My Evolution Portfolio: The ‘When,’ ‘Why,’ & ‘What’

First, I want to express my gratitude to all my finance mentors who have guided me along the way:

  1. My Family: A heartfelt thanks to my parents and brother for instilling the right habits and helping me make informed decisions.
  2. Firstly, ValuePickr Forum where I learnt a lot, to @Worldlywiseinvestors , Neil Bahal (Negen), @shankarnath, Amitabh Vatsya (Sadhan), SmartSync team, Shashank Mahajan (Value Educator), and media icons like Raamdeo Agrawal, Rakesh Jhunjhunwala, Sanjeev Sanyal and many more. Your insights have been invaluable!

My Background

I’m a Mechanical Engineer with over 14 years in the automotive industry. With a busy schedule, I have limited time to study the markets. Therefore, I rely on “borrowed conviction” and only invest once I’ve built my confidence in an opportunity.

My investment journey began in 2011 with modest SIPs in funds like HDFC Top 200, guided by basic advice from a mutual fund advisor—advice I would approach differently today. Back then, my SIP amount was around one-tenth of my take-home salary, which was modest. Apart from that, I also started with some FDs. I remember investing in DHFL FD at ~12% interest.

Those were the days when I used to watch Zee Business, CNBC and other channels for Stock prices and recommendations.

A Step Up

I opened a Demat account with Sharekhan and started investing in blue-chip stocks like Tata Motors and ICICI. I was introduced to a basket investing strategy called “Sharekhan Top Picks,” a monthly rebalanced portfolio of 10-15 stocks complete with price targets and investment theses. I followed this approach and made some profitable investments, including a standout in Ashok Leyland.

Who Am I?

I’m the kind of person who likes to dive deep into subjects that fascinate me, which also reflects my role as an analyst in the corporate world. I consider myself a curious tech enthusiast.

I had a habit of maintaining a logbook of my investments and a folder containing all the paperwork. Nowadays, since everything is in demat mode, I am not maintaining it anymore. However, I’ve switched to a comprehensive Excel spreadsheet for financial calculations.

By nature, I’m a fundamental investor. I seek out companies with strong cash flows, reputable management, and longevity potential. Sometimes, after I do all the due diligence, before I decide to invest, I ask a simple question: "– If I am asked to run this business, will I do it? If yes, then only I buy.
I believe in value investing beyond just the price-to-earnings ratio—using it as the sole metric can be misleading. While I admire Benjamin Graham, I don’t fully agree with his low PE approach.

I also have a keen interest in special situation investing, focusing on demergers, rights issues, and promoter changes. More on that in future posts!

Who Am I Not?

  • A Trader: I don’t trade based on past candlesticks.
  • An F&O Guy: I’ve never engaged in futures and options, nor do I plan to.
  • A Crypto Investor: Despite my reading, I still struggle to grasp its intrinsic value.

What Went Wrong: Lessons Learned

  1. LIC Policies: I was pressured into investing in LIC policies like Jeevan Anand and a money-back plan. I regret these, as I still pay premiums for inadequate coverage.
    Lesson: Opt for term insurance ONLY if you have dependents. I believe, if your wife is working and your parents are financially stable, and if you don’t have much debt, then you don’t need a insurance.
  2. “Secured” NCD Investments: In 2012, I heavily invested in secured NCDs from DHFL and SREI, lured by their “guaranteed” returns. When DHFL collapsed, I learned that the ratings by international firms that were AAA/AA made no sense.
    Lesson: Trust your research; never rely solely on ratings for NCDs or bonds.
  3. Fixed Deposits: While FDs aren’t inherently bad, they pose risks if a bank fails. Ankur Warikoo’s warnings :wink: prompted me to shift my focus. Rather put your money in NPS tier II (50% Equity & 50% Debt) and sit tight.
  4. Avoiding Market News: I guess this is a no brainer. I’ve stopped following market news and recommendations, as they often lack substance.

