My Journey & Learnings : Strategy & Portfolio

Hi Everyone,
It is a great feeling to be part of VP forum. Undoubtedly this is the best archive of knowledge and the investor fraternity interactions are supremely value adding to own research.
To introduce myself i work in middle management of an MNC and have a great interests in business and its nuances.
My investment journey can be summarized as below:
2014-2016 : Not much investments, punts here and there but a lot of reading and listening to market content.
2016-2018 : Started investing significantly through Mutual Funds
2018-2019 : Started investing directly into stocks along with Mutual Funds
Sep’19 Onwards : Nil Mutual Funds, Direct stocks investing

Asset Allocation
Equity : 65%
Debt/Fixed/Retirals : 25%
Cash: 10%
This is the balance i strive to maintain, it does fluctuate depending on market situation.
Cash is largely into liquid funds. Debt has large component in PPF/NPS/FD and depending on expected yield, short or medium term debt fund may be included.

Now coming to equity portfolio which consumes bulk of my time and effort, my strategy and portfolio approach has been ever evolving, tried value, growth, mix and multiple combinations of large, mid, small cap. Learned my lesson and now i can say i have a broad understanding of what i am good at and which strategy suits my personality and behavior. I started with investing in large companies and then strayed into mid and small cap. Tried some sectoral bets and turnarounds, some worked some did not. My current portfolio approach is divided into 3 buckets:
Large Compounders -30%
Mid & Small Compounders - 40%
Big Bet : 30%

Large compounders are essentially companies which i expect to grow their earnings at 15% CAGR with least amount of volatility. It acts as an anchor to the portfolio specially in tumultous times.
Mid & Small compounders are companies which i expect to grow their earnings at 20% CAGR with some amount of volatility. It acts as growth engine for the portfolio.
Big Bet are essentially a bet at outsized returns, prefarably small cos. in very big market and deep discounted companies. It acts as a rocket booster to the portfolio but the risk is very high.
Due to the nature of companies in different baskets the number of companies varies, the high risk basket has more companies and hence lesser allocation per company to limit the risk exposure using diversification.
My vision for portfolio is to slowly increase my allocation to big bet basket as i gain more confidence and knowledge ofcouse i need to be comfortable and at peace with such allocation considering the risks involved. My plan is to be financially independent in next 7 years.
My investing gurus are Sunil Singhania(Abakkus) and Sumeet Nagar(Malabar) and ofcouse Howard Marks and Ray Dalio from US.


Stock Rationale Allocation Abs Return CAGR
Large Compounder
RELIANCE IND Pivot to Digital & New Age business, building platforms & monopolies 4% 42% 37%
LAURUS Industry tailwind & Foray into biotech 4% 31% 153%
ICICI LOMBARD Low penetration of Motor, Health & PC, Excellent RR, Float Play, Yield Balance 4% 21% 21%
TITAN 9% organised gold retailing, entering new unorganized markets like Saree, affluence play 3% 52% 63%
ASIAN PAINTS Big expanding real estate market, big home improvement opportunity 4% 61% 64%
L&T INFOTECH Huge market potential, great cashflow, good growth and dividend 4% 113% 97%
KOTAK BANK Large established lender with trust and low cost of capital, value unlock potential 4% 4% 5%
METROPOLIS Low test to presciption ratio, large fragmented market possibility of consolidation 3% -3% 0%
Subtotal 38% 63%
Mid & Small Compounder
AFFLE Great cashflow business and runway for growth, innovating new revenue stream 4% -7% 0%
ROUTE MOBILE Great cashflow business and runway for growth, innovating new revenue stream 4% 17% 82%
AU SMALL FINANCE Serving Large unbanked population 4% 21% 75%
PRINCE PIPE Expanding Real Estate market, good technical collaborations and capex 4% 33% 105%
HIKAL One among few complex APIs and CRAMS 4% 119% 1248%
SOLARA Diversified API player in human and animal health 4% 4% 12%
BURGER KING Excellent cashflow business, MNC brand, huge unorganized QSR market 4% 37% 64%
MAHINDRA HOLIDAYS Brilliant cashflow business, affluence play, asset light 4% -1% 0%
Subtotal 30% 39%
Big Bet
NEOGEN One of very few bromine and Lithium chemistry player 3% 6% 21%
BHANSALI ENGG Play on consumer durable market, new capex to drive down material cost 3% 26% 69%
INFOBEANS Large market, inorganic expansion to acquire IP 4% 57% 436%
ARVIND FASHION Value play, one of largest brand collection 3% 98% 828%
NEULAND Complex APIs and CMS opportunity in niche therapeutic areas 3% -37% 0%
HSIL Value play, 2nd largest glass bottle manufacturer, improving building material financials 2% 16% 68%
YASHO High growing specialty chemical microcap 3% -6% 0%
HINDUSTAN FOODS Huge FMCG market with shift towards CM 3% -8% 0%
Subtotal 19% 80%
Total Portfolio 30% 63%

