hi guys,
here is my long-term portfolio constructed since dec-11:
mayur uniquoters 20%
granules india 15%
kaveri seeds 13%
atul auto 12%
balkrishna ind 12%
cera sanitaryware 12%
arshiya intern 8%
unichem labs 8%
stocks in my watchlist:
astral, GRP, page, hawkins, muthoot cap, thangamayil, cravatex
i would follow up with a reasoning for each stock in my portfolio in the next post. i would like to invite comments and suggestions from the fellow valuepickrs.
regards,
looks like a good selection of stocks. not too sure about arshiya though. they have taken on lots of debt to expand and most of the times that is a recipe for disaster.
if i were you i would increase allocation to unichem maybe at cost of arshiya. among those in watch list, grp, page, astral, hawkins are great businesses to own. at what valuations to buy is one’s own look out.
following up with my previous post, here is the reasoning behind every pick:
1). mayur - not much to add. its everyone’s favourite here. came across mayur reading on TED and valuepickr and was immediately impressed with the growth, dividend, oppurtunity size and return ratios. bought it at around 179 ex-bonus in dec-11 and intend to hold it for another 3-5 years.
2). granules - wanted to pick something up in pharma seeing the sectoral bull-run. came across ajanta here but it ran up to 700+ before i could lay my hands on it. picked up granules at about 85 after reading about the management interviews and the annual report of the company reinforced my conviction. amazing capacity addition in the next quarter or so which should help drive the revenues and shift to finished dosages would take care of the margin expansion. a long-term pick for the next 2-3 years.
3). kaveri seeds - owe this to hitesh. read about it from his write-ups on TED and then here on valuepickr. bought it at around 805 and intend to hold till the growth continues to be good(may want to be oppurtunistic here unless management finds other growth avenues apart from bt cotton)
4.atul auto - found out about this from one of the interview of vijay kedia. growth has been good in a very difficult environment for the company and the valuations are very cheap. avaerage purchase price is low and hence intend to hold it till the next turnaround in the auto cycle
5.balkrishna - owe this to valuepickr and ayush’s blog dalal-street. management is excellent has led the company through many cycles in a commoditized industry. replacement market should be fairly resilient to the slowdown and softening rubber prices should act as tailwind to earnings. long-term pick till atleast 2016 when the full benefits of the capacity expansion would be seen
6.cera sanitaryware - proud to say this one was my own pick and that too from my own house. got cera fittings in my new house and was impressed with the quality and value-for-money for the goods. dealers were all praise for this and so looked at the earnings and annual reports. needless to say they have been very good and bought the stock straightaway at around 185. this is a proxy for the housing and consumption boom and has third largest marketshare in sanitarywares. think it deserves much higher PE and there is a long way to go for the stock
7). arshiya international - i have to say it is not a typical value pick but a story-based investment. have seen the ftwzs of dubai and singapore and what impact they have had to the logistics space there. management has very good execution capabilities and if the first two ftwz’s in panvel and khurza have seen reasonable success. the next two ftwzs should get constructed by 2014 and the debt repayment should start after that. if they can deliver on their promises, this price would look dirt cheap in 3 years time. risk is if there is a huge recession and demand slows down considerably, the debt and interest payments could drag the company down. its a high risk high return story and patience is required to hold it for the next 5 years. investment price is 120 so don’t see much downside here.
8). unichem - need not say more after hitesh’s wonderful writeup. i am positive on the company’s turnaround strategy and would hold it atleast for the next 2-3 years. picked it up at around 120 and have seen a good run.
Thanks hitesh.
The points you have raised are genuine concerns about arshiya but as described in previous post have reasons for conviction in the stock and am willing to hold it for 3-4 years. I have some cash in hand and am waiting for either a broad-based market correction or few bad results to nibble into the stocks in my watchlist.
Hi,
I’m also concerned on the debt and all on Arshiya but have heart some good things from some good investors.
Have tried understanding this co but not much clarity till now.
