Ronak's Portfolio - building it slowly

A bit of back ground to start with :

Starting in Stock market (year 2015-2018)

I have bought my first share ICICI bank on 23Mar2015 followed by Infosys. At that time both the stocks moving very slow and when you have entered the market your expectations were quite unrealistic as well. So, then I had bought the stocks based on tips from my uncle, friends, CNBC. As during this period midcap and small cap were doing well, I usually buy the stock and sell it once I have profit around 30%. I did not care to look into balance sheet, management or anything else. I wasn’t aware about the market cap of the stock at that time.

Stocks traded during this time : Motherson sumi, Sona koyo, Texmaco rail, Sical logistic, Upper ganges, Aksh optifibre, Bhansali enginnering, VIP Industries, Minda corp, Rico Auto, Capacite, Jamna Auto, Meghmani etc

Midcap correction period (Year 2018-2020)

Initially I have booked profit in the stock from above list but then after Jan 2018 , there were few stocks left in the portfolio and I kept averaging down in the hope that these were the prices to good to ignore. Stocks in the portfolio : Meghmani, Tata motors DVR, Capacite, Hikal, HUDCO, Motherson Sumi, Srikalahasthi pipes, Gabriel etc. Most of these stocks were down more than 50%

Covid time (2020-Present)

From around 2019, I have started reading books One up wall street, common stocks uncommon profits, The little book of behavioural investing, Fooled by randomness, Dhandho, Value investing – Parag Parikh. Though I did not have an immediate impact of reading these books but somehow, it helped me to get the direction in investing. “5 rules of successful investing”(Thanks to @hitesh2710 sir) , “The most important thing” have the most impact on me.

Though midcaps have returned back in favor after 2020, but I had decided to sell them even in loss and enter in stocks where I have the maximum conviction. Because during this journey I did have some good stocks as well but I sold them with 20-30% movement because I did not have the conviction in them.

My Investing style:

Over years, I have realized what suits me. The market works in cycle, before 2018 small/midcap were firing then we had a period where quality stocks took over and in last 2 years again small/mid cap rallies. So, it is important that you stick to your style of investing. Investing is all about probability, it is very difficult for me to spot the winners early, identify the turn around story.
I would like to focus on my career and family at the moment after marriage, so it will be difficult for me now to go through every concall, Annual reports of all the companies. So I would like to keep investing simple where I will keep investing in Index funds and in well known companies when they are out of favor. My expectation is to earn ~15% but with minimum volatility.
TCS/Reliance has market cap of more than 10 lakh crore and many will join them in the list going forward, so I would like to buy established companies in the industry where it can keep growing. My preference is mostly companies in B2C segment, so I can judge the company as a customer as well. Few things I look while buying business :

  • Decent growth in sales/profit
  • Low debt
  • Consistent ROCE/ROE>=15
  • Consistent high Margin
  • Positive Cash flow

Current Portfolio :

image

Apart from above I have significant stake in CSK through unlisted market, I have bought it during Covid times where it was available at around 2.5K crore market cap and I feel IPL can be really big similarly what we see in UK/US sports league.

Note : I know still the portfolio is not balanced, but I have started to build it from last year and I am not finding enough opportunity to add at the moment and that’s why as can be seen in above table, still 73% of the money is either in cash or Debt mutual fund. Equity mutual fund is my monthly SIP in Nifty 50 Index fund, Nifty next 50 index fund, Parag Parikh fund.

I would like this forum to keep building my portfolio over time.

And lastly thanks Valuepickr forum, @hitesh2710 sir, @pratyushmittal sir for Screener (the best ever tool), @ranvir (really like your thought process), @Worldlywiseinvestors (for all your content) , @basumallick, @zygo23554

2 Likes

Just a thought. Big bets are in safe nifty stocks, so why not index Or any good mf? Your PF will in any case move in tandem with index

Can you tell the process of buying in unlisted markets?
Please share your analysis of CSK and IPL industry. I am invested in LSG through RPSG Ventures.

