Sahil's Portfolio

sure. i am benchmarking a product with minimal capital. I dont see what the problem is. If you are following the thread, you probably know i am not doing this smallcase for generating alpha for the PF, only as a benchmark. I have minimal capital invested in this smallcase.

my intention of asking the question is how the price movement impact your buying decision ? aint questioning your thesis.

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it doesnt you place a market order and buy it asap, as simple as that.

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Im surprised by the # of questions on smallcase on this thread. I dont know why people assume i am an expert on smallcase and ask about all the corner cases and how X and Y and Z work :smiley:
I do my best to try and give an answer but frankly these are only guesstimates because i havent been a smallcase user for very long either.


Sorry to hijack @sahil_vi, just adding my thoughts

I have invested 5% of my corpus in Abhishek’s quant fund. Joined last November with the intention of creating some alpha (I’m not good at it) and trying a quant model (as an engineer got obsessed when read about it).

But Folks should understand that this year market is in the uptrend, so quant performance is excellent above expectation. We need to watch how it performs during a downtrend and sideway market. Abhishek’s recommendation is not to invest a significant part of the portfolio in this and to go slow as the risk is high.

In my personal opinion, if your portfolio size is good enough, diversifying a negligible portion to such high-risk bets makes sense if you are not good at technicals and momentum investing. If your overall corpus is small, it doesn’t make sense as you need to pay subscription charges and take high risk.



Someone had done calculations for laurus FY23 earnings based P/E of 14 and was asking whether it is cheap or not. I wanted to share my thoughts on valuations. Copy pasting my answer here to ensure my thoughts on valuations are documented on my pf thread. I could also link, but my suspicion is my laurus post might get deleted since it is technically unrelated to laurus :smiley:.

Valuations lie in the eyes of the beholder and are the most difficult part of any investment thesis for me personally. I have seen so many amazing businesses but given them a skip (prince pipes) or decided to
sell out (poly medicure) because the valuations seemed stretched/not enough margin of safety. Everyone has a different way to value a company. There is no single “valuation” to speak of. Each investor must make their own decision on what is cheap, what is expensive. I can give you some guidance on how I think though note that this is not investment advice.

I personally think valuations are completely driven by (narratives around growth & unit economics) and and opportunity cost. If the collective market thinks a company will grow topline at 10-12% for 10-20 years with high and stable or improving unit economics and with some operating leverage higher bottomline growth, then valuations would remain elevated. P/E of 100 is elevated. P/E of 50 is also elevated (to most investors). Why I add opportunity cost is that some growth hungry investors (count me in this bucket) would decide to sell off their 12-15% Asian paints compounder and rather go after economy facing stocks like X,Y,Z. As long as the narrative around growth and unit economics remains, valuations would remain elevated as price discounts decades of growing stable profits.

So we must ask ourselves about laurus labs. Are laurus earnings as predictable as some of the other companies? Does market believe so? I would say no. Thus, since you are looking at FY23 earnings whether 14 P/E is expensive or cheap would depend on Laurus’s growth prospects and unit economics in FY23 and beyond. Now investor can do their own homework (by reading this VP thread, and other laurus labs material like the collaborators laurus thread: Laurus Labs: A much bigger journey ahead?) and try and understand what laurus labs would look like in FY23 and beyond. What would the growth prospects be? What would the unit economics be? Are both trending down or trending up. How stable or sustainable are they versus lumpy or one-off. Are there going to be far superior opportunities to Pharma/Laurus in FY23 which cause opportunistic investors to jump ship depressing valuations. Answers to these questions and experience based on studying evolution of valuations of multiple companies over market cycles can help an investor answer whether a P/E of 14 based on FY23 profits is cheap, or not.

The next question becomes how do we figure out these numbers. How do I figure out what growth beyond FY23 and unit economics beyond FY23 look like. Well, this is why valuation can only be done after developing a deep understanding of the business. And since a business is like a movie, we need to keep repeating this exercise every few months/years. Some places to start doing so for laurus would be sajal sir’s biotech seminar to understand the industry structure, growth prospects. In this BQ interview Dr chava gives some soft guidance on what richcore/laurus bio could look like in K years.

