Sagar's portfolio

Q&A: Questions & Answers Portfolio Q&A
1
Company Weightage
Alembic Pharma 27
Ajanta 19
ARBL 18
Cera 14
Swaraj Engines 16
United Phosphorus 6



I first bought Alembic P. in Dec.,2012.At the same time I bought Eros for trading purpose.It turned out to be a bad call & I sold it at 20% loss(it is worse off now) I invested the proceeds in APL.I want to add some Supreme Industries,Greenply,Kajaria,Kaveri Seeds.
The rest of my cash :) is into mutual funds.The breakup stands at 2:1 b/w funds & stocks.As I gain more conviction,I will increase my positions in stocks.Its still early days.Isn't it?
Views invited.

2 Likes
2

Hi Sagar,

Had and still have similar breakup between Stocks and MF. The thing about MF is they can give u at best 5-10% better than index while in case of stock-picking you can better your chances as you dont have restrictions like fund manager.

The key is to identify reasonable opportunities at good prices and beating index will be a cake-walk (Still adequate diversification is required in stocks). Currently, re-aligning my persoanl equity portfolio towards stocks.

Happy Investing

3

Hi Sagar,

Good to see a very balanced approach at a very young age.

Liked your stock portfolio with some thought put in allocating higher amount for your high conviction ideas. Though there are some great investors in this forum with more than 15-20 stocks in their portfolio and making good returns, I found it appealing to reduce risks and gain more returns by allocating more in high conviction stories.

All the best and hope to see some young guns like you firing in the analysis and ground work part too.

Vinod M S

4

hi sagar,

great portfolio.

since u are very very young, try having around 40-50% portfolio of stocks in steady compounders like hdfc, hdfc bank, page, etc. Since time is on your side. Else u can get rid of the MF component and convert it into these compounders. It does not take too much thought to convert the MFs into these compounders as these will any day beat the MF returns.

regards

hitesh.

5

So elated to see seniors viewing & giving a thumbs up to the portfolio.I would also like suggestions on what I should call you guys: Vinod Sir & Hitesh Sir? Or Dr. Vinod & Dr. Hitesh? :wink: For the time being I am addressing you guys by your names so…gustakhi maaf

Vinod MS,

Regarding scuttlebutt,I would like to disclose that I live in Dehradun & there are not many stores of Valuepickr favs: kaveri seeds,astral poly in the main city.However,Kajaria,ARBL,Cera are very visible all around :slight_smile: I feel in order to establish a brand/‘moat’,its important not only to have good,appealing ad campaign but also a good distribution network(dealers & stores) As the company becomes bigger,their penetration in the city(ies) must also increase.So,I like Greenply.

Hitesh,

I have seen some of your ‘conviction ideas’.Ajanta,Kaveri,Greenply,etc.The good thing about Valuepickr is that one can’t make up recos(i.e.,one can’t take undue credit!) It’s all present on the reco date with CMP,Mcap,etc at that time.Great picks,all of them.I would’ve said the same even if the prices had not appreciated so much,but the gains do dilute the appreciation I have for your ideas.

Thanks for the recos.I really like Emami(more than ITC,HUL,etc) as a steady compounder.But in all such cases,the price assumes prime importance.I never felt that the ‘price is right’ in Page,Eicher,HDFC Bk,though IndusInd looked great at 390 & Emami at 580(in the last meltdown of sorts)

As regards MFs,my strategy is to exit a part of my units when I want to buy a stock.If Supreme comes at <315,Page around 3500,Mayur around 400,La Opala around 300,etc. I will be disinvesting :wink: a MF.That would automatically reduce my MF exposure & increase exposure to stocks.

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sagar,

addressing me as just hitesh is fine.

regarding MFs I feel its a mug’s game if u know even a little bit about investing.

Why pay for the MF managers when u can beat them any day of the year.

hitesh.

7

Sagar,

I am no where near the “Sir” league in terms of age and experience, so avoid that.

I agree with Hit Bhai that you should get out of the MFs and am pretty sure you will do that sooner than later :slight_smile:

Cheers

Vinod

8

Ok.So no formalities.
I think Vin bhai & Hit bhai is cool :).I invite your views on Emami & my earlier post.I really feel Emami is an underrated FMCG company,i.e.,its talked about very little.Very good growth,brands(Navratna,Boro Plus,Fair & Handsome),diversified products.Actually Navratna alone is a 100 cr. brand.The other such stock would be Persistent Systems,a mid cap IT company which to me, is a play on Cloud computing.I mean the potential it has in the coming 5 years & more.

9

sagar,

if you wait forstocks to correct, then your MF also would have corrected. so not much advantage for switching. i was in same boat, i started switching my MF to Equity around 9 months back and i have seen MF has corrected more than quality stocks like page, indus, mayur, kaveri etc.

so dont wait for switch. it hardly matters

btw, i used to hold the best of best MF like sbi emerging biz, idfc prem equity, icici disc, relaince oppo etc.

looking back, my equity PF has beaten what my MF PF would have given

10

bala,
Thanks for your views.And it’s kind of you to help me not repeat the same mistake you made.Yes,the idea is to switch to stocks completely.The problem is that I still don’t earn enough of my own money(3-4k a month thru tuitions) So I can’t take as much risk as I would have taken otherwise…it took some convincing to get to even this much equity holding.But since my performance has been decent I am allowed to withdraw a bit more.In the coming years & if possible,months,I shall surely move to stocks.
Thanks again.

