Hitesh portfolio

[hitesh2710]

@Sandeep_Mehta

I hold HBL Engineering and my views should be considered biased.

This quarter results suffered mainly from marginal dips in revenues in the industrial batteries and defence segments and a major dip in electronics. Results has provided segmental breakup and even screener paid version provides for segmental break up and margins of each segment.

Recent announcements made by the company have been encouraging for the TCAS ( Kavach ) segment ( which falls under electronics) wherein they have bagged Kavach Loco orders worth 1500 crores. And subsequent to this announcement came the announcement of Kavach track orders of 400 crores. This should provide visibility for electronics division revenue and profitability for FY 26. And we keep hearing and reading about new and new Vande Bharat trains being introduced on various routes which keeps the Kavach order flow visibility healthy.

If industrial batteries and defense continue their steady revenues or show growth, and Kavach revenues get added to the overall revenues, Fy 26 can be a good year.

Even in a presentation made by the company few months back, they had clearly mentioned that Fy 25 would be a year of consolidation and FY 26 and Fy 27 would be years of growth.

Based on order wins, presentation, and management articulation in the AGM, I remain bullish on HBL. We have a very detailed thread on VP for anyone wanting to understand the business of the company.

Some other aspects of the company I like are that

1. the company has not needed to dilute its equity since 2017 and we have seen strong growth in last couple of years.

2. Plus balance sheet remains debt free and cash surplus .March 24 ROCE was a healthy 36%.

3. Promoter holding has remained steady and infact marginally increased albeit by a very small percent.

I like companies that grow, and/or have strong visibility in terms of levers of growth, and don’t need too much additional capital for growth.

disc: I own HBL as disclosed before and have been adding to it in recent price corrections. (this is not an investment advice. Anyone contemplating investment in this company should do their own diligence and take an informed call. Resources for studying this company are freely available, in terms of AGM video, presentations, annual reports, and threads on VP besides other resources one can find. )

[Sailesh_Karn]

Hitesh sir, what are your views on Zen Technologies keeping the budget and Q3 results in mind? Thankyou.

[rahil_sayta]

Hi hitesh bhai the correction is brutal but also offers a scope to add good names . My question to you is good names that you mentioned some post back that you were tracking shaily, genesys , axiscades all have also corrected but valuation wise they may still be expensive ( inspite of 30% fall ) . Growth in future is what we are pricing at todays price how would you look at add in this fall. ( stock names to just understand valuation )

Add on decline or wait for dust to settle to find a bottom and add at 10% bounce . How do you play this correction to make best of it .

Request your views

[SAGHOS01]

Hiteshbhai, Also appreciate your view of Zaggle Prepaid Ocean Services(which you mentioned earlier ) -business analysis and growth opportunities in India.

[hitesh2710]

@rahil_sayta

The correction as you say is brutal and as of now shows no sign of abating. The small and midcaps which were the poster boys of last leg of rally are now being cut to size. Usually during the last phase of correction, the strongest stocks which were holding out all throughout the correction ( last men standing) tend to correct to varying degrees.

We are now seeing some corrections in the previous list of stocks I had put in watchlist to varying degrees. We need to see where they settle down and form a base or reverse from.

All these stocks had strong narratives, and or earnings, and hence were the last to correct. But in a market where everything corrects, there is compression in PE assigned to these high PE stocks as well.

The silver lining is that usually after these sort of sharp corrections, one or more sector tends to show early signs of bullishness for next round of sectoral momentum. As of now I am in wait and watch mode, to see which sectors show such momentum.

Ideal way to play such corrections is to wait for dust to settle, have some early signs of a bottom having been formed and then choose stocks.

@Sailesh_Karn I don’t track Zen tech.
@SAGHOS01 I don’t track Zaggle too closely. It used to be one of the stocks holding out in the correction, but as of last few days it has also been hit hard.

[Doonsrini]

I was going thru Hitesh portfolio discussion. Saw this one and compared

[james_kerala]

Dear @hitesh2710 ji,

Looking for your post with wisdom on current state of markets and technical views after longest losing streak of nifty for 5 months and 10 days closing in negative consecutively. Then small caps showed some change yesterday and nifty today. Do you see a trend reversal now or fear a dead cat bounce?

