Small update on portfolio before going into earning season
I have halved my invested amount in Hang seng bees & added some in other positions and around majority retained in cash for further deployment.
After earnings and concall current positions might sell or add into based on my expectations regarding certain metrics or triggers.
To summarize i have simple process of taking long term gains and short term capital losses as I believe in cutting them soon.
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MATRIMONY.pdf (481.1 KB)
Recently presented idea on VP Mumbai meet. Hope it adds value or is worthy to go through.
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| Instrument | % | Avg. cost |
|---|---|---|
| APTUS | 1.41% | 305.75 |
| AWHCL | 3.23% | 303.35 |
| BIRET | 5.35% | 257.1 |
| CARERATING | 1.29% | 559.71 |
| DHARMAJ | 0.85% | 263.97 |
| FLAIR | 1.61% | 204.91 |
| HDFCBANK | 2.06% | 1485.92 |
| HNGSNGBEES | 4.54% | 280.7 |
| INDIAMART | 8.94% | 2148.76 |
| KKCL | 1.05% | 455.56 |
| KOTAKBANK | 5.20% | 1607.31 |
| KSCL | 9.31% | 838.5 |
| LAOPALA | 2.37% | 205.26 |
| LINC | 2.06% | 103.82 |
| MAHSCOOTER | 4.44% | 9610.5 |
| MANORG-BE | 1.35% | 585 |
| MATRIMONY | 11.75% | 507.9 |
| MUFTI | 4.60% | 142.17 |
| NATHBIOGEN | 4.68% | 183.9 |
| ORIENTBELL | 1.16% | 251.44 |
| SGFIN | 2.37% | 341.57 |
| SGMART | 2.45% | 331.07 |
| VAIBHAVGBL | 11.04% | 223.07 |
| VSTIND | 4.40% | 271.82 |
| Cash | Balance |
I was lucky to have allocated to mosted of them before the rally wont know if i would probably going to future.
Views on the new allocations:
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Aptus- Small tracking position in HFC space where it is dominant in geograhpy and niche it operates, best in class return as well as asset ratios. Further stock has delivered fundamentally but not performed price wise. May allocate further once conviction gets built in.
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Dharmaj- Agro cycle is turning up for good, prices maybe at bottom and company went through huge capex which is yet to get utilized making it pure operating leverage and capital cycle play. Still figuring the value chain out its just starting position may dump or allocate further.
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Dreamfolks- Business is dominant in niche it operates i.e. airport lounge access service, however it is going through sectoral headwind plus there maybe no pricing power but it is being addressed from diversification of services, bringing in new employees (capex for digital company), new clients apart from banks, and also trying to crack the international markets as well. It is also starter position and may build further or selloff based on evolution of thesis.
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MANORG- have to see how the bhimseni new capex and B2C foray pans out depending on which scaling of position will take place or it will be sold off.
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NATH BIO GENE- Net net ben graham style bet in the hybrid seed segment where i expect the segment to have good year due to good seeds production, better rains and better mix of products i.e. more high margin products as compared to only cotton where prices are controlled by government.
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Orient bell- Tiles are going through consolidation whereby many weak hands are getting folded, exports have good chance to revive putting ease to the pricing pressure and dumping by the morbi guys & company has clean balance sheet along with most of capex done to achieve turnover of around 1000 crores so operating leverage can kick in too. Still need to see how and when exports pickup and pricing pressure eases.
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Exited Dreamfolks due to structural issues which I ignored as it was fixable but now also services remains poor and with customers like ICICI, Axis and Mastercard potentially moving away seemingly cheap valuation will appear cheaper but poor business performance if these issues remain structural will make the business expensive to own over period of time. Exited amount is retained in cash to deploy wherever and whenever opportunities arise.
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I had a similar thesis with Dreamfolks. Looks like a very interesting company when you look at it for the first time, but there are too many issues going on. I feel, in simple terms, the main one is a lack of MOAT. The company needs some structural changes.
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This was pretty good contra bet. Even though previous metals were in the rally, hesitation is always there. But this investment was spot on, how much heng seng bees you hold now
Actually i have sold all of it. My view point on exit was 1- Uncertainty in tariffs, 2- (Main one) Spends on capex by digital companies and other are increasing, 3) (Also one of main reason) Xi is talking about consolidation and overcapacity, we donât know which company he will be after my bet is he will be against big companies and try to break them or ask them to reduce capacity due to communist blood they donât like corporations especially big ones. I maybe wrong but letâs see also u I am keeping powder dry as India has returned to fair value and underperformed for last year and can be contra bet if it becomes cheap from here onwards.
I donât know if it makes sense but this was my thesis for exit. I maybe wrong so do your due diligence.
