ValuePickr Forum

Southern_Cross's Portfolio

Hi Dhiraj,

Here are my answers.

  1. Agree. Like I mentioned in my original post, I would like to see it to 15 companies eventually and some tracking list. Among my coffee can list, Repco Housing Finance which is at the moment is decreased by 70% and so it did not even feature in the top 25 list & LIC Housing Finance is down by 50%. Abbott India gave well over 150% returns. The lesson I learnt is - the housing finance sector which was widely considered to be no risk play when faced with headwinds can go down drastically, especially when it is small cap. To move to a concentrated portfolio, I need to understand the business, have some margin of safety and build strong conviction. I am currently working on this… .

  2. Agree with respect to weightage and would like to consider decreasing it further. Actually, I want to have my Top 10 stocks to be sure that the chance of losing money in these to be very less. This is the reason why BSE ended with 9% weightage. Now why BSE is given this weightage - I have good margin of safety. and so my conviction is high. I completely agree with you on hike of management charges considering their performance so far.

Here is my analysis of BSE.

I think I have become biased in BSE and have to learn to think more objectively.

These are some other things I thought about BSE.

  • When NSE gets listed, people would definitely have to trade in BSE and this way it can help people to get accustomed to trade in BSE and some market share also increases in equity- NSE is valued between 40K to 50K Crores and I am sure there will be more float.
  • The chance of me losing money is very less here as the stock is trading below book value and also the value of BSE building is considered as some 35 cr in book value as against its market valuation of 800 cr which is done some years back
  • India INX value unlocking option - I think it is a hidden asset here. I see more value in monetizing this compared to BSE Star MF
  • The management is trying several things - gold mini options, BSE Ebix Insurance, direct user access which is mentioned during concall, monetizing BSE Star MF etc - I think they want to showcase it like an integrated e-commerce platform and may come with packaged pricing which can attract more traders.
  • SEBI enforcing “Best Price” in place of default NSE for brokers by August end. For example, in HDFC Securities NSE comes as default when I buy/sell a stock.This can change the game in this duopoly business. Need to see the results though.

Regarding HDFC AMC, I think there is some more penetration left for distributors. With Index investing, the fee for distributor will be almost nothing. My analysis about HDFC AMC is covered in the below threads in detail.


  1. I agree with you regarding shocks of Sterlite’s management. In fact, I took a calculated decision of buying it only after seeing their buyback price and investor presentations. I am seeing this more of a trading bet rather than portfolio stock even though the company has many good points after its demerger from Sterlite power in 2016.At the moment, the management cannot go for delisting below 150 as it is the buyback price determined by them.

  2. Agree. Hence, my position is also less here.

Thank you for taking time and sharing your investment framework. I am still working on improving my investment framework.

Cheers!!!

2 Likes

Thanks Investor_No_1.

It is in my to-do list. I recently watched this video of him and it is very good.
Infact, I would like to see Peter Lynch kind of fund manager to join HDFC AMC :slight_smile:

2 Likes

Agree. We don’t need to allocate to all sectors for the sake of diversification. Investing on companies/sectors we can understand is certainly the way. Also, many of these cannot be considered portfolio stocks and rather value buys.

Sterlite - This is the company I followed the maximum and fortunately I am still in profit. I am closely following it as anything can happen due to promoter’s reputation. This cannot be portfolio stock though.

Cupid - The main problem here is the promoter’s(also CEO) age and they are still on the hunt for next CEO.from last 3 years. I am planning to take my initial money and keep the rest. Thanks to @dineshssairam for his extensive coverage on this scrip in valuepickr.

BSE - Here I have more conviction and also I have good margin of safety

NMDC - It is trading at very cheap valuation and you are literally getting their 3MTPA steel plant for free. This is very easy business to understand even though there is government interference. Ideally, they should make this wonderful free cash flow business like a crown jewel of PSUs but with unnecessary interest in building nagarnar steel plant, massive amount of money is lost.
See this article where NMDC’s cash equivalent to Market cap was 53% in 2016.

Gateway Distriparks - I recently entered this scrip when it slided below 100. I believe the logistics sector will eventually play out as it is needed for India to move to developed nations category. The recent news about dedicated freight corridor and current CEO investing in the scrip strengthens the conviction. Interestingly, even though the stock has fallen from the year 2015, not even one insider has sold so far.

2 Likes

Hi Hitesh,

I see some action in BSE of late. I got it more like a value buy but will closely track it whether it can deserve to be a portfolio stock. Regarding, the track record of the stock price, I understand the unhappiness of many investors. In fact, two individual investors turned up in last con call and giving suggestions on how to make this scrip better.

I mentioned my analysis in this thread

Regarding pharma, I am investing in DSP Healthcare fund from Dec-2018. Due to recent run up, pharma is at 24% of my overall (Equity + MF) portfolio already and so I am thinking about next promising sector like logistics, telecom etc

Yes. I want to scale up allocation to sector leaders like that.

I aim to eventually move to more concentrated portfolio like you suggested and also have dominant business position / tailwinds.

Thanks for your time and feedback.

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 9% Financialization theme
2 LAURUS LABS LIMITED Healthcare Mid Cap 6% Sector Tailwind
3 BSE Limited Financial Small Cap 6% Financialization theme
4 HCL TECHNOLOGIES LIMITED Technology Large Cap 6% Coffee Can
5 ABBOTT INDIA LIMITED Healthcare Mid Cap 6% Coffee Can
6 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
7 DR. LAL PATHLABS Limited Healthcare Mid Cap 6% Coffee Can
8 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 4% Coffee Can
9 AVENUE SUPERMARTS LIMITED Services Large Cap 4% Long-term retail play, debt free
10 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 4% Promising sector for future
11 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 3% Coffee Can
12 BANDHAN BANK LIMITED Financial Large Cap 3% Coffee Can
13 KAVERI SEED COMPANY LTD. FMCG Small Cap 3% Promising sector for future
14 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
15 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
16 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
17 NMDC LIMITED Metals Mid Cap 2% Almost monopoly, debt free
18 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
19 LUPIN LIMITED Healthcare Large Cap 2% Coffee Can
20 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 2% Growth
21 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 2% Promising sector for future
22 JSW Steel Limited Metals Large Cap 2% Sector Tailwind
23 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
24 GRAPHITE INDIA LIMITED Engineering Small Cap 1% Cyclical play
25 RELIANCE INDUSTRIES LIMITED Energy Large Cap 1% Long-term retail & telecom play
Stocks
Top 5 34%
Top 10 58%
Top 20 81%
Top 25 88%
Market Cap
Large Cap 38%
Mid Cap 35%
Small Cap 27%
Sector Split
Financial 29%
Healthcare 22%
Communication 9%
Technology 7%
Chemicals 6%
Engineering 6%
Services 6%
Metals 4%
FMCG 3%
Textiles 3%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

