Ranvir's Portfolio

Investor_No_1 · February 25, 2021, 11:26am

Sir, like you I am also gradually working on adding more economy facing stocks.

Apart from FMCG, Life Insurance, Tech - I have some exposure to Retail, Paints/Adhesives & Consumer Durables

I am bit confused in the Consumer Durables segment as not able to identify clear leaders here. Therefore, I have chosen a basket approach here - Whirlpool, Johnson Hitachi and Voltas so far in Domestic appliances/AC segment. Main criteria for these are either top quality MNC/Indian MNC governance.

I intend to increase allocation here and reduce Life Insurance picks, other than the leader HDFC (Had same thought few months back but instead misallocated to Pharma where I do not have any understanding/conviction).

Wanted to know why did you chose TTK Prestige & V Guard in Domestic appliance instead of a broader play like Havells or Whirlpool or Voltas?
AC is one of least underpenetrated and highest growth (after mobiles). Why did you not chose AC players? eg. Johnson Hitachi, Voltas & Blue Star.
Any reason for leaving out some other solid players here like - Hawkins, CG Consumer, Blue Star, Bajaj Electricals etc.

I know my question is not very clear. basically I am trying to identify clear long term stable winners in Consumer durables/Appliances growth. I want to boil down to 2 or at max 3 names…so wanted to know your overall perspective and thoughts. Thanks

ranvir · February 25, 2021, 6:32pm

Hi…

Actually, my choice of company started with a relative valuation comparison. So, when I bought TTK and V Guard, they were trading at aprox 35 times FY 21 earnings. Most others with diversified portfolios were trading far higher. So…that was the starting point.

On the choice of business -

TTK Prestige is the number 1 cookware ( metallic + electric appliances ) maker in India. Hawkins doesnt make electric kitchen appiances. The metallic ones last longer and hence may have lesser repeat demand. However, the penetration levels for both are poor. So…at similar valuations, TTK looked better.

In the FMEG space, the listed players include- Polycab, Finolex Cables, Havells, Crompton Greaves and V Guard. The first two have a wires and cables heavy portfolio with aprox 10 pc kind of contribution from other appliances like - fans, geysers, switches, MCBs etc. The next three have far greater degree of product spread with Havells being the clear leader in most categories.

I chose V Guard for 2 reasons - No 1 was relatively cheaper valuations. Dominance in Stabilisers, resonably good presence in Geysers, Fans, Wires and Cables and Kitchen appliances.

WRT the AC players…to be honest, I dont have an indepth idea.

Regards,
Ranvir Dehal

Investor_No_1 · February 25, 2021, 6:37pm

True, just one small yet significant addition, something which I underestimated - the Lloyd acquired portfolio of Havells which actually made it provide stellar performance and competition to other established white goods players this Q…with llyod performing, the way I look at Havells has changed completely…

ranvir · March 7, 2021, 2:03pm

LAURUS LABS

Notes from Q3 results -

Business Snapshot -
Three business segments -

(a) Laurus Generics - APIs
Making the APIs in the following therapeutic categories -
ARVs ( anti retro virals )
Anit Diabetics
CVS
PPIs ( proton pump inhibitors )
Oncology

Commercialized 60+ products, filed 61 DMFs

4 manufacturing facilities ( 3962 KL ), 1000KL underexpansion

(b) Laurus Generics - FDFs

Developing and making oral solids for LMIC, North America and EU markets

Backed by in house API strengths

Making APIs under the following therapeutic categories -

ARVs
Anti-Diabetics
PPIs
CVS
CNS

Capacity - 5 billion units, expansion under progress

Contract development and manufacturing servises for global pharma companies and several late stage projects executed

Steroids and Hormones manufacturing capabilities

Sale and mfg of speciality ingredients for use in nutraceuticals, dietary supplements and cosmeceuticals

Dedicated mfg unit ( 137 KL) for steroidal and harmonal intermediates

Set up a dedicated block for high potent phytochemical APIs

Q3 Revenues - 1288 cr ( up 76 pc yoy ), EBITDA margins at 34 pc vs 21 pc yoy, NP at 273 cr, up 275 pc yoy, Q3 EPS at 5.1

Q3 revenues breakup -

APIs - 737 cr ( up 103 pc yoy )
ARVs - 568 cr, Onco APIs - 64 cr, Other APIs- 99 cr

Generics FDFs- 430 cr ( up 47 pc yoy )

Synthesis - 127 cr ( up 63 pc yoy )

Laurus Bio ( Richcore ) - Acquired majority stake ( 72.55 pc ) in Richcore lifesciences for 246 cr - via internal accruals

It has 2 mfg facilities - first one with fermentation capacity of 10,750 lt, second one with fermentation capacity of 1,80,000 lt…will be avlb by Mar 21.

