Portfolio for review

Below is my stock portfolio with equal weightage for 10 plus years. My first step in Equity, have been investing in MFs for last 3 years

Will buy more every month on one of the red days and rebalance every quarter. Please review the same.

Current corpus is 5L. Will invest 25K every month for next 5 years.

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Welcome to VP.

You need to write thesis on why you are buying this and avg price as well so that others can provide feedback on your portfolio

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Hi, below are my reasons to chose these companies:

ITC: I see lot of value at current valuation. Planning to reinvest all the future dividends to enable compounding. Would like dividends to work as post retirement support as well

HDFC: The strongest NBFC as of now. In have absolute trust in HDFC group and will exit only if underlying facts change

HDFC Life: I think private life insurers have lot of scope of expansion and again bias towards HDFC. I was more inclined to go for ICICI Pru but at the end brand bias

IDFC First Bank: I think it should not be on the list based on current financials but I have complete faith on Vaidyanathanji and his ability to turn this bank around. All his promises after merger could also be seen in the numbers (retail orientation)

Persistent: Had a tough choice between HCL and Persistent. At the end I trust PPFAS management and they are betting on this stock

Castrol: Only because its MNC and pays relatively good dividends in the sector.

PIDILITE: It has kind of monopoly in the business. Also innovative management

FInolex Cables: Available at good valuation now, I was confused between this and Polycab but chose Finolex for couple of reasons. It is more focused business in terms of products and also pays more dividend

Sonata Software: Phenomenal YOY growth, debt free, relatively higher dividend payout in the sector

HDFC Bank: Best private bank. Period.

Engineers Ind: Its a consulting company and that too government one. I think they are phenomenal in what they do. Only company I understand since its close to my profession

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On AVG price, I think this is irrelevant since I will keep on adding via SIP in these stocks. But I purchased this mostly in April/May 2020 so I have relatively good avg prices for all these stocks.

The list looks good. My suggestions for long term are:

  • Remove: Engineers India. Very poor returns over last 10 years. Next 10 years are unlikely to be better. Has huge contingent liabilities
    Shift to L&T which has been down for long time now and if the economic cycle changes, it could be a 2-3 bagger over 2-3 years. Remember if stocks double, you got your 15% CAGR return. So L&T is a good bet than Engineers India. Else look at NCC which is heavily under-valued
  • Remove: Sonata Software. Very high customer concentration dependent on few big names.
    Shift to HCL Technologies or Tech Mahindra which have better employee strength and quality. Which software engineer worth his salt would want to work for Sonata?
  • Finolex Cables. No comments. But I would have something like Asian Paints or Lal Pathlab types of companies

For long term, you could also add ITC which is available at attractive valuations now. Nestle, Abbott are solid long term bets with low risk.

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Thanks.
ITC is already on then list. Will give a thought to other recommendations.

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very big exposure to HDFC group (30%). What made you initially incline to ICIC Pru over HDFC Life?
Castrol - I dont track much but fail to understand why it has been such a laggard?
Persistant - Other than PMS you name, what things you like in this company? Why not an Mphasis, LTTS or Tata Elxsi? Sonata also comes in here to compare.

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Persistent has better IP creation that Mphasis. Look at the starting salary at Persistent over Mphasis. Mphasis is a pureplay low end IT services firm, while Persistent operates at a higher end.
HDFC is a coffee can group. Cannot say the same about ICICI

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My own term plan is with ICICI. Plus I believe ICICI is more retail oriented that HDFC which is big market for life insurance.

Great start. Thanks for articulating your thoughts.

IMO, only few companies from your list qualify for long term of 10 years i.e. ITC, HDFC group of companies, PIDILITE. Rest all will give pain down the line… Please monitor them periodically and kick them out mercilessly if fluctuations are wide.

I have some long term holding PF for public view if you wish to look for alternatives. But do your own due diligence and research before investing.

Disc. invested is some above names.

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agree with others… 3 HDFC franchise stocks don’t make sense… Pidilite seems too expensive to me…

ITC is a good company and very cheap only if you look at PE ratio. If you look at Free Cashflow, it is too expensive. Over years this has been a value destructive company because of poor capital allocation. Education, Hotels have been poor investments while FMCG-Other’s contribution to the bottom-line is negligible. Their constant pursuit for growth at cost of ROE and profitability makes them a poor investment candidate. They reinvested approx 45,000 cr of earning back in business in 5 years to generate 5Kcr of extra profits an year. ROE on this incremental capital invested is a poor 11%.

IDFC First Bank is potentially a good bet, but I would wait to get clarity on the moratorium loans as they had very high % of loan there. They might go in another cycle of NPA cleanup for next 2 years. If that doesn’t happen, they can be a 2-3 bagger.

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I would suggest to relook at Castrol , Sonata Software, IDFC first, Persistent, Finolex cables .
You can replace them by LTTS, Polycab, City Union Bank, HCL Tech. I am not a fan of ITC too but won’t anything about it . Engineers India I never digged. HDFC Life , I would add at dips not a current price. Rest looks good as per me.

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I see lesser of a risk in HCL Tech and LTI than Sonata, hence switched out completely from Sonata. Also both of these had been growing at a phenomenal rate!

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Your portfolio lacks Chemicals and pharma, why?
I have had Alkyl Amines, Bharat Rasayan, Divis Lab which could be added for the long term to your portfolio!

I am waiting for good opportunity to enter in Divis Lab and Dr. Lal Pathlabs.

I have done following adjustment to the Folio:

  1. Exit from HDFC
  2. Entry in Bajaj Finance
  3. Exit from Engg Ind and Finolex cables
  4. Entry in TATA consumer products (used latest correction as a entry point)

Many thanks for the guidance so far. Planning to enter in Divis Lab and Dr Lal Pathology Lab sooner

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Added 3 more stocks to my portfolio during this correction:

Added Deepak Nitrite to PF in this correction

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My only concern would be IT. After 8k Miles, it is highly recommended that one sticks to the big guns, mainly TCS, INFY, HCL, TECH MAHINDRA, especially if you’re building a long term PF.

At the same time, risk assessment is up to individual investor, whichever way he or she wants to play it. Just a word of caution since most of your picks are quality long term bets, stocks to hold for life without a worry in the world.

Best wishes!

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