ValuePickr Forum

Hitesh portfolio

Hi Hitesh Bhai,

Any idea on Birla Tyres? The stock has zoomed over 400%
I cant see much information about this stock in screener or any platforms except for the news of JK tyre acquistion on Birla tyres dated : 2015

Likewise - Indag Rubber, TVS srichakra, Balakrishna ( we can possibly see that the shares are trying to breakout - am assuming this is just a short demand bounce due to the exhausted lock down)

Dear Hitesh Sir - thank you for your continued guidance, and I’ve been off late a silent observer of your invaluable posts. I see that you had Muthoot Capital Services back in 2012 (and may or may not still have it). I took a substantial position in my portfolio back in 2018, and the stock has been coming down since due to a multitude of factors including but not limited to NBFC crisis, Kerala Floods, Auto slowdown, etc. Requesting your views on the stock whether a revival could be in place, and in a significant way once the Auto sector picks up (am betting on it would with people preference changing to having own vehicles post Covid, and more so the 2 Wheeler space where Muthoot primarily focuses on) or any other tailwinds you see in the time to come. Many thanks, and appreciate your time and help in advance.

@grovmo

The financials and NBFC sector are going to be one of the worst affected due to the covid pandemic. I think the writing has been on the wall since March sell off. I had sold it off many years ago.

The stock has been under pressure right since July 2018 ever since the auto cycle trouble came to the fore. Since then, the stock price has gone down from a high of 1300 to the recent lows of 270 or so.

There is a theory floating around about the two wheeler industry turning around citing the reason that people would prefer to use personal vehicles instead of public transport due to covid. But personally I dont find too much merit in the argument.

The only hope I see is that the auto industry being typical cyclical would at some point of time turn and can lead to revival in fortunes of companies like muthoot capital. But when that happens is anybody’s guess.

I feel sorry for your plight and dont have an exact answer to your query as I have no clue when the cycle is going to turn around. It seems a tough call to take at this juncture with so much price erosion already happening. If they do a concall, may be you can listen in and try to take a call based on what they express about the business.

I think everyone needs to have a sort of mental stop loss in their holdings so as to escape severe punishment. After a point these kind of positions tend to become hope positions. Sectors that have lost market fancy are going to give a lot of pain to those who hope for these sectors to revive in the short term. It will take a long time of consolidation even after a bottom is formed for these sectors to make any sort of meaningful comeback. And on the business front, the macro environment and extension of moratorium etc are not going to help either. When things go wrong, its not only one or two that go wrong. They go wrong in bunches.

@nithin_Shenoy I have no idea about the tyre sector as I have not looked at any of the auto or auto ancillary companies of late. These beaten down names can attempt dead cat bounce but one has to be nimble enough to play it and time the entry and exit accordingly. Not my cup of tea.

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Hi Hitesh bhai,

Can you please help me understand how you value a stock…Warren buffet tells it’s how much money the owner can take out of the company in the life time of the company and discounted back in risk free rate. He also says stocks considered as a bond without a coupon rate and identifying the coupon is the trick.

Some people use DCF which I also prefer but is not precise and lot of assumptions.

Some people seeing the stock tell it’s overvalued because growing at 25% and PE is 70. May be by seeing PEG they are saying this.

I have seen people saying it’s a zero sum game just by seeing few numbers.

Can you please advise how to learn this and how you approach. Also pls suggest some books for this. I have read 8 vantage points by sanjak Bakshi which is slightly useful

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@arvind_aries

Its tough to explain how to value a stock in a post. Plus it is not a one size fits all kind of calculation. The same stock will be valued differently in different business environments and one has to keep pace with these developments. e.g Bajaj Finance. You can see stark difference in valuations within 2-3 months with stock having corrected from levels of 5000 to less than 2000. Because the business environment has changed.

The idea should be to get things approximately right rather than precisely wrong. One needs to keep observing how markets value stocks and how valuations and perceptions regarding the company undergo change and what are the triggers for those things.

There are books that should help in learning this topic. Pat Dorsey’s book on five rules for successful investing provides background on how to analyse different companies in different sectors. If you are up to reading a lot of theoretical stuff then you can go through Prof Aswath Damodaran’s writings. You can also read up Copeland’s work on valuations. I myself have learned valuations by observing things in the market and have not read the latter two authors. For businesses with consistent predictable cash flows and growth, one can go for DCF. I personally don’t use it.

Many times valuation is a game where beauty lies in the eyes of the beholder.

A useful thread on the subject is The ART of Valuation

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Hi Hitesh Bhai,

Please provide your inputs on Essel Pro Pack both on technical and fundamental aspects.

I had initiated a thread on the VP forum for the same.

Regards,
Ramesh

@sabbaniramesh

Fundamentally the big (and probably positive change) that has happened in essel propack is the exit of the previous promoter group and entry of a PE firm. How they take the business forward needs to be seen. In the short term due to logistics and supply problems results might be a bit soft.

Technically the stock is strong and can get support from the 150-160 range. Below this range it could turn weak.

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Hiteshbhai
Your view on L T foods(dawaat)
It is consistantly giving good results
Q42020 givee excellent result.
Debt has reduced
Margins are stable

Wha is you opinion for longterm

@Pragnesh

LT foods results were unexpectedly good. And the debt reduction was the icing on the cake. Need to listen to concall to take a call. We also need to be sure that this is a consistent trend going forward.