Did partial profit booking in granules yesterday after the run-up to raise some cash. Added wimplast to the watchlist.
booking some more profit in granules, allocation stands at 10% now. added more to kaveri(15% now) and ajanta(now 2%). pharma is now 33% of my portfolio. have done some technical analysis on the bse pharma index. seems like we are in the third primary wave of a multi-year pharma bull market(recognition phase) and there is long way before this bull would end. typically sectoral bulls end when the leaders quote at 35-40 PE and the second-tier quote at 20+, e.g. IT and dotcom(1997-2000) and infra and real estate(2004-07). would try to post a relevant chart.
guys, finally things seem to be moving on the reforms front. FDI in retail, aviation, power exchanges, broadcast services. some work on fiscal deficit by cutting fuel subsidies. and the global likely to fall in place with ECB and FED going all in with money printing. i think nifty could get into a sustained uptrend here for next 6-12 months with 2010 highs in sight. infra stocks could be value buy here if things start to fall in place. i would be adding here in arshiya, atul auto, astral and GRP.
Hi Hemant,
I am still not fully convinced by the single day unleashing of reform to make up for the policy paralysis that has been the signature for UPA2. I have several questions for this sudden burst of optimism.
1). When a govt, ridden with corruption scandals, with severe policy paralysis, all of a sudden, on a fine day, decide to release the secret cure-for-all reform agenda, I am compelled to ask, why is UPA2 doing this now? why it didn’t take the same decision in last 3 years. Isn’t it a gimmick to move away the current topic of discussion on corruption to something else.
2). With allies like Mamata Banerjee hell bend on stopping reform like FDI in retail, and threatening to pull out from UPA2, and opportunistic ally like Mulayam’s SP, wanting to ride on the pro-SP feeling of UP, the existence of UPA2 is at stake. If there are no UPA2, then what is the point of reform.
3). Diesel price hike, tends to have a strong inflationary effect on economy, so does inflow of money via FDI. There are rumor of rate cut on Monday. With inflation already at 7-8%, I am thinking where the inflation figure will go up post reform, and for how much time the rate cut can be sustained.
4). With opposition hell bend on opposing retail FDI (some points of which I agree with, like widespread manufacturing reform a must before allowing foreign FDI in retail), I doubt the fate of these reform post UPA2 time frame.
5). I am very skeptical of things which are easy to do, or sudden change in policy. History tells us that what became the fate of USSR, post economic shock treatment. I like slow, and difficult path to achieve reform. They tends to have a long lasting positive effects.
6). Allowing FDI in sector plagued with issues, and hoping it will solve the issue, is like giving analgesics to a malaria patient and hoping it treat it. Govt need to analysis the fundamental reason behind those issues, and enact reforms to solve them. That would be permanent solution to it. All other are just eye-wash to me.
Hence, in short term, I see investing opportunity in capital intensive sector like infra, auto, aviation. But in long term, stocks with solid fundamental behind them will be the winner.
Hi subash,
Please find my reply For each of the points below:
1). I think a lot of the credit here goes to chidambaram. Pranav mukherjee leaving the FM post was the turning point. In India, reforms happen because of intense pressure and not out of own will. An example is the open market reforms of 1991-92 when india was almost forced into bankruptcy.
2). I wouldn’t Mindanao early election as well. The point here is that finally the govt has shown some intent and it will not go down without fighting. They have been pushed into a corner and had no other option but to go ahead with these reforms.
3). Diesel price hike would be inflationary in the short term but will help reduce the fiscal deficit which in turn will help reduce depreciation pressure on rupee which would in the long term reduce inflation. Artificially suppressing any prices is not good for any market or economy.
4). Once implemented these reforms would be very difficult for the new govt to rollback due to intense political pressure from goats across the globe as the interests of their companies would be at stake.
5). These reforms should have happened slowly but allies didn’t let those happen and congress couldn’t find their backbone to stand firm on their decision. Hopefully these would not be the last of the reforms. GST, Land reforms, labour reforms, Pension reforms and coal and power sector reforms are more important reforms and still pending. Passing of a few of these can easily add a few percentage points to india’s GDP.
6). The announcement of these reforms is not the real thing. The real benefits would accrue once global companies invest in the supply chain and infrastructure to form the backbone of their supermarket chains. This would give a huge fillip to india’s infrastructure and logistics. Companies like arshiya would be one of the biggest beneficiaries of all this and hence my strong conviction in the stock.
The essence here is that everyone in this market is either bearish or doesn’t believe in this rally. When you open cnbcindia, you hear every other analyst claiming the end of the rally or saying this rally will fizzle out in a few days. Retail participation in the stock market is at historical lows. This kind of bearishness creates a perfect breeding ground for a bull market. Examples from the history are 2003 and 2009. I am not saying this is a bull market but this rally could be first leg - we need to monitor. Even first rallies in 2003 and 2009 started with lot of disbelief. Global tailwinds like ECB bond buying and QE3 wold support.I am not hopelessly optimistic but I would say that we should not lose perspective in all the bearishness around. Anticipate, monitor and adjust.
