My valuepicker portfolio - fundoo

THE VALUEPICKER PORTFOLIO

Most of the portfolios coming on the forum are companies that get recommended very very frequently. Where is any value picking in them? And most of all, I believe if one thinks that these 250/300 companies is the whole Indian share market universe, there is no need to talk about value picking. All these are there in all MF portfolios under some scheme or other. Just look at the ones which have the maximum no. of these and buy them and go to sleep.

Further, I am in the market not only for making money but also for some excitement. And there is nothing more exciting than making a real VALUE PICK that justifies the name of this forum. Hence, most of the shares I own are shares which are completely out of sync with most of the other portfolios disclosed on this forum. Other than Sterling Wilson, and Cosmo Films, I own the other 3 for a long time(4-7 years), but added good quantities post March crash. One common thread is that despite not being talked about frequently, they all are among top 3 in their field.

1. Visaka Industries : CMP Rs. 495

  • No. 2 in Asbestos roofing sheets, No. 2 in Cement Board Panels. Unique Yarn Producer, Original ATUM solar panels ( product patented for 20 years).
  • Strong financials with high growth expectations in coming years.
  • Investor friendly. High dividend yield. Dividend Rs. 15 last year.
  • 50% interim CFY.
  • Low pledge. Low borrowings. Low PE ( below 8 ) on FY21e EPS – 65+…
  • High promoter holdings – now 52%+. Have increased their holding by over 10% in last 9 months.
  • Old established co.
  • Highly innovative. Vnext cement board panel and Atum solar panels are the examples.
  • Had couple of lukewarm years but has bounced back magnificently

2. COSMO FILMS LTD. : CMP Rs. 605

  • BEST PICK IN LAST 2 years. Among top 3 in packaging material co. Supplies to TOP MNC’s around the world. Have almost 57% turnover from high margin specialty films – some invented by it.
  • Very Strong financials with high growth expectations in coming years.
  • Investor friendly. Dividend last year Rs. 15. This year interim Rs.25. High dividend yield.~ 5%. Committed Dividend payout policy. Very liberal tender based buyback at over 30% over prevailing price.
  • No pledge. Low borrowings. Low PE (below 6) on FY21e EPS – 100+.
  • High promoter holdings – 44%.
  • Old established co.

3. TV18 Broadcast : CMP 34

Once merger completed, it will be a part of the largest digital player in India Network18

  • with content production,
  • event management,
  • broadcasting news and entertainment including regional channels,
  • most popular Stock Market portal in Moneycontrol,
  • llast mile connectivity for TV and internet through Hathway and Den,
  • most popular business channels in English, Hindi and Gujarati.
  • Profit making. Owned by the largest corporate in India – Reliance.
  • All this put together could turn out to be money spinner like Reliance Jio in few years.

4. QUESS CORPORATION : CMP Rs. 620

  • Largest manpower provider in the country,
  • very large business solution IT setup,
  • largest HR solutions IT company - Allsec,
  • Tie-up with Amazon for post sales services for appliances,
  • largest facility management organization,( services list is endless),
  • low debt could be debt free by end of FY21, high promoter equity, high free cash flow.
  • Have started integration of subsidiaries.
  • CON : Has not paid any dividend so far. But could be generous pay master by next year

5. STERLING & WILSON SOLAR : CMP Rs. 240

  • Largest EPC contractor in India, probably no. 2 or 3 in the world,
  • MNC in true sense,
  • large order book,
  • in fast growing line of business i.e. solar power generation, pollution free.
  • Have started adding third party solar plants to its portfolio on operations and maintenance basis, very asset light and high margin activity.
  • Also involved in data centres setting up, the heart of cloud computing. As the cloud computing is growing exponentially, so is the need for larger and larger data centres.
  • The low price only due to controversial loan repayment issue, which will get sorted sooner or later, as the hearing in the parent co. matter with Tata Sons has been concluded and judgment could be out shortly. And then it will fly.

