Can you elaborate more on your comment about, “investing doesnt take much time and it can be a parttime pursuit”, coz what i hear and read is, you need to follow so many things, so many con calls, so many annual reports …Then different investing books and continuously following different parameters for different industries, then global markets, macro factors like interest rates, unemployment rates, updates on that…there is so much to read and understand and there are only 24 hours in a day…So overwhelming…or am.i misreading something…??
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Again intruding.
You should look at the context for such statements. Harsh is a scientist, so it is pretty obvious that, what seem tough, time consuming, a big effort for most of us is not the same for him, because of his cognitive abilities. What takes a day for me to learn could take an hour for him. Haven’t you come across such intelligent members in the forum? I have.
He may see some losses as Newton did, prone to some misunderstanding, given the nature of businesses, where there exist things that are not quantifiable, and certain non mathematical, psychological and emotional aspects effect prices. But his intellect surpasses a lot of things, so his journey is not the same as that of ours, and as he is sharing his thought process, learning with us through this thread, he is helping us all.
I think even you belong to finance/commerce/business spectrum, so it is relatively easy for you too, as compared to someone who is an outsider, like me. I need a calculator, you don’t.
It is impossible to master certain things when one is not blessed with a particular level of intelligence. No amount of hard work, dedication or practice help, as there is a prerequisite, a line that is drawn when we are born. And market is not that, market is not a place where there is entry fee is a high IQ, I wouldn’t be here if that were the case. There is a lot of learning involved, but that can be accomplished with time and effort.
Having questions or doubts help, but we may never find the perfect answers, so we have to settle with something that helps, so that we can go forward in our journey. And market is so big that if we know where to look, we can be profitable. In essence, we have to find our own place, and there is a place for us, I am in the process of finding mine, hence all this talk.
Hope I didn’t make this laboratory like thread untidy with my reply 
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Results were quite poor, but I expect rampup in next few quarters. Lets see if things turn around.
Caplin is a formulation co and Anuh is an API co, so their business models are quite different. While Caplin has consistenly delivered very good numbers, their nos are optimized to a great extent, where potential for further improvement in margins is little, especially because their current growth is coming from a much more competitive US market. On the other hand, Anuh Pharma can have some margin expansion if they can scaleup their chronic portfolio. So, the delta in earnings can be higher for Anuh.
Also, my experience in smaller companies has been much better than larger ones, especially if one gets in at a cheap multiple. From a nos perspective, Caplin might look better but from a risk reward, I feel both offer good opportunities.
The large players in this sector are Anarock, Liases Foras and Propequity. The core market of selling real estate prices data is not very big, given that nobody really wants to pay for data in India. Thats why all these companies have tried to build ancillary services that can be offered to clients, where their real estate data is used as an input. Companies like Anarock offer consultancy services to help builders sell more flats by helping them with pricing and a better connection with local brokers. Propequity has taken a slightly different approach, where they provide valuation reports to finance companies based on their database. The opportunity in this business is quite large, and there is not much organized competition around this. I am sure if Propequity scales this, there will be more competition. As my knowledge of this space is still evolving and Propequity is a recent IPO, I want to give more time to see how management behaves and deliver on their plans.
@james_kerala @parkhi_nazar You guys are being very kind, we all learn from each other. I have benefitted 100x+ more from this platform than what I have given back.
You can make it as complicated (or simple) as you want. In my family, I have seen people having huge investing success by reading one issue of Capital Market Magazine a month, and also being very unsuccessful despite following all sorts of complicated finance theories. My own observation has been that more information often doesn’t mean better insights. Its the unique insight or thought process one brings into the markets that gets rewarded over time (assuming its correct).
Investing in its pure essence is very simple (buying good things cheap and hoping for the best). Once you get through the basic learning phase, its quite simple and also a very enjoyable pursuit.
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I think Harsh has answered this well, so I’ll just leave this meme here. I’m not saying that I’m the jedi on the right (far from it!), but I’ve been around long enough to acknowledge that there is a ring of truth to this meme.
Translating into English, the person the left and the one on the right do similar things, but for different reasons.
The person on the left side sees all those factors you mentioned (so many things, so many con calls, so many annual reports …Then different investing books and continuously following different parameters for different industries, then global markets, macro factors like interest rates, unemployment rates, updates on that) as too complicated and so does some simple thing e.g. Index Funds.
The person in the middle sees all the complicated factors you mention as a challenge and exciting, and tries to solve for it. And this often has a not-too-great-outcome.
The person on the right realizes that there is actually a lot of noise. S(he) knows that a few parameters have an outsized impact on outcome. E.g. such a person may realize that asset allocation plays a much bigger role in wealth creation than stock picking. And then voila, goes for…Index Funds.
(The index funds example is just a crude illustration, to bring the point alive).
