Looking at this article can ITC once again face a huge selling pressure
Looks like a red signal for ITC once again after a good single day gain
Comments ?
Thanks
Other way thinking can be smokers will buy a pack of 10 or 5 or 20 that will lead increse in sales
I thought this way also but all the individuals generally do not consume or purchase a full packet
Ya this may work that way people consuming in group may increase due to odd number of consumption
In hotels/restaurants/supermarkets etc itās full packs anyway. The only place where this loose cigarette rule will pop up will be gaados and shops. These places have no issues selling foreign illegal cigarettesā¦ I canāt see them having issues selling loose cigarettes even if they are not allowed. These kind of rules are barely followed from what Iāve noticed in my past smoking career lol. That being saidā¦ I honestly donāt mind if this turns out to be a bad thing. Infact Iām secretly hoping ITC has a tough 5 years so I can keep adding via SIP every year at Sub 200(would just buy all now itself but the opportunity cost is too high so settled for sip). The cheaper it stays for the next 5 years the better for me haha. At some point it will get too expensive to make the risk reward favourableā¦ so Iām hoping it takes years to reach that point.
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You are having good set of stocks in your portfolio. I advice to keep an eye on portfolio allocation as there are some risks such as godās act and we should be prepared for it, its crucial for chemical and pharma sector.
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@ sivaram ā¦ Tbh Iām not too worried with most of my stocks. Iāve got huge cushions for most of them to protect my self even if they fall by 30+ percent and The sectors Iāve put money in (pharma, chem, agri, FMCG, fintech, IT) all have no headwinds as of now. I am considering booking a few profits in my small caps so I can keep some cash in hand if an opportunity comes to average down my main stocks but apart from that I have no plans on selling atleast until post Q4. I have full faith in most of my companies posting strong results this year(apart from those few small caps where I have just 1 percent exposure) so even if the nifty crashes Iām still quietly confident that il be fine purely based on earnings which is all that matters in the long run. I am keeping my ear to the ground for headwinds though.
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Joy ,
Reading above information is synonyms to your name , Its informative and a pleasure to read .
Apart from valuepickr forum . share your Twitter Account if you have one , Iāll shall follow you .
Blessings
Arigato
Hi Malcom, have loved this thread. Partially also because of confirmation bias since we share a few common bets in the portfolio (Deepak, Alembic, ITC). Laurus I was too late to discover and even though havenāt deep dived into the analysis, it looks like a train missed as of now. IT is one space that is ideally in my circle of competence (engg graduate last year) but I still donāt own any IT stocks particularly for the reason that I donāt see our IT industry as very revolutionary in terms of the products/services they make. That also reflects in the kind of personnel they attract, so as an example I come from a decent tier-1 engg college which has good placements and the likes of Wipro, TCS, Infosys only take away the last remaining students (with poor profile) from the placement season, who in their own words just join the firm for the sake of it. Contrary to them, KPIT and Larsen Toubro Infotech hire from our campus on Day 0, Day1 (the best profiles). Have heard some raving reviews from batchmates about LTI regarding the work they are doing in IT consulting, especially in forward looking tech-stacks like Blockchain. LTTS is another firm that I like since I favour automation as a theme more than IT/consulting over the next few years plus theyāve been getting some huge clientele. Is recruitment quality a good metric to factor-in while evaluating these IT firms? Would love to know your views on this and also about the Larsen twins. Looks like LT is betting big on IT with these two and the Mindtree acquisition.
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Hey @Anshuman_Sharma I have been searching high and low for a good IT/Tech stock. Considering the world we live in IT/Tech should on paper make the most sense. However, they can be the riskiest bets in the stock market since they are highly valued, difficult to track, The way I see it is I put them into 6 brackets.
- Good Old IT: I am not a huge fan of the business model in our current age here. Everything seems priced in and I donāt like Large Cap anyway. Plus most of my friends work for these big guys and from what Iāve heard itās not very exciting and a pivot to digital is not guaranteed. What I am looking for is a small cap IT company where the inherent issues(stagnation, us dependancy etc) could weigh less on the stock while the good surprises would weight in a bit more. I regret not buying LTI in April.
- Companies that are moving into digital pureplays based on IOT, Blockchain etc. Happiest minds looked a good bet but is overpriced too. That being said while I have a basic knowledge about these concepts itās really impossible to track these kind of companies since there are so many moving parts and if you just mention the word digital they get priced in at 30+ PE making them too risky.
- Companies that are almost SAAS/App based: Indiamart/affle fall into this category. However the businesses in these kind of sectors do not have any moats. Iāve seen hundreds of tech companies become extinct overnight due to a bigger fish /competition coming in. With Google and amazon taking over the world Iām very wary of these kind of.companies especially with valuations at dot com bubble levels. Would definitely buy cheap however.
- Companies that say they are tech but arenāt: Theranos, we work, wire card have taught me lessons here. Some companies try to fool you with tech jargon when in reality they are just commodity/retail based companies.
- Holding companies/incubators: Infoedge falls in this category. Imo these have the most potential since all it takes is 1 Zomato to cover the losses from 5 failed startups. Again these are highly valued and takes guts to hold long term since nothing is guaranteed and you are paying huge valuations for future profits that may not arise.
