No major structural change over last one month. New additions have aggregated to ~10% of portfolio.
Trimmed positions in Godrej Properties and Relaxo Footwear. Recent runup in Godrej and Mindtree have helped contribute to alpha generation
Avg Buy Price
TATA CONSUMER PRODUCTS
LARSEN & TOUBRO LTD
CENTRAL BANK OF INDIA
TV18 BROADCAST LTD
CARTRADE TECH LTD
CarTrade Tech is the newest addition to the portfolio. The company operates platforms such as CarWale, CarTrade, BikeWale and AutoBiz. It is one of the unique plays along with Cars24 in an ever growing market for digital new and pre-owned car/bike sales. The company also engages with financing and auto ancillary companies to provide after sales services on its portal.
While the IPO valuations seemed demanding, the company still has a long runway for growth and the recent correction in the stock price offers a good margin for safety. Still evaluating my thesis and will increase allocation once I build more conviction over the next few quarters.
No new entries apart from a tracking position in One97 (Paytm). I want to see how this story plays out and believe that proper scale-up of the lending business can potentially re-rate this company. They have built up a good user base among merchants and through the transacting volumes can get good visibility on their cash flows, thereby helping the credit evaluation process
Increased positions in CarTrade, Mindtree, Metropolis and Havells during the quarter.
Completely exited from Godrej Properties and ICICI Bank
Evaluating Minda Corp and Kotak Mahindra Bank for fresh investment
I have been holding Mindtree since 2014, before listing of LTI and LTTS. There was multiple value unlocking when this was taken over by L&T group.
On return parameters, the company has better RoCE / RoE profile (35% & 29%) as compared to LTTS (30% / 25%). Have not analysed L&T Infotech in detail, but unless there is a fundamental change in Mindtree (slowdown in growth, attrition, unrelated diversification), I would not likely exit and move to another peer. I used to hold Hexaware Technologies earlier, which I have exited post the delisting.
Added Minda Corp and Kotak Mahindra Bank with 2% allocation towards each company
Reduced allocation in Reliance, Mayur Uniquoters and TV18 Broadcast.
Post sharp correction in Metropolis, have doubled my position there. Healthcare is one of the most inflation-resilient sectors and most of the cost increases are passed on. Promoter has been accumulating when one of the institutions wanted an exit, which is a positive sign.
Metropolis plans to add 90 labs and 1800 service points over next three years. The Hitech acquisition along with expansion of its B2C business and market leadership in Western India are strong levers for growth going forward.
These are a proxy play on the huge manufacturing opportunity ahead for India and the Govt’s high capital expenditure allocation for FY23 and FY24. Will keep adding to this investment in SIP mode since valuations appear to be reasonable. After assessing the performance of this smallcase for a year, I will decide whether to continue and keep this as my mid and smallcap focused satellite portfolio.
Your portfolio approach seems to be buying what has fallen in recent times and the past heroes. Never try to average down on the stocks, one does not know where the bottom would be and when the stock would come back in momentum.
Thanks. Most of my core portfolio consists of companies where my average holding period is four years. After completing an initial investment (usually 2% of direct equity portfolio) I observe the company’s performance for a year before increasing allocation.
I use short term price weakness to avg down on companies i have strong confidence in which gives adequate margin of safety. This has worked well in case of companies like Havells and Mindtree.
If company has deteriorating fundamentals, I do not hesitate to sell even at a loss.
Exited TV18 Broadcast and Escorts Limited
Added fresh allocation to Bank of Maharashtra and increased Axis Bank and Kotak Mahindra Bank.
While the latter two are well discovered and widely researched, thought of sharing my thesis on Bank of Maharashtra which I have been tracking over last 6 months
This bank was in regular need of capital infusions from the Government (like most PSU banks) during FY14-20 and double digit NPAs prior to Covid saw its price sharply decline from Rs 48 in 2014 to Rs 9 during Covid peak in March 2020. Bank was put under PCA in 2017 and took two years to move out in 2019. It was apparent that investors were expecting this bank to once again whittle under NPA pressures which were on a declining trend since FY18. Well, the opposite happened.
Bank of Maharshtra, under the able leadership of Mr. A.S. Rajeev (joined in Dec 2018, former ED of Indian Bank and Director of NPCI), has transformed itself into a Retail, Agri and MSME focused bank, with a single-minded focus to improve asset quality. The results are there to show for the efforts. RAM now accounts for 60% of the business mix and Bank of Maharashtra today has a CASA of 58%, one of the highest in the industry. Balance sheet has been cleaned up to a large extent and NIMs have expanded to 3.15% (consistently above 3% in FY22)
Particulars (Rs cr)
Net Interest Income
Net Interest Margin
Capital Adequacy Ratio
The bank has also become selective in choosing corporate / project proposals, with a preference for those backed by sovereign guarantees. This has resulted in GNPAs improving from 16% in FY19 to 3.94% in FY22 (better than more established peers like Bank of Baroda - 6.77% and Canara Bank - 7.51%). All this while achieving a 17% CAGR in Net Interest income, keeping a high PCR of 95% and diluting equity only once in the last two years, through a QIP of Rs 400 crore in FY21.
Whether the bank comes up for privatization or not remains to be seen. 90% of the loan book is investment grade. Bank of Maharashtra has strongly focused on last mile connectivity to clients as is evident in its current branch expansion strategy. They plan to raise Rs 2000 crore this year and at current valuations of 0.8x P/B, can expect a good amount of interest. ICRA has also upgraded the credit rating to AA (stable), the second upgrade in last nine months.
Have invested 2% in this and will reinvest the dividend announced by the bank (payable in July).
Sure @manoopatil …Suven is a key supplier of NCE molecules and drug intermediates to MNC life science and fine chemical majors. This is a high margin business and cannot be easily replicated by competition. The company has announced a capex of Rs 600 crore to modernize and upgrade it’s facilities. Previous investment in Rising pharma has been liquidated at a decent profit and some of the proceeds utilized for another US acquisition.
Lastly, they have demerged their life sciences business which was a drag on overall returns.
It’s been a long time since the previous update and not too many changes have taken place in the core portfolio. I have completely exited Bank of Maharashtra (2x) and Reliance Industries (2.5x) since I believe the room for upside over the next 2 years is limited.
Sitting on 4% cash position currently. I am yet to reinvest the entire sales proceeds. Stocks currently under consideration include Thermax, Trent, Sapphire Foods, Gabriel India and ABB Ltd. The capex cycle has clearly shown signs of revival over the past 6 months and most of the above companies have announced capacity/store expansion. The smallcase currently includes Amrutanjan, Piramal Pharma, Mayur Uniquoters and Asahi Glass
I have a separate mutual fund portfolio with the following funds
Axis Bluechip Fund
Kotak emerging Equity
DSP Midcap fund
HSBC Tax Advantage (erstwhile L&T)
These are investments done through SIP mode. Have stopped investments in fund 4 since last 2 years. The issue I have with mutual funds is that there is no limitation to the number of stocks they can include. For incremental AUM that the fund manager gets, they have to look at incremental avenues for that investment and may not necessarily be able/willing to reinvest in the companies already in the fund
With direct equity, i have the flexibility to decide the exact allocation to each stock and rebalance the portfolio on a monthly basis.
Equity Mutual funds to direct equity ratio is 35:65.
Added more allocation to Metropolis Healthcare and Pidilite Industries.
Recent management interaction with Metropolis has reinforced my conviction that company’s expansion is on the right track. Q2 numbers are also encouraging.
Pidilite has always been an accumulate stock for me. Have increased weightage there and reduced in Cartrade which has run up significantly over last 3 months. Also exited Route Mobile.
In the current correction, financial company valuations are beginning to look attractive. Will gradually build up positions in Kotak and Bajaj Finserv (purely as a short term play) in addition to the long term portfolio holding.