Regards,
Hemant
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as i expected in my earlier post, nifty is now firmly on course to touch its 2010 high in the next 6-9 months. nifty and sensex have crossed their 2012 high but the small and midcaps are still lagging. i would expect them to play catchup soon. there would be corrections on course to the all time highs but any dip would be a buy here. rupee appreciation would help dampen the inflationary pressures paving the way for rbi to follow a more growth-oriented stance. i feel the interest rate cycle has turned down firmly and would help the balancesheets and margins of the companies.
added to astral, kaveri, arshiya and added amararaja.
Hi Hemant,
Looking at the stock delivery % chart, I can understand now, why did you decide to do a partial profit booking in granules on 5th Sep. The delivery percentage has plummeted to 20% range, and there was a huge run-up of the stock. The same pattern I can observe with TBZ, and Hiteshbhai’s selling decision.
It seems one sign to sell a stock is when it has rose substantially and delivery percentage has reached in and around 20-25%.
Please correct me if I am wrong.
Regards,
-Subash
you are indeed correct subash. i do closely track the delivery percentages of all my stocks. but this was only one of the reasons for me to book partial profits. i had bought granules at 85 and sold 25% at 230 which is 170% return in a few months. this makes my current holdings(still decent size) very cheap and i would continue to hold them for the next 2-3 years. also, i need to raise some cash to enter some stocks which would benefit from the macro rally which i anticiapated and believe would continue for the next 6-9 months with some corrections. i added to my holdings in arshiya at 115 and bought some amara raja at 375. i believe arshiya was doing well in any case and with the overall economy bottoming out, it would do very well going forward. amara raja is a play on the auto ancilliary and telecom cycle for me and should do well in the next 2-3 years.
Restructured my portfolio over the last few weeks - booked partial profits in unichem, balkrishna and added to Arshiya, astral and amara raja. The current portfolio looks like
Mayur 15%
Kaveri 14%
Granules 11%
Cera 12%
Arshiya 12%
Atul auto 12%
Astral 11%
Unichem 6%
Balkrishna 7%
Hi Hemant,
Could you share why you decided to sell some Unichem? Was it some price/volume indicator like you mentioned previously? Any thing else as well?
Reading your thread, its been 2 times that you have booked timely profits. Would like to learn from this.
Hi HG,
I am a professional trader for the last 5 years Which helps me decide good entry and exit points for stocks but I am relatively new to investing and learning a lot from this forum. I use a lot of indicators but major ones are delivery volumes(more the better), traded volumes(too high for many days is a warning sign), RSI divergences( positive is good for entry, negative for exit), elliot wave theory to determine the long term technical picture for market and stocks. Once trading volumes pick up and delivery percentages go down I would be on watch for euphoric moves and would tend to book atleast 25% profit after a big move. For example, I booked 25% each in mayur at 428, granules at 228 and recently unichem at 198. I was holding therefrom very low levels and partial profit booking is warranted after 100% rise in even your highest conviction stocks. This makes your investing strategy self funded and helps you invest in new ideas with no additional capital required. If you read through my previous posts, I am very bullish on Indian markets for the next 6-9 months and I believe quality infra names have a long way to go. Arshiya is one of my high conviction bet which could be a huge multibagger over 3-5 years. I used the cash from partial profit booking to add to arshiya and a few more names.
Thanks for the insights, Hemant. I’m a newbie and it’s becoming quite clear that knowledge of technicals is useful for long term investors as well.
Hi Hemant G,
You have quite good experience in trading which helps to decide entry/exit points.
Please suggest some study good material books/audio/video or any professional training courses.
Thnks
Hi vishal,
There are various books and materials available online on technical analysis but my learning has been more at my job my observing the market every second, learn from every move and then put them in practice. Hiteshbhai has been putting some examples of these technical patterns in the technofunda calls section. I would try to do a detailed post sometime on identifying optimal entry and exit points. These patterns and indicators should just be used to optimise entry and exit but not to decide investing decisions.
Regards,
Hemant
Hi Hemant,
I’ll be quite interested in reading that post. Hope to see it soon 
