Dear sir,
for cyclical businesses I want to exit before mass exodus. When price reaches near its intrinsic value.
for non-cyclical businesses I want to watch it like an continuous unfolding movie, as long as long term prospects are good/improving, management taking rational decisions, will stay invested, if find anything wrong, will exit immediately irrespective of price.
You may have done enough study before investment.
But i will advise u to do be very careful before investing in companies with market cap less than 500 cr.
Thanks,
Will like to follow your portfolio closely. Since you have shared details elaborately, understand that you will update here if anything goes wrong / good about stock and your exit / addition thereof.
Do you have calculated intrinsic value for each stock, if so, can you share it here?
Regards
Thank you sir!
Iâll try to update everything I get to know about stocks I hold and stocks in my watch list, but I get lazy sometimesâŚ
also request you and others here to update if you/they get to know something that I donât know.
I can surely share my intrinsic value calculations but may be that wont be fit with VP rules, thatâs why did not share.
Thanks, sure will update incase of any information on portfolio.
I am too not aware of rules about sharing intrinsic value calculations, senior mambers may advise suitably.
Many of Indiaâs successful investors have followed this path from business/govt service to investing. All the best in your journey. I am sure with your methodical approach you will do well.
Regards
Congratulations Kalpesh on your stock selection and performance !! Looking at the current prices, DHP and PPAP are still available at discount, wondering if they are still a good buy? Also where can I check about their future growth rates ?
Thanks.
DHP & PPAP both are trading below my purchase.
Future growth rate is unknown parameter, we can only assume. so the trick is to buy below todays intrinsic value.
Disc. : Not a recommendation
Changes made in portfolio in Monday sell-off,
| NAME OF COMPANY | CMP 15-04-2021 | Allocation | |
|---|---|---|---|
| AVG INVST PRICE | |||
| TIME TECHNOPLAST | 37.98 | 65.00 | 23% |
| VIPUL ORGANICS | 114.07 | 168.00 | 22% |
| PPAP AUTO | 259.97 | 183.00 | 11% |
| IDFC FIRST BANK | 42.17 | 52.05 | 14% |
| KG PETROCHEM | 183.57 | 210.00 | 10% |
| DHP INDIA | 420.48 | 370.00 | 9% |
| GNA AXLE | 264.99 | 359.70 | 11% |
| VALIANT ORGANICS | 1,363.83 | 1,417.35 | 0% |
Sold out Transpek & NRB Bearing completely and bought IDFCFB from the proceeds.
View of world from my lenses -
Per 1000 people global car avg is 195 whereas India is doing only 36
First thing that come to mind is our auto car industry have lots of runway left for at least more than a decade or two, our per capita income is approx. $2000 which is expected to constantly increase going forward.
So what do you think, who is the obvious winner, Electric cars or traditional Combustion Engine cars?
But remember psychologist say first obvious thought comes to our mind is often wrong, world is changing faster than we think. So who will be the winner? Many people believe its Electric Vehicles. But remember what psychologist said?
Actually first thing came to my mind was EV but I decided to dig deeper,
What I found was psychologist are correct,
Next decade belong to CNG, off-course Petrol/Diesel cars will be around for next 10-15 years, EV is in relatively in early stage.
Engine driven car technology is robust, reliable & has proven track record of least few decades.
âThe cost of running CNG is only Rs 1.5 per km whereas for petrol and diesel it is almost Rs 4 per km. People are now preferring CNG as the running cost is very low so there is a growth in sales of CNG vehicles,â
âAnother reason for the rise in demand for CNG vehicles is the increase in the number of cities under CNG stations network, he said adding four years ago, the number of CNG stations in India was 1,200, which has doubled to 2,400 at present.â
âBy next year the number of stations will be 4,500. So if you look at it, in four years it will go up from 1,200 to 4,500. Also the number of cities covered will go up. It has already gone up from 145 four years back to 240 this yearâ
âMoreover, Finance Minister Nirmala Sitharaman has said in the Budget that the government would increase it to 100 more cities. In March 2022, it is expected that there will be almost 375 cities covered, he noted.
