The Anti-Portfolio

[vikas_sinha]

Oops! Seem to have provoked some undesirable, half-baked responses! I am no good, nowadays fully retired and too busy spending money rather than chasing more returns. I do not see what is wrong with high-degree of dependence on value-pickr forum. Am not forcing anybody to waste their time on thinking up such responses.

Some details may quench the fire though!

Yes, it is tax free only becoz majority only long term gains were booked this year. But yes, there were losses previously there too, hence tax free now.

More relevant is the reasoning behind actions of buy and sell, weak though they may be. Coastal corp seems to be battling against shrimp oversupply situation due to a weak chinese demand situation.

Yes, Best agro seems to be positioned precariously after a steep rise, indeed a high risk situation. It may be far better to stick to bottoming out stocks like PSU banks a few months ago, for better risk management.

The Anti-Portfolio

DISCLAIMER: I do my investments with only very basic research, trying to find fast movers, with good conviction level and low downside risk (naturally!) Usually do not do the ground work myself but depend largely on the community. I do not take investing that seriously, to the point that slow growth or little loss is ok with me. Hence diversifying now (and increasing quality) to reduce the risk of errors in judgement! I am financially atma-nirbhar now, the point is to relax, investing will bec…

PS: the portfolio graph looks flat ONLY because I paid 8% of its value as taxes on booking (short-term) gains. And liquidated 4% more for past ~2 years expenses.

[Nishant_jha1]

Where are you Vikas jee , This thread is silent from more than a month now ?

[vikas_sinha]

Good timing for the enquiry

Had decided to stay away from market action and wait for the thesis of my holdings to play out for longer time, like another year or so. But the market correction provided an opportunity to jump ships looking at better bets.

Missed doing the general status update when markets were at peaks otherwise its not motivating enough

Sold off APL apollo with 50% gains, Affle with 5% loss, Expleo with 100% gains, booked notional loss in Best agro and Krsnaa.

Bought Satia, Tinna rubber, Agarwal ind, 5% allocation each
Added a tiny bit to Ugro and Best agro, both now below avg buy levels, reduced a bit from Krsnaa, losing some patience here

Expleo was sold since wanted to stay away from IT sector for a while, they also seem not interested in being fair to the public shareholding. It was long-term so tax-free, have used up 65% of my booked carry-forward losses now

APL and Affle are both expensive, have always been so. Affle may face pressure since advertising is a weak link when slow down happens. APL I do not understand valuation triggers, it was invested via Tricoat as a special situation mostly.

Agarwal ind imports bitumen for roads mainly, fully integrated with ships, tanks, trucks and factories, somewhat similar to Tinna rubber, which recycles tyres, and about half goes to be added to bitumen to improve it.

Satia is punjab based agri residue based paper maker, with sales mainly to school boards, its expansion is coming online since past quarter.

Govt plans to make recycled rubber surfaced roads compulsory soon, cement is difficult to work with and quite expensive, while risk is that bitumen price and hence margins decline. Tinna is running at 65% capacity currently and expects to do full in about a year, and by then start work on new capacity. It is India’s largest rubber recycler and mixed road material maker

Agarwal ind is mainly doing bitumen and some LPG transport/import+distribution, it has been buying ships since 2019, and now owns 6, risk is that growth slows and margins decline. It is largest bitumen provider in collaboration with oil PSUs but market is fragmented

Satia is faces high level of competition and is diversifying into paper cutlery where it just ended a failed collaboration with american Zume co, now it is doing it by itself and seems to be stuck with delayed FSSAI license, but this is just a small and much delayed start, mainly new plant is scaling production since past quarter and that should be enough with demand from school boards/institutions and some export potential for its green sourced product (using mainly crop residue and 500 acre plantation in Karnal where it recycles waste water). Single use plastic, like disposable cutlery, is banned since july 2022, Satia missed their own guidance though

Tinna has 50% stake in a water-proofing coating biz in association with PI ind, that is doing quite well

Tinna may be tied to infra and auto/rubber cycle, and tyre recycling policy is stuck in draft for 5 years now, but it seems the best bet among the 3 new ones. Satia may see more demand since a new education policy may lead to more paper use for publication. Agarwal ind may be the riskiest bet, bitumen is only used in final prep of road and demand seems ok, while shipping rates are falling to record lows which was their fastest growth contributor, bitumen requires 200 degree temp to stay liquid, so transporting it looks specialized biz.

