Q2FY20 Portfolio Performance

The Nifty has posted a 5.17% return on a YTD basis while the midcap and smallcap indices are down by 10.44% and 13.63% respectively. Our portfolio is down 2.55% on a YTD basis. YTD Performance Portfolio Performance 5 quarter performance The Alphamultiple portfolio fell 2.03% for the quarter. We under-performed the Nifty but out-performed the midcap and smallcap indices. From its peak of Jan 2018, the portfolio is down ~ 18%. As our portfolio is primarily concentrated on smallcaps, we have maintained high cash allocation in the portfolio over the last two years. But, now our allocation equities has increased to 63% (Read: Live Portfolio). Our investments in a credit rating company and a media-entertainment company have performed dismally but other investments have balanced out those drawdow... Read Full Article

Hester Biosciences Stock Analysis

Hester Biosciences stock has delivered stellar returns over the last decade. Over the last 5 years, the revenues have grown at a CAGR of 20.8% while PAT has grown at a CAGR of 34.51%. The Bill and Melinda Gates foundation has given the company a soft loan and grant to start manufacturing in Africa. Company Overview Hester Biosciences was founded in 1987 by Mr. Rajiv Gandhi (MD & CEO). The company operates in two verticals – Poultry and animal healthcare. The company is one of India’s leading animal healthcare and second largest poultry manufacturer. Hester derives 76% of its revenues from poultry and 21% from animal healthcare. The company derives 92% of its revenues from the domestic market and just 8% from exports. The company has over 50 vaccines and 35 health products. The comp... Read Full Article

CreditAccess Grameen Stock Analysis

The CreditAccess stock price is touching 52 week highs. We are getting a lot of requests from our blog readers to do a CreditAccess Grameen stock analysis. A rapid growth in the loan portfolio and profit after tax makes it a potential growth stock. About CreditAccess Grameen Ltd., formerly known as Grameen Koota, was founded by Vineetha Reddy in 1996. Today, the company’s promoter is CreditAccess Asia. In 2008, the company moved from being an NGO to being an NBFC. The company is the 2nd largest micro-finance institution in the country. Karnataka and Maharashtra contribute ~ 60% of the gross loan portfolio. The top 10 districts make up nearly 32% of the portfolio. Also, Rural contributes 82% (vs 68% in FY15) which makes the portfolio concentrated. Industry Nearly 52% of the agricultur... Read Full Article

AIA Engineering Stock Analysis

AIA Engineering stock has delivered multibagger returns over the last five years. The company has healthy return ratios and has exhibited strong growth despite the slow economic growth globally. AIA Engineering operates in the grinding mill internal market on a global level, serving the Cement, Mining, Thermal Power and Aggregate industries. The mining industry is the major source of revenue for the company. Exports contribute 76% of the company’s revenues. Industry & Product AIA Engineering designs, manufactures and markets consumable wear parts (mill internals) which are used in the process of Grinding and Crushing. Due to impact, abrasion and corrosion, there is wear & tear on these parts and they wear away. The company makes these consumables in high chrome metallurgy whi... Read Full Article

July 2019 Newsletter – Negative Sentiments

Market Outlook As we write the July 2019 Newsletter, the sentiment on the street is negative. Investors do not want to put their money in small-caps or even mid-caps. Whoever is still sticking to equities is now talking about investing in Bajaj Finance or other large caps that are at 52-week highs. Just a simple trend analysis of the term Multibagger on Google will show you this graph: Multibagger Search Trends Even multibaggers have fallen out of trend now. Look at the peak of 2017 and compare it to the scenario now. Investors want to invest in Index funds, large caps and want to stay away from small & mid-caps. The mid-cap forward PE tracked by institutional analysts usually trades at a discount of 5% to 10% to the Nifty’s forward PE. This discount is now above 20%, a level seen wh... Read Full Article

April 2019 Newsletter – High PE Ratio

The markets made an all-time high in April 2019. The markets are consolidating close to these highs. The General Election of 2019 is going on and as we write this newsletter, most of the constituencies have already voted. By the time we write to you the next month’s newsletter, the election results would have been out. While the Bharatiya Janata Party is most likely to be the single largest party, the markets will be having a keen eye on the number of seats the BJP wins on its own. Anything above 220 will keep the sentiment positive on Dalal Street. However, if the single largest party fails to win 200+ seats, then the markets could react adversely. In 2009, the markets were locked in upper circuit after the Congress won 200+ seats on its own and the UPA retained power with an even more ... Read Full Article

Wipro Buyback 2019

Wipro has announced a buyback worth Rs 10,500 Crores. The Wipro buyback is for 32,30,76,923 at Rs 325. This represents nearly 5.35% of the company’s equity. In 2016, the company had done a buyback for Rs 2,500 Crores and in 2017 it did a buyback for Rs 11,000 Crores. The buyback type is through the tender route. Wipro buyback details Buybacks create an arbitrage opportunity for retail shareholders. SEBI’s guidelines on buybacks through the tender route stipulate a 15% reservation for retail shareholders. Those with less than Rs 2 Lakhs holding on record date are considered retail shareholders. Simple calculations and assumptions can show us the probable returns from this buyback. In 2017, we made ~ 10% over 5 months in the Wipro buyback and later also made a similar return in t... Read Full Article