Few more name i am currently studying like Intellect Design, Meghmani Organics, Shaily Engg and Ester Industries.

The number of stocks may look large but that is what i am comfortable with currently more so because of the prevailing market/geoeconomic conditions.

Below are my past winners:
Adani Gas : 6X
GMM Pfaudler: 3X

Below are my mistakes:
Coal India : Tried hardcore value investing only to realise it is not for me, lost 30% capital
Jubilant Foods : Identified the great cashflow machine but got spooked by valuations and sold at 50% gain
LTTS : One of the first stock to put a large bet on, lost patience and sold off since growth was not as per expectation only to see it go 3X from my buy price.
DHFL yes DHFL :rofl:: It was a noob choice in 2016 looking very cheap optically but made 2X(reduced from 4X post the fraud came to light), extremely lucky to sell that before total crash.

Your valuable suggestion/comments/counter thesis are most welcome. Keep learning, keep engaging and keep enjoying !


Nice journey… I too started in 2018 and still majortiy chunk of my salary goes to mutual fund… For direct stocks in large cap I hold Reliance / HDFC twins / HDFC Life / Airtel / Crisil / Britannic / Godrej consumer and in small / mid I have Tips / Tata Elxsi / STL / IFGL / IDFC first etc…

Thanks. What is your thought process for small and midcap stocks since i see very interesting names tending towards value investing ?

Update to the Portfolio:
Exit : AU Small Bank
Concerned about resignation in risk control profiles. While on concall Mr. Sanjay did explain the personal reasons and challenges of having Jaipur as HQ and poaching by competitors but all resignations in such profiles raised many doubts. My mind connected it to NPAs which are reported much better compared to competitors and somehow i didnt feel comfortable with the entire situation and hence exited with small tracking position left. I will continue to monitor the situation and maybe buy again if all is clear.
Entry : Jubilant Ingrevia
I had a good hard look when it got demerged from lifesciences buisness and valuations were also very good, was optimistic about the buisness verticals but could not take a decision due to limited information and complex interdependencies along with environmental litigations. Finally after some more research i invested partial of the defined allocation as i still believe this is somewhat risky, Mcap doubling since listing only increased the risk further. Will increase allocation as i understand the business better and management delivers on growth plan.


Update on Portfolio
Mastek & IDA
I have been reading and reading on both these companies for long time and witnessing the price rise, do not know why but my inherent standing was to buy one of the two. Contrary to popular opinion, i am more bullish on IDA, i believe it has got foot in the door of product industry and should be able to capitalize it and with licensing and AMC contribution increasing the unit economics should be non linear, i have some doubts around management with respect to corporate action but again these are doubts nothing to substantiate. Additionally Mastek also makes a solid case for itself with better management (my opinion) and good presence in Europe govt services and trying to make inroads in US private space and new verticals hence could not ignore this completely. Allocated 3% of PF to each and will monitor and decide future allocation basis business performance.

