My model portfolio - Target a 12% CAGR over 5 years - request feedback!

Q&A: Questions & Answers
1

Dear Friends,

I am a great fan of valuepickr ever since I have come across this wonderful platform. The collective wisdom of the senior participants here is truly amazing & much better than the content on various biz channels. After about 15 years of haphazard / directionless investing in stocks, having made innumerable mistakes & paying lots of tuition fees to Mr.Market (have lost 60-90% capital on some stocks like Tata Motors, UFO, Sintex, Kwality, IDFC etc). I believe I have now settled down, set more realistic expectations and shifted my focus towards better quality stocks which can hopefully delivery a realistic 12% CAGR over the medium term. My portfolio holdings are as under along with a short summary of why they have been picked. I seek your feedback on this portfolio.

Company Name Sector % Of Portfolio basis CMP Thesis

Reliance Industries Limited Diversified 11.73% Leadership position in all biz, multi year growth runway in telecom / retail, value unlocking possible with demerger / IPOs

ITC Ltd Consumer 9.14% Stable dividend yield; FMCG biz margin expansion could trigger stock rerating. Also a demerger across business verticals could trigger a rerating. Until then live with the cash machine

NESCO Ltd. Real Estate 8.31% Steady growth - annuity biz model, proxy play on real estate, liquid cash / investments on balance sheet, debt free,capex is backed by internal accruals

HDFC Bank Limited Financial 6.74% Steady compounder, market leader, innovator, low NPAs, low concentration, digital push

Granules India Ltd Pharma 6.51% Medium term strong growth prospects due to pharma tailwinds, building good pipeline of ANDA

Hikal Limited Pharma 5.99% Medium term strong growth prospects due to pharma tailwinds also a play on agro theme

Trident Ltd Textile 5.23% Steady growth, presently headwinds, bounce back on overall economic revival, good dividend yield, management commitment to debt reduction

NOCIL Limited Chemicals 5.04% Leadership position, proxy on auto industry, debt free, steady compounder - presently headwinds

Tata Consultancy Services Limited IT 4.07% Leadership position, stable compounder, proven track record, strong execution

Alembic Pharmaceuticals Ltd Pharma 3.64% Medium term strong growth prospects due to pharma tailwinds, strong pipeline of ANDA, proven execution

Larsen & Toubro Limited Infra 3.43% Leadership position, presently headwinds however strong bet on India’s infra journey, defence manufacturing.

Mahindra & Mahindra Limited Auto 3.33% Leadership position, stable compounder, presently headwinds - however strong proxy to agri / rural theme, strong management

Ambuja Cements Ltd Cement 2.80% Bet on India’s infra journey, one of the biggest players in cement biz, strongest balance sheet, debt free

Avenue Supermarts Ltd Consumer 2.76% Strong growth, steady compounder (possible threat from Reliance Retail in long run), strong execution

Fortis Healthcare Ltd Pharma 2.36% Change of management, change of brand, possible value unlock in diagnostics biz, turnaround story

Sbi Life Insurance Company Ltd Financial 2.16% Steady compounder, amongst top players in Private sector life ins, huge cross sell opportunity to SBI branch customers, digital push

Action Construction Equipment Limited Infra 1.75% Market leader in some product lines, bet on infra story, presently headwinds but likely to gain traction once economic revival in place

Yes Bank Limited Financial 1.26% Change of management, hoping no more skeletons left & reboot for a fresh journey

CASH 13.75%

TOTAL 100.00%

Watch list items include:
Avanti Feeds, Assoc Alcohol, EIH, Laurus Labs, Lux Industries, Oberoi Realty, Suprajit Eng, VIP Industries

Regards

6 Likes
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You seem to have decent picks in large cap stocks (RIL, L&T, ITC, Ambuja, Avenue, TCS, etc). It is not unreasonable to expect 12% cagr from these stocks over medium to long term. Although you have not mentioned average acquisition cost and time.

Among other holdings, ACE, Nocil and trident are cyclical stocks and returns may be skewed.

The remaining names like Nesco, granules, alembic are decent companies and again is not unreasonable to expect 12% cagr in medium to long term.

Key is to track these small /medium cap stocks regularly and take timely suitable action.

There are 18 stocks in your portfolio with bottom 6 stocks having allocation of less than 3% and cumulatively around 13%. You may either increase the allocation based on your conviction or consider exit as such small allocation doesn’t materially impact on portfolio returns but cost you similar time and effort tracking them.

Wish you good luck with your new investment journey!!

Regards

1 Like
3

Hi Aroraji,

Have tried to add the info in a table format for easier interpretation. Thank you for your valuable insights. Agree to you point of having a meaningful % allocation & will rationalize accordingly.

Barring RIL, Dmart IPO, most have been acquired in the last 1-3 years.

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Regards

1 Like
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The image is to small to view. Can you reload ?

Coming to Trident, they are struggling with over capacity at the moment. They have done the expansion but yet to generate demand. This was the case in 2019 as well. This aside the management justified the stock split as a reason to make it more affordable which was not well taken by the market. Trident growth has not been so satisfactory till date. Just my two cents. If you had invested in this stock in the recent Market dip i think you should have already made at least 50% as the stock went from 3.50 to 6.80