Hitesh portfolio


(Hitesh Patel) #2167

rajarshi

I feel the main aspect of MFI lending affected by demonetisation would be the impact on asset quality. I think most of the lending of MFIs can be termed as unsecured. (although the companies claim about joint liability group lending etc. ) And hence I would be watching for a quarter or two to see how the companies are affected in terms of asset quality by DM.

Regarding companies getting attractive after the recent fall its all about relative attractiveness. If a stock falls from 200 to 120-130, there’s no reason to assume it cant fall to 100 or below. Its like catching a falling knife. (with not too sharp blades but some edge which can atleast cause minor grazes). I would like to watch the prices of these companies to stabilise before taking a call.


(Neeraj) #2168

Hitesh Sir,

What is your view on Piramal Ent post demonetization. do you still have it


(Vamsi Krishna) #2169

Hitesh,

happy new year!

Post abilify noting seems to fall significantly in place for Torrent Pharma. How do you view the development? In view of poor results over the last year.


(Hitesh Patel) #2170

@neeraj, Piramal is exposed to real estate lending and one needs to see how it fares in terms of asset quality. Ajay Piramal comes across as a very savvy guy and hence he might guide the company through troubled times. I had exited PEL some time back because of sharp run up which later seemed like a very frothy unsustainable upmove.

@Vamsi,

Torrent Pharma will have a couple of lacklustre quarters because of lack of filings during fy 16. I think real growth will kick in post fy 17 by early fy 18. Full utilisation of Dahej facility will provide the capacity to meet any surprise upsurge in demand from regulated markets. Overall it seems like a company with limited downside, but currently it also lacks any trigger for sudden upmoves.


(jainaj) #2171

Hitesh
I am invested in shilpa medicare for year now. What I like about shilpa is they think about future and start verticals which has potential. thereby derisking business. now they have started work in bio and nano similars. Can it be core portfolio pick and how do u see it progressing 5 years from now?
Thanks in advance


(Peabody) #2172

Hitesh

Any views on Granules at the current juncture. Due to its investment cycle currently it has not moved for the last 1 year -rather declined 20% odd YOY.

disc invested


(Hitesh Patel) #2173

@jainaj, For me Shilpa has remained as a high conviction portfolio bet because of the developments happening in the co and the approvals it has been getting.

@peabody, Granules seems like a good story but the triggers lined up would probably take a long time to play out. Currently it seems around 100 odd levels valuations look attractive.


(Aksh) #2174

Hiteshbhai @hitesh2710,

I recall you emphasizing two major elements while evaluating the risks of investing in pharma companies facing some sort of regulatory issues like FDA import alert, ban etc.

  1. Downside on price
  2. Opportunity Cost

You also mentioned some examples wherein such companies rebounded strongly in 2-3-4 years once the issue got resolved.

I’m looking for some disconfirming evidence and in that context, do you recall any instances wherein any good pharma company didn’t go back to its past good old days or rather became just another ordinary pharma companies post such issues?

I can think of just Ranbaxy…any more instances?

Thank You,
Aksh


(Hitesh Patel) #2175

aksh

The immediate examples that come to mind of companies not quickly coming out of USFDA issues are Ipca Wockhardt and Sun Pharma. Other smaller players include Smruthi Organics.

I think the key while investing in these kind of situations is to keep a fairly long time horizon and buy only on extreme pessimism.


(Aksh) #2176

Thanks a lot Hiteshbhai. This helps.

I believe Ranbaxy was far more serious than just long delays, almost bordering on scandal, forgery unlike cases of Ipca, Wockhardt, Sun Pharma wherein it seems, at least as of now, to be cases of genuine inordinate delays which is expected.

Can’t agree more on this. I think Pricing it right is very important as it will help one wait more for the turnaround. Extreme pessimism should reflect in the price but the same is not happening fully I think due to excess liquidity. I know it’s tricky but do you have any handle/pointers on this in terms of absolute valuation? I think assets seem to be a good measure to value the same as sales/earnings would swing wildly. is 2x Assets/Book safe price to pay with limited downside or it’s too conservative as many are quoting at far better multiples?


(gaurang_99) #2177

Hitesh bhai,

Divis lab @ 673 looks very reasonable with all this usfda issue.

what’s your view on that counter.


(Hitesh Patel) #2178

gaurang

I earlier too mentioned about investing in situations where companies are stuck with USFDA issues.

There are two aspects to think about

potential downside and

opportunity costs.

If u can get answers to above then one can invest in divis kind of situation. Looking at examples like Sun, Ipca, Wockhardt etc which havent cleared USFDA issues inspite of a lot of time having gone by, I feel one can afford to wait in case of divis. Atleast that i what I am doing.


(jshah17umd) #2179

Hiteshbhai,

What are your views on BHEL?

Last three years the sales have declined and it looks like market participants have written off BHEL. When you look at the Market cap of a biscuit company being more than a market leader (though in a different segment) like BHEL, it appears to be grossly undervalued.


(Rohit Kotewale) #2180

Hitesh bhai, what are your thoughts on AllSec? On charts it looks set for a multi year bottom formation which could potentially double the stock.

Disc: 8% of PF in Allsec


(Hitesh Patel) #2181

@jshah, I dont track BHEL so not much idea about it.

@rohit, Allsec has taken out its all time of 377 posted in 2007 and hence seems to be in free zone. Business momentum is strong and we need to see how the results of next few quarters pan out. Based on past examples once a stock takes out its previous multi year high it can easily move up by 50-100% from those levels. I too am invested in allsec so lets see how it plays out.


(Sourabh Agarwal) #2182

Hi Hitesh ,
Which are the sectors you are closely tracking as of now?You were one of the pharma bulls but it has been out of flavor as such.With home loan interest coming down my picks would be housing sector.Do you hold your old favorites like canfin homes and repco?


(Hitesh Patel) #2183

sourabh,

I dont have any specific sectoral outlook currently. I dont hold either canfin or repco currently but recently bought Bajaj Finance post demonetisation when it corrected. I think it could be one of the beneficiaries of demonetisation once all the dust settles down.


(kanvgarg123) #2184

Hitesh Bhai,'
All the HFCs are posting great numbers but the valuations of companies vary a lot. Eg you can see the difference between valuations of Gruh, PNB, Can fin and DHFL. I understand the effect of ROE on valuations but how much should it effect? ROE of Can Fin is 23 and DHFL is 16 but the difference in valuation is huge which is same for Gruh. Can you put some light on the way to select a HFC? Also, any particular company or sector you are bullish on? Is it a good time to add pharma according to you ?

Thanks
Kanv


(Abhishek Basumallick) #2185

super timing, as usual :slight_smile: And welcome to the club!! I was pleasantly surprised with their results and the management commentary on the concall yesterday. Quite reassuring.


(ajjw123) #2187

Hitesh you should discuss and share often about your failures or mistakes of 2016 or investing life.
Or you should start a separate thread for that.
It will be very insightful. Thanks