PAST INVESTMENTS : In addition to the above, I also own Bajaj Finance, Bajaj Finserve, SRF, TVS Srichakra Tyres, Piramal bought when they were relatively unknown names 5-7 years ago.

Had invested in specialty chemical cos. Atul, Amal, Akshar Chemical, Ashahi Songwon, Bodal Chemical long before the fancy for the industry began. Got out of Akshar at almost 10 times in 3/4 years ( 65 to 650) and multiple times gain in others, although not as stunning.

WORST LOSS IN AVADH SUGAR , bought at close to peak at around 1100 initially and finally got out at around 400 ( adjusted for bonus). Other Major losses in Trigyn Tech, Sinclair Hotels, L&T Finance, Indusind Bank ( bought around 1600, sold at ~450), Piramal Enterprises ( Bought around 2600).

BASIC THOUGH PROCESS :

Look for the best but not BEST KNOWN.
Do detailed due diligence before increasing exposure.
Don’t get scared by market moods.
Falling knives are best catch if you are convinced about the potential, but add slowly.
Added all the above mentioned shares in March / April 2020 fall. Doubling / tripling the holding in some cases. Some of them near their all time lows.
Tripled the holding in Cosmo Films post declaration of Q2 and Q3 - FY21 results as the conviction grew. It did nothing much for 4/5 months gaining only about 20% in a roaring bull market. Finally, the patience paid off last week when it picked up 25% in 1 week.
Portfolio losses are heart breaking but keep your cool(very difficult).
In case of conviction holdings I AVERAGE on both sides. ADD slowly when falling and SELL slowly while rising.

I am convinced that this portfolio is not the type what one generally finds favour with lots of forum members, but I firmly believe that these cos. will do well in next 3 to 5 years solely on the basis of their unique business models and financial strengths.

My latest additions to portfolio are Alembic Ltd. and Granules India

13 Likes

Hi
Granules India is a multibagger stock
It has just started its upward journey
If you hear the recent management talk the daughter of the promoter she sounded very optimistic.
You can also look at Tata power / Tata chemicals/ Subex/ MMTC / Hind Copper/ Hemisphere Properties for multiple returns

Hi Ganesh, Would love to know your views on Hemisphere !!

Just check out Ramco Industries and Sharda Cropchem too!!

It’s a land bank

The following is the recent news for stamp duty payment for NCR property

• Hemispehere Property has allotted non-cumulative preference shares to the govt. and raised Rs.700cr. to pay stamp duty for the Delhi land. Imagine the value of the land if the stamp duty is 700cr.! The stock trades cheap at a market cap of under Rs.5000 cr. Buy at every decline for multi-bagger gains.

Actually the Company has 739 acres of total land out of which the land at NCR is only 127 acres .

As per simple maths for 127 acres land the valuation is 14000 cr based on stamp duty @5%.

The present market cap is less than 5000 crore.
This appears to be really undervalued as the value of total 739 acres would be in multiple thousand crores.

It’s my personal view.

.

1 Like

I liked sterling & Wilson but want to stay away from the company as in past all excess cash was taken over by Promoter group as loans and they are not returning money based on agreed timelines. in future as well, promoter may take away free cashflow as inter group loan and not distribute amongst shareholders

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@ankit_vira : This is the sole reason for low price of the share. In case of a settlement with Tata Sons, SP Group will have more than enough money not only to repay this co. but to liquidate its entire debt and stll be left with huge surplus. Issue is more of when will this happen. I think co. has already passed resolution barring intercorporate loans. Further, its own balance sheet literally has no borrowings other than the controversial pass thru for SP group. Once that is settled, it will be almost a debt free co. Having patience to wait thru this uncertainty is the key in this case. Last Traded almost Rs. 30 up in last session.

I was tracking this company (Sterling and Wilson) closely and when it fell to 70 it was a screaming buy. While there may still be value left at this price and the SP Group resolution should definitely help …given the business model there are inherent risks which the company is currently just glossing over…one given that they are EPC players and they are starting to execute projects in multiple overseas territories the company is subject to forex risks, overseas counterparty/receivables risks as well as project execution risks which if they materialize could be a substantial hit even if it is only in 1 or 2 projects.