Thanks to @kalpesh4430 @Rafi_Syed @Dhruv_Galada among others for focus on Satia, @rinkupranjan and @sahil_vi for info on Tinna, and some unknown messenger for Agarwal ind even before a thread was started on it by @jet_nebula

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

[rinkupranjan]

@vikas_sinha

Tinna is running at 65% capacity currently and expects to do full in about a year, and by then start work on new capacity. It is India’s largest rubber recycler and mixed road material maker

Thanks for mentioning me😊

Few days back I had sent few queries to the management of Tinna Rubber regarding capacity utilisation etc. and got reply from the company.
Reposting here:–

Disclosure:- invested in Tinna Rubber

[Apurva_Dubey]

@vikas_sinha

Satia is punjab based agri residue based paper maker, with sales mainly to school boards, its expansion is coming online since past quarter.

Vikas ji,

Thanks for sharing your thoughts and investment thesis.

I was invested in Satia earlier but exited because i saw some yellow flags ;

(1) Management not doing a con call for Q1FY23 (2) Management revising down the FY23 PAT guidance from 200 Cr to 140 Cr (3) Backtracking on the Zume story (4) extremely low compensation of CFO.

Will appreciate your views on these observations.

BTW, Andhra Papers posted blockbuster results and so will Satia i feel.

[vikas_sinha]

Thanks for the continued updates!

Yes, my figures are very speculative a fast growing company is a bit difficult target to track! Good part is that the capacity expansion of 2021 is already full. Going by management guidance of next 3-4 years of 25% cagr growth is the best I can do, they seem decent enough. Any large greenfield would be icing on the cake.

[vikas_sinha]

Thanks for the comments!

Yes, backtracking on Zume does not look good, that would have been a real differentiator with high margin products with global acceptance. Maybe that’s the reason for it being little cheaper now. Chirag Satia does look at the finance and accounts aspects, so CFO is more like a secondary role player here, other management looks decently paid. For a small sized firm it is already A rated too. Management compensation is bit on higher side also, zooming a lot in previous year. Guidance still provides comfort to valuations.

The strength is a decade of consistently strong and rising margins. Thankfully 2 out of 3 companies, Tinna and Satia are ESG kind, this helps the longer term story.

[vikas_sinha]

Sold off Krsnaa, the problem here in hind-sight is that govt doctors/staff (radiologists/pathologists/technicians) never get fired, so apparently only new launched facilities are being covered by Krsnaa. Also it is not easy to become a B2C player, there are Dr Lal labs every 300 m and still many more players. Their radiology machines are very expensive and tendering means low prices.

Bought Diamines & Chemicals Ltd, its sales are at peak margins and peak revenues, so appears cheap. They are moving forward after a ~8 year delay on their capex, primary use is in detergents, drugs, lubes, paints. Margins can vary quite a bit but european production may remain low to support it, just guessing here. Capex will be total 7x current level, perhaps better product mix too, land and buildings are present, equipment is in progress, more guessing here. No info shared by management except 90 minute interaction from AGM. Perhaps 1-2 years before capex comes fully online, sales is another matter

Had bought Diamines before, held it for 6 months between Feb-Sept 2020, avg buy 220, avg sell 430. Good call since it did much worse in 2021, now a big reversal in 2022 which is a risk going forward. They had clearance which was going to expire after doing nothing for 7 years, they renewed it in 2022 for 4 more years, IIRC. Rough guess from EC doc is 10x capacity expansion but also hear that revenues may only be 4x from here. As base case it will easily do if management performs in timely fashion. Peers such as Balalji and Alkyl amines have done 4x since 2020-21 since it seems that Chinese supplies were being stopped by shipping issues and duties.