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When you hold nifty stocks in individual capacity, you can hold them longer and sizing can be as per your wish and conviction. But in Nifty Index fund, index management committee , keep on adding new stocks and removing old stocks on the basis of momentum of that stocks, trading quantity etc. and weightage also can be depending on such trading criteria. Recently , I think they added PayTm, zomato and Nyka…which given a chance , I will never buy, as I consider these stocks inferior companies. hence I think, long term performance of Index Fund and Index stocks held in individual DMAT account can be very different. This is just my personal opinion…I have not studied any past data to support my personal opinion and hence I can be 100% wrong.
Disc… I hold Index funds as well as index stocks in private Dmat account

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My overall strategy is divided in 2 parts.

  1. keep investing in Index as big companies will get bigger with time and I invest through SIP route so that unlike direct investing, I will not wait for the correction and I keep on investing
  2. Direct investing as I described above

Now at the moment there is an overlap between 2 because I have recently started building the portfolio and at the moment there are better opportunities in large cap compared to Mid/Small cap, but that doesn’t mean that I won’t invest in them.

To get the sense at very high level, I used to look at the below table and as we can see Nifty50 under performed in FY2020 & 2021, hence I am focusing at the large cap.
Using this similar strategy I have invested in small cap mutual funds until mid of 2020 and booked all the profit by end of 2021 as that bet was for medium term.

Actually, I wasn’t actively looking to invest in unlisted space. My friend knew some broker and offered me to invest in CSK.
It was very simple decision for me at that time when available at 2.5K crore market cap, I have not done any in depth analysis on IPL but rational from me to keep invested in CSK :

  • I have seen the kind of fan following for FC in UK and in India it is just the beginning, with time their brand will become stronger
  • RPG bought Lucknow at 7K crore and expect it to reach around 10K in 3-4 years time
  • Recently CSK partners with ICICI bank for the credit card and in future they will leverage their brand through different routes
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Out of 17 years, Nifty 50 and Nifty Next 50 are ranked first 11 times…That is 65 %…so we can stay invested in these 2 indexes and still be 1st winner in 65% times…No need to take risk in small or midcap also

3 Likes

Hi,
I like following Saurabh Mukherjea but one thing that always bugs me is the valuation of the companies in his portfolio.
At one end we all have example of Infosys and Wipro after dot com bubble where due to high starting point in valuation the return for next decade was almost null, and at the other end we know companies like Asian paint and Visa which keep on growing and getting expensive over time.
We have an argument that starting valuation matters and the counter argument is that we rarely get good companies cheaper and valuation gap will always be there between high/low quality companies.
Honestly right now I want to focus more on my career and family and I have a long way to go so I can afford to be wrong on valuation side rather than quality side, I am more comfortable with firms grows slowly but consistently over time rather than fast movers on both side. Building position slowly helps my style of investing.
Coming back to valuation side, I believe that over long time price and pat growth percentage will be in sync. So by keeping that in mind and let’s say I want 15% return over next 5-7 years, can’t we just focus on expected EPS vs PE
Few examples on how I think

  1. LTTS : To get 15% over 5 year means stock roughly has to double in price.
    Current price : 3,122, Current EPS : 90.71
    Expected return 15% over 5 years
    FV : Future value(price) of stock should be more than: 6,279
    The boxes in green represents the scenarios which will give me this return.
    For example: Company needs to grow ~30% and PE should be more than 20 after 5 years or if company manage to grow at 15% then PE should be more than 35

Then I look at their historical performance to get the idea of growth


LTTS1

  1. Finolex Industries :


Finolex1

As I stated earlier it is very difficult for me to invest in cyclicals or to find turn around stories. I would like to invest in proven companies which are currently ignored in the market but at the same time just because of cheap valuation don’t want to get trapped by holding past winners. I don’t want to complicate things too much.
I usually look company using 3 parameters : Quality, Growth and Valuation
From valuation point of view , is this approach too simplistic do I need to consider few more things?
Would really like to know thoughts @hitesh2710 sir, @basumallick sir, @zygo23554

Note : Not invested in above companies and investment period of 5 years is for illustrative purpose, like to hold companies till I have conviction in it.