Hitesh portfolio

Q&A: Questions & Answers Portfolio Q&A
1402

Hi Hitesh,

I agree. The expensive valuations due to the run up is precisely the reason I thought of waiting for an appropriate opportunity to enter Blue Dart.

At the same time throw away valuations of Gati, TCI etc when they were trading at 35-40 levels compelled me to take a position in them. I had taken a position with a very long term view and without any expectation of making any decent return on them in the next couple of years. Luckily they have moved up though.

One interesting fact is that RK Damani has stake in all three of them i.e. Blue Dart, Gati and TCI!

Cheers!!!

1403

Hi Hitesh,

I agree. The expensive valuations due to the run up is precisely the reason I thought of waiting for an appropriate opportunity to enter Blue Dart.

At the same time throw away valuations of Gati, TCI etc when they were trading at 35-40 levels compelled me to take a position in them. I had taken a position with a very long term view and without any expectation of making any decent return on them in the next couple of years. Luckily they have moved up though.

One interesting fact is that RK Damani has stake in all three of them i.e. Blue Dart, Gati and TCI!

Cheers!!!

1404

Hi Hitesh,

I agree. The expensive valuations due to the run up is precisely the reason I thought of waiting for an appropriate opportunity to enter Blue Dart.

At the same time throw away valuations of Gati, TCI etc when they were trading at 35-40 levels compelled me to take a position in them. I had taken a position with a very long term view and without any expectation of making any decent return on them in the next couple of years. Luckily they have moved up though.

One interesting fact is that RK Damani has stake in all three of them i.e. Blue Dart, Gati and TCI!

Cheers!!!

1405

Apologies for the multiple posts. Due to 503 server error. Option to edit/delete would have been great.

1406

Thanks Hari, HR & Hitesh for your comments, I also agree Bluedart is the best pick, it also subsidiary of DHL, but @75 PE. Others are not doing so good, v high debt, low ROE etc. I thought there would be something new, small cap logistic start up, riding this story in listed space.

Thanks for all valuable inputs.

1407

Hi Hitesh.

Sorry for coming back again to you again sirji. Just wanted to check with you just to play chocolate/ice cream/spirits long term story for India, with demographic etc, who are the best businesses hence stocks to own or track. I am struggling with this for last several years ever since Cadbury Indiais delisted. Nestle is the next on this ? On spirits after Diaggia United spirits is@100 PE, with high debt, low earnigs etc. Similarly researched Vadilal/kwality, but was not impressed with their rations/managements etc

So looking for some one like Page, who also has powerful brands, ROE etc,small and has a long way to go. Did you ever had a llok at these sectors to play on consumption and demography theme.

Any body else can also chip in

Thanks !

Santosh

1408

Hitesh bhai

What’s your take on your longtime favorite unichem

Better exit and move to higher growth name?

Thanks

1409

Dear Hiteshbhai,

What is your view on Graphite India:

@ Current P/E of 12

I find its numbers very compelling also

- Significant reduction in debt, leagues ahead of its competitors

Competitor ananlysis






Name Sales Turnover FY 14 Net Profit FY 14 NET PROFIT MARGIN FY 14 Total Assets P/E D/E ROCE 5 YEAR AVERAGE
CURRENT FY 13
Graphite India 1,768.08 170.92 9.67 2,212.61 12.47 0.35 17.3
HEG 1,466.81 86.62 5.91 2,078.42 12.7 1.41 15.2
Esab India 435.55 33.12 7.6 267.27 32.79
Ador Welding 368.92 4.23 1.15 186.03 69.77 0.01 18.47

GRAPHITE INDIA
2014 2013
Secured Debt 357 500
Unsecured Debt 106 243
Total Debt 464 743
Cash and equivalents 410 276
Net Debt 54 467
Net Worth 1759 1712
D/E
0.03x 0.27x
Dividend per share 3.5 3.5
1410

HiteshBhai,

This is my first post in this board and i am a new comer and a learner with not much experience… I have gone through a lot of posts in this board and here are my queries…

