Ranvir's Portfolio

Q&A: Questions & Answers Portfolio Q&A
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Q3 results from V Guard Industries

Severe Raw Material inflation is clearly visible in the results and initial management commentary. What remains to be seen is the timing of price hikes in Q4 and their impact on demand. Because if demand sustains despite price hikes, the Stock price should be firm going ahead.

Went through the results of Havells India and CG consumer electricals as well. The story is very very similar.

My gut feeling is that the Mkt is buoyant enough to absorb the hikes to the tune of 5-8 pc across product categories. And this much should be enough for these companies to grow their bottom-lines in a handsome way.

Plus…Q4 is critical for all these FMEG companies as the channels are stocked up before summers kick in.

Disc: invested in CG Consumer and V Guard Industries

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650

Look like very good results from Aster DM

Its one of the best turnaround candidates available in the Mkt today at descent valuations.

Disc: invested, biased

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651

Strong results from Fortis ltd

Disc - Holding, Biased

652

Was going through the Zydus Wellness, Eris Life, Caplin Point q3 concalls.

Q4 guidance is reasonably good for all of these.

I have a feeling that these company’s stock prices may be close to bottoming out specially in case of Zydus Wellness.

Disc: initiated a tracking position in all of these.

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653

Disc: added Kopran, Angel one

Angel one - due consistent tech improvements and gain in mkt share
Kopran - due business momentum

Since, I had no money…bought these on Margin through icici direct.

This is a high risk strategy as I have to square off within 365 days.

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@ranvir

U have ventured into unknown names, i mean u changed from some what from your preferred brand names/companies, after Covid correction. what was the experience like.

Also now after decent correction lot of Brand businesses are coming to buying range for example like V-Guard trading at historic multiples.

Request you give look into Borosil Comsumer business, give your feedback, brand business, 600Cr.capex announced/going on, with a lots of potential and restructuring happening.

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Hi…

The experience has been mixed with huge winners like Laurus, Divis and losers like Neuland ( was late to buy, bought at around Rs 2000), Jubilant Pharmova.

On V Guard…I am optimistic about its future. I think, its a good buy at cmp.

On borosil consumer… I have not yet studied. So… I won’t be able to comment.

One idea that I may suggest is CG consumer. Its already the no 1 player in Fans and Pumps, No 3 in Lighting, Good share in Geysers. The best thing has been its acquisition of Gandhimathi home appliances ( announced today). CG consumer had aprox 700 cr on its books. Its buying Gandhimathi for aprox 1150 cr ( 55 pc stake ). I think, its a huge shot in the arm fro CG consumer as it gives them access to consumer’s Kitchen with a good brand like BUTTERFLY.

CG’s management can really turn this into a big business. Mr Khosla is a great at execution. Plus the stock is available at 20 pc below All time high.

So…Thats an idea that maybe be that you can explore.

Another theme is domestic focussed Pharma companies -

Ajanta Pharma
Eris Life
JB Chemicals
RPG Lifesciences

Except JB, all are trading 20 pc below their peaks. All are reporting good to descent results. All will get a 10 pc odd price hikes in Apr 22…this will boost their top and bottom lines. Maybe u can explore this.

A few turnaround / undervalued ideas that u can explore -

Aster DM
Indoco Remedies
Metropolis Labs
Monte Carlo
Mirza international
Mayur Uniquoters
Aarti drugs
Granules India
Neuland Labs

Regards
Ranvir Dehal

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657

Disc :

Added - Angel One, Eris Life, HDFC ltd, RIL, Kopran

Buying on Margin…to be squared off within one year. ( ICICI direct offers this facility )

Hope to make a quick buck.

This is a high risk, high return strategy. But…I think I can pull this off as the holding period avlb to me is 365 days @ 9 pc interest rate.

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658

Nice.
Can’t say much about Angel one, Eris and kopran but HDFC and Reliance will withstand the bear market, if that happens.

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Notes from AR - FY 2021-22 and half yearly results for FY 21-22 iro Kopran Ltd -

  1. An integrated Pharma company committed to supply best in class Formulations and APIs. Formulations plant is located at Khopoli ( Maharashtra ). API plant is located at Mahad ( Maharashtra ). Company caters to over 50 regulated and un-regulated markets.

