Astec life is mainly into agrochem as you mentioned and as a company was not going anywhere till 2017. I think somewhere post that, godrej group took over the company. While topline has been growing steadily, company’s net profits had remained stagnant during fy 18 and fy 19 at around 36 crores. In fy 20, q4 fy 20 turned out to be a blocbuster quarter and that gave a fillip to fy 20 numbers. Part of big jump in net profits seen in fy 20 is also attributable to lower tax rates due to corporate tax cuts. Now what we need to be sure is that the kind of growth seen in recent quarters is sustainable. If they do concalls, you can listen to them and try to find out answers or else read the latest annual reports. Nowadays there is strong fancy for most agrochem stocks and part of it has rubbed on to astec as well. With the kind of valuations it is quoting at, it will have to deliver numbers to maintain these kind of valuations going ahead. I personally dont track too closely so not too sure about what the future holds for this company.
Paushak is in a niche business. Because the products are hazardous, few licenses are given for these kind of businesses. March quarter has been a letdown in terms of sales and profits and June quarter may also be affected because of lockdown and all its associated complications. Need to see how it fares for next few quarters. Over the longer term it does look interesting.
Regarding which companies are going to be the fast growers I think there are no easy answers. One has to track quarterly numbers, concalls, annual reports and in short get the hands dirty and only then the answers will be evident.
In a portfolio it will always happen that some stocks will not perform as per expectations or in line with other stocks. Here if the business quality is great and we feel the problems the company is facing are temporary it makes sense to remain invested. But if near to medium term prospects appear bleak then it makes sense to make an exit and get into companies with better prospects. Regarding allocations, I think it depends upon individual comfort levels on how high to take allocations. I have heard that Basant Maheshwari is one guy who sometimes has only 4-5 stocks in his sizable portforlio. He would be okay with it while others like Ayush who holds relatively more diversified portfolio would be okay with higher number of companies.
I am someone who believes in being aggressive when I have figured out that the chips are loaded in my favour and I have clear visibility in terms of business performance and it correlates with stock price movement and strength in stock price. In such situations I dont hold back and bet big and try to ride the momentum in business and stock price. But such situations and such clarity happen once in 2-3 years and that is the time when I try to go for the fences. But this thing comes naturally to me and I often have to control myself in terms of allocation. Whereas some fellow investors who I talk to are surprised and feel uncomfortable holding such concentrated bets. For me too these are short to medium term pheonomena and not the norm. After this thing gets over I try to get back to the regular allocations which I follow most of the times.