Added little money where prices are below buy avg, Best agro and Ugro.

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

[Apurva_Dubey]

Dear @vikas_sinha – surprisingly both Satia and Kilpest haven’t made much of a move despite very good results (more so in case of Satia where the PAT kind of shot through the roof). How do you read the market is reading these results?

[Kuldeepjadeja]

Apollo finvest(India)Ltd.

The model is quite difficult to understand, but it’s bet on digital lending in india.
Mikhil Inani and Diksha.Nangia has build the organisation very well.
They called it Amazon web services (AWS) of digital lending space .

I request u to evaluate and share ur view .

Disc .:- Tracking position

[vikas_sinha]

Kilpest has two things in progress, one being the reverse-merger and renaming which will help it to focus on biotech only. Another being the use of cash reserve to buy a suitable European target company. Maybe the recessionary trend helps them get a better deal. Export performance looks as expected. Price is very close to fair value due to small scale and high level of competition. We seem to be in a waiting phase now, definite success of these two events, should kick up the stock. Thinking a bit further, some 1-2 year(s) more of consistent results, having come out of the covid bump, should drive a re-rating. Currently at close to fair-value, it looks little tempting but it’s already in my top 4 holdings.

Satia is resting like the rest of the paper pack, market is not looking beyond the elevated margin cycle for paper. Satia is different, it always managed a flat margin profile which will improve when they finish with the many efficiency improvements regarding fuel, feedstock, mill, boiler etc. Also cutlery is showing decent progress and loans are being paid off early. Satia has always been a little over-priced, in expectation of large capex kicking-in or maybe coz of overall biz quality. So it is just resting a little bit, so is the market in general, next kick comes when topline and margins both increase within a year or so.

As long as biz is performing as expected and valuations are reasonable, it is good to hold and sleep soundly.

[vikas_sinha]

Have very limited interest in finance sector, since it has 40% weight already in folio.

Apollo fin has very little disclosure, very small scale of operations with declining metrics. Valuation offers little comfort. Promotor stake is in decline. Combining finance and unviable internet startups does not look a good idea to me. It is a very different kind of biz for sure, may need to dig deeper than this superficial analysis. From personal experience, it helps to tend bit on conservative side when dealing with topic of finance. Very few succeed like Bajaj fin, which is why it is a superstar. What they are saying is we have the tech platform and the license but will not play the market ourselves. Seems they understand the financial risk part (adjusted to each player’s taste) and just want to play broker/facilitator on the sidelines to make money. Looks like they hit temporary bump due to crack down by RBI on lending apps. It is avoid for me, since they seem to provide a side hustle for small time operators who do not have resources themselves.

[Apurva_Dubey]

Thanks for sharing your thoughts!

BTW, why do you say Kilpest is fairly valued? No matter how I skin this cat I see it deeply undervalued. With an EPS of ~40 per year, and the type of business they are in, a PE multiple of 10 looks quite low. Plus they have 100 Cr+ in the bank.

Thanks again

[vikas_sinha]

Thanks for correcting me! 10 would be year forward PE, currently closer to 14. Definitely undervalued or fairly valued to buy, with risk of downside protection, I would venture to rephrase. Cash not getting deployed for growth, small scale of operations with competitive intensity and phase of risk Europe is facing currently need to be factored. Maybe I am biased by anchoring to my buy price. I am sure tempted to buy more but my risk management is tending to be more conservative nowadays.

