ValuePickr Forum

Dishant's Portfolio - Views Invited

I started my investment journey in July 2017 (my age was 24 then) during the peak of the small cap bull market. Almost all of the investments made during this phase were in low quality small and micro cap stocks which resulted in huge losses by the end of 2018 and i almost stopped looking at portfolio for almost an year. Started focusing on my investments again from January 2020 and made some gains before covid hit. This time I didn’t abandon my investments and started adding better researched stocks from May, 2020, things look much better now and I have recovered most of my losses from 2017 and I have sold almost all poor quality stocks in this bull market and invested in strong names.

Learning’s during this investment phase.

Before investing in the market invest in learning about the markets and stock analysis. I would have never made the investments I made in 2017 if had had read only a few good investment books.

Never invest on random advices from telegram channels, twitter or even from Moneycontrol/CNBC experts. Borrowed stock ideas and conviction never helps. When you invest in your own ideas you either gain immense satisfaction if you are right or you get a good learning experience, neither of that is possible when you copy someone else’s idea.

Investing should never be stressful even during the worst of the days. Stocks that give you the most stress are generally the lowest conviction or random bets.

Portfolio Design Strategy

For me the first and the most important thing is the company’s management, there is no compromise when it comes to the ethics management team

I generally go for companies that have a good balance sheet with manageable debt, a good product mix with the ability to innovate.

Companies with a track of delivering on their promises

Portfolio

S.No Stock Name Allocation% Comments
1 ITC 10% Leader in Cigarates. Growing FMCG. Growth + Dividend. It’s more of an FD with the possibility of principal appreciation. High conviction
2 Sequent Scientific 9% Leader in Animal API. Change in management playing out well. Strong execution and innovation skills with huge tailwinds. High conviction
3 IndiaBulls Real 8% Change in management yet to play out. Huge land and asset base lead by the Embassy group. High conviction
4 Jubilant Ingrev 7.8 Valuation mismatch due to demerger. 900cr capex. Ethical management with good execution skill. High conviction
5 Jubilant Pharm 6.8% Undervalued at current levels. Good growth expected going forward. High conviction
6 Polycab India 6.8% Huge potential to grow. Gaining market share. FMEG can be big contributor going forward. High conviction
7 IEX 6.5% Leader in power exchange. Huge tailwinds. Growing market share in a growing market. High conviction
8 CDSL 6.2% Leader in a duopoly market. Huge growth potential ahead. High conviction
9 Marksans 5% This one is a past mistake. Still holding due to the kind of results that they have been posting. Plans to get into API manufacturing for captive use. Low conviction
10 Godrej Agro 4.8% Huge tailwinds. Rise in palm oil prices to benefit. Improving margins of dairy business. Good product mix. Decent valuations. Medium conviction
11 Pioneer dist 4.7% Arbitrage opportunity. Management is trying hard to improve margins and reduce debt. IPL franchise. Market Leader. Can become a cash cow going forward. Medium conviction
12 Hikal 4.5% Cheap valuations. Trustworthy management. Industry tailwinds. Medium conviction
13 IndiaBulls Housing 4.4% Cheap valuations. Rumours of stake sale. Low conviction
14 Federal Bank 4.4% Cheap Valuations. Good top brass. Good asset quality. Medium conviction
15 RPSG Ventures 3% They have a few good brands like Too YUM, Souled store, McCaffine etc. Stake in FirstSource justify current valuations. Low conviction
16 Granules India 3% Decent management. Cheap valuations. Reduced position due lower than expected results. Medium conviction
17 RPG LifeSciences 2.8% Decent Valuations. Good Management. Improving product mix. High conviction
18 Sadbhav Eng 2% Past mistake. No conviction. Will exit if a sudden up move comes given the governments focus on highways

Other Investments

  • GoldBees – To diversify and add liquidity to my portfolio. Current allocation is about 1% and I am slowly adding to it.
  • Health Insurance- For when stock investing becomes too hectic, just kidding. It is a must have and should be considered as an essential investment
  • ELSS- Will move this money to stocks when they mature next year. No investing in ELSS schemes anymore.
  • PPF- One of the safest and the best debt instruments with 0 risks and much better than FD returns
  • NPS- Aggressive 75% equity allocation. It has so far given atleast at par if not better returns than ELSS schemes. Additional tax saving 80CCD(1B) so no harm in saving extra 50k per year of not much.