- Companies that look like they arenāt tech but they are:
These are my favorite kind of companies. Sbi cards is an example. Everything they do is tech based(apps, digital payments, big data) but people think of it as a finance company and so when they make tech like moves they explode. I bought it as a tech company around 25 PE or so and I will never let go. Some companies like idfc first bank utilise tech in a fantastic manner but they are too dependant on big ticket items ie housing/auto etc. Sbi cards isnāt. Cams is intriguing too. They are purely tech based and have the secularity of mutual funds to ensure stability. However, they will never have debt and are slowly moving into other growth drivers like handling individual accounts of HNIs etc. These are the kind of companies I want.
KPIT at around 10 PE was my favourite since it has a huge runway in electric vehicles while everyone was pricing it with the auto industry(recently took a technical bet in it and sold at 123 as mentioned above since the valuations began getting too high).
Sorry for the long postā¦ at the same time I couldnāt explain what I wanted to say in detail since the post got too long haha. I hope my point got through. Currently sbi cards is my fintech bet. If I find another similar company which is tech based but has a moat(CAMs for eg) and a field I understand well(for eg finance)i will be going all in with that company. Until then I wait. In short: when it comes to IT/Tech I am looking for a reasonably valued company that uses tech to reduce working capital and debt and who has a moat that cannot be broken overnight who work in a field that I understand thoroughly (finance Vs IOT for eg). Those are very difficult to find but removes the risk and gives you the reward of chasing IT/Tech companies
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Small Cap Product IT companies merit study on your part. Some interesting names are Nucleus Software - Lending, Intellect Design -BFSI, Ramco Systems
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Cheers Sunnym. Will start looking at those straight away. Thanks for the list 
Guys who say Large Indian IT companies nothing revolutionary and they do just usual low grade stuff - You guys just check how these companies have grown over last 10 years. And then compare how these small cap / midcaps done.
There used to be KPIT technologies - then they merged with birlasoft then some division demerged and again became KPIT technologies. Same happened with Mastek - Majesco. Then there was I-flex which Oracle took over. Oracle already has unlisted subsidiary in India. Now there is lot of confusion if digital business like Cloud technology is with Unlisted entity or listed entity. The Jain guy sold Polaris and some division of it now is Intellect Design!.. I do not know if all these mergers-demergers created value for small shareholdersā¦
My only point is - Over the last 10 years or so, TCS Infy etc have created great value to the shareholders. They may not be great FANG-like stories but they are consistent performers. Of course if one can trade in small caps at a particular period of time and book profits, itās great but can you bet on them for longterm?
Anshuman bro - how can you extrapolate what happened in your campus to everywhere else. There are 100s top engineering colleges in India. I know quite a few where top preference given to TCS Infy etc.
I am no software expert. Absolutely no knowledge of business model of IT companies. But having gone thru Annual Reports of Indian IT companies, I can say that they are not pushovers either.
Thanks.
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Completely agreed to this, but itās not about the historical shareholder returns but FAANG-like reputation of products thatās missing from the Indian IT scene. I tried to validate that through ONE OF THE metrics, i.e their recruitment (which is also a consequence of their low pay compared to the private sector IT roles like in Google, Amazon, Microsoft, Adobe, SAP, Salesforce, DE Shaw, Arcesium, Nutanix, KPIT, LTI, even Oracle for that matter). Donāt know about other sectors but talent recruitment and retention plays a major role in scaling an IT firm because tech changes rapidly. Itās not a commoditized sector where operational efficiency is the only differentiator, itās all about innovation in IT. If you hire top grads/postgrads from the top colleges, and on top of that there is employee retention (like in Amazon) it will eventually transpire to better products/services. 2 decades back, Infy, TCS were the major names for any IT grad to join in the country (even from IITs) but not anymore and have been losing out to private competitors on a yearly basis. Not sure which top colleges youāre talking of where Infy, TCS hire the cream, but in IITs, BITS, IIITs and top 10 NITs (these are over 50 colleges) thatās not the scene anymore. Now Amazon and Microsoft have built their biggest Asia offices in Hyderabad and have been relentlessly hiring. Tech startups by Indians, both US-based (like Nutanix, Cohesity, Rubrik) and India-based (like Freshworks, Flipkart) are rampantly hiring in India among the top colleges. In 10 years time, when the batch of employees whoāve been hired over the last and upcoming decade, mature into their roles and be part of companyās leadership, there will be stark difference between these players and the likes of Infy, TCS.
Coming to main point of the thread, for shareholder returns, yes these might still be the most reliable IT bets but imho thatās due to the lack of high quality publicly listed alternatives so I personally wouldnāt invest in them given that I donāt see them competing toe to toe (on tech capabilities) with MNCs or even top Indian tech startups in 10 years time.
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Hi
Thanks for sharing your personal thoughts. Does LTTS also recruit from your college and what kind of roles it offers? Which technologies? Is any of your college mate in it and are they doing any good meaningful research and product development for future? Anyone working can suggest you that how the DNA of LTTS and LTI is different? Their results so far do not support anything substantial they are doing and looks like just another services company focusing on engineering vertical.