[Kuldeepjadeja]

Your every word is correct, but i m seeing different picture . See HDFC Empire created with much lesser efforts than Reliance.
At same time Google / Amazon is created with very few efforts as compared to HDFC. And the value is far greater.
What i see is they r first movers in Digital lending space.
If each nd everything Will be Digitise then why Lending will be left. So digital lending will be the future there is. No question on it. If that happens this couple will definitely creats some space in industry.
More they r working with Flipkart, Amazon,Zomato and few more lending apps.

I request u to have some deeper analysis on Apollo finvest.
Thanks

[vikas_sinha]

Latest folio status:

Not bad full year with 10% gain (considering withdrawals, just 4% if ignoring those small-circles showing pay-in/out on value graph!). Last peak was hit in December 2022. Now, 8% down from that peak. No significant withdrawals since last update, now running expenses purely on accumulated dividends of past 5 years so far, will last a few more months like this.

Past year graph: (courtesy zerodha)

Past 3 years graph: (courtesy value-research folio service)

Biggest loss of this year has been Coastal corp, it might still work out 1-2 years down the line but the wait is itself not risk free. Krsnaa is second, same pattern. Still holding the third, Best agro, with conviction

Tips and RACL were the biggest winners, tied for top spot. Expleo next.

Current folio: (best and simplest is to focus only on the “Current return %” since the others include the historical trades since 2017, as computed by value-research folio service)

Company name	Last price	Cost per share	% of Total	Return % pa	Total Return %	Current Return %
Ujjivan Financial Services Ltd.	267	124	15.0	124	107	115
IDFC First Bank Ltd.	56	38	10.2	64	45	45
RBL Bank Ltd.	159	105	9.3	62	52	52
Kilpest India Ltd.	411	362	7.9	16	13	13
Mirza International Ltd.	273	156	7.8	76	75	75
KPI Green Energy Ltd.	451	431	7.4	10	5	5
Gujarat Themis Biosyn Ltd.	612	608	6.7	28	10	1
Ugro Capital Ltd.	154	173	5.8	-26	-23	-11
Shivalik Bimetal Controls Ltd.	438	196	5.7	96	125	123
Agarwal Industrial Corporation Ltd.	646	592	4.7	368	9	9
Satia Industries Ltd.	122	120	4.4	33	2	2
Tinna Rubber And Infrastructure Ltd.	369	381	4.4	-44	-3	-3
Diamines & Chemicals Ltd.	419	411	3.7	179	30	2
Best Agrolife Ltd.	1099	1439	3.5	-82	-29	-24
Meghmani Finechem Ltd	1073	772	3.5	34	39	39
Total Stocks			100	22	86	28

Trying hard to maintain a limited list of 15 stocks. Recent buys have been mostly PE=10 or below, except Best agro and Tinna. Best agro price fell post buying, which reduced the multiple, would have instead liked earnings rising of course Trying to reduce risk of elevated expectations, though of course some are cheap for the nature of commoditized biz/sectoral valuations.

Thanks to the support shown by value-pickr folks! Especially for the very nicely reasoned replies to the trolls!

[narenarora]

Hi Vikas

Would request you to check NACL. Similar profile as Best Agro.

New capex/commencement in phases gives runway for next 2-3 yrs.

Thanks

[vikas_sinha]

NACL is already valued (about 2.5x Best agro) for its growth plans, which extend quite many years into the future, some of the big greenfield are still in pre-clearance and planning stage. Incremental growth is going to be limited, as capacities get bigger. It is still dealing with chemicals which it is working to stop being banned by the govt, while best agro is making novel combinations or new molecules for import substitution. So, NACL while looking not bad, is not suitable while trying to build a small sized folio.

[vikas_sinha]

Sold off Mirza since it had become too insignificant after reduction in value post the de-merger. Added the proceeds to Diamines since it was one among the smallest positions and averaging up while still close enough to the original buy price.

[Bhavya_Vyas]

hello vikas ji hope you are doing great , any updates to the pf?
also wanted your views on apar and powermech
and how do you book profits in stocks that ran up a lot after your buying ? lor how do you trail your positions?
thankyou