Manufacturing facilities -

At Vizag -

Unit -I - API facility includes capacity for ingredients, synthesis and contract manufacturing, commenced ops in 2017. Capacity at 1226 KL

Unit - II - API mfg facility includes capacity for ingredients, synthesis and contract manufacturing, commenced ops in 2015. Capacity at 1757 KL

Unit - V - Dedicated hormone and steroids facility for Aspen. Capacity at 137 KL

At Acutapuram -

Unit - II - FDF and API mfg facility , commenced ops in 2017, FDF capacity at 5bn tablets / yr, expansion under progress- to be avlb by Q1 FY 22, API capacity - 83 KL

Unit- IV - API mfg facility, includes capacity for ingridients, synthesis and contract manufacturing, commenced ops in 2018, 221 KL capacity

Unit - VI - API mfg facility, commenced ops in 2018, 758 KL capacity

Growth levers for the future -

Robust growth in other APIs segments led by CVS, PPIs and Anti-diabetics

Synthesis business to show gains in line with new customer additions in CDMO

Have a healthy order book for FY21 and beyond for FDF CDMO business with strategic partner in EU

Doubling of FDF capacity by FY 22

Initiating greenfield expansions for all divisions - APIs, FDFs, Synthesis. Also continuing brownfield expansions in line with order book visibility and business outlook

Acquired assets of an API unit unit in Vizag to be used for backward integration and pre clinical chemistry

Disc : holding from lower levels, added at CMP

ranvir · March 26, 2021, 3:53pm

Disc : As I brought out earlier, I was underperforming the market post the budget rally. So I started rebalancing my portfolio. Continuing with the same trend, did some more reshuffling over the last one week.

Reductions -

RIL ( due uncertainty over capital intensity in the 5G space and whenever I read about the Starlink project of Elon Musk, I really get jittery as a RIL shareholder )

Nestle ( due to perceived expensive valuations )

Britannia ( complete exit …due to the nagging issues of inter company lending )

HUL ( due to perceived expensive valuations )

Additions -

Alkyl Amines, Aarti Industries ( hoping to generate more than defensive returns )

Havells, Kajaria Ceramics, Pidilite ( again, the valuations are debatable but I believe that they can grow faster than typical FMCG names like Nestle, HUL )

Divis Labs, Aarti Drugs ( increasing my weightage behind API players )

Kotak Mahindra Bank ( averaging down )

Although, I typically don’t like to get into so much of chopping and changing …but the corona pandemic did trigger bouts of portfolio activity. I guess, its taking some time to come back to a relatively steady state portfolio.

Regards,
Ranvir Dehal

Shankar · March 27, 2021, 5:37am

Dont you think Alkyl is at a premium valuation when the commodity cycle is in its favor. It is around all time high margins and multiple.

ranvir · March 27, 2021, 9:52am

You are absolutely right.

I have only bought a tracking position in Alkyl Amines. Only 0.5 pc of portfolio.

Will add more, only if the stock price corrects significantly due normalization of margins.

ranvir · April 3, 2021, 10:15am

Disc : have been studying companies like Radico Khaitan, Amrutanjan Healthcare and Emami over the weekend.

All three look promising wrt current business momentum.

Planning to take up tracking positions in at least one or all of them.

May resort to mild trimming in high PE stocks like Asian Paints, HUL.

manoopatil · April 3, 2021, 10:51am

Did you happen to compare Radico with Associated Alcohol? Is that because of smaller size of associated alcohol ((1/10th) of Radico) can be a factor to discourage?

ranvir · April 3, 2021, 10:56am

No…I have not studied Associated Alcohols.

