Yogesh's blue chip 10 Portfolio

Yogesh has a good question and we can revert back to that one…

I feel that owning companies in Nifty 50 or BSE 500 or Sensex 30 and eliminating the non-performers will always work well. Now, the problem is defining what does “non-performance mean”. If you set the non-performance period to 30 days or 90 days or 220 days, then the rally in that stock might start right after.

So, the challenge is first defining your ‘holding period’, then the ‘measurement period’ and then ‘how often do you want to churn your portfolio’.

As soon as I have held onto something in India that has not performed, write lots of negative things about it, the stock takes off and doubles from there.

Example: HUL, RIL, TGBL…All three went through a LONG period of boring times, and when the giant woke up, it doubled and doubled again after that. Look up the 30 year charts on each of these and you will know. Glad I only sold a bit of it and bought into other missing sectors in my portfolio. But, I kept the faith.

So, in my special case, I give the Non-Performance term to be just under 10 years. When HUL woke up, I had already sold 10% of my holdings, but I am glad I was holding 90%. It went from staying between 200 and 345 for almost 10 years, and then went to 700, in 2 years, and then went to 1400 in another 2 years. How would I have felt by not having ANY in my portfolio?

Play Indian Market with a Long Term View like Mr Agrawal says from MOSL. He went from virtually Rs0 to Rs1000 crores, which we cannot replicate but if we can replicate some of it, it would be great.

Just my 2 cents and a different view than many since I am a multi-decade investor and will hold some stocks for another 20+ years.

KKP Investor


Brilliant -mighty impressed with your holding capacity and patience.I wish we imbibe at least 10% of it.

I wouldn’t value a mining company based on PE or P/B basis. You can only use price multiples to compare valuations of mining companies around the world with each other but these companies generally go up or down together so a relative value analysis is not very useful. If the company pays regular dividend, you can use DDM to value the company but that generally yields low value.

DCF using operating cashflow can be used but operating cashflow tends to be volatile. You can normalize cashflow for cyclicality and value the company based on that but such a valuation model is sensitive to assumptions so wouldn’t give you accurate valuation.

Mineral reserves of a mining company is an important indicator that determines valuation but I have seen it being used to justify high valuation rather than a base valuation. Reserves is just an estimate and provided by the management and may not be independently verified by a third party so such number should be used with a pinch of salt.

I really haven’t been able to come up with a way to value mining companies like Vedanta. The only sure way to buy a mining company is when mineral prices are down, stock price is down and company’s balance sheet is still strong enough to sustain few more months/years of downturn. However such situation happens once in a decade (if at all) so it cannot be an investment strategy.


Aurobindo has been able to grow its book value only by growing debt along with it. This indicates low (or no) free cashflow. Market generally value such companies much lower than companies like Sun and Lupin that have managed to grow their book value without pilling on debt (until they they acquired other companies with debt).

Aurobindo was expensive stock for last several quarters/years as it went up along with rest of pharma companies but its financial fundamentals aren’t as strong as Sun & Lupin. I am saying this based purely on financials and not based on its portfolio of drugs or its R&D capability. I believe at this price, valuations reflect the fundamentals so any uptick in earnings should results in higher price.


Looks like the taxes are finally having their effect on volumes and pricing power of tobacco companies. Govt will raise taxes until volumes stop growing. I know ITC no longer release its volume numbers anymore, not sure about other companies. Godfrey’s margins have been shrinking for years as it has not been able to pass on taxes to consumers. ROE is now in single digits.
Based on the data I have, United Breweries has been able to grow its top and bottom line for last several years. Its stock price is going sideways because it is very expensive so there is a time correction. Higher prices may be causing some marginal consumers to switch to cheaper brands.


"Aurobindo has been able to grow its book value only by growing debt along with it."
Yogesh, I am a newbie - trying to understand financials. Reading the balance sheet - 2013 to 2017 - what I see is that the non-current liabilities have come down from 1117 to 139. Should I be looking at TOTAL liabilities (current and non-current) rather than non-current alone? Please excuse my ignorance. Invested in Aurobindo from Rs 128 levels

Yes, you should look at all financial interest-bearing liabilities and in some cases non-interest bearing liabilities (like accounts payable, deferred taxes, provisions etc) if these are large (relative to overall size of the balance sheet) or growing rapidly.

In accounting statements, liabilities are classified as current and non current then further as secured and unsecured. However, from an investor’s POV, what matters is whether liabilities are interest bearing or ‘free’. Typically borrowings are interest bearing and classified as financial liabilities. Sometimes having too much of non-interest bearing liabilities can be bad too as that indicates company is having trouble paying down its liabilities.

Typically a non-financial company should be able to grow its equity without taking on too much liabilities. What is too much depends on industry and especially stability of cashflows.


Thank you very much for clarifying and for giving me an explanation. Sincerely. Ishika

I think we should look at debt during such scenarios. If a company is having debt and not able to pay liabilities then it might be in trouble. But if its a debt free company then rather it can be good sign if liabilities form from trade payable. That means company has power to negotiate terms.
Please correct if im wrong.

Dear Yogesh ji,

When is the annual rebalancing of the portfolio scheduled.


