which you plan to stay invested for 5 - 7 years.

Do note that the way PSU banks are run, it is not to generate returns for shareholders. Because, the board or the management doesn’t have the right kind of incentive both to persevere the capital or to grow it. And the major shareholder, the GoI has not taken the initiative in spite of several suggestions.

Taking this into consideration, it is far safer to stay invested in any other company which you understand better than a PSU bank.

The only exception to the above is if you find significant undervaluation which you know will get corrected in a short to medium period. Once that happens you plan to offload and you don’t find any other risks to upset your assumptions. If you answer no to this, better sell this right now irrespective of whether you gained or lost your investment so far.

This is just a suggestion and leave the decision to you.

Good luck.

Thanks for the suggestion.

Dear All,

I have not received any feedback, except for one.
This would mean that my investing ideas are totally flawed or the reverse.
I need some feedback so that I can take corrective actions, if my philosophy is flawed.
Please help me out.

Need not be. It is just that people have not shown interest or they were busy with other things. Rather than worrying about what others perceive about you, study the companies you hold more and more and start to look at the competitors and see what they have to say. That should give you a picture.

At the same time, stick to companies for 3-5 years minimum. Because this is one common mistake several investors have because of their impatience.

Few more comments to add on some of the two other companies you hold.

ICICI Bank continues to have a higher NPA compared to all the leading private sector banks. For me from the beginning this bank never looked attractive as an investment vehicle. So I have not followed it, but occasionally I look at their results.

So instead of ICICI Bank & Bank of Baroda, you can invest in some of the well run private sector banks like HDFC Bank, Kotak Mahindra Bank, Indus Ind Bank. All three I have in my portfolio hence I am biased.

ITC I had invested earlier, but noticed that Deveshwar is presented as a semi-god, which I could not accept. Simply look at how much the company pays to him compared to the CEO. It went to the extent of filing a defamation suit at company’s expense rather than he pay for the suit. That is ridiculous. Filing suit against a proxy advisory shows its intolerance to the opposite views which will always exist.

As a company which wanted to diversify from its risky income from cigarettes it has created umpteen number of brands and entered wide range of sub-sectors in FMCG and burns the cash. Rather it could have incrementally scaled them with decent profit motive. That would have given it an option to scale down where it is not succeeding. Meanwhile it could have distributed the free flow of cash from cigarettes to the shareholders rather than enlarging the managements ego. I would have preferred it to be a focused company. The management continues to opt for diworsification as it has announced its entry into hospital sector. A well run company but badly focused. So I eliminated it from portfolio after staying invested in it for a decade. But I consider it as a giant which can teach a lesson or two to the multi-nationals. And also it is highly nationalistic company.

Other companies I do not have any opinions worth to share.

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Try to bring it out to 15. 21 could be too huge to track only Mutual fund mangers can do with so many companies. Take out those with least conviction and not performing as expected. Good that you have very realistic return expectations, You will definitely get more than that for the time horizon planned.

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