Agrochemical sector is a high ROCE sector due to great asset turns and decent margins. The market is huge and Indian cos. have good presence in global markets as well. Companies which operate in both Indian and global markets can derisk themselves from seasonal component of business. It again has formulation sellers, technical grade manufacture and CMS players like PI Industries. With large dependence on formulation main focus becomes India market which has good penetration even though per hactare application may be low. Technical grade suppliers and exporters i believe are better placed in terms of growth potential and that is where Heranba shines other than their focus on synthetic pyrethroids which seems to be a greener alternative and has leading market share in India market. Their are some issues around promoters’ past legal hassles but generally when companies go public their corporate governance gets better, thats a hope in this case as well. Hence when i invest in such companies i do not allocate large sums and let the investment mature and as i get more confidence i increase my allocation. 90% of times i have averaged up except during Mar’20 fall.

I have two more companies to finalize post which my portfolio will be done in terms of intended design, then it will be all about action basis performance or a decision of replacement if a vastly superior opportunity comes. Thank you.


Can you pls elaborate on this point…what events lead to those doubts? Thanks

Events leading to Polaris demerger, timing and number of instances of share sell is not very clean action, but as i mentioned nothing substantial but these pointers are little discomforting.

It is still not clear what events and timing of demerger. Would be helpful if you mention details. I understand all views are your personal…

During demerger instead of buyback, shareholders of IDA were provided option of NCD which to me is not very common practice. In recent past, KMP have sold shares lot many times, even though the quantum is not significant but it more of a signalling noise anyway.


Portfolio Update
Reduction : Reliance Industries : Reduced portfolio weight as valuation seems overstretching now, maybe will add back if it corrects or any announcement of demerger.

Burger King : Better alternate opportunities.The ramp up is slower than expected and some doubts around medium term profitability of this space.
Mahindra Holidays : Better alternative opportunities.
HSIL : As discussed in SHIL thread, replaced it with SHIL.

SHIL : Bought this in Aug, optimistic about real estate recovery. Has legendary brand Hindware which has good brand recall, and the company is minting this by expanding into related products with same brand name. The company has already taken leadership position in kitchen chimneys and is expanding into kitchen appliances, room cooler, air purifier, water purifier, water heaters and furniture fittings as well. The company has also forayed into furniture retailing through asset light model of franchising under Evok brand. They are also moving into some highly innovative products like gas water heaters by collaborating with global players. If executed well this company has great potential to shake market leadership in the appliances category. The furniture retail market is huge and unorganized, if they are able to figure out a profitable business model this can be a very big opportunity.

Saregama & Tips : Entered in Sep. Yes i know i am a late entrant here if you consider stock price rise but i believe this industry has just found its feet and there is a long way to go. The business economics are superior and hence i was OK paying up little bit considering potential growth ahead. Saregama has superior management and good IP and Tips has superior IP but management is laregly led by promoter. He called out that the company is planning to have professional management which will manage the show till his son gets to know the business better. Allocated 5% in total.

Offlate i am being bit cautious of the market valuation and spending more time relooking at valuations of my holdings. There are a few companies which are in stretched territory like LTI,Asian Paints while Titan is clearly at absurd valuation. Working on multiple scenarios to take a decision.
Started allocating some part of incremental capital to gold through fund.

Better sense prevailed and i lightened up my portfolio on expensive stocks. Shrunk portfolio by 25% at cost and 50% on current value. I am in midst of rationalizing my portfolio, will post a detailed thread once done.

Update on Portfolio
Restructured the portfolio in last 1 month, sold some expensive looking stocks (wrt growth) and consolidated the portfolio to increase portfolio weight on companies i have higher conviction and comfortable with valuations. Below is the latest portfolio. I am still buying and maybe by next month i should be able to allocate the desired capital. Will still keep around 15-20% in cash to capitalize on any big drawdown, possibility of multiples triggers (Fed taper & rate hike, RBI raising rate due to inflation, general risk sell off, geopolitical event)

STOCK Allocation @ Cost

Another 5% remains unallocated, researching some cos., will allocate if something is finalized else will keep in cash.
Against my target allocation of 65% to equity, i am at 40%, will increase to 50% and keep the remaining 15% in cash.

