ValuePickr Forum

Tar's Portfolio and Information Attic

Listing down my portfolio here, would like other investors to opine.

Goal: Compound Wealth for Long Term (30-40 years)

I am in mid 20’s and can take risk and hence the higher weightage to mid and small cap sector. I am also a trained CFA and work in investment banking sector so have knowlege of financial concepts.

Portfolio: (Most of these stocks were bought in the panic sell of Mar and April. I was buying when others were selling, so have made decent returns in almost all of them.)

  1. Vinati Organics
  2. Navin Fluorine
  3. IOL Chemicals and Pharmaceuticals
  4. Biocon
  5. Avanti Feeds
  6. Kaveri Seed Company
  7. Laurus Labs
  8. Divis Labs
  9. Granules
  10. Manappuram Finance
  11. Indian Energy Exchange
  12. Vodafone Idea
  13. Tata Power

Rationale for each stock below

Vinati / Navin : based on emerging trends on Speciality Chemicals space globally and in India

IOL : based on their growth, market forces creating disruptions for BASF. They are increasing production capacity to 3x and branching off into other products.

Biocon: their growth in Syngene + Biosimilar story ( I am waiting for Biocon Biologics IPO, will decrease holding in Biocon post IPO and allocate more towards the Biologics)

Avanti Feed and Kaveri Seed: Leaders and borderline monopoly companies. They are set to benefit immensely with the planned upcoming Govt spending on aquaculture + agriculture. I see both the companies are highly undervalued.

Laurus, Divis, Granules : Mixture of 3 high growth large cap, mid cap and small cap companies within the API space. I am only invested in these till Covid related tailwinds dry up. Monitoring them every quarter and don’t plan to sell at all for next 2-3 years. I think the industry is poised to grow at a decent growth rate and may face some consolidation in upcoming years.

Manappuram Finance: NBFC based on India’s rural growth story. It’s easier for NBFCs to create a banking system in rural India and if India needs to become a $5 trillion economy rural sector has to participate more. Manappuram has a second competitive advantage, with interest rates being so low they are able to raise millions of dollars at rates as low as 5-6%. Most of their loans to their customers are at 24-30%. This creates a massive Net Interest Margin for them. Further they operate more efficiently than their other competitor (Muthoot).

Indian Energy Exchange: Monopoly power exchange with consistent return on capital rates of over 40%. The company is set to benefit massively on renewable shift in power sector. Govt of India is also amending policies on how power will be traded in the country. We are moving away from 25 year fixed PPAs to a daily weekly real time exchange system of power. I beleive India will become a world leader in renewable energy esp solar since we are the only country in the world that gets considerable sunlight throughout the year. I expect IEX to continue growing for next 5-10 years.

Vodafone Idea: This was a valuation play. Market noises had beaten the stock down to throw away prices. I started accumulating this at 3 to 4 Rs. Market hasn’t considered the spectrum assets of this company. On just liquidation value alone VIL has more value than the stock represents. Airtel and Jio both has their spectrum expiring in 2021-2022 and will have to spend 40,000 cr each to gain new licences. VILs spectrum only expires in 2030 to 2035. I expect them to get 15 year time period for their AGR dues and bring down significant debt via selling stakes in the company. Further the sector has many tailwinds. VIL can also significantly increase their ARPU above 200 by focusing more on corporate accounts.

Tata Power: This is a fairly small position. I am increasing it as I see the company executing on its forward growth plan. I see the company becoming a renewable first energy company with a leading and possibly a monopoly on EV charging stations in India. They will also benefit from Tata Motors focus on becoming a electric vehicle first company.

6 Likes

Indeed very good allocation …
It will be better if you can share rational behind the individual stock…
Vodafone Idea and Tata power looks out of your general theme…

Thank you!
All stocks are selected based on primarily a trend or an upcoming catalyst. I use global trends to narrow down the industry and then use fundamentals to find a value stock within that industry.

Vinati / Navin : based on emerging trends on Speciality Chemicals space globally and in India

IOL : based on their growth, market forces creating disruptions for BASF. They are increasing production capacity to 3x and branching off into other products.

Biocon: their growth in Syngene + Biosimilar story ( I am waiting for Biocon Biologics IPO, will decrease holding in Biocon post IPO and allocate more towards the Biologics)

Avanti Feed and Kaveri Seed: Leaders and borderline monopoly companies. They are set to benefit immensely with the planned upcoming Govt spending on aquaculture + agriculture. I see both the companies are highly undervalued.

