ValuePickr Forum

Malkd's Core Portfolio

All valid points and precisely that’s why getting into the Tata ecosystem should have been such a big boost to both parties. This business has network and trust effect and what better than a Tata partnership. Unfortunately did not hear anything on that front. If they have a strong network and multi business promoter involving B2B and B2C businesses within the conglomerate then I would definitely scale up my holdings above from tracking position to more meaningful percentage. If they are Tatas, then I dont mind having 5% plus being allocated here for me. Standalone, I am yet to believe the story - just like you said. @Malkd - you have very good nack of understanding young companies without solid promoter names…I still do not have that level of understanding as well as courage …so tend to keep my first filter on big business houses involvement…Agree I miss out on many opportunities with this filter!

1 Like

Very well summarised and in sync with my views. After Malkd kept on pouring his love for the future of this company(no offense), I had to listen to the concall of Indiamart to get a similar view of future and I didn’t see any kind of moat and totally disliked the management commentary. (JD are planning to have a similar business like theirs and a like for like comparison can be done considering few years in future), no explanations regarding their acquisitions (just kept on using SAAS fancy technology term without linking it to their business, ). Their valuations have been lofty and I was tracking JD till recent with a pure profit venture but realized I didn’t need even 1 rupee of money making me lose my sleep and have removed it from watchlist for good.

2 Likes

Haha no offense taken. Like I’ve repeatedly said above though… I have taken a 2 percent bet in it and have posted my reasons above. It’s not that I Love the company or business… I just find it very undervalued and can see triggers in the future and I am excited to own it and consider it a low risk bet. Also, I agree with you regards indiamart and can see just dial taking a lot market share from them in the future since I can see this space up for the taking with no real moat towards the bigger companies. If one doesn’t like this entire space then i understand why one would stay away. Considering its just 2 percent of my PF I think it’s taken up too much of my thread talking about it :slight_smile:

1 Like

It does not take much time for a 2% to become 10 or more, specially in technology/disruptive fields…so I think the talk and specially your thoughts are worth it and very valuable…so keep them coming :slight_smile: Imagine if any big conglomerate like Tata buy a strategic stake, then Just dial has all the elements to become a solid backbone of all their digital ambitions…I can see its worth of being a jewel in Tata’s digital crown…if at all that happens…so you are not al all wrong in judging the potential of the business and/or space…the Amazon & Apple’s of the world were also once in a garage…it takes right strategic moves to make an Apple out of an Apple :slight_smile: I have learnt my investing lesson in technology businesses the hard way…now I will never ever ignore any tech or disruptive tech business/opportunity and specially if anyone like Tatas maybe interested in it…I cannot directly invest in Tata digital or Jio…but if we get any part of this digital ecosystem directly or even indirectly to invest…we need to lookout that space very very carefully and with hawk eye…its worth many pages/threads…Cheers! :slight_smile:

Tbh I’m just dipping my toes into Tech and going into undervalued companies that are out of market favour since I can justify the valuations of the more favored companies.
Once I realised that these platform/product companies work with high margins, generate loads of cash, don’t need capex to grow like the other companies I invest in I began understanding why they are so highly valued. They can also easily pivot/grow with synergistic or even non synergistic acquisitions and at some point can payout huge dividends.
However, This sector is so disruptive though with competition coming in left and right and hence why I stayed away from anything with high valuations since a company can go out of business with a Google or Amazon coming in or any one of the plethora of startups.
At lower valuations you get the benefits of all of the above with the additional benefit of not being exposed to disruptions at high valuations so even if Amazon gets into b2b seriously for eg indiamarts stock price will get hit with a huge de rating while just dial will just chug along since it’s market share can’t go from 0 to -10 and if it’s valuations fall by half the business will be free.
I realised all of this too late and missed out on the current preferred optkons so hence why I went the way of Oracle financial services (at 2980 rs), intellect design arena(at rs. 430), vaibhav global(at 2700) and just dial (I would obviously prefer an IndiaMART or some other of the fancier ones but only if they all both trading at similar valuations and market caps)… The plan is to stay invested with all 4 and ride out the next 3 years and see what happens. It will be a learning experience if nothing else.
I know for a fact I will personally never buy a Zomato or an infoedge etc at current stretched valuations so this is the only way il enjoy any upside in the tech sector and forces me to learn with skin the game so I can identify future opportunities.
It’s almost as though these 4 companies are in my portfolio to prevent me from succumbing to the fomo of investing in the likes of nazara/any other upcoming tech offerings at stretched valuations and its working so far (the only other platform/product based company I wanted was when i tracked cams and nearly pulled the trigger at 1270 but dint do it and I’m still annoyed with my self lol).

