Ranvir's Portfolio

Q&A: Questions & Answers Portfolio Q&A
670

I have seen some investors rotate their capital within their invested shares as well…and I think you already did that during March 20 crash when you moved capital gradually from FMCG to Pharma…

Why are you not following your same strategy which worked for you then and resorting to leverage now?

Is it because this time you are more confident of better returns in next 1 year than during march 20 crash?

For me, the rotation somehow doesn’t work good till now as I end up selling precisely the wrong stock at wrong moment…I need to learn this rather difficult way of generating capital…to differentiate between my own portfolio stocks short term returns…one reason I falter in this is because I have a very long term thinking ideology and that makes it difficult to chose which one to sell and I end up selling something which have a short term trigger…

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671

Hi…@Investor_No_1…

  1. Yes… they do charge interest @ 9 pc per annum.

  2. Rotation of capital in 2020 was incidental. It was just that the FMCG valuations were rich. Pharma valuations were relatively better. So… I resorted to rotation of capital. It wasn’t for the sake of rotation. It was because I could not convince myself to hold on to HUL, Nestle , Britannia etc at 60-70 PEs with volume growths in single digits. I thought, better opportunities existed elsewhere. Otherwise… I am also really poor at timing ( at least I think so ) nor do I try to time.

  3. Just an observation… In stock markets and in life too… I think it is important to keep thinking and having the ability to change your mind as frequently as the facts on ground change. If the facts on ground do not change ( say FMCG valuations remain sub 50 PE with double digit volume growth ), there is no need to change your mind. But if facts change ( valuations > 50 times with single digit volume growth ), there is no harm in changing one’s mind.

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672

Got it, so if m not wrong u did not do that rotation for raising capital but because you wanted to sell the highly valued firms

So what I understand is that at present you see all your existing stocks decently valued and hence not raising capital by selling few but rather by leverage…

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673

Notes from Q3 results iro ASTER DM Ltd -

  1. For 9M ended Dec 21…
    Revenue break up -
    GCC - 76 pc, India 24 pc

EBITDA break up -
GCC - 73 pc, India 27 pc

Hospitals vs Pharmacies vs Clinics breakup -

Sales - 56 pc, 21 pc, 23 pc
EBITDA - 58 pc, 14 pc, 28 pc

  1. Current hospitals break up -
    UAE - 8
    Oman - 3
    Qatar - 1
    Saudi - 1
    Kerala - 4
    Karnataka & Maharashtra - 4
    AP and Telangana - 05

  2. Hospitals in pipeline -

GCC - 02 Greenfield, 02 brownfield
India - 04 Greenfield, 02 brownfield

Out of these, 03 are in construction phase ( 02 in GCC and 01 in India ) and are likely to be commissioned in FY 23. Others are in Design phase and are likely to come up only by FY25- FY26

  1. Some competitive advantages -

Company leverages GCC brand equity to promote medical tourism in India.

For GCC assets, company sources talent from India.

Cost of debt is lower in GCC @ 3.5 - 4.5 pc. Consolidated debt rates for the company at 6-6.5 pc.

Company has a extensive network of 118 clinics that feed patients into its network of 27 hospitals.

Company has strategically located 323 pharmacies.

Good combo of leased and owned assets. Most hospitals on leased model for asset light structure.

  1. Last 6 yrs ( FY 16 to FY 22 ) Operational beds -

1976, 2653, 2740, 3092, 3438, 3634, 3828

Last 6 yrs ( FY 16 to 22 ) Hospital numbers -

18, 19, 24, 25, 27, 27

Clinic numbers -

96, 101, 114, 117, 115, 118

Pharmacies - GCC -

202, 207, 219, 238, 223, 233

Pharmacies - India -

Nil, Nil, Nil, Nil, 8, 90. Aim to reach 300 pharmacies by March 23. Also focussing on private labels, FMCG and non Pharma sales to boost gross Margins. E-Comm foray by middle of next year.

Labs India -

Nil, Nil, Nil, Nil, 13, 66

  1. Financials Q3 FY 22 vs Q3 FY 21 -

Sales - 2650 vs 2228 cr
EBITDA - 397 vs 328 cr
PAT - 148 cr vs 92 cr ( due turnaround in India operations )

  1. Financials 9M FY 22 vs 9M FY 21-

Sales - 7525 vs 6218 cr
EBITDA - 1021 vs 742 cr
PAT - 300 cr vs 42 cr ( due diminished COVID effect )

  1. Maturity profile of hospitals -

GCC Mature hospitals ( over 3 yrs old ) - 10 , EBITDA - 16.3 pc

GCC new hospitals ( less than 3 yrs old ) - 3, EBITDA - 14.7 pc

India mature hospitals ( over 3 yrs old ) - 10 , EBITDA - 19.8 pc

India new Hospitals ( less than 3 yrs old ) - 03,EBITDA-
13.4 pc

Disc : invested, biased

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674

Q3 results highlights iro Devyani International -

  1. Total store additions in Q3 at 81 stores. Total stores addition in 9M FY 22 at 192 stores. New KFC stores at 75, Pizza Hut at 94, Costa Coffee at 6, Others at 6 stores. Current store strength post expansion stands at -

KFC - 339 stores
Pizza Hut - 391 stores
Costa Coffee - 50 stores
Own brands ( like Vaango etc) - 58 stores

Stores in Nepal and Nigeria -

Nigeria - KFC - 28
Nepal - KFC + Pizza Hut - 18

  1. Omicron led third wave in Jan led to lower footfalls in stores and delivery channels reporting greater share of sales.

  2. Q3 sales at 624 cr, up 65 pc vs last yr. KFC and Pizza Hut revenues were up 64 pc each. Same store growth for KFC @ 24 pc, Pizza Hut @ 25 pc.EBITDA at 147 cr, up 67 pc. EBITDA margins at healthy 23.7 pc. **Gross margins at 71.4 pc.**Overall business performance was higher than pre pandemic levels. Pizza Hut continues to show strong operational turn around.

  3. IPO proceeds fully utilised towards reducing loans and funding growth.

  4. Percentage of stores in Metros - 49 pc
    Percentage of non Metro stores - 51 pc

  5. Brand wise revenues in Q3 -

KFC - 362 cr, up 20 pc
Pizza Hut - 155 cr, up 17 pc
Costa Coffee - 14 cr, up 52 pc

  1. Brand wise avg daily same store sales in Q3-

KFC - Rs 1.24 lakh vs 1.16 lakh
Pizza Hut - Rs 47000 vs 45000 LY
Costa Coffee - Rs 37000 vs 27000 LY

  1. Brand wise EBITDA contribution -

KFC - 83 cr vs 67 cr, Margins at 23 pc
Pizza Hut - 26 cr vs 21 cr, Margins at 16.8 pc
Costa Coffee - 4.6 cr vs 3.1 cr, Margins at 32 pc

Disc : Not invested, Planning to take up a tracking position

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675

Disc -

Added the following stocks today -

Angel One
Crompton Greaves Consumer
RIL
Jubilant Foodworks
Kajaria Ceramics
La Opala

Not a buy / sell reccomendation . Just a disclosure

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676

Visited a local Red Tape store yesterday. Was really disappointed seeing the quality of apparels on display.

Tried 6-7 shirts and T-Shirts of similar sizes only to find defects in 3 out of them. Thats a really high defect ratio.

Hence decided to sell out of Mirza International at a 7 pc gain.

Re-Deployed the money in ICICI bank and TTK Prestige at cmp. I think that risk/reward ratio in both are good at these levels.

Also studied NGL Finechem today. Planning to take up a tracking position tomorrow.

Just a Disclosure. Not a buy/sell recommendation.

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677

Disc: added NGL Finechem and Fairchem Organics today. Both tracking positions.

NGL, with its leadership position in 3 animal APIs and a 20 pc plus mkt share in several others is well poised for growth. To me, the cmp looks reasonable.

Fairchem ( a Fairfax group company ) is the sole producer of 02 imp Oleochemicals ( Daimer Acid and Linoleic Acid ) in India. Its cmp also looked descent for an entry.

Just a disclosure. Not a buy/sell recommendation.

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678

Was going through the Q2 and Q3 results of Emami ltd. Some of their brands are showing descent traction…like - Boroplus ( body lotions, traditional cream, petroleum jelly ), Zandu healthcare range ( Balms, Chavanprash, Nityam, Pancharishta etc ), Kesh King range, 7 in 1 oil and Navratna cooling oil. The mkt share of Fair and Handsome now looks like stabilising thanks to better packaging and better product positioning.

