The Anti-Portfolio

[vikas_sinha]

See, it is quite simple, I have the same entry point as yours, so we both judged that right

1. Company had been trading at only the median PE mark (5 years period, looking at screener.in) while sales and margins were increasing past 2 quarters and now markets were bullish.

2. Yourself knew about stable/sticky sales. Also margins were decent and fairly stable given huge see-saw in rubber prices.

3. On top of this company was increasing focus on exports (reviews of US customers on amazon are good).

When companies survive this long, and have decent metrics and growth, with capex too in next few quarters, we need to judge a decent upside. Yes, now it may be trading close to correct value, given small size and lack of disclosure also. But I expect a re-rating given their growth looks structural and long lasting. Or maybe you made a right exit

[vikas_sinha]

Thanks!

Shivalik bimetal.
Ugro.
Sandur.
Steel strips.
Expleo.

In decreasing order of preference.

DISCLAIMER : this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing

[Shikhar_Seth]

I am hugely biased for Ugro and Steel Strips
Disc: Invested and biased too

[Sun_Light_17]

I think
it is not about right or
wrong
It is about conviction and interpretation of information’s

Learning from your posts

All the best

[vikas_sinha]

UPDATE:

Exited Bajaj Steel and Rajapalayam, bought Kilpest and IDFC ltd, also added to Ugro.

DISCLAIMER : this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing

[vikas_sinha]

Reasoning:

Kilpest provided a decently safe entry point, non-covid biz is the interesting part really, also very cash-rich.

IDFC ltd seems like a safe bet given de-merger etc. arbitrage. Financials biz overall trend seems to be swinging up already.

Bajaj steel may just be having seasonal tantrums, maybe more people follow this closely enough by interacting with the company directly. Position had grown too big and lost patience.

BAJAJ STEEL INDUSTRIES LTD - Proxy on Agri Theme

Dramatic decline in all segments. [image] Company is not bad, but no interaction with investors, maybe growth was just because of entering US and African market. Trying to do too many things, not worth the risk, as it is business is bound to be deep cyclical, once cotton machinery is bought, repeat/replacement sales will be tiny, difficult to predict growth here. Better to stay invested in predictable, well analysed, transparent biz It may also just be a game to allow big fishes to make entr…

DISCLAIMER : this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing

[pcygnii]

Hi Vikas, how did you assess the arbitrage opportunity in IDFC as opposed to buying IDFCFB directly considering the ratio hasn’t been decided yet?

[vikas_sinha]

UPDATE:

Medium churn of folio given opportunities provided in the fall.
Total transaction worth 15% of folio value

Sold off Marksans, Vipul organics, Meghmani organics and Bajaj health, also trimmed several holdings a little bit.

Bought Mirza, Krsnaa, Sapphire and Ujjivan financial.

Reasoning:
Better to buy good, well-discovered, long running biz at a decent price and get peace of mind, even if there is short-term issue, so shoes, pizza, bank etc.

Sell
Vipul organics was facing issues due to exports related problems, cannot put a timeline on resolution. Anyway utilization is 65% and valuation is expensive. Nobody is tracking this, all this info is thanks to @kalpesh4430

Meghmani organics is expanding relatively slowly, max 50% in 2 years, valuations provide comfort but are historically permanently de-rated due to lack of ‘sanskari’ promotors.

Marksans/Bajaj health does not inspire much confidence, as stated before, covid elevated profits of most pharma and it will be difficult to match unless there are growth plans underway already.
Now, Laurus and Kopran are my only pharma holdings.

Buy
Mirza is splitting leather and non-leather biz, latter is fast growing and money making while the former is lossy, it is very cheap for a profitable shoes and fashion retail brand. Maybe bit late entry as always. Thanks @sahil_vi for tremendous details! Also for Kilpest! Thanks to @msandip too.

Ujjivan financial will merge with Ujjivan bank and hence should gain from price arbitrage, and if the bank gets back to decent profits then the upside is ~3x. Thanks @amey153 @KP2018

Krsnaa is amazing diagnostics chain, mainly out-sourced biz for hospitals and just got contract for 10 districts from UP govt, for a decade, Krsnaa is the only listed player tendering for govt. Thanks @Chins @Dev_S

Sapphire has decent metrics and cheaper than exact direct competitor Devyani by 50%. Thanks @Vivek_6954

Overall folio status:

Reduced from the red-colored ones and added to the other colored ones.
Reduction in decreasing order Shakti, Pix, Manorama, Steel strips, RACL, Kopran, KPR and Praj.
Better to book some profits, even if some look like long-term bets, when seen at fair valuation and upside seems to be taking fairly longish time.

Gains are a time value function, very rare to have the foresight and patience to wait for it.

DISCLAIMER : this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing

[Karthikbaskaran]

@vikas_sinha could please explain why you exited marksans. I feel it has an undemanding valuation and even orbimed invested at 74.Sir your thread is wonderful.i have learnt a lot from you.thank you so much.

