Portfolio for 3 years

Can you advise me on following portfolio for next three years:

  1. Federal bank (25% as I have very strong faith in new management with change in compensation structure. I feel it has started its journey like of Indusind)
  2. VIP Industries ( 12.5% Strong brand and consumer boom in India will help)
  3. ITC ( 10%-evergreen cigarette business with growing agri business. Strong management)
  4. Power Grid (7.5%- Strong revenue generation with huge transmission network requirements for a country of size of India. Assured return on Investments by customers)
  5. Maruti Suzuki (7.5%- Tried and tested largest 4 wheeler company in India)
  6. HDFC bank (7.5%- Very strong franchise with world class management)
  7. IIFL (7.5%- String NBFC business with company becoming largest wealth management player in India beating global players like Credit Suisse, Citi etc.)
  8. Sintex Plastics (7.5%, good brand recall with stock being undervalued after recent correction)
  9. Mannapuram Finance (7.5%- big network, takeover candidate, secure gold business with good margins)
  10. Dewan Housing finance (7.5%- Cheapest Housing finance company with presence in Tier 2 and Tier 3 cities funding low and mid range housing. Some issues with management)

Figures in brackets are proposed allocations

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God bets for long term. You may want to reconsider your allocation to financial sector, which forms more than half your portfolio.

I am not recommending anything just giving my views.
I would stay away from ITC… WHY ?
1.because the returns you will get are going to be way less than you will get from a mutual fund. I think you can extend your exposure to midcap/smallcap if you can manage the risk. And lower your exposure from finance companies a little.
2. Promoter holding is 0, IMO promoter holding is very crucial for a company.

And 1 more thing about your perception about ITC that cigarette business is evergreen !
No the new generation is educated and they very well know the adverse effects and in future government will also try to discourage tobacco business as it costs to govt. eventually in form of healthcare expenses.
##Current smoking has declined from nearly 21 of every 100 adults (20.9%) in 2005 to about 15 of every 100 adults (15.1%) in 2015( USA figures )##

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3 years for equity is too low, one bad day and you will be loss. If you need the money by 3 years I suggest debt and not equity investment.


I fully agree with your point of view however the government healthcare spend is too low in India. Further, we are many years away from reaching that education levels in India not forgetting the fact that educated class is the highest contributor to cigarettes. I am also betting on success of their Agri business which may turn out to be a dark horse in next 3-5 years.

Most over owned stock after HDFC = Mannapuram Finance.

I was holding powergrid till Oct 2017 and then sold off completely. It moved down till 190 and is back to 200 range now… Though they will have continuous business growth for next 2-3 years , decided not hold on PSU :slight_smile: