Hi Hiteshbahi,
Thanks for your reply with excellent analysis. It’s very helpful. I am new to VP platform , but I have a sizable portfolio built over the years. I never looked at technical analysis before but after going through your earlier posts, I found it very interesting and realized that had I used such analysis before buying Jubilant Ingrevia and Vaibhav Global , I would not have got stuck with losses (30-40% of my investment amount) during last one and half year. Funny thing is that in case of Vaibhav Global, I followed Chairman buying the stock. But it’s a good lesson and will help me in future.
Now , about HBL systems , in the recent past I added at 162-168 levels – ‘FOMO effect ‘ and today I sold whatever I added . It may become a multibagger in future , but at this juncture with whatever information at least I have , I believe it does not justify that price. Further , hope can’t be a strategy. Let’s clarity comes after the Q1 result and at that juncture, if I can justify the price definitely I will add.
Finally , Hiteshbhai you are doing a great job by sharing your knowledge with so many investors like me.
And noticed that it is trading above it’s 52 week high like many other indices.
Do you consider now thin at this index also turned bullish? Are you invested in any of Pharma names? What are the stocks you consider very good from Pharma sector.
Also, which sector(s) you consider aps very promising in the current bull run?
Disc: I am invested in Natco, Alembic Pharma and divis at lower levels and DR Reddy’s and microcap anuh Pharma close to current levels holding each of them 4.5, 3, 3 and 2%
As mentioned in the earlier post you quoted, pharma sector shows strength in select pockets. The pharma index is strong because its main constituents like Sun Pharma, Dr reddys, Zydus life etc have very strong charts and are in strong up trend. However some stocks like Laurus, Divis, Aarti Drugs etc which were big wealth creators in the past bull run in pharma sector seem to be well below their All time highs.
Since we have a broad based overall bullish market, there will be sector rotation off and on, but its difficult to conclude that a fresh pharma bull run has begun. The large cap pharma companies do look good on charts. I am not invested in any pharma names as of now. Used to have a trading position in Natco pharma, but exited that too because I had a small allocation and did not scale up in Natco due to perceived opportunities elsewhere.
@hitesh2710 hi hitesh sir, I want to ask you about index management. As the it sector and reliance is expected to go down is it the time for psu bank and left out private banks like axis, ICICI, and Kotak banks turn to rally? Sbi and Kotak are looking good on charts. What’s your view on the banking space and especially on sbi and Kotak ICICI?? Why I’m asking this is as index and other stocks rallied and took out ATH it’s the banking space which is more or less below their ATH. So to keep the index up
There is a whole theory of index being managed (sort of conspiracy theory) doing the rounds, even among the learned circles. Personally I don’t give too much importance to these kind of theories. I don’t know whether there is any truth to it or not, neither do I care. I mainly focus on companies I am invested in and hence am not too worried about these kind of stuff. Broadly if the trend is up with a few days of correction I am okay with my views on markets.
Aside from this index management aspect, heavyweight banks, heavyweight PSUs like NTPC, maybe a couple of big pharma and auto names could pitch in to support index. IT index as of now seems weak, though I feel stocks like TCS need to be watched for any sign of reversal.
@prav.br I don’t track Cantabil ( I hope that is the correct spelling of the company) so no idea about it… @hitusohi1 I don’t track indiamart. @Moiz_Engineer I don’t track Stylam.
@pravinamirth You can look at the 52 weeks high thread and other technical analysis threads on VP for companies showing good momentum.
Asian Paints remains a high quality company in a segment that is less likely to be disrupted by product substitution. However the threat of competition from deep pocketed players like Grasim, and JSW group remains. But with the kind of brand strength and distribution might, it could be a long time and a difficult journey for new incumbents to dislodge this leader. Stock price has recovered from earlier levels of 2800 to 3500 kind of levels now. It is a company that can at best be a consistent compounder, and not a multibagger from here.
PVR Inox on the another hand is a business model that has been disrupted by the OTT onslaught. When people have access to high quality entertainment ( lots of options to choose from) from the comfort of their homes at comparatively negligible costs, who is going to go to the multiplexes , where one has to pay for all things like parking, popcorns, and tickets. And then if the movie turns out to be a dud, all the money goes down the drain. Personally speaking, I used to watch movies in a nearby good quality PVR multiplex before Covid almost once a month, but since Covid, have not been to the multiplex again at all and have not even felt the need to go. Most of the stuff that is shown in multiplexes comes to OTT platforms in next month or two.
ITC demerger was an even that was on the cards since long. I don’t think it makes any material difference to the company. ITC Has run up from levels of 200, when a lot of memes were doing the rounds, ridiculing the company related to non movement of its stock price. And now the pendulum has swung to the other extreme. Just read a headline that market cap of ITC is higher than Hind Unilever. Shows the kind of difference in headlines/sentiments towards the company in a matter of less than 2 years. ITC is a compounder type of stock and buying has to be done considering that. Usually while buying these type of companies, its always a good idea to buy extreme pessimism ( in case of ITC when those memes were doing the rounds) and then sit back and let markets do their stuff. Personally I don’t have any views on ITC, but one can use above mental models to invest in compounders if that is what one wants to buy.