Secondly the company had overstated their order book at the time of the IPO when they included orders on the basis of LOIs without a notice to proceed…they have changed the disclosure process from this year but this made me uncomfortable.

Besides the above it is a good company and the price could still fly but i am a bit cautious because of the above issues.

Disclosure: Invested at 70 levels and exited at 210 levels.

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i have looked the stock in very detail,i am in real estate buisness and luckily i specialize in both gk and chattarpur land banks

i have seen both the land banks and estimated value of these land is 12000 cr not including the land in other states but current market cap is 4400 cr which makes the company seem cheap but there is a catch:-

  1. there are a total of 40 cases on these land banks out of which 12 are on the land banks in delhi ncr alone (i will be studying these cases in detail and post it in the main thread) .Usally until unless the case is resolved the tehsil doesn’t grant noc without which the properties cannot be transferred into the companies name now we all know how good our court and legal systems are but this is the goverment we are talking about all this can be fast tracked if the goverment wants it to.

2)Some of the land banks are agriculture properties specailly the one in chattarpur where i majority of the money is paid in black as most people have farmhouses here just to give you an example stamp duty value for these land is 53 lakh rs acre but actual realization comes out to be 25 to 30 cr and majority of these transaction is done in black almost in the ratio of 80 :20 sometimes ever higher.so how does one value the land bank.(i am being told gk propety which alone is valued at 10000+cr is also agrilculure need to find out not sure).
3)selling these land bank specially in chattarpur will be difficult as no construction can be done on these land bank until unless there are certain provisions for these made in the delhi master plan even if included conversion charges will be extremly high to get these land banks converted.even for land bank in gk dmrc has constructed a metro station on the gk land ,one can go through the AR to see a case filed against delhi metro by the company .

althought the land bank maybe valued at 3 times the current market cap but no one would pay full price for these land bank as these are disputed propeties and settling the cases and realizing the value can even take 1 decade despite all this i still feel the stock is stillundervalued and bought few share few days back at current market price but only a small postion and i believe stock can give good returns if one buys on dips and patienly waits out.

TLDR i am not sure how undervalued the stock is that depends on the 12 cases pending and what delhi goverment has planned for these land banks in the masterplan .

3 Likes

Giving a accurate target will be difficult for anyone but lets get a very pessimistic target

this picture show valuation of the properties back in 2013 , i have no clue about valuation of properties in pune and other states article states valuation as approx 1000 cr lets say there are a lot of disputes and there is no appreciation in land prices and actual realization is 500 cr 50% of the value(extremly pesimistic figures)

now coming to chattarpur property this is agricultural land right next to Dlf chattapur farms which is the most expensive farm society in whole chattarpur region a plot of land will set you back anywhere between 20 to 25 cr (value depends on legal title of the property as some lands are were aquired by the goverment but goverment didnt pay the compensation but still the land here commands a hefty premium due to the location),our property is on the main road i am assuming a very pessimitic realisation of 20 cr per acre which gives us a figure of 1160 cr ,sky is the limit if this agriculture lands rights can be changed and devloped into a housing society .what is the this limit lets decode it in chattarpur there is building being constructed Risland Sky Mansion, 3 & 4 BHK Apartments in Chattarpur the total plot of land is 5 acre and realization for the whole project is 900 cr land our land is 58 acres(but it is agricultural if part of masterplan huge possibilties are here)

Now i have saved the best for the last the G.k land ,i have little knowledge about this land whether this is agricultural or can be used for residential or commercial purposes(trying to figure out once figured will update) but there is commercial building right next to it and the land parcel is blocked by a boundry wall so hard to figure out what is inside but there is defenitly a encroachment on our land by Delhi metro who have build a metro station entry and and a whole station underground on our land there is legal case filed against them can be seen in annual report as well ,it will be imposible for me to value this land but land in G.k which is one the porchest area in delhi homes some of the biggest industrialist in india one of them being pawan munjal ceo of hero honda group land here can range from 3 lakh per sq yards to 6 lakh per sq yards at 3 lakh per sq yards figure comes out to be 10000cr if devloped again sky is the limit.

adding all the above figures give and just outright sale of land gives us a realisation of 11500 cr minus the stamp duty of 7% 10695 cr

few points to note how serious are legal matters because without them resolved outright sale will be difficult and legal cases can take years sometimes decades to solve it took 12 years to settle the tata communication case.

