Subject : your opinion on stocks which get highlighted in ET
I know you suggest us to stay away from the regular market noise, if we are long term investors. But my regular reading of various articles and newspapers have intrigued me to know your views on following stocks. Will be very grateful to know your take on the following -
Endurance tech; Arvind smartspaces; yes bank; RBL bank; isgec heavy engg; rane holdings; welspun india; axiscades engineering; indigo; tech mahindra; avenue supermarts; dalmia bharat; eicher motors; tata steel; edelweiss; phoenix mills;
While none of these fit our models for long term portfolio selection, the following stocks are good but at currently command premium valuations:
Yes Bank, RBL Bank, ISGEC, Indigo, Edelweiss
Some very good stocks at extremely rich valuations are:
Eicher, Avenue Supermarts
Subject : Wipro Buy Back
Any chance that Wipro will touch 315 in near term ??
Fair chance. Exit above 315 if buyback is not announced till then. The process is stuck at SEBI's end for approval which can come anytime.
Subject : Reg: Indian Energy Exchange Limited
I subscribed to this IPO after reading the analysis. But, scrip failed on listing day to book profits and even after few weeks also, it is not upto the issue price. Where analysis went wrong ??
Excellent long term pick. You can continue holding for 3+ years. Not suggesting fresh purchase now but definitely worth holding for IPO investors.
Subject : Regarding jubilant food works.
Sir, Once you came up with report on jubilant food works in which I remember is very much bearish view. Any fundamental changes, as it is having good run from that level around 900 I think.
We came out with our report at the exact bottom of the price fall and since then the stock has soared ~ 80%. Thank fully, it is just a view and noone has lost money on that view.
Jubilant Foodwork's results have been better than what we forecast due to improved margins. The market did not expect Jubilant to improve margins and nearly double its quarterly profits (Nor did we). However, the stock is very very expensive and the revenue growth is < 10%. In this market where every stock is rising, its tough to predict a fall. We are still bearish on the long term prospects of Jubilant Foodworks.
Subject : Telecom Industry
Where is the telecom industry heading? Is telecom a good long term investment due to data revolution?
Telecom is heading towards an Oligopoly with Airtel, JIO, Voda+Idea and BSNL being the only major players. We do not expect any pricing disruption over the next 5-10 years as every telecom player strives to increase ARPU and push up the meagre ROCE that the industry is witnessing. If you put a gun on our head and ask us to buy a telecom stock, we will go with Reliance because of a better balance sheet and support from the oil business. However, we believe that once JIO becomes profitable, they will hive off the telecom business into a new entity for "value unlocking". Also, the future of this industry, on a hypothetical note, is spectrum consolidation. We believe that the telecom giants will form a common entity like Indus towers and this entity will own the spectrum and lease it to every telecom company. This lightens up the balance sheet and also improves the ROCE, PAT, etc.
Subject : Raghav's Portfolio
I have been curious since the beginning but never asked this. Will it be possible for you share your personal portfolio, so that we may get an idea, in how many stocks that you have recommended, you yourself are invested in with what percentage.
Disclaimer : I am not doubting you here. I am just curious. I apologize in advance if I have made you feel bad about anything.
Hey, it is a very good question to ask your advisor. I only have the stocks that have been recommended on this website and nothing else. The % allocation differs due the timing and risk profile (my allocation is higher for equities and lower for cash). I have no other stock apart from the 12 advised in the model portfolio at this moment.
Subject : Equity allocation in portfolio
Ideally, how much do you allocate to equities in the long run? Isn't it a conflict of interest that you might increase allocation just to keep clients happy?
In the long run, definitely 100% (or maybe 95%). It takes time to build up a 100% allocation to shares and in the current market scenario ~ it will take longer than it usually takes us for building a 100% equity portfolio. We truly are grateful to our clients being patient and acknowledge their maturity in understanding the dynamics of the market. We communicate openly about the allocation and the future outlook. While we can get away with random allocation in the current upwards trending market, in the long run such gimmicks don't work out. We want to be a long term player in the market and thus we won't take any short term decisions which are wrong.
Subject : Increasing allocation to existing stocks
Which stocks can we increase allocation for our existing holdings?
The most probable looks Bajaj Corp. We will come out with a detailed note/report if the allocation is indeed increased for any of our holdings.
Subject : 100% equity allocation
I am bored of low equity allocation, can we increase allocation to 100% from existing stocks?
We are not getting paid to suggest you liquid funds. We try not to get frustrated with low equity allocation for new clients because we know clients like it on rocket mode (100% allocation). However think it this way - You are paying us not to manage returns but to manage risk by investing in equities. You will definitely move to a 100% equity portfolio, but give it time. We are yet to see a meaningful correction and thats why most of us don't know what bear markets are like. As a new client, you will get new recommendations as and when they come! So your allocation will start increasing in a planned and systematic way. As long term investors, we need to master the art of patience. In the long run as an investor, it won't matter to you if you invested in one go or over six months.
