Ok, I've increased stake in Piramal Enterprises, Mazda and IGL, while completing full investment in many others. Here's the composition.
1. No increase in number of stocks any further.
2. No increase in investments in top 7 stocks (BHEL, SRF, BHARTIARTL, CROMPGREAV, INFY, MOIL, OPTOCIRCUITS)
3. Need to analyze SRF again, and see if it would be prudent to reduce it, purely due to the concern of a little higher debt level, slower growth outlook and risk that it is a small company, relatively. Needs more analysis.
4. PEL is about 6.7% of my portfolio, but before I take it to full 10% level, need to stock and do some some critical analysis...primarily on the fact that can I buy it lower in next few months, and the fact that whether there're some serious concerns about the pharma business and infusion into real estate and financial divisions.
5. No further increase in IGL, as I wrote in the post. It is good business, but to balance the risk of pricing regulations, I decide to limit the exposure.
6. Choose if it makes sense to further increase stake in MAZDA, or if Amara Raja Batteries turns out to be a better bet.
In all, I've about 10% surplus funds, and need to choose which makes the best investment out of PEL, MAZDA and AMARA RAJA batteries. As far as PNB is concerned, I won't liquidate it - it can give decent returns + dividends when market bull phase comes back in full swing.
I performed an expectation analysis also, here's the summary:
| Stock Holding | Purchase Price / CMP | Fair Value Estimate | 1.5X fair value reversion | Potential upside due to 1.5X fair value reversion | 3y average dividend yield |
| BHEL | Rs. 220.50 | Rs. 322.00 | Rs. 483.00 | 119.05% | 2.61% |
| BHARTIARTL | Rs. 263.90 | Rs. 300.00 | Rs. 450.00 | 70.52% | 0.38% |
| SRF | Rs. 206.73 | Rs. 480.00 | Rs. 720.00 | 248.28% | 6.77% |
| CROMPGREAV | Rs. 129.28 | Rs. 100.00 | Rs. 150.00 | 16.03% | 1.49% |
| MOIL | Rs. 251.11 | Rs. 314.00 | Rs. 471.00 | 87.57% | 2.26% |
| Opto circuits | Rs. 128.96 | Rs. 180.00 | Rs. 270.00 | 109.37% | 2.97% |
| INFY | Rs. 2,249.88 | Rs. 2,318.00 | Rs. 3,477.00 | 54.54% | 1.96% |
| PEL | Rs. 472.86 | Rs. 680.00 | Rs. 1,020.00 | 115.71% | 2.46% |
| PNB | Rs. 709.07 | Rs. 1,143.00 | Rs. 1,714.50 | 141.80% | 3.10% |
| IGL | Rs. 261.49 | Rs. 221.00 | Rs. 331.50 | 26.77% | 1.85% |
| MAZDA | Rs. 98.63 | Rs. 134.00 | Rs. 201.00 | 103.79% | 3.55% |
| AMARA RAJA BATTERIES | Rs. 227.13 | Rs. 150.00 | Rs. 225.00 | -0.94% | 1.66% |
| 102.15% | 2.64% |
As you can see, I've listed my average purchase price, my calculated Intrinsic Value / fair price and the 3 year average dividend payout, and accordingly, my portfolio dividend yield is a decent, if not great, 2.64%. Also, assuming markets will revert to mean in next 3 years, my portfolio can earn about 102% profits, which amount to a handsome 26% CAGR!!! Not to account for 2.64% annual dividends, yielding to a total expected return or about 30% from this portfolio.
While this might be a little overstretched, but then, we know a very bullish market can become highly irrational, and that's the time to take some profits and channelize into better opportunities.
I'll now soon freeze my portfolio (except selling if something flies away too fast, potential candidates being PNB, INFY and smaller stocks...) and focus back on continuing reading. Need to structure the reading, so much to read, but need to prioritize...just need to spend couple more weeks on completing this choice of 10% incremental investment in MAZDA, PEL or AMARA RAJA, and think if need to reduce stake in SRF
Let's see how things unfold...
Based on my experience,
ReplyDeleteList of stocks which are risky and may further give negative result/flat result.
1.MOIL(flat/negative)
2.PNB (nagative)
3.INFY (flat/negative)
Thanks Aniruddh
ReplyDeleteWhat time frame do you think this would happen? If your read my posts below on these individual stocks, PNB and INFY are stalwarts. They're market darlings in good times, so if good times return in next 3 years (I sense they're coming sooner, and then we might again crash...similar to 2010-11...), I'll sell these two positions for ~30-50% returns.
On MOIL, well, its a commodity business, and at this point, Manganese prices are near all time low. This is due to sluggish infrastructure development across the world, due to which steel and hence Manganese demand is low. However, as markets revive, the demand for steel and hence manganese will revive and that would reflect in share prices of MOIL, SAIL and Tata steel etc.
Of course, if I find a better opportunity, I'd consider reducing or exiting MOIL, but before that, I've many other candidates...MOIL I consider as a safe bet, well managed company, quite undervalued, yes, cyclical business...
Thanks for your feedback :-)