I added a 2% position in Kaveri seeds. This is in-line with increasing exposure to agricultural sector as I can find relatively higher number of bargains compared to other sectors. As we had a cyclical upturn in agri in 2020, I am adding my bets slowly (currently have Swaraj Engines and Kaveri seeds at 2% position sizes). For Kaveri, rice hybrids have been doing very well. My speculation is FY25 sales of around 1500 cr. translating into an enterprise value of 6000 cr. (4x EV/sales), translating into market cap of ~6500 cr. (share price ~ 1077) (assuming cash of 500 cr.). I will increase my position size if price drops or business starts performing better.
Updated portfolio is below. Cash remains high at 23%.
Core compounder (44%)
| Companies | Weightage |
|---|---|
| I T C Ltd. | 8.00% |
| Housing Development Finance Corporation Ltd. | 4.00% |
| NESCO Ltd. | 4.00% |
| Manappuram Finance Ltd. | 4.00% |
| Alembic Pharmaceuticals Ltd. | 4.00% |
| Amara Raja Batteries Ltd. | 4.00% |
| Avanti Feeds Ltd. | 4.00% |
| Eris Lifesciences Ltd. | 4.00% |
| Ajanta Pharmaceuticals Ltd. | 2.00% |
| HDFC Bank Ltd. | 2.00% |
| HDFC Asset Management Company Ltd | 2.00% |
| PI Industries Ltd. | 2.00% |
Cyclical (13%)
| Companies | Weightage |
|---|---|
| Kolte-Patil Developers Ltd. | 4.00% |
| Ashiana Housing Ltd. | 2.00% |
| Ashok Leyland Ltd. | 2.00% |
| SWARAJ ENGINES LTD. | 2.00% |
| Kaveri Seed Company Ltd. | 2.00% |
| Jamna Auto Industries Ltd. | 1.00% |
Slow grower (8%)
| Companies | Weightage |
|---|---|
| Power Grid Corporation of India Ltd. | 4.00% |
| Cochin Shipyard Ltd. | 4.00% |
Turnaround (6%)
| Companies | Weightage |
|---|---|
| CARE Ratings Ltd. | 4.00% |
| Lupin Ltd. | 2.00% |
Deep value (6%)
| Companies | Weightage |
|---|---|
| SJVN Ltd. | 1.00% |
| ATUL AUTO LTD. | 1.00% |
| Jagran Prakashan Ltd. | 1.00% |
| D.B.Corp Ltd. | 1.00% |
| Time Technoplast Ltd. | 1.00% |
| RACL Geartech Ltd | 1.00% |
Its a very deep value opportunity currently, a 2.2 dividend translates into 8% dividend yield currently. That takes care of the holding cost. Its trading at a very deep discount to replacement value (a 10 cr. per MW translates into enterprise value of 20’165 cr. for their current active capacity of 2016.5 MW vs their current EV of ~11’000 cr.). If we take into account their future expansion plans to become a 12000 MW company by 2030, there is optionality of good growth. Depending on their execution, I will be happy to scale up my position.