[SmartCat]

Originally Posted by Imran.Syed

I'm a novice investor & I have 10L residual cash that I can invest and forget for 3-5 or even more years.
ITC is on the top of my list, and I have done rigorous research on it.
My other pick is Bharat Electronics for only for two reasons, it is a defense manufacturer/supplier and it is on Smartcat's screener. Haven't done the due diligence on BEL yet. I plan to invest 75% capital in ITC and rest in BEL.

Yikes, that is a bad idea. Issues:

- You are a novice investor
- You plan to put 75% capital in 1 stock (way too high) and 25% capital in the other (too high)

ITC and BEL are value for money stocks though.

Since you are just starting off, put that Rs. 10L capital in liquid funds. Pull out Rs. 30,000 to 50,000 per month from this capital and invest in stocks. This way, it will take 2 to 3 years for you to deploy all the capital, allowing you to "learn along the way".

You could start by investing Rs. 10K to 50K per stock, and not more than that.

[hondafanboy]

Originally Posted by Imran.Syed

I would appreciate some advice from the experts here. I'm a novice investor & I have 10L residual cash that I can invest and forget for 3-5 or even more years.

I was also in the same situation but later on decided not to go all in via direct stocks. Too much work to identify and monitor. In the end i stopped at 2.5l in direct equity and the rest of it in couple of mutual funds including the index fund.

If someone who can invest and then forget that for long term and wants to take a dip in direct equity, I would suggest to go with a topper or second ranker from each sector pharma,tech, fmcg, etc. so 2L in each stock that too enter on different levels and no more than 5 stocks in total.

Good luck.

[Imran.Syed]

Originally Posted by hondafanboy

I was also in the same situation but later on decided not to go all in via direct stocks. Too much work to identify and monitor. In the end i stopped at 2.5l in direct equity and the rest of it in couple of mutual funds including the index fund.

I'm actively researching & learning more about MFs.

Originally Posted by SmartCat

Yikes, that is a bad idea.

You could start by investing Rs. 10K to 50K per stock, and not more than that.

Thank you, I'll slow down and invest like that you said and learn along the way.

[adimicra]

Originally Posted by SmartCat

Yikes, that is a bad idea. Issues:

- You are a novice investor
- You plan to put 75% capital in 1 stock (way too high) and 25% capital in the other (too high)

ITC and BEL are value for money stocks though.

Since you are just starting off, put that Rs. 10L capital in liquid funds. Pull out Rs. 30,000 to 50,000 per month from this capital and invest in stocks. This way, it will take 2 to 3 years for you to deploy all the capital, allowing you to "learn along the way".

You could start by investing Rs. 10K to 50K per stock, and not more than that.

+1.

Having burnt my fingers (or hand) in stock market, I have learnt quite a few lessons. So, just want to share my 2 cents.

• Never put more than 10% of your equity allocation in 1 stock - NEVER, period. More so for new investors.
• If you have 10L to invest in equity, then put the lump sum in liquid funds and do SIP in 2-3 mutual funds for 1-2 years.
• If you really want to try your hand in direct investing, start with 10-20% of your equity allocation and see how it goes for 1-2 years. So, in your case put 1-2L in direct equity and rest in MFs (don't invest any lump sum, spread it out over 1-2 years).
• Equity investing is not simple. It's not like you look into a few key ratios and invest in a stock and it will go up magically. I see so many retail investors getting trapped in supposed value stocks like ITC, SBI, PSUs and losing money while market makes new highs. So, before you invest directly, find out what kind of a investor are you? And then you need to have the discipline to stick to your style and conviction, no matter what. Ask yourself, do you have that? If not, stick to equity MFs.
• As with all skills in life, equity investing needs passion, patience, determination. Don't expect you will come to market and beat experienced fund managers easily.

Not discouraging direct equity investing but it's a long tough road. So, start small, and see how it goes. Wishing you best of luck. I am myself in the process of transitioning from mutual funds to direct equity (right now, I have a 50:50 ratio between MFs and Direct equity)

[deathwalkr]

I have a handful of shares in HDFC, Kotak, ICICI and Reliance. With Nifty being where it is today, should i be selling these? Had invested in March during the crash.

Looking at it only on a long term basis but seeing returns at 51% is eye watering!

[shivkumar19]

Sharing Diwali picks from the top Fund houses I received from a WhatsApp group.

[Imran.Syed]

Originally Posted by adimicra

+1.

Having burnt my fingers (or hand) in stock market, I have learnt quite a few lessons. So, just want to share my 2 cents.

Thank you for sharing your experience and advice.

The only reason for selecting ITC was earning dividends with a small chance of capital appreciation when(if) the FMCG business really picks up in 5-10 years. I don't understand ratios very well but I do somewhat understand business.
But it is clear that that's not good enough reason & knowledge to make an informed investment decision.

Will refer to this thread as I learn

[BaCkSeAtDrIVeR]

Originally Posted by Imran.Syed

... I have 10L residual cash that I can invest and forget for 3-5 or even more years.
ITC is on the top of my list, and I have done rigorous research on it.
My other pick is Bharat Electronics for only for two reasons, it is a defense manufacturer/supplier and it is

Avoid PSUs because management has no freedom. Avoid highly regulated sectors. I dont own any PSUs, so a personal perspective.