  1. Return of Capital - :+1:
  2. Beat BSE Sensex in terms of CAGR :+1:
  3. Beat FD returns :handshake:
  4. Beat MF(direct) returns (15.5% CAGR so far) :-1:
  5. Reach 15% CAGR :-1:

Recent changes -

  1. I started working on reducing the weightage of Financials and increasing allocation to the scrips I have more conviction. The idea is to keep my top 10 holdings in a way that the chance of me losing my capital should be of least probability. Right now, apart from Airtel, all the other 9 shares are in positive

  2. Even though I found Sterlite to be one of the front runners in taking advantage of digital revolution, the promoter can’t be trusted. Hence, I pared down my stake when the stock was trading at 170 which brought down my buying price to below 60. I am comfortable with this margin of safety and the allocation percentage to this scrip.

  3. Increased allocation to Bharti Airtel as in Buy on dips strategy. Airtel certainly is not in very bad shape like Vodafone Idea. It has the backing of Singtel and operations in Africa which is a turn around story. Airtel Africa’s ARPU is 40% higher than in Airtel India. Right now, Airtel is below half of valuation of what Jio is commanding.

  1. Added more HCL Technologies shares after its recent Q2 results and positive outsourcing commentary from Accenture. Overall, the accelerating digital adoption and HCL’s focus on cloud/IM with positive cues on hiring and salary hikes.

  2. Doubled up Avenue Supermarts after recent results.D-Mart is expanding to B30 cities like Warangal and they have a huge runway left. Here in Australia where I stay, there are two supermarkets by name Coles & Woolworths. After capturing the market, they are having almost every product with in-house label. It starts with stacked chips(very similar to Pringles) to batteries to cheese/rice. Backed by a fantastic investor as promoter and with its operational efficiencies in offline retail, the conviction is high.

  3. Added more shares of NMDC after looking at global trends of iron ore price and traction in steel sector due to helicopter money, added to the comfort there is significant undervaluation of NMDC. However, soon the states started demands for more royalty and I sold the shares whatever I bought recently. Overall, the lost the profit I got in NMDC by way of dividends due to this.

  4. Added some shares of HEG & Graphite India. With so much of helicopter money spread across, there can be a chance of supply/demand mismatch for graphite electrode.

  5. After Cupid became 2X, I sold half of the shares and made the rest as zero cost. Promoter’s age is an overhang there.

  6. Added Kaveri Seed Company looking at the agri economy demand pick,annual report and reading valuepickr threads

1 Like

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 10% Financialization theme
2 LAURUS LABS LIMITED Healthcare Mid Cap 9% Growth
3 AVENUE SUPERMARTS LIMITED Services Large Cap 6% Long-term retail play, debt free
4 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
5 BSE Limited Financial Small Cap 6% Financialization theme
6 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 5% Coffee Can
7 DR. LAL PATHLABS Limited Healthcare Mid Cap 5% Coffee Can
8 ABBOTT INDIA LIMITED Healthcare Mid Cap 5% Coffee Can
9 HCL TECHNOLOGIES LIMITED Technology Large Cap 5% Coffee Can
10 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 3% Promising sector for future
11 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 3% Coffee Can
12 BANDHAN BANK LIMITED Financial Large Cap 3% Coffee Can
13 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
14 KAVERI SEED COMPANY LTD. FMCG Small Cap 2% Promising sector for future
15 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
16 NMDC LIMITED Metals Mid Cap 2% Almost monopoly, debt free
17 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
18 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
19 JSW Steel Limited Metals Large Cap 1% Sector Tailwind
20 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 1% Promising sector for future
21 LUPIN LIMITED Healthcare Large Cap 1% Coffee Can
22 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
23 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 1% Growth
24 LIC HOUSING FINANCE LTD Financial Mid Cap 1% Coffee Can
25 TITAN COMPANY LIMITED Cons Durable Large Cap 1% Long-term retail play, debt free
Stocks
Top 5 38%
Top 10 62%
Top 15 75%
Top 20 84%
Market Cap
Large Cap 39%
Mid Cap 36%
Small Cap 24%
Sector Split
Financial 28%
Healthcare 23%
Communication 10%
Services 9%
Technology 6%
Chemicals 6%
Engineering 5%
Metals 4%
Textiles 3%
FMCG 2%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

  1. Return of Capital - :+1:
  2. Beat BSE Sensex in terms of CAGR :+1:
  3. Beat FD returns :+1:
  4. Beat MF(direct) returns (17.8% CAGR so far) :-1:
  5. Reach 15% CAGR :-1:

Recent changes -

  1. Added more shares of Laurus Labs in dips after checking Q2 FY21 results.
  2. Added some more shares of Avenue Supermarts at the same time.
  3. Cleared some tail which are less than 1%
  4. The top 15 stocks account for 75% of the portfolio. Eventually, I would like to move it to 90% but not so soon.
1 Like

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation Rationale
1 LAURUS LABS LIMITED Healthcare Mid Cap 10% Growth
2 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 10% Financialization theme
3 AVENUE SUPERMARTS LIMITED Services Large Cap 6% Long term retail play, debt free
4 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
5 BSE Limited Financial Small Cap 6% Financialization theme
6 HCL TECHNOLOGIES LIMITED Technology Large Cap 5% Coffee Can
7 ABBOTT INDIA LIMITED Healthcare Mid Cap 5% Coffee Can
8 DR. LAL PATHLABS Limited Healthcare Mid Cap 5% Coffee Can
9 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 5% Coffee Can
10 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 3% Promising sector for future
11 BANDHAN BANK LIMITED Financial Large Cap 3% Coffee Can
12 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 2% Coffee Can
13 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
14 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
15 NMDC LIMITED Metals Mid Cap 2% Almost monopoly, debt free
16 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
17 KAVERI SEED COMPANY LTD. FMCG Small Cap 2% Promising sector for future
18 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
19 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 2% Promising sector for future
20 GRAPHITE INDIA LIMITED Engineering Small Cap 2% Cyclical play
21 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
22 JSW Steel Limited Metals Large Cap 1% Sector Tailwind
23 LUPIN LIMITED Healthcare Large Cap 1% Coffee Can
24 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 1% Growth
25 LIC HOUSING FINANCE LTD Financial Mid Cap 1% Coffee Can
Stocks
Top 5 39%
Top 10 62%
Top 15 74%
Top 20 83%
Market Cap
Large Cap 38%
Mid Cap 37%
Small Cap 25%
Sector Split
Financial 28%
Healthcare 24%
Communication 9%
Services 9%
Chemicals 6%
Engineering 6%
Technology 6%
Metals 4%
Textiles 3%
FMCG 2%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Beat MF(direct) returns (21.8% CAGR so far) :-1:
Reach 15% CAGR :-1:

  1. No changes in stocks addition from last portfolio update.
  2. Stopped MF SIPs
3 Likes

Happy New Year.

