Came here only to see if you added Laurus. And I was right 
Were you not already overweight in Laurus? If ai may ask, whatās the total allocation after todayās allocation?
2 Likes
I think 460 would be a better level to add
@greengoblin
After the run up to 700+ it had reached approx 50 percent. Now itās near 46 or so even after adding since the crash was drastic . Will be adding more near 460 or so if it does infact reach there and bring it back to 50 percent overall weightage. Yes I am overweight but thatās just the risk I take with a concentrated PF. Deepak too is at nearly 25 percent+ after the run up(and crash) and Iām still very comfortable with both in the long run
@anjeshv4
Iāve learnt not to time the market. I am comfortable buying at 200 dma do Iāve begun with my first tranche. If it does reach 460 il add my next few tranches. In a raging bull market thr smallest good news like a good result/less than expected margin contraction/government intervention in China to slow down coal price rise(already coal futures crashed yesterday) could lead to a domino affect and a price rise with laurus. The same way I didnāt foresee the crash a few weeks agoā¦ I donāt think Iād foresee the rise either.
I trust the management and the company long term so Iām happy putting my eggs in this basket at what could be slightly higher percentage points(my average is still low 200s so mentally Iām still comfortable and averaging up instead of down) and will only consider exiting when I hit my target a couple years from now (I have a flexible target of laurus bio demerger which is still atleast 5+ years away)
On a side note: yes it is a bit annoying knowing you have to sit with a PF that will continue to slide in a raging bull market(though is it going to be a raging bull market from now on with inflation and china problems and covid raising itās ugly head again abroad affecting nearly every company in some way?) but thatās something Iāve learnt to live with. Whatever is lost now will come back in the future. Though, maybe that future has got delayed a bit now with a 20 percentage PF loss.
If I removed my laurus money I wouldnāt know what to do with it. Iād probably buy my current office to save on rent but thatās a 5 percent return per year (considering rent saved) and office prices arenāt going to be rising in my area for the foreseeable looking at vacancy rates.
If reits were at a good yield percent like earlier in the year then maybe Iād consider parking the money there but ideally thatās something il do a few years from now when my PF is large enough for the yield to cover all my expensesā¦ But thatās still years(and an reit downcycle) away.
For nowā¦ There is no better opportunity in thr market among all the companies I track that I can find for such a huge amount(ITC finally left my 200 buying range too) so the money stays in laurus(and the rest of my PF) through this admittedly tough period.
7 Likes
Please have a look at SSWL. With these results, reducing pledge and the compelling valuations, this could be a great bet.
Steel strips and wheels#SSWL
ā Shreenidhi P (@nid_rockz) October 22, 2021
Very very good Q2FY22
Record q2fy22
Superb cash flows
Rev at 961cr vs 410cr
Pbt at 97cr vs 15.5cr
Q1 PBT at 63cr
Almost 50% up QoQ
6.1x YoY
PAT at 63cr vs 14cr
Higher taxes
Ocf at 175cr vs 15.5cršš
Nov 22nd-record date for stock split pic.twitter.com/wg91fxYTwQ
2 Likes
@Malkd awaiting ur comments on Vaibhav Quarterly results and mauling that is going on in that stock (albeit, for obvious reasons of reporting such numbers) and also ur latest read post todayās Laurus resultā¦thx a ton
@KS16
I expected this result from VG so Iām no surprised. Therell be continued pressure on VGs margins for the foreseeable due to their Germany costs which are being onboarded now and higher shipping costs with the supply chain disruptions and increased costs on their digital platforms. Also, with covid now slowing down ecommerce is taking a dip since shoppers are moving outdoors. Whatās encouraging is that their revenue is still increasing on a high covid base. These problems will continue to stay in play for the next few quarters and the lack price movement last few months has predicted this. Personally il be doubling my investment here over the next year if I get a chance under 500(though I already began adding at 600 today) . The only thing wrong with the company is valuations imoā¦and this period will bring them down to earth. Already keeping the funds aside. Nothings changed regards the 5 to 10 year view here. its still one of those āperfectā Business model companies for me and expecting the problems to be temporary here(depends on your viewpoint of temporary thoughā¦ I am fine with 3+ quarters of pressure if needed)
Keeping expectations low from laurus labs later today. If they do surprise me il be happy.
8 Likes
So laurus labsā¦ Seems like the market darling has now become a toxic company that everyone is trying to exit. Maybe Iām not meant for growth or momentum investingā¦ Or whatever the term is since I tend to become more active and excited in scenarios like this.
