ValuePickr Forum

Ram Charans's portfolio

Hi All. This is my first thread in valuepickr. Apologies for not adhering to the guidelines if any. I am a Graduate in Arts/Literature and run a family business. Investing in stocks got me intrigued at a very young age. Buying stock is buying a business for me as I understand the businesses well maybe because of my background.

However, being not from science/commerce stream I am very poor in number crunching. I did try reading on valuations, intrinsic value, detailed balance sheet analysis etc. but still i must admit I am poor at it. Therefore, I always fear to put all my money in very few stocks, fear mainly being what if something which was very apparent on these documents, because of my lack of understanding, I failed to find.

I did experiment over the years buying mid-caps and small caps but some turned out to be run by dishonest promoters and lost money. Therefore, management integrity is the first thing I look upon in a company as dishonest mgt can completely destroy the company. Valuation, quality of business and all other things come after Management quality. I believe, even at times if I have overpaid for good companies, if the management is of top quality, there is no permanent loss of capital.

The Companies in my portfolio, at least some as per me are very good businesses run by good people. But as I said, the only question is did I pay a very high price for them. As I said, I do only basic number research like PE, ROE, ROCE, NPM, OPM, 5 year-10 year sales growth, etc. mainly from screener (thanks to them, it’s wonderful and free!!). Secondly, I look at the Balance Sheet to find out the debt position. Growth fuelled with mounting debt is a recipe for disaster according to me.

I did try to calculate the intrinsic value and stuff on excel using discounting method etc., but I learnt quickly that its not much of a use, as small variation in numbers assigned can completely change the picture. The other thing that I avoided very early is considering PE as metric for valuation.

I consider no one in this world is as smart as Mr.Market. I past 7 years I have many great investors fail big way with all the wherewithal. Below is my portfolio with short reasons for buying it. Request views of the boarders here on these stocks. Any act of mine based on any suggestions here will solely be my responsibility.

  1. ITC - 11% - Buy price Rs.250/-

Their other than cigarette FMCG may not be bringing money presently, but the products are very good and in demand. Slowly they are building brand and gaining market share. Cigarette - Philip Morris; smokers will smoke, addiction is difficult to overcome. High duties can be passed on. Good brand and pricing power.

  1. TATA MOTORS - 10% - Buy Price Rs.340/-
    Bought long back. Good management. I must admit one of the reason for buying was the fall in price from 500 ish to these levels. Their Indian business for some 2 quarters did very well and JLR had issues mainly in China. THought this to be short term pains and bought despite the debt levels. Consider this as a not so thought of buy.

  2. CARE - 10% - Recently - Rs.650/-
    Oligopoly - these companies can never be out of business. seen with Moodys after the subrime lending saga. Price qua dividend was tempting. Crisil holding 8% and entry barrier.

  3. CUMMINS. 7% - Rs.720/-
    Good management and margins. Decent ROE and ROCE. They have a very good established brand

  4. PIRAMAL ENT 7% - Rs.2,000/-
    Bet on the management. This business is a bit of a concern to me.

  5. CASTROL. 6% Rs.145
    Good Dividend. Margins. ROE and ROCE. Quality management. Zero Debt.

  6. L&T FINANCE. 5% - Rs.140
    L& T Brand. Walked the talk on few of occasions. still was a mistake to buy at this price.

  7. GODREJ CONS. 5% - Rs.630/-
    They are doing good outside India. Good Growth. ROE and ROCE is good. Decent Dividend.

  8. PIDILITE. 5% - Rs.1040/-
    My favorite stock. But as they say, never fall in love with your stocks :slight_smile:

  9. HDFC AMC. - 5% - Rs.1600/-
    HDFC group. Posting good quarterly results and the business was growing. The price thereafter to which it want was purely luck.

  10. CDSL. 4% - Rs.230/-
    Duopoly. Not much of risk kind of business.

  11. ZYDUS WELLNE 4% - Rs.1400/-
    Did some local market research. Sugar free is doing very good. wait and watch before adding more as to how Heinz business will contribute.

  12. INFOSYS. 4% - Rs.670/-
    Generous dividend and decent growth in business. Safe stock

  13. LARSEN. 4% - Rs.1300/-
    A beneficiary of Indias infra and trillion dollar story.

  14. CADILA HEALTH. 3%. - Rs.360/-
    Decent margins and have good products in portfolio. Buy price in hindsight looks like a mistake

  15. CENTURY PLY. 3% - Rs.217
    Sales was growing decently. ROE and margins decent.

  16. SWARAJ ENG. 2% - Rs.1400/-
    GOod Mgt, ROE and margins.

  17. BSE LTD. 2% - Rs.600/-
    Duopoly. Entry barrier and dividends.

  18. HESTER BIO. 2% - Rs.1750/-
    Mainly Sales growth. Young company

3 Likes

Did you bought in the dip?

I would suggest you to hold Pharma & Customer Goods for the next 1-2 years many of them will give 50-100%.

Please add agro chemicals, they are the next big thing

Recent changes have been to sell BSE and Hester Bio as allocation was very less. Added united spirits from Rs.450 and today it averages at Rs.530 in portfolio allocation of 6%. Have been accumulating ITC which forms now at 12% of portfolio and largest allocation in portfolio.
Compared to other FMCG I find the downside risk is very limited in ITC at this price and the cash flow with such clean balance sheet is so tempting. De-Growth in cigarettes business, regulatory hurdles are surely to continue as also the FMCG not expecting any sudden jump in margins and I am ok with it.
USL for me with 55% of Indian spirits market was a good value. Regret not adding more hoping to fall more and buy cheap.
Now eyeing Cummins india and Care ratings to add more.
Which are the Customer goods and agro chem u have in mind?

LT Finance : https://economictimes.indiatimes.com/markets/expert-view/theres-no-free-lunch-cant-promise-to-grow-20-in-sectors-with-negative-growth-dinanath-dubhashi-lt-finance/articleshow/73421747.cms?from=mdr
(Comments from MD & CEO) : Dated : Jan 2020
TATA Motors : Automotive industries are seeing high set of headwinds now - it would be till the year end we can expect a growth ( you can follow up tata motors thread) and since the new brands such as MG, KIA entering into India am quite pessimistic.
ITC : Their major sales are due to cigarette and government keeps on raising tax slabs - this turns the profitability into ashes ( seeing into future on growth of consumer goods such as : Books, Food & beverages they do considerably well -well you can have a view on TATA consumer thread in the forum)
Piramal : Kindly look into their real estate issues - am not following it after it has issues in real estate
Castrol : Oil prices are a tumbled down - these are cyclical which has affect from govt and international markets…

1 Like

Can u pls explain how profitability is turned to ashes with increased taxation? Revenue for company maybe lost because of some hit on demand with increasing taxes, but how any already made profits destroyed?

BSE ltd…not much growrh till now. BSE holds CDSL.
Can add HDFC or HDFC Bank.

LT will be volatile as all kind of economical issues will affect the company. Management is good but investors could not make money over last few years. Trying to increase ROE. No company in India could compete wuth them except foreign companies.