  2. Formulations - Mainly into oral solids and dry powder formulations for both penicillin ( anti biotic ) and non-penicillin based drugs.
    Penicillin based finished drugs made by the company- Anti-infectives, Amoxycillin, Ampicillin, Cloxacillin, Amoxy Clauv
    Non Penicillin based FDFs made by the company - Macrolides ( erythromycin, azithromycin etc ), Anti - Hypertensives, cardiovascular, Anti- helmentics ( anti worms… basically ), Anti-histamines ( anti allergy…basically ), EDS ( exceptional drug status… like tricyclic anti depressants ), Anti diabetic, CNS, Pain management and GI drugs.

  3. APIs - company has dedicated and versatile facilities for manufacturing of - Atenolol ( beta blockers ), pregabalin ( anti epileptic ), various sterile and non sterile Cephalosporins ( non - penicillin based antibiotics ) and various Sterile Carbapenems ( beta lactic antibiotics ) , Macrolides and Urological APIs. Company is one of the leaders in Atenolol and Sterile Carbapenems.

New APIs under development / commercialised in FY 21-22-

Biapenem, Tabipenem, Faropenem, Imipenem, Ertapenem, Ticagrelor ( Anti-thrombotic ), Rivoraxaban ( anti-coagulant ), Apixaban ( anti-coagulant ), Empagliflozin, Dapagliflozin, Canagliflozin ( all three anti-diabetics )

  1. Last 5 yrs data starting FY 2016-17-

Sales - 318cr, 314 cr, 357 cr, 359 cr, 491 cr
PAT - 19 cr, 20 cr, 24 cr, 21 cr, 61 cr
Finance cost - 13 cr, 8 cr, 9 cr, 9 cr, 6 cr
Depreciation - 8 cr, 8 cr, 9 cr, 10 cr, 10 cr

  1. Last 6 months, segment wise API sales breakdown -

18 cr - anti hypertensives
19 cr- Macrolides
7 cr- neuromodulators
48 cr- carbapenems
9 cr- cephalosporins
14 cr - urológicals

Total 121 cr

  1. Geography wise formulation sales -

Africa - 30 cr
RSA - 38 cr
SE Asia - 9 cr
Others - 7 cr

Total - 84 cr

  1. PLI scheme commitment made by the company - 80 cr vs the current Gross block of 132 cr

  2. Other highlights -

Completed upgradation and expansion of Mahad facility undertaken during the last fiscal

Completed upgradation and expansion of solvent recovery plant

Expansion of non sterile plant undertaken by the company will be completed by Jan-Feb 22

Development of Panoli site expected to be completed by Apr 22

Disc : holding, tracking position, biased

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660

Notes from Q3 concall iro EMAMI Ltd-

  1. Sales at 972 cr, up 4pc…due very high base of last FY. Two year CAGR at 9 pc. India business volume growth was flat. Brand wise sales growth-

Boroplus - 2 pc due channel loading in Sep ( Sep to Dec growth at 9 pc )

Pain management - 7 pc

Navratna - 11 pc

7in1 oil - 5 pc

Kesh King - Flat

Male grooming - (-) 3 pc

Healthcare - 2 pc

Immunity - Double digit de growth due high base

  1. Channel wise growth -

Modern trade - 14 pc

E Comm - 75 pc

A total of 16 pc of domestic sales are coming from these two new age Chanels now

  1. International business - Grown by 7pc, translates into a 2 yr CAGR of 16 pc. Excluding immunity and hygiene, intl business grew by 14 pc during the Qtr. Growth was led by Srilanka and Bangladesh. MENA sales were flat. CIS sales saw a decline due higher base.
  2. Gross margins declined by 300 bps to 67 pc. EBITDA at 342 cr was flat but grew 14 pc over a two year CAGR basis. PAT at 220 cr grew by 5 pc.
  3. For the 9m period, sales up 13 pc. EBITDA at 788 cr, up 9pc. PAT at 483 cr, up 31 pc. Cash profit at 734 cr, up 13 pc.
  4. Company announced a buyback of shares upto 10 pc of shares capital at price upto Rs 550 per share. Over and above, declared an interim dividend of Rs 4 / share.
  5. Male grooming mkt saw a steep decline due pandemic as ppl did not step out much plus the schools, colleges were shut. EMAMI maintained a two yr CAGR of 1 pc in the male grooming segment. As the mkt now opens up, company plans to go hyper aggressive in this segment. Have signed up Salman Khan for Fair and Handsome.
  6. Company has launched 2 digital brands - Imported creme 21 from Germany and Kesh King onion oil.
  7. Input cost pressures are moderating in Q4. ( I am not sure of the impact on Input costs post the Russia - Ukraine conflict as it has led to a huge spike in Crude prices )
  8. Most of the growth in boroplus range is coming from Vassocare, Body lotions and other brand extensions. The core anti septic creme was flat …more or less. ( I don’t think that’s a bad outcome as long as the brand extensions keep growing … specially the Boro Plus Vassocare and Body lotion ). Company has also launched a Rs 10 Boroplus soap in the rural Mkts and is getting good response on the same.
  9. Balms are showing super normal growth. Have been entering new households due pandemic induced awareness, marketing efforts and newer variants launched by the company. Seeing good growth in January as well.
  10. There was pressure on Navratna Oil for the last 2 yrs due to its cooling properties as ppl were averse to the same due pandemic. Going fwd, growth in Navratna oil should pick up. 7in 1 and Kesh King continue to do well.
  11. Zandu cough syrup continues to do extremely well. In Jan too, it did really well.