Subject : Monthly Allocation
Is monthly allocation guidance always same as model portfolio?
Similar but not same. Few stocks may have different allocation from the model portfolio.
Monthly allocation depends on different parameters which we compute at our end.
Subject : Will future allocations be 2% or 3%
There are many stocks with 2% to 3% allocation. As they are high risk ones, will new recommendations for new members have low allocation too?
New members have a 2% - 3% allocation because the stocks have run up quite a bit since our initial recommendation and our maths shows us a 3% allocation at the most gives optimal risk reward at a portfolio level at the current prices.
New members will get 5% and higher allocation for new stocks. Low allocation is only for old recommendations which are in our buying range.
Subject : Bharatmala project
There is lot of buzz going on infra sector because of bhartamala project in which govt is planning to invest in coming years. Any company you can think of which have better balance sheet combined with better execution capability which we can consider for portfolio for next 3 years.
We are digging up data on this theme. Too early to comment but we will keep you updated :)
Subject : Best sectors for next 3 years
Which sectors will give best returns over the next 3 years?
i) Housing Finance: The growth will be good, however we expect margins, ROA and ROE/ROCE to go down due to heavy competition in the industry.
ii) Accessories/Jewellery: After 5-6 years of muted growth, this industry looks ripe to benefit from the expansion that they have undertaken in terms of physical presence.
iii) Tyres: Another industry which has shockingly underperformed in terms of volume growth, especially when automobiles have been doing good, is the tyre industry. We expect recovery in volumes but the softening of margins will be a dampener for most tyre manufacturers.
iv) Reality: Established housing developers will do good and enjoy good tailwinds. Look for companies with a dependable order book for the next 3-5 years.
v) Pharma: Some pharma companies will benefit from revenue growth in new ANDA approvals and related product launches. However, deep domain knowledge is required in this front to cherry pick the companies.
Subject : what should we do in crazy times like this?
With even blue chips hitting uppercircuit what should an average investor do. How to sit silent? As metioned by you in previous posts PE can be this for very long term, and even could take years to get back to buying range. How should we handle this situation.
This is a heated up phase in the short run. An average long term investor should be patient with his long term holdings and not fall into the trap of churning the portfolio. We have not seen more than a 2% fall for more than 200 days! Volatility is at extreme lows and this is NOT NORMAL. We are heavy on cash and will only deploy in meaningful opportunities.
Subject : Nifty PE above 26
Nifty PE is above 26! Historical high is ~ 28. Are we going to crash from here?
A PE of 26+ is very expensive. It is not a function of growth but purely due to low interest rates by central banks. Because of low interest rates, there is cheap money available and also higher growth forecast. A bubble burst is usually the result of a disaster like the tech boom or the sub prime mortgage crisis of 2008. Not just India but almost all global markets have done well over the last couple of years. We are expecting a mild correction (~ 10% to 15%) but we cannot predict the timing (We have failed to predict it since the last couple of years). We are cautious with a low equity allocation and going slow because of fewer opportunities. If your horizon is 3+ years then this should not be a problem.
Subject : PE above 24
With PE above 24, are we at an overvalued zone? Are we heading for a crash?
We are not in a bubble and we do not see a crash coming. A correction is very much possible.
Subject : Equity Mutual Funds - Dividend
Would you suggest saving a lump-sum amount in Dividend Mutual Funds? If yes, can you suggest some for us.
Dividend mutual funds are not a good investment from taxation purposes. A growth fund yields better returns.
While the dividend is not taxed in your hands, the fund house incurs DIVIDEND DISTRIBUTION TAX on the dividend it pays out.
Consider that the NAV has risen from 100 to 120 and the fund house declares a dividend of Rs 20. Before the dividend reaches you, DDT has to be paid on it. So the company pays the DDT from the declared dividend!
Now, DDT on the Rs 20 dividend works out to:
DDT @ 15%: 3
Surcharge @ 12%: 0.36
Cess @ 3%: 0.10
Total: Rs 3.46 (Or 17.2% of dividend)
Now your net gain from a growth fund is Rs 20 while from a dividend fund is Rs 16.54.
So, it is not advisable to invest in a dividend fund.
Subject : Tax saver Fund
Need help from experts here for tax saver fund.Please guide.
Birla Sunlife Tax Saver '96 and Axis Long term equity are the suggested funds for tax saving u/s 80C.
Subject : Reading Books
Is it compulsory to read books to be a successful investor?
No. It is a very big myth to be honest. While I am personally an avid reader (because of interest), I can name many successful investors who don't read!
To start off - Porinju Veliyath, Vijay Kedia don't read any books. Then there are many small but successful investors I know who do not read.
Read annual reports, news papers or business magazines and you are good to go! There are 4-5 good investing books which you can read if you want to give it a try. You do not have to read 100s of books to be a successful investor.
To end, if reading meant success in investing then Librarians would be top fund managers. Read books out of interest, not compulsion.