A good part of my portfolio is ITC. But I wont suggest investing more 5 -7 % in ANY stock. Since you have only so much and tracking too many stocks will be a pain, still limit yourselves to 10 - 15% of cost per company / corporate group and limit exposure to 25% per sector.

Do remember that profits in excess of ₹ 1 lakh per financial year are subject to LTCG - if you hold a stock for more than a year. And @ the marginal rates applicable to you if holdings are for less than a year. So are dividends at the rate applicable to your slab. So keep track of costs both while selling and buying.

And dont go by tips and others' recommendations. Use such suggestions as a basis for further research into a company.

We have separate threads on auto stocks and mutual funds and Incomevtax as well.

Above all, you dont have excess cash, and dont park it. Just invest whatever amount you want to invest for the time frame you want. Hope you get the point.

[K_Drive]

Any suggestions on Ashok Leyland. Stock has gained good momentum past few weeks. Is it good to hold on a long term perspective?

[BaCkSeAtDrIVeR]

Originally Posted by K_Drive

Any suggestions on Ashok Leyland. Stock has gained good momentum past few weeks. Is it good to hold on a long term perspective?

Yup. Buy when prices spike. Sell when prices fall. Sure shot way to make money - for others.

Seriously, where were you? I recall buying AL at 12 - 15 range not so long ago, before COVID. I then sold at 3 digit prices and purchased again at 2 digit prices - just before LTCG came. With King Long gone for a long toss, and possibly defence orders, it is improving fundamentally.

[K_Drive]

Originally Posted by BaCkSeAtDrIVeR

Seriously, where were you? I recall buying AL at 12 - 15 range not so long ago, before COVID. I then sold at 3 digit prices and purchased again at 2 digit prices - just before LTCG came. With King Long gone for a long toss, and possibly defence orders, it is improving fundamentally.

I do hold AL and it is on profit. I'm planning to sell it when it hits three digits(104 precisely). Just want to check if it is worth to hold it for long term.

[ajmat]

Originally Posted by K_Drive

Any suggestions on Ashok Leyland. Stock has gained good momentum past few weeks. Is it good to hold on a long term perspective?

No

It is only powering on momentum. ROE is negative at todays prices. Gearing is 200%(Outstanding debt is twice the book equity). Negative cash flow,

[BaCkSeAtDrIVeR]

Originally Posted by K_Drive

I do hold AL and it is on profit. I'm planning to sell it when it hits three digits(104 precisely). Just want to check if it is worth to hold it for long term.

Ok. Fine. I purchased at low 2 digits for dividends, when dividends were tax free. Now that is not the case,so may review the situation later on.

Originally Posted by ajmat

No

It is only powering on momentum. ROE is negative at todays prices. Gearing is 200%(Outstanding debt is twice the book equity). Negative cash flow,

Isn't that debt-equity ratio normal? For a manufacturing entity, at least? And what did you mean by "today's prices" when you speak of ROE? I recall that equity in this context is equity capital + free reserves (which can be used to make bonus shares). Current market valuations of a business do not affect ROE. Or have I misunderstood?

Yes,, there is a down turn,I'm not happy with them selling a R&D unit couple of years back, exit if the CEO, etc. Yes, current movement from 50 - 90s is momentum. So was the fall. This is a very high beta stock.

My view is their brand value. And defense deals. And lower TCO. And their competition is Bharath Benz, not Tata. People buy Tata out of brand perception and / or loyalty. The ones doing Cost of ownership chose between AL and BB.

The recent shift from roadside body building to the Bus code and factory fitted cabins for goods vehicles - I'm yet to figure out its impact. But looking around me, i see more new registrations with the AL logo than Tata. Eicher seems to lead the sub 10 tonne pack. And BB is growing its share of the pie.


Yes, AL is nearing its peak if you look at past financials. Looking at dividends, I still get 7‐10% (prechurn). But holding on for dividends is not a very good idea. Pre covid there was scope (IMO) for 30-40% growth in public transport. I dont know how it will be now. If the regulators get wiser and sensible and increase buses on roads to avoid crowding and standing passengers, it will be good for the industry, environment, economy and reduce congestion on roads.

[SmartCat]

Originally Posted by ajmat

Gearing is 200%(Outstanding debt is twice the book equity).

Originally Posted by BaCkSeAtDrIVeR

Isn't that debt-equity ratio normal? For a manufacturing entity, at least?

Debt to equity ratio of Ashok Leyland is quite low for a manufacturing company. Remember that published financial data includes that of Ashok Leyland Finance (NBFC) too. If you look at standalone entity, the debt to equity ratio of Ashok Leyland is just 0.6

My view is their brand value. And defense deals. And lower TCO.

Your investment logic is fine. If FY20 numbers are messed up because of lockdown, you could look at FY19 PE ratio (around 14). So valuation-wise, Ashok Leyland is reasonable (but not cheap). But remember that this is a cyclical stock, directly affected by India's economic health. The stock can crash if there is bad news on the economic front. And vice versa.

[K_Drive]

Gurus, what about CEAT tyres? I can see multiple OEMs opting for CEAT. Nissan Magnite, Mahindra Thar, RE Meteor etc are popular ones. As these models are expected to perform well, isn't worth considering this stock for investment? Currently not holding this. Is it good idea to enter this stock in current market price?