Here is the latest portfolio.

S. No. Company Sector Capitalisation Alloc. % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 11% Financialization theme
2 LAURUS LABS LIMITED Healthcare Mid Cap 10% Growth
3 AVENUE SUPERMARTS LIMITED Services Large Cap 7% Longterm retail play, debt free
4 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
5 BSE Limited Financial Small Cap 6% Financialization theme
6 HCL TECHNOLOGIES LIMITED Technology Large Cap 6% Coffee Can
7 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 5% Coffee Can
8 DR. LAL PATHLABS Limited Healthcare Mid Cap 5% Coffee Can
9 ABBOTT INDIA LIMITED Healthcare Mid Cap 4% Coffee Can
10 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 3% Promising sector for future
11 BANDHAN BANK LIMITED Financial Large Cap 2% Coffee Can
12 NMDC LIMITED Metals Mid Cap 2% Almost monopoly, debt free
13 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 2% Coffee Can
14 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
15 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
16 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
17 KAVERI SEED COMPANY LTD. FMCG Small Cap 2% Promising sector for future
18 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
19 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 2% Promising sector for future
20 GRAPHITE INDIA LIMITED Engineering Small Cap 2% Cyclical play
21 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
22 JSW Steel Limited Metals Large Cap 1% Sector Tailwind
23 LUPIN LIMITED Healthcare Large Cap 1% Coffee Can
24 LIC HOUSING FINANCE LTD Financial Mid Cap 1% Coffee Can
25 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 1% Growth
Stocks
Top 5 39%
Top 10 62%
Top 15 74%
Top 20 83%
Market Cap
Large Cap 40%
Mid Cap 36%
Small Cap 25%
Sector Split
Financial 28%
Healthcare 22%
Communication 10%
Services 9%
Engineering 6%
Chemicals 6%
Technology 6%
Metals 4%
Textiles 3%
FMCG 2%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Reach 15% CAGR :+1:
Beat MF(direct) returns (24.3% CAGR so far) :-1:

No changes to existing portfolio from last portfolio update and not planning to add any new companies for coming months.

What’s next? –

  1. Apart from tracking, I would like to spend time in learning about business cycles and global commodity cycles.
    Commodity and Cyclical Plays

  2. Read some books to enhance knowledge - right now, reading “Selfish Gene” by Richard Dawkins
    Thanks to the below thread and @phreakv6 , I find plenty here.
    Multi-Disciplinary Reading - Book Reviews

  3. Work on valuation models and define better exit strategy

Where did I lose money in my investments? - Bandhan Bank, HEG, 8K Miles, Olectra Greentech, Muthoot Capital Services, Repco Home Finance, Yes Bank

Why did I lose money?

Bandhan Bank - I actually bought Gruh Finance and as part of merger with Bandhan Bank, received equivalent shares of Bandhan Bank. Gruh is one of the consistent compounder and I never bothered about its valuation during my first entry as I just wanted to buy the Coffee Can Portfolio shares and observe whether the thesis of Coffee Can really plays out. The risk of MFI component (more than 60%)with Bandhan Bank and losing the brand of HDFC’s stable have a significant change of investment thesis. Original thesis is housing finance investment and now, housing finance component is just around 30% in Bandhan Bank. What I observed is the bias of supporting my investment and so started adding all the positives to it and never did I have really an exit strategy in place. This loss is close to 1% of my PF. Bandhan certainly is good company, I just need to identify when to enter and when to exit.

HEG - I was just looking at the cash generated by this cyclical company and all those traditional metrics like PE,CFO etc and never ever thought of what can go wrong with this company. The main lesson is - for a cyclical company, it usually is the case that we need to sell the company before it is trading in its lowest PE or it in other words, it is near its peak. I added some more shares of it few months back when I found the global cues are in favour of steel cycle based on my scuttlebutt. I am hoping this time I am playing the cycle right. However, my allocation is 1% here and this serves as learning. This loss accounts to 0.7% of PF.

8K Miles - One of my blunders and I kept some shares of it in my demat just to remind me of my foolishness. In fact, I was tracking from its price of 810 and entered only at 330 with around 10% of portfolio at that time. I sold 50% after it reached 100. The integrity of the promoter is so important and here it is missing. Like, 90%. It was itching to put another 5% when it has fallen continuously. I discussed with my wife and showed her my investment thesis. She told me to not allocate any further. Even though she is not in stock market and also not much knowledgeable in financial assets, I do this to remind myself that I am accountable and have someone to answer. This loss accounts to 1.5% of PF.

Olectra Greentech - I did very good research of this. I see big opportunity size and new promoter is among one of the top 50 richest persons in India and been a major player in infrastructure. This has best technology(BYD is the partner), money muscle of promoter and huge opportunity (Electric buses). Their Opex model of operating buses is also very good. However, it is B2G and there is China angle as the most important parts like battery etc comes from China. I exited with 55% loss. I still track this but with pandemic, my assumption is government will not keep aside cash for incentives like FAME. As it is B2G, the chance of success also becomes difficult. This loss accounts to 2% of PF.

Muthoot Capital Services - The company is certainly good. The management is very good. Only, thing bad is my timing of entering this stock. During the crisis, when the stock has fallen to sub 300, I averaged it. After the news of rural economy pick up and rise in auto sales, especially in 2W, I feel this is right investment. The comfort is it is consistent with its sales growth for 10 years and so it is part of coffee can. This loss accounts to 1.5% of PF.

Repco Home Finance - Bought this as part of Coffee Can stocks and it is small cap. The positive thing at this point of time is, there is some traction in housing market. I did not average it. Currently, at 50% loss. Allocation is less than 0.5% of PF.

Yes Bank - I invested in Yes bank for a buy price of 292 as part of tracking. Having seen the 8K miles and the touch of falling knife, I never wanted to put money in Yes bank but was tracking it where it can finally end. There were a couple of positive news like SBI and other banks providing support, Ravneet Gill’s comforting words but somehow I always had this doubt in my mind. How many people would like to put their FDs in a bank which has tarnished image even if they give higher interest? After institutions came on board, especially Amansa holdings invested some 4000 crores at 12 rupees per share, I found some interest and bought some shares at 11.2 rupees. The allocation is still less than 0.5% of PF.

4 Likes

Hi
Just my thoughts on your PF.
Stocks I like HDFC AMC,HCL Tech,Astral poly,Abbott india,Page ind,Hdfc bank,LTTS,PSP are great pick.
My comments :-
JSW steel,NMDC :- Metal until we know when to enter and when to exit its difficult to track and understand cycle. If strategy hold and sit tight long time then this kind of stock will derail returns.
Kaveri seeds,Graphite: This also look cynical. If allocation is less you can increase same on other company as 1 or 2% don’t feel much advantage.
Lupin: 1% with pharma side they constantly disappointed growth side last few years. You can increase Laurus or abbott instead of keeping one stock with 1% allocation.
SBI parents available cheap and any day SBI is PSU. SBI cards may look good but any policy change may come from govt and promoter is prone to govt intervention. In future sbi if need money they may need to dilute SBI life or SBI cards to cover NPA mess.
Exide I like much better than AMAR raja and again 1% allocation is kind of may not return PF return.
If you wish instead of BSE which going doldrums in volume of transaction, consider CDSL for financial theme. Most discount broker have CDSL and volume /transaction looks good. Bse losing market share gradually.
Instead of Muthoot,Bandhan stick with prominent player, since you have HDFC bank, how abt kotak? Why two small ant instead of having big elephant in portfolio and have great visibility with credible promotor.

its your wish but I will have minimum 5% single stock portfolio and instead of many 1-2% will sell in this market high time and increase allocation to top picks.

4 Likes

Hi Ranjith,

Thanks for the detailed comments. Here is my response.

Totally agree. I am closely tracking this sector and will not see this as buy and hold.

Right. These companies are cyclical and so will not fall under long term holding. We need to seize the opportunity and get out. I am actually doing the same. Regarding the allocation, I think I am still not that confident in playing cyclicals. Consider that I am in learning stage, trying to understand the game. Once I get a good hold of cyclicals, that’s where I think I can go for higher allocation.

For example, NMDC is going to give a very good Q3 result considering the fact that there is increase of both volumes and iron ore price. In December itself, NMDC hiked the price from Rs.4000 per ton to Rs.5700 per ton. The iron ore price was around Rs. 2600 per ton in March 2020. Most of the sales increase due to iron ore price increase is going to add to the bottom line as NMDC does not have any vendors to pass the price benefit.

Basically, I bought all these as part of Coffee Can. So, these were one of those 12 companies where sales have grown every year by some 10% consistently. From what I understand from Saurabh Mukherjea in the book - Coffee Can Portfolio, In a period of 10 years, not all years a stock can give positive returns. May be 4 or 5 times in 10 years they give and then there is sector rotation. I see coffee can stocks as a basket and so unless something extra-ordinary comes, may not sell any of the original allocations till 2028.

Yes, SBI is at a very cheap valuation. I was actually probing on why HDFC AMC funds were not performing. One of the big allocation companies is SBI. So, then I started reading about SBI and its subsidiaries and bought some shares at 183. SBI has fantastic subsidiaries(SBI cards, SBI Life, SBI Capital, SBI MF,SBI Pension funds etc) and also not many people know that SBI & by way of its subsidiary SBI Capital has around 8% stake in NSE which is hovering around 50,000 Crore market cap in unlisted form. However, based on the same rational you mentioned I sold SBI at 240. Eventually, I think I will also sell SBI cards. This is the reason why I did not add/average after IPO.

My rational for BSE is written here.

The current market cap is 2832 crores. The cash equivalents are 1843 cr as per screener.
BSE’s stake in CDSL(5500 crores market cap) is 20% - 1100 cr. Let’s give holding company discount of 50% - 550 cr. India Inx, which is its subsidiary at GIFT city was valued at 300 cr by ICICI. Currently, BSE has 90% stake.
BSE Star MF which is like a part of its business is commanding around 2000 cr as per below article. Let’s give 1000 cr as a lesser estimate.

Basically, what I would like to convey from these calculations is - there is very less chance of downside here. On the upside, it can give me disproportionate returns if India INX and Star MF clicks. Right now, I am at 50% profit which is giving me some valuation comfort.

Regarding opportunity cost, like why not invest in a consistent compounder like Abbott India? Or why not a B2C companies like Godrej Consumer products, Marico, Dabur, Nestle India, Britannia, HUL etc.? Yes, I do get these doubts time and again. the answer I get is I have to understand valuation and business cycles properly and that’s what I am going to do now.

Regarding allocation of minimum 5%, I completely agree and it is in progress.

Apologies in case of lengthy writing.

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation % Rationale
1 LAURUS LABS LIMITED Healthcare Mid Cap 13% Growth
2 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 8% Financialization theme
3 BSE Limited Financial Small Cap 6% Financialization theme
4 AVENUE SUPERMARTS LIMITED Services Large Cap 6% Long-term retail play, debt free
5 ASTRAL LIMITED Chemicals Mid Cap 6% Coffee Can
6 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
7 DR. LAL PATHLABS Limited Healthcare Mid Cap 6% Coffee Can
8 HCL TECHNOLOGIES LIMITED Technology Large Cap 5% Coffee Can
9 GATEWAY DISTRIPARKS LTD. Services Small Cap 4% Promising sector for future
10 ABBOTT INDIA LIMITED Healthcare Mid Cap 4% Coffee Can
11 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 4% Promising sector for future
12 NMDC LIMITED Metals Large Cap 3% Almost monopoly, debt free
13 JSW Steel Limited Metals Large Cap 3% Sector Tailwind
14 KAVERI SEED COMPANY LTD. FMCG Small Cap 2% Promising sector for future
15 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
16 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
17 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 2% Coffee Can
18 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 2% Promising sector for future
19 BANDHAN BANK LIMITED Financial Large Cap 2% Coffee Can
20 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
21 LUPIN LIMITED Healthcare Large Cap 2% Coffee Can
22 INDIAN ENERGY EXCHANGE LIMITED Services Mid Cap 1% Growth
23 LIC HOUSING FINANCE LTD Financial Mid Cap 1% Coffee Can
24 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 1% Growth
25 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
Stocks
Top 5 39%
Top 10 63%
Top 15 86%
Top 20 93%
Market Cap
Large Cap 39%
Mid Cap 37%
Small Cap 24%
Sector Split
Healthcare 25%
Financial 24%
Services 11%
Communication 10%
Chemicals 7%
Metals 6%
Technology 5%
Engineering 3%
Textiles 3%
FMCG 2%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Reach 15% CAGR :+1:
Beat MF(direct) returns (24.6% CAGR so far) :-1:

Changes - Sold off positions in HEG and Graphite India. No other additions/removals from last portfolio update.