Hi Hiteshbahi,
Hats off for such a good analysis. While building up a portfolio for long term and specially those who are unable to absorb big swings in their overall portfolio value, I think , one needs to have a few compounders like Asian Paints, Pidilite, Nestle etc. But as you said, definitely you will have to pick those up when there is extreme pessimism in the market or price of the script is depressed because of a bad quarter or other adverse news flow. But the real test is holding those for a long time. It’s extremely difficult to hold your position when it remains range bound for a year or so , and most of the market analysts advise you to sale.I bought Pidilite in 2014 at an avg. price of INR 350.00 and now it’s 15% of my portfolio. There is no movement of the stock price during the last one year ,when a few of my stocks have gone up by 50-60 % during last 5-6 months. Now, Pidilite is getting into paint business. They have excellent network of distributors in the related field and if they can capture 5 to 10% of the market then turnover and earnings will shoot up. What’s your view? Regards, Samir Ghosh.
I do not track in details either Asian paints or pidilite inds. I am not too much a fan of compounders as of now. ( who knows at a later date, I might decide to semi retire from markets and move into these type of companies But as long as I enjoy the challenge of finding big winners and techno funda investing, I am all for it)
But broadly speaking, Pidilite is a dominant force in its line of business and since that business is a very slow growing business, incumbents would not be interested in getting into the space. When the castle itself is small, even a smaller shallower moat will do because very few plunderers would be interested in raiding the castle as the riches are few.
Whereas Asian paints revenues are nearly 4 times that of Pidilite and hence more suitors would be interested in getting into the business. So a bigger more lucrative castle and hence needs more fortifications.
Assuming Pidilite getting 5-10% market share is easily said than done. Many players have tried and few have suceeded. So Pidilite getting into paints and using that as an investment argument does not cut too much ice for me. By itself, I think Pidilite is a fantastic business, and can be a good candidate for consistent compounder portfolio. However as mentioned in an earlier post, these need to be bought at times of distress.
What is your view on Paytm? There is consistent increase in lending with very attractive take rate. Also given that ESOP expense will materially reduce from FY 25 onwards, Do you think valuation is reasonable if we consider two years forward earnings.
This really makes me think that Pidilite being in the enabler of Infrastructure/Real estate/Industrialization, Smart city etc. space - Construction chemicals, all kinds of Adhesives/Water proofings, even niche spaces such as under water construction related chemicals, and even retail direct consumer offerings etc…Why would such a space in a developing country like India be “slow growing” It makes me think what is not in line here…food for thought! Would be great @hitesh2710 sir if you may share your views on what could be the reason for less growth in this space or did I understood something not correctly here? Thanks!
Sir, Can commodity stocks be a part of long term core portfolio…many metallic commodity stocks ( steel, aluminium, industrial metals etc ) have given multifold returns of late…your views on this piece especially if one wants to make them a part of their core portfolio for long term…
I do not know the exact product profile of Pidilite except the superhit products like Fevicol and Fevikwik etc. But if I were to venture a guess, I think Pidilite has saturated its geographical coverage in India. Its products like the 5 rupee or 10 rupee small pack of Fevikwik is available even in small kirana shops. That leaves very little scope of geographical expansion.
The main avenue for growth in such a scenario remains launching new products. Its difficult to come up with products which are consistently blockbuster akin to fevicol and fevikwik. Broadly the company’s growth will mirror the setoral growth which again is a saturated market. In times when economy picks up and construction and infrastructure activities go through the roof, this company will grow fast, other times tepid.
Plus in times when raw material prices ( read crude) shoot up, company’s sales will go up, but I don’t have much idea about how profits fare during those times.
Maybe its one of the reasons why company is looking for areas beyond its usual area of competence in an attempt to get faster growth.
@nilwadmalwar I don’t track Paytm. You can go through relevant thread on the company. Digant Haria presented on the company in our last VP annual meet in April 2023. You can find it by googling or on you tube.
Hope you are well! Each message from you on this thread is a knowledge treat!
The chemical sector (Specialty chemical as well as agro chem) is going through the headwinds and participated in this special rally since April in a wrong direction.
Having said that we get to hear/read from knowledgeable experts that this is a temporary blip. Probably will last for 2-3 quarters. And things will turn around. With that turn around, there is an opportunity for investor to make big gains given the correction in these chemical and agro-chem stocks. It will be very helpful to know your thoughts on how investors can benefit from this expected turn around in chemical/agro-chem sector? How can the investor prepare themselves for this future opportunity.
‘ and today I sold whatever I added . It may become a multibagger in future , but at this juncture with whatever information at least I have , I believe it does not justify that price. Further , hope can’t be a strategy. Let’s clarity comes after the Q1 result and at that juncture, if I can justify the price definitely I will add.
But as long as I enjoy the challenge of finding big winners and techno funda investing, I am all for it)