Chins’ Portfolio

I’ve really been enjoying myself over the last three days.

Many companies in my watchlist are now falling into a window where valuations are attractive enough to warrant a position.

In the last three days, I have done the following:

• Friends have pointed out to me that post merger book value is closer to Rs. 45. Stock has corrected around 20% from my exit price, and I have bought 3% worth of Equitas SFB at 51.

• Have initiated a 1% position in Fusion Micro Finance at 360 per share. I re-iterate that I’m not a fan of IPOs, but this is a company in the MFI space that can do 4.5% RoAs and is currently at 2x book. If they maintain the run-rate seen in H1FY23, it is currently available at a PE of around 10.

• I have bought a 3% basket of Maithan Alloys and Indian Metals and Ferro Alloys.

Thesis for Maithan is just that it’s currently at book value, and has not broached this level after becoming debt free. There is no trigger on the upside presently, and I’m using it as a proxy for cash.

IMFA is currently trading below book. In the past, the price has dropped to 0.3-0.5x book, but there’s a nice nuance to be made.

In the past, IMFA had leveraged quite a lot, shown below:

Now as of September 2022, they’ve paid off all of their long term debt, and after looking more closely at what their short term debt is, one realises that they’re in fact debt free. This means book value should be the bottom, unlike the downcycle valuations of the past.

My basket of Maithan and IMFA is a proxy for cash, and I’ll be raising my allocations in this basket through next week.

• Have bought a 2% position in Sharda Cropchem. It’s an exceptionally good business that’s currently trading almost at lifetime lows that were only broken during the initial covid drawdown:

Current margins are the lowest seen in a decade, and are due to forex losses after the sudden rise in the dollar earlier this year.

Based on the above, the bottom for their margins was already made in Q1/Q2, and things will improve from here. It’s a really high quality business, and I’m happy to scale up allocations here to 5% if valuations remain where they are.

Currently have around 14-15% cash. Looking forward to more blood on the streets.