Vishnu's Portfolio


Great to get update from you. Thanks for initiating thread on your new position.

Thyrocare is somthing I would be interested at lower proper valuaton.
Prabhat and Snowman have very limited understanding to pass any comment.

However, just one suggestion would be increase number of companies to 6-8 at least. This is my opinion and may not be relevant to you. Wish you all the best for future endvours !!!

Hi Vishnu,
I prefer a company which has already proven itself & there is long runway for growth with good management.
Why go for Prabhat when Hatsun is available.
Stock price of Hatsun is not cheap but it comes with excellent management, brand & successful execution skill. Their debt to equity problem would be addressed in current quarter with right issue proceeds.

Thyrocare is a good choice for 5 to 10 years.

Snowman I don’t know much about but I think this company has to prove itself on multiple fronts instead of that why not go for a company with proven track record , it doesn’t matter if you pay a little more for that.

Thanks Dhiraj and Hashim.

Every opinion counts and is very valuable however contrary it may be.

Goal is indeed to settle on a core portfolio of 5-8 positions. However, I have managed to build very high conviction on only these 3 so far which are not overly expensive IMHO.

3 years back, I would have been wary of any of the listed dairy companies given the dominance of Amul and their business model of wafer thin margins.

Now, I believe there is space for niches within the dairy products space which can be capitalized by smaller players.
Btw, Hatsun is on my watchlist. Would not hesitate to buy if it comes down to more reasonable levels. However I prefer Prabhat with its smaller base, proven quality on account of B2B segment and employing a similar playbook to Hatsun which targeted rural areas in its initial years and reasonably valued relative to mgmt’s 2020 revenue guidance.

With respect to Snowman, there may be a scarcity premium possibly associated with it due to it be the only pure play cold chain logistics company.

Cold Chain industry is currently measured by the pallet occupancy metrics which leads to low asset turns as in case of the large potato storage centers which are occupied for months on end and farmers pay the rent for it. If however the focus shifts to throughput of pallets (i.e. flux of goods going in and out of the warehouse - such as Fast Food chains which have quicker inventory turns), it would imply the assets are being sweated better.

It is a hedged bet.
In the next 5-10 years, Snowman can benefit from the increase in consumption of junk foods and fast food chains (Govt is making a push for more food processing which to me will lead to more chronic illnesses while there maybe increase in productivity/efficiency)
Longer term say 15-30 years, when the public abandons fat-free, low-fat and cholesterol-free foods and demand for high saturated fats, Snowman can benefit from the increased focus on frozen meats and dairy products in future (assuming it survives till then, of course)

Above notions may sound preposterous, but that is my “variant perception”:- possibly extreme, but nonetheless mine to bear and defend. I am under no illusion as it is definitely going to take time to reverse the “saturated fat/cholesterol causes heart attack” hypothesis that has been pushed for the last 50 years.


@crazymama your views on prabhat’s latest results ?

Except for the increase in ST Borrowings to handle the Working Capital Needs, I feel the results have been good.

Management in their latest concall explained that the additional funds were needed due to the 2-3 months lag in the INR 5 subsidy payment being provided by state government.

As one can see below, despite the increase in ST Borrowings, they seem to be not utilized given the corresponding increase in “Bank Balances excl. C&CE” line item.

Mgmt continues to take the benefit of low milk prices and increase in gross margins by spending on S&D.

I like the fact that mgmt continues to spend on Bulk Milk Coolers, which should help to increase the density.

Overall, I see that management has been consistent in walking the talk so far.

Disclosure: Have bought more this week since the price dropped.

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:

  1. Play on Metformin with India having >65% (by Sales) market share globally and Balaji Amines having highest market share for key intermediate DMA HCL.
  2. Lack of substitutes for DMF.
  3. Capex for BSCL done.


  1. 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.
  2. 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.


In my view ,Thyrocare seems to be an overhyped stock .It is too crowded a segment with low-entry barrier and price-undercutting. There’s no moat involved .Again my personal view.

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Thanks for sharing your opinion. Much appreciated.

I agree with all your points. But in my opinion they represent the consensus view held by Mr. Market for the next 2-3 years.

I am more interested in where the puck will be going.rather than where it has been,

My thought process is as below regarding the future (Not forecasting but teasing out the possibilities):

Let us consider a thought experiment of 2 possible alternative worlds:

  1. An empowered consumer-patient who has become disillusioned with the top-down dietary guidelines (based on correlation/association) and decides to self-experiment to figure out how different lifestyle factors (nutrition, exercise, sleep, stress, alcohol) affect him/her. This is where various diagnostic channels will help. It could be Point of care devices like Fitbit, Oura ring (24x7) or monthly/quarterly profiles from vendors like Thyrocare. Most would prefer data-points from different sources to corroborate rather than depend only on one device/medium.
    In this scenario: i think Pathology/Histology + Genomic should benefit.