2 Likes

Thanks for the detailed information
I believe the company will start paying stamp duty of different properties one by one
It has already started with Delhi
If anyone can ask further details from the company would benefit the members in taking form decision.
There was one thread earlier for this company (Hemisphere Properties) but it was closed long back.
I tried to open new thread but it didn’t allow.
Once again thanks for details and request to keep posting the updates.

1 Like

@Waynef225 : I did my first buying at around Rs. 680. Confident of my understanding of business and sticking to my strategy, started averaging once the shit hiit the ceiling post delay in repayment by Promoters. Bought larger quantities below Rs. 100. So finally my avergae cost came below my confort level. Have sold some to bring down the cost further. Intend to hold the same. The pitfalls mentioned by you are part and parcel of any international business. Issues like Order Book Overstating and Promoter Loan outstanding are well known now and discounted by the market. The co. is taking corrective steps and I believe they are in right directions. Hence I continue to believe that there are good chances of more than 25% return from this scrip in next 1 year.

@ganesh_bastwadkar and @raku : Sorry for being sport spoil. But could you please start a separate thread for discussion on hemisphere rather than continuing the same here. It is quiet distracting. Apologies once again for interupting.

@ankit_vira : The move in Sterling & Wilson to RTs. 290 (+20%) has been too swift for my taste. Howerver, I have done nothing so far as the expected news is not out so far. The news is too critical from long term point of view, hence no action for another 15 to 20% (if it happens)…

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it has been good run up on stock price… still not very much convinced due to promoter taking away cashflows of company…

@ankit_vira : You are continuing to think of the past only. Start thinking about the future of this co. based on its line of activity rather than the past trasgressions. Corrective measures have been taken.

MAJOR REVIEW :

TV 18 BROADCAST : Due to recent Corporate action, there is a massive change in the situation in TV18. As the value in TV18 is linked to the Network 18 merger scheme, I have replaced my entire holding in TV18 with Den Networks. Price of Den Network has fallen steeply post announcement of OFS by Jio, making holding till merger more cost effective in Den. Hence the replacement.

STERLING & WILSON : SC in its wisdom has refused to get into valuation of 18% holding of SP group in TATA Sons while delivering the judgement in the case. As the judgement is perceived to be unfavorable for SP group, the price of S&W has fallen by almost 20% from its latest high. However, no action on investment front as this judgement in my view has no impact on working of S&W.

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Hi @Fundu, The merger of Den Networks has been cancelled with Network18. What is the scope of Den Networks now? How are you going to deal with your holdings in Den Network?

@puneetmehla : Bad decision by the group. However, no control on it. Now Den has to be looked at as an independent co. Frankly, although not expecting this cancellation, I was already looking at Den’s P&L and BS and shifted after that only. A move that has backfired for time being. Well part of the game. Salient features are
(1) Face Value - 10
(2) EPS FY 21 : 4.15
(3) BV : 57
(4) Market Cap ( @CMP -42.50) : ~2025 cr
(5) Cash on Hand : 2394 cr
(6) Long Term Debt : Nil

This all indicates very strong Balance Sheet, low valuation ( PE ~10), lot of cash in hand.

WHAT I AM PLANNING TO TO DO : Add some at around 42. ( I did @42.10) Do nothing for the rest for time being. Let the dust settle down before taking any action. After the fiasco, management may be under pressure to take some investor friendly move ( pure conjecture ). A solid notional loss. But looking at Co’s financial, I expect to recover the same in next 3 to 6 months.

3 Likes

MY VALUEPICKR PORTFOLIO - A REVIEW