Portfolio advise needed

Q&A: Questions & Answers Portfolio Q&A
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Dear all,

This is my first week on ValuePickr, yet to go through all the good stuff here. I consider myself as a new investor with an exception of buying few stocks in year 2011. I entered the market at a wrong time but wanted to build the portfolio. The strategy till now had been to pick good stuff majorly in Banking, FMCG, IT and Auto sector. I do realize I need to consolidate and have only 10-15 shares but it will take some time to get to that level of understanding to select and reject the right stocks.

Here I am sharing my current portfolio for the comments and advise.

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Please post rationale for your portfolio stocks.

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Hey, welcome to the world of equity.
Though your portfolio optically looks having some solid proven companies, suggest you to keep max 2 top leaders from in each sector. As an investor, it is extremely difficult to track 29 companies. Yes, you need to post your rationale for stock selection. All the best.

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First I shortlisted the sectors: Was keen on banking, FMCG, IT and Pharma. Then I selected the stocks based on known names. Since I was building the portfolio wanted to stick to good firms with good fundamentals/ I do look into PB, PE, Debt position, management, ability to adapt to change, Resilience and New ideas. This week I have joined the forums to increase my knowledge and do more research.

Banking: My first buy were SBI and ICICI they looked very attractive, the fundamentals were very strong. Unfortunately I bought very very less quantity. Later picked HDFC and Indusind Bank, again the rationale were the fundamentals. Can fin was a recommendation.

FMCG: ITC was my first buy, very strong fundamentals and felt it was very cheap at 175. The reason I had very small qty was the growth over the years was not very encouraging, now I regret the small qty. Picked other four stocks based on the fact post August was expecting these four stocks to do better. I have been buying on dips but stopped buying Nestle as it crossed 10% of overall portfolio.

Pharma: Astra and Panacia were old stocks, picked Pfizer and Cadila due to the vaccine. Cipla and Divi’s were picked as they looked attractive on that particular day. I also bought Granuels at 330, missed listing it.

IT: Infosys and HCL Tech both are well managed IT firms and I like the way they are transforming their processes.

Auto: Wanted to have some exposure in Auto. Fundamental of Maruti and Tata Motors look great.

Telecom: Again fundamentals of Bharti Airtel were good though I wasn’t comfortable with their debt position but it was the first choice as I have seen the company performing well over the years but Vodafone Idea is a risky bet. Wanted to have one stock which I am not too sure of, in terms of performance but might surprise in long run.

SAIL and GAIL are old stocks, not too happy with their performance.

Reliance I bought recently more due to FOMO, if it makes sense :-).

I am yet to have a proper strategy, one thing is clear that I need consolidation. It would be great to hear your opinions.

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Thanks, I have given my rational would appreciate to hear the views.

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I still believe you should stick to max 2 top leaders in the each sector. 29 stocks is too many.
I may skip your media, oil & gas (except RIL), Telecom and Metal & Mineral names for now.
In Chemicals, probably I would go for Pidilite over Himadri chem. Also you may look at leaders in paint sector.

Discl: I do not have any of the stocks mentioned.

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Thanks. Will work on consolidation.

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My advise would be to remove the target price. I don’t know what benefit it provides. If your company price increases to reach the target, it makes no sense to sell it. You can end up selling winners and holding losers. If you don’t like what you have, sell immediately. There is always an opportunity cost attached to your decision.

About industry, auto, metal and oil (not Reliance) are cyclical in nature. Entry and exit has to be timed correctly.

IndusInd promoter is Hinduja group which previously allocated capital poorly benefiting group companies at the expense of minority shareholders. Do your due diligence.

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Thanks Akash. My strategy is to only have 10-12 quality stocks by year end or sooner, the reason I have target price is to exit once they come closer to target. Like Banking I might just stay with ICICI and SBI but would like to exit from HDFC and IndusInd near target price. IndusInd is part of the banking rally, I had offloaded 30% couple of days back at 1071. So target price is more indicative I can ignore it completely.

Thanks for info on IndusInd. Appreciate it.

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Would like to hear views on which ones to keep in my portfolio.

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Thanks Sameer, any recommendations on the stocks I should hold.

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Asian Paints looks expensive right now, will wait for correction.

Himadri is doing some good stuff, I do have hopes from this stock. Haven’t Pidilite already reached its potential? Looks a bit expensive at current rate.

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Looking forward to hear your views.

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Will it make sense to hold SBI versus HDFC? Should I exit SBI and hold HDFC?

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You may consider exiting the following given small holdings:
Tata Motors, SBI, ICICI Bank, Canfin Bank, ITC, Colgate, Mrs Bectors, Dish TV, SAIL, GAIL, Cadila, Panacea, Bharti and Vodafone Idea. This should give you 15 stocks.

Next, you may consider tweaking % allocated within the sector; like between Maruti and Escorts. You may consider increasing position in Hind. Lever. You may consider increasing position in Cipla and Divis gradually, reallocating from Pfizer. Typically, hold 5-7% in any stock if you are convinced; beyond 10% may be risky unless you have done in-depth analysis.

Your portfolio looks good with large caps when you are starting new. As you become expert, you may want to have fewer large caps and more mid/small caps.

I am not the right person to advise; not registered with SEBI. This is the first time I have looked at someone’s portfolio and suggested changes. Feel free to ignore my suggestions.

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My investment experience and observation has been, companies like Asian paints, Pidilite would always command premium valuations due to the niche sector that they operate in. So one won’t get deep corrections in such stocks (unless there is a market crash such as March 2020). Best way to buy them is in SIP mode during days of every 5-10% correction.

Coming to chemicals space, as an example; look at Pidilite, in addition to great fundamentals and financial ratios, they are virtual monopoly company in the adhesive market and with the recent acquisition of Araldite maker, it further strengthens their market position.

So you need to have some solid companies in your portfolio.

Note: These are not buy recommendations. Please do your own home work prior to investment.

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I frankly feel you have a very good portfolio. Hold all of the stocks for one year and you are likely to see very good returns on your portfolio. One thing which you can do is trail your stops to the latest weekly Higher Low made by them. In fact on the stocks where you feel you bough low quantity; you can add more on declines (e.g. SBI/ICICI Bank).

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Thanks, did buy Asian Paints at 2400. Keeping an eye on Pidilite.

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Thanks Salil. At current level adding SBI and ICICI is not possible, will wait for big correction.

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I could not understand trail stop and weekly higher low.