Portfolio Update
Added Tatva Chintan post Q2 result at 2300 levels, considering the valuation allocated only part of planned allocation, considering capacity constraints till FY24, there are chances of some meaninful corrections to add as per planned allocation.
Also adjusted desired portfolio weights basis Q2 results. Current allocation to equity stands at 49%, remaining 16% allocations is dependent on right valuations.

Not sure I understood this. their current capacity is 280KL reactor capacity & 17 assembly lines. Utilization levels in FY21 was 68.9% for reactor capacity & 54.5% of assembly lines. (Refer page 14 in Q2 IP)
Their growth plan after capex is to have 480 KL reactor capacity & 39 assembly lines. So roughly 70% capacity addition in reactor capacity & more than 100% capacity addition in assembly lines coming onstream by Oct’22. (Refer page 28, Q2 IP)
So all put together they have headroom to use roughly 50% more than their FY21 utilization till Oct’22 by when they get these new capacities onstream for another 80%.

So not sure, how you concluded they have ‘capacity constrained till Fy24’ ? It’s actually quite opposite, by Oct’22 they will have capacity to grow 2.5x times of their FY21 utilizations. Isn’t it ?

FY21 is at 69%, if they grow 30% in FY22, it will already touch 90% utilization ( i assume this is max that can be extracted). So from Mar’22 till new capex planned to commence operations in Oct’22 they will be capacity constraint. Assuming capacity rampup and new site approvals might take some time full availability will be starting FY24. I am taking realistic assumptions, if they are able to do early its good.
Also management mentioned that they might loose some sales due to capacity unavailability on concall and that there is a delay in expansion project, it should have been planned earlier. Infact to one analyst’s question they responded that they will try to maximize sales of SDA in place of PTC since it has better margins if capacity is constraint.

Portfolio Update
Added Devyani International and Burger King (yes its back in portfolio), reworked the portfolio allocation.
Want to add Aptus but valuation & limited public time is holding back. Studying Equitas SFB, valuations are favourable and liability franchise is growing strong, Q3 should be last quarter for any Covid related provisions.

Just a suggestion. Please ignore if you don’t see this as sensible. I saw the heading of this thread was learnings but I didn’t see any rationale was added in adding Burger king after selling very recently. Conviction lost and regained in such short time or something else ?

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Portfolio cos. delivered 58% growth in earnings YoY and 19% on QoQ basis. Portfolio P/E stands at 57, not very cheap but acceptable in current environment. It is also impacted by some loss making companies like Arvind Fashion & Burger King.

All questions are welcome and that is the objective of posting here, critical evaluation by self and others and i am glad you questioned the reasoning. If you observe my reason for selling BK in earlier post was slower than planned rampup and headwinds in profitability. I bought it on listing day and held it till recently with no price appreciation post listing gains, so i had some roadmap in mind for the company. The current quarter results were surprisingly good to me and since i reserached this space much more before investing in Devyani International, my confidence improved on this. Also if you read through the changes i made to the portfolio due to valuation discomfort (selling Asian Paints, Titan etc.) i had cash on hand, i have 3 choices, do nothing, add to existing cos. or buy new. Since i already have enough cash i intend to deploy some and in my existing holding i do not find either valuation or inclination to add more. Also as i pointed earlier, looking at current market valuation, volatility, risks i am more inclined towards a diversified portfolio rather concentrate and hence new investments. Devyani i have already written a thread for the rationale and BK i have held in past and is a known devil. So the way i see, it is not one factor but a collective basket of options and circumstances which dictates a decision and i just quoted the case for this one. Maybe 10 years down the line i will read all this and find it stupid but that is what journey is all about, improving one step a time. Thanks.


Hello Sir, What are your views on GPIL?