I want to invite your comments on the below portfolio. Tata Elxsi , JB Chem are recent additions (1-2 weeks).
HDFC Mid cap Mutual Fund
I am planning to sell the MF and also allocate 20% additional cash to the above portfolio, ideally not much more into pharma (for diversification). Also I think Avanti needs to be decreased and Repro needs a kick.
Already in consideration are Pi Industries, Vaibhav Global, Mindtree, Elclerx, Hinduja Global, Shilpa, Poly Med, Tree House, VST tillers, RS Software, PC Jewellers, Shakti Pumps. May be also Astral, Mayur, Atul, Amararaja on declines.
Suggestions invited on the above portfolio/ additions. I most probably would not venture into financial sector or Real Estate.
Repro- I have been invested for over an year, and this has been laggard. Always had good conviction on this one, but it could’nt yield results. I might sell out one or other day mainly due to frustration.
)- Consistent dividend, High yield ~6%
)- Exposure to Africa, which according to me should keep growing irrespective of what happens in other markets
)- No major Capex requirements till the sales reach to about 600 crores ( which is 60% above FY 13 sales), operational leverage
)- Currency depreciation should start reflecting to the earnings very soon, scope for margin expansion
)- Trading at 4-4.5 PE mainly because it has not been able to grow in recent year.
Overall I believe, the physical books are here to stay despite digital revolution. The slight un-attractiveness of the business gets compensated on itself as no major player is likely to enter into book printing.
Paushak- Alembic group company into phosgene chemical business. Now, the The profits have been increasing at tremendous pace only due to selling value added products and relevant margin expansion due to some export dependency. As far as I understand, there is an element of monopoly (in India) as well as demand supply gap. This needs a further dig. Company has applied for capacity expansion, which has been pending at various stages for last 2 years. Once done, it will trigger growth for years to come. In any case the downsides are very limited as its trading at ~ 4 PE.
Hi Gaurav.I have been tracking & am invested in Paushak from last 2-3 months(included in my ‘Valuepickr PF contest’ as well) Its a micro cap & if I had more money,I would have liked to take a good concentrated bet here.You correctly pointed out that Paushak is moving up the value chain,their margins are on an uptick & they are a specialty chemical player.I think they recently got a clearance for opening a Phosgene plant,which triggered the rally.The time I had bought,the stock offered a very good dividend yield too,plus promoter holding is high & no debt or pledging issues exist.Return ratios are looking up.However,the stock is in PCA & has run-up 130% over the past month or two.So,upsides might be capped in the short term,liquidity too,is a problem.Results on 29th Jan.Though you never know,and certainly,the stock will be cheaper after Q3(higher EPS)
Disc.: Invested.Views maybe biased
Sagar: I sold off my Paushak holding after 3.5 timesappreciation. I think the stock could be bit cheaper after Q3 result, because of decrease in EPS compared to Q2 due to absence in other income component.
Rajarshi: Granules had increased the capacities about 9 months back, and last two quarters show the increased utilizations. Both Sales and Margins are increasing and should continue to do so for next few quarters atleast. Management has also indicated the same and projected 30% sales growth over last year. Going by Q2 results, I expect about 35% sales growth in second half with atleast 7.5% net margins (just due to increased utlilizationeven assuming constant EBITDA margin). This translates to EPS of 17.5 (standalone) for Oct-Mar. Based on the estimate and at 219, its currently trading at 6.6 PE multiple for FY 14. I think it has enough growth triggers (Actus Pharma aquisition, Tieup with Ajinomoto Omnichem) to sustain growth and demand better multiples. Invite your comments on the same.
I was invested in Granules earlier and was put off by continuous pledging by promoter which seemed to be a impending black swan. All I would say is you have taken a punt as your allocation is quite high.Please adhere to strict stop losses in case the results are lackluster or poor.Ideal SL should be at 205.
Hi Rajarshi, really appreciate your views. I am quite bullish on Granules, but also realize that my current expsoure is a bold bet, possibly due to recent gains in most stocks. As you recommended, I will keep a stop loss on the result day to protect the gains. Many thanks.
But my skeptism isnt on pledging part , as promoters have actually increased the stake from 43 % to 48%. The result expectations are however too high and there are reasonable chances that they fail to deliver, and hence stop loss makes lot of sense.
Sagar, can you please let me know what makes you believe that Paushak has got clearance for the new plant, I could not find it anywhere in the web. I have sold off on it, but would not mind buying even at higher price if the clearance has really been obtained. I will shoot an email to investor relations anyway, lets see if they reply.
Feb was amazing for me. Could buy Tata Elxsi, Avanti in significant quantity. Those along with most others performed very well. Shifted lot of Kaveri to Ajanta as I am hoping for rally before Q4 results. Have reduced Tata elxsi and shifted most to Can fin today.
I have about 10% cash. Want to deploy sometime in March but getting a bit uncomfortable with exposure to Pharma (else Shilpa is easy choise). Would choose either of ENIL, Tree house, Symphony, VST or Hinduja Global. Any suggestions?
While most of the midcaps have rallied a lot in last month, Can fin is surprisingly stable. I think fundamentals are well discussed, I was just waiting to take a position (form 2 weeks) as I soon as I see first signs of upmove. Moreover Tata Elxsi was getting too hot to maintain. Could buy Can fin at average price of 181, hope it pays off.
Its basically an undervaluation play according to me.Repco and Can finhave comparable sales as of now, and can grow at comparable rates, although Repco has better margins. Canfin’s market cap should be in the range40-50% of Repco as its a PSU i.e. about 800-1000 crores.
Focussing on 20-25 odd stocks, most of the well discussed in Valuepickr is allowing me to apply some sense of timing. Its working well as everything is moving in one direction or is at worst stable. But generally, i do not intend to shuffle it too much, all of them are intended to bemedium term/ long term holdings.
Top 5 comprise about 70% and i feel all of them are deeply undervaluedas well as growing( Kaveri is around fair zone). Ifthere’s no negative stock specific development, I will hold on to all of them even if the market turns around/ volatility increases.
JB chem and Shilpa are also undevalued but I am not getting guts to increase exposure to Pharma. So they will probably remain there.
Acrysil - bullish in medium term, a bit high on exposure given that its a micro cap.
Poly/ PI/ Alembic/ Tata Elxsi- Valuepickr favorites and Great fundamentals, but will have to work too hard to give more then 20% returns in 8-9 months.
Thanks Vivek.I think we share our bullishness in Avanti and Shilpa.
Some further changes after last post- i sold offPoly Medand Tata Elxsi and reduced Kaveri. Have invested all the proceeds to Shilpa. Some of the cash that I have would probably get invested to Can Fin. Lets wait for result season.
Expecting great to goodresults from Granules, Avanti, Ajanta, CanFin atleast. Cant say the same about Shilpa in short term but stock should do well.
Have some cash and looking to deploy. Request some seniors to suggest good stocks in Domestic sectors that could be purchased at current price. My list includes VST Tillers, Dhanuka, Heritage Foods, Tree House, Atul Auto, Aditya Birla Chem, Can Fin, Cera. Please suggest some more good companies to track & buy now or on 10-15 % correction.