  2. Or the consumer-patient continues to believe the Govt/experts know what is best for them and continue on the path towards higher proportion of chronic illnesses with various specialists working in silos and looking at diagnostic markers in isolation (such as LDL cholesterol) or focusing on the wrong markers (such as Blood Glucose instead of Insulin and Insulin Resistance related markers). Essentially the diseased/disordered outnumber the healthy despite following the guidelines perfectly.
    In this scenario: PET-CT scans should benefit (Genomic should as well but for the wrong reasons).

I would very much prefer 1st scenario rather than the 2nd one.
But we will end up somewhere in between the above 2 extremes.

Given the sheer weight of numbers in terms of population, Thyrocare and other big diagnostic firms can leverage the huge amount of data they are accumulating currently to look at all the parameters at a holistic level and see if predictive patterns can be discerned. (Possible integration benefits with Goqii ecosystem). Assuming they anonymize the data first.

With respect to Genomic testing, it is a small portion of what can be analysed. There are a lot of other -omics such as Proteomics, Metabolomics, Lipidomics, Transcriptomics (currently limited to research). Genes are ultimately switches to be turned off or on by epigenomic (environment around the gene) factors. It is the change in genomics on account of the epigenome which is far more crucial information.
Given the current cost of performing genomics testing, my current understanding is that it is done just once on request of a doctor or for the purpose of 23andMe profiles. It makes more sense when somebody can perform these tests say on a half-yearly or yearly basis to track the dynamic changes in genome.
As the cost of gene sequencing decreases further, at some point of time Thyrocare may find it feasible and profitable enough to include it in their profiles (all that is needed is a tongue swab to be collected by the phlebotomist)

With respect to pricing and regulation (lack of entry barriers), I can understand why the Govt may not have been active in enforcing regulation on diagnostics. I assume they wanted to encourage sufficient availability/penetration of diagnostic labs before focusing on regulation.
The recent announcement of the National Essential Diagnostics List (NEDL) draft, is IMHO a positive first step towards standardization and more regulation. PMJAY would necessitate the need for proper accreditation/quality of diagnostic labs before they can tap into those insurance payments.

Above is an example of a health insurance firm which have linked health markers to the premiums.
A diabetic maintaining a lower HbA1c pays a lower premium compared to a higher HbA1c patient.

Funnily enough, I have never discussed about any financial metrics because Mr.Market accepts the fact that the balance sheet is of a high quality with sustainable cash flows from B2B and has the capacity to suffer a downturn in terms of increasing competition + price under-cutting at least for the near term (2-3 years). Don’t know if it is anti-fragile. But it is for sure not fragile.

Increase in tighter regulation is bound to start consolidation. Timeline is uncertain. But given that there is currently over supply, we must wait for the inevitable change in cycle and consolidation wave. Question is will Thryocare adapt to acquire or surrender to get acquired? I am betting on the former.

Under a tighter regulation regime, I think Thyrocare’s kitchen sink model can come to the fore and there may be a premium in the eyes of the B2B customers for being associated to Thyrocare’s network.

I would encourage folks to posit opposing views to the hypothesis I have proposed above (Again a reminder that I am not making an attempt to forecast the future)

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Thanks for sharing.

Pleasantly surprised. No intention of reacting to the news flow now.
Will let things settle down before re-evaluating the position.

Continue to hold for now.

So after the sale of dairy business they will build animal nutrition and genetics business which I suppose was a recent announcement as well and current revenue is all from dairy business.

Sudden announcement and difficult to understand the idea behind it. Any inputs from you on their cattle feed business or animal nutrition?

Agree that the announcement looks out of character given the fact that the mgmt were strident about reaching 2000 Crores by 2020.

Anyways, I am not interested in their cattle feed business since I believe that cattle and the milk is more healthier when fed grass/pasture (@ lower yields) rather than grains/cattle feed (@ increasing yields)

Let us wait and see how they intend to deal with the cash received.
Given the fact that more than 40% of the promoter holding is pledged one must be more careful for any signs of mis-allocation.
On the other hand, looking at the tofler company network map, most of the entities related to Nirmal family are related to Milk or Agriculture. In that sense one can be slightly more confident that they intend to continue to focus on dairy-allied sectors given that it is their core competency.

Too early to have a concrete opinion. Let things settle down.