The way I see it is the story is the long term shift from arv to cdmo/bio etc. That story is on track and management has proved in the past that they are fully capable of making huge shifts when it comes to new products/streams. The players ie Dr chava etc are still the same so if one believed they could do it a few months ago then one has to believe they could do it now too. The only change is that while the shift was expected to be smooth without much pain in the short termā¦ We will now have pain in the short to medium term due to the pressures in the ARV business and supply chain issues.
So as the price slides further the valuations to capture the growth story of the non arv business gets better and better. I have a 4 year building plan ahead of meā¦ I do plan on slowing my business down by then and letting my portfolio do the heavy lifting after. Until then itās my business that will do the heavy lifting and will fund this portfolio. So I have a 4 year window to deploy fresh cash and I only expect returns post those 4 years. So if anything this situation is a godsend for me since I get laurus at cheaper valuations and not peak valuations from a few months ago. Fully expecting stagnation and even further derating here here until early FY23 and I am welcoming it. Re routing all my fresh cash and my wifeās fresh cash into laurus for both our portfolios(added more today near low in both our pfs). Also doing the same with vaibhav global which is now actually giving a decent yield too. I find the valuations of deepak etc too high; and even though the likes of idfc and ugro have done ok Iām still not comfortable putting more cash in finance(and Iāve reached my peak comfort level with cash in intellect) and apart from market outsider bets like kaveri/amaraja and my favorite ie itc(which il only ever add at 5+ percent yield so I have a long wait ahead of me there) etc I canāt find any place for my cash so Iād rather park it in laurus/deepak for now.
These will be interesting times. At worst I end up wrong about laurus and my retirement plans get delayed by another few years and considering Iām not that old I donāt mind taking that risk. Letās see how this plays out. The news will get worseā¦ The negativity will get unbearableā¦ My networth which has already slid by 20 percent will probably slide down a lot further while the rest of the world enjoys a roaring bull market(maybe lol)ā¦ If anything, these next few quarters/years will atleast test my mettle as an " investor " And I will come out of this with a lifelong lesson either way.
27 Likes
How much returns you are expecting from Laurus from the current price? 15 to 20% CAGR returns for next 3 to 4 years or much more than this?
What can be the terminal P/E after 3 to 4 years from now after successful transition of CDMO & Non ARV?
2 Likes
@pumba22
Iāve learnt not to expect anything cagr wise or even aim to figure out what PE the market will value a company atā¦ though my broad target was an exit at rs 2000 ie approx 100k mcap since that alone would lead to my so called financial freedom with the amount I currently have in it. Ideal scenario is negative cagr during my building phase so I can buy as much as I can over the next few years. If thatās the case then even an exit at rs 1000 would suffice since I would be doubling my stake here if thatās the case. Of course I wouldnāt just sell thenā¦ But Iād be open to selling in that scenario and putting the cash in safer yield instruments(why climb up the hill only to come back all the way down etc etc) .
More than cagr etc what Iāve realised in time is that itās conviction and time in the market and the size of bet that matters and the ability to sleep at night while my money growsā¦ and there are just 3 companies where I could put all my net worth in and sleep at night without worry: Laurus, deepak nitrite and itc. Every other place I put my money in thereās an element of doubt preventing me from doing so. The management of laurus and deepak and the sheer potential of fmcg and safety of yield in itc make these instruments one of a kind for me. So whenever I feel they are undervalued il be placing my bets there.
