Gaurav's Portfolio- Growth + Value advantage

What are the triggers in Granules & Acrysil ?

Why havent you looked at Astral,Mayur & Repco? If carlyle selling in repco is done can it shoot upwards? Destimoney is expected to get multibagger returns when it sells its 49% stake in PNBHFL.

Cud it lead to rerating of the entire sector?

Granules

The company is bulk drug manufacturer of 5-6 products and focuses primarily on manufacturing. With increased capacity from Q1FY14, the company has been able to scale up production significantly. The operating leverage is playing out quite well. The good thing is that management is able to walk the talk. An article from Apr13-

http://www.moneycontrol.com/news/resultsboardroom/granules-india-expects-30-growthfy14_859950.html

It has aquired Actus pharma which is a loss making company but management expects turn around and good business from the company within a year. Some management communications worth reading -

http://www.pharmabiz.com/NewsDetails.aspx?aid=80648&sid=1

http://www.mydigitalfc.com/news/granules-india-seeks-tap-30-cent-growth-598

http://articles.economictimes.indiatimes.com/2014-03-07/news/48005321_1_granules-india-capacity-utilisation-finished-dosages

There isnt much information about the expected loss due to Actus, but ignoring that I expect EPS of atleast 13 in 4th quarter and50 in next year. At CMP of 255,the stockis trading at roughly5 times forward PE. It isnt a company in league of some other Pharma once, but should command around 10 times to say the least. Added potential advantages are from Actus & Ajinomoto Omnichem deals.

Dividend payout is around 15% last year.

Negatives include some amount of share pledging and also it has some leverage.

More articles:

http://www.business-standard.com/article/management/efficiency-is-key-not-product-portfolio-114032300639_1.html

http://www.dksh.com/htm/388/en/News-Detail.htm?Id=476868

http://www.business-standard.com/article/companies/granules-india-looks-at-further-expansion-113112800665_1.html

Please ignore the article about dksh, its nowhere related to Granules India.

Hi Vivek

I am consciously giving lot of good companies a miss because of the valuations. I feel Page, Astral, Mayur, TTK, Hawkins, Supreme, Symphonyetc are all great businesses but with my focus on taking concentrated bets, i need both decent valuationsand good fundamentals before investing. In fact I am decreasing Kaveri for the same reason.All of themlook more like lost opportunity rather then a real prospect even after minor fall.Hawkins is the only one which will be back in my radar with 1 good result.

Repco is good, but Can FIn is trading cheaper and growing faster. I do not believe that one should invest just because a particular fund is investing or someone is recommending it. We as small investors have better opportunities to grow wealth.

-Gaurav

Good choice of quality small n midcap stocks destined to grow higher.

What’s been your portfolio performance so far n have been key leanings so far?

Also do tell something more about yourself, how you came into world of stocks , where are you based ?

Avanti our common pick seems destined to go to higher places both in near n long term.

Hi Vivek, thanks for your interest. I have been very busy last fortnight, couldnt reply.

I am currently in London, work in IT industry, asset management domain. Have been very interested in stock markets right after my MBA in 2007. I have been very bullish and almost investingmost of my savings right through out in stocks/equity MFexcept during panic times in 2008-09 due to heavy losses. The journey was average till mid 2013 and could just recieve about FD returns of 10%. Post that due to a combination of good markets, serious time & commmitmentand inputs from forums like valuepickr, i am doing quite well. Have recieved about 150% return in last 7 -8 months of amazing run.

Personally, I have always believed in potential of Indian markets. Itsremarkable that absolutely no one around you relatives, friends, colleguesetc seems its an smart idea. Its good to have forum like valuepickr where people like us can have fruitful discussion .

Otherwise, everyone specially in ITlikes Real estate only without even giving a serious thought on what they are doing. I believe we are very close tobubble markets as far as real estate is concerned. On the other hand, large bunch of stocks specially mid and small caps have great future ahead and many can turn to be big multibaggers. Unfortunately, retail investors have close to zero exposure here and they will probably start investing post a bull run has passed away.

Recent Trades -Bought Deepak Fertilizers, PTC Financial, RS Software as trading bet. Sold off Alembic and PI due to need of funds.

Bad day for mid/small caps. Possible that it contiunes further for some more days and uncertainity is going to be very high till election results.

Granules had great results overall ( and subsequent rally :)) and Canfin had moderate quarter in terms of Net profit. PFS and Ajanta expected to post good results. Lets wait.

Sold off Deepak Fert and RS software for minor profits, also decreased Kaveri. Holding on to all others as I believethe upside risk is still higher then downside risk even in this volatility.

