My portfolio-Nibin

Q&A: Questions & Answers Portfolio Q&A
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I have trimmed portfolio into 17 stocks . portfolio is aligned to upcoming real estate, credit, auto cycle and CDMO/CRAMS/Chemical space

  • Real-estate: Increased weightage in indiabulls real estate to almost 23% and its the biggest holding now. Ibreal estate after merger will have around 16-18K market capital and considering other peers it is highly undervalued. .

  • Consolidated CDMO/CRAMS/API space with Laurus, Sequent, Hikal,Solara. Going in SIP for next 2 quarters due to recent price correction

  • Increased allocation in consumer bussiness to Globus spirit and burger king .

  • Financials include icici bank and bajaj finance . In past stayed away from bajaj finance due to its valuation but each time when i see their quarter results i always regrated . ICICI bank was included because of rerating ,digital push ,credit cards

  • Sold L&T infotech with 2x return and entered into mastek and infosys . Sole reason is because of valuation, I entered it during 2019 because it was the only company to get more than 40% revenue from digital at that time. Now all IT companies get into digital and don’t see any difference and no justification for this valuation.

  • Auto : SIPing in endurance & Sona comstar

Indiabulls real estate 23.78 Real Estate
Infosys 14.87 Digital
Polycab 9.00 Real Estate
Laurus lab 8.82 CDMO/CRAMS
NOCIL 7.36 Chemical
Endurance technologies 7.04 Auto Ancillary
Sona Comstar 3.74 Auto Ancillary
Burger King 3.70 Consumer
Jubilant Ingrevia 3.56 Chemical
Globus Spirits 2.73 Consumer
CAMS 2.71 Platform
Hikal 2.57 CDMO/CRAMS
Mastek 2.55 Digital
Sequent scientific 2.39 CDMO/CRAMS
Solara Active 2.19 CDMO/CRAMS
ICICI Bank 1.53 Financial
Bajaj Finance 1.46 Financial
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22

Portfolio update

Exited from Nocil, CAMS, Globus Spirits, Hikal, Aegis, SCI

Nocil: Entered at 140 and sold around 260. It is a debt free company with no further capex plans as of now. It didn’t receive Anti-Dumping Duty (ADD) on a key chemical which was unexpected. with 20% specialty and rest is commodity without ADD and rising raw material price margin will take a hit

CAMS: Entered at 1400 and sold off at 3100 I feel stock run too ahead and valuation were not comfortable.

Globus spirit: it’s a compelling story but lately I am getting skeptical about ethanol story as everyone is increasing the capacity and soon there it will be a volume play with no pricing power.

In Hikal and Aegis it was unforeseen events and in SCI which was a disinvestment bet but didn’t went off due to govt extending the bid date again.

Increased allocation - Endurance tech holding from time of IPO. it went up to 4x from IPO price and currently at 2x price

Endurance tech a low float company with low debt and an excellent management. They started with aluminum casting for Bajaj and later entered transmission & suspension for 2W & 3W. In recent years added new products like disk brakes, CBS (combined braking system), ABS, alloy wheels, etc. They are diversifying into driveshaft, ABS, Genset etc. In ABS their main competitor is Bosch and endurance can gain market share as their prices are less than Bosch and already have orders from Bajaj & Royal Enfield. Driveshaft is another niche product with GKN and Nexteer having market share of 40 %. Market size is around 2000 cr. They got orders from EV players like Ather and Polarity. Company is entering into non-auto casting to reduce dependency on Auto. in Europe, last quarter they got orders from Porsche, Daimler and Stellates. Most of their product are compactable with EV except clutches. To my surprise, Marcellus included into their portfolio of rising giants

New addition

Ujjivan financial services & Equitas holding due to merger and recent QIP. High risk bets

Indiabulls Housing: Trading at 50% less than book value, P/E less than 10, AUM of 60K crore, Net NPA of 1.8 . Once part of Nifty 50 index it went from 1400 to 130 now. Loan book got reduced from 1L crore to 60K crore now. Multiple litigation is there in courts related to promotors. Promotors known for laundering money. All in all, extreme pessimism is baked in current price. On a positive side Sameer is not a promotor anymore (9% stake) and not part of board, new management with possibility of Blackstone coming into board, 7 colending partnerships Q3 colending of 1573 cr, AUM growth is flattish, but management confirms as FY23 as base and guiding for 15% growth, borrowing cost should get reduced further. With uptick in real estate sector IMO it’s a high-risk value bet like Indiabulls real estate. Added a small position will increase allocation if management is executing

Krsnaa diagnostic & IIFL finance: covered very well in respective forums

Tracking Jubilant foodworks after recent correction due to CEO exit, Eureka Forbes (Pratik potta is expected to join as CEO), Piramal Enterprise due to spinoff pharma division.

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23

i am tracking now Gati Ltd ( a special situation )

  • One of the oldest express logistics player with around 16% market share. Allcargo group took over Gati

  • Leadership change happened recently , new CEO Pirojshaw Sarkari former CEO of Mahindra logistics is planning to increase revenue 2x

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  • Sold off/Quit loss making entities

  • Digital transformation - moving to GEMS 2.0

  • Planning to improve Gross margin to 30

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  • Planning to start 7 new hubs in next 12-18 months and 95% Turn around time (currently it is below 90)
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  • Leadership change in 2nd level , recently CFO & CCO changed

  • About express market

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Peer TCI express is ahead in all parameters and Gati is not a match but if the new CEO delivers as per the plan then it will be a great turnaround story.

