Santosh's Portfolio

  1. Affle India (Mobile advertising company with consistent performance over QOQ and YOY)> expected to provide 40% CAGR. Currently, trading at expensive valuations. Good management with a lot of experience in the software industry.
  2. Birlasoft (Provides software solution for vehicles). Reliable promoters.
  3. Saksoft (undervalued software company, consistent improvement in revenues.)
  4. Sonata Software (strong fundamentals and good management, good dividend returns)
  5. Deepak Nitrite (Good fundamentals, market leaders in most of the business verticals, classic management)
  6. Bajaj Healthcare (microcap healthcare company with moderate valuations and reliable promoters).
  7. Dr. Lal Path Labs (healthcare company with expensive valuations, good management, and coffee can portfolio company)
  8. Prince Pipes and fittings ( PVC pipes manufacturing company with moderate valuations). Competes very well with industry leaders in sales of the products and holds 5% of market share and has an equal number of products and production capacity as industry leaders. Plenty of space is present for the expansion in the industry through 35% of unorganized players.
  9. KEC international (infrastructure company with strong fundamentals)
  10. Hindustan Foods (contract manufacturing company with expensive valuations)
  11. Tata Consumer Products (FMCG, tea and coffee products)
  12. HDFC Life insurance (life insurance mega-cap company and expensive valuations)

I hold all the stocks with equal weightage. Any advice on how I can improve my portfolio for long-term investment can be appreciated.

Companies you have chosen are good except I am not sure about Bajaj Healthcare, Saksoft, Prince Pipes as not checked those in detail

And It’s strange your portfolio contains none of below sectors which are running high on drugs at the moment

  • Pharma
  • NBFC or a bank or a AM company
  • no retail as well (DMart, Reliance) which are B2C

Good selection of companies but i am not sure about Prince pipes & Bajaj healthcare. Do think about Pharma, one more Chemical company and of course retail cannot be ignored.

Any specific reason behind only going for Prince Pipes and Bajaj Health Care over their respective peers?

I think it’s KPIT Technologies that is into Automotive Engineering solutions and Birlasoft is into “Digital Technologies” Please Check.

Prince pipes is currently trading at lower PE when compared with the industry leaders Astral Poly technik and Supreme industries. Prince pipes production and operational capacity are same as Industrial Leaders. Prince pipes has a wide variety of products suitable for housing, sewage, and agriculture purpose and focus only on PVC pipes. Prince pipes has seven operational plants that are spread across the country and it focuses on capex.

Market share of the industries in the PVC pipes segment

  1. Astral Pipes - 35%, PE: 81
  2. Finolex industries - 20%, PE: 20.9
  3. Supreme Industries - 10%, PE: 42
  4. Prince Pipes - 5%, PE: 27
  5. Unorganized players - 30%

Market consolidation: There is consolidation present in the market even before the covid-19. This should affect all the unorganized players in terms of balance sheets, servicing of their loans, and working capital. Post covid the consolidation is going to accelerated and can result in a vacuum in the market through knockdown of the unorganized players and this gap can be filled by the big players.

Disadvantages: negative cash flows when compared with peers.

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I think Birlasoft is present in following verticals: automotive, banking, health care and energy. However, KPIT focuses completely on automotive software solutions.