As I said , firstly you need to classify how you view the stock. I would personally categorise my portfolio into following.
- Banks (HDFC, Manappuram, IndusInd, Federal, Bandhan)
- Financials (MOTI)
- Pharma, chemicals and related industries ( Tarsons, Lincoln, IOLCP, NGL, Aarthi Pharma)
- Consumer goods ( Stovekraft, Sirca, Lux Indusries)
- Logistics ( GPPL, Mahindra Logistics)
- Tech (TechM,HCL)
- Rest ( OCCL, Quess, ACC, Vedant )
Now, I will just take the first category which is bank. In that, HDFC is retail focussed, Manappuram is loan against gold but has it’s own challenges wrt growth and new initiatives they are taking, IndusInd has good loan book again vehicles, Federal has good loan book mix and looking at good high margin products and bandhan being focussed on micro-finance.
Now with such diversification within banking sector itself, the growth of loan book, profits, NPAs etc would be very different and stock prices would also be very different over next 4-5 Years.
Having said this, what you should be able to make is an educated guess wrt any company is how much are they earning as of today, is it predictable or not, how much can they earn on additional capital employed, how much reinvestment is required to sustain such earnings, what does company financials look like, how company is moving forward and where they’re spending the capital, what’s the total addressable market as of today, probably 10 years from now, competition and how long can they survive. Based on all these things, you should be able to make an educated guess in comparison to any of your other alternate investment opportunities and identify if sum of retained earnings for the holding period or the greater higher earning capacity of the stock in the future would make sense and among all the other stocks you own, which one deserves highest capital and more and more. You can buy value investing by Parag Parikh because what I have mentioned is just on the surface and out of top of my mind. It’s an open ended problem.
To summarise, it’s game of comparing one investment opportunity to 1000s other available options to you both within and outside the market, trying to figure out what’s better among the candidates you’ve and finally deciding allocation keeping in my mind risks involved and then periodically revisit your decision and check if everything holds good and whether your conclusions are right and redoing same exercise agin and again. I don’t know if this answers but if you are looking for more crisper and less vague answers, there isn’t one.