There are a lot of things that I still need to learn like proper portfolio allocation, technical analysis, fundaments analysis and controlling my emotions. So I request you all to provide your valuable insights and feedback to my portfolio picks and on how I can make my Investment journey better.
@Malkd @hitesh2710 @gurjota @Malai_Subramanian @ranvir @harsh.beria93 @sahil_vi @MihirDam
Thank you

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Most of your business are mid cap and small cap except ITC. Little bit aggressive allocation IMHO. You do have some really good business in your portfolio. Your portfolio is missing IT business. And the two platform business you own CDSL and IEX are good but needs continuous tracking due to the risk associated with it. Keep learning!

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Hey @d.investor … will be glad to offer some feedback.
Firstly as long as you have conviction nothing else matters. So don’t let me or anyone dissuade you regards your picks.
Secondly… try to cut your portfolio down to high conviction picks only. The reason I state that is if you plan on owning those businesses long term there will come a time when you’ll have to make a decision about buying more or selling when there’s a drastic 20+ percent crash in one of your names. High conviction picks would make you average down immediately since you would know you’ve got a deal on your hands… the low conviction picks will leave you second guessing yourself at those moments and will cause you to book a loss or exit early or not take advantage of a drop.
Personally I would cut my losses with sadbhav, rpsg,indiabulls housing, marksans and distribute that monet into your high conviction bets. Note that I know nothing about those companies… but if I had no or low conviction I wouldn’t be able to hold a company for long and would panic the moment the inevitable bear market returns.
You have some quality names like ITC, Jubilant, polycab, iex, granules in there that you could surely put more money in over those low conviction bets. You may suffer some short term loss but long term you’d be all the better.
The companies you have medium conviction in I’d advise you to revisit your thesis and study them thoroughly and either increase your conviction throught study or cut them loose too. There are so many options in the stock market… make sure you stick to high conviction bets and keep your money safe.
Also make sure your conviction isn’t directly proportional to the stock price… but rather to the actual company.
Good luck

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Hello Dishant,

You’ve built up a decent portfolio. It’s good in hindsight that you began your investing journey at the peak of the bull run, no amount of knowledge gained from books beats real experiences of losses. I will be able to comment on your portfolio based on your return expectations. Do you have a market cap limit? What level of risks are you will to sustain? Like @Malkd mentioned in the previous post, I believe in high conviction bets as well (usually a 10*10 portfolio, no rebalancing until valuations become unrealistic). I also like to take the pyramid portfolio approach pioneered by Li Lu but you can also adopt the other approach of going all in and seize the opportunity, usually adopted by ones who are very confident on their analysis (a la pabrai).

Regards,
Gaurav.

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You have a couple of scrips of Indiabulls Group and the management is not having good feedback from market of late…

thank you for your feedback sir, I have a mid cap heavy portfolio and some good small and micro caps too mostly with reputed promoters. I feel they offer good growth opportunities and can give disproportionate returns if that the managements walks the talk and delivers on their promises. I don’t have any IT businesses as I have no understanding of how to value them and how to look for companies with good growth opportunities, wanted to invest in Happiest mind but it went up too quickly. I would love to learn more about IT businesses and how to select a few to invest in.

@Malkd thank you for your feedback, I have been keenly following your portfolio for quite sometime and I am quite inspired your investing methodology. Apart from sadbhav most of the stocks are in positive or at a minor loss, although i will sell them out when I get a good entry in high conviction bets.
Medium and low convictions bets are the ones which I keep tracking frequently to check for any positive or negative signs. I am still trying to build an investing methodology and I might need another 5-10 years, there is so much more to learn and I am grateful for the insights people such as you share on valuepickr

@Gaurav_Sheregar starting out during the peak of small cap bull run forced me to look beyond stock prices and short term gains and that lesson has helped me in getting good returns from good company stocks that i would love to remain invested for long term. I don’t usually care about Mcap, but a good management is an absolute must for me. My high convictions stocks make more than 60% of my portfolio and I am willing to take short term risk if I believe in a companies long term story and I generally go all in on such stocks (Jubilant ingrevia being the latest one, where I was sure about the management’s ethics, industry tailwinds and the company itself )

thank you all again for your feedback, really looking forward to a great learning experience from your feedbacks.