In short we have to consume all publically available direct evidence/sources (interviews, concalls, ARs) as well as read industry reports and understand broader trends to figure out the quantum of the growth we can expect. Also, we can track product mix change from same management commentary to understand the way unit economics and margins are headed.

There is another interesting aspect to valuations. One does not need a weighing scale to tell whether someone is fat or not. Similarly we do not need exact estimates of FY23 beyond growth and product mix changes to tell whether a P/E of 14 is expensive or cheap. We only need to evaluate whether there are enough growth and unit economics triggers to sustain or improve current valuations. Then, as a corollary, P/E of 14 on FY23 earnings would be cheap. :slight_smile:

PS: Since valuation is an art, all of these are just my opinions. I could be entirely wrong about everything


I wanted to announce a change that I would be making in the way i calculate total PF returns. let me demonstrate what I was doing and why it is problematic.

If i have 1 lakh rupees deployed into 10 stocks (10k each). Suppose PF doubles to 2 lakh rupees with each stock doubling (20k in 10 stocks each). PF returns are 100%. Now, if i sell half the stocks and redeploy into 5 other stocks, i was counting total capital deployed as 50k (for 5 stocks not sold) + 1 lakh (20k each for each of the new 5 stocks bought). PF returns would become 1 lakh / 1.5 lakh = 66% despite only a switch between stocks. This was happening because the profits I made (which is not external capital deployed) was being counted as external capital deployed. External capital is my salary which i deploy into the stock market. This change becomes necessary as PF gets churned as i find better investment opportunities.

With this 1 change, the Total returns become 79% for the data shared in may beginning. This is because the base reduces. Redeployed profits do not count as capital deployed.


That’s why I use XIRR for tracking returns as it won’t include realised profits that got re-deployed and simply track the cash flows between bank and PF. In addition, it brings the duration of investment into formulae so a 2 bagger in 10 years is different from a 2 bagger in 2 years.

As you want to calc returns separately for different categories you have in your PF it won’t work for you as we discussed earlier in chat.

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Yes exactly. Frankly I get it. Standardization enables comparison and people want to compare. But that is definitely not what I am going after. I am simply waiting zerodha to build an internal xirr tracker/calculator. It’s too much effort to do it manually for me. And all the data is still there so I can always revisit the decision later on. Intuitively xirr will be higher than total returns as I calculate it because even on a higher cash inflow base the return is 70% so xirr would be higher. Another factor is that PF size has growth dramatically. Lot of capital was deployed in CY 2021. But I am not interested in xirr yet because that is not what I take out as an investor. As an investor, I put in X I take out Y. It makes sense to track X and Y. Y must grow exponentially with X. Those are the only things worth tracking imo.


Zerodha will never build that. It can expose the poor performance of their traders who can quit trading.

You can download transaction report of all trades from console. Upload it in Dashboard - My Investment | Portfolio Manager | Value Research (

It will show a beautiful graph of your progress and all xirr returns from different periods.


Hi sahil,

A few days back you were researching on route mobile. Why did you not invest in it.

was it bcoz of low margin business and low differentiation(or twilio’s entry)? if that is the case, I want to ask if you researched on their new acquisition of phonon? also, what i fail to understand is IT firms like mphasis, coforge etc have very little differentiation between the skills they offer to the client, yet they have seen earnings expansion for 3-4 yrs (that too in double digit) My question is ‘Is differentiation in business necessary for IT firms’? and if you could share what discouraged you to invest in route

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have posted my views in route thread already, dont have much to add. It is slightly commoditized services company trading at high valuations.