I usually do it after all the annual reports are released. Around Diwali time.


Hi @Yogesh_s, I have been going through your posts and your thought process and its clarity is amazing. Thanks for enabling us all to learn more!

While your portfolio and its picks have been discussed above, what I (and I guess others) would also like to know how you come up with the stock ideas in the first place specifically in the small and mid cap space (as large caps are fairly well covered) for eg say an APL Apollo tubes or Kovai. I guess you must have quantitative screeners (based on ROE etc) but are there any other sources/resources you use to hunt for ideas? For eg following other great investors, blogs, on ground checks within your network etc. Would be very interesting to hear about your idea generation process

Apologies if this has already been asked and answered


Thanks a lot for such a convincing and inspiring strategy.May I solicit your opinion about MOSL in long term context.

MOSL and Edelweis are great companies that are doing really well in the world where more and more accounts are being opened. ICICI Securities just came out with an IPO also and it was not priced great due to all of the issues with Chanda. Days of ICICI are almost over like Merrill Lynch was 20 years ago, since Zerodha and IIFL and Kotak are in the works, but MOSL and Edelweis will remain in vogue since they are great money managers, portfolio creators and also have a good growth model in progress. Best is to hold thru thick and thin since we will get some corrective periods when these brokers will take a sizable hit. Keep 1/5 of your purchase outstanding to buy at that time in the future. KKP Investor

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Over the years I have used several methods to find new stock ideas including reading news, IPOs, new listings, magazines, recommendations from friends, stock screeners, MF top holdings etc. However, one method that has consistently worked for me is to quickly scan everything that is available to buy and then bookmark the ones that are worth further digging.

In order to scan all the 3000 odd companies that trade on NSE & BSE quickly , I extract high level financial data from a corporate database which I have subscribed to. It can also be downloaded from screener.in. Once this data is in Excel, I use a set of charts to quickly visualize the important numbers from income statement, balance sheet and cashflow and important ratios for last several years on a single screen. Screenshot below shows how a typical screen looks like

Story of a company in 40 charts

This screen lets me quickly check how the sales have grown over the years, if the sales growth has trickled down to gross profit, operating profit and net profit, how the book value has grown, if the debt is growing, how has the cashflow kept up with cash profits or has the receivables and inventory ate up all the profits. Cashflow analysis help me analyze if the company is able to fund it capex with CFO or it had to go external funding. DuPont analysis quickly gives an idea how efficiently company has utilized its capital and if the high ROE is a result of higher leverage or higher ROA. I can also check if there any structural change in its asset turnover vs operating margin trade-off. Finally, the market cap chart (on the bottom right corner) shows how market has responded to the developing story.

If a picture is worth thousand words, a chart is worth thousand numbers. 40 charts on this screen tell the story of a company as it unfolded over the last decade. It literally takes me just a few seconds to reject a bad company. I cycle through all the companies in the database either by alphabetical order or by market cap. Sometimes, I end up rejecting few good ones too, but I am OK with that. Within 2 to 3 weeks I am able to scan all the companies in my database. I go thorough this exercise at least once a year.

Once I go through charts of several hundred companies, a good company will quickly stand out even if it does not meet all the characteristics of a good company. Your mind gets trained in identifying patterns of a good company. A visual image of a company based on its numbers is far more convincing that some qualitative factors like visionary management or key shareholders. This method also give me an assurance that I have looked at all the available options before making a choice. A stock screener on the other hand makes you wonder if a good company has been wrongly filtered out only to discover it later after the price has ran away.

Normally I bookmark about 200 to 300 companies that stand out for further study. Usually, only about 20 to 30 companies are replaced each year. Rest of them remain the same. Out of these, based on fundamentals of the company, I create a shortlist of 20 largecaps, 30 midcaps, 50 smallcaps and 10 SMEs for further analysis. Out of these 110 companies, I further narrow my focus to 50 and then 20 based on valuation. After that its my gut feel. I end up having about 8 companies in my portfolio from this 20.

This process is similar to how we buy a car or a mobile phone. You start with everything that is out there, make a shortlist, then go for a test drive before making final choice.


Thanks for he prompt and such a detailed response

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Thanks for putting such a detailed and pictorial method to look for the stocks, can you please share how can I make all these charts in excel sorry for asking such a naive question as I’ve very less exposure to the excel.


Just adding to the above question, if I may - am guessing you would be using macros to make the charts once you have all downlaoded all the data into excel as there would be around 120k charts (3k*40) or do these come as part of the standard template in excel from the database

Thanks a lot for the detailed reply @Yogesh_s. Can you please guide the process to get this data for all the companies in one shot from screener.in.

Best regards,

Such a displined approach need patience and great deals of experience.I have strong belief that acquiring knowledge takes a great amount of man hours but after learning make in to use and sharing knowledge is the best part thanks
Could you please share the data source that you are using .Analysis is based on wrong data may leads to various biases and ultimately you enter in the right company at wrong times or missed some excellent companies even sometimes it happen you choose wrong company.
can I ask you to share your Exiting checklist if any from a stock thanks a lot .Your journey is motivated me and I am sure others also .It help to sharpen the tools thanks again