Index & Equity Portfolio Review-Saurabh

Q&A: Questions & Answers Portfolio Q&A
1

Hi All
This is my first post and been reading posts on VP for last year and been a great learning. I would request if experts on VP can review my portfolio and guide, would be really grateful.

Aim: To compound my wealth by 15-20% and have 10-12% Dividend Income

Current Portfolio

  1. Index Funds: 30% of portfolio: Consist of SBI ETF IT (50%), Nifty Next 50 (27%), MON100 (10%), I plan to stop Nifty Next 50 and MON100 and replace them with SBIT ETF consumption, Nippon InfraBees. Rationale for high IT is that technology would be in demand for coming years. As India is a developing nation and is on growth path both in terms of infrastructure and per capita income, growth in consumption, and Infra index will stay. I plan to increase Index funds to 60% from current 30%

  2. Equities: 70%

  3. Bajaj Finance: Biggest NBFC and targets professionals with good credit scores, thus less chances of NPAs and evolving its technology quite well. It is also showing good profit growth

  4. CDSL: Monopoly stock, and as access to stock markets increase and more companies get listed their income and profit is expected to grow

  5. CAMS: Same as for CDSL, and more focus on mutual funds, thus CAMS expected to grow also

  6. Godawari Power: One of most undervalued stock, with high growth, the iron pellets and steel would grow as India grows. In addition it does plan to invest in solar power. The current export duty levied may impact its profit, but long term should perform well.

  7. Redington: Low OPM, but high ROE and been evolving its business and revenue channels. It is focusing on cloud business, retail, services etc. With technology growing and people buying more technology gadget, Redington seems to be a good bet

  8. Divi’s Lab: One of prominent API companies

  9. Deepak Nitrite: Leader in nitrites and phenols, as demand for specialty chemicals grow, it is expected to grow at decent rate

  10. Lux Industries: One of most undervalued company in textile group, currently diversifying in premium segments and expanding its portfolio, again can ride consumption boom in India. Recently had been affected by SEBI order, however seems to be a short term effect (I may be wrong seeing fate of Yes bank, CCD, etc) will be following up

  11. Relaxo footwear: Again India consumption story
    10: Indiamart Intermesh: Largest online B2B player and as technologies and businesses grow, Indiamart expected to be a good bet.

Dividend Equities

  1. PNB Gilt: 15% Dividend yield, only company authorized for Government borrowing, and govt is xpectd to keep borrowings high in view of growth of the country
  2. BPCL: 19-120% Dividend yield, Govt company
  3. Coal India: Coal expected to stay even though EVs coming up, Dividend yield: 8.8%
  4. Clariant Chemicals: Purely for dividend yield (37%): 14-15%

Going forward I intend to reduce current share of Equities to 30-40% and increase share of Index funds to 60-40%

Would request experts to provide their valuable guidance and feedback on my portfolio

Regards
Saurabh
Request if experts

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Hi Saurabh. I am not any expert as such but I can see you have picked the right stocks for longterm 15-20% growth CAGR. Your Dividend Income target might be unachievable as of now. Here are my suggestions or the rules I follow when I Invest.

  1. You have a perfect mix of Mutual Funds and Direct Equity but it is always recommended to have some cash. So as you said you want to bring your Direct Equity allocation to 60%, instead of investing the 10% in something it’s better to keep some cash, incase if markets suddenly correct you have enough Investment corpus to benefit from the downturn.

  2. Even though you are investing in Mutual Funds but they too comprise of equity. So if you look at the larger picture, your whole portfolio is still allocated towards equity. Apart from the 10% cash, you could consider stopping your Next 50 and MON100 SIP and start an Sip in a Debt Fund till you allocate 20% to it.

  3. Your stock selection is quite logical. The only thing is you don’t have companies that are focused on the future, for example EVs, Renewable Energy and IT. These companies generate huge Alpha as with each Innovation and Development in Technology, these companies gain a lot of Opportunities. You can check out Olectra Greentech, M&M, Tata Motors, Tata Power, Kei Industries, KPIT Tech and Tata Elexi.

I wish you best for your investment journey. I have also posted my portfolio and would love it very much if you read my thesis and share your opinion.
Have a great Day!!!

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what is your rationale of increasing Index fund portion to 60% and reducing direct equity to 30%? since you are improving your stock selection skill by reading valuepickr?

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Thank you Ishu for review, I had EV companies such as Tata Elxsi, Tata Power and KPIT, however exited as their valuation was too high, however I do plan to add as they become attractive. I very much liked th suggestion of Debt Mutual Fund to be part of portfolio, certainly will add on. Will review your portfolio and provide inputs
Regards
Saurabh

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Through VP forums realized,
The huge amount of energy and time needed to search for opportunities,
Importance of valuation
Relevance of concentrated portfolio
Lastly if the need is to compound your weatlh at 12-15% PA with minimal stress Index funds can help you best.
Add on the above good valuation companies to make it near to 20% return
I know nothing of the above returns are 100% guaranteed, however based on my readings on the VP forums above approach does have good probability to reach my expcted target

Regards
Saurabh

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