Along the way Iām sure il find other similar bets/il grow into further conviction in my other PF stocks as the years pass by and il add to this exclusive list of 3(dont get me wrongā¦ My conviction level in ingrevia, vaibhav, intellect, idfc, ugro and the other PF companies is hugeā¦ Just not infinite money parking huge yet )For now though As long as the managements of these 3 companies donāt out right go out and cheat their shareholders il be holding on for the foreseeable and adding when the valuations seem reasonable and thereās blood in the water. Even if they perform average the sheer quantum of cash il be holding in them over the next few years(and already have at present) and lack of selling fees due to no churn etc should make even a 12 to 15 percent cagr a good investment for me since my holding period is decades long if needed(though obviously Iām expecting a much larger return due to the concentration risk Iām taking)
Every time I think of switching my money around I stop and realise that every company in the market will go through a bad phaseā¦ Iād rather stick through the bad times with a company I know and trust like laurus then switch to some other company and enjoy the good times there and get stumped and lose sleep when the cycle turns. In fact by holding on and adding during times like these Iām increasing my potential of future returnsā¦ Which is what mattersā¦ Staring at unrealised gains doesnāt
10 Likes
Laurus labs has grown to nearly 30% of my portfolio size due to bonanza execution for last two years. Many times I thought to trim it up, but everytime I see how the management has executed, and the first time promoter of showing passion with vision, I held on to it. I did know the ARV business when I bought it, I did also know HIV vaccine research is in full swing and a vaccine can may be come out in this decade when I brought the company. It was the same two years back. When price falls, perception of public changes. Now everything appears a threat. Every business will go through such cycles which sometimes they cannot control. And definitely, you would want to stick with the management you trust during headwinds. Of all my portfolio stocks, Dr.Chava still tops the list as the management to stick to. Nice to see someone sticking on 
14 Likes
Checking on something about INVIT taxationā¦ This is what I dug out as policy on taxation in INVIT distribution. @Malkd can u pl confirm then, the Rs 1.28, in Nov 11 2021 payment , which is coming in as CAPITAL REPAYMENT, will not be taxedā¦pl confirmā¦ Thx a ton
- Your returns from InvITs are subject to complex taxation. Though the InvIT itself is treated as a pass-through entity, its distributions are taxed based on their source. Any loan repayments by SPVs distributed to you are not taxed. But dividends earned by the InvIT from its SPV and passed on to you are taxable at your slab rate if the InvIT has opted for a concessional tax regime. Interest received from SPVs and distributed by the InvIT are also taxed at your slab rate. Capital gains you make on transacting in units attract tax at 15% if held for less than 3 years and at 10% if held longer.
Hi Malcolm
Alembic pharma results were on expected lines. However the FDA reinspection (with 10 observations) was bit of a shocker.
The pricing pressure is expected to continue for 1.5 quarters (aurobindo earnings call).
How do you see the alembic story now.
Regards
PS. Laurus continues to struggle too
@narenarora
Yes. The FDA re inspection was a bit of a shocker. Iāve not added more to alembic since I began the sip post the horrid result and crash a few months ago and Iāve taken a pause in siping here until they look clean again(since my working thesis was they were one of the cleanest pharma companies fda wise). Considering that I donāt have much invested here so il just be sitting it out patiently.
With laurus I have a long leash and Iāve continued adding though since my invested amount is getting a bit too huge here and since vaibhav global is at a great price and I may prioritise building a bigger position there for a few months alongside a position that Iām planning on starting in rajshree polypack. Will comfortably hold it though.
The way I look at it with a pharma company or any manufacturing company for that manner is growth only comes after a period of capacity buildup + margin increase with change in strategy due to the inherent nature of a manufacturing business. As investors we need to build capacity (invested amount) in the down cycle while management builds it and hold during the good times and then rinse and repeat. Laurus has gone through its growth spurt due to the work done before over the past few years. Now the cycle slows down until that huge growth is seen again. However, Iām not expecting the time lapse this time to be that long. By q4FY22 we should be back at where were last q4FY21 and then expecting big things in FY23 ie their billion dollar revenue target(though Iād say this may get delayed by a few quarters) and then we ll go through another cycle again until a further push and the margins will improve as the product mix veers towards cdmo too.
I canāt help but look at it as Iām buying a high margin cdmo + animal bio and synthesis company 5 years early while itās a relatively cheap unpredictable margin arv company. Itās a ll about trusting the execution capability of management to handle this change and I personally fully trust them to do so. The same applies to alembic but the quality of management, overall generics business without a catalyst for change and the FDA issues makes it a somewhat different bet than Laurus and is more of an underpriced bet than anything else.
8 Likes
Hey Malkd,
Could you share your views why Vaibhav Globalās cash flows look kind of cyclical although I am perfectly aware that itās in no way in a cyclical business. I have a very basic understanding of this business and wanted to be sure of numbers before diving deep. Thanks.
1 Like
@vibhor_vaish
I recommend reading up on the story of vaibhav global ā¦ There was a teaching note mentioned in the VG thread that covers it. Itās been a company in flux. Near death a decade ago and then a pivot into the business model it currently is in so I wouldnāt really bother about the initial years in that screenshot. After those initial transformative years I wouldnāt say it is a cyclical business anymore, although they do have strong quarters vs some weak ones every year due to the seasonal nature of the kind of products they sell ie holiday heavy etc. Right now their revenues are far more predictable over a year though and itās one of the least risk businesses Iāve seen in the stock market due to the inherent nature of the business plan.