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Hi Vishnu,
With such a wild swing , from almost +25% to -15% at close of market, I am curious to know what was your stand? did you sell off some of it, or still continue with their new line of business idea?

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Looks like a bonafide mistake of commission for me.

Before I discuss further, let me disclose upfront that I have reduced my allocation to less than 10% for Prabhat and intend to reduce it further to around 5%. Sold off around 80 at 20% loss to average buying price.

Will continue to hold and track it as a special situation (explained below).

Moving forward to my preliminary observations after lot of introspection yesterday night:

  1. Though I had considered the company being acquired as a distinct possibility, I had expected that it would be close to FY20 and had not done proper work on how market would react to it. Also had not done my homework on the company holding structure and if that could cause some ambiguities.

From Twitter:

Though I differ with the above since 1227 cr. is being paid for Sunfresh Agro and 472 cr. is being paid for remaining dairy business which is being transferred to Sunfresh Agro. If we were to apply 29.9% on 1227 crores, then one can expect a better expected dividend/share (assuming promoters will try to maximize the amount they can retain as hypothesized in Social Media)

Clarification from mgmt:

  1. Lot of Institutional Holding. One of them have sold of 16 lakh shares (ALQUITY SICAV INDIAN SUBCONTINENT FUND) yesterday. Guess they preferred to bailout rather than go through another LEEL, which I think is fair enough. Considering there is still plenty of Institutional shareholding left, one wonders if they are willing to stick around for shareholder’s approval vote?

  2. Recency Bias of LEEL. I don’t think I have come across any negative coverage on Nirmal Family and Prabhat’s governance prior to yesterday. Yes, the structure of the deal is debatable. However does it warrant an expectation of high probability of it turning out to be same as LEEL? I am not so sure given the fact the mgmt wants to focus on new business beyond this acquisition.

  3. Why sell at all?
    I had bought it with a 2 year holding period that could potentially be carried forward assuming mgmt met their guidance. However, on introspection and what should have been evident immediately was that it became a special situation as soon as the facts changed (naive on my part to wait for things to settle down).
    If one views it as a special situation then the immediate thought should have been about the allocation which is where I missed another trick in selling off earlier yesterday rather than wait till today.
    Last but not the least, I still am not sold on the idea that the mgmt is dishonest and will do the max to avoid sharing the cash. Anyways will remain as a reminder to do more thorough work on acquisition scenarios.

This reminds me of why it is good to start this thread. It helps me to commit to put down my mistakes and leanings from them, rather than having locked them away deep in a mind castle.

I expect I can learn more from this experience over time and can revisit or add any additional learnings which escape me currently.


The trick or the lesson i personally learned is, if one is having concentrated PF and high allocation, then sell first or get out at slight hint of doubt/discomfort, price does not matter just sell instantly, as the story/thesis changed and analyse later on side lines. If the thesis still hold good can be entered later.

Mostly it will save lot of permanent damage to the PF.

Another recent example : GRUH changing hands.


Hi Vishnu,

Any views on Balaji Amines, at current levels?
Company posted another tough quarter, with lower margins last quarter was also poor.

Also management isn’t doing any concall now…

No change in my views. Levels are same as at the time of initial buy.
Would re-evaluate at end of FY19.

You can watch out for management commentary. I think they normally give an interview to one of the channels.
Would be nice to see if BSCL through EDA has started contributing to revenues.

I don’t think there was a question of doubt/discomfort. As I have stated above, when the investment rationale was affected by this announcement (facts had changed), I should have spent at least 10 mins to reflect on the allocation. I don’t think I would have sold it all as it would mean that I never trusted the management at all.

Nonetheless the advise is worth pondering over.

Below is an interesting blog post.

Some math for investors who own or want to own the stock.

Of the 1700 cr cash, expect about 350-400 cr to be paid off as taxes. 1300 cr is all cash as the LIABILITIES too are being taken over by Thirumala Dairy. 1300 cr is about 133 rs of cash per shar e. Assume 33 rs is given off as dividend, at the CMP of 60 your net investment price is about 30. For a 30 rupee investment you are getting 100 rs cash in a company , that was created by the same management that people willings bought at 230 rupees a share not too long ago.

Remember with a 50% holding at a point, the promoter was worth 1200cr. Will he really damage his networth and credibility and bring it down to a mere 300 cr ? Current market cap 600 cr and falling)

My observations of above is that, it is now a question of probabilities and base rates.

How likely is that Prabhat ends up being a LEEL?
What is the base rate for this kind of acquisition considering all past slump sales including LEEL?

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Any inputs ?