My first post on this forum.I am reading threads and following it for past four years now and it has helped me immensely on both knowledge front and psychologically. I found Investing and researching stocks to be a very lonely exercise, many times my mind seeks validation/confirmation of investment thesis for a particular stock idea, Valuepickr comes to my rescue in such times.
My investment style has evolved from 2017 till date in three phases.
I started investing in March 2017. At that time i was looking for companies which are relatively debt free, low PE and low Mkt Cap.I was following mainly bottom up approach without paying any attention to the industry trends. I started investing with low amount due to fear and not being confident due to lesser knowledge and no experience of any bull/bear period. I was testing water and being invested kept me in touch with market and tracking of company(whether management guidance is correct or they sell dreams!!). I have lost money (Almost 40%) in the shares i have invested during that time. Some wrong picks were DHFL, Bodal Chemicals, Indian Toners, Satin Creditcare, Alphageo. After holding these shares for almost a year, i sold them off as conviction of me being wrong gets prominent.
2nd phase of my investing was from May 2019. After selling off the laggards in my portfolio, I changed my approach and was now looking for one key extra factor i.e.
Is Growth present in stocks for next 4-5 years? I begin to listening to concalls or atleast read the summary on valuepickr, (so many good souls contribute here).
I should say I invested in some good companies during this time… GMM Pfaudler,Deepak Nitrite, PI Industries, KEI Industries, LTTS etc. But it didnt help me much . As in March 2020, due to the fear of Covid-19 I liquidated my portfolio of stocks (invested in 2019). I bought only ITC during that time. When the market was running ahead I was sitting with cash for correction .In hindsight , one lesson learnt.
3rd phase begun from September 2020. Now, I cant find stocks from my watchlist trading at reasonable valuation. The bull run has begun and in my mind I was still waiting for correction. As my investment journey continue, I was curious to know why deepak nitrite, GMM, PI which i have sold are continuing there rise.I didn’t expect them to rise as much as they did. I decided that i should look at a industry as a whole. Thus, in third phase, i started looking at industry structure as well and then studying the peers. It is after looking at industry structure I realised why Deepak Nitrite and PI has such a good run. When i bought the shares in 2019 and sold them in 2020. I didnt realise what i was doing due to less or little clarity about the industry (or as I say Business Environment of company).
My investment thesis has now took the following shape.
I look for businesses which has nice entry barriers, good opportunity size so that can have long period of growth (~ 10 years), quality management, reasonable valuation(Valuations are a mystery to me…),
Here I present my portfolio I built stocks over a period of time since last 4 year.
Request the members to kindly comment on the same. Please address the following points.
- Current Valuations
- Regarding no of shares, How can i reduce them? Shall i reduce them? It is difficult to track 20 shares.
- Are thesis pointers right?
4, All suggestions/comments/crticism are welcome.
S No Stock Name Allocation
1 ITC 3.7%
Bought in March 2020, Cigarettes business wont see any growth but is a cash cow which will help FMCG grow. FMCG will grow much larger due there strong sales and distribution network. Nice Bolt on acquisitions. Capex has been done and in order to form strong brand image of any FMCG products in the mind of consumer it needs time. In hotel, they are moving towards Management contact. A good decision
2 LAURUSLABS 8.1%
Change in product mix from API to formulation.Strong order book, Customer Stickiness in formulation business. At a good juncture for non linear growth
3 NEULANDLAB 7.4%
Expecting a change in product mix with focus on CMS division . If successful will result in Stable revenues and higher margins. Need to look out closely for it
4 PIDILITIND 5.1%
Long proven track record, a kind of monopoly in its segment. Proxy play to Indian Infrastructure growth story. I believe in there brands, it provide such a strong moat. it is not going anywhere.
5 SAREGAMA 6.3%
Largest catalog which will be there for coming times. As digital streaming service booms, the company will benefit due to holding IP. Such MOAT makes it indispensable. Asset Light business with low Maintenance Capex. As streaming service grow, all revenue will translate to margin from existing IP. Dont have any trust in Caravaan though.