Notes -

  1. Laurus Labs has been a standout performer and having it with highest allocation helped the portfolio returns

  2. 5 Multi-baggers among top 10 stocks - Laurus Labs, Astral Poly Technik, Dr. Lal Pathlabs, Abbott India and Gateway Distriparks

  3. The portfolio beta in general has been less due to diversified portfolio and high allocation to pharma.

  4. Gateway Distriparks turned 3X. I personally think, this stock can give good returns in future as well.

  5. Metals upcycle is being played out - NMDC turned 2X, JSW Steel turned 3X. Only regret is not investing in Godavari. I did read about it but did not invest.

  6. Strongly feel this is not the time to invest but learn and hold

1 Like

If possible can you shed some light on mutual funds you own or any thought process for picking the same?

I own the below mutual funds

SBI Small Cap Dir-G
Axis Mid-Cap Dir-G
Invesco India Contra Dir-G
Parag Parikh Flexi Cap Dir-G
Quantum LT Eq-Value Dir-G
DSP HealthCare Dir-G

My general take on mutual funds is invest in them when the sector/theme is out of favour and get the benefits when the tide turns over. It is preferable to glance at the top allocations,alpha,beta in the fund portfolio and also check the star rating about the mutual fund in valueresearchonline.com but they also get updated. Unless I am not already invested, I prefer only 4-star and 5-star funds. Please avoid sector funds if you are new to MF investments.

If your investment horizon is long-term and don’t want to track actively, it is better to go with SIPs and buy lumpsum delta amounts whenever there is a significant drop in market like in March 2020. This way, I think you will still be able to reach 15% CAGR.

Disc - At the moment, I don’t have SIPs running in any of the funds. I am not a SEBI registered investment advisor/planner and biased with my investments.

1 Like

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation % Rationale
1 LAURUS LABS LIMITED (XNSE:LAURUSLABS) Healthcare Mid Cap 12% Growth
2 BSE Limited (XNSE:BSE) Financial Small Cap 9% Financialization theme
3 AVENUE SUPERMARTS LIMITED (XNSE:DMART) Services Large Cap 9% Longterm retail play, debt free
4 DEEPAK NITRITE LIMITED (XNSE:DEEPAKNTR) Chemicals Mid Cap 9% Growth
5 HCL TECHNOLOGIES LIMITED (XNSE:HCLTECH) Technology Large Cap 7% Coffee Can
6 ASTRAL LIMITED (XNSE:ASTRAL) Chemicals Mid Cap 6% Coffee Can
7 ABBOTT INDIA LIMITED (XNSE:ABBOTINDIA) Healthcare Mid Cap 6% Coffee Can
8 HDFC ASSET MANAGEMENT COMPANY LIMITED (XNSE:HDFCAMC) Financial Large Cap 6% Financialization theme
9 GATEWAY DISTRIPARKS LTD. (XNSE:GDL) Services Small Cap 3% Promising sector for future
10 PSP PROJECTS LIMITED (XNSE:PSPPROJECT) Construction Small Cap 3% Asset Light business in construction
11 Zomato Limited (XNSE:ZOMATO) Services Large Cap 3% Growth
12 STERLITE TECHNOLOGIES LIMITED (XNSE:STLTECH) Communication Mid Cap 2% Promising sector for future
13 PAGE INDUSTRIES LIMITED (XNSE:PAGEIND) Textiles Mid Cap 2% Coffee Can
14 HDFC BANK LIMITED (XNSE:HDFCBANK) Financial Large Cap 2% Coffee Can
15 MUTHOOT CAPITAL SERVICES LIMITED (XNSE:MUTHOOTCAP) Financial Small Cap 2% Coffee Can
16 KAVERI SEED COMPANY LTD. (XNSE:KSCL) FMCG Small Cap 2% Promising sector for future
17 INDIAN ENERGY EXCHANGE LIMITED (XNSE:IEX) Services Mid Cap 2% Cigarbutt
18 SBI CARDS AND PAYMENT SERVICES LIMITED (XNSE:SBICARD) Financial Large Cap 2% Growth
19 NMDC LIMITED (XNSE:NMDC) Metals Mid Cap 1% Almost monopoly, debt free
20 TITAN COMPANY LIMITED (XNSE:TITAN) Cons Durable Large Cap 1% Longterm retail play, debt free
21 LIC HOUSING FINANCE LTD (XNSE:LICHSGFIN) Financial Mid Cap 1% Coffee Can
22 LUPIN LIMITED (XNSE:LUPIN) Healthcare Mid Cap 1% Coffee Can
23 KOVAI MEDICAL CENTER AND HOSPITAL LIMITED (XBOM:523323) Healthcare Small Cap 1% Cigarbutt
24 AMBIKA COTTON MILLS LIMITED (XBOM:531978) Textiles Small Cap 1% Promising sector for future
25 ORIENTAL CARBON & CHEMICALS LTD (XNSE:OCCL) Chemicals Small Cap 1% Cigarbutt
Stocks
Top 5 46%
Top 10 70%
Top 15 82%
Top 20 90%
Market Cap
Large Cap 29%
Mid Cap 45%
Small Cap 25%
Sector Split
Financial 24%
Healthcare 21%
Services 17%
Chemicals 16%
Technology 7%
Textiles 4%
Construction 3%
FMCG 2%
Communication 2%
Engineering 1%
Metals 1%
Cons Durable 1%
Energy 0%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Reach 15% CAGR :+1:
Beat MF(direct) returns (28% CAGR so far) :-1:

Changes - Sold off some stocks due to misunderstanding of norms and reduced some positions as part of profit booking. However, it gave me comfort of having good cash balance and do portfolio rejig. Apart from the existing list, added Deepak Nitrite and Zomato as new additions and increased position size in PSP Projects. Laurus Labs, Astral, NMDC, Gateway Distriparks and Sterlite technologies are all made at zero cost now.

