Hi Hitesh bhai,
Whats your view on syngene and jubilant lifescience ?
Many thanks
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Hi…Hitesh Bhai …Thnak you for sharing your experiences and educating us…
1)Can you share some parameters which made you to exit market in March?
…Technical + Fundamental both
2)What parameters or signals made you to enter again? % rise from bottom,Moving averages,liquidity,FII-DII data etc
3)Is it quantifiable to fix entry /exit rule ?
This is a brilliant insight. Came a cross similar sentiment in a letter written by Templeton templeton letter.pdf (2.6 MB)
Hello hitesh sir, what is your view on can fin home and MPS for long term investors,
regards ,
vimal agarwal
I myself was in the same thought process that you articulated. I thought that Covid getting out of control would impact the economy and would in turn impact markets.
But liquidity has taken markets in a different direction from the one most people anticipated. Now how long this music lasts and when it stops is anybody’s guess.
Opening of the lockdown was the big relief I think the markets were waiting for. Now that we can see things clearly it seems such prolonged lockdown did not serve its purpose and in turn caused a lot of problems to the economy and migrant workers etc. And the numbers of covid patients continues to grow unabated.
What the lockdown has achieved seems to be flattening of the curve but the disease prevalence will be pronlonged. If lockdown was not ensured, there would have been an initial spike, too many deaths, overloading of an already poor healthcare infrastructure and some amount of chaos for few weeks after which numbers could have started declining. But for a country like India with some heavily populated regions, this strategy might have created massive disease outbreaks and deaths and no politician in his right mind would want to answer to these situations. So economic considerations were put on the back bench and the expected steps were taken.
What happens now is that businesses are struggling at ground level to operate at optimum capacity and this can continue for some more time. I think the SME guys will face maximum problems as they have lesser resources as compared to bigger companies. So companies which can continue to work in an environment of increasing corona cases would be the flavour of the times.
For a long term investor who wants to build a portfolio for next 5-10 or more years, it could be a great time to pick and choose and bite at opportune times. For most India facing companies, q1 fy 21 and even q2 fy 21 in some cases would be a washout and hence stocks might correct nearer to results date. These would be times when strong solid companies with multi year runways would be available at reasonable (not cheap ) valautions. So focus should be on growth at reasonable price. One can have a list ready and levels ready to start nibbling and since things are not expected to improve in a hurry, there will be time to keep accumulating.
For those who want to get into a moving train, sectors like pharma, speciality chemicals etc offers good options.
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@hitesh2710 Pharma is fine. Some pharma companies have reported an excellent set of numbers despite the ongoing situation and pharma looks set to be the next hot sector. However, none of the speciality chemical names are still showing up on screens yet. Neither have any of them reported a good set of numbers yet.
Apologies if I am being ignorant, but wouldn’t betting on speciality chemicals be more of guesswork, as things stand today? Another question that has been on my mind was whether it would be logical to invest money into a speciality chemical company with the hope that some business may come from China to India, once things stabilize?
As always, thank you for your guidance in these tricky matters 
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Speciality chemicals comes well behind pharma in my preference in terms of sector. But there are some companies in the sector which could do well and are doing some niche business. Like vinati, navin fluorine, etc. Or are on their way to achieving scale. Like deepak nitrite.
Idea remains to keep these on the watchlist and observe. Even agrochem companies are in fancy and I see them showing good relative strength.
But if there is one sector where most of the companies are showing good relative strength, it is pharma.
@VIMAL_AGRAWAL I dont track mps or canfin. No too interested in financials as of now.
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@hitesh2710 hi hitesh bhai ,
am looking to add 8 to 10 % pharma [ as a basket -, mostly due to my lack of in depth 4 or 5 stocks knowledge and too much moving parts for pharma ] .
i have shortlisted the following :
pfizer , sanofi , lupin , sun , dr . reddys , divis , cadilla , torrent pharma , alkem labs , cipla , biocon , abbott.
if you were to choose 5 of the above which ones would tht be .
Hello Hitesh Bhai.
Your views on various questions by members are quite often enlightening. Please offer some advice on following situation. You have an option to choose between two stocks. Both are in same industry, have reasonably good management, similar debt/equity, margins and overall size. One stock has past 5 yrs average RoE/RoCE around 14-15% and 4-5% growth. The other has average 10% RoE/RoCE and 9-10% growth. Which stock would you prefer and why.
Thanks.
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I think if one is not too confident about analysing specific companies in the pharma sector, its better to have a basket approach. Or else buy some pharma mutual fund.
As of now I would focus on companies with strong export portfolio. Companies like Sun, Lupin, Cadila, Cipla, Dr reddys, alembic, torrent pharma, etc qualify for the purpose. Another subsegment that is interesting is the API manufacturers like Laurus, Aarti drugs, Divis, Solara etc.
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Hi Hitesh bhai ,
How do you find Transpek ? How does it compare to Vinati and Navin fluorine?
Many thanks
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The biggest difference between vinati and navin vs transpek is that the former two are proven players who have demonstrated a decent track record of growth and markets have accorded them higher valuations. Plus the business models of the former are diversified as compared to transpek.
For me, while navin and vinati are proven race horses, transpek remains a dark horse.
@pankajdewan I dont go too much by numbers while selecting investment candidates. I like to look at the bigger picture and feel of the business while analysing a company. So I usually don’t get into this x vs y debate wherein only numbers are the deciding factors.
