Porinju Veliyath Latest Stock Picks Recommendations

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Pee Vee
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Porinju Veliyath Latest Stock Picks Recommendations

Postby Pee Vee » Wed Jul 05, 2017 10:59 pm

Porinju Veliyath, Equity Intelligence India, says stock pickers have got enormous opportunity to pick stocks and make 20%, 30% and perhaps even 40% CAGR for next four-five years.

Foolish to think of a crash as economy is growing at a rapid pace

This is a very typical attitude. Many people in the market are not convinced about the India growth story. I have always been taking a stance that India for the first time since independence is changing in a significant manner both politically and economically and both these are very much connected as far as the stock investors are concerned.

It is just the beginning of a new India. We have a long way to go from a $2 trillion economy to a $5-6 trillion economy in the next few years. So, thinking about a crash or waiting for a crash is just foolish.

Enormous opportunity for stock pickers

Market has not been boring. It has been boring for those who look at only the Nifty and Sensex and approaching the market as a general market. Today, there is nothing like a stock market for investors. It is a very grey area. What is stock market after all? We have stock exchanges that facilitate investors to own a company or to disinvest a company. It is very simple mechanism but world over, this word is used very often and perhaps business media exists because of that. You have to admit that it is all about stock picking.

We are definitely at a huge inflection point which although just started a few months ago, is at different level from the point the country is heading to. The stock pickers have got enormous opportunity to pick stocks and make 20%, 30% and perhaps even 40% CAGR for next four-five years. This has been the theme I have been always talking about and it is happening.

Disruption has hit RCom, Idea etc

It is happening in individual stocks because especially in a disruptive world now when people who invested in traditional telecom stocks like RComm, Idea or similar companies are having a boring time. That’s why I have been talking about companies which are going to survive in the disruptive world in which companies are going to face major challenges. Some of those challenges could be beyond their capability to manage, even if they have the best managements. It is a very dynamic world of stock market today in which India is still a paradise for stock picking.

Impact of GST on the stock market

Coming to the GST, one of the most talked about events, like demonetisation, GST is again a very radical change. It is hugely positive. When we use words like manufacturing disruption or accounting disruption, these are too silly words faced with such a hugely positive historic economic event. The negatives are very small and can be managed by auditors and chartered accountants.

The government will take enough steps. They will make all the small, medium, large enterprises take care of theor problems and temporary confusions. Actually, I would like to talk about two sectors escpecially. There are many sectors which are benefiting as listed companies because of GST.

Buy Bata India and other footwear stocks

One sector I feel very strong about is footwear. Leather that is a big industry in India we are big exporters. Bata is a stock which I have been always liking of course we are not holding Bata in our portfolio management or personally. But I am talking about a large company. There could be some smaller companies which I cannot name because of the regulator restrictions to protect the investors.

In the footwear and leather segment, around 60% to 65% of the business is in unorganised sector and that will change now and 40% organised business can grow to 70-75-80% in the coming years. That is a huge unprecedented jump in their business volumes and profitability.

India has 1.3 billion people and chappal and shoes and all items that are like wearable and consumables. There is a big potential for some of those big brands. Now Bata is quoting at around 7000 plus market cap. It is a very plain, very capable company with a strong management.

It is a very good company. That does not mean you go out and buy it today. It can even react and come back to Rs 500 or whatever. I am not giving a theme which is for the day or for the week. The footwear and leather is one theme I would like to request investors to look for exploring further and see the comfortable valuations and consider how these companies are taking shape and growing for the future.

Buy HSIL and other construction material stocks

The second segment I have in mind is construction materials. I would say the home improvement products basically the ceramic tiles, paint or plywood, light electrical and even cables and wires, sanitary ware. This is one segment where around 50% is produced and manufactured in the unorganised sector. Some of them do not pay tax properly, do not do accountings and avoid may be sales tax or excise duty. So there is a lot of complication in grey and black areas in these kind of businesses.

There are some smart companies in that segment. We have discussed Hindustan Sanitaryware (HSIL) earlier. That stock is also doing very well. Today it is at around Rs 2500 crore market cap. We are holding HSIL in our portfolio management schemes. But there are many other companies which I do not want to name because they are price sensitive. Let investors explore these kind of segments where they always used to have competition from the unorganised sector and one need not really worry about this unorganised sector, where many will grow up in an organised manner.

Buy TCI and TCI Express for 10x gain

When it comes to your footwear theme, the opportunity is huge. Bata does not even have 3% or 4% market share, so sky is the limit. I am completely with you and if you are bullish on low-cost housing like you have been saying, you buy a house, you need to buy tiles, bathroom fittings, sanitaryware and lights. So I am completely with you when it comes to these two mega trends. I am going to take the clock back and talk about things which you have discussed in the last 1.5-2.5 years. You have earlier talked about the logistics theme and that time you spoke about TCI and TCI Express. The stocks are doing extremely well. Even though it is a low margin, very competitive industry. How will dynamics change for these two stocks?

