Hi guyz,
Please provide your valuable inputs here. I am still a newbie and your views/suggestions will be of immense help to me. I look for sector tail winds - like textile sector, Optical fibre sector, Auto sector, Pharma, etc. and then try to dig out companies on MOSL parameters of Mid size, Quality of Mgmt and business, Growth, Longevity and Price (valuations). Also do comment/advice me on my investment style.
All the below companies in my portfolio satisfy the MOSL parametres.
My portfolio-
Please suggest any changes.
Based on your investment thesis of sectoral tailwinds, it seems a good portfolio.
But u will need to keep in mind that these sectoral tailwinds dont last for ever and hence u will need to be mindful of when to get off the train will.
Thanks a lot Sir. Happy to see your comment.
In response to your reply, I would like to put my logic/understanding here -
Fiem - I havent chosen this stock just basis the Auto sector expansion. FIEM enjoys 4% additional margins compared to its competitors (100% backward integration play). FIEM has 3 dedicated R&D house (Japan,Italy and India). Superb mgmt and great execution. 5 triggers in the company - my RR attached herewith. It trades cheap and has great upside potential. Honda has a track record of being a market leader in its markets world over (i had read this in some article) - Honda is dependent on FIEM for its 75% of LED/lamp consumption. Let the Auto sector go down. I just go for sector tailwinds so that my portfolio not only gets the EPS re-rating but also the PE rerating effect.
Nandan Denim - It is No.1 position in Denim fabrics. Denim market has very less competition since the pie is much much larger for all to grow simultaneously. Consistent performance over years and mgmt doing all that to actually change their image and grow the company professionally. For instance E&Y appointed for mgmt audit (is this the chiripal group which we know?). I dont worry about the textile sector. Nandan will perform since it has a good moat.
Same for others.
You are correct for vindhya telelinks - my bet here is more based on sector tailwinds - no moat in the business. I have to be careful in that stock. But what do you think about other stocks. If there is enough moat or sustainability of earnings do I need to think about sector tailwinds? FIEM-RR.docx (191.1 KB)
Hi Abhishek,
I am a little doubtful about Kitex garments and Alkem Labs in your portfolio. Kitex because of their notorious conference call where the excess cash was discussed, and Alkem because it is a recent IPO and not much money has been left on the table. I feel Alkem can be replaced with other pharma companies.
Regards
Aditya
Hi Aditya,
Yes, you are correct about kitex garments. Also the recent news - removal of CFO (Sabu’s brother), is a big red flag. I am thinking to sell kitex garments now.
I chose alkem because it focuses in domestic market. Seeing the global issues, I feel Alkem is a safe bet compared to those pharma companies which are selling globally. What do you say? Should I still sell Alkem and buy some other pharma company considering the global scenario?
1 Like
Hi Abhishek,
Why do you feel that pharma companies selling globally will be affected? Are you looking at a short term horizon or long term? And if they are affected for sometime wouldn’t that provide a buying opportunity based on the fundamentals? I see quite a few of the pharma companies discussed in this forum have had decent corrections in the last few weeks.
I have heard that the Government could cap the profit margins of drug makers in India. link below
Also Alkem labs seems to have built a large product pipeline for US. Will that not get impacted? I am just trying to find out more answers on the impact since I too have a decent exposure to pharma sector.
Hi Abhishek,
Hitesh is the expert on pharma sector so I would go with his advice. Personally, I am invested in Ajanta Pharma, Shilpa Medicare, Torrent Pharma, Aurobindo, Lupin and Alembic Pharma (marginal investment in last two). There are other stocks like Lincoln, Anuh, Granules and Suven Lifesciences that are discussed extensively on this forum.
As per my understanding, US exposure need not be a negative given the patent cliff. If you look at the recent FDA red flags, most of them have been over non-issues, so I do not think Indian pharma companies with exposure to the US are really at a huge risk.
Regards
Aditya
@abhishek90
Agree that going by the current scenario pharma companies faces a strong headwinds in the face of US FDA.
But my thinking is US FDA is not the end of the industry because companies always gets the second chance to rectify the issues. The biggest concern with the companies should be data integrity ( eg Ranbaxy ), unless and untill the comapany is out of the data integrity issue, it should be the risk in long term.
Moreover one should go with the companies which is in complex chemistry which is difficult for small to replicate or have good entry barrier.
some of the companies like sun pharma, shilpa medicare for complex chemistry
suven and SPARC for innovation
syngene for CRAMS
granules india for GENERIC
1 Like
Samir, Aditya, Chirag,
Yes you guyz are correct. I am new to the pharma sector overall. I should shuffle stocks in pharma sector.
Thanks for the advise.