Notes -

  1. The overall debt-equity balance stands at 31:69
  2. Played the metals cycle right and got off from JSW Steel and kept NMDC at zero cost
  3. Felt little emotional when selling good stocks like Dr. Lal Path Labs & LTTS recently
  4. Tracking gaming stocks but no positions so far. The risk reward can be disproportionate.
  5. The portfolio is overall green with a CAGR of 24%
3 Likes

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation % Rationale
1 AVENUE SUPERMARTS LIMITED (XNSE:DMART) Services Large Cap 9% Longterm retail play, debt free
2 BSE Limited (XNSE:BSE) Financial Small Cap 9% Financialization theme
3 LAURUS LABS LIMITED (XNSE:LAURUSLABS) Healthcare Mid Cap 9% Growth
4 DEEPAK NITRITE LIMITED (XNSE:DEEPAKNTR) Chemicals Mid Cap 8% Growth
5 HCL TECHNOLOGIES LIMITED (XNSE:HCLTECH) Technology Large Cap 6% Coffee Can
6 ASTRAL LIMITED (XNSE:ASTRAL) Chemicals Mid Cap 6% Coffee Can
7 ABBOTT INDIA LIMITED (XNSE:ABBOTINDIA) Healthcare Large Cap 6% Coffee Can
8 HDFC ASSET MANAGEMENT COMPANY LIMITED (XNSE:HDFCAMC) Financial Large Cap 5% Financialization theme
9 NAZARA TECHNOLOGIES LIMITED (XNSE:NAZARA) Technology Small Cap 4% Promising sector for future
10 PSP PROJECTS LIMITED (XNSE:PSPPROJECT) Construction Small Cap 3% Asset Light business in construction
11 GATEWAY DISTRIPARKS LTD. (XNSE:GDL) Services Small Cap 3% Promising sector for future
12 INDIAN ENERGY EXCHANGE LIMITED (XNSE:IEX) Services Mid Cap 3% Growth
13 STERLITE TECHNOLOGIES LIMITED (XNSE:STLTECH) Communication Small Cap 3% Promising sector for future
14 PAGE INDUSTRIES LIMITED (XNSE:PAGEIND) Textiles Mid Cap 3% Coffee Can
15 Zomato Limited (XNSE:ZOMATO) Services Large Cap 2% Growth
16 HDFC BANK LIMITED (XNSE:HDFCBANK) Financial Large Cap 2% Coffee Can
17 MUTHOOT CAPITAL SERVICES LIMITED (XNSE:MUTHOOTCAP) Financial Small Cap 2% Coffee Can
18 KAVERI SEED COMPANY LTD. (XNSE:KSCL) FMCG Small Cap 2% Promising sector for future
19 OLECTRA GREENTECH LIMITED (XNSE:OLECTRA) Engineering Small Cap 2% Promising sector for future
20 TITAN COMPANY LIMITED (XNSE:TITAN) Cons Durable Large Cap 2% Longterm retail play, debt free
21 SBI CARDS AND PAYMENT SERVICES LIMITED (XNSE:SBICARD) Financial Large Cap 1% Growth
22 NMDC LIMITED (XNSE:NMDC) Metals Mid Cap 1% Almost monopoly, debt free
23 LIC HOUSING FINANCE LTD (XNSE:LICHSGFIN) Financial Mid Cap 1% Coffee Can
24 LUPIN LIMITED (XNSE:LUPIN) Healthcare Mid Cap 1% Coffee Can
25 KOVAI MEDICAL CENTER AND HOSPITAL LIMITED (XBOM:523323) Healthcare Small Cap 1% Tracking
26 AMBIKA COTTON MILLS LIMITED (XBOM:531978) Textiles Small Cap 1% Promising sector for future
Stocks
Top 5 42%
Top 10 65%
Top 15 79%
Top 20 88%
Market Cap
Large Cap 34%
Mid Cap 33%
Small Cap 33%
Sector Split
Financial 22%
Healthcare 17%
Services 17%
Chemicals 15%
Technology 10%
Textiles 4%
Construction 3%
Engineering 3%
Communication 3%
FMCG 2%
Cons Durable 2%
Metals 1%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Reach 15% CAGR :+1:
Beat MF(direct) returns (28% CAGR so far) :-1:

Changes - Added Olectra after increase of stake from promoter and buying from Nomura in the recent past. I am tracking this company from 2018 and the bet is on electric vehicles - city buses/inter-city buses/other optionality like trucks in future. The company is part of MEIL Group and supplies buses to EveyTrans company(another subsidiary of MEIL Group but not listed) which runs the buses on GCC(Gross Cost Contract). Added Nazara based on the this investment rationale.

Notes -

  1. There is no FOMO experience and happy with current CAGR(25%) as it is above my expected returns of 15%
  2. There was a massive selling seen in top weightage stocks like Laurus Labs and Deepak Nitrite which has reduced the returns a bit. I am planning to increase stake in both in the coming days.
  3. Healthy weightages across sectors with highest sector weightage of 22% and also market cap split.
  4. Services as a sector has given me great returns apart from Laurus Labs & BSE Limited - Avenue Supermarts, Gateway Distriparks, Indian Energy Exchange
  5. Closely tracking Nazara, Gateway distriparks and PSP Projects
1 Like