That being said the last year and a half was a freak bumper period due to ecomm benefitting due to covid. Expect a few slow quarters vs last year but whatever base is set now should be a good base to jump from in the future. The extra costs of their expansion into new regions also make their business look cyclical(for eg Germany right now) but these are 3 to 5 year periods of investment followed by a huge jump in consistent revenues after. One of the few businesses Iāve seen that can jump into new regions and start a consistent business almost risk free(though thereāll always be short term pressures during these periods).
Personally Iām using this period to increase my stake to make it the 3rd biggest holding in my PF alongside ingrevia(laurus and deepak are distant first and seconds). The dividend policy is an added bonus(nearly 1 percent yield + steady safe long term growth is a bit weird to see) and the management is right up there with the best for me.
Now that the valuations have cooled the biggest negative for me(overpriced) has been removed too.
6 Likes
Hi sir,
How do you have such a huge conviction for Laurus?
I have been studying the company and have made a fresh entry recentlyā¦.
Iāve posted enough about laurus @Adithya_G and I donāt want to type it all out again so il just post some broad strokes regarding my mindset ā¦ Sometimes you just come across the perfect storm ie amazing promoter, great business model and future plans, and at cheap valuations(atleast when I bought majority stake). Iāve spent nearly 1.5 years since attending concalls/reading presentations/annual reports/every single bit of literature available and even have a factory visit planned next month. Once you are that comfortable with a business you can see far ahead of most people and it becomes easy to keep your eye on the long term game and ignore short term problems and buy when everyone is scared out of their minds and the good stuff isnāt priced in. Itās one of those opportunities Iām almost sure of will get me to my financial targets 5+ years down the line. That being said everything has risk attached to itā¦ So I have a good source of income that should continue for a while and age in my favor to take these kind of concentration risks. If I donāt take the risk Iād regret it more than if I take the risk and fail basically. This story reminds me of ajanta pharma from a few years ago. I got scared out of that story since I dint understand the business or pharma that well. this time i did the work and there is no way Iām missing out on it since I can see a fantastic company and future large cap blue chip taking shape here over the next 5 to 10 years.
The way I see it is The biggest risk with any company in India is the promoter cheating the share holders tbhā¦ And I just canāt see that happening here. Fda issues/product mix issues/supply chain issues etc come and go but over a long enough timeline the risk of losing capital is minimal in any good company and time in the market is more important than anything else and there are a few other companies Iād be able to suffer through 50 percent drops without panicking. So even if everything goes wrong Iād still get an ok return if I extend my timeline to a decade (though Iām obviously expecting a lot more than OK). Hopefully patience, a long tenure and an eye on the long term prevails. That being said maybe Iāve pumped enough money here now and I need to find something else (though il only look for one in an overall bear market so until then itās laurus and vaibhav and my other PF companies only since I can only stomach current valuations in the stock market with companies Iām very comfortable with and canāt even think of starting positions in new ones)
8 Likes
Amazingā¦
I just started a year backā¦ pharma has always been a difficult topic to understandā¦ even though I have missed out on Laurus at the start. It has come to my level.
But, hearing about your conviction of the companyā¦. I myself might just go all in. 
Yes, I have studied the company and it is in the right direction still it does hold me back in adding moreā¦.
My favourite so far is Neogen.
@Adithya_G
Trust me on this. Donāt go all in based on someone elses conviction. It never ends well. Do the work and one day you may see a clear picture . Start with the grassrootsā¦ Remember, these arenāt ticker tapes. They are businesses. Think of them almost as your own. I run my own business so for me it becomes a bit easier to look at all these names as actual living breathing companies that I own and is one of the main reasons why I like concentration and limit myself to just a few companies. I donāt get a sense of ownership if I own 20+ companiesā¦ But again, itās not for everyone.
Also, change your mindset a bit when you find a good companyā¦ Stop looking at the stock market to see unrealised gains. Donāt keep a price target to aim for.
Instead make a rough estimate of where you see the company being regards product mix/revenues/profits X years from now and then just go along for the ride and check that itās on course to reach there. When you do that then short and medium term price drops become opportunities to add more and not panicky situations or feelings of opportunity cost seeing someone else make money with a different companyā¦
Remember, most of us donāt have lumpsums, so itās a steady flow of money that comes monthly or quarterly that needs to be invested. If everything rose every month then thereād be no place to put fresh moneyā¦ So welcome red days and huge hits to share prices ā¦ And donāt listen to strangers on the internet like me and put in your own hard work since the laurus free fall may well continue for a few quarters and at some point the flight response will kick in if you arenāt sure about your investment lol. At the end of the day your own level of conviction and patience will determine your returns as an investor . Cheers and good luck.
23 Likes
To be honest I donāt have much to say after what you have toldā¦. Thank you.
1 Like