I need your advice on whichones to choose and in what proportion and which ones are to be left out…

1). BF utility

2). Deccan Gold

3). Lloyd Electric

4). South Indian Bank

5). Cityunion bank

6). Om metals

7). Madhucon projects

8). Manaksia

9). Kwality

10). TCI finance

11). HCC

12). Indiabulls real

13). L&T Finance

14). Dewan Housing

15). Jyoti Structures

16). Balkrishna Industries…

I would like to know from the above list which are the ones worth investing and for what reasons… Kindly advice Hiteshbhai…

Thanks

1411

Hi Hitesh,

Sorry, for re-posting this message, earlier posted under “VALUEPICKRi PUBLIC PORTFOLIO - ANALYSIS-DISCUSSION-CRITIQUE”, seems it gone unnoticed because of too many messages.

As rightly predicted by you earlier in the month of March, NBCC has already doubled and not looking to go down anytime soon because of positive news coming relentlessly. It is making all the right andaggressivemoves like a private company. Need your opinion if it is going to be long term(approx 3-4 years) bet due to the following events:

1.http://www.financialexpress.com/news/enhanced-autonomy-for-eil-nbcc-with-navratna-status/1263940 Link: http://www.financialexpress.com/news/enhanced-autonomy-for-eil-nbcc-with-navratna-status/1263940

2.http://www.4-traders.com/NATIONAL-BUILDING-CONSTRU-10508016/news/National-Building-Construction–NBCC-TO-BEGIN-WORK-IN-100-CITIES-18562779/ Link: http://www.4-traders.com/NATIONAL-BUILDING-CONSTRU-10508016/news/National-Building-Construction–NBCC-TO-BEGIN-WORK-IN-100-CITIES-18562779/

3.http://www.4-traders.com/NATIONAL-BUILDING-CONSTRU-10508016/news/National-Building-Construction–NBCC-PLANS-GLOBAL-EXPANSION-EYES-100-SMART-CITIES-PROPOSAL-18620398/ Link: http://www.4-traders.com/NATIONAL-BUILDING-CONSTRU-10508016/news/National-Building-Construction–NBCC-PLANS-GLOBAL-EXPANSION-EYES-100-SMART-CITIES-PROPOSAL-18620398/

4). http://www.livemint.com/Companies/Jldm5sdRWRm9A6h8nKjo3N/NBCC-plans-tieups-with-sick-PSUs-to-boost-real-estate-busin.html

Positives on NBCC:

1). With NBCC having Navaratna status, greater autonomy from operational and financial standpoint. Hopefully, some negative aspect of PSU will be taken off.

2). Its asset light business(commission based) model with assured margin of 15%. Warren buffet quote: aI try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.a

3). NBCC is planning global expansion in countries likeOman,Botswana, Sri Lanka,BangladeshandMyanmar.

4). Debt free company.

5). Planning to boost real-estate business by taking over the land acquired by Sick-PSUs decades ago . These land pockets would be very valuable now.

Negatives on NBCC:

1). It remains PSU, vulnerable to Govts interference. Ofcourse, with Navaratna status, it is less affected.

2.Less efficient compared to Private companies.

Disclosure: Invested and Positively biased,

I think before the correction in most of the VP stocks began they had a stupendous run and they seemed to be on the upper limit of fair valuations. Now they seem to be taking a much needed rest.

Looking at the current rally, I think the time might have come to bet on the beaten down names like PSU banks, some stocks like NBCC etc. There might be powerful 20-40% pop ups within a month in these names mainly due to reduction of risk aversion in the markets.

Coming to how much one can bet on these names, I think if risk reward remains favorable one can easily bet 10% on a couple of names.

The other rate sensitives like SCUF and some other quality NBFCs also might make a comeback.

I think one can embrace the Horses for Courses philosophy during the current rally.

1412

@Santosh, The listed companies in the space you mention are few and most of them are quoting at high valuations. I cant find anything from eatables space expect for Jubilant Foodworks.

@excel, Yes A switch from Unichem seems a prudent course. I would prefer Shilpa in its place.