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Portfolio update:
Sold- IndiaBulls Housing, it was a mistake buying on the rumor of a stake sale.Granules as it showed no/negative movement even when other pharma stocks were moving higher, further dampening my conviction. Sadbhav finally got rid of this and booked loss, its better to look forward rather than holding on to past mistakes.
Bought- Cadila Healthcare, the stock still looks undervalued given the Covid related tail winds and upcoming vaccine which its has completely developed on its own, end to end manufacturing will give complete control and good margins. Dharamsi Morarji, the company has under taken capacity expansion and will get into specialty chem, good management track record gives confidence. Ganesh Bezoplast initiated a tracking position, available at cheap valuations, Liquid storage terminal should perform well given the tailwinds in chemical industry and increasing exports.

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Portfolio update:
Sold- Godrej Agrovet, the results where below expectations and the stock prices have remain stagnant.The company might take a couple of quarters to report better numbers and ill better hold cash and watch while the results improves.

Portfolio update-
Sold- Marksans, I might have made a mistake of selling it a few weeks too early but even after good results I couldn’t build any conviction and the management concall was another reason to sell out
Bought- Neuland Labs, as the pharma API and CDMO tailwinds does not seem to be going away soon and this seemed like a good bet, although I have bought more quantity than I am comfortable with.

Sl No Company Allocation
1 Neuland Labs 13.81%
2 Hikal 12.50%
3 Jubilant Ingrevia 11.51%
4 Indiabulls RealEst 7.30%
5 Sequent Scientific 7.24%
6 ITC 6.92%
7 CDSL 6.49%
8 Polycab India 6.19%
9 Jubilant Pharmova 5.14%
10 IEX 4.86%
11 Cadila Health 4.43%
12 Pioneer Distilleries 4.16%
13 RPSG Ventures 3.84%
14 Federal Bank 3.43%
15 Dharamsi Morarji 2.19%

Neuland Labs- A very good thread was posted by @sahil_vi on twitter, here is a link for the same " https://twitter.com/sahil_vi/status/1403719236892061696 ". With the ramp up of Unit-3 and with commercialization of new molecules, operating leverage could take the margins much higher than what they are at present. Next 1-2 years would present us with a clear picture of this companies future.

Hikal- A company form the Kalyani group, a gold standard management. The company has human, animal and crop API business, and has recently started a new plant and has won a 10 Year contract for its Animal API business. Management has guided for a 15-20% revenue growth and a 50-100 bps margin expansion, All three divisions will be performing well and the recent concall gives an idea of all the positive developments. With the kind of focus the management has been showing lately who knows where the company might be in 3-5 years.

Jubilant Ingrevia- This group has created massive wealth for its shareholders in the past and hopefully it will keep doing the same in the future. A lot of compliance related issues were raised on VP but I think the company has just demerged we should gives this company at least a few years and it will definitely resolve these issues. The recent Monarch report captures every thing about this company, a multibagger in the making.

Indibulls Real- I don’t like the Indiabulls group or the real estate businesses but I have been following the Embassy group and its REIT and Mr. Virwani is exactly the kind of promoter that I would be comfortable investing with. Indiabulls will be renamed as Embassy Developments after its merger with Embassy and will also be backed by the likes of the Blackstone group. The company will become a 10000+ Cr MCAp company and will have synergy benefits with the listed REIT. Hemisphere has a land bank of 750 acres valued at 10000-15000 crs and while the merged entity will have 3350 acres land bank, its not wise to value them based on their land banks but this sure gives us the massive potential Embassy will have on their hands. Will keep a close eye on the merger updates to further evaluate the company.

Sequent Scientific- The only listed pure play Animal Pharma API company operating in regulated markets, a lot of future triggers are lined up with its entry into the US market. Waiting for Q4 results and the annual report, I am planning to hold this one for a long time.

ITC- I treat ITC as a FD with a 5% yield and I don’t care even if the share prices stay near 200 levels for the next 5 years.

CDSL- A bet on the growing stock market adaptation in India, this is a cash generating machine with very little reinvestment needed and a pandemic proof business. Here is a very insightful thread on CDSL " https://twitter.com/MJKinvestments/status/1372820381279481857 ".

