Dear all,
Firstly wishing you all a happy new year! As part of my New Year resolution I have decided to document my thoughts and process for investing into shares in India.
Background: During this pandemic with the lockdown, I found time to reignite my interest in investments. Since 2018, I’ve started my investing journey via mutual funds. But now I felt was a good time to start looking into equity investments. I went no further than ValuePickr to start off (had heard of it in 2011). Of course along with the classic reads. So far I’m done with the intelligent investor, one up on street and next is 5 rules for successful stock investing.
Being located in Germany, I was also lucky to have found the VP in Europe post (initiated by @rajanprabu and @harsh.beria93). After long struggle with banks during the pandemic, I finally have a Demat and trading account and now looking forward to turn theory and discussions into practice!
Current capital allocation:
Low risk (Cash and Gold): 35%
Medium risk (Mutual funds, mainly equity and some debt): 45%
High risk (Direct equities, India and ESOP in Germany): 20%
Target: low – 20%, medium – 35%, high – 45%. Here mainly looking to increase my holdings in Indian Equities.
As mentioned above I want to track my investing ideas, current investments and progress in Indian Equity Markets via this post. I really look forward to receiving your feedback!
Idea:
Buy 10-15 quality business with a long term view (3, 5, 10 year view depending on business). Not think about valuation too much as I am still very new (will develop this skill slowly)! Review holdings and ideas on quarterly basis (listen to calls, read annual reports and follow developments). Expectation is 12-15% CAGR. I understand 2021 could be a tricky year!
Current holding (started in November 2020):
ITC: 100% - mainly a “safe” buy as per discussions with few people. My personal conviction: a company with great know-how of running a business. Growing revenues and profit % in FMCG business. Cigarettes won’t go away anytime soon but FMCG (with great brands and market share) will expand. It is currently available at low PE and they pay good dividends too.
Tracking and looking to invest in the coming weeks:
Banking:
HDFC Bank: top private bank, good management, long way to go in Indian banking expansion
Kotak Mahindra Bank: good management and looking to expand business
NBFC:
Bajaj Finance: top NBFC today, good history and great prospects for the future. As an NRI, only NBFC where I found an FD option.
Finance + Housing:
HDFC: great company with wonderful holding companies (bank, amc and life. May be securities will get listed too?)
HDFC AMC: 2nd largest market share in an ever expanding industry. Long term growth expected as Indians invest more money into MFs. I myself hold few of their funds.
Nippon AMC: top 5 amongst the AMCs in India. Nippon is an international giant in Insurance and MF. Only other AMC listed today. Do not hold their MFs.
Personally feel Mirae Asset and Axis are solid companies. I will probably invest if they get listed.
IT:
Infosys: success of Indian IT industry, digitalization and Industry 4.0/IoT focus in the future.
TCS: same as Infosys.
I will look to zero in on more details and differences between the two. Appreciate any pointers.
Auto ancillaries:
Suprajit Engineering: highly competent management with good succession possibilities. Worth proven in cables and now expanding into lights. They have made international acquisitions as well. With a good relationship established with major 2/4 wheeler OEMs, entry with other products will be easier.
Pharma:
Firstly don’t understand the industry too well. Currently unsure, mainly because of the recent hoohaah! Everything seems hunky dory currently, hence do not want to get sucked into something which I might regret later. Will research and speak to more people in the coming days. Only buy if fully convinced.
Chemicals:
Vinati Organics: good management with strong technical know-how. Backward and horizontal integration of products. Recently expanded capacities. No threat from China instead supplies to China.
Pidilite: strong fundamental company. Very competent current MD (Mr. Bharat Puri). Great network in India. Will only grow further as Indians look to upgrade/renovate their homes. Currently expanding capacities.
FMCG:
ITC: 100%, one and only holding. Rationale mentioned above.
HUL: great company with amazing products. Expected to grow further. But even as an amateur I see it is extremely highly valued.
Nestle: same as HUL. Appreciate any pointers.
Telecom:
Firstly don’t understand the industry too well. Unsure between Bharti Airtel and Vodafone Idea. After not a great run in the last few years, should be a rise out of the ashes sort of story (maybe). Will research and speak to more people in the coming days. Only buy if fully convinced. Any pointers appreciated.
Insurance:
HDFC Life: insurance industry has a great potential in India. Very low market penetration. HDFC along with its good reach via Bank can sell this well.
LIC listing could also be very interesting next year.
Some of the pointers and conviction reasons might come across as immature currently, but I look forward to grow along with this thread, your comments and fruitful discussions!
Wishing you all a healthy wealth and wise 2021! 
Best regards,
Sameer
Posting after April 2021, close to 2 years. And what a period it has been. No kidding when they say you need to pay tuition to the markets in the initial years. Be it loss of capital or opportunity, you do pay in some way, only to (hopefully) benefit in the future.