4 Likes

Small PF update:
Been a fun day today booking vaccine slots and watching the market crash at the same time lol. Used some of spare cash to add to just dial near 772 today. Expecting a poor result today however I’m also expecting a good Concall and I’d rather make my position now then on Monday since its taken support near a previous huge resistance and is at rsi oversold. It now takes up 3 percent of my PF.
Also used some cash to reenter borosil renew at 271. Kept a limit of 271 and dint expect it to hit considering it opened at upper circuit but I’m glad it did. Their result on Wednesday was way beyond anything I’d expected… At max I thought they could hit 40 crores. 60 crores is sensational and reaffirms that the company isn’t too overvalued and even if margins crash there’s a buffer here since they have somehow outperformed even the most wildest imagination and hit 60 crores. I had exited at 271 a few weeks ago and reentered now again at 271 so I’m pretty chuffed I got the result for free and I can continue holding it now and adding more through a possible rights issue. Added just 1.5 percent of my PF. Will add the balance through the rights issue and if the price falls over the next few months/in the future if/when margins cool. I admit that i was wrong to even exit here and I’m back with even more conviction than before.

Also added the following to my watch list: godawari power, angel broking and Pix transmissions for reasons that have been brilliantly covered in VP.

2 Likes

Good to see you jumping on the investment opportunity.
It really isn’t overvalued, if I just multiply the quarterly EPS of 5.5 times 4, the current PE is just 12 for a business that is growing its capacity 4 times in next 2 years.

Would like to know your thoughts on how do you deal with the taxation issue of frequent selling and buying? Short term tax rates are at income tax slabs now (if not, then at least at 20%) + there are other charges like stamp duty, STT and DP charges. In my experience, I am more worried about these charges eating into my total returns over the long term than a stock falling by 30%.

One of my portfolio goals is to give Zerodha and Govt less than 0.01% of my total portfolio value in charges.

Since, you seem to be exit and enter quite frequently, just want to understand your view on this problem.

@Tar
I usually make sure I exit and enter only with the likes of companies that take up 1 or 2 percent or less of my portfolio. I have a strict core of 90 percent of my portfolio that never gets touched. For eg Laurus labs and Deepak alone take up 75 and I will not sell a single share of those for a few years. Vaibhav, Intellect, ingrevia take up more than 15 percent and will be untouched too. The likes of ITC, embassy, Rites and oracle will also remain untouched in my wife’s PF(though the dividends there are high but that’s another tax issue) . My remaining shares in Idfc and just Dial too are now locked in for the foreseeable and borosil looks like its found a nice spot too. So out of my and my wife’s total networth combined just a small 2 percent I leave for experimentation until I’m comfortable with a company and to jump on companies and get rid of fomo. This only works since 95+ percent of both portfolios combined is stable and there is no intent to sell any of that 95 percent for years to come.
The main reason for the agressiveness past year however is my business is based on gathering crowds of students together in classrooms so my income slab for FY21 was and for most of FY22 will be at record lows offering me this once in a lifetime chance to experiment without overpaying the tax man. Also, the profits booked helped cover expenses in absence of my business so I was a lot more aggressive this year and dint mind paying extra tax.
Now that visibility of my business looks like it will improve a few quarters from now il need to make a lot less selling decisions and just hold onto the companies I have and my liquidity worries will go away soon too so hopefully I join you with only giving away 0.01 soon too lol. So it was a strategic and necessary move for FY21 that kept me above water and still allowed compounding in my core pf to take place and is still doing so and won’t be replicated in the future.
I have been lucky that the market this past year allowed this to happen and let me book profits in almost any bet I took so I could cover household expenses and survive with my business at nil and let me hold on to the likes of Laurus etc for compounding to occur. I’m pretty sure it won’t ever let me do this again and I won’t need it to a few months from now lol

5 Likes

Thank you for your clarity :slight_smile: Much appreciated

It would have been better if u had waited till concall as it’s on Monday in case of just dial before adding further position…Just curious to know.
Disc: Just dial is in my watchlist.