Thanks in advance.

[hitesh2710]

@james_kerala

We have had five months of negative close as on February end… In the past this was seen back in 1996 or so… Goes to show the extent of price and time correction in a single downswing. Individual small and midcaps have corrected anywhere between 25-50% effortlessly.

Yesterday was a day of decent gains in our market and at levels of 22000 and slightly below we might have made atleast a temporary bottom. My personal view is that after such a correction, and testing and retesting of levels of 22000 (plus or minus a few points) multiple times, we might have made a medium term bottom. These kind of corrections have in the past been followed by strong rallies lasting weeks and months.

So we need to be observant which stocks and sectors offer best risk reward situations. Once the rally has some legs under it, the potential winners are likely to be found. As of now, if you are a fundamental investor, its time to prepare a buy list and levels at which we want to buy and maybe get active. Folks following technicals or techno funda investing will find it easy to buy at specific levels based on chart patterns as and when they develop.

These are the views based on the kind of correction and capitulation we have seen till now. If 22000 levels on Nifty are breached conclusively again, I would have to revise my views.

[Surender]

@hitesh2710

If 22000 levels on Nifty are breached conclusively

@hitesh2710 Bhai: Thanks for sharing your views. Your post motivated me to look at a more granular level. I had a look at the weekly price charts of the Nifty50 constituents.

Price pattern of names that contribute:

• 60% weightage to the index looks weak.
• 32% weightage to the index looks to be in the base formation stage.
• 08% weightage to the index looks positive, hardly any name in an extremely bullish state.

Also, only names that contribute 10% weightage are showing an oversold state. I infer that 22k might be challenged sooner or later.

[hitesh2710]

@Surender

It’s always darkest before dawn… So at the bottom if you try to analyse, you will see a lot of stocks showing bearish patterns. But once markets turn for the better, lot of things change.

On the macro front, US dollar index has fallen from highs of 109 plus to below 104 now. USD INR also seems to have halted, or may infact have reversed. Oil prices remain cool…

The recent global uncertainty is mostly related to temper tantrums of Trump. But in these kind of events, markets tend to react violently for the first couple of such news/rumours, and over a period of time these kind of things tend to get priced in.

More specific to Indian markets, the recent carnage was to correct the excessive froth that had built up in Indian markets in the rally till September 2024. I was expecting the correction to be a long drawn slow grind down, and initially the Death by a thousand cuts correction did appear like that. But in the final phase of capitulation in late January, and February all the catharsis and bleeding seems to have been done. A lot of small and midcaps have corrected to varying degrees from 20-50% or more… And overall correction has been for nearly five months.

So having a very fixed view about things may not make much sense. I remain cautiously optimistic after this correction, as enough bloodshed has already happened. An important thing going ahead is to see how markets react to perceived bad news… If they keep digesting bad news in their stride, it can be an important sign of a strong bottom being behind us.

[aceinvestor_75]

Hello Hiteshbhai,
This is my biggest take from your note “An important thing going ahead is to see how markets react to perceived bad news… If they keep digesting bad news in their stride, it can be an important sign of a strong bottom being behind us” . It will surely signal the behavioral change of market participants. Thank You for sharing your wisdom with such minute but very relevant observations. Current market correction has helped me learn few very important lessons. Respect the screen and learn more about the price / volume action, that to me is the netsum of all actions by the company and reaction by investors and second most important is to be unemotional based on price action, be curt in exiting. This has helped me escape a large drawdown and empowered me with confidence to add new positions based on price/volume as a start followed by interpreting results and concalls to establish likely outcomes in upcoming qtrs. & for foreseeable future. Interestingly my portfolio now has less talked about sectors but are making new highs. Being humble with self learning and learning from experienced and humble investors like yourself certainly increases the odds of winning. Thank You

[Dhiren_Barvadiya]

Hi @hitesh2710 sir can you please review my personal portfolio which I have posted in valuepickr platform and want to add any insight to it it would be extremely helpful as I am new to market and now navigating this bear market for the first time thank you.

