Novice Investor Portfolio

Hi All,
I have been on the platform for the last 2 years, I have learned a lot by going through other people’s posts. I am submitting my portfolio for review by fellow valuepickrs.

Company Avg Buy Price Current Market Price % Returns %Share
Eternal 119 249 109.24% 38.65%
Edelweiss 42.83 103 140.49% 17.20%
Care Ratings 420.43 1858 341.93% 8.77%
Time Technoplast 181.23 429 136.72% 7.31%
SG MART 398.79 382 -4.21% 6.11%
Dhanuka 677.93 1647 142.95% 5.55%
Arman Financial 1544.97 1767 14.37% 5.42%
Beta Drugs 1900 1762 -7.26% 4.33%
Nuvama 1712.37 6966 306.80% 4.07%
Kotak Mahindra Bank 1740.83 2146 23.27% 2.59%

I have chosen a Buy and hold strategy by identifying good companies available at a fair price. I am okay with highly concentrated portfolio as my time horizon is much greater than most people. Apart from Time technoplast (mostly a cyclical play) and Kotak Mahindra bank (compounder but future compounding (post intrinsic value is reached) will be slow due to size) I plan to hold all other stocks for next 10 years (If fundamentals do not detroit or companies reach very high valuations).

For Edelweiss I will be shifting money from Edelweiss to EAAA after ipo and Edelweiss AMC business post listing on the stock exchange. This was my initial thesis on investing in Edelweiss because I thought that Edelweiss has 3 great businesses Nuvama, EAAA and Edelweiss AMC and other businesses are so-so.

My largest holding is Eternal, even though it is a large cap but I think it has a long runaway from growth. If they continue to grow at more than 50% CAGR for their next 3 years their topline will be 4 times of what it is today (20,243 Cr).Even if they are able to increase their topline by 3 times instead of 4 times due to operating leverage profits will increase manyfold in comparison to revenue. And, nobody is talking about their nugget verticals from which they will be launching Saas products. This could be their Amazon AWS moment. Saas products once they reach a critical mass have a high net profit margin.

I got introduced to rating agencies by watching a Guy Spier interview which helped in understanding their moat. I first bought a care rating when most of the people were selling it. It was available at an enterprise value of 700cr with a 83 cr in fy2020 less than 9x their profit and their rating business is a cash cow business and they hit a temporary bump due to ILFS crisis as Standard and Poor and Moody’s hit after Lehman crisis and you can look and from their low in 2009 they were 10X in 10 years. They will always be a need for rating agencies till the time we have bond markets. As the fundamentals kept on improving I kept buying it till 550 INR. Looking at hindsight this looks like a mistake.

I’ll be posting about my thesis for other stocks in subsequent post. Feel free to drop your views on my portfolio. I am creating this thread to dump my thoughts and keep track of my investments.

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my 2cents here, don’t fall for the bias which you have, from the post it looks like you are very biased towards eternal’s performance, i mean nothing wrong just saying that you should do some deep dive into eternal’s fundamentals and then you can expose yourself to such high concentration bets.
50% cagr for 3 years is extremely ambitious, very few companies at such a base really maintains that
operating leverage in zomato is not as big as your think, please do tell me what exact operating leverage you are talking about.
the AWS moment through saas sounds exciting but it is pure speculation for now,there is no product,no traction,no validation. eternal may do well but comparing vertical expansion to amazon’s aws is a bit too much, amazon’s aws was the biggest pivots in tech industry and respectfully eternal is nowhere close to it

Hi , Just looked at your portfolio, sharing my 2 cents

a. Your stock concentration is too high with top 2 stocks (Eternal + Edelweiss) = ~56%
b. Sectoral Exposure - Needs to be more diversified, it appears tilted toward financials (Edelweiss, Arman, Nuvama, Kotak) . Pls add exposure to FMCG, IT, Pharma (large cap), Infra, Green Energy sectors

c. Overall mix - Risk Type is quite High due to concentration + mid/small-cap tilt. You may look at balancing your portfolio with Large(30%), Mid(40%) and small cap stocks(30%)

Hope above is useful. Thanks a lot

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Thanks for your reply. I will re-evaluate my position on Zomato once their Annual report is out.

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Thanks for your 2 cents. I know top 2 holding contribute a big chunk of my portfolio. Some of it is by design and some of it is due increase in the price of shares for both Eternal and Edelweiss.

However I will revaluate them when the annual report is out and make necessary changes.

I will move money from time technoplast and kotak mahindra bank once they reach my evaluation of intrinsic value into mid cap so that exposure is reduced from small cap.

Here is the reason why I invested in rest of the stocks.

I got introduced to SG Mart through Ranvir’s thread on Valuepickr. SG Mart is a company acquired by APL Apollo Promoter group and after acquiring they started doing steel trading business through this company. Currently there are three verticals, Steel trading, semi processed steel (through company owned service centers) and royalty based TMT and other products. They plan to double EBITDA in the current financial year and double it again in next financial year (400 cr EBITDA by FY27). Even if they achieve this EBITDA by FY28 instead of FY27, I am ok to hold the company because long term prospects look good. They even want to go into other building material products post FY27 which can keep the growth high for next 3 years from FY27.

I bought Dhanuka when it was available at 12-13 times PE. Company has return of equity of more than 20% for the last 10 years, 5 years and 3 years period. On top of that they do regular stock buybacks. They are also planning to manufacture technicals through their Dahej Plant. It is a long term investment.
Arman Financial is probably one of the best managed microfinance companies in India. They don’t do top-up loans or other such activities which might lead to evergreening of loans when the microfinance sector goes through a downturn. I have invested in the company because I think what matters the most in microfinance is the promoter and Arman has one of the best promoters in the microfinance sector.

Beta Drugs is a pharma company in the oncology vertical. Beta drugs have return on equity in excess of 25% for the last 5 years and they are the lowest cost manufacturer. They are branded domestic business, exports and CDMO business. They plan to double their topline in the next 3 years. They have strong growth triggers in place with no. of products in the pipeline for registration for their domestic and exports market.