Maybe I should have. I’m still a bit stunned that profits are only in the 30s and I’m slowly beginning to understand why nobody thinks this is a good investment right now lol.
My logic was I got all of the info I wanted from the last Concall and was waiting to add it near support levels of 770 since the launch of jdmart went off smoothly so rather than time the market I stuck to my plan and added 50 percent more to my small position. It had a breakout above 770 and technically it had created a base in this region above a previous few years resistance and had reached oversold levels coincidentally too. The results for this quarter were expected to be poor so I wasn’t expecting a good quarter anyway but I still need to stomach the fact they only managed 34 crores lol.
My conviction here is maybe a bit too weirdly high and I admit I could be making a mistake but I can’t help myself and as long as I have only 3 percent at risk I’m currently still sleeping happy though I’m a bit annoyed with myself for making this move after what’s been a good year.
Maybe waiting for 200 dma levels would have been the better choice though I agree lol.
Imo their business is at Rock bottom now with just organic traffic for their core business and huge expenses on jdmart while smes are struggling with lockdowns. Hopefully the price is also at rock bottom lol.
Anyway, Il wait it out since I want to see this play out for a year atleast before writing it off as a bad investment And I’d prefer not turning this into the just dial thread again so I’d rather not spend more time talking about it lol :slight_smile:

3 Likes

Thanks for your view…I expect it to touch 200DMA soon…indiamart is also coming down to 200DMA…all are just guess work as of now…lol

Hello, your thread has been really useful in exploring new ideas. One such idea I picked up recently is Borosil renewables. I’ve studied it for a week now and seems like a good business with good prospects in the years to come especially with their expansion plans. But don’t you think it is very expensive currently. One thing I always liked is that your picks are usually of high quality and at reasonable prices. But my feeling is you seemed to have gone off track on this a little bit especially since the company did a QIP at much lower prices and management is very sure that Q4 margins are an aberration and should not be projected. Would be great to hear your views. TIA

@Inimitable_Investor
Borosil is a terrifying business to own and I haven’t even told my wife I’ve bought it because she ll call me a gambler lol. They are fully dependant on one product. So in the long run if there’s a move away from solar glass to a new tech the company disappears. Also, their margins are in no way sustainable and they deal in a commodity so margins will come down. However i do believe post the recent result that’s its still cheap and worth the risk.
I had taken a position around qip price and exited at 270 due to the fears above and also the fact I needed conviction with an actual result and not speculation and I reentered yesterday at 271. As per my calculations I’d expected a max of Rs. 40 crores profit at peak margins and the risk reward seemed weighted more toward risk so I dint feel the conviction I needed.
Borosil went ahead and got 67 crores! Now these margins will drop back to 25 percent in the long run which is what management has guided towards… However, considering the solar tailwinds at present this may be a few quarters away. The way I see it is this windfall profit from the next few quarters will put the company on a good foothold and they’ll be able to complete their expansion plans without too much dilution due to this and hence these tailwinds have come at the perfect time. Their margins are above 50 percent right now… Let’s assume it falls to 25 percent. They would still hit 30+ crores on current capacity. However, considering their capex plans and increasing operating leverage this drop in margins will be countered by doubling capacity(and there’s an even further double later). So even considering margins dropping in half for whole of FY22 they’ll hit approx 120 crores(if margins sustain for a little while this will be 200+ crores). Once capacity doubles with operating leverage they should hit 250 crores on 25 percent margins too so this quarter could be the norm going forward if tailwinds sustain and then capex support comes in. Even considering equity dilution for capex(and I will participate in the rights issue to counter some of this) they should hit at least 12 EPS in a bear case and 20+ EPS in a bull case with just current capacity. So as things stand even at 271 rs(which is the price I bought back in yesterday) they are valued at approx 13 to 22 times earnings. If you consider capex and operating leverage from expansion plans then the valuations drop by half too from FY23.
All things considered I find it a bet that’s too hard to ignore and now that I’ve seen the peak margin performance and that I can calculate the performance even when margins come back to long term averages I can’t ignore it anymore. I will be building a position that’s bigger than I had before but slowly and not in one go(considering its a commodity there will be days of 10 percent crashes when solar glass price fall news etc comes in and il add again then) . Basically, If you ignore the current PE and just picture the PE one year from now it isn’t expensive at all for the potential it offers and this latest result was the tipping point for me and showed me the true potential of what lays ahead even if Margins halve(hopefully in a year it will look cheap and I can then tell my wife haha)