[ripzc09]

Dear @hitesh2710 sir, we would love to hear your opinions on how to read the tariff situation and proceed with our investments. what pros and cons do you see and is there any advice that you would like to share with us with navigating through this tricky situation ?

[AKKHIL_GARG]

@hitesh2710 please revert to this as well sir.

[hitesh2710]

@ripzc09

The recent tariff wars have started since April 2, ever since US imposed blanket tariff of 10% on all countries. Since then there have been a barrage of newsflows and lot of nervousness in the markets and in last few days we have seen severe cuts across various sectors of the markets.

One thing markets are always nervous about is uncertainty. When some worry keeps looming over markets, it takes a lot of time for markets to adjust to this scenario. The other trigger is removal of this uncertainty.

As of now we do not have any clarity as to how things will pan out in this aspect. Each country head will like to protect his turf and get the best deal or option for his country.

There are worries about US getting into recession due to these tariff wars..

Overall the macro picture remains quite murky and hence markets seem to be on shaky ground. Even a small dose of negative news is enough to induce severe cuts.

In these kind of worrisome times also lie opportunities. Best thing to do in these times is to prepare a watchlist of companies with clear growth visibility and triggers. With a lot of capitulation days in markets. there will often be chances to load up the favorite companies at very attractive prices.

Personally I feel this Tariff thing can drag on unless US president takes a step back on their proposed tariffs.

Best thing to do is to allow the dust to settle, and watch for any signs of bottom formation and resumption of uptrend before making major commitments. This is what my thinking is. There will be a lot of other views from market veterans.

Someone having a 3-5 year view has a golden chance of picking up stocks if he/she is able to weather near term volatility.

[sanni_kumar]

Hitesh sir good morning
Sir what’s your view on Techno electric on today scenario after revenue has decreasing due to FGD .
Is it better to hold for next 02 to 03 years already corrected 40 % .

[Shankar]

Hitesh Bhai

Don’t you think we should look at the future post the settling of tarring dust.

One way or the other this may not have high impact on long term prospects of most business

[Shakti_Srivastava]

Hi Hitesh Sir @hitesh2710 ,

Hope you are doing good.

Off late a lot is being written about domestic consumption theme doing well for the next 2 to 3 years at least.

Eager to know your current outlook on domestic consumption themes like :

Hotel/tourism
Hospitals/healthcare
Alcohol
Jewellery
Telecom

Sir, also regarding individual stocks request your insights and guidance for the following stocks :

HBL power
Piccadilly agro
Aurionpro solutions
Zen Technologies

Thanks & Regards.

[hitesh2710]

@Shakti_Srivastava

Indian markets have been on a roll since past few days ever since making the bottom at around 21750. US markets have been in a corrective mode and still Indian markets continue to do well. A lot of news, data points, and drops in US markets which might have been perceived as negative have been digested effortlessly.

I think its time to be a stock picker and try and find out businesses that will thrive in the new world order post the Tariffs. The most obvious space is purely domestic focussed sectors like banking, domestic consumption ( this can be a huge basket, with FMCG, consumer durables, alcohol, tourism etc) , defence, PSUs, NBFCs, Insurance, so on and so forth.

The second order beneficiaries could be companies which could benefit out of shift of business to India in view of strained relations of US and China. This would be in form of export focussed businesses where Indian manufacturers have scale and cost advantage, and there is higher shift of business from China to elsewhere, India being the favored destination.

@Shankar Markets usually adjust to new dynamics and it often takes initial knee jerk reaction followed by slow adjustments. We seem to have reached the adjustment phase, where the reality of tariffs are accepted and markets have decided to move on.

@sanni_kumar I don’t track techno electric too closely and am not aware of latest developments in the company.

[Shakti_Srivastava]

Hello Hitesh Sir,

Sir, how much importance should be given to operating cash flow..what should be done in case a company’s top line and bottom line is growing but it’s not reflecting in the operating cash flow..

Also Sir, minimum what percentage of profit should come in operating cash flow…please guide…

Thanks & Regards.