Dear Hiteshbhai,
For academic purposes, do you mind sharing if you held on to any of your long term picks through this and how it fared if you are still holding any of them.
Also how do you view “Buy right, Sit Tight” phrase during these kind of broader correction mode.
Thanks for your unbiased view which provide ray of hope for many like me in the middle of the bear market. As you said rightl, the companies with wide moat are the one’ s that will survive and create wealth at the end.
I entered into it only yesterday after listening to positive managemnt commentry on succession planning, Bharat Financial inclusion synergy which is going to add 20-25% to overall bottomline, possible future tieups with foreign insurance companies to get into insurance business moving from distributor to producer, ILFS tackled all in FY19. Cost guidance and Bharat merger adding to accretive NIMs.
On Technical side, stock formed double bottom formation which made me believe target to 2000. But post results, stock has been weak pointing to investors being spooked by provisions and auditor resignation (RBI banned auditor for one year).
All in all, other than negative sentiments I could not add up why the counter is on recent decline. IMHO the valuations look fair on FY21 basis and it is good time to either do SIP or start nibbling the counter.
I thought you could throw more light in case you are tracking.
Thanks Hiteshji.
Amit
I have been holding on to Indian Hotels all during this correction. Besides this I hold transpek. I view both of these companies as having the potential to have atleast a good couple of years.
Indian hotel had given aspiration 2022 presentation in feb 18 and since then the company has tried to follow the path mapped out in the presentation. Of course the monetisation of land bank etc will be difficult or may not even happen but margin improvement, balance sheet clean up, getting asset light etc is happening if we go by the numbers and announcements of the company.
Transpek has a multi year contract with an MNC to supply some product/s. The timing of the accident was very unfortunate. Accident itself is an unfortunate even but in this case, it happened just before the elections and as is usually the case, nobody wants to take any kind of decision during that time. The whole bureacracy goes to sleep and hardly anything gets done. So the re opening of the plant took more time than expected. Good part seems that the MNC contract looks like continuing as per some scuttlebut. The trigger to watch out for would be another such contract. If and when that happens it could be an interesting development for the company. As of now it seems market participants are worried about the near term and possible poor results for q1 fy 20. The AGM on 9 August should provide better viewpoints on the company.
Stock price of both these companies have not gone anywhere during this correction. There are the ocassional bump ups but most rallies tend to fizzle out.
Buy right, sit tight is a good concept but the difficult part is buying right. All the right stocks I see for sitting tight seem to be at very expensive levels.
And the cheaper stuff doesnt inspire too much confidence to buy and sit tight.
How about Rbl bank ? Not worth considering in same league?
Hi Hitesh bhai,
1 Was observing past few years trend and the opportunity to buy quality secular stocks has been ever decreasing as in the past 4-5 years (unlike earlier ), quality scripts dont seem to correct even that much enough to afford a reasonable return. Fall of these quality scripts ( earlier although less fall than overall market gave reasonable return) but now such scripts reach abnormally high levels more on pe expansion and then dont correct very less . In such cases how to invest in such quality compounders ? What should be the strategy ?
2 What’s your view on Dabur?
Thanks for the guidance
Even in the last 4-5 years there have been plenty of opportunities to load up on quality companies. Just to give a recent example, in Jan-Feb 2016 or Jan -Feb 2018 look at the price correction in quality names and you will find out that most of these corrected by 20-40 and sometimes 50%. Problem during these times is one is too scared to buy as the newsflow is too gloomy and there is fear of further fall.
Now the scenario as of now is different but markets being markets there will be no dearth of opportunities to buy good companies. Only thing needed is a list and loads of patience.
I dont track Dabur too closely but looking at the resilience shown by these fmcg companies during the current correction, it seems they will do well. Plus fmcg consumption will be the last to get affected amidst a slowdown and the first to recover.
Thanks so much Hitesh bhai for timely cautioning on not to buy at overvalued levels ( removing " fear of missing out" feeling ) and also reiterate the importance of patience
Hello Hitesh sir,
What is your opinion on Mayur Uniquoters and Balaji Amines now? They seem to be priced quite attractively at this moment
Dear sir, please give your views on Phillips Carbon
I am holding a good position of it in my portfolio and wants to increase it.