Laurus, Divis, Granules : Mixture of 3 high growth large cap, mid cap and small cap companies within the API space. I am only invested in these till Covid related tailwinds dry up. Monitoring them every quarter and don’t plan to sell at all for next 2-3 years. I think the industry is poised to grow at a decent growth rate and may face some consolidation in upcoming years.

Manappuram Finance: NBFC based on India’s rural growth story. It’s easier for NBFCs to create a banking system in rural India and if India needs to become a $5 trillion economy rural sector has to participate more. Manappuram has a second competitive advantage, with interest rates being so low they are able to raise millions of dollars at rates as low as 5-6%. Most of their loans to their customers are at 24-30%. This creates a massive Net Interest Margin for them. Further they operate more efficiently than their other competitor (Muthoot).

Indian Energy Exchange: Monopoly power exchange with consistent return on capital rates of over 40%. The company is set to benefit massively on renewable shift in power sector. Govt of India is also amending policies on how power will be traded in the country. We are moving away from 25 year fixed PPAs to a daily weekly real time exchange system of power. I beleive India will become a world leader in renewable energy esp solar since we are the only country in the world that gets considerable sunlight throughout the year. I expect IEX to continue growing for next 5-10 years.

Vodafone Idea: This was a valuation play. Market noises had beaten the stock down to throw away prices. I started accumulating this at 3 to 4 Rs. Market hasn’t considered the spectrum assets of this company. On just liquidation value alone VIL has more value than the stock represents. Airtel and Jio both has their spectrum expiring in 2021-2022 and will have to spend 40,000 cr each to gain new licences. VILs spectrum only expires in 2030 to 2035. I expect them to get 15 year time period for their AGR dues and bring down significant debt via selling stakes in the company. Further the sector has many tailwinds. VIL can also significantly increase their ARPU above 200 by focusing more on corporate accounts.

Tata Power: This is a fairly small position. I am increasing it as I see the company executing on its forward growth plan. I see the company becoming a renewable first energy company with a leading and possibly a monopoly on EV charging stations in India. They will also benefit from Tata Motors focus on becoming a electric vehicle first company.

Happy to hear any thoughts from other fellow investors here.

1 Like

@Tar Your Portfolio seems good and has a greatd scope for the future and your rationale behind the selection seems solid. Is there a reason why you don’t have FMCG & IT stocks in your portfolio?

@mukunt.s36 I don’t find many FMCG companies that can grow at double digit growth rates. FMCG is a good stable business dominated by large players. It’s also not under my circle of competence.
The only company I like in FMCG space is probably Hindustan Foods which serves as a proxy for growth in large cap companies.

Regarding Tech, I used to invest in Motilal Oswal Nasdaq ETF for the past couple of years. Liquidating that now slowly to build a US company based Tech heavy portfolio. I find more tech related opportunities in US stock markets than India.

2 Likes

Hi Tar

Congrats on setting a 30-40 year long term mindset at your young age. Have you thought so:

  • What can go wrong with these businesses over the long term?
  • What are reasons to not own these companies

Cheers
Rajiv

@rajivr: Thank you!

Absolutely, all these businesses carry risk. I monitor these companies on a quarterly basis and only take action to sell/buy based on any changes in either a) the catalyst or tailwinds that initially made me invest in these companies b) case of detoriating financials.

I like concentration in my portfolio as it makes it easy for me to track 12-15 companies.
I am not in love with any of these companies, they are just mere ways for me to grow my money. I get out as soon as any of them deviate from their investment story that I have told myself.

2 Likes

Disclosure: After today’s AGR judgement, I have exited Vodafone Idea completely. Was able to double my investment in a fairly short time with it. I am not clear as to where the company goes from here now and until that clarity arrives, I will not be an investor in the company. The only route for them from here on now is to re challenge the verdict along with raising funds and increasing ARPU. At 20 year timeframe this would have been possible, its nearly impossible at 10 year timeframe.

Half the proceeds from Vodafone Idea sell are now invested in Hindustan Foods. Other half is retained in cash as I expect the market to go correct 5 to 10% and plan to invest the remaining cash in that sell off.

1 Like

Hi @Tar How did you arrive at this number? For example, why not higher?