Disclosure: baised and invested 4.5 percent of portfolio at 55

[vikas_sinha]

The term is used loosely here, the valuation is SOTP, MF biz sale value and left with Bank, valuing the stake it holds in the bank.

[vikas_sinha]

Yes, it does seem fairly valued, but I do not see any upside triggers or growth coming soon. There seemed some better opportunities meanwhile. Doubtful owner after all and the deal with the global pharma fund is too comfortable, with convertible debentures at high rates etc. Why not just take loans when DE is almost zero?

Thanks!

[vikas_sinha]

UPDATE:

sold off valiant organics, a specialty chem with ~40% margin erosion in past year and then paracetamol supply from china starting up again, and the promotors are constantly selling off!

added to some of the most recent buys, i.e. ujjivan fin, mirza, kilpest, ugro, in that order

DISCLAIMER : this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing

[vikas_sinha]

@vikas_sinha

writing in more detail about my holdings in descending order of folio weight.

5. Expleo solutions

Merger with all other group entities in India will double top and bottomlines, likely the updated numbers get published within next 1-2 quarters. Biz will diversify from testing/quality focus to more technical software development etc. EPS though will likely only bump up modestly in 20-30% range. The backing of a large european PE fund and outsourcing wave for IT means growth should be quite strong for some time. Growth plans are already rolling along, though have yet not started contributing positively to the financials. Seems a fair bet for the longish term, based on management quality too.

DISCLAIMER : this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing

[Bhavya_Vyas]

loved your constant update here , i have bought some stocks in my dads pf (IN OCTOBER) just wanted your views on how you see them(upside and quality etc)
1.HDFC AMC
2. NARAYNA HRUDAYALA
3.HDFC BANK
4.DEEPAK NITRITE
5.TAMO AND TATA POWER
(NONE OF THESE ARE RECOMMENDATIONS)

[vikas_sinha]

Thanks, Bhavya!

I rarely look at blue-chips and larger sized cap names, they tend to be over-bought with upside limits, of course my risk appetite is maybe very different from your father.

1. HDFC AMC, not a big fan, they seem to be struggling when bull market was on, not a good sign.

2. Narayana hrudalaya, I am with @hitesh2710 about capital intensity muting returns for hospitals (he should be little more knowledgeable about this domain than we are!). Numbers of most hospitals support this thesis, their covid rollercoaster might be at the top.

3. HDFC bank, this I like, quality and consistency, barring minor hiccups, banking is indeed a reflection of the broad economy/macros, hence should be a decent compounder for the long term.

4. Deepak nitrite, seems to have reached its fair value for a while to come, seems pace incremental growth might be much slower looking forward.

5. Tata motors, find this one very difficult to analyse, since Jaguar+Land-rover international biz is the dominant entity, nothing great overall.

6. Tata power, seems promising but is there enough space for all energy/solar players for a plain commodity biz? Tata firepower may not be able to match the other heavies here, given current valuation. Any boost from power sector reforms maybe over sooner than later. Coal price might be a worry too.

DISCLAIMER : this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing

[Bhavya_Vyas]

thank you soo much vikas ji

[Bhavya_Vyas]

just adding to my ques
what can be some pockets where i can look for (sectors,industries) for my dad , he is ready to take a mid risk ?(for time horizon of btw 1-5 years)

[vikas_sinha]

Some good ones, mainly looking at my own list:

1. Banks, if macros show grow the financials have to do well, most seem to be offering decent valuation esp. HDFC (low risk) or IDFC (medium risk), or if wanting higher risk look at Ujjivan or some other SFB.

2. Basic commodities have done well where input is not escalating as well, so mining such as iron-ore will continue to do well, suggest GPIL and Sandur as they themselves are on strong growth path.

3. QSR, after covid related underperformance and undervaluation, situation show reverse strongly, suggest any Pizza or Burger related franchise. Travel will also add to people eating out.

4. IT, outsourcing will continue to boom for long term, just need to find a decent valuation, maybe Cyient (low) or even Expleo (medium) offer a good deal.

DISCLAIMER : this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing

[Bhavya_Vyas]

thank you soo much vikas ji , ill dig deep in these pockets specially qsr looks very attractive to me for the next 5 years .

[Midhunjoe]

Hi Vikas

Have been following your thread for some time now. Just read your thread end to end over the week end. I am completely in awe on the transformation in your fortunes from 2019 and the wealth you have generated over this short period up to now. Your achieving atma Nirbhar status is highly inspiring to say the least.
Just had a few queries ( pls feel free to chose not to answer/ answer selectively if it’s too personal )

1. Are you working full time now . I am assuming you have quit your job now . How do you spend your day if that’s the case. Time devoted to investing etc.
2. What was your starting corpus . Was is huge enough or is it just compounding that has helped you to attain financial independence.
3. Could you give a brief of your life story so that it can inspire many investors who are engaged with you.

Appreciate the candid and prompt updates in your thread and like your chill attitude to investing !!