My portfolio updates and investment journey

Hi @Crishna ,

We are driven by our (personal) experiences (in some form Morgan Housel mentioned this in his book “Psychology of Money”). So some history (my experience) and some rationale to justify my buy.

Previous personal experience: I was invested in Dixon from pre-Covid. Luckily I made some 6-7x within 2 years. I was holding the stock even when it was consolidating for a long time. However, in one of the quarter there was flatness in revenues and contraction in margin, on top of it management downgraded its year-end guidance sharply. I exited the stock completely around 3K, now its 7k. So, may be I was trying to be smart in Syrma, sold in 550-600 range completely. Now re-entering at lower levels makes me look smart (only histroy will decide though).

Justification of my buy:

1. When I listen to experts, they say EMS might be at juncture where IT was in late 90s. So seems huge runway for growth, I did not have any stock to play EMS theme and my historical bias made the tilt towrds it.
2. Q3 FY24 was impacted by push of deliveries to Q4 FY24,thats why revenues and margin got impacted. In Jan they already did 362 crores of deliveries so company seems to be on track at least on revenue front.
3. Management continues to guide for industry+ growth. I think industry shall grow in 30%.
4. Margin: Margin contraction was expected from previous quarter (Q2FY24). Reason is they are getting into prescriptive business (like Dixon) where margins are lower but ROCEs are comparable to their business. So simply put company is focussed on EPS expansion and not margin exapnsion. Dixon at 4% margin trades at 100+PE. Syrma is around 80PE. However, Dixon has very good cash flows and ROCE. I am hoping Syrma turns good on these metrics in near future.
5. Margin: Their product mix shift from industrial to consumer is leading to margin pressure. Consumer is growing at very high rate which is low margin business. So at business segment level margins are holding up but at overall level its the product mix issue. If they get into laptop business then margins will go down further, however EPS may expand and ROCEs may improve.

Please note that I can sell the stock any time.

Disclaimer: I am not a financial advisor and nor a SEBI registered Analyst. The content shared here is only for learning purpose. All the names mentioned here are for example and learning purpose. I may buy more, exit or partly sell the stock/bonds without any prior intimation.