As of today, I have sold my 2% position in Infosys, reduced allocation in Indigo from 4% to 2% and invested the money in HDFC bank (at 4% position size).
Assumptions
Infosys: FY20 revenue: 90’791 cr., will grow @10% to 146’220 cr., Earnings (28% PBT margins): 146’220*28%*75% ~ 30’706 cr., Sell at 22P/E ~ 675’532 cr. (share price: 1587). Incremental returns are ~6%.
HDFC bank: FY21 book value: 210’443 cr. (382/share), share count ~ 551.23 cr. In FY25 book value will grow @18% to ~ 408’000 cr. Long term share dilution ~ 2% i.e. 597 cr., Book value per share: 683 (including impact of dilution). I would like to sell at >4P/B (share price: 2732). Incremental returns are ~19% (adding 1% dividend yield)
Risk reward seems to be more favorable for HDFC bank vs Infy (hence the switch). Updated portfolio is below.
| Companies | Weightage |
|---|---|
| HCL Technologies Ltd. | 6.00% |
| I T C Ltd. | 6.00% |
| PI Industries Ltd. | 6.00% |
| Power Grid Corporation of India Ltd. | 6.00% |
| Larsen & Toubro Ltd. | 6.00% |
| Ajanta Pharmaceuticals Ltd. | 4.50% |
| Kolte-Patil Developers Ltd. | 4.50% |
| Ashiana Housing Ltd. | 4.50% |
| NESCO Ltd. | 4.50% |
| Maruti Suzuki India Ltd. | 4.00% |
| Suprajit Engineering Ltd. | 4.00% |
| Manappuram Finance Ltd. | 4.00% |
| HDFC Bank Ltd. | 4.00% |
| Housing Development Finance Corporation Ltd. | 3.00% |
| HDFC Asset Management Company Ltd | 3.00% |
| Reliance Nippon Asset Management Co | 3.00% |
| CARE Ratings Ltd. | 3.00% |
| InterGlobe Aviation Ltd. | 2.00% |
| Lupin Ltd. | 2.00% |
| Avanti Feeds Ltd. | 2.00% |
| Cera Sanitaryware Ltd | 2.00% |
| National Aluminium Co. Ltd. | 2.00% |
| NATCO Pharma Ltd. | 2.00% |
| Wonderla Holidays Ltd. | 2.00% |
| Maithan Alloys Ltd. | 2.00% |
| Cadila Healthcare Ltd. | 2.00% |
| Inox Leisure Ltd. | 2.00% |
| Jubilant Ingrevia Ltd | 2.00% |
| Jamna Auto Industries Ltd. | 1.00% |
| Ashok Leyland Ltd. | 1.00% |
| Cash | 0.00% |