Six months ago before the budget, I had talked about this stock.TCI was at Rs 167 on February 1st . Today, it is at Rs 340 or something means the stock has doubled and this is the leadership company in this country. TCI is a core holding now in our portfolio management. I want to disclose that including TCI Express, we bought both these companies much before the split at Rs 200 to 250. Today TCI is at Rs 340 and TCI Express is nearly Rs 600.So that is a huge gain for our portfolio management investors.

Buy industry leader stocks which are not in the Nifty or Sensex

We are still holding on to the stock because these are industry leaders. I was one day discussing only about the industry leaders in such a huge country with Rs 500-600-crore market caps. One need not really look into the Nifty-50 stocks to find the industry leaders. There are many more industry leaders below that. Now some of those Rs 400-500-crore market cap companies have become Rs 2000-3000-crore market cap companies. It may go double and triple from here. Look at the companies. We are still holding on to TCI and TCI express and they look very comfortable.

Buy Everest Industries and Future Consumer (FCEL)

I have got a lot of questions about some of the stocks which you have discussed in the past and one such stock is Everest Industries and Future Consumer. Do you still like the way how the business is shaping up for Future Consumer and Everest Industries?

Yes. Everest Industries has run up a bit not significantly but Future Consumer is a stock which has been moving very steadily. We started buying the stock at Rs 10. I have been giving disclosure all the time. This is one of the core holdings. I would like to specifically give disclosure that FCEL is a core holding in our PMS. It is a long time investment. Even though we stopped buying this stock recently because of better options, we continue to hold the stock.

Multibaggers are there in the turnaround space

One space where you are going to make a lot of money is the turnaround space where you are going to make multibaggers. We are in a very big sweet spot today as equity investors. In next two-three years, the companies which are changing their profiles by changing management attitude and quality, taking care of the minority shareholders and the way they conduct business should do well. If somebody is not willing to change with times, they will be forced to change, thanks to Narendra Modi.

Venky Multibagger

Purely from a news point of view, I do not know whether you have taken a look at the price action in Venky’s India and if you have an opinion there?

Amazing move. Again it is a big brand. This was one stock I used to be bullish on 10 to 15 years ago. We had a small experts in PMS when the stock price used to be at around Rs 200 levels. We held on to it for many years, did not move much.

There are such companies which are just sleeping, that sleeping of stock happens because of any major corporate event or the promoters’ attitude. So please let the small investors identify such great businesses, good brands which national market as their market. There are some such highly profitable and growing businesses which are sleeping as far as stock price is concerned.

Venky’s we are not holding at this point of time. There are some other smaller companies also, related businesses whose names I cannot tell because of the change in consumption pattern. Investors can very easily find stocks because we are having more than a dozen segments and hundreds of themes and hundreds of small cap and midcap companies which will be 5 and 10 times in the next five years. That is happening only because of that unprecedented rate of change, radical change happening in the style of the managing the economy by the politicians and the long-term vision of the government and it is a real change, an inflection point and we are still at an inflection point. You are not late to buy into stocks.

Balaji Telefilms

You have bought into Balaji recently. Are you betting on their ALT business, which is disruptive in your terminology? Balaji after the ALT launch is promising to be the Netflix of India. Can it be so?

Yes, that is a new development but more importantly that is another sleeping stock. It has been sleeping for over last decade. It is at the same price. It was at a much higher price maybe 15 years ago when it was the industry leader. ALT Balaji is something new and that is why am looking at the stock. This could be a new inflection point for the company. I was buying the stock at 80-85 levels. I was accumulating many months ago when people were throwing shares away for demonetisation because of ignorance.

If ALT Balaji really goes successful there are some indications already and it really takes shape as expected by the promoters and the management this can even be a billion dollar company going forward in a few years’ time. If it does not happen, even if ALT Balaji fails, it is something very interesting and so we bought the stock in portfolio management. We are holding on to it.

Best stock recommendations for 2020

Out of the four five stocks which we have discussed, with the disclosure and you have been very forthright with your buying price and admitting and acknowledging that they are part of your portfolio management service which means you have a vested interest in them and you want those stock prices to go higher that will benefit you professionally. We have discussed TCI, ALT Balaji, Bata and HSIL. Now since we are talking about years, this is 2017 and by 2020 out of the five stocks which you have discussed, which stock has the strongest potential to be a 10x?

That is a very difficult question. We discussed all the performing stocks already because these are basically large companies and that is what we prefer to discuss because when you talk about 10x, my mind travels to the small and mid-caps and some large small-caps. 10x for this kind of companies is very difficult to talk about. I would say these will be decent compounders that is the word I can use because these stocks have already run up.

Five months ago, we talked about TCI at Rs 170, today it is Rs 340 and I am talking about 10x from here. It is like I am talking at 20x five months back. You cannot take this very lightly as this already has moved very much. People should look for breathers in the market. Any economic development tends to make some people bearish. But that also creates an opportunity. Let us wait for the next economic reform to be implemented by the government and you will get a chance – from the day it is announced and the day it is implemented, just like GST.

http://economictimes.indiatimes.com/mar ... 454493.cms

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Re: Porinju Veliyath Latest Stock Picks Recommendations

Postby mariareese » Thu Aug 17, 2017 3:54 pm

Good recommendations for Balaji ..

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