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A few changes to the PF:

Instrument Avg. cost LTP Net chg. % Allocation % PF
IDFCFIRSTB 36.42 60.4 65.84 0.122 0.133
RACLGEAR 127.58 325 154.74 0.07 0.117
VAIBHAVGBL 536.16 813.25 51.68 0.095 0.095
NEULANDLAB 1370.23 2039.2 48.82 0.093 0.091
SAREGAMA 1748.32 1980.05 56.57 0.084 0.086
MASTEK 1264.62 2448.7 40.06 0.093 0.086
LAURUSLABS 323.63 572 76.75 0.062 0.072
SEQUENT 192.76 278 44.22 0.064 0.061
AXTEL 238.94 927.7 42.93 0.052 0.049
ANGELBRKG 649.05 315 31.83 0.055 0.047
DYNPRO 326.46 504.55 54.55 0.045 0.046
GRWRHITECH 834.94 880 5.4 0.055 0.038
SASTASUNDR 196.36 233.25 18.78 0.041 0.032
PIXTRANS 454.29 443 -2.49 0.046 0.029
KILPEST 410.11 442.4 7.87 0.015 0.011

Summarizing the changes and some observations here:

  1. A few pf churn: arman out, ncc out, pokarna out pix, garware poly, sastasundar, kilpest inside. Reasons in next few points:
  2. Arman will have an undefined period of pain with covid 2nd wave, more potential waves. The other thing is i am uncertain whether MFI industry can hit the kind of valuations it used to have. Even commentary from MFI players is that days of 0% NPA are over (even in steady state). If profits get wiped out once in 3-4 years, real ROEs go down by that much which makes it difficult for any rerating to take place. I still expect arman to compound beautifully in long term, but to reduce pf risk and to keep bfsi allocations in check, sold out of armaan. Sold it despite future return expectations being high.
  3. NCC: easiest one i decided to sell. Cyclical. Difficult to have any revenue visibility. Can expect a pop in valuations and also some growth of revenues; but due to cyclicality and inability of management to do anything about that cyclicality this was one of easiest one to sell. It also showed low future returns as per my return expectations.
  4. Pokarna: Similar to NCC, revenue visibility was poor, definitely some pop in valuations and growth was expected (housing demand picking up in USA) but could not see how long it can last. Whether this is pent up demand or not. Becomes difficult to sell out of such stocks. Was also one of lowest expected return stocks and hence easy to sell.
  5. Pix: have written extensively about it in pix thread. Secular capex cycle expected in india as well as globally. Much better unit economics than even global leader, trading at discount to global leader, gaining market share in exports. Very anti-cyclical industry with demand for replacement belts always there even during downturns (can be seen in pix revenues in last few years). A unique case of smallcap dominance. Improving cash flows. 5000 SKUs. Industry tailwinds is a key element of investment thesis.
  6. Garware hi tech films: Clearly misunderstood co with co being clubbed together with commoditized players. Dominant position in many sub-verticals like shrink films, indian market. Expanding marketshare in US and export market. Part of value-added in topline expanding and with it, the margins. Clear revenue visibility for 2 years at least. R&D focussed co. Another example of smallcap dominance.
  7. Kilpest: Another misunderstood co. People are thinking this is a covid play. And covid has helped this co. But their biotech R&D strength and obsession with quality goes way beyond that. Have written extensively in Kilpest thread. Their tests are better than even some american competitors. First USFDA approved Indian covid RTPCR test. One among only 5 RTPCR tests which can test saliva. Shows the biotech R&D capabilities of the Co. Huge opportunity size (7000cr and growing indian market, 21B$ global market). Lots of optionalities: 120cr cash due to covid tests, exports to US, UK. Possibility of rerating after co’s amalgamation scheme. Similar korean co growing topline at 15% is valued at 20-25 earnings. This one as per my estimate is at 10-12x non-covid earnings. Efficient market hypothesis working well? Go figure.
  8. Now coming to riskiest investment. Sastasundar. Definitely high probability of going bust thanks to hypercompetition with Amazon, blah blah. Key investment thesis is that SS is profitable (or close to it). Will grow at 40% topline every year. With wright’s law, profitability will follow soon. Deeply undervalued. Potential for 3x rerating and then acquisition by larger player. If they can raise money, then potential for even higher growth, delayed profitability but higher chances of emerging as top K winners in the sector. MoH e-pharmacy rules when implemented would be a huge tailwind (competitors cannot do the kind of crazy advertising they’re doing right now). Their key competitive advantage is the brand and higher ability of medicine and customer relationship they are able to establish by ensuring some physical presence (online only model is completely a commodity).
