Malkd's Core Portfolio

The emotions of people and the market never ceases to amaze me. The same people who were bullish for the long term just a few months ago are now packing their bags and leaving the market. The market does direct moods though… a few months ago while the market was rising you had people talking about how in the long term everything would be fine. Now that the market is falling everyone and their neighbour assumes this is the end of the current world order. Personally, I’m enjoying this. I’ve always bought companies only when i feel their valuations were good and hence why ive not experienced a huge Zomato esque crash.
I haven’t added more to my PF since I’m still about 6 months away from reaching my target Emergency fund value. However, my wife already has an emergency fund built so I’ve begun building positions for her again.
Added a huge amount of Lux industries yesterday at 2080. I have been patiently waiting for these levels for a while and I’m glad i got to pull the trigger.
Will be adding more into piramal too.
Also, watching Bajaj consumer intently. If the overall market crashed and it’s available at 110/120 i will finally pull the trigger
I’m also eyeing a new age tech basket for her with Zomato + infoedge etc but they are still nowhere near the valuations I’m comfortable with so I’m hoping for further draw down.

In short, if we don’t build our positions during bear markets when companies reach reasonable valuations… when do we? I’d rather build now over the next few quarters or years(depending on how long the bear market lasts) and stop building when we things are rosey and everyone predicts infinite growth.
When people start predicting market direction with certainty(almost everyone assumes we have a recession on our hands)… it’s time to go in the opposite direction… atleast if one has a long timeline and huge trust in their mentality and the companies they own.

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At such mouth watering valuations, I have also been meaning to add Lux Industries but still not able to make peace with the corporate governance, especially the recent insider trading case. Even though, I feel that all these pessimism is built into the current valuations, but still it feels not so safe to bet on such management for long term.
I have been studying both Lux and Rupa, since both looks very attractive at such valuations. But IMO, business wise Lux fare much better than Rupa especailly the way they have scaled it up and changed the product mix towards premiumisation. Lux also has a better brand recall than Rupa. But just because of Coroporate governance overhang in Lux, I ended up buying Rupa couple of days back.
What’s your view on this?

I can overlook it since it’s not about money being diverted to subsidiaries. Case like these are rampant in the Indian markets and are forgotten in the long run. There’s a grey area here too regards disclosures and i find it provides opportunities more than anything else. Had a similar issue with intellect and i was comfortable with it. Lux as a whole won’t suffer due to it. It may take a couple years to resolve… but by then lux would have moved further into premiumisation and opened more ebos so as a whole the company will be a lot more valuable then. Will be adding every few quarters until the position is large enough. Right now I’m just done with tranche 1 and will add more if it breaks this support and falls further

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@Malkd Thank q for the timely updates and valuable data points with strong conviction views on businesses.
I read couple of your views on Bajaj Consumers, if u are looking for developing consumer story request to check/look into Borosil Consumers, solid story developing there.
Refer below some snaps from Investor Presentation and latest Concall added for quick review.


@MHS

I’m a huge fan of the borosil group… especially renewables. I am staying away from high valuations at present though. Maybe on much further drawdown i would consider.
The reason i like the Bajaj consumer story is because

  1. Pessimism has reached the point where the dividend yield alone should be near 6 percent even during trying times. Perfect place to park money long term vs my idfc first savings account once I’m sure we are near bottom since huge supports have been broken and the original ipo price is around 132 and I’m going to be greedy here and stubbornly wait for that price(ignored it at 140 too)
  2. Nothing good is priced in. I like their new digital ad campaigns along with Mr nandi and the move to premiumisation and do believe that they are moving in the right direction but slowly. Their overall business is a good margin cash flow business so even if they don’t grow and give the shareholders the money i m happy.
    The bet is to buy in at 6 percent yield and wait for the business to improve and see the dividend rise from rs. 8 to rs. 12 per share over the next few years and see the share atleast retest 200s. If things go superbly then this could go even better. If things go bad i would probably be stuck with the 6 percent yield for a few years which is equal to the idfc savings account. I know i would enjoy seeing the progress over quarters via the presentations and concalls too.

There are obviously much, much better stories in the market right now and this is one of the worst companies to bet on… and hence why i like it lol. In the current market i only like these kind of low risk (for me) bets. Not eyeing the likes of borosil etc right now but will have a look in the future. Cheers.

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How do u view this development at strides

This was expected the moment war broke out And hence the low valuations. Bought it with this in mind… I won’t be adding further but i will be holding on to the stake I’ve added already to see how it plays out. It’s a small risky position that will prove insignificant if it fails and could have a huge upside if it works out. Buying companies like these at huge valuations when there’s hope in multitude is the problem. Buying them at current valuations offers a margin of safety. I’m not a huge fan of the company though… can see a lot of pain here with recent admin changes, debt servicing, delay of demerger, generics derating etc and if anything it’s the perfect storm of things going wrong for me to sharpen my knife regards pharma and give me a huge amount of knowledge that i can apply elsewhere ie laurus which is my main pharma bet

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