~Mr. Srivastava said in one of his interview.
Gov. has plan to install 10,000 CNG stations in next 3-4 years. This will drive huge growth for CNG car sells. Consumers prefer cheap running & maintenance cost, so CNG car is a choice at the moment wherever CNG stations are available.
So clearly next decade belongs to CNG not EV.
EV will mature in the meantime and will snatch market from CNG after next decade or so.
But remember after a decade or so our cities & roads will be crowded and we will have so much better public transportation system, it will affect car sales.
World is changing faster than we think, after 25-30 years I think transportation will be so much different than what we see today, a common person can own flying car by then.
Would you know the proportion of pollution caused by EV as against CNG vehicle.
CNG is considerably less polluting as compared to petrol & diesel, Whereas EVâs donât pollute at all.
But remember what psychologist say? 
Itâs not the case,
EVâs do make pollution, Electricity we use to charge EV battery bank is mostly generated by Thermal power plants, and thermal power plants in India operates at the efficiency of 20-25%, which are very polluting in nature.
And again,
Improperly disposed batteries contribute to water and air pollution and negatively affect human health.
CNG vehicle cost lot lesser than EV, clear advantage in terms of buying decisions. EVâs will take long time to solve this problem.
CNG vehicles come with dual fuel option, so you donât have to worry about gas tank getting empty on the middle of journey.
We should agree that EV have lower running maintenance cost, but again battery bank will have to replace after some time, which will be costlier.
CNG process of re-fill takes around five minutes at the max, EV takes hours of charging time, and its real issue.
So until these challenges are solved, CNG is the real winner.
I am seeing Vipul Organics stock in almost everyoneâs portfolio. I am not that much experienced in this field. Could you please elaborate your points about allocating almost 22% of your portfolio to this single one?
Growth is almost certain
Operating leverage about to kick in
Available at discount wrt growth
Doesnât need much capital to invest for growth, meaning it will generate high free cash flow in future.
Hi @kalpesh4430, most of your picks have some sort of short/medium term triggers.
What positive triggers do you think for Valiant organics might play out in 3-4 years timeframe.
Could you explain your investment thesis here?
Hi @KushalKasliwal Thanks for writing,
Actually I hold only 1 share as a tracking position,
my view on Valiant is more based on resourcefulness of promotors than anything else,
They posses following qualities,
and experience of scaling up business rapidly.
They are uniquely positioned & I believe they can bring a big business going forward due to cited factors.
FROM NOW ON I WILL USE THIS TOPIC TO PUT MY THOUGHT, VIEWS ETC ALONG WITH PORTFOLIO UPDATES
So which is the best investment,
Excellent business available at fair value but no or slow growth
Excellent business available at fair value and moderate/fast growth
Excellent business trading at 50% discount with no growth
Average business available at deep discount with good growth potential
Average business available at good discount and business fundamentals are consistently improving and growth is fast
Let us go one by one,
1. Excellent business available at fair value but no or slow growth
According to me it makes no sense as it will give FD like returns, so why bother equity.
2. Excellent business available at fair value and moderate/fast growth
This makes all the sense because it may give good returns like 15%+ in the long run, and such opportunities should not be missed.
Even if they are trading at fair value their intrinsic value keeps on increasing year on year.
3. Excellent business trading at 50% discount with no growth
Suppose we come across a business that has intrinsic value of 100, now due to market sentiments trading at market cap of 50.
This business generates ownerâs earnings of 10 every year.
So, even if this business doesnât grow it will generate 10 for owners, so this money will be given to owners by either dividends or stock buyback, otherwise it will be keep piling up in balance sheet.
So if I donât find other good opportunities I may consider this kind of business which can give 10-15% returns consistently going forward.