  9. Moderator asked me to not post total returns so i will not do that. Anyone that wants to compare returns of individual PF stocks can do so by comparing with previous post. Suffice it to say that PF returns have been quite satisfactory. PF size has also grown by 12% as i deployed capital into new positions and scaled up the top investments like Vaibhav, neuland, saregama, idfc first bank.
  10. Only major increase in allocations is saregama: when i listened to the concall i realized what a wonderful business this is. And how long and secular the growth runway is for them. Each and every business vertical is total money minting machine just that 2 are not yet firing and dented due to covid. But management commentary is quite bullish for all segments. Some people consider carvaan to be capital misallocation. 2 things are good for saregama: only profits generated from carvaan would be plowed back into it. Streaming profits go back into streaming. So, simply by the virtue of higher more profitable growth in streaming it becomes larger part of pie. Unless: carvaan can improve its unit economics with podcasts. Heads i win. Tails i dont lose much (or, eventually I win). Also their music catalog seems far higher quality than all incumbents (specially tips) except T-Series which is not listed. The growth in revenue with paid subscription will surprise everyone on the upside. Also imo it is very difficult to disrupt this incumbent. It won’t be profitable for Spotify or anyone to directly make music unless they can command 20-25% market share. This industry is fragmented and likely to get more fragmented with time unless someone can create differentiation.
  11. Lot of people use top down thinking to see why investments dont make sense “if tatas or reliance enter how will they compete? Are durable client relationships established over X years and process expertise developed over many decades their only competitive advantage?” Well, of course. You can dismiss any company on earth by saying “what if amazon starts doing it” but unfortunately reality is seldom top down, reality is seldom so simple or black and white. Tatas and reliance are present in many industries. They are not monopolies in most of them. There is enough room for many of them to succeed. “What if HDFC bank starts giving loans to IDFCF’s customers” They could have, all these years. They didnt. “What if Indigo paints distributors are poached by asian paints”. Indigo paints grew despite asian paints. There is a need for us to stop idolizing the industry leaders, understand the extent of their moat and seriously consider the small guy. You obviously cannot get a 300cr mcap company with HUL’s or Asian paints’ brand or distribution dominance. You can only look for certain patterns of success, make enough high quality bets, build a high quality PF and then hope that you can catch a large successful company in it’s infancy.
  12. Interesting anecdote: Something very interesting happened in angel broking. I bought my quantity at 550 rs average. It got short delivered. I ended up getting 800 rs for each stock, while MP was 650. Bought again at 650 and it is at 930 now. This implies almost 100% gains in a short span, thanks to the sharp run up and some dumb luck.

Disc: Invested in all these companies, this is not buy or sell reco. Do your own due diligence before investing. Please dont tag me and ask me what i think about results. Invest based on your own conviction. I will add my thoughts here on PF thread after all my PF companies results come.


I am eyeing Mastek :slight_smile: Wonderful business, their acquisition of cloud services company is paying results. Their significant presence in UK healthcare and govt contracts should give some tailwinds to the business. UK’s health service is getting a massive budget to transform its tech and move to cloud. Mastek is the lead candidate in servicing that.

Curious if you have posted your notes on it before?

I haven’t actually. this is a very well researched company i didnt have much to add. You’d also find that i havent added much for racl: same case, very well researched.