11

sagar,

regarding emami, I also feel its a good company but never studied it seriously.

They are very good at launching products which are totally new in their category or plug a gap in product range. e.g they introduced the concept of men’s whitening cream. (I am told there is no such product in US also— maybe bcos Indian men are more vain)

Dermicool also fits in same category.

So I think we need to get down to financials of emami and dig deeper.

About alembic pharma which is your top holding, one matter of concern is that their top brand AZITHRAL has now come in dpco and its price will have to go down to around 55-60 per strip of 3 tabs as compared to current 90-95 levels. This I know bcos their MR recently visited me and was talking about it. Not much idea about how their other products are affected by the new pharma policy.

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Hit bhai ;),
Thanks for that piece of info.APL recently launched the generic equivalent of Pfizer’s Pristiq: Desvenlafaxine,which is being marketed by Ranbaxy.The product is an exclusive one & its market,i.e.,the anti-depresaant market,stands at 2500 cr.The current quarter will show the results(good/bad) In a recent interview,Mr. Baheti(CFO,APL) said that Ranbaxy remains loyal to their product.
The DPCO will cost APL 3-4% of their current EBITDA.So,the management is aware of that.I am pretty sure that the growth will still be good.Also,the drug pipeline seems good,they have filed for a decent no.(I don’t exactly remember the correct qty.) of ANDAs.I read in BS that around 4% of APL’s total sales was spent as R&D,among the highest in the country.This again is a positive.Since most of the major Pharma cos trade at 20+ P/Es(including Ajanta),I find comfort in APL’s 17 odd P/E.They are also looking to reduce their debt.So,I am comfortable here.Remains a high conviction bet.
Hope I clarified your doubts :slight_smile:

13

Hit bhai,
When I had posted my portfolio,I remember you had suggested that I park 40-50% of my money into steady compunders coz age is on my side.But even after today’s meltdown,only HDFC BK has corrected meaningfully.CMP: 636.Its 200 DMA stands at 627.Its 3 month low is 602.So should I wait for that price? Or go for it now? Supreme too has corrected from 375 to 330(from what I have seen,it doesn’t fall even this much) & I am considering buying it too.
Now,my basic expectation from my portfolio is a 20-25% annualised return.The problem is that the going has been pretty good so far,so I have an urge to stick to mid-,small- caps coz I feel even Cera,APL,ARBL can give steady compunding(and more).There is also a valuation comfort compared to largecaps.The only other question is about corporate governance,which I feel is in place with these 3 atleast.
Your views.Others senior members are also invited.

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Company Weightage
Alembic Pharma 24.6%
Cera 19%
Ajanta Pharma 17%
Swaraj Engines 14.5%
Avanti Feeds 11.2%
ARBL 9%
UPhos 4.7%



The above table shows my intended weightage(not taking into account the gains or losses in the 7 stocks)
Added Avanti F. since I feel that all negatives are factored in at CMP.High dividend yield is a bonus.
Have high conviction in Cera's growth so increased allocation.
Looking at buying Greenply,Bajaj Corp,Kaveri Seeds,ARBL.

15

Hi Sagar

You have increased allocation to Cera. Can you explain more about its growth prospects.?

Have cera in the portfolio.Intend to allocate more. Waiting for some more correction.

Regards

mallikarjun

16

Malikarjun,
Cera has been so intensively discussed on ValuePickr by various boarders, that little remains to be said.Still,here are the facts I like the most about Cera:

  1. Good brand value.A conscious effort by the management to make it bigger
  2. Huge scope for sanitation industry.Even the replacement sales will pick up after a few years.
  3. The high quality of products & product range shall keep it well against competition
  4. Ripe for re-rating

Even without re-rating,Cera is a good long-term investment.Since its a smallcap,I will check into it from time to time.
Cheers.

1 Like
17

Hi Sagar

Thanku. Senior value pickers don’t hold Cera in their portfolio. Hence was trying to find the reasons behind it.

Regards

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Seniors are much more smarter than me.They will come to Cera only when they feel it would give a quick 25-30% return.Most of them have Kaveri Seeds for the same reason.

19

Dear Sagar,

Cera is a very good company to hold for long term.

But short term we need to monitor the margin trend as it is less likely that company can achieve 25% EPS growth considering the Q1 margins.Market predicting a 25 % EPS growth and CMP factoring this.Any disappointment in this front can give short term corrections and may give good entry points.So my prudent advice is to acumulate slowly…am a novice in equities,this is just a personnel openion.

Disclosure : Invested in Cera from 415 levels (10% portfolio)

regards,

Shanid V H

20

Shanid,

Appreciate your concern.
Q1 has been traditionally weak for Cera(as compared to other quarters) This time,however,the topline still grew by 40% which is very good considering all macro factors.Coming quarters should play catch-up on the PAT side.
Expect a Rs.45 EPS for the year.