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3000 crore topline by fy26 can only be at best 2x of current fy22 revenues. Where did you find 3x revenue guidance?

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In last conference call an analyst mentioned that 3x revenue by fy26, i too got the same mistake . Corrected in the original post

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Endurance technology has acquired maxwell Energy Systems which is an electronic company whose flagship product is BMS ( battery management system) , as per management BMS is around 7% of total EV vehicle value . Even though company didn’t give future growth number i believe Endurance is on right track as they are focusing on new areas like ABS, Drive shaft and now BMS where established players (Bosch) have high market share and its possible for endurance to gain market share with competitive price. it is evident from that fact that Bajaj is giving orders for ABS and more orders are coming up. Other than this acquisition, Q4 result were as expected below average with 2 wheelers degrowing and supply chain issues , chip shortage, high energy cost etc are there .

some pointers on Maxwell

  • An indian company focused on R&D , product is customized for india based vehicles
  • 100 members for R&D. Product is developed in house
  • Max price of acquisition is 3080 million , upfront payment of 1350 million for 51% stake and rest of the stake for 1730 million after fulfillment of certain criteria in span of 5 years
    -1500 million of order book
  • they work with all major 2&3 wheelers OEM and battery manufactures
  • R&D on other products like telematics , high voltage BMS, different BMS for other areas like UPS, telecom etc

Invested from time of IPO

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I have sold 50% of endurance tech during the recent run up . Stock is good compounder and giving around 20% including dividend in last 5 year . Reason for trimming is around 1/4 of revenue from Europe and the energy crisis may impact the margins and topline . Also recent run up makes the valuations high.

Sold off gravita (entry 250), PEL (entry 1680) .

Increased allocation to
Gati : Last quarter company was able to improve margins and shows sign of turnaround . 7 new sorting centers in next 1-2 years will improve the overall margin & topline . Merger with ACCI & buying out stake of KWE by allcargo is the next triggers
Gateway distriparks : Management increased the capex to 250 cr in next 2 years . commissioning of Dedicated freight corridor in next 1-2 year will significantly improve the performance
Ujjivan financial services : Good improvement in last quarter and recent run up in share price made me to average it (entry price 130) . In next few quarters they have to do QIP and in another 1 year reverse merger will complete .
Sandhar technologies : very similar business to endurance tech but undemanding valuation made me to enter this. After completion of capex and Full utilization topline will be around 5000 cr and current market cap is 1400 cr

Top holdings
Laurus Lab
Infosys
Indiabulls real estate
Ujjiavan financial services
Restaurant brands Asia
Gati ltd
Krsnaa diagnostics

Watchlist: Punjab chemicals, La opala, Tiger logistics, Specialty restaurant, Newgen

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28

Sold off gravita (entry 250)
Any specific reason for you to exit Gravita?

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It was a small position and in short period it went 30%. Debt to equity is above 1.2 and that make me a little cautious and their tall claim of 30% volume growth every year is need to watch off . I might reenter.

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Can we get to know your latest portfolio holdings

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Good portfolio. How has it worked out for you so far? Do update us!

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Added Infosys, Punjab chemicals and Piramal pharma. Ujjivan result were so good and there is still upside left but I booked profit (entry price 130) and planning to invest in DCB or South indian bank ( both of them shown turnaround and current book value is far below their historic valuation). Punjab chemicals showing good growth with an undemanding valuation . Added more infosys as part of ESOP and direct buying. Added tracking position in pondy oxides; recycling is a theme I am very much interested in.

Current Portfolio based on allocation

Infosys
Indiabulls real estate
Laurus lab
Restaurant Brands Asia
Gati
Jubilant Ingrevia
Krsnaa Diagnostics
Punjab chemicals
Gateway Distriparks
Sequent scientific
SJS Enterprise
Sandhar Technologies
Piramal Pharma
Pondy Oxides
Indiabulls housing

@JuhiUpadhyaysquirrel cagr is in range of 15-18%. IMO trigger for many of the shares will happen in next 2-3 years only; laurus & ingrevia ( 2000+cr capex) , RBA (1000 stores combined of india & indonesia by FY26), Gateway distriparks (fully functional Dedicated fright corridor and upcoming ICD’s), Gati (new hubs to be fully operational by FY25 ), Punjab chemicals ( 2000 cr revenue)., SJS & Sandhar (turnaround of autos) . I am continuing SIP monthly in these shares and slowly accumulating

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33

Would you still say the same? I believe they are not in your portfolio anymore except Burger King. The storyline hasn’t changed much (I think. I looked at them a while ago and only did a back of the napkin valuation). BUT valuations have. They were expensive to begin with in my opinion. Your thoughts?

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Sona comstar my entry price was 401 which was just after the IPO and market was not giving much attention to it. I was interested in it as it was kind of pure play EV company and thought of giving a premium. By that time many twitter analysts started coming up with threads, videos and blogs and brokerages came up with initiating reports; within a few months, price went up to to 750+ and no premium was able to justify that valuation. I sold it around 700. with recent correction i believe it is coming to a decent valuation and i may look to reenter

I entered Burger king after their IPO, their store addition was highest in industry and future plan of 600 stores by FY26 looks achievable. I missed Jubilant in its initial days and thought, BK will go through a similar path. Then they went for Indonesian acquisition which i dont like it at all but want to give it a try. Q2 results of BK shows the problem of clubbing a below average business with a good business. However with addition of Popeyes, it may turnaround

PI industries i sold it after their ind-swift acquisition got cancelled as i believed that they need acquisitions to further continue their growth. But recent results has shown otherwise . I sold it early

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