Yes, you’re right. Mastek is in a very high growth areas of ERP cloud migration, digitization (extreme tailwinds in western economies), good capital allocation, looking to diversify in a larger way into US market. Order book growing by 40%. two key monitorables for me are:

  1. who will the new CEO be :slight_smile:
  2. How will they deploy all this cash? Asset light business so dont need too much capex. All this cash generated they will try to acquire. Need to evaluate the strategic intent of the acquisition. Would be prove to be a nice 1+1=11 type bolt on acquisition? We hope it turns out like evosys not like previous acquisitions.

Hi @sahil_vi, might seem like a naive qustion but I’m going to ask anyway:

Did you mean the number of songs in the music catalogue when you say quality?
Saregama music licensing revenue is about 3x that of Tips, but they have 4x the number of songs. So my understanding was that Tips revenue per song is higher than Saregama - meaning average streaming of a Tips song is 33% higher than a Saregama song. Is this correct or am I missing something?

Here are top reasons i prefer SRGM over tips. 1st one answers your question

  1. No, i mean the quality. As per scuttlebutt done by some private investors there is concentration in tips catalog. There is a large contribution by head and smaller concentration of the tail. Just like few biz have client concentration risk, tips library has singer/artist concentration risk. In comparison, SRGM catalog is much more diverse, much more spread out over artists and also eras. This makes it more robust to demand trends. As a poor proxy, consider cumulative views of top 10 songs by views. This is 18% for tips. This is 13% for saregama. The actual metric: singer concentration would take tremendous amount of hard work to verify.
  2. Saregama is trying to play up retro coz that is their game. But tips being having more fresh catalog of course get higher streams per song and thus higher revenue per song. However, interesting thing here is the incremental share of pie which each co will take on. For saregama this is 25% of all songs released. For tips, this cannot be that large. Large Incremental share of market is going to come to saregama.
  3. Frankly I dont find much of what tips management says very trustworthy. They take about payback period of 1 year. This means that whoever is selling their song, is selling it for same amount as the amount of profit it takes in a year for tips. Why would anyone do that? It doesnt make any sense. Management also talks about music streaming industry growing 30-40%. Music streaming industry releases data and the growth rate is not 40% for sure.
  4. I know right now everyone is going gaga over music streaming (that includes me), but i like betting on managements who are looking to get ahead of the curve and experimenting with new sources of revenue. I find that in SRGM: carvaan and yodlee are both experiments. Yodlee definitely successful, carvaan: it remains to be seen. A big intangible people are discounting is the analytics they can do over the catalog using carvaan. They are able to get a distribution of song listens wrt any underlying variable, age of song, singer, geographical region (in carvaan 2.0, my guess is) and analyze where the gaps in their library are. Other music labels ability to do this is restricted. Other intangibles are there too. When the young people listen to old people listening to songs on carvaan it serves to enable SRGM to capture the young person’s mindspace.
  5. Tips music streaming gets 40-50% of their revenues from non-digital means (TV, live music concerts). Their revenue streams are less anti-fragile against covid like disruptions which we can see in 9MFY21 degrowth in revenues.

Hi Sahil,
I wanted to know how comfortable are you with RACLGEAR now forming 11.7% of your portfolio. Till what point would you be comfortable? Just wanted to know your conviction and timeframe towards this company.
PS: Thank you for sharing invaluable knowledge and insights across various threads. Incredibly helpful and gives direction and perspective to a new investor like myself.


Infinite. I don’t believe in cutting my flowers and watering my weeds. Only criteria to exit is poor business performance outlook or extreme overvaluation relative to business outlook or opportunity cost (better business available).

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I am closely watching performance of arman at ground level , i dont find any difficulties at considerable level ,
They have created 7.2% buffer which is highest in industry and If you check at customer level they dont have any issue because of COVID second wave.
But being conservative they have provided full year profit,
They will come up with great set of numbers next year , Majority of armans customers are cattle owners who have 2 or 3 cows or buffalos this people can easily survived by selling thier milk to nearest BMC unit. Which was essential goods and milk supply was uninturupted during whole pendemic.

Disc. Could be cometly biased because of My top holding

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