I am 21 Years Old and my goal is wealth creation, I recognize myself as a patient investor that can stick with fundamentally growing and sound companies for a long period of time.
Started my investment journey when i was in 11th grade through direct equity after researching stocks on my own with a capital of Rs. 1 Lakh given by my dad and doubled it within 1.3 years then started investing through SIPs in Parag Parikh Flexicap Fund, Tata Sensex Index Fund & Parag Parikh Conservative Hybrid Fund SIP were done from the stipend that I earned from my CA Articleship SIP my full Stipend.
Coming Back to direct equity side of my portfolio i have a capital of around 3.5 Lakhs that i built by myself through my own research in a period of 2.5 years Currently my portfolio consist of:
Allcargo terminal
Transformers & Rectifiers of India Lts
DSJ Keeplearning Ltd
Mindtree (Bought around 1000 Levels)
BCC Fuba India Ltd.
Vasa Denticity
Ugro Capital
Man Industries Ltd.
So I want you to share your insights regarding my portfolio and want to build this forum in such a way that young investors like me who are new to the markets can learn about stock selection, portfolio building and restructuring, How to Invest in the markets with small capital size & most importantly how to trust your research and take call on it.
I’ll be very honest here. If you really had the skills to 3.5x your portfolio in 3 years, starting in 11th grade, then you’re already far smarter than the average investor that you’re gonna find on this forum. So my advice will not be on how to invest, but more on what to do to maximize your wealth creation:
Increase your allocated capital: 3.5L, while an impressive figure, is still too small. The good news is, you’re very young, and I presume you haven’t entered the workforce yet. Get a decent job. Try every trick in the book for saving as much as you can from that job. Build cash reserves. In the immortal words of Charlie Munger “The first $100,000 is a bitch, but you gotta do it. I don’t care what you have to do – if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.” In short, get to 50-60L of capital and see the magic happen from there.
Understand that the stock market isn’t the only means towards wealth creation: I don’t know about your financial situation, so take this piece of advice with a grain of salt. Everyone in the markets is out to make money, and that’s perfectly fine. But only knowing capital allocation as a skill puts you at a significant disadvantage compared to technologists, entrepreneurs, scientists and even atheletes. I’ll give you an example: I was invested in MCX for a while when it had dropped down to 1600 levels and the Q1 FY23 concall was held. MCX, for the longest time was trying to move over to a new trading platform, after having demerged from 63 Moons (long history there, but you don’t need to know most of it). However, this shift was constantly delayed due to the platform not having completed the requisite software testing and auditing. On the concall, almost all of the capital allocators were from a financial background and were asking questions on how much work had been done on writing test-cases for the trading platform. Even the management (all financial folks, since the CTO had recently resigned), were quoting the numbers that their software vendor had probably given them (which was about 95% in their own words). To a capital allocator, a 95% test case completion sounds like “only 5% work is remaining and the platform shift should happen soon, perhaps before the next concall”. However, any decent software engineer knows that the last 5% of the test cases in any software production environment are usually the hardest (and humans, predictably, tend to cater to them at the very end, because everyone wants to do easy stuff first). I was able to pull out of the stock based on my intuition as a software engineer while I believe the market still kept the stock bouyant at 1550s till the next quarterly results. When the results came the following quarter and the shift had still not happened, the stock dropped to 1350-ish, at which I entered. The stock has now done very well, though I exited after making a 2x on it. In short, my training as a software engineer allowed me to see things that a lot of the seasoned financial people in the market were not able to see. You should try and learn these niche skills, and exploit them when the right opportunity comes to you.
Have a clear understanding of what you want from the market: If you’re looking to increase your capital to a few lakhs, you’re much better off just doing a job and saving money from it than looking at capital allocation. If you wish to make a few crores and then retire, do a job, save from it, and then intelligently invest in opportunities that present themselves to you. If you wish to make hundreds of crores, realistically, your best bet is doing all of the above and running your own business. In the end, there’s only three types of people that become ultra wealthy: Entrepreneurs (most numerous), Elite Capital Allocators (rare), and Virtuosos (extremely rare). A virtuoso would be someone who’s literally one-of-a-kind like Virat Kohli in cricket, Tom Cruise in acting or Jim Simons in mathematics.
So true I am planning exactly the same like after getting a decent job I am planning to save 70-75% of my income by living in a minimalist way and build a capital of 1 crore and then investing it religiously in markets and when opportunities come and also doing go in job so that the salary income can help me increase my allocated capital more.
Rn i am saving 100% of my CA articleship stipend and investing it religiously in MF’s.
The fact that you already started with direct equity, did a doubler in 1.3 years at total portfolio level and yet religiously investing full stipend in selected MF…shows me a lot about the current kind of investor that you probably are…
Risk averse & conservative to begin with and maybe even after the good begining with direct equity you still consider yourself a novice…all this is good news for long term IMO.
Just keep your discipline and keep doing what you have done and plan to do…time will make you learn all that you want.
Regarding your portfolio, if you want comments from this forum, you may have to write your rationale about each for others to comment.
Personally I track none of them except Mindtree which is niw LTIMindtree amd I am invested in it. IMO its one of better companies in midcap IT to hold…
The basic rational of investing in MFs is because that I want to pursue CFA charter exam and want to fund my further education on my self without the money taken from my parents and since all my current beta have a long term horizon of five years and my CFA Exams will commence from next year that why I am investing in MFs
Investing in (equity) MFs doesn’t at all guarantee that you’ll have the same amount available next year. Hope you are aware of it, but just wanted to point it out. If you need some amount next year, put the money in a arbitrage or debt fund.
