Hitesh portfolio

With bad management, you shouldn’t believe anything that is posted on business performance. Dishonest promoters and book cooking often go hand in hand and no amount of research will protect you from downside risks. Look at what has happened to stock prices of Zee and Polycab.

One should have a very strict rule in this case. If you are not comfortable with bad Mangement then you should exit or avoid stock completely regardless of their quarterly earning performance. A stock may still double, triple of quadruple from your exit level but you should be willing to take it in your stride.

On the other hand if you are not bothered with quality of management and are willing to take a leap of faith with their reported numbers then probably have a target price for exit (and do exit when you meet your target). At the same time be extremely vigilant and ready to pull the trigger at first sign of trouble assuming you get a chance to do so.

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Hi Hitesh Bhai,

Please can share your view on ‘CMS Info’ Cash Management(CMP 386) for short and medium term. The company ROE, is good. PE is below ROE. Should I wait for it crossing 424 before adding? Bought at lower level @ 360. Thanks

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@Satishmm1982

CMS Info has been delivering steady growth ( without being spectacular) over the years. Stock price also shows a similar steady uptrend. Overall it looks like a good combination of a company with good fundamentals with a chart in uptrend.

Where to buy in these kind of companies and charts is a tricky call so maybe gradual accumulation can be a good idea. However you need to do proper analysis before taking a call. It’s your own money and you should have an idea what you are doing and why you are doing it.

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Hitesh Sir… What’s your take on Defense, Railway and Infra after the recent budget announcement…

Do you plan to take position in any of these themes…

Regards.

@Shakti_Srivastava

What you refer to as the recent budget was just a vote on account which is usually the case before any impending central govt election . It does not carry the full significance of a regular budget.

The other aspect of this question is about the impact of the announcement on various sectors. Regarding this I would like to narrate an anecdote which establishes the importance of not giving too much importance to announcements and news out in the public domain.

We were lucky to attend Howard Marks lecture at Mumbai few years ago. He narrated the incident as follows. According to Howard, one day his son came very excitedly to him and mentioned that he should buy shares of a particular automobile company because he read it in the newspapers that its latest model was selling like hotcakes.

Howard next asked his son “WHO DOESN’T KNOW IT?” If the news is out in the newspapers it is probably baked into the price, or atleast the bulk of it is built into the price. Similar is the thing you are asking, Who doesn’t know whatever is mentioned in the (so called ) budget announcement?

In this day and age of very quick transmission of news/rumours its futile to react to these kind of stuff. Instead its better to go through the old grind of tracking companies, doing detailed research and then take a call.

Maximum and quickest money is made when we can catch a company in transition at an early stage. That transition can be a laggard company entering growth phase, or a turnaround company heading towards successful times, finding sectoral tailwinds, a chart breakout, or chart breakouts in companies of the same sector, so on and so forth. We at VP are lucky that there are a lot of noble hearted folks who share their research and that too at an early stage of a stock’s journey. That is the time for us to buckle up and do full research to either accept or reject the idea.

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Thank you Hitesh bhai and +1000 to what you shared.

“We at VP are lucky that there are a lot of noble hearted folks who share their research and that too at an early stage of a stock’s journey. That is the time for us to buckle up and do full research to either accept or reject the idea.”

A lot of people including me may very well miss out on these important updates.

So when you notice a moment like this and your convinced and investing in the idea :bulb:

When you share your knowledge with the wider audience, how can you make sure a critical, P0, rare opportunity in your personal opinion is recognised by the audience in the same spirit versus other updates.

I’m sure there are a few and select times when as an investor you’d feel that this is one of those rare once in a decade 5 years etc opportunity and the odds are in your favour to allocate a sizeable portion.

How can you ensure that these stand out, a hashtag, a special call-out?

Would love your thoughts and feedback on this suggestion and request Hitesh bhai.

I know a lot of people follow and deeply value Hitesh bhai, if you also face this issue and beleive this is a good idea please +1 to the idea and add your inputs so that Hitesh bhai can look into it.

Thank you :pray:

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@rahulbhardwaj19

I don’t exactly get your question, but I guess it is to do with folks highlighting outstanding high conviction ideas on their posts on VP.

The same dictum as mentioned before holds true again. This is a self help forum and not a place where spoon feeding should be done.

Idea can be shared by anyone, but we as investors have to do our own homework and develop our own conviction and then only take a call. If you go through a lot of successful ideas over past few years, the idea initiator has started off providing crisp investing logic in his/her write up. There are even follow up posts highlighting developments/updates/results in the company. After that it is up to us to take it forward.

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Dear @hitesh2710 ji,

Wondering if you are still tracking or have a view on Lux Industries (you started the thread way back)

Lux has been fraught with challenges in the last couple of years…
1/ Insider trading case in early 2022 against promoter’s son (Udit Todi)
2/ Surge in raw material price (cotton)
3/ The two brothers at the helm (Ashok and Pradeep Todi) not getting along
4/ IT raid in late 2023

But looks like some of the issues are behind them, with…

1/ Udit Todi has been given a clean chit in the insider trading case
2/ Cotton price has cooled off
3/ Per the grapevine, brothers Ashok and Pradeep have divided the empire (split by brands) – the recent results also reported the numbers by “verticals” for the first time which to me looks like carving up the empire

IT raid is the only big known unknown in my view

Additionally, a new unit at Jagdishpur came on stream last week which will add ~400 Cr to the top-line in the next ~2 years

Risk-reward ratio looks very favorable to me…

Thanks in advance

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@Apurva_Dubey

Lux Inds results have been on a continuous decline since March 2022. As of now things don’t seem to have improved a lot. All the points you mentioned seem valid, but I think there are better options like Dollar inds, page Inds in the same space with no stains on reputations.