Here is the latest portfolio

Sr. No Company Sector Capitalisation Allocation % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED (XNSE:HDFCAMC) Financial Large Cap 11% Financialization theme
2 BSE Limited (XNSE:BSE) Financial Small Cap 11% Financialization theme
3 AVENUE SUPERMARTS LIMITED (XNSE:DMART) Services Large Cap 10% Long-term retail play, debt free
4 HCL TECHNOLOGIES LIMITED (XNSE:HCLTECH) Technology Large Cap 8% Coffee Can
5 LAURUS LABS LIMITED (XNSE:LAURUSLABS) Healthcare Mid Cap 7% Growth
6 DEEPAK NITRITE LIMITED (XNSE:DEEPAKNTR) Chemicals Mid Cap 7% Growth
7 OLECTRA GREENTECH LIMITED (XNSE:OLECTRA) Engineering Small Cap 6% Promising sector for future
8 ABBOTT INDIA LIMITED (XNSE:ABBOTINDIA) Healthcare Mid Cap 5% Coffee Can
9 ASTRAL LIMITED (XNSE:ASTRAL) Chemicals Mid Cap 5% Coffee Can
10 NAZARA TECHNOLOGIES LIMITED (XNSE:NAZARA) Technology Small Cap 5% Promising sector for future
11 TITAN COMPANY LIMITED (XNSE:TITAN) Cons Durable Large Cap 4% Long-term retail play, debt free
12 DR. LAL PATHLABS Limited (XNSE:LALPATHLAB) Healthcare Mid Cap 3% Coffee Can
13 PSP PROJECTS LIMITED (XNSE:PSPPROJECT) Construction Small Cap 3% Asset Light business in construction
14 GATEWAY DISTRIPARKS LTD. (XNSE:GDL) Services Small Cap 3% Promising sector for future
15 PAGE INDUSTRIES LIMITED (XNSE:PAGEIND) Textiles Mid Cap 2% Coffee Can
16 INDIAN ENERGY EXCHANGE LIMITED (XNSE:IEX) Services Mid Cap 2% Growth
17 HDFC BANK LIMITED (XNSE:HDFCBANK) Financial Large Cap 2% Coffee Can
18 AMBIKA COTTON MILLS LIMITED (XBOM:531978) Textiles Small Cap 1% Tracking
19 KOVAI MEDICAL CENTER AND HOSPITAL LIMITED (XBOM:523323) Healthcare Small Cap 1% Tracking
20 LUPIN LIMITED (XNSE:LUPIN) Healthcare Mid Cap 1% Coffee Can
Stocks
Top 5 47%
Top 10 75%
Top 15 90%
Top 20 97%
Market Cap
Large Cap 36%
Mid Cap 33%
Small Cap 31%
Sector Split
Financial 24%
Healthcare 18%
Services 15%
Technology 14%
Chemicals 12%
Engineering 6%
Cons Durable 4%
Textiles 3%
Construction 3%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Reach 15% CAGR :+1:
Beat MF(direct) returns (26.8% CAGR so far) :-1: The difference is 1.4 now

Changes –

  • Removed stocks where conviction is less and wherever there is lesser allocation
    o Sold off Zomato, Cupid, Kaveri Seeds, LIC Housing Finance, Muthoot Capital Services, NMDC, Repco, SBI Cards
  • Increased allocation to Titan after Q2 FY22 results
  • Increased allocations in HCL Technologies, Abbott India & HDFC AMC when the market was trading in deep red
  • Sold off Zomato as it is more of a hope story and bought Dr. Lalpath labs during news of Omicron almost at the same price where I sold earlier
  • Increased allocation to Olectra based on the below rationale
    Olectra Greentech - Electric Bus Opportunity

Notes –

  • Understood that selling half of the shares once we the share price doubles is bad idea. In fact, selling decision should be taken based on the stock specific valuation or overall pf allocation for that sector
  • As I removed most of the tail(less allocations) , I deployed more capital into the high conviction ones
  • BSE Limited is more than 4x now
  • Increased allocation to defensives(IT,Pharma) to 31% and New Age(Nazara, Nykaa, Olectra) to 12%. The plan is to increase allocation to New Age businesses to 20% in future.
  • With 90% of allocation in Top 15 stocks, I will have more to do research per stock
  • Got Nykaa IPO allottment :blush:
  • Evaluating whether I am better off by moving equity to PMS or MF rather than direct investing. Looking forward to how I perform during bear market.

Interesting videos

  • Samit Vartak has beautifully explained about how to build a superior portfolio to generate 10x in 10 years
  • Another great learning about portfolio construction by SOIC
  • Very interesting discussion between Rakesh Jhunjhunwala and Akash Prakash from Amansa
5 Likes

Happy New Year !!

Here is the latest portfolio

Sr. No Company Sector Capitalisation Allocation % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED (XNSE:HDFCAMC) Financial Large Cap 11% Financialization theme
2 BSE Limited (XNSE:BSE) Financial Small Cap 10% Financialization theme
3 AVENUE SUPERMARTS LIMITED (XNSE:DMART) Services Large Cap 9% Longterm retail play, debt free
4 HCL TECHNOLOGIES LIMITED (XNSE:HCLTECH) Technology Large Cap 9% Coffee Can
5 LAURUS LABS LIMITED (XNSE:LAURUSLABS) Healthcare Mid Cap 7% Growth
6 DEEPAK NITRITE LIMITED (XNSE:DEEPAKNTR) Chemicals Mid Cap 7% Growth
7 ASTRAL LIMITED (XNSE:ASTRAL) Chemicals Mid Cap 5% Coffee Can
8 OLECTRA GREENTECH LIMITED (XNSE:OLECTRA) Engineering Small Cap 5% Promising sector for future
9 ABBOTT INDIA LIMITED (XNSE:ABBOTINDIA) Healthcare Mid Cap 5% Coffee Can
10 DR. LAL PATHLABS Limited (XNSE:LALPATHLAB) Healthcare Mid Cap 5% Coffee Can
11 NAZARA TECHNOLOGIES LIMITED (XNSE:NAZARA) Technology Small Cap 4% Promising sector for future
12 TITAN COMPANY LIMITED (XNSE:TITAN) Cons Durable Large Cap 4% Longterm retail play, debt free
13 GATEWAY DISTRIPARKS LTD. (XNSE:GDL) Services Small Cap 3% Promising sector for future
14 PSP PROJECTS LIMITED (XNSE:PSPPROJECT) Construction Small Cap 3% Asset Light business in construction
15 PAGE INDUSTRIES LIMITED (XNSE:PAGEIND) Textiles Mid Cap 2% Coffee Can
16 INDIAN ENERGY EXCHANGE LIMITED (XNSE:IEX) Services Mid Cap 2% Growth
17 HDFC BANK LIMITED (XNSE:HDFCBANK) Financial Large Cap 2% Coffee Can
18 AMBIKA COTTON MILLS LIMITED (XBOM:531978) Textiles Small Cap 1% Tracking
19 KOVAI MEDICAL CENTER AND HOSPITAL LIMITED (XBOM:523323) Healthcare Small Cap 1% Tracking
20 LUPIN LIMITED (XNSE:LUPIN) Healthcare Mid Cap 1% Coffee Can
Stocks
Top 5 46%
Top 10 74%
Top 15 91%
Top 20 97%
Market Cap
Large Cap 35%
Mid Cap 36%
Small Cap 30%
Sector Split
Financial 23%
Healthcare 20%
Services 15%
Technology 14%
Chemicals 13%
Engineering 6%
Cons Durable 4%
Textiles 3%
Construction 3%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Reach 15% CAGR :+1:
Beat MF(direct) returns (26.9% CAGR so far) :-1:

Changes –

  • Increased allocation to Dr. Lalpath labs and a little to Astral when the market was down
  • Sold Off Quantum Long-Term Equity MF. With this, beating MF returns becomes even more difficult. Especially, I am no longer buying any SIP or lumpsum while I am doing some investments in direct equity

Notes –

  • The allocation to defensives(Pharma.Tech) is 33% now and New Age(Nykaa, Nazara, Olectra) at 10%
  • Samit Vartak’s words on superior portfolio construction(how to make 10x in 10 years) and always looking at future market cap of the stock while investing has made a profound impact on my current investing thought process
  • The portfolio is evenly balanced across market cap sizes
  • The top 10 allocations are now filled with high conviction ones and in most cases has a history about their narratives and numbers. To break into the top 10 now, is very difficult. The only rookie stocks I see are
  1. BSE Limited which I think can hold the place for it is a duopoly and will remain as long as stock markets are present in India. The optionality of 20% stake in CDSL and monetisation of BSE Star MF and India Inx(GIFT City) along with Cash Balance of 2200 Cr makes it more safer.

