New entrant: Portfolio suggestions: Valuable opinions

Q&A: Questions & Answers Portfolio Q&A
1

Hi, I am a software engineer, I have Nil knowledge of finance(I know I need to learn a lot). I have done a lot reading in VP threads, sometimes taking leaves just to read more of it :stuck_out_tongue: & came up with this below portfolio.

I would like suggestions based on my assumptions, also since I couldn’t do my own DCF(I am learning how to do one), I don’t know whether I bought at low or high prices, would love recommendation on the valuation too.

I have done all the investment in last April, I am thinking of selling 5-8 of my positions as this looks more like a MF :smiley: also I can’t devote much time on tracking all of these, would love suggestions on which one to let go off!

Screen Shot 2020-05-31 at 8.13.04 AM
Screen Shot 2020-05-31 at 8.13.04 AM1546×1168 406 KB

1 Like
2

Though I am not a senior VP member I think
All the names are good… You have done really nice reading in VP and you know that hard earned money needs to be invested wisely…

I have only few thoughts which you can consider later on…

Your portfolio has a mix of Consumption, Chemicals , E-commerce, Auto , Gas.

It would be very good idea to add Pharma/Healthcare and Finance/Insurance/AMC stocks as well… Ofcourse timings you can decide as per valuations available…

Also sometimes it becomes difficult to track 20 companies at a time… May be you can look to get it concentrated to half number of names… Which can allow you a qualitative study of those names…

One last thing… I know timing market is not possible but we can always try our best to do…Please wait for entry once you decide the name you want to get in… Sometimes you will regret if price falls too much after your entry…

All the best…

1 Like
3

I am not tracking quite a lot of them so can’t provide any inputs. I did evaluate IonExchange some time back and decided not to buy it because of low promoter holding.You have bought Gold when it is going up so you may see downside when economy recovers. Some of these companies have very high PE’s like IGL, ASIANPAINT etc… Having high PE is not bad in itself but it shows that market has high expectations from these companies if they can’t leave up to the expectation for what so ever reason then PE will be re rated.

Auto industry is in downturn so EICHERMOT would take some time to get back to the growth path.

Sterlite technology promoter pledged shares I guess now it is released. But they have lot of debt. Once there is a corporate governance problem generally market is always suspicious.

2 Likes
4

Thanks for the invaluable suggestions

I have started tracking Abbot, Sun Pharma, I would never invest on Banking/Finance stocks(just following my principles), I am willing to increase my stake in IGL by 4-5%.

Ideally I would like the list to not be more than 10

About timing market suggestions, I learned the hard way, to never invest all in one go, typical noob mistake, I have started investing in tranches and to go aggressively if the price tanks!

5

@moderators I do need your help as I am still very new to all these, if you could spare at-least a minute!

7

You can not neglate the potential of finance stocks they are biggest wealth creator in past…
Like HDFC, KOTAK, BAJAJ FIN and other small names like Chola,Manapuram , muthoot etc…
For example Manapuram surge its profit 4cr in FY06 to 600cr in FY12. . .and current situation is better than that time from Manapurams perspective…and such 150time jump in profit

1 Like
8

I am not saying that they are terrible stocks, Its just that my principles doesn’t allow me to invest in them & as I believe that One is not a man if he is not of his principles! hence keeping away from them.

1 Like
9

Why don’t you have any exposure to IT, BPM or ER&D or IIOT domain?

2 Likes
10

I started with Sonata Software, attended their earnings call, never had such a demotivating call with management, thats when I realized if I get such a negative vibe with the management, I should not be in bed with them!
Also Sonata has high exposure to travel & tourism!

If you could suggest few good mid-cap & small cap IT stocks will surely look into them.

11

Hi,

I guess your learning from VP has really helped to narrow down few select stocks, which is evident from your portfolio. However my take is…

  1. Too many stocks in your portfolio, which makes difficult to track. Stick to max 10 quality names.
  2. I would exit from Ion exchange - Reason i hate very low promoter holding.
  3. I would exit from Sterlite Tech - Reason too much debt on the books.
  4. Axtel Ind…Hmmmm ??? do you really need it?
  5. You are missing Pharma :frowning:
  6. I would absolutely stay away from financials for the time being.

All the best.

2 Likes
12

Hi

Since you seem to be new to investing in equities on your own, its better to stick to quality names till you get your hands dirty and learn to analyse small and midcap companies. The list of "safe stocks " you have put up seems a good list. You can buy these in a staggered manner.