The company generates the best Gross, Operating and Net Margins in the FMCG universe in India. On a TTM basis, the Company has generated a Net profit of Rs 570 cr. However, the Cash profit is far higher… in the range of 850 cr…due amortisation charges on Kesh King acquisition.

With a cash profit of around 850 cr, the company’s current Mkt cap is just 21000 cr. For an FMCG company, valuations don’t look steep at all.

If they can keep growing the Boroplus , Fair and handsome and Navratna franchise in single digits and Zandu, 7 in 1 and Kesh King in double digits… the stock can give returns over the next 1-2 yrs.

Disc : initiated a tracking position. Not a buy/sell recommendation.

679

Can you share the reason behind adding Crompton Greaves?

680

Hi ……

CG consumer is the leader in fans and pumps segments in India. Its no 3 in LED lighting.

These three segments comprise their base business. Except for LED lighting, the other two are not under penetrated and the growth rates there cant be expected to remain high. Although…. these are very profitable.

What CG was missing was meaningful stake in high growth categories. Then came the acquisition of Butterfly’s kitchen appliances business…… excellent use of company’s cash on the balance sheet… IMO

I think, this can super charge the CG consumer’s otherwise stable business dynamics. This is what makes me really bullish on the company.

Needless to say, even before the acquisition… the company has been maintaining higher than FMEG industry growth rates despite being heavy in relatively mature categories.

Plus …. their margins profile post the appointment of Mr Khosla as the CEO has been really healthy.

I believe, that this acquisition is a well timed move by the company and can propel it into even higher growth orbit.

However…… i reserve the right to be wrong :expressionless: :expressionless:

Regards,
Ranvir

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681

Hey ranvir i have a doubt that does the current quality of apparels and quality affect the business in long term!. Like many well known brands do make mistakes like try and error types! Wasnt your thesis for buying mirza a little weak or bloomy?! Was just curious! Not at all want to pull you down! I love your whole thread​:heart: just finding this difficult to digest​:joy::tipping_hand_man:

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682

Hi… U are absolutely right.

Mirza Intl was a tracking position for me.I felt uncomfortable post visiting their showroom due to the quality issued that I brought out. If the company gets its act together, it can still do really really well. However, I was uncomfortable holding it post the showroom visit.

I guess… the very purpose of tracking positions is to keep accessing and re-accessing the bet…and then increase the weight behind the bet or exit. I ended up doing the latter.

However, I ll still keep monitoring the situation as I do feel that the issues that I brought out are solvable.

Thanks for your feedback !!!

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683

Hello @ranvir ,
I have also taken small position in “Fairchem Organics” last week. Promoters of the company has sold off roughly 16% of the stakes(Although DII and FII has bought some percentage). How do you see this ?..Is it a negative or warning sign ?

Do you track “Titan Biotech” ? - A Nano cap company with strong fundamentals. Please share your views.

Thanks !!

684

Hi…

Your observation is spot on.

However, I would rather focus more on the operating results and the fact that the company continues to be the largest player in two important oleo chemicals in India. Plus, its only a tracking position for now.

685

Disc: I ve trimmed my margin positions by almost 50 pc that I initiated during the panic selling post the Russian invasion of Ukraine.

The fact that the conflict is not ending and crude prices are firmly above $ 110 a barrel, make me uncomfortable holding onto substantial long margin positions.

I did make some money, however …it seems that market’s upside look capped for the time being.

Will buy again on margin if the markets were to crack again due high inflationary expectations.

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686

Disc : initiated a small margin position in Alembic Pharma. In my opinion, the worst is over for the company wrt price erosion in the US business. Plus the India business seems to be doing really well.

Not a buy / sell recommendation. Just a disclosure.

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687

hey ranvir whats your views on inox and pvr merger ?
10 inox shares(469/share) will be converted in 3 pvr shares (1821/share) i see a arbitrage opportunity of around 14% gain . (if you buy 10 shares of inox today total value=4690 , you will get 3 pvr shares total value =5463 ) plz correct me if i am wrong

688

Yes… the opportunity looks good. Plus the consolidated entity is gonna be one big monopoly as far as movie watching scene in India is concerned.

Arbitrage is an added kick. Even without that, it looks like a sound business in the making.

689

Disc : have initiated long positions in Titan, Jubilant Foodworks and Polycab at cmp today. Buying on margin.

Fall in crude prices and strong demand scenario is giving me confidence to go ahead with such long positions.

Just a disclosure. Not a buy / sell recommendation.