  2. Olectra Greentech is aggressively capturing the market share in Electric Bus segment. Its order growth and execution seems to be impressive. The way they are operating intercity buses between Pune to Mumbai only shows the intention that they are not just looking at State Road Transport Units. Its foray into EV 3-Wheelers and Electric Trucks will increase the opportunity size.

  • 2021 has been a great year in terms of learning as well as returns in direct equity. The portfolio 1 Year returns are 62.2% and overall CAGR is 25.5

Outlook for CY 2022

As per the below text, it is clear that ETFs may not be outperforming the Active Mutual Funds due to the fact that the rally is broad-based across sectors/companies in Nifty. Corporate India is at one of the lowest profit to GDP ratio and having very much de-leveraged(debt/equity ~ 1.6) with balance sheets displaying strength just like start of a bull run in 2003.

the below image gives us the direction that Nifty most probably will underperform the broader market(Mid and Small Caps)

Government of India along with RBI has been coming up with supportive fiscal and monetary policies, and hopefully will continue to keep the corporate tax lower at 25%. PLI schemes,China+1 in selective spaces like chemicals will also aid further growth in earnings.

With Covid-19 hitting much of MSME industries, I believe the organised players will aggressively increase their market share. It will be much more prevalent in Small Caps.

The key risks I see is the inflation which can spoil the party. Also, never in last 10 years, one asset class has been dominant for three years in a row. In fact, not even two years in a row. However, Covid itself is an exception.

Based on the above rationale, I am continuing with 70% Equity( and 30% Debt) and having defensives as 33% within equity to give some comfort in case market turns bearish. I see the signs that in the near term, it does.

Interesting Videos -

  1. Ashwath Damodaran is hitting a nail in my head that I should firmly understand valuation. Our assumptions for valuation can go wrong but without valuation it is akin to shooting in the dark. This remains one of my key learning areas for 2022. Professor is so much for disruption in education that he has kept his entire valuation class recordings in YouTube.
  1. @basumallick in the below podcast has explained very well about how to become financially independent with calculations from 1:08:24 to 1:10:45. The entire podcast is very good - Thanks @vivek_mashrani and @basumallick for this. Now, if we can identify one 100x company in 15 years where we allocate say 10% of portfolio, our portfolio returns will itself becomes 10x with this one great choice. However, the catch as mentioned in the video, in India, generally, the 20+ CAGR growth may not sustain after 5 years for most companies. This is where some of the 100x companies of the past like Astral are expanding to other adjacencies(Adhesives, Tanks, Faucets etc) whenever they see limited scope for margin expansion with existing verticals. This theme is visible in other such multi-baggers like Page Industries, Deepak Nitrite and Pidilite Industries. Laurus Labs seems to exhibit these characteristics but we don’t have too much of history to ascertain. Now, the most important question is - Can I identify one such company in next 2 years and stay through it in thick and thin like Rakesh Jhunjhunwala stayed put with Titan? There will be long stagnations and also significant drawdowns resulting in short term opportunity costs. If I identify one and has the vision to stay long, the incentive is - I will be financially independent in 15-17 years.
  1. As usual, Motilal Oswal’s wealth creation study gave good insights on what worked and what did not work in last few years. The enthusiasm with which Raamdeo Agrawal presents the study makes it inquisitive to watch.
9 Likes

Interesting insights from this thread. Thank you @Southern_Cross for sharing your journey so far.

Would you please elaborate how the different MF you invested performed on CAGR wise as I do see MF was ahead of direct equity. Trust you are measuring CAGR for the same periods for both equity and MF.

2 Likes

@james_kerala - Thanks for dropping by.

From March-19 to December-20, I invested in the below MFs through direct route using SIP. I did one additional SIP in March-20 for all except DSP Healthcare. I did 3 extra SIPs for DSP Healthcare in March-20. SBI Small Cap is from July-18. I stopped all SIPs in December-20.

Fund Return
Axis Midcap 39
DSP Helthcr 43
Invesco India Contra 30
Parag Parikh Flexi Cap 42
Quantum LT Eqt Value 24
SBI Small Cap 37
Overall Mutual Funds 27

In my case, my capital is fixed and did not add any incremental amounts. Now, the reason why I was comparing between my performance as Investor_MF and Investor_Stock is to check the best pathway for my portfolio. In the case of MF, the best returns come when we invest during the down cycle. After watching the carnage of Mid and Small Caps in 2018, as seen in the above table, I invested in sector/caps which were out of favour. As I cannot time the market, I opted to SIP route. If you look into the below chart , it gives you the correlation between CNXSMALLCAP(Nifty Small CAP 100 Chart) with NIFTY 50. The Small Caps peaked in 2017 and then they were down till Apr-20. If we accumulate the SIPs during the downcycle, the returns will be maximum.

Now, I cannot compare between MF and Stocks as the best case for these investments are different. Like, the SIPs in 2021 will not yield great results compared to ones accumulated in 2020. Ideally, the best case for MF investor will be putting yearly SIP as lumpsum for each 1000 points drawdown in Nifty starting from March 2020. This is because in March-2020, some of the stock prices were similar to 2013/2014. However, I added only 1 extra SIP as I felt, I may do better as stock_investor.

In Small Cap MFs, I personally like SBI Small Cap.

Lets say you invest in SIP in SBI Small Cap, the amount did not show great returns till Jul-20 from Jan-17 but after that the returns will be disproportionate. If you have long horizon and able to top up in huge drawdown cases like March-2020, the CAGR of this small cap fund is very impressive.

Hope I answered your question.

5 Likes