I had invested in this earlier as a techno funda bet back in 2017 and exited but since then it seems to have done okay. According to presentation, the contribution from branded segment keeps on increasing on a consistent basis.

It is not a very high quality business but seems undervalued if there are no hidden cockroaches.

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Hitesh Sir,
With mass migration of laborers back to villages and government strategy to keep them engaged there by boosting agriculture and to some extent MNREGA (my cousin is Sarpanch in a remote village in North India ,he confirmed that Govt. wants returnees to be engaged in MNREGA and hence there has been good flow of fund in last 3-4 weeks)
(1) Are we going to see accelerated focus on automation in manufacturing area? If so, is it right time to take bet on Honeywell automation.
(2) Villagers mostly throng to their nearest town/cities for discretionary spend , could V-mart which is mostly focused on tier2 and tier 3 cities be beneficiary in long run?

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Hi Hitesh,

If I may ask, please share your current view on Abbot India, do u see potential business growth given the huge base, in coming 5 years.

Thank you.

Hi Hitesh bhai,
Would love to pick your mind on the following article. The age old debate of value VS growth investing. In US particularly (and i think India is no different) lately value investing has utterly disappointed investors. (Warren buffets under performance for last 11 years, Prashant Jain funds performance being two examples).
I live and work in the US and follow the markets here. The way growth stocks in tech space are being rewarded here makes one wonder if it even makes sense to follow the pursuit of value investing anymore. These growth stocks no doubt have 50%+ revenue growth consistently but most of them are loss making. I understand that each company needs to be assessed on its own merits however just curious to know how you approach value VS growth phenomena while making investing decisions.

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@hitesh2710 bhai,

Would you be able to comment on Symphony

https://www.bseindia.com/corporates/anndet_new.aspx?newsid=144f500d-7ae9-4c49-baed-f05061af08ac

Quarterly results have been good. Mgmt commentary is positive on new launches as well as response. Seem to be innovation oriented and expect Covid may help on cooler adoption( one theory).

Int biz seems to holding well( except china which they see more as R&D going forward). Also capital invested to acquire these biz seems very conservative.

Valuations are very reasonable from long term averages point if view.

Thanks.

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@ajay.singhraj

I think this migration of labourers is not a permanent event. In the first place the migration happened because there were few job opportunities in the nearby geographies and hence labourers migrate to places where the opportunities and pay are better. Once the Corona scare is over, whenever it is, I expect things in terms of migrant labourers to go back to pre covid levels.

Hence one cannot base the investment decisions on such temporary events. The best one can say from the above summary is that rural economy is likely to bounce back quickly as it has been least affected due to the lockdown. Here too the risk of disease spreading to rural areas due to reverse migration cannot be ruled out and that can be a dampener.

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@dhruv11

The meaning of growth investing is pretty clear to everyone. You buy companies which can show a good CAGR in growth over multiple years in terms of sales and profits and preferably with improving margins and return ratios, and good/improving balance sheet. Usually there is no ambiguity in these things.

Problem is how you define value investing. Different people have different definitions of value investing. Buying statistically cheap bargains was the way of Ben Graham. And that is what most people feel is value investing. Another class of people say that buying growth stocks at cheap valuations is also value investing. :grinning:

Personally speaking I dont want to get drawn into these endless debates of value vs growth investing and waste my time and energy in the process. The bottomline is whether you want to win arguments or make money. I prefer the latter. To each his own. Whatever works for you is good.

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@Dev_S

Symphony results have been on expected lines. The channel inventory seems to have gotten exhausted. Going ahead, we need to see how the dealers stock up inventory. Management has given outlook post covid situation in a seperate announcement.

Only problem I see is that even with a very hot and elongated summer, the company could not reap too much benefits due to the lockdown all throughout the summer months. Now the company is fighting a rear guard action to make the most of the remaining summer.symphony covid impact may 2020.pdf (228.3 KB)

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Hi Hitesh Bhai,

Are you tracking or looking at Kaveri Seeds ? What is your comment on last quarter results. Is it going to be permanent that Company will not have any more loss making quarters ? I think next quarter will be big considering Agri is not impacted at all due to Corona virus.

Finally look at today’s 20% move.

Thanks in advance for your response and your selfless service to the investing community out there.

Regards,
Ramesh

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Hieshbhai
Yr view on Hikal ltd?

@hitesh2710

Hello Hitesh Sir,

Hope you are doing good there.

I have been following your thread silently for few years, and admired with your passion on analysing the business and generosity to guide others. While I contribute less in the forum, wanted to ask something about canfin homes. I personally believe in long term systematic investment method (instead of investing lump sum/equal monthly instalments). When it comes to canfin homes, I planned for 10 years SIP starting 2017 and currently the portfolio is down by say around 19%. The rationale behind selecting this script is due to management quality/consistent in performance/focusing on retail home buyers. My question over here is,

  • What is your thoughts and views on SIP in stocks, say for min 10 years?
  • What is your view on Canfin homes, considering my exit is around 2026-27

Glad if you could share your thoughts pls. Thanks in advance.

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Hitesh bhai - do you track Neuland labs? Your thoughts on this small-cap pharma company? with their Unit 3 starting soon, could this re-rate the stock as it starts contributing later this year?

what API companies would you suggest to study that look good to capture the API story.