Nikhil Gore Portfolio

Q&A: Questions & Answers
1

Hi All,

I have been investing in the market for the last four years. Forum like Valuepickr has helped me a lot in polishing my investment skills. All credit to Donald for starting such a wonderful forum.

I am posting my portfolio here and invite comments on the same.

Weightage Avg Hldg Cost Rationale
GRUH Finance Ltd. 10.6% 203 Best Way to play real estate story
Mayur Uniquoters Ltd. 9.8% 178 Market leader in its field with strong financials
Page Industries Ltd. 9.6% 1,644 Strong moat in terms of brand and positioning
Atul Auto Ltd. 8.5% 116 High growth despite weak market conditions. Decent financials
Aegis Logistics Ltd. 8.4% 122 The kind of assets they are creating are very difficult to replicate. Their objective is to build a necklace of port terminals around India's coastline
Hawkins Cookers Ltd. 8.3% 1,763 High quality management, strong balance sheet and good dividend yield
Pidilite Industries Ltd. 8.1% 270 Strong brand in form of Fevicol. Could offer stable growth going forward
Astral Poly Technik Ltd. 6.9% 308 Impressed with consistent high growth. Nice way to play growth in plumbing systems
IndusInd Bank Ltd. 5.7% 303 High growth private bank with an objective to bouble branch strength by 2016
Ajanta Pharma Ltd. 5.6% 403 Zeroed in on Ajanta Pharma after reading ValuePickr thread and has worked well for me
Repco Home Finance Ltd. 5.0% 250 Best Way to play real estate story
Cera Sanitaryware Ltd. 4.9% 425 Pseudo real estate play
Kajaria Ceramics Ltd. 4.2% 245 Pseudo real estate play
NIIT Technologies Ltd. 4.2% 141 Strong focus on travel vertical coupled with good dividend yield and excellent management

2

Pretty strong portfolio except 2 relatively unknown names (to Valuepickr atleast)- Aegis Logistics & NIIT Tech.

What’s the reason for bullishness??

Aegis looks very high on debt… Also PAT in 2013 seems to be coming from Other income & not operating income.

NIIT profit growth CAGR isn’t looking too impressive.

What say?

3

Hello Jatin,

Thanks for the comments.

Aegis Logistics

Though (as of Mar-13) gross debt (ST + LT) stands at 313.2 crores, net debt (LT + ST - Cash) is 108.7 crores. With EBITDA of 131.9 crores,I dont see any problem with repayment capacity.

You see PAT coming from other income. That is correct.Other income is driven primarily due to gain from some forex options contract. I assumed other income to be zero, removed the option costs from other expenses. Then, net profit from operations stand at ~21 crores which is quite low.

However, I am bullish on the Company’s prospects as it has made a big move from revenue of INR 304.9 crores in FY 2010 to ~INR 4,000 crores now. The growth was driven by import of LPG for sale to national oil companies as well as Aegis’s own distribution. However, margins suffered due to forex issues. Historically(before 2010) financials have been very strong withample FCF generation. I believe, significant debt reduction (from 2400 cr to 313 cr) during FY 2013shows management intent at improving balance sheet.

Key drivers going forward are as follows:

)- Liquid terminal capacity to reach 500,000 Kilo Litre from 339,000 KL currently

)- It has 94 auto gas stations (operated under Aegis Autogas brand) under operations and plan to increase it to 135 by FY 2015

)- Double commercial and industrial distributors to 80 by FY 2015 (Aegis Puregas brand)

)- Entry into O&M services for Oil & Gas storage installations

)- Entry into Supply of Bunker fuel to ships (bunkering)

Though I believe that Aegis is not one of those Companies which looks very attractive from the perspective of financial statements, I certainly have a feeling that the demand for the kind of services Aegis provides will explode once the economy revives and trade activities returns back to normal. I certainly believe its a very risky as well as volatile stock, but I am willing to take that risk. I am buying a Company with INR 4,000 crore revenues at INR 400 crores (MCap) with an expectations of margins stabilising in future once economy revives and rupee movement normalizes.

NIIT Technologies

Its an IT services company with strong focus on travel and transportation industry. Though profit growth is low, return ratios are high(~25%) coupled with high FCF generation (OCF INR750 crores in the last five years vis-a-vis capex of INR 400 crores). Current valuations are attractive at PE of ~8x. I bought it in 2009 at a price of about 140/share. Till date I have received dividends of 24 and CMP is 264. Current dividend yield is ~3% which I believe is still very attractive.

The Company seems to be better than many mid-sized IT Companies due to its sectoral focus and strong management

Regards.

4

Nikhil,

Excellent picks at great prices.

all that needs to be done is sitting tight and enjoying the ride.

regards

hitesh.

5

@ nikhik

not onlyExcellent picks at great prices.

but you have good conviction on your picks. and you have good knowledge abt market.

but one thing whydon’tyou postregularlyon forum it will help all of us.

6

Thanks Gaurav. I am still learning and I believe the process will continue forever

I have learned and decided about most of my picks only after following the discussion forum over here. So, credit goes to valuepickr. Yes, conviction is one thing which cannot be taught and comes over a period of time.

I will sure post comments as and when I get an opportunity

onlyExcellent whydon’tyou postregularlyon