Also what are your college mate thoughts on Oracle financial softwareā¦the listed company which is erstwhile iflex and just owns the flexcube part of Oracle business. Thanks
Agree and resonate with most of your points just one addition. These are very old solid companies with huge cash pile and believe me very shrewd and capable management at top. They hire, as you say the lowest of pyramid but also some cream both in India and abroad. Their business relationship in developed economies is very deeply rooted into big corporates and they know the tricks well. When needed, if time comes, they can and will buyout the startup competition. SAP, Oracle, Microsoft, Amazonā¦all need these low pyramid player as partners as they have their own nicheā¦I had written down Indian IT 5-10 years back when digital/new tech was just comingā¦they proved me wrong so far. I think they are here to grow and challenge in their own waysā¦
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No LTTS doesnāt hire from our campus. Infact I only figured out about their existence after graduating and when I started investing and it seemed strange to me that LTI (tech consulting) hires from campus but not LTTS (ER&D) when the latter would need more core-tech profiles. Havenāt explored them too much but basis their ARs it does seem like they are getting strong clientele (like the smart city solutions in the middle east alongside Qualcomm). Their financial performance is pretty strong as well but you might be right here though, that it eventually transpires into an ordinary services company in the engineering division which is why I need to explore them further before considering investing in them.
On Oracle, their corporate structure is confusing to me. The Oracle that hires from our campus is usually seen as a mass hirer (but among the decent profile students), takes about 30-40 grads every year and pay them well in cash and ESOPs, but the retention is extremely poor. The recruits have nothing great to say about the work culture and usually see it as a stepping stone to just move on to an MS/MTech in a couple of years time. But again, Iāll need to deep dive into what part of that firm is the same as the listed entity āOracle financial servicesā. Vijay Kedia has been backing it recently.
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Thanks, I think this maybe a good news. What this actually means that LTTS may not need freshers much and maybe more active in lateral hires but I donāt see much of them in job portals either and none of the people I know of work in LTTS.
Yes you are right about OFSS backed by kedia recently. It is actually Flexcube product for Banks. It is not Oracle cloud and many would confuse but Flexcube, and all other banking products, have been reinventing themselves with digital/cloud offerings. So OFSS is one of very few listed MNC product company with strong presence in digital/cloud but limited to only Banking. Also their dividend payout is strange and not linear.
Disc. Not a buy/sell recommendation. Hold tracking positions in LTTS, OFSS and Tata Elxsi in technology.
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LTTS is purely into engineering services. e.g. autonomous vehicles, 5G, medical, industrial/plant engineering etc. Personally I believe they have potential to grow as they seems to be the only company who is in pure play engineering services. Just to give example, they have 5G labs in Bangalore. Similiar they have some other labs. Their might be many companies going forward who want to outsource research part to LTTS. Also they have 300+ patent(along with client).
Only drawback with the company is that they are purely into engineering. So in current type of situation, they will not grow much as comparative to other IT service companies since generally companies cut cost on R&D in economic slow down.
Future in IT seems to be the technologies like IOT, ML, AI. Nowadays every company is using them as buzzword to show their expertise to the clients. I like Mindtree in mid cap space. Reason is because they own Magnet360 in US who provides cloud services(SalesForce). I have seen Saleforce growing in US. Other trends that I have seen is migration from AWS to Azure since Microsoft is putting lot of focus on Azure after seeing AWS making lot of money from it. But I havenāt explore which company can benefit from it. Microsoft has partnership with lot of companies who can provide Azure implementation.
Disc -Invested in LTTS and has small position in Mindtree.
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Update on my portfolio so I can get my thread back on track
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My allocations in Laurus labs, SBI cards, Kaveri, Deepak Nitrite, Granule, Racl have remained unchanged
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Alembic, I added more in the last dip at around 890 to bring it up to approx 17 percent of my portfolio so that it matches my other heavy weight allocations
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Followed my gut and technicals and ended up selling ITC a little after it broke itās 179 support and just before the last huge crash in the sensex and kept that cash in hand. In hindsight it was a good move since I was using ITC as an FD for the next few years anyway. Will invest again at a lower rate/Post results. May wait until next year so I can keep the cash liquid for worst case scenarios with my business though. Will definitely be re investing again at some point though maybe via SIP over the next few years instead of a lumpsum
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Sold off my small stake in Cupid around 220 too. Figure the market looks choppy and Cupid is not covid proof like the rest. Will give it a worthy allocation when things settle down instead of just 1 percent.
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Bought and sold kpit at 104 and 123ā¦ was a purely technical bet. Want kpit long term but againā¦ markets look a bit overvalued and with not much visibility in non pharma/agro/chem sectors.
Overall portfolio allocations has remained stable through all the volatility of the past few weeks and I have a lot of cash in hand to average down my pharma companies/Deepak if needed. Watching CAMs closely and hoping I can pick it up at under the IPO price soon. That being said I have no urge to buy anything in my watchlist yet and no urge to sell anything in my PF either. Now looks like a time to hold rather than buy with so much uncertainty in the markets. Will re evaluate post elections and Q2 results
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