My portfolio

Avanti Feeds 15.1
RS Software 7.1
Ajanta Pharma 6.4
TV TodayNtwrk 5.9
Mayur Uni. 5.1
P and G 4.9
Tata Motors 4.8
Dewan Housing 4.3
Tree House 4.1
Wim Plast 4.0
Granules India 4.0
MCX India 3.9
Adi Finechem 3.6
Selan Explore 3.2
Muthoot Cap 3.2
Shilpa 2.9
PTC India Fin 2.8
Delta Corp 2.8
Shilpi Cable 2.7
Shakti Pumps 2.6
MPS 2.3
Kesar Terminals 2.2
Bhageria Dyeche 2.0

Guys, I have been following Valuepickr for about 6 months and have created this portfolio for myself. I know there are way too many stocks but some suggestions on which ones to remove would really help.

Also, would help if you could suggest which ones to add to, to balance the portfolio

Hi Abhishek, this seems to be excellent small & mid cap portfolio. Keep it up. I do not think concentration is a necessity if you are able to give some time to review the companies that you hold on monthly /quartely basis.

Some companies I dont like as much as others

Delta Corp- Real estate is main business!! 35 PE is way too costly for that.

P&G- Good comapny, but expected growth rate doesnt justify valuations

Muthoot Cap- NIMs are too high to be sustainable

TV Today- overrated story, dont see much besides short term technical movements

MCX India- exchanges need trust, and this one will remain tainted for ever



If you write a brief about your investment rationale in each of the stock, It would help the members give better feedback.

Dear Gaurav, thanks for taking the time to review and comment on the portfolio.

I will try to be brief about the thought process behind the stocks.

Avanti, RS, Ajanta, Mayur, Shilpa, PFS, Kesar and MPS have been discussed thread bare.

Regarding the negative stocks which you mentioned:

1). Delta - I have been reducing allocation to this stock because I am not too comfortable with the mgmt. However, it needs to be said that they have completely exited the real estate business and are only into gaming and hospitality. Last quarter, the gaming segment contributed more than 75% of total revenues. Its a high barrier to entry business that is growing extremely rapidly. From a year ago when they had 700 gaming positions, on opening of daman casino they will have in excess of 3200.

2.P&G - the company has been growing at 25%+ rates since the last 3 quarters. Penetration levels of sanitary napkins is abysmally low (lower than 15% in rural areas against about 65-70% in china) - there is a thread on this company for more info.

3.TV today - i dont believe that digitization is a hype. Lot of people have burnt their fingers in media in the past and have become extra cautious about the sector. However, their last years results are proof enough that things are changing on the ground. Rising realizations and falling costs at the same time can result in some really phenomenal growth in profitability without much growth in topline.

4). MCX - the earlier owners of MCX dont own and manage it anymore. It is totally professionally run with Kotak securities having a large stake, things are likely to be better. I dont think there is a stronger type of moat than a network effect. This stock has been discussed in one of the threads regarding quality of businesses. Despite all the scandal surrounding the promoters and the imposition of CTT, MCX continues to have market share higher than what it was before the scandals. If its competitors and any potential new entrants couldnt take away share from MCX during such a controversial time, its unlikely that they ever will anytime in the near future. Think about the impact cost for a large commodity trader for not trading on MCX. Its like a large fund trying to buy a meaningful position in an undiscovered low liquidity small cap. By the time they finish buying, they have moved prices to beyond the range of fundamentals. No large player would mind paying a little more commission for the option of having a little more liquidity.

5). Tree House - getting a little expensive but its a business which is likely going to continuously improve on ROCE’s in the future. Their model is unique in India whereby they concentrate more on owned pre-schools as opposed to franchises as in the case of competition. This reduces the per unit cost of operating a pre-school significantly and also means more consistent quality. Most importantly, the utilization of their pre-schools are continuously rising leading to better asset sweating. In preschools where they are running full capacity they have started day-care centers to further sweat the assets. Further, with the K-12 capex behind them, this is only going to contribute more towards the bottomline going into the future. I think its a good story to hold for the next 2-3 years.

6). Adi Finechem - great story in my opinion. Its a quasi consumer play. They supply chemicals that are used in the paint industry as well as chemicals which are used to make Vitamin E. They are the only company in India and among the very few in the world to do this out of waste bi products produced by the vegetable oil industry. Everybody else does it out of virgin oils. This gives them a huge cost advantage and also a moat as this is not easy to replicate. There is no standard quality of waste bi-product and there is a certain amount of trade secret and know-how surrounding how to convert such a wide variety of inputs into an output of stable consistent quality. 15% (and growing) of their sales mix comes from products of which there is no other manufacturer in India. Pricing power is evident by the fact that gross margins have been maintained for all the last 10 odd years that I reviewed. Capacity will almost double in a few months at very little CAPEX.