Thanks for the input. Let me study this one as well.

manoopatil · April 3, 2021, 12:47pm

Hi Ranvir, How does a tracking position in your portfolio usually journey through to full fledged position or ruling out an opportunity. Would be interesting to understand - what steps/checks/trends verification you carry out subsequent to having a tracking position…

ranvir · April 4, 2021, 12:27pm

Hi…

I generally take up tracking positions ( 0.5 to 1 pc of portfolio ) in mid-small cap companies where I see descent business momentum.

Then I convert tracking position into a proper investment position ( > 2 pc of portfolio ) if the following conditions are met -

Continuation of business momentum over the next 1,2,3 Qtrs
Deeper / Better understanding of business over this period to build up conviction levels.

In case these are not met, I generally exit.

ranvir · April 6, 2021, 2:35pm

Disc : resorted to mild trimming in Asian Paints.

Added : tracking positions in Amrutanjan Heathcare and Radico Khaitan ( Aprox 1 pc of portfolio each )

Will monitor their results for next 2-3 Qtrs.

May increase their portfolio wt if business momentum sustains.

Regards,
Ranvir Dehal

ranvir · April 9, 2021, 5:29am

Disc : resorted to mild trimming in HUL.

Added - tracking position in Adani Ports. I know, I am late here. But, lets see how it goes.

ranvir · April 12, 2021, 5:59am

Disc :

Mild trimming - Marico, Divis Labs

Additions - Adani Ports, Havells, Amrutanjan Healthcare

Reason - slight portfolio rebalancing to profit from price movements

Not a buy / sell recommendation.

Just a disclosure.

ranvir · April 25, 2021, 3:09pm

Disc : will be resorting to mild trimming in TTK prestige, Dabur, GCPL, Asian Paints

Will add - Jubilant Pharmova and Jubilant Ingrevia tomorrow

Reason - Initial lead provided by - Sajal Kapoor in his webinar yesterday.

Kept reading about them today. Both opportunities look good to me. Plus the valuations are not demanding.

So…planning to take up small positions in both.

This is not a buy/sell recc.

Just a disclosure.

d.investor · April 26, 2021, 4:40am

sir i am also invested in both Jubilant pharmova and ingrevia and find both the companies available at a discount to its peers, can you please share the learnings from this webinar?

ranvir · April 26, 2021, 12:46pm

Hi…it was a 5 hr long webinar on Bio Tech in Pharma, Agrochem and other industrial uses. Its not possible to cover the key learnings here as the whole subject was too complex and exhaustive.

To cut the long story short…according to Mr Sajal Kapoor the following companies look interesting in the above mentioned space -

Biologics - Biocon, Lupin

Biotech - Syngene, Biocon

Vaccines - Cadila Healthcare, Gland Pharma ( he did spend some time explaining the economics of Vaccine manufacturing. And they were superior iro gross and operating margins )

Bio Tech in Agrispace - Rallis India ( too many details are not avlb in public domain, however the company is investing agressively in this space )

Industrial applications of Bio Tech - Praj Industries ( he did spend over 30 mins on Praj Industries. He was extreemly bullish on this counter )

Jubilant twins ( Pharmova and Ingrevia ) - they came up for discussion during the Q&A session. He was bullish on both and owned both

Conventional APIs and CDMOs - came up for discussion during the Q&A session. According to him, they have a long long runway ahead. He expects Indian players to turn the tables on the Chinese players

These takeaways are by no means exhaustive. I am just quoting from memory. I am sure, I must have missed a few imp takeaways.

Regards,
Ranvir Dehal

gurjota · April 26, 2021, 3:01pm

In terms of conventional and complex APIs - would be very surprised if Laurus, Neuland and Sequent weren’t part of the whole discussion. Has appeared very bullish on them on social media platforms.

ranvir · April 26, 2021, 3:25pm

Oh yes.

He was indeed extremely bullish on both - Laurus labs and Sequent scientific .

Infact, he was particularly bullish on - Laurus Bio ( earlier - Richcore ). I forgot to mention the same in the previous post.

Wrt other API makers like - Solara, Neuland, Aarti Drugs etc…there was no discussion. However, he is going to conduct another webinar on APIs - next month. These names will surely come up for discussion there.