I have been a trader for the most part of my life. I am planning to invest a portion of my capital. Holding investments for a long time has been very difficult for me. I hope to make it right this time, given decade-low valuations in small and mid-caps. I am willing to take considerable risk in my investments.
My assumptions are the following around the macro scenario:
- India, like all EMs, is going to take longer to come out of the credit crisis and corona epidemic. NPAs in the banking sector could be catastrophic
- The government has to eventually print money, like in developed countries. However, it is going to be challenging for INR.
- Companies with near term cash flow visibility and dominant market share would be the winners in the years to come.
Given all these assumptions, I am looking to make a concentrated portfolio in 4-5 names. I have started with a 12% allocation in ITC, the rest of the portfolio is in cash/trading.
The rationale for ITC: Attractive valuations; market underpricing FMCG potential; strong margin trends in FMCG in the last 3 years; Stable cash flows; a huge opportunity for the dominant player in traditional business: India at the bottom of the per capita tobacco consumption
I am looking to utilize my capital in the coming weeks/months.
Would appreciate suggestions from the forum members. My criteria are:
a. No lending institution, I don’t think we have seen the end of the NPA cycle
b. Near term increasing cash flows
c. Scalable opportunity
d. Trust-worthy promoters/management
Looking forward to your responses!