6 AARTIIND 4.3%
Industry leader in Benzene chemistry. Long term Contracts with client. Planned Capex and foray into benzene derivatives and intermediates. With sectoral tailwinds it will also perform good in the next 4-5 years
7 DEEPAKNTR 4.2%
Reentered again after selling it off. It is a market leader in Phenol. Changed industry by way of import substituion. Management demonstrated ability to execute large project. Foray into phenol derivatives, Intermediates and speciality segments present opportunity for better margin and good opportunity size. Still available at reasonable valuations
8 HAPPIEST MINDS 2.2%
The company is into upcoming space of providing Digital services. Repeat business from client. Good Management. Cleint base profile looks interesting . it provides services to many different verticals and geographies . I believe it shows that they are poised for growth… May increase allocation as to how the story unfolds
9 ICICI LOMBARD 3.6%
i was more interested in exposure to the sector to learn and take future positions. insurance Sector is underpenetrated and expects growth in health insurance sector in the next decade. When i bought the shares they were hit by carnage and thought it as good time to enter.
10 INTELLECT DESIGN ARENA 2.7%
I like the vision of the business as they are building capabilities on technology which will be leveraged by BFSI segments in the future.It tries to provide complete solutions. However, I am more interested in their offerings to insurance sector. how they employ ML for analysis based on data over different clouds. Moreover, SaaS also has potential to provide high growth. I will increase allocation as I research more and understand it further.
11 PI industries 3.4%
Have enetered again. ainly interested in CSM services. In Agrochemicals they are a complete platform. CSM has high entry barrierand provides longevity, moreover, the growth is non-linear. Present in all the right areas where growth is expected in future i.e Herbicie, fungicide. Many unknown drivers may also emerge in future in case of enzymes, nutraceuticals etc. which will be a bonus in long term
12 STRIDES PHARMA 6.7%
The company may be entering the best phase from FY 22. Strong ANDA pipeline. Stellis will be a cash generating machine when demerger happens.
13 SYNGENE 3.5%
CRO emerging as alternative to in house R&D. Largest CRO facility in India and offers platform begining from discovery to manufacturing. It has long term contracts. In its space trust is the key, which is a MOAT in itself. It has upgrades its capacity recently.
14 UGROCAP 4.6%
Well capitalised NBFC; Defined targets for next 5 years; Try to capture SME segment which has a huge opportunity size; The value proposition of the company is in line with the long term Indian Growth story. Management seems to know what they are doing. But need to track closely.
15 MANAPPURAM 9.0%
Bought it in 2017 . One of the initial picks. Management has high integrity. Bought it thinking it is undervalued. 4 years later, it is still trading at the same valuations. No re rating. Nothing changed in business as such. I will just leave it as it is.
16 POKARNA 6.2%
Bought it in 2017, as i got excited with the quartz business. Company has had a roller coaster ride. After 4 years the growth story as given by management seems like is beginning to unfold. Have hold it in the period of pain. Will hold it further.
17 RAIN 7.1%
Bought it in 2017 as was available cheaply. The management always keeps on talking exciting things. After 2 years I realize it is a cyclical business and deserves low valuation . But still holding it as the lean period was over and will sell of once i feel the uptrend is over.
18 MAITHAN ALLOYS 2.0%
Bought it in 2017. The reasons were simple… Robust Balance sheet, trading cheap,Niche players and a market leader in the segment. Planned expansion. Fast forward 4 years , realised its a commodity business, not much opportunity size. Just keeping it as financials has not deteriorated and sector is favourable now.
19 BAJAJ FINANCE 4.4%
Everyone knows why. I still believe there is a lot of head room to grow before the growth reach single digit
20 IDFC FIRST BANK 5.6%
Invested in 2017, Got sold to the story of being the next HDFC bank. The wounds may be many bu the managment is doing the right things over a period of time but still the pain is there for next couple of years. The boook has improved the base is being built. Now i realise no bank is the next HDFC bank or there is no Next in any business. Tracking business for 4 years i realise the pain of building a bank or how setting things right takes a lot of time. It is a valuable experience and learning (if i don’t get any return, the learning will make it up for me)
Tata Consumer products Ltd
AU Small Finance Bank