Polycab- This is one of the safest bets in my portfolio and it might not be a multi-bagger like the API’s or the chemical companies but it will definitely be a 25%+ CAGR compounder. The management has recently guided for the doubling of revenues by FY2026 and they are aggressively expanding their distributor reach for FMEG products which will lead to margin expansion. Here is a peer comparison from Moneycontrol-

Polycab Havells Crompton
Revenue 8927 10457 4750
Profits 882 1044 605
Mcap 25000 65525 25167
FY 21 p/e 28x 63x 42x

Jubilant Pharmova- Top notch management and has a lot of future potential. Generics is facing margin pressure and Radiopharmacy have been disrupted to Covid but will be back to normal soon, CMO and CRDS have have strong order visibility and are expected to perform well along with the API business. The main thing to watch out for would be the commercialisation of some of its proprietary drugs which could propel it to a whole new league.

IEX- The company is a monopoly for the time being at least, the volumes on the exchange are rising continuously and starting of cross border trade is another positive. Here is a very good thread on IEX " https://twitter.com/MJKinvestments/status/1374651124213420033"

Cadila Health- This one is a short term play on Covid medicines and vaccine, will probably move out of this one soon.

Pioneer Dist.- Will get merge into United Spirits, Diageo has done a lot work clearing the mess of the past management and the company will become debt free this year. The company is bringing in a new CEO and selling out low margins brands to focus on premium products, along with margin improvements the next 5-10 years will see a lot of growth in this company. The company also owns the RCB team.

RPSG Ventures- A value bet with a huge margin of safety, apart from its stake in Firstsource it also has a few popular and growing D2C brands like Too Yum, McCaffine, Vedix etc. It’s like being a part of a Venture fund with very High risk return possibilities. Will evaluate further after reading this years annual report.

Federal Bank- The stock still hasn’t crossed its 2017 highs despite the bull market we are in and I have come to realise that its best to invest in the sector leader like HDFC and Kotak. Will move out of this one after a couple of months.

Dharamsi Morarji- The company has a 100+ years history and is undergoing a decent capex that will strengthen its speciality chemicals division. The management seems to be going in the right direction and looks determined to take this company to new heights. Expansion will double the revenues and speciality chemicals will improve the margins, next 1-2 years will be huge for this company.

Watchlist- Supreme Industries, Jubilant Foodworks, Biocon, Zydus Wellness, Network18, EPL, and JCHAC

Disclaimer- These are personal views and I am just a beginner still learning. Also please provide me with your valuable feedbacks.

Edit- Bought R System International today with about 2.85% allocation, 40% revenues comes from digital, has presence in IoT, AI, cloud, analytics and mobility. Revenues and cash flows have been increasing and they have increased their workforce last year and the management has guided for margin expansion and strong revenue growth.

Started SIP in Nippon India US equity opportunities fund with the aim to get around 5-10% exposure to US equity. After a lot of searching I found this fund to be the most appropriate for my purpose.

Other Investments-

Mutual Funds- Consists of 2 ELSS funds which will have a lockin till 2022, will exist them when the time comes. Allocation equivalent to 15% of Equity portfolio.

NPS- I have been putting small amounts in NPS (75% equity + 25% debt) since the past 4 years and it has given me a better return than ELSS funds that to with a negligible expense ratio. I have decided to put more money into NPS instead of mutual funds while also getting the tax advantages of section 80 C. I also believe that the government will make a lot of positive changes in the NPS rules to make it more accessible and attractive for voluntary contributors. Allocation equivalent to 15% of Equity portfolio.

PPF- Much better than debt mutual funds along with EEE tax status. I have been putting money in ppf for 4 years now and I am eligible to get a loan against it till the 6th year and for partial withdrawal from 7th onwards. With my portfolio size this takes care of my debt allocation for the time being. Allocation equivalent to 15% of Equity portfolio.

Plan for the rest of the year is to deposit money just into NPS and PPF while continuing SIP into Nippon’s US fund while also trying to build cash balance.

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Any updates on Hemisphere properties , you mentioned in above , When is the monetization is going to happen , and what will be the current value?

I am not tracking Hemisphere and I only mentioned the perceived value of the their land to support my argument on Indiabulls. Hemisphere has no revenue and to evaluate any company on the basis of their assets is pure speculation, we don’t know the quality of the land that they have and its not easy to monetise land specially in India. Sobha and Indiabulls are the only companies that I track in this area, both have huge land parcels available with them and are a much safer bet to play the real estate theme imo.

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