4. Average business available at deep discount with good growth potential
Average business is average because of two reasons,
So this is space where lot of people make and loose most of the money in share market.
I think only people with sound knowledge of market cycles/commodity cycle should dwelve in this space.
5. Average business available at good discount and business fundamentals are consistently improving and growth is fast
These are the businesses transforming from average to excellent.
This is the space where one can find multi-baggers.
So what I learned is excellent business is not always an excellent investment &
Average business is not a bad investment if fundamentals are improving.
Hi sir,
Have you analyzed stock warrants issue in the Vipul organics ?
I m sharing my write up , it will be helpful if you share some insignts on the same âŚ
On 23 August 2010 the Company issued and allotted 19,75,000 Warrants on preferential basis convertible into equivalent number of Equity shares of Rs. 10/- each at an issue price of Rs. 20/- (including premium of Rs. 10/- per share) to the persons in Promoter Group and others
August 2010 mkt price was High 43.5, Low 34.2 Close 35.25
On 31 March, 2011, the Company issued and allotted 8, 50,000 Equity shares of Rs.10/- each upon conversion of 8, 50,000 warrants issued on preferential basis.
But promoters holding were increasaed by just 700000 shares from 22, 46,600 on 31.03.2010 to 29, 46,600 on 31.03.2011. AR is silent about balance 150000 shares.
If you look at the amount received from this allotment was just 1.7 cr⌠Whatâs the need of such allotment??
One interesting thing , one should notice âŚ. For balance 1275000 warrants there was no issue of equity shares. Because after march 2011 share price was going down and reached Rs 8.65 -9 odd levels in the year 2013
So basic intention of the promoters was to make money not to fund the company .
On on 13th June, 2016, the Company on 6th July, 2016, issued and allotted 22,50,000 warrants for cash at an issue price of Rs. 40/- (Rupees Forty only) each [including premium of Rs. 30/- (Rupees Thirty only) each] on preferential basis to the promoters and others, carrying an option / entitlement to subscribe to equivalent number of Equity Shares of Rs. 10/- (Rupees Ten only) each within a period of 18 months from the date of their issue.
June 2016 Mkt price was High 75 and closed at 64
The Company had issued and allotted 7,90,000 Equity Shares of Rs. 10/- (Rupees Ten only) each, fully paid-up, upon conversion of equal number of warrants issued on preferential basis at an Issue Price of Rs. 40/- (Rupees Forty only) per share (including premium of Rs. 30/- per share) on 30th March, 2017
This time too details of 600000 shares out of 790000 issued on 30th march is there for balance 190000 no details is there in the AR
For the balance 1460000 warrants (2250000-790000) equity shares were issued in 2018-19 but to whom nobody know but not to promoters . No information in the Annual report of 2018-19 .
This time warrants were fully exercised, because in 2018-19 share price was in 160-200 range. So u can understand the intent easily
Hi @cabunny ,
Thanks for bringing this out,
If you read AR 11 you will find below,
Back then it was a very small company and they had recently gone for some capex, and working capital was increasing too. So i guess they may have gone for it probably for rising working capital requirement.
No one wants to pay Rs.20 /share when stock is trading at Rs.9 /share in secondary market. No one does that.
AR17 -
AR18
Promotor group & their relatives subscribed those warrants.
I hate this options & warrants system, as it gives promotors chance to literally print the money out of thin air
Vipul is a very small company and as companies grow in size, these corporate governance practices start improving.
Too Much Analysis Lead To Paralysis in decision making. I learned this hard way in the past by letting go excellent investment opportunities for small issues.
Hope this helps!!!
One more thing,
In past amalgation arrangement they valued one entity by market price method & other on asset valuation method.
As long as warrant system is legal, managements will keep doing this.
Using different valuation methods & issuing warrants is legal as per rule of law, there is nothing we retails/individual investors can do about it except using our voting power.