7). Bhageria Dyechem - this is an opportunistic trading bet. Dye chemical and intermediete prices have gone up by almost 300-400% in the last year or so because of a large number of units being shut in China on pollution norms - thereby leading to shortage of capacity. If prices can hold from here for another 3-4 quarters, this stock can double from where it stands today.

@ aksh and gaurav - Would appreciate your counter arguments!

@ Gaurav onMCX-I know there are short term obstacles…CTT, NSEL fiasco, FTIL stake dilution or not etc… Volumes shrinking by 2/3rd…

I think all these are short term issues if one has a long term view and these issues would be weeded out eventually…

The growth from 2003-10 in the commodities trading (98% CAGR) would eventually come back later and may be able to match the pace set in the past…

few links below which underline the opportunity…

globally this a space that keeps witnessing lot of action… and global exchanges trade at decent valuations… Going forward I believe that coz of the development of commodities mkts in India smthing like MCX would definitely command premium valuations… Asian exchanges etc trade at better valuations then their global counterparts coz of better growth opportunities…

Couple of articles are old but they do underline the opportunity…

Discl: Was luckily able to get some at 300 levels and still holding.



Adi Finechem is a good one in the Chemicals space.

Chemicals is considered to be boring industry but this industry is set to create lot of wealth. Many chemical stocks are already multibaggers.

I play this sector by having Atul Industries (speciality chemicals), Dynemic Products, Camphor Allied (terpene chemistry, proxy play on consumer play where perfumes and deo industry growing at 15-20% cagr which is the fastest in personal care and fmcg)andExcel Industries (Bulk API Manufacturers+solid waste composite machines).




Hi There

I would suggest exit Bhageria dyechem as you rightly said it was an opportunistic bet; prices of dye intermediaries are not sustainable in the long run plus these chemicals are also subject to lot of environmental norms. In addition if you see the numbers of this company it had shown net losses in frequent cycles… Just a humble opinion switch to good chemical companies like astec lifesciences etc


Latest portfolio weights. A total of 22 stocks - about 4 too many - I am slowly exiting Tata Motors, Dewan Housing and PC Jeweller.

Have taken up small positions in Cera, Wonderla, Pidilite and Arvind in this recent correction and hope to add more in the next 3-6 months.

Wonderla - I like the healthy ROCE’s, the fact that it is difficult for competitor parks to come up in similar localities and compete on cost due to continuous inflation in land prices. With each passing day, the total investment for a new park keeps going up and increases the length of payback for a prospective competitor. Further, unlike some of my other stocks like MCX or P&G, it is one where huge amounts capital can be continuous deployed at healthy rates of return in new parks.

Arvind - it is a powerful and emerging business. This is one of the only businesses which I have invested in ignoring current realities and numbers (10 year ROCE under 18%). Primary reason for investing is sheer quality of talent that the organization is able to attract and retain. No other company in the textile/brand sector is even close. I believe that a powerful team led by smart promoters like the Lalbhai’s will create an enormous amount of value in the future. I think ROCE’s will move up disproportionately in the future as discretionary income in consumer pockets rises and operating leverage comes into play and brands become more powerful. Good marketing spend on brands some of which are already household names in the Indian context. Management is deploying majority of new capital in brands business as opposed to existing manufacturing business.

Cera - very simple thought process. Powerful distribution model. Unbelievable consistency in numbers.

Pidilite - brand name that has almost become a generic name. High ROCE’s and consistent profit growth. 70% market share in the adhesives segment. Powerful brand recall particularly among buying influencers such as carpenters.

The philosophy behind the portfolio is to invest in stocks with extremely powerful moats. Don’t mind paying up a little for them because I have almost no time to very limited amount of time to track and churn the portfolio given that I run a business. I make no excel models, no spreadsheets; most investments only have a simple qualitative reasoning behind them such as the ones I provided above. Don’t want a concentrated portfolio for the same reasons. Idea is to invest in stocks that can generate a healthy 18% per annum for long durations of time consistently.

MCX India 9.0%
Ajanta Pharma 8.0%
Avanti Feeds 7.8%
Wim Plast 7.6%
Hindustan Media 6.1%
HDFC Bank 5.5%
TV TodayNetwork 5.2%
Mayur Uniquoter 5.2%
P and G 5.1%
NESCO 4.3%
Tata Motors (D) 4.0%
Jubilant Food 3.8%
Kovai Medical 3.7%
Capital Trust 3.4%
Pidilite Ind 3.3%
Shilpa 3.2%
Dewan Housing 3.1%
Cera Sanitary 2.9%
PC Jeweller 2.6%
Arvind 2.4%
Wonderla 2.2%
Kesar Terminals 1.7%



Any particular reason your are exiting DEWAN Housing. Or is it just a case of an relative opportunities?

Their ROE is approximately 16% for the last 10 years. This caps the long term growth rate to precisely that number. This causes them to dilute equity too frequently. Also their cost to income ratio is by far the highest in the industry.