Disc : not holding, planning to take up a tracking position

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Disc :

Added the following stocks today -

CCL products
RPG lifesciences
La Opala
Cadila Healthcare
Angel One
Mayur Uniquoters
Caplin Point Labs
Zydus Wellness
Emami Ltd

Have been buying on all dips. Buying on margin. Aim to take total portfolio upto 130 pc of investible capital ( 100 pc invested earlier plus 30 pc on margin )

Will bring it down to 100 pc by closing the margin positions once mkt recovers to descent levels… say 19000 on the Nifty in the next 6-9 months.

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662

Hi Ranvir,

Mayur Uniquoters announced buy back at 650 and stock was at 480 that time but still i just kept falling and again closed at the low of day yesterday.
I am too holding this but the stock is showing no strength at all.
Whats your take on this

Regards,
Kapil

663

Yes… ur right.

Same is the case with companies like - Ajajnta Pharma, UPL ltd , Emami Ltd where companies have announced buybacks at much higher levels ( just like Mayur Uniquoters )

I think, the mkts are just bashing most mid and small caps due geo political tensions and rising commodity prices.

I think, we ll have to brave it out or add more ( if possible ). Cant see much wrong with the business as such.

Thats why… success in mkts is more about temperament than intelligence…I guess !!!

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Disc :

Added Crompton Greaves Consumer, HDFC Ltd, CCL Products today.

Have now hit 25 pc leverage on my portfolio. Will reserve the last 5 pc for further falls ( just in case ).

Just a disc. No Reccomendation… Obviously.

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665

Is this the ICICI direct margin you took?
What’s this 25 pc and last 5 pc?
What happens when you see more opportunities (read more mkt correction) and 5 pc is not enough?

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I like that even when you hit leverage that you still bet on stocks with strong fundamentals. Your portfolio has always been a study on backing strong fundamental companies. But lately I can see that even you have been struggling to resist FOMO. I am mostly in cash now wary of the high market valuations. Buffett is on 35% cash now. I feel that a high quality and value investor like you should not be on leverage now especially given the volatile geopolitical situation. This probably is a time to think twice rather than invest on leverage.

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Hi…@sudhakar

Yes… I am talking about the ICICI Direct Margin facility wherein one can buy on margin by pledging shares and repay / square off within 365 days. My aim was to buy upto 30 pc of my portfolio’s value on margin so as to take total portfolio value to 130 pc ( 100 pc invested earlier plus 30 pc on leverage )

Now … I have hit 125 pc of portfolio value and I am left with another 5 pc to invest. Once I exhaust this, its just too bad and I will wait it out.

I don’t envisage the markets to remain depressed for the next one year. In case they do, well its a calculated risk that I am taking.

One must strive to be greedy when others are fearful. However, its a risky strategy. And there are no two ways about it.

Regards,
Ranvir Dehal

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Hi… @SlownSteady …

Mr Buffett owns a number of businesses and has access to their steady cash flows. Retail investors like us do not have that luxury. So… once someone is fully invested, this is one way of raising some money in case the mkt provides lucrative opportunities.

And… Its the teaching of Mr Buffett that one must strive to be greedy when others are fearful that I am following.

Lets see how it pans out.

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Does this mean for 365 days, ICICI will not take any interest on the leverage you take by pledging your portfolio shares? If they take interest…I think they should be taking interest equal to personal loans…maybe around 10%?