Friends –markets are volatile due to rupee depreciation, crude oil prices and newer trade barriers being erected by US.
But India’s consumption story is still playing out. People are not reducing their petrol consumption. Neither are they are reducing their eating out or holidaying or festivities. The general mood of optimism that comes with a growing GDP is very much prevalent.
Most companies are doing well and so there are opportunities in stock market.
Here are my stock recommendations. Having said that – please do your own research before you invest:
- HDFC Bank: This company is a great compounder of wealth The company has ten year top line CAGR of 20% and bottom line CAGR of 26%. The stock compounded at over 20% over the past ten years. At current price of 2020 – it is priced right –I am OK to buy this upto 2040.
- Pidilite: We all are customers of Pidilite as we all use Fevicol. It is not very difficult to make this product (it is after all an adhesive chemical) – but it is very difficult to sell it in a B2C scenario. There are quite a few companies who have tried competing with Pidilite – and have realised the truth. This company is great in branding and distribution and this moat is here to stay for years ahead. The company has ten year top line CAGR of 13% and bottom line CAGR of 25%. The stock has compounded at 35% over the past ten years. At current price of 1110 – it is priced right – it would be worth entering up to 1150.
- Motherson sumi: This company has a story similar to TCS and Infosys. This company has grown from being a supplier of harnesses (electric wires) to Maruti with a turnover of 23 crores in 1993 to a global company with a turnover of over 50,000 crores supplying interior parts, harnesses and rear view mirrors to almost all car companies in the world. The moat of this company is it’s senior management relationships with automotive companies globally which is built on years of good execution and a culture of focus on ROCE across the organisation globally. The company has ten year top line CAGR of 40% and bottom line CAGR of 29%. The stock has given almost 40% CAGR over the past ten years. At current price of 292– it is priced right – it would be worth entering it up to Rs 320.
- Gruh Finance: This is a HDFC group company –they give small home loans to the self employed. The company’s moat is it’s ability to analyse the credit worthiness of it’s customers who happen to be very small entrepreneurs. I believe that the company has a large untapped market in the years ahead. The company has ten year top line CAGR of 21.5% and bottom line CAGR of 24.5%. The stock has given almost 50% CAGR over the past ten years. At current price of 330 – it is priced slightly on the higher side –the entry price for me was 315 and it was at that level one week back – If you wait patiently, it will surely touch 315 in the weeks ahead and at that price it would be worth entering.
- Marico: This company needs no introduction. The company has ten year top line CAGR of 11.5% and bottom line CAGR of 16%. The stock has given almost 25% CAGR over the past ten years. At current price of 350 – it is priced slightly on the higher side – if you can get it at 335 – it would be worth entering.
- Asian paints – This company also needs no introduction. Paints too, is easy to make but difficult to sell. Like Pidilite, their moat is their brand and their distribution. The company has ten year top line CAGR of 14% and bottom line CAGR of 20%. The stock has given appx 20% CAGR over the past ten years. At current price of 1291– it is priced slightly on the higher side – if you can get 1100-1150 – it would be worth entering.
I am also exiting Avanti feeds that I had entered few months back – my entry timing as wrong – the company had a one time bumper year in 2018 and the stock reflected that good luck – their EBITDA went from 353 crores (in 2017)to 730 crores (in 2018) -now it is expected to be around 400 crores (in 2019). Even though the company is well managed and will do well in the coming years – I will not make any money if I stay invested for atleast 2 years – hence I am exiting with a loss.