One thing I have realised is that during bull markets idea should be to make maximum money rather than get trapped in so called value stocks quoting at near 52 week lows. Even on charts there does not seem to be much strength. Will need to watch if any strength materialises on the back of the investment positives you listed .

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Hitesh sir, What’s your take on Pennar Industries and Capacite Infra?
With recent boost in infra sector, these 2 companies are giving multi-year breakout. Do you plan to take any position in either or any other infra stock?

Thanks and regards.

Hi Hitesh ji,
Thank you for your immense contribution to the learning of so many retail investors including me. I was recently looking at RIIL & the pattern seemed a very long consolidation & Cup & handle Pattern with top around 1180 & bottom around ₹ 198.
Does this qualify as a breakout from a C&H pattern with potential targets of ₹ 2000, in your experience?

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@Jitendra_Vyas

I dont track the fundamentals of either Pennar Inds or Capacite infra. Charts of both companies look interesting. They are not in my watchlist.

@Sambhavk

RIIL has given a multi year breakout above 1100-1200. Stock price is at almost a 15 year high. But I have never managed to understand on what basis the stock keeps going up and down. Fundamentals wise a quick glance at the 10 year results on screener does not provide a very encouraging picture.

In the final phases of a bull markets stocks often go up, and go up a lot purely based on stories and narratives.

Our job as investors is to make sure we know what we are buying and why we are buying. This view has got nothing to do with RIIL in particular. Who knows it might go up a lot from here. But if I dont have any fundamental conviction, then it would be difficult for me to hold on to it if it starts correcting.

The biggest mistakes are committed in roaring bull markets and they often turn out to be the most expensive. Hence while investing particularly during frothy bull markets we have to be very sure about what we are buying.

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Biggest issue with Lux still continues to be corporate governance. Any company where you find instances of insider trading, IT raids, family feuds is always a risky proposition regardless of whether those issues are behind them or valuations are low.

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Dear Hitesh Sir,

What would be your view on Sportking India.
The company has completed a significant capacity addition last year, running the plants at high capacity utilization, have installed rooftop solar power so would get around 1% savings in power cost in FY25. The RM prices (as per mgmt) have bottomed out, there are demand challenges from Bangladesh, China and also India demand is muted. If demand improves, then the realizations can improve.
Technically, the stock is consolidating between 750-800 levels. Op. Margins (7-8%) are near to the lower end of their range. Pre-Covid the margins have been between 10-16%.
Does this set up look interesting?

Thank you,
Ketan

Dear @hitesh2710 ji,

Can you share your views on the new-age manufacturing companies in India (in aerospace, defense & engineering sectors) like Azad Engg, Aeroflex, Cyient DLM etc?

There is lot of buzz that such manufacturing companies will do very well over next 10 years given the focus being given by the govt. They are also mostly young companies & small-cap (though valuations are quite high). Is it worth investing in such companies assuming there will be steady govt support (in terms of promotions) and these companies will grow well?

@newone

Whenever narratives and stories and projections are made for 10 years or more, its time to be careful. First thing in such a situation you do is to check what kind of run up the stock price has had in past 1-2 years. If it has gone up 2-5 times or more, then be very careful about what kind of valuations you are paying. Plus you should know what you are buying and why you are buying.

EMS is the latest sectoral fancy in our markets besides of course the PSU stocks, and the rally still seems to be on in full swing. Problem is we have no clue how long this is going to last. Besides even in terms of overall markets, we have had a strong rally behind us. Maybe even front of us. But we need to be wary of not getting caught up in the frenzy.

I don’t have any specific views in these names, but think overall caution needs to be exercised.

@Ketan_Chheda. I don’t track sportking. Its a typical cyclical textile company and has to be played accordingly.

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Sir this caught my attention. In the overall mid and smallcap context - do you see that we have reached certain level which warrants caution. If yes, please share your thought process on the same (why you think so).

Also please share your own action of last couple of months (did you add or reduce?). If you reduce allocation, where that money goes? I noted at one point of time you parked some money in BSE for dividend (please ignore the stock name). Has the approach changed when you reduce stock allocation.

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Hitesh Sir, what’s your mantra to not get carried away in this euphoria when every tom, dick and harry stocks are going up.

What’s your strategy regarding portfolio rebalancing and allocation in this bullish market.

Does number of stocks in your portfolio also move up in this scenario.

Your views are welcomed Sir.

Regards

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@joinjp2003

The froth in small and midcaps space is there since quite a while. But we cannot wish away market froth and bubbles. They will finish their due course before bursting. And when that happens is anybody’s guess. And if you know how to ride them, the last phase of a bubble is actually when maximum money is made. (And also lost if caught in the storm on the wrong foot.)

Strategy has not changed much. I am largely fully invested, Only thing I do off and on is to book atleast partial profits in some positions where I feel stock price run up seems unsustainable.

Regarding parking space, these days a lot of options are available in the large cap high quality names. Stocks like ITC, HDFC Bank, Asian Paints, etc are in corrective phase and once these show first signs of a change in trend, these can be good parking space with potential of some upsides too .

@Shakti_Srivastava I usually do not exceed a number of 10 stocks in my portfolio. It’s only when I can spot some kind of sectoral cyclical plays that I increase this number to accomodate a basket of stocks from that particular sector. Just as some people are not comfortable with concentration, I am not too comfortable with diversification. Here there is no right or wrong. Depends on which style suits your temperament.

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@hitesh2710 ji that’s impacable! Is there way for new learners like me to know about your current companies allocation?
Also are you always fully invested? Do you invest in those 10 companies for long run or for swing? How do you determine when to sell-off?