What Went Right: My Learnings

Investing in Businesses: Over time I understood that in a developing country like India, where there is cheap & abundant workforce, much better government and a favorable climate – it’s a perfect place to invest in growing businesses. The focus should be on assessing management, which can be challenging but comes with experience.
Investing can’t be copied but it can be leant. More on this later in my future posts…

My Goals: What I Want to Achieve

I once chased the FIRE (Financial Independence, Retire Early) concept, but now I seek financial independence where my salary isn’t the primary source of income. Honestly, I haven’t set a timeline for achieving this.

What I Will Not Disclose

I won’t share my portfolio’s worth, as my intention isn’t to show off but to learn. Additionally, I might also not discuss my investments in Real Estate as this might not be the best forum and I believe RE is a different game altogether.

Why This Thread?

  1. To learn from all of you on how I can improve.
  2. To create a personal thesis report for future reference.
  3. To share my experiences with the younger generation, so they can avoid similar pitfalls.
  4. I plan to write more detailed posts on various topics mentioned above.

Stay tuned for my next post on My Portfolio structure. Please like and comment to keep me motivated!

Happy investing!

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My Portfolio Structure as of October 6, 2024

I wanted to share my current portfolio distribution and thoughts on my investment strategy. Here’s how my assets are allocated:

Assets Net Worth (%) Expected Distribution (%)
Indian Mutual Funds 13 20
Indian Equity 8 10
US Equity 1 5
NPS Tier I 14 20
NPS Tier II 1 0
EPF 18 20
PPF 29 20
RD 9 0
SSY 7 5
TOTAL 100 100

Indian Mutual Fund Breakdown

I view my mutual fund investments as key long-term wealth creators. Here’s a closer look at my current distribution:

Fund Net Worth (%) Expected Distribution (%)
PPFAS 52 30
PPCHF 20 0
Navi US Total Stock 14 15
Old Bridge Focused Equity 6 30
MO Gold & Silver FoF 3 5
Tata Midcap 150 Mom 50 3 20
Tata Liquid Fund 2 0
TOTAL 100 100

Focus on Indian Equity

My Indian Equity is mostly focusing on small & micro cap as I believe Small cap funds do not have the freedom that the retail investors have w.r.t to Market cap and liquidity.

Sr No. Indian Equity Net Worth (%) Reason
1 Praj 8 Green energy theme
2 Shivalik 7 Proxy to meters
3 ACE 7 Construction
4 Samvardhana Motherson 7 Automotive
5 Skipper 6 Power theme
6 Nuvama 6 Investment
7 Interglobe Aviation 5 Aviation
8 Raymond Lifestyle 5 Special situation
9 KPIT 5 IT
10 Sanghvi Movers 4 Construction
11 Genus Power 4 Power theme
12 Ganesha Eco 4 Green energy theme
13 Zen Tech 4 Defence
14 Pondy Oxides 4 Circular economy
15 Premier Energies 4 Green energy theme
16 Welspun Enterprises 3 Circular economy
17 Triveni Turbine 3 Green energy theme
18 Sterling 3 Green energy theme
19 HPL Electric 3 Power theme
20 Ion Exchange 3 Circular economy
21 Senco Gold 2 Proxy to gold
22 Shriram Finance 2 Special situation
23 Indo Tech 1 Power theme
24 Blue Star 1 Proxy to Data Center
25 Agro Tech Foods 1 Special situation
TOTAL 100

I welcome any questions or suggestions you might have! Stay tuned for more details in my next post.

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Hi @SALIL_HARLIKAR sir, what’s your view on Raymond lifestyle latest quarterly results ?

Hi @Nagu_Danavath,

Thanks for asking!

Revenue Growth: Achieved ₹1,70,826 lakhs in Q2, a slight dip YoY but strong sequential growth from Q1 FY25’s ₹1,22,012 lakhs.

Profit before tax fell to ₹5,282 lakhs, impacted by one-time exceptional costs, including ₹5,772 lakhs in stamp duty from the recent demerger.

Key segments like textile, shirting, and apparel delivered steady performance, contributing to continued resilience in core areas.

Strong balance sheet with a net worth of ₹9,47,833 lakhs, debt-to-equity ratio at 0.11x, supporting sustainable growth.

74 stores opened in H1

Management had guided a subdued H1 while H2 will be good on account of wedding season.