Actually I am bit confused as whenever I think of buying it goes down by another 7-8%
Mayur uniquoters derives a significant portion of its revenues from auto segment. The reported numbers lack the consistency shown previously during its strong bull run. Plus the clarity regarding succession is not there in the company. I dont know what the stage the PU plant is as it was delayed a lot after management indicated their intention to get into the PU production plant. I think all these factors are creating pressure on the stock price. If we can figure out if and when some of these factors can get resolved, Mayur can be considered for investment.
Balaji Amines I have no idea. I gave up looking at it since it diversified into hotel business.
@RPA1700 I dont have any idea about philips carbon black.
Hello Hitesh sir,
What is your opinion on Care Ratings (broadly rating agencies)?
Can they make a comeback similar to the 2008 financial crisis?
Currently, the stock is offering a 5% dividend yield.
@hitesh2710, where do you part idle cash during market falls. Please throw some light on this topic from your experience. Thanks.
Sir, read one up on wall Street and five rules of successful investing by pat Dorsey. Criteria laid by both are little different for stock selection. Can you please enlighten us as to which fetches more return in long term? Or anything u can share related to same. Thanks.
@hitesh2710 Hitesh Sir,
Stock like Asian paint are at all time high with their P/E ratio are historical high right now. No doubt it is a high quality stock and we should not use P/E ratio to value these stock. But given the deep correction in the market ,will you transfer fund from these stock to other high quality stock which have fallen quite a bit ?
Thanks,
Bikram
Sir Balaji Amines didn’t enter hotel business with the view to foray in hospitality, it was just the usage of free hold land … Other wise they would have come up with more hotels too…
They keep on concentrating on their core business only as far as their annual report shows. They have not done any developments more on hospitality since that one hotel opened long ago .
@hitesh2710, Considering there are so many small/mid caps, how do you find the one to research? There are too many if we have to go by financial results. Thanks.
Hi Hiteshbhai,
1 Whats your view on Titan ? Its seems to be well set to play the consumer discretionary boom, however in the past, changes in RBI policy on Gold imports had a significant impact on its growth and although now its diversified into sarees etc but still more than 80% comes from jewelry business. Although now atleast 40% of their gold comes from gold exchanges with consumers which they reportedly want to take it to 50% , so the import risk may reduce but can regulatory changes affect Titan significantly ? Whether the high growth run can continue (eg secular uninterrupted growth like HDFC bank etc although both cant be compared as in different sectors but i meant longevity/consistency of growth rate)
2 Britannia is a great FMCG play considering its oppurtunity size and management leadership which focussed on premiumisation and foray into dairy . However how much importance should one give to below news .
Also there was some rumour on resigning of Varun Berry which turned out to be false . However Varun Berry has initiated significant changes in the business and led to its growth . So should ones investment decision be based on Management (in case of the change maker resigning in future or the business in this case ?
3 Dmart has had huge growth over the years . However how much growth rate is sustainable in future coming 5 years considering Reliance retail , Amazon joining hands and increasing competition . Whats your view on dmart ? Thanks in advance
How to handle cash in the portfolio is a question that will have varied answers. If one expects to deploy cash within a few days/weeks, its better left alone. But if duration of sitting on cash is higher,
One can use liquid/debt funds/instruments like indigrid invit/bank fd etc.
Another alternative is to look out for strong low beta stocks where there is some or other form.of downside protection due to cash flow yield, dividend yield, favourable tailwinds even in face of market volatility etc. Earlier I used page and hdfc bank for such purposes. Currently it seems infosys, asian paints, hind unilever, dabur and other strong fmcg counters look suitable. Having said this can often prove risky, as if correction gets elongated and deeper, these too will go down.
For someone who is ready to settle for lower returns but solid downside protection, bank fd offer best option. Only thing to do is to select a solid bank like hdfc bank.
One up on wall street is for igniting the art of investing whereas Pat Dorsey’s book is the science part. Ideal is to read both multiple times and get a good grasp of both aspects of investing.
And I am not too sure that reading books alone fetches good returns. Investment has many other aspects. Books are for collecting knowledge which should ideally lead to wisdom. Wisdom also comes from observing and analysing observations and then internalising them.
