As of today, I have sold my stake in Indigo (fair valuations, slightly hazy future) and reallocated the remaining 2% cash in Amara Raja Batteries. I used to own Amara Raja but sold it in April 2019 when the news of discontinuation of collaboration with Johnson Controls came out. Over time, it became clearer that the true edge of Amara Raja was not superior technology, but a superior distribution and higher brand spends. Sales growth has been subdued over the last few years due to auto slowdown and this seems to be coming back (also reflected in Castrol’s numbers). Additionally, the industrial segment seems to be coming back. Given the giant CAPEX spend by Amara Raja over the last few years, its now time to sweat out the assets and generate free cash. Recently, Exide is growing at very similar rates to Amara Raja and this remains a key monitorable. Lets see what happens going forward! 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. | 4.00% |
| HDFC Asset Management Company Ltd | 3.00% |
| Reliance Nippon Asset Management Co | 3.00% |
| CARE Ratings Ltd. | 3.00% |
| Lupin Ltd. | 2.00% |
| Avanti Feeds Ltd. | 2.00% |
| Cera Sanitaryware Ltd | 2.00% |
| National Aluminium Co. 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% |
| Amara Raja Batteries Ltd. | 2.00% |
| NATCO Pharma Ltd. | 1.00% |
| Jamna Auto Industries Ltd. | 1.00% |
| Ashok Leyland Ltd. | 1.00% |
| Cash | 0.00% |
Valuations + inherent uncertainty in my understanding of future sales growth. Revlimid opportunity has been known for a while now, the approval is simply a confirmation. Natco is an optionality position for me and I scaled it up when prices became very attractive in 2019/20. However, I don’t put more than 2% in an optionality bet. I will hold on to the rest of shares to see how business numbers come out (we have to wait for FY23 for revlimid numbers).