2 Likes
13

Thanks Sameer

  1. I am planning to reduce to 10 quality stocks
  2. I too stay away from low promoters holdings, but I see growth opportunity here, but since you pointed it out, will spend more time on it to understands it better!
  3. I am missing pharma, would love few quality suggestions to begin with
  4. I believe Sterlite has been reducing debt, also the pledging issue got resolved, correct me if I am wrong
14

Thanks Hitesh, I will move my positions from the risky to safe category.
Also could I recategorize any among these IndiaMart, Affle, HLEGLAS, Relaxo to safe category?

15

LTTS can a good stock to add in list, i guess.

1 Like
16

IT usually gets better with scale. Look at LTI, HCL Tech etc.

17

Yes …
Lot of companies in IT…

Safe
TCS, Hexaware, Tech Mahindra, infosys, LTTS, LTI, Tata Elxsi

Little Risky but good product company
Nucleus Software

1 Like
18

Let me give my thoughts, just select companies based on the below

  1. Clean account books, market leaders.
  2. Companies offering essential services / products.
  3. High entry barriers, as high as himalayas.

Think of the below portfolio 1:

3M india, CRISIL, HDFC Bank, ITC, Johnson Hitachi Controls, Nestle, P & G Hygeine, Pidelite, United Spirits.

Considering the current situation considering Portfolio 2;

HDFC Bank, Kothak Bank, Bajaj Finance, P & G Hygeine, United Spirits, Kajaria, Coal India, Oberoi Reality, ITC, VST industries.

All this stocks has its own might, just do your own research. Always but market leaders when the price is apt. Keep only 10 stocks, focused concentrated portfolio.

1 Like
19

You forgot one thing that Saurabh Mukherjea mentions. Return on capital employed. Use of free cash flow in a way to get back high returns. Which is not always done well by all high Roce companies. Where a Asian paints, Nestlé is able to put their free cashflow to good use, a Gillette, Castrol HUL and colgate can’t do it. They don’t know where to put all the cash and generate more return on capital. Hence subpar compounding

2 Likes
20

Thanks for the suggestions, both looked great, these two now constitute all of my tech portfolio!

its better to stick to quality names till you get your hands dirty and learn to analyse small and midcap companies. The list of "safe stocks " you have put up seems a good list

@hitesh2710 I tried to, but couldn’t move, the stock story were too convincing, I held onto IndiaMart, AFFLE, HLEGLASS and now have more than 100% returns on them, Affle seems to be too expensive now, if the earnings don’t grow, will exit partially!
Still invested in IndiaMart & HLEGLAS would love an exit strategy for these, initially I bought for 3-4 year holding atleast, but they have grown too much!

  1. Axtel Ind…Hmmmm ??? do you really need it?

@sameernics
I asked myself this question & then sold off completely, but then reentered after excellent results & enjoying 40% returns on them, will keep tracking the results!

Recent changes to the portfolio, sold off Bata India => Poor results
Sold off IONEXCHANGE after it gave me the desired returns of 20%, wanted to exit because of low promoters holding & staggered growth.

Sold offSTRTECH after poor results & bad debt

Sold off SIRCA because they were trying out too much, they haven’t yet decided on what they should focus on.

Thinking of selling Blackrose, subpar results & fear of oversupply.

Exited DMART, RELAXO & VBL in the fight to concentrate the portfolio & poor results!

Additions:

  1. Alkyl Amines : Market leader & innovative products
  2. DIVISLAB: Saw good number & wanted a part of this Pharma growth story
  3. LTI & HCLTECH: Best in class tech companies, well diversified & excellent growth in this June quarter
  4. GUJTHEMIS: Excellent promoters & they proved they can deliver the turn around story, recently changed the business model from contract manafactruing to direct to sales!
  5. ULTRACHEMCO: Best in class cement player. Excellent numbers & hopin for infra to revive the economy, also read the whole thread of VP cylical industry: Cement
  6. Also lost a lot in Kilpest, invested a small amount, now unable to exit because of iliiquidity!
1 Like
21

New additions:
CAMS: Market leader & consistent returns
Granules: Excellent results & better future prospects

Exited:
Affle: Looks overly priced
Kilpest: Illiquidity & too much uncertainty to the companies future earnings

1 Like