Hi Gaurav

What is your view on R S Software at current price i read managment interview they are very confident for next 3 to 4 qtr they are expecting good bussines from euore they have some strategic tie up and that will deliver good bussine is it worth to buy at this level and if yopu have any idea on nucleus software

Hi Gaurav

What is your view on R S Software at current price i read managment interview they are very confident for next 3 to 4 qtr they are expecting good bussines from euore they have some strategic tie up and that will deliver good bussine is it worth to buy at this level and if yopu have any idea on nucleus software

Gaurav,

Once again congratulations on your great picks n superb performance that would have automatically followed.

Are you still invested in PFS which has given great performance from 14-16 Rs to 31-35 in a short span. Wonderful pick.

What’s your take on PFS at CMP both fundamentally n technically ? I feel it can still double in next 18-24 months .

Also your take on PFC, Syndicate bank, Tata Communications n any other picks u r liking at CMP?

Hi Vivek, the performance has indeed been quite good. I think the market is getting a bit too hot, but good quality should still provide returns in next 1 year.

PFS was completely inspired from Ayush Mittal’s blog, whose picks have been doing well recently. I am still invested due to following reasons.

)- Management very positive for next 18 months. I believe them that they can double there balance sheet in that period.

)- Directly correlated to power sector which will be among Namo’s top priorities

)- Potential surprises from sale of equity investments specially when could be valued aggressively

)- Still trading dirt cheap at around 1.2 P/BV,Zero NPAs

)- Does not need to raise capital for 18-24 months atleast

)- High Dividend Yield

Targets are anyone’s guess. All I can say is its good business and should do very well in next 2-3 years.

PFC is one of best picks among larger companies for next 1 year due to similar reasons as above. Anything related to Telecom is strict no for me due to Reliance’s entry. I think banks tend to move together as a sector, and has been very difficult to time for short term specially for me. One should just invest passively for long term and for me, best pick for long term would be be Yes bank.

My current portfolio

Shilpa 17.61%
Avanti 16.57%
Granules 14.45%
Ajanta 13.65%
Can Fin 12.70%
PTC India Financial 8.95%
VST Tillers 5.98%
Technocraft 3.64%
Kaveri 3.30%
Kitex 3.15%

Not surprisingly, I am bullish on all the stocks in my portfolio, and most heavily on Shilpa. It would go up to 22% just if I can convince myself sell something.

What’s the reasoning behind Technocraft n Kitex? Any triggers? Yes Ayush has been a great selfless man helping thousands of investors . He has also mentioned Anuh Pharma . Hv u studied it?

Study Tata Comm seriously as its a nice asset play n core business also improving due to data boom.

I feel PFS , Auro, Mayur can move sharply from here as well in next 1-2 years.

me.Repco and Can finhave range40-50%

Gaurav: I ahve not analysed Repco and Can fin in any detail. But after quick glance they do not look exactly the same to me. Look at profitability of both businesses…E.g. Return on Equity. 5 year Average ROE for Repco is 22.26% while for Can fin it is only 14.17% barely equal or less than cost of equity. On the other hand Repco is adding serious value to stock holders year after year by earning more than required return. In the long run this gap can make a huge difference in my opinion.

I am also curious to know the reasons for such a high turnover in your portfolio. Have you thought of the impact on overall returns in terms of short term capital gains tax, typical Bid/Ask spread on small/micro caps, STT and brokerage commissions etc.

But I can see that you are enjoying this game.

Hi Gaurav,

Recently i am following your posts…

Any update on your portfolio ,or added anything new ?

Dolly Khanna recently added premier Explosive micro cap.

that is unexplored, looks goods valuation…

http://www.moneycontrol.com/bse/shareholding/shp_public_shares.php?sc_dispid=PE02#PE02

or any idea you are working on…

Hi Gaurav,

I personally hold some of the stocks like Granules, Shilpa, Avanti. I am interested in adding VST Tillers in my core portolio. At present, this stock is going through a correction. What is your view on this stock for the next 3-4 yrs.

Hi Vikas

I have sold off VST tillers as it was trading bet for me. But I think its great buy for longer term point of view. Despite the run, its fairly priced.

Hi Ashish

Looking at recent history, I think it does make sense to follow investors like Dolly Khanna for a small part of your portfolio. Mainly because lot of investors follow it, so just go with the herd during bull market. I havent done so myself due to shortage of funds and conviction on my own picks.In hindsight, Vimta, Liberty were a miss although i came close to buying them :(. But unless you have done enough research , restrict these kind of bets to 3-4%.

What are your estimates for Shilpa?

Shashi,

Shilpa seems to be a long term story. Based on the current business only, I think it should post an EPS of 6 this quarter and 27-28 for the year easily. In longer term, their is a huge growth potential but part of this growth is subject to approval from US FDA. I like the Indianivesh report besides of course the detailed discussion that has already be done in valuepickr.

http://thefinapolis.com/TradingCalls/Shilpa%20Medicare_Initiating%20Coverage_Mar%202014.pdf

Various drivers listed in the report can result in multifold growth in EPS within 2-3 years. Even at 510, market seems to be ignoring any of the potential growth from margin expansion, new facilities, new markets etc.