Yes, I am aware of it so the funds are already invested in that manner major fund is parked in parag Parikh conservative fund and rest is in the equity oriented funds to give me capital protection
I am actually just a year older than you, also have given my CFA L2 I would advise you to actively read concalls and annual reports about companies you are curious about, best way to learn, I would say more than CFA actually being in the markets will teach you a lot.
I will be sharing my thesis about my take for MAN Industries Ltd. so that we can discuss and most importantly you can share your points of disagreement and insights because ig that’s how we learn and grow
Brief Introduction:
The Man Group was promoted by the Mansukhani family in the 1970. It is a diversified group with its flagship company Man Industries (India) Ltd incorporated in 1988. The Company is engaged into manufacturing of Line pipes, Core Carbon Steel LSAW & HSAW Pipes, API grade ERW Pipes, Seamless Stainless Pipes & Steel Bends & Connectors.
The Company has two facilities at Anjar, Gujarat & Pitampura, Madhya Pradesh totaling 10 MTPA per annum equally distributed between LSAW & HSAW Pipes and recently company has commissioned 1.25 Lakh Tons API grade ERW pipe manufacturing facility. The company has recently declared its foray into Seamless Stainless Steel Pipes manufacturing with capacity of 20,000 tons per annum.
Brief History:
The Company has a history of poor corporate governance due to promoter disputes regarding ownership/Title rights to shares & Acquisition of shares during closer of trading window. The company has two promoter groups mainly JCM group & RCM group. The Bombay High Court has given the statement in favor of the company and currently RCM Group heads the company.
My Rationale :
The Company is doing a Capex of around Rs. 170 Crores in setting up API Grade ERW pipe manufacturing facility, Rs. 800 Crore Capex for Seamless Stainless Pipes & DFT technology Pipes & Rs. 75 Crores Capex for Steel Benders & Connectors totaling to Rs. 1045 Crores. Whereas the entire capex in the last decade from FY12 to FY22 was Rs. 403 crores hence, the current capex program is 3x the capex done historically.
Our Take on the company earlier had internal family & promoter disputes but that doesn’t translates into lack of integrity secondly the company faced governance issues primarily related to procedural violation of security laws but, no money was siphoned out of the company.
The current promoter group is making serious efforts to rebuild the image of the company by engaging in quarterly concalls giving raw explanations regarding the historical disputes and timeline by which it will be solved
The Company’s has forayed into value added products that are high margin products which will help company to improve its EBITDA margins (%).
The Company’s traditional business of SAW pipe manufacturing is not a very attractive business & the industry suffers from over capacity plus the ROE for last 10 years has been 10% & MAN industries is also not a industry leader in it. They are however, expanding into high value growth products.
The company is available at a relatively cheap price (P/E ratio: 19.5, 6x PAT of FY24e) which offers good safety of margins to us.
The Natural gas pipeline sector in India is going through structural transformation and is facing strong industry tailwinds as India intends to increase the share of natural gas in energy mix to 20% from current 6% by year 2030.
The government also Target to increase the pipeline coverage by ~54% to 34,500 km by 2024-25 and to connect all the states with the trunk natural gas pipeline network by 2027.
Capex under City Gas Distribution Scheme, Nal se Jal Mission, Jal Jeevan Mission & National River Linking Scheme are further providing strong tailwinds to the sector & LSAW & HSAW pipes are widely used for water transportation.
The SBI lead consortium has supported Company’s expansion plans by granting them working capital & long term debts for their ERW plant they also conducted special audit on the company, they wouldn’t have granted the loan if they would have found siphoning of the fund it is to be noted that the current loan has been sanctioned to the company after the Forensic audit conducted by SEBI & transaction audit conducted by SBI led consortium.
MAN Historical Growth has been Poor:
MAN lost almost a decade due to internal promoter & family disputes
Over the last decade from FY12 to FY22 total cash generated from operations is Rs. 1562 Crores only Rs. 403 Crores were invested back into business.
The company lost the market share and order book to the competitor leading to lack of growth & expansion.
Expectations of the Management:
The Company aims to have sales of Rs. 5000 crores or more by FY 2025-26 & growth of 20% CAGR in revenue from now.
The company targets EBITDA margins in the range of 11-15%
The company has an order book of 13,000 crores as on this date and expects conversion rate of 20-25%
The company aims to expand revenue from ERW pipe, Seamless Steel Pipe Sale to Rs. 1700 Crores
Expects sale of Rs. 200 Crore from ERW pipe sale in the current year
The Stainless steel pipe plant will become operational from Q1FY24 & start full fledges production from Q2FY24.
Concerns for the company:
ERW pipes & Seamless Stainless Steel Pipes is a new sector for the company & does not have existing relationships with clients in this sector
The Company derives majority of its revenue from Oil & Gas industry and even today the capex of this industry is linked to oil prices and the sector goes through cyclical in nature.
The Company has contingent liabilities worth Rs. 406.33 Crores & Disputed Debtors worth Rs. 95.20 Crores however; the company has given guidance that the company will be able to recover the amount.
The promoter groups have dispute regarding right to receive dividends of Rs. 4.45 Crores however; the Bombay high court gave decision in favor of the company and the JCM group has further challenged it in Supreme Court of India.
*Not a SEBI registered Research analyst just sharing my views and its for learning indeed