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Hello Harsh…It looks like balanced decision to sell 50% in chamanlal…I still hold full…
Have u checked Bajaj consumer? Do u think it has the potential to become atleast 3x over next 5 years? Margin at bottom, getting diversified from single product, possible PE expansion if everything goes well, and can’t missout good dividend as well…
Thanks
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As of today, I have created a 2% position in Aptus Value Housing which reduces cash to 3%.
I have been working on Aptus’ value proposition for the last couple of years and have been very impressed by the kind of lending model they have built. Their niche lies in maintaining a balance of high yielding business loans (20%+) and medium yielding affordable housing loans (14-15%), which gives them higher blended yields (17%) while maintaining an ultra low cost structure (2.5-3% opex). Their cost structure is a reflection of centralised credit underwriting operations, which means most of their local branches only needs to have sales personnel, who draw lower salaries compared to credit underwriters. In lending financials, we can only infer a few things from numbers due to the opaque nature of the business.
- Cost structure of organization
- Credit performance in bad cycles by studying performance of static loan pools.
I have seen that organizations that are good at lending also tend to have lower costs (e.g. HDFC, Canfin, HDFC bank, etc.), as lending is a commodity business and in any commodity, one can only control costs. Aptus has the lowest cost structure amongst peers like Aavas or Home first. Additionally, Aptus has the lowest credit costs amongst its peer set. You can see an illustration of their unit economics below.
Now, lets look at nos they have reported in past few years to see if my nos actually make sense (historical nos are even better than my assumption)
Having tracked a lot of lending cos, I haven’t seen any company with this kind of unit economics. These numbers make Gruh Finance look like an average underwriter. Given that valuations have cooled down significantly after the IPO (from 6-7x PB to 3.6x PB), I am willing to take a bet and see how things turn out. My two worries are:
- Reported nos are not scalable as they expand beyond their core geographies
- The true credit costs are higher than whats being reported.
Lets see how future pans out.
Core compounder (42%)
| Companies | Weightage |
|---|---|
| I T C Ltd. | 4.00% |
| Housing Development Finance Corporation Ltd. | 4.00% |
| NESCO Ltd. | 4.00% |
| Eris Lifesciences Ltd. | 4.00% |
| Ajanta Pharmaceuticals Ltd. | 4.00% |
| HDFC Asset Management Company Ltd | 4.00% |
| Aegis Logistics Ltd. | 2.00% |
| Gufic Biosciences | 4.00% |
| HDFC Bank Ltd. | 2.00% |
| PI Industries Ltd. | 2.00% |
| LINCOLN PHARMACEUTICALS LTD. | 2.00% |
| Caplin Point Laboratories Ltd. | 2.00% |
| P.E. Analytics Ltd | 2.00% |
| Aptus Value Housing Finance India Ltd. | 2.00% |
Cyclical (47%)
| Companies | Weightage |
|---|---|
| Kolte-Patil Developers Ltd. | 4.00% |
| Sharda Cropchem Ltd. | 4.00% |
| Avanti Feeds Ltd. | 4.00% |
| Aditya Birla Sun Life AMC Ltd | 4.00% |
| Alembic Pharmaceuticals Ltd. | 4.00% |
| Amara Raja Batteries Ltd. | 4.00% |
| Chaman Lal Setia Exp | 2.00% |
| Stylam Industries Limited | 2.00% |
| Ashiana Housing Ltd. | 2.00% |
| Ashok Leyland Ltd. | 2.00% |
| Kaveri Seed Company Ltd. | 2.00% |
| Sundaram Finance Ltd. | 2.00% |
| Time Technoplast Ltd. | 2.00% |
| RACL Geartech Ltd | 2.00% |
| Manappuram Finance Ltd. | 2.00% |
| Transpek Industry Ltd. | 2.00% |
| ANUH PHARMA LTD. | 2.00% |
| Shree Ganesh Remedies Ltd - PP | 1.00% |
Turnaround (2%)
| Companies | Weightage |
|---|---|
| Punjab Chem. & Corp | 2.00% |
Deep value (6%)
| Companies | Weightage |
|---|---|
| Geekay Wires | 1.00% |
| Jagran Prakashan Ltd. | 1.00% |
| D.B.Corp Ltd. | 1.00% |
| Shemaroo Entertainment Ltd. | 1.00% |
| Modison Metals | 1.00% |
| RKEC Projects | 1.00% |
Sorry, I dont track Bajaj consumer.
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Thanks for the update! but don’t you think 3.6x P/BV is still expensive compared to industry valuations?
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@harsh.beria93 are you trackking ddev plastics, last year got de-merged. Company is into making plastic compounds like cables, footwares, emginnered plastics for automobile, appliances, electronics etc. Clients are KEI, finolex, havells.
And
Company is forayed into producing Halogen Free Flame Retardant compounds with production facilities of 6000 MTPA are expected to be commissioned by Q1 of FY24.
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Its a general question from your investment style.
Do you follow any exit strategy or any stop loss you maintained for any stock.
If yes, Please share it.
@harsh.beria93 I follow u from last one year and learn a lot from your valuable post
Thanks…
Make some reasearch on ur last position of anuh pharma and having following concern,
-
company presence from more than 50 years but growth stuck in some level
-
not much clarity on relation and dependcy with SKant group
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not much information available on internet about SKant groups.
Skant is a. Sister company and together it is a big family owned conglomerate and aince 1932
I am sorry, I haven’t done much work on ddev.
I dont use stop loss or any share price based criterion to exit stocks.
Skant is a formulations co whereas Anuh manufactures API. There is a lot of information on their group website and their respective rating reports. I have shared some of these on Anuh Pharma thread.
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Hi there,
I’m beginner in investing. In your profolio I saw stylam under cyclical. But their margins never shrink. How it comes under cyclical industry. Can u please explain is it because of raw material? Thanks in advance
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Hi,
How do you see the results of Geekay Wires. Seems muted. Also, the scrip has been placed under periodic call option.
-
Ashiana Housing is a great pick for real estate. I believe this is the only company on which I can bet on in the sector.
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ITC : It is a great pick. But since you have allocated 6% in FMCG, you can look at nestle as well. Nestle has an absolute dominance of about 97% in children cereal industry. And due to India’s regulation regarding advertising the children cereal industry, competition affecting Nestle’s position in this growing market is difficult to disrupt.
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Interglobe : I do understand your thesis of airline being a growing industry. Globally, the most profitable airlies are those of the developed nations. So, if you have a very big time horizon for aviation (about 20-25 years) , then I believe you are at a good spot. But, if its not for such a long duration, I believe you can think it once again. But, no doubt Indigo is a better investment than other listed airlies in India.
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HDFC : You should be loading HDFC bank I believe. The stock has not moved much in the last 2 years, but the earnings have compounded on a healthy rate, making it relativelty cheap right now since earnings have grown but the stock price has not. Thus, a good time to enter the league.
Would like to advice you to see IDFC first bank as well. Stock is lead by very good management. The CEO has built the retail business of ICICI bank back in the days. The COO of the company is ex-ICICI COO guy and a very respect person in the industry. And naturally, good management translates to ethical banking practices → good asset quality → less NPA/defaults. Also, this is a retail focused bank now.
Feel free to express disaggrements if any. Happy to learn!
I am not an advisor. These are not recommendations. These are based on my understandings.
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Hi @harsh.beria93 - Hope you are well!
I came across the Q1 results and investor presentation for Best Agrolife - here
The Q1 results are impressive for this agrochem player in tough environment. Besides, management is very clearly guiding for 30% growth and 20% margin for FY24. They however had negative cash flow for last couple of years. Longer cash conversion cycle. High amount of inventory. The management mentioned during the concall that they will address this challenge in next 2-3 quarters.
Did this company catch your attention? Do you any thoughts to share about this business.
You can call it non-cyclical if you want. Most building material cos go through cyclical highs and lows which generally correlate with residential cycles.
Results were good with them recovering margins. They are running at close to full capacity which might lead to muted growth for sometime.
Their results were really good this quarter, especially amidst all the agchem problems. I have been contemplating my future course of action, but haven’t yet made up my mind.
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Dear Harsh,
2+ years back you invested in HDFC Bank, later and I could see you reduced the position size to 2% from 4% and increased HDFC from 3% to 4%, thus in effect reducing from 7% to 6% and remained there since.
Now many things changed including the merger. I could see historical PB is close to lowest of 10+ years near 3.0. How do you see HDFC bank going forward? You seem to have taken 4 year point of view in bank and 2.4 years already passed. How do you view HDFC bank in the light of the merger and leadership changes? Are you keeping the whole position intact - which is 4% from HDFC and 2% From Hdfc bank making it 6%. What would make you to increase the investment to 8% like ITC at some point or on the other side to exit/reduce the position from 6% you had.
Note: I recently invested about 3.2% of PF on reversion to mean as I expect profit growth and PB go up once merger process firmly behind in few quarters and consider this as an investment with less risk with increased margin of safety. I am not well versed in deeper analysis of banking stocks.
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I am surprised how well you have tracked these transactions, my current allocation to HDFC bank is ~5%, as a result of their merger with HDFC and general share underperformance. But I haven’t sold anything (either in HDFC bank or in HDFC). About upgrading it to 8%, I can do it if there is a sharp upmove in the market and I am unable to find better opportunities. However, currently there are lots of other opportunities.
About HDFC bank, there is no other lending company with such consistent nos for such a long period of time. Currently, people are more fascinated by loss making banks making profits and ignoring how well HDFC and HDFC bank managed the 2020 downcycle. This kind of environment reminds me of 2017, when people were more fascinated by Repco/Indiabulls/DHFL. Generally, I tend to be conservative when it comes to banks or NBFCs. Also, given how HDFC bank is priced currently, its easy to make 25%+ CAGR and I am reasonably confident about it working out.
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