Overall, I feel it’s a beginning of a good turnaround story. The company has high chance of getting included in the smallcap index in Jan 2025. Expect good inflows.

Disclosure: invested and added more recently.

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Nice Write up Salil… welcome to VP Club.

Regards
Manjunath.C.A (Mechanical Engineer with 16 + year Experience :blush: :innocent: )

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Any reason not to have Pharma stocks in your portfolio ? and your are betting on the green energy themes, Any strong conviction to have these ? Thanks

To be honest, I don’t understand the complexities in pharma sector w.r.t their products, R&D and valuations since every medicine is having a different purpose, different margin and different lifecycle. And I don’t invest if I don’t have atleast the basic understanding of the business. But I prefer the healthcare (hospitals) sector but the valuations doesn’t look cheap now.
However, I would be more than happy to learn from you all here.

Regarding green energy theme, YES, I am very bullish on this theme. I believe the demand in this sector will keep on increasing irrespective of government, climate, economic conditions or any other macro conditions. World is moving towards and investing heavily in circular economy and renewable theme. And my conviction further increases as I am a avid nature lover! Cheers!!

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Any specific reasons to have Senco gold ? i could see others have better numbers than senco ?

Welcome to valuepickr. Liked your first post very much.

Well, I think one might need to rethink this at some point of time or other (I am thinking loud here and also myself learning as I think and type. Also, I am speaking in general below so pls forgive or ignore the extreme events mentioned as we have to consider those when we think of insurance).

Life insurance is ideally not to cover immediate expenses of dependent family once they are gone but rather to ensure that the lifestyle of the dependents are not negatively impacted over the long term once the gone member’s income is taken away from the picture. Considering above, I think only a person/family who has enough other assets to ensure that the lifestyle, including inflation over long term, is not impacted may not need an insurance. Wife working & non-dependent parents are great to have and would ensure that financial survival is not impacted at all but would mean extra burden on the surviving members.

Another aspect to consider is, what if both earning members are gone is any unforeseen event. Then the non-earning or minor surviving members would definitely face huge financial stress.

Coming to health insurance, that again in worst case scenario, the earning members income will be in huge stress under unforeseen events. However, I feel taking a small health insurance policy is not of much use. The insured sum should be as big and comprehensive that if someone would have to shell that out of pocket, it would mean a massive future lifestyle impacting change. Problem with health insurance policies is that such big sum policies are extremely expensive upfront costs. In case of Life, the term insurance of big sum insured, I think is still at a reasonable/manageable cost. (I may be wrong here).

So, I think majority of people would need insurance. Its only that either they are fortunate enough to not have adverse events or they do not know it still that they need insurance. Problem is the upfront costs.

Can you pls mention more details/benefits about NPS tier 2 that you prefer it as part of your debt/hybrid portfolio?

Do keep writing such holistic/strategic posts like your first one. Good to see such structure, thoughts and vision.

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Only reason being, that the precious metals are having a rally and I found Senco as a good proxy and relatively cheap . I did some homework and took a small position.
However, the stock gave me more than expected returns in a very short span and I finally sold it.

Thanks for sharing your thoughts! I will definitely think about it.

For me, NPS Tier II acts like a fixed instrument ( I know it’s not fixed!). My point is, if I feel the markets are heated up, and it’s time to book some profits but if I don’t see any opportunity to buy anything, then I will simply put it in NPS Tier II. Benefits are that you can withdraw it easily, it’s relatively safer (50%E 50%D) and LEAST expense ratio. My expectations from this asset is just 10% (beating actual inflation).

For the current market, I am expecting a further 15-20% correction in small and micro caps. When, I don’t know. If it happens, I will certainly deploy back the amount from this NPS account back to stocks.

I believe it’s better than liquid fund.

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This was the exact question I was about to ask…what makes you feel NPS tier 2 is better than liquid/debt funds…is it the lower expense ratio? I think for liquid/debt funds, expense ratio is anyways very low? (Pls correct me if wrong). Also, for debt funds, the ratio is generally 70:30 (debt to equity) unlike 50:50 that you mentioned for NPS tier 2. Is that giving them slightly better returns than liquid/debt fund? I think taxation must be similar for both? Thanks