@rishabhkaul123 lots of liquidity and momentum in the markets, expect a few days or a week of profit booking nothing else. Hence the estimate of 5 to 10%. Anything over that will trigger a large scale sell off which at this stage doesn’t seem like a big possibility.

As you like Syngene, then why not invest direcly in Syngene and wait for Biologics IPO and invest then in that?

I don’t know when Biologics IPO will take place and Biocon as a holding company gets 75% of the yearly profits from Syngene. I am also not that bullish on Syngene, its already facing competition from the likes of Laurus and others who have either started their on contract research services or will be starting in the coming year. Main reasons for investing in Biocon are a) undervaluation of the company b) immense growth prospects in the Biologics space.

1 Like

Updated portfolio, made 51% returns in 2020. Hoping to achieve similar returns in 2021. Will be investing in a few IPOs this year and increase allocations to existing names.

Sr.No Stock Name Category Avg Buy Price
1 Avanti Feeds Consumption 427
2 Biocon Pharma 321
3 Borosil Renew Green Energy 126
4 Burger King Consumption 122
5 Deepak Nitrite Specialty Chemicals 919
6 Divis Labs Pharma 1760
7 Granules Pharma 315
8 IEX Green Energy 169
9 IOLCP Pharma 471
10 Laurus Labs Pharma 179
11 Navin Fluorine Specialty Chemicals 1991
12 Sequent Scientific Pharma 143
13 Tata Chemicals Green Energy 486
14 Tata Power Green Energy 72
15 Vinati Organics Specialty Chemicals 885

Vinati and Divis ,you brought at good level ,surely these will give you multi bagger returns

1 Like

Thank you!
My positions in IOLCP, Burger King, Borosil Renew are free btw. Each has given me multiple bag returns and I usually sell my initial investment when a stock runs up too fast. Already taken out my initial investment in these and all existing shares for me are at an effective cost of 0.

1 Like

Updated Portfolio as on 4th Feb 2021

Exited
Granules - Wanted to consolidate my pharma holdings, proceeds from this invested into my existing position in Laurus Labs as its a higher growing business than Granules.

Tata Chemicals - Main reason for investing in this was their Lithium Ion battery plant. I don’t think that Lithium Ion is the future for batteries anymore and advancements in solid state batteries will make lithium ion batteries outdated before Tata Chemicals can construct any significant business from that vertical. Proceeds from Tata Chemicals were invested into my existing position in Tata Power.

Added

RACLGear Tech - Micro cap auto ancillary company with great clients and substantial increase in sales QoQ. This is my bet for a 100x returns in 10-15 years.

Increased Positions In

Biocon
Burger King
Laurus Labs
Tata Power
Sequent Scientific

Stock Name Industry
Biocon Pharma
Avanti Consumption
IOLCP Pharma
Sequent Pharma
Divis Labs Pharma
Deepak Nitirate Specialty Chemicals
Laurus Labs Pharma
Tata Power Green Energy
IEX Green Energy
Vinati Organics Specialty Chemicals
RACL Automobiles
Navin Fluorine Specialty Chemicals
Burger King Consumption
Borosil Renewables Green Energy
3 Likes

Can you pls quote some references for this statement? Also, Tata chemicals wants to be a formidable player in EV battery life cycle… which not necessarily be restricted to Lithium ion or any other tech. What would stop them to adopt new tech if that grows as they are still nascent and nimble in this verticle?

For solid state batteries




Toyota is coming out with the first solid state battery car this year.

Tata Chemicals may figure out something but right now I don’t see them focusing enough on this space and I wanted concentration. Figured whoever makes batteries, EVs will still need electricity and charging infra so doubled down on my investment in Tata Power.
May enter Tata Chemicals again once they provide more clarity on their battery plant. Also, I don’t like their core business of soda ash etc.

1 Like

R&D for solid state batteries is still limited and companies like QuantumScape have a 5 year headstart. Solid state batteries charge faster, have 4 times the range and cost cheaper than lithium ion ones.

2 Likes

I respect your views and decision. Thanks for pointing this out, I will delve deeper, also if any tech disruption for Tata chemicals or any company venturing into new vertical happens, it’s better if it happens sooner than later. Good it’s happening now and as you rightly mentioned need to see how battery companies or those interested in batteries respond…

1 Like