Exited Varun Beverages (VBL) and bought Dr.Reddy’s Lab
Rationale:
- VBL declared poor profits which is lesser QoQ,
- it has high stock promoter pledges,
- Technically Pepsico but its not Pepsico, I would rather invest in a business which I understand better
- book value is deteriorating and
- it is in high sell zone
It has high PE and high PEG ratio
Why Dr.Reddy’s?
Not a favourite stock especially in this forum, but along with IDFC, Tata motors, it is screaming at me with valuations like pick me.
- Dr.Reddy’s Lab is a pure cyclical play.
- It is much cheaper,
- I understand this business as well as I’m tracking Natco Pharma
- it is having high ROE,
- Low debt,
- increasing EPS,
- increasing Book value
- and it is a hedge for falling Rupee.
Plus its a top loser in pharma space as of now. It has the highest foreign holdings for the PE that is trading.
So I have two investment rationale, which I am convicted on and start investing slowly and steadily.
- India is witnessing a K shaped recovery in terms of Economy and
- Price of Rupee is falