Portfolio Update:
| Avg Buy Price | Allocation | |
|---|---|---|
| Thyrocare | 590 | 28% |
| Prabhat Dairy | 103 | 21% |
| Balaji Amines | 454 | 18% |
| Snowman Logistics | 38 | 15% |
| Kkalpana Industries | 29 | 2% |
| NIFTY LEAP Put Option | 1% | |
| Cash | 15% |
Previous Allocation:
Looks more balanced now.
Sold off a bit from each to buy Balaji Amines.
Brief Rationale for Balaji Amines is as follows:
- Play on Metformin with India having >65% (by Sales) market share globally and Balaji Amines having highest market share for key intermediate DMA HCL.
- Lack of substitutes for DMF.
- Capex for BSCL done.
Risks:
- Despite the capex for MIPA (Mono Isopropyl amine) being oppurtunistic due to the anti-dumping duty on it, I feel there is regulatory risk in terms of ban on herbicides like Glyphosate which require MIPA.
- Positives of Metformin (a possible longevity drug) is offset by regulatory risk of bans on Agrochemicals (though a low probability event given the entrenched vested interests, just as unlikely as a ban on sugar)
Kkalpana is a medium term play (1-2 years) on deleveraging and possible tailwinds from increased focus on T&D and evacuation infrastructure for RE.
Rationale for Kkalpana is captured in detail here:
Being a big fan of Taleb’s works, I have opted to buy a long dated option as an insurance given the high likelihood of increase in volatility around elections and subsequent drawdowns.
Views Invited.
Looking forward to what looks to be a very exciting 2019!
PS: Intention is to update PF on a half yearly basis.