@aditi… Graphite is a quasi cyclical company. Fortunes depend upon steel cycle. By itself its a good company but one has to know the phase of the cycle to make good money out of it.

@dushyant, I cant find anything among the list thrown up by you which matches the valuepickr public portfolio stocks or other evergreen stocks like hdfc bank, page inds, etc.

@jagadish, I havent studied NBCC too much. It looked good back when I posted about it. I dont know about the merits of its long term investment potential.

Based on current prices and valuations stocks that seem attractive are Shilpa, housing finance companies like lic hf and gic hf (which have gone up but still seems there is more juice left), and based on technicals, zensar, hgsl, and kpit tech.

disc: i have holdings in all the above picks mentioned.

1413

Santosh, If you are looking for a company offering milk and products based on milk then you might want to look into Amrit Corp. Ltd… Its not pure FMCG company but its I think making its way into that sector.

Market cap. is 160 crore, book value 466, P/E:18, EPS: 27.66 D/E: 0.19, Reserves: 137.25

Indiais is@100 Link: mailto:is@100 etc,small

1414

hitesh bhai

would request you to look at the thread of fiem industries.

do you think kajaria can be a good play even at current levels for the indian housing theme.

it can be a proxy play cause of increase tax saving…govt focus …real estate incentives in the budget…and in itself is a well managed market leader in tiles industry.

regards

divyansh

1415

divyansh,

Fiem seems a decent company in an unglamorous space. Even more interesting is the run up in stock price from 200 to 550 since nov 13 till now. I think since the run up has been sharp, there might be some sideways movement and that might provide buying opportunity if one is convinved about the story and the valuations.

Kajaria to me seems expensive at current valuations. Although an argument can be made putting forth the theory of size of opportunity versus market cap.

Personally I dont see too much chance of re rating upward from these kind of levels. If one has a five year view with a capacity to bear near term pain, it seems okay.

1416

kajaria is adding additional capacity which should go in books by august 2014.I think about 3 MSt. Plus their plant to develop bathware will be a direct competition with cera and HSIL. The budget for new bathware plant is passed around 50Cr.( Will update one management come with progress report on the plant).

The best thing about Kajaria is able to control its working capital while sales are increasing working Cap. is getting tamed.

With dealership of around 900. This new competition (in Bathware ) area will be interesting.

Pe re-rating mostly take place when markets are flat , with a high a Nifty pe stock re-rating will be unlikely…

1417

I agree with Hitesh, Kajaria is expensive at current valuation for me the price of 480-490 a buy price for EPS = 16.75(approx), growth rate = 20.

1418

Hi Hitesh…whats your take on Unichem after the Q1 results & concall. Domestic formulation is still sluggish, whereas they are quite hopeful on their US filings. Also do you think that Drug Price Control which is predomininantly in Diabetology & Cardiology can have adverse effect on them.

1419

rajeev,

Unichem is suffering from lack of growth. Management has in the past also claimed good future growth but that doesnt seem to have materialised.

DPCO will have some impact on Unichem but for most pharma companies it would be “seen that done that” kind of thing. But if the govt persists in bringing more and more products in the ambit of DPCO then it would be sentimentally negative.

1420

Dear Hitesh, need your advice on my holdings

Housing finance stocks occupy 35 percent in my PF, nil exposure to gruh and repco and gichf is 50 percent of allocated. remaining are lichf canfin dhfl.

currently profit in [canfin] and losses in lichf and gichf and dhfl at cmp

free cash in hand at 25 percent

Thankyou

1421

RK,

There might be some short term negative perceptions for LIC HF due to the RBI notification. But I dont think the banks will dislodge these HFCs soon. Plus currently the market for HFC itself is so huge that for next 2-3 years everyone will make hay.

As mentioned in details by Vinod MS in the canfin thread, canfin is likely to be the fastest growing HFC while size wise, LIC is second only to HDFC.

Repco and canfin would in most likelihood grow strongly over next 2-3 years.

You can base your investment thesis on that.