The Anti-Portfolio

Update made few minutes ago:

Booked 100% profits of Granules and bought in equal parts Bharti Airtel and Gujarat Themis Biosyn, transaction worth 5% of portfolio.

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Reasons for the above trades are trying to reduce concentration and diversify more, a defensive strategy. Aurobindo seemed cheap, is on the list of top API makers, large-cap comfort and the thread on valuepickr is enough to give more details on strengths, immediate trigger was dexamethasone for COVID.

Granules had run up enough from my buy average, and telecom has been commented on as being one sector similar to Pharma which will continue good growth. Think Voda-Idea may not be in position to really compete with the strong players like Airtel and Jio, it may limp along if it survives. Wanted a pure play telecom company hence not Reliance. Gujarat Themis Biosyn seems to be experiencing a really strong spurt of growth, seems it can really do a structural shift to sustain this momentum somewhat.

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Switched Airtel to Reliance, forget the telecom pure play, Ambani is Ambani, esp. if it is Mukesh!

Hi Vikas,

It’s interesting to see your portfolio doing well - i appreciate

Some questions
Currently reliance increased the capital via rights issue, institutional funding & much more. so people ended up buying without company having to do extra effort

Going ahead, i presume the company will reduce its stake and leverage the capital inflow from share capital and it will be soon enough to clear its ‘Net Debt’.

Don’t you think the valuations are high with respect to the given value?
Many people have entered into reliance - going forward there would be lot of corrections - wouldn’t that sounds an good entry point?

Currently isn’t that the wind sailing the ship?

Disc : I have not invested in reliance : am still studying with respect to the industry.
Reliance : Jio , TV18, Reliance Entertainment, Reliance Fresh, Reliance Clothing, Reliance Digital and much more

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I do not foresee any substantial corrections to create an entry point. There will be a downside after Q1 results show big impact from refining margins and retail shutdowns, but by then share would be 200+ already so down move will just perhaps touch current market prices not much lower etc. Even when fresh shares come into the actual trading system, there is a year before that, same logic applies.

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Whats the story behind Guj Themis Biosyn? How is the mgmt n business quality ? Any moat or entry barrier ? Whats the CAGR & Roce ?

Somehow they are the only manufacturers of Rifampicin in India. I got this investment idea from @kdjolly who had posted once on valuepickr an analysis of the company. The product is used in TB multi-drug combination therapy so market is big and growing, till some new science changes the treatment.

The technology is from Korean company which has also invested in it, 25% stake. The idea is that they may replace China as source of more anti-biotics and have started looking beyond Lupin, another investor and collaborator/buyer. CAGR is quite uneven, company just had early turnaround from BIFR in 2015-16. Now it appears that it is able to deploy a strong growth strategy. How much momentum can be sustained is difficult to say, I cannot find much details on this, hence, took a small position in overall PF.

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Exited Aurobindo, even very strong results seem to have hardly moved the needle on the stock, it seems to never make a break out the past few years above the CMP.

Reduced Granules and IOLCP by equal amounts. Made fresh investment in Suven Pharma, about 4% of PF, for reasons just look at the great analysis on the Suven Lifesciences thread!

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Latest PF status after all the changes in the intervening period, just turned net positive this week! (compared to the value in last week of Jan 2020)

Company name % of Total
IOL Chemicals & Pharmaceuticals Ltd. 12.3
Granules India Ltd. 10.3
Solara Active Pharma Sciences Ltd. 8.2
HLE Glascoat Ltd. 7.1
Diamines & Chemicals Ltd. 7.1
Arman Financial Services Ltd. 7.2
Black Rose Industries Ltd. 5.5
SREI Infrastructure Finance Ltd. 4.6
Suven Pharmaceutical Ltd. 4.5
Jain Irrigation Systems Ltd. 4.5
Aarti Industries Ltd. 3.9
Kanchi Karpooram Ltd. 3.3
Ion Exchange (India) Ltd. 3.1
Frontier Springs Ltd. 3.0
Gujarat Themis Biosyn Ltd. 2.9
Reliance Industries Ltd. 2.5
Welspun India Ltd. 2.4
Bandhan Bank Ltd. 2.2
Biocon Ltd. 2.1
Bank Of Baroda 1.5
Indusind Bank Ltd. 1.1
Total Stocks 100

No cash added, just moved around, fresh investments are highlighted and the top-two in the list have been reduced by about 1/3rd, 10% reduction to Black Rose also.

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Regrets for squaring off the position at 360.

Assumed that the story was done, buying rate was at 230.

@vikas_sinha Vikas Am unsure about the supply of ibuprofen to BASF is still intact and for how many years… promoters alloted shares at a price of 195 per share and lock in period for 3 years

Can you shed some light on the supply and api space?

I lost a little too by shedding 30% while stock zoomed almost 80 above the disposal rate! Most of my buys were when the stocks were around their 52 week highs! For IOLCP too! in Jan-Feb 2020 (except Granules and Arman which I had been accumulating since December 2019).

Exactly I am not sure on BASF! And IOLCP is not ramping up fast enough with alternative products in my opinion, so this is a risk. Market still thinks that is still 1 year or more away, and will not cause a sudden fall in Ibuprofen margins perhaps. IOLCP is getting marks for paying dividend, zero debt, more disclosure and enough cash flows which is being deployed in diversification of product line. Hence, still tops in my PF.

PS: My PF was down 45% at the end of March, had no option but to think long-term!

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The promoters are buying the bottom fishes and are handcuffed for 3 years.

This gives some sense of comfort - however given the tailwind of ibuprofen and supplies am assuming the Q2 fall wont be largely impacted.

Will take a fresh position tomorrow.

Disclaimer : Am not an sebi analyst/advisor, this is not a stock recommendation

nice pick vikesh. are you still holding it. what do you think of management integrity and competence to execute a great business strategy? we picked around same time and same price but not as much portfolio allocation.

lokesh.

Management seems honest, from interviews on CNBC, but that can be difficult to judge!
Related party transactions, about 30% of revenues is a huge amount, that is a red flag.
They showed great competence to execute Ibuprofen plan (got lucky also), and rest of the expansions they have justified to be of good strategy, looks overall ok to me. I think they will manage well on their plans, depending a bit on luck!

Thanks! Still holding, thinking of adding!

related party red flag is a huge issue unless management comes out explains or provides great disclosures and details. Stock can run up even 10 folds like yes bank. I have a 4 percent position only. My experience tells me something this cheap is a red flag as well. Rest your portfolio looks great to me. Would recommend you to consider adding hdfc bank at some point like you did reliance.

Thanks! God knows I tried to buy HDFC bank 3-4 years ago, but could not because as NRI demat holder, I get counted in foreign holder list and have been denied since that quota is always full. I stopped trying since early 2018 after it reached 1000 but am tempted to try again!

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Hey! The quota opened in February and you can buy now. I bought some from February onwards.

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I am NRI as well, In USA, Princeton, NJ. I have HDB the ADR listed on NYSE.

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Made an opportunistic bet on Jubilant Life sciences with SIP worth 1.5% of PF. Somehow the (large) mid-cap space has good range of ok valued, decent quality stocks. The opportunity might be remdesivir production, sales starting July. There seems to be a worldwide shortage of this and it might be effective just like masks which were also initially controversial. Also, fundamentally it is a decent quality stock with good news expected down the line. Planned demerger will be value-accretive.

Latest status update: got an unexpected burst of liquidity 2 days ago, added 5% to portfolio, spread out unevenly in the 4 stocks highlighted, all mainly in the large-caps which had low-weights and relatively fresh buys, still hovering at the original buy prices.
Net 10% increase over end January.
Looks like Nifty will easily test 11k+ before there is some downside after Q1 results disasters are published. All the money being printed world-wide has to go somewhere!
At this point maybe should consolidate by selling 2-3 stocks.

Company name % of Total
IOL Chemicals & Pharmaceuticals Ltd. 13.2
Granules India Ltd. 9.3
Solara Active Pharma Sciences Ltd. 7.7
Arman Financial Services Ltd. 7.4
Diamines & Chemicals Ltd. 6.6
HLE Glascoat Ltd. 6.4
Jain Irrigation Systems Ltd. 5.0
Black Rose Industries Ltd. 5.0
Suven Pharmaceutical Ltd. 4.3
SREI Infrastructure Finance Ltd. 4.3
Kanchi Karpooram Ltd. 3.7
Aarti Industries Ltd. 3.4
Reliance Industries Ltd. 3.0
Frontier Springs Ltd. 2.7
Indusind Bank Ltd. 2.6
Ion Exchange (India) Ltd. 2.6
Jubilant Life Sciences Ltd. 2.4
Gujarat Themis Biosyn Ltd. 2.3
Bandhan Bank Ltd. 2.1
Welspun India Ltd. 2.1
Bank Of Baroda 2.0
Biocon Ltd. 1.9
Total Stocks 100
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