I had once reviewed it but looking at the valuations (around March) and seeing it rallied so much, didn’t went deep into it. Also one lot was of 8 Lac rs which was unaffordable, hence ignored further on.
I have no idea about their technology and hadn’t included the technology part in my review at that time.
What have been your experiences and observations in general w.r.t profits or losses with such a PF?
Even with mid caps and sometimes with large caps, there happen to be rallies, and in SME space, where the participation is less, and maybe the shares are with less number of holders, and there is a chance of pump and dump, lower circuits, no bids for days etc reasons, price could be a rollercoaster ride.
It certainly is a roller coaster ride for most. In case of RBM Infra I was sitting on 100% profit and due to no updatea and sub par results I went into losses.
I have some wealth destroying cases in small caps and mid caps (I was hit both by 2018 and 2020 and I was a kid back then) (See my rationale to go to SME is flawed but as a kid you want some revenge buying and you go do random things when you see every penny cracking badly, the only plus point in my case was that I was told repeatedly to never do F&O unless you are qualified or experienced) that I started to believe that big businesses cannot be run by corporates; like if promoter holding is below 20% why is he/she still in the business and other useless stuff. So I saw high % holding shares and there I encounteres my first SME.
Normally what happens is that these shares give high returns but very fragile. They will be the first to fall like anything. I prefer fundamentally sound companies only (Kotyark and PNGS Gargi are the only ones who were expensive at the time of buying). My PF was struggling in Dec 22. Then in Jan 23 it zoomed ahead and then long consolidation of 4 months occured and I went into losses after 18 months. Excellent results in more than half ofy PF and recent euphoria like rally again led to good gains which went dowhill 12th Sep onwards. I had my best streak of 0.8-1% gains for 9 straight days (25th Aug - 4/5 Sep) and also biggest fall (12th Sep).
You have to be very cautious in companies. One bad thing and all gains are wiped.
Cosmic Crf posted court matter of 11 cr which was recorded as contingent liability. Share went from 310 to 230. (Got exit at 289)
Similarly Aurdis was 260 when excise department notice arrived of 143 cr (mcap of 200 cr). Share went straight to 190.
Holding good companies is the only comfort.
I currently hold very few shares of KMEW at the moment (I sold major chunk at 100% profit) whose cost is 49 rs against cmp of 1500.
I once briefly reviewed every listed SME company (My belief was that if mgmt is strong, valuation are fair/below fair, sector is decent and they have capacity to grow then there is less harm in giving a shot, though it can backfire) and after reviewing shortlisted 5-6 companies and invested in 4 of them. Of 4, 1 is at cost, 1 at 20% gains, 1 at 50% gains and Pngs gargi 150% gains.
I usually try to not get FOMO. It is deadly and useless strategy in broad market but a sure shot disaster in SMEs. I purchased Cargosol Logistics in Fomo and exited recently at 45% loss (the sector was at peak when I invested and the result was a disaster leading to 20% lower circuit).
The experience varies from case to case but good companies will do good whethet it is SME or not. You can see Veto, KPI, Gensol, KPEL, Ksolves, E2E, Ice make, etc. who were Sme migrated to main and did well.
I am cutting my SME portfolio bit by bit and switching to mutual fund and small caps. My mutual fund exposure was 1.8% when I posted my first message. It is now 2.5%. I plan to reach mutual fund to 20%. I also bought SGB recently. My aim is to invest non-actively and so will cut my SME exposure to 50-55% in 1-2 years. I definitely will not leave SMEs because of the profits it gave me. Luck plays more role in SMEs. (Mainly after reading on VP I realised that on value investing I might be on right path but the stock category I choose is not)
Several sentences of mine might be repeated but again I am a newbie turning into slight Amateur now and my vocabulary is limited and so are my experiences.
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That is more than required, appreciate you giving such a reply.
VP in a sense is more matured investing, even the members who churn more relative to others, and I don’t remember anyone investing exclusively in SME. I guess, even the members who can understand more about businesses, who can allocate more, for whom lot size does not matter, even they don’t participate as much as you. And I have looked at just a few SME names on occasion, but never participated. One reason being the restriction of capital for such endeavors, other being to wait for the stock migrating to main board, and that I can wait, even if a business is compelling.
There are some young members who are active in the forum, but they participate in bigger names, and yours, from the topic title to the latest post, is exclusive to SME, unique contribution.
Although I do have some basic idea of how things work at the lower rungs of the ladder SMEs, your experience is a good learning of a high risk, high reward segment.
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Now that SEBI has intervened, the Exchanges were forced to action. It is clear to whom they serve. Why they could not see the exuberance in SME sector, when everyone could see it? It was some sorts of a scam. Issues being oversubscribed by more than 500 times, that too not 1 or 2 but many.
With introduction of short term ASM, the euphoria will be over. Many scrips without fundamentals, may become penny stocks, which they deserve. But what pains me, is that many gullible investors will suffer and take heavy loss, which is not good for anybody.
Some SME stocks are bound to be tomorrow’s stalwarts, but to identify them is a herculean task due to paucity of information. So it is better to avoid them instead of investing on the basis of scanty information and hearsay .
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Portfolio as on date.
Did some tax harvesting in certain stocks when needed funds to add Holmarc on listing.
Changes with regards to initial post:
- Cadsys: Re-entered (Initially exited due to cash constraints)
- Holmarc: Mentioned in previous post.
- Kotyark: Valuations bit high. RPTs going out of comfort zone, hence reduced stake.
- Aurdis: Tax Harvesting. In this downturn, actually benefitted a littlle in shifting.
- Perfect Infra: Forgot to mention in previous post as only Rights entitlement were there. Holding company only to bet on their product. Else every parameter is bad. Even Auditors have qualified opinion. Lots of court cases. Covid basically finished the company and they are on a sort of turnaround phase. Planning to hold this upto Mar 24 results.
Note: I do not own the stocks in quantity equivalent to a lot traded on exchange. I hold them in sharing with 4 people. (If somebody interpret that Oriana Power at 0.81% for 1 lot, then my Portfolio would be on astronomical figures and I would be holding commanding free float in Omfurn which is certainly not the case)
| Stock | Cost % | Latest % | Avg Holding Period | Recent Changes |
|---|---|---|---|---|
| Omfurn India | 25.89% | 24.53% | 9 | Tax Harvesting |
| Holmarc | 15.19% | 15.83% | 2 | |
| PNGS Gargi FJ | 5.38% | 6.62% | 85 | |
| Aurangabad Distill | 7.31% | 6.43% | 0 | Tax Harvesting |
| Chaman Metalics | 5.30% | 6.21% | 161 | |
| Magson Retail | 6.76% | 5.75% | 84 | |
| Labelkraft Tech | 5.54% | 4.72% | 133 | |
| Bondada Eng | 4.87% | 4.40% | 0 | Tax Harvesting |
| Cadsys | 5.50% | 3.96% | 8 | |
| Knowledge Marine | 0.13% | 3.61% | 847 | |
| Technopack Polymers | 3.61% | 3.30% | 37 | |
| Kotyark Industries | 1.98% | 2.64% | 247 | |
| Evans Electric | 2.11% | 2.33% | 83 | |
| EP Biocomposite | 2.56% | 2.17% | 125 | |
| Nirman Agri | 1.68% | 1.70% | 43 | |
| Uma Converter | 1.60% | 1.47% | 49 | |
| Perfect Infra | 1.10% | 1.29% | 28 | |
| Silicon Rental | 1.43% | 1.28% | 37 | |
| Markolines | 0.97% | 0.94% | 43 | |
| Oriana Power | 1.08% | 0.81% | 16 |
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I have also been investing in SME stocks which have sound financials and sustainable business model. Recently invested in Aatmaj Healthcare - hospital in city of Baroda. Had entered Cloud varanium at ~147 and exited at ~165 with some profit in few weeks. Have also been allotted IPO in Cell Point - which corrected by ~50% in 8-10 days post listing. Apart from this, had got an IPO in Dec '22 on which I had booked profit of ~42K on listing day itself.
Based on my limited experience, I would say that this space is highly risky and volatile. You need to time your entry and exit to be able to benefit from price movements. Additionally, have been tracking this space using Trendlyne - SME IPOs performance.
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Update:
Added Saakshi Medtech and E-factor Experiences in pre-open.
Also added KPI Green at 875 rs per share.
Exited none.
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Aatmaj is a good value pick.
At one point I had Cell point but exited at break even. (Initially I thought company is good and is still good but operators were kicking it here and there. Hence exited)
I also traded in Cloud and exited luckily with 5-10% profits. The company’s profits and OCF has no co-relation at all which is a big red flag plus the preferential, rights and management’s handling of investor calls was not good. (Recently I read somewhere that company isn’t able to pay dividends on time🤣. I feel the company will delist soon)
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Are you following Ashish Kacholia on Saakshi Medtech? I think he also added it, in his portfolio.
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Yes, he also added yesterday. Today is the strongest upper circuit from its listing.
Ashish Kacholia bought 3.5% in it.
I read the Rhp and invested as there was very few issues in the business.
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Tried finding resources and data on Aatmaj , Not able to find good information to analyze the company on , how did you reach the conclusion of it being a good value pick ? Also where can I learn more about the company and management properly?
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RHP has good enough data to go through for SMEs (I have no knowledge of the industry and I have no healthcare stocks in my PF)
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Fundamentally looks decent and does constitute value (I feel), although value isn’t equal to stock performance. The mentioned peers in RHP showcase that it is cheaper than others.
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In RHP again, “management of the company” and “promoters and promoters’ group” section shows all basic information. Age, experience, education, other directorships of promoters and financials of group companies.
I just viewed it when IPO was open and assumed that it could be a good pick since it is reasonably valued. Also, it is posting good results from last 3 Financial Years, hence it appears less window dressed.
Note: SMEs are risky. Promoters may or may not be a positive point but lack of good promoters/ absence of business centric promoters/ promoters with no succession plan can be a big issue in long term. In big market caps, generally some basic level management is often automated to lower managements but in SMEs promoters are everything and if promoters decide to exit or any other reason, the company is done. I primarily invest in SMEs and reached 100% allocation. Now bit by bit I am going towards small/mid-caps and Mutual funds and so exiting SMEs wherever possible.
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Can you provide more information on Nirman Agri. I am also interested but couldn’t found much information on how business is doing ?
It is continuously drifting more towards a pump and dump type company. Results are next week, so will have to wait till.
Initially updates were good. But the company keeps on throwing announcements here and there and whenever share is down, promoter buys and they intimate within market hours and share hits UC.
You really have to see the intent of promoters. The share went from flat to 50% down to 4x from there and promotet is buying at such high rates.
% of profit is good in my PF for Nirman so have some cushion.
Their previous corporate announcements and new announcements have big quality difference. It has transformend from a mandatory communication to picturesque hope for investors.
The numbers might be genuine. Might not be.
I am cautious on this and exited major quantity at 167 before joining this forum. Holding very small quantity now. Might even exit soon after result.
I am not into the sector but the way they are doing things, you always have doubt if things are superficial.
thank you this helps to decide on making fresh entries.
The Valuations are Crazy. EV/Asset - 17.3. PE - 290 , Yearly revenue around 19 Cr and market Cap is 571 Cr. Its a big bubble waiting to burst.
Please do check out the video posted on Saaskhi Website. Its quite impressive, looks like some real work is going down there – https://www.youtube.com/watch?v=-bZKj-lZYsE
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Update:
Exited Efactor last week. Had good profit and some funds were needed. (researched well but entered hastily and had to exit due to that)
Also exited Nirman Agri after the results. Their Investor Presentation contained nothing related to financials apart from bar chart. Increased my doubts which I developed earlier and hence exited.
Entries:
Added more of Saakshi Medtech on Monday.
Felix Industries (pure bet, company has hell lot of issues but is now coming out of them, results should give better picture).
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