It’s a risk but knowing the potential for wealth creation here I know I’d be more annoyed with myself for missing out on riding a fantastic story than I would if I lose my base capital invested here if the story breaks down

2 Likes

Hi

Doesn’t it make sense to look at yours and your wife’s portfolio as a while as far as concentration etc is concerned.

I look at it that way.

Infact i have a small portfolio in my kids name. It is the money from her piggy bank/ gifts she recieved

Dear Malcolm, Calling Solar glasses as commodities is like calling Nescafe as a coffee powder making company hence this company is trading commodities, How does Nescafe commands premium , through its quality and it has built a reputation , can you compare the image and quality of Nescafe with others , there are other players and they sell coffee powders but nothing like Nescafe, I know this is a crude comparison ,sorry abt it.

Making solar glass requires mastering of engineering. Please go through the below video ,starting from 10:02

1 Like

I am a believer in borosil so you are preaching to to the choir @rshankv :slight_smile: … However no matter how we look at it they are dependant on outside pricing and hence why the fluctuations in margins. They are more like a faux or proxy commodity where in technical expertise and name will help them but overall they are dependant on solar glass prices rising/falling. A nescafe won’t have operating margins ranging from 10 to 50 fluctuating with the price of coffee. They can charge their premium and get away with it. Borosil can’t. However they aren’t as exposed as a low entry barrier commodity like sugar so they are a lot safer vs the usual commodities. I am convinced enough to invest

@Shankar
Yes. As a whole I look at concentration risk. And hence why the companies in her portfolio do not overlap with mine and the strategy followed for hers de risks our overall portfolio with mine being aggressive and hers being capital protection ie dividend yield companies/reits etc. It allows me to take risks with my portfolio since hers is built for stability. As far as possible il be sticking to this strategy and avoiding overlap in ownership except for ITC (and the little Laurus and Deepak that already exists). However her portfolio is meant for capital protection and yield and not capital gains. So I don’t consider it when tracking my portfolio cagr.

4 Likes

@Malkd Did you attend just dial con call? Will you be able to add your comments here?

@amit3649 actually last few days we have been hit badly by the cyclone here in Goa and we have had no electricity and barely any range. So haven’t been able to unfortunately. However, I just checked the just dial thread and there’s a fantastic summary there.

Minor update:
Made my final addition to just dial at 728 Rs on the day of the crash a few days ago. Takes up 4 percent of my portfolio now. Its already back to nearly 800 as I type. Will be just letting it run now since I don’t think there’s much downside left since the business is at bottom now and the price survived the onslaught that was the last few days. I’m glad I held my conviction through what was one of the worst results of results season overall.
Have also started a position in ugro capital as my nbfc of choice and the only lender I own alongside Idfc first. Currently 1.5 percent. Have kept a limit order at Rs. 95 for the final 0.5 percent. Have documented all my reasons for the same in the ugro thread:

I don’t want to risk too much money on lenders so I’ve gone for the explosive route where I can’t lose much but can gain a lot with my allocation here. Idfc + ugro will equal 4 percent… And I’m willing to lose that amount but not more for the potential upside of being exposed to lenders(may add 1 percent of edelweiss to complete 5 percent and get exposure to the Amc side of financials too to complete my bank+nbfc+Amc trifecta at below/near book values)

Portfolio looks settled finally and not expecting any major changes for the foreseeable. Will just be adding to it as I get more cash.

5 Likes