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Thanks so much Hitesh bhai for the crystal clear explanation as always .
Could you please elaborate more on this as to what you look for as I too believe feel over financials as financials hide more than reveal and what factors make you decide when to sale as an example ?
Hitesh bhai,
Theres always a search for purity and sanctity (atleast for novices like me ) in stocks that one goes for when investing in stocks , but issue being that such stocks are already overvalued and can at best be compounders while some stocks start small (and has multibagger potential )but then diversify or expand and grow while many others wither away . Its a given that one needs to ignore certain factors in these new stocks if one needs to invest in them
1 What factors to ignore in such stocks or management ?
2 what would be the factors that trigger exit for you (non compromising) in such stocks , on the happening of which you will sell the stocks and wouldnt continue ?
3 Is Aarti Inds secular (and not just commodity business) like Navin fluorine and Vinati organics ?
4 Read somewhere in your earlier posts that you like to take meaningful allocations I.e concentrated bets I.e between 8-15% . Is it same for small caps also ?
Sorry for so many questions , Hitesh bhai but couldnt restrain myself .
Many thanks for always devoting your time and insights that shorten the learning curve tremendously for amateurs like me .
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On the matter of feel about a company, it usually comes with following the company for a long period of time. You have read the annual reports over the years, listened to the concalls, presentations and heard the management at AGM (if possible). After all this, you form an impression about the company, the management, its business quality and prospects. Its difficult to quantify because it is highly subjective.
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Ignorables in small companies will always be a debate and at times it involves a leap of faith. The one thing that cannot be ignored is poor corporate governance and poor capital allocation. Among other things, things will come in different forms where one has to take a call on whether to ignore the things or not. In case of ajanta it was promoter reputation back in 2011-12(numbers were telling a clear story) , in case of kaveri it was non payment of taxes (where rules clearly stated that they did not need to pay taxes as income was considered agricultural income), in case of mayur it was some long dated issue about issuances of shares (about which management had issued clarifications also and which according to me was a non issue to begin with, but those who wanted to find negatives persisted with it). Canfin it was ownership by a PSU bank.
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Triggering exits would be in form of some corporate misgovernance or poor capital allocatioin.
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About aarti inds being a secular story, I think you should go through a few annual reports and form a conclusion yourself, or go through the thread on aarti inds where there are a lot of views and counter views.
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Regarding allocations, I am by nature a very aggressive buyer and usually take a significant stake if I am confident about the investment thesis. These days in small caps if there is poor liquidity, I allocate lesser. There are some small caps where there is a lot of liquidity in terms of volumes traded and there I am okay with reasonably decent positions. Only problems with these positions is that when there are sharp corrections, liquidity in these counters tend to dry up and its often difficult to make exit is position is big. For beginners, who have a small portfolio size, this should not be a problem.
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Thanks so much for the practical insights as always , HItesh bhai
Can pledging be considered an issue ? How to judge pledging as it often triggers risk but is regularly found in small caps and a lot of them are filtered due to pledging ?
How to judge promoter buying in small caps ? In large caps , often the promoter buying is followed by profits while in small caps , it most often doesnt . Is it due to lack of well developed judgement on promoter part or due to external factors ?
Hitesh bhai, could you pls elaborate on this for better understanding as at these times only most amateurs like us sell out
Many thanks
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Hi Hitesh Sir, I have recently started looking at some of pharma and specialty companies and wanted you thoughts on it.
Pharma - I was looking at Granules India(37% pledging is concerning though), Alembic Pharma, Jubilant life science(due to injectables and license to sell remdesivir in India) . Reason why I shortlisted these 3 companies is due to valuation. I am still debating with myself if I should start buying them or wait for some correction in pharma companies. Want to know your opinion on these companies or any other pharma company which looks interesting like JB Pharma etc. I have small quantity of Aurobindo pharma and want to add 2-3 more pharma company. I looked at Divis lab too, but it seems expensive.
Chemicals - I have Vinati Organics and was looking to add 1-2 more specialty chemical. I was looking at Aarti Industries and Atul Ltd. Just wanted to check your thoughts on these two companies.
Thanks
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Hitesh Sir,
Could you please provide your views on Road construction companies like Dilip & Ashoka Buildcon from a 5 years investment horizon in times like these
Hitesh ji,
Got to know from your posts that you recently exited Deepak Nitrite (and are currently tracking it).
I wanted to know your thesis in exiting the scrip at this point when the management commentary seems robust about growth.
Thanks.
While looking at promoter buying, one has to look at how much stake they had in the first place and what quantum are they buying. Many a times the promoters themselves are in the same boat as the investors especially when there is a lot of uncertainty. Their guesses are as good as ours. But in general, promoter buying is a good sign. (unless they do it for trading purpose)
Pledging can be an issue if the quantum of pledging is huge. Plus one has to see whether pledge is increasing or decreasing. And what is management’s explanation if any regarding the matter.
Regarding ajanta promoter perception, you can go through the ajanta thread from the beginning to get an idea about how a multibagger is born, its journey, the bumps on the road etc. There will be lot of instances of newsflow/events which shake our confidence as investors. And how to deal with them. Its all in there.
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@hitesh2710 Hitesh bhai… Any thoughts on Triveni Engineering?
Sales and PAT have been growing (although intermittently, just as one would expect for a commodity industry like sugar) while PE is at lower single digits.
PS: Sales & PAT grew well in Sep 2019 and Mar 2020, while Dec 2019 was a show spoiler