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Here is my updated portfolio as of now, some of average prices have changed due to buying and selling during the quarter along with i have shifted some weight around portfolio to make some cash available. Below i will try to summarise my thoughts for exits and new additions.
| Instrument | Avg. cost | Allocation |
|---|---|---|
| AWHCL | 391.84 | 6.8% |
| BIRET | 257.1 | 5.0% |
| CARERATING | 559.71 | 1.2% |
| DOLLAR | 370.25 | 1.0% |
| FAZE3Q | 490.68 | 0.5% |
| FLAIR | 204.91 | 1.5% |
| FRATELLI | 119.37 | 1.5% |
| INDIAMART | 2155.47 | 8.5% |
| KSCL | 1056.13 | 9.0% |
| LAOPALA | 205.26 | 2.0% |
| LINC | 103.82 | 2.0% |
| LIQUIDCASE | 110.93 | 21.0% |
| MAHSCOOTER | 9610.5 | 4.0% |
| MANORG | 510.12 | 1.0% |
| MATRIMONY | 506.31 | 9.0% |
| NATHBIOGEN | 170.2 | 3.5% |
| ORIENTBELL | 279.75 | 1.0% |
| SGFIN | 356.31 | 1.5% |
| VAIBHAVGBL | 224.29 | 10.0% |
| VSTIND | 272.53 | 10.0% |
You have a very high holding in matrimony. Any reasons for the same , considering the current state of dismal results .
For exits-
-
Aptus- a) Concern regarding the customers and portfolio mix of loan.
b) Prisitine credit cycle might be behind us and now the baton of delinquencies might be passing from Micro credit sector towards MSME Sector as alluded by many management commentary of prominent banks and NBFCâs.
c) Further the sector everyone is enjoying fruits of lowest NPA from where things can go to only one place i.e., downhill now the timing of it remains uncertain but better to be prepared rather than being sorry. (I might be wrong as i tend to exit early and be extremely cautious) -
Dharmaj- Couldnât understand the sector and company well now better being it limited to only watchlist.
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HDFC & Kotak Bank- a) Easy money might be behind us as data suggests the PSU Banks are getting competitive in lending and every other segments where it was not present.
b) Difficult in garnering deposits and slowing credit growth might not lead to huge re-rating in multiples.
c) Potential de-rating of valuations if PSU starts aggressive in growth in short term creating pressure for bank and may provide entry in future.
d) Pristine asset quality in whole sector can lead to fragmentation of market share. -
Hangseng bees- a) I have concerns regarding the new policies of Xi to reduce the capacities to correct over supply and how that will be implemented along with rising valuation in tech stocks along with higher spends towards discretionary R&D and capex can lead to poor future returns.
b) Uncertainty regarding tarriffs and global supply chain is being re-wired making it hard to model for future.
c) Returning towards maybe fair valuations at around 13 times which is fair for index dominated by PSU Bank and Utilities along with commodity companies. -
KKCL & MUFTI- a) Too much of fragmentation and entry of new entrants (startups scaling with no concerns of profitability).
b) Value fashion is eating the market share of mid-premium or premium guys leading to higher discounting in segment. (Competition is increasing in value segment as well would make even worse for these companies)
c) I overestimated the value of brand moat and under estimated the costs of refurbishment, closures and openings required along with spends for brand saliency. -
SG Mart- a) Increase in competition with JSW One, Inframart, Birla Pivot, etc leading to fragmentation.
b) Too early and ever evolving business models with service centers unit economics will be known down the line along with its solar structure business as well as management ability to execute and innovate like APL Apollo.
c) Still looks interesting and maybe biased to enter in near future if valuations permits to.
For new entrants-
Dollar- a) Project lakshya seems interesting and may lead to better cashflows growth as compared to PAT growth.
b) Consolidation of several privately held entities with listed entity by promoters along with brand ownership shows good signs of governance.
c) Just a tracking position may exit or add depending on future performance of business as well as share price.
Fazethree- a) Capex completing in FY27 leading to better utilisations and operating leverage going forward.
b) Near term tarriffs impact may lead to further de-rating and opportunity to enter at lower valuations.
c) Disruptions in other home textile exporting countries can be tailwind along with end customers now actively seeking to diversifying suppliers exploring new geographies.
Feel the same and have reduced weight from 11.75% to currently 9%.
Will reduce more after coming quarters results if billings doesnât grow and it keep on throwing away cash on new ventures.
If billings grow might hold steady but i am not willing to allocate more unless growth momentum returns for good and sustains for more than year.
But I actually feel there is a silver lining somewhere. The only tough part is to hold on and not let any opportunity costs effect.
I feel the expenses with regard to marketing and employee expense have peaked (the largest expense) , they would rise very minimal compared to revenue growth from now on.
Letâs say that they close this year close to 500 crore revenue and in the next 3-4 years they can hit 700 + crores , it would be enough to send this stock into an upward spiral. Operating leverage from 500 crores above I think will be immense.
I think they have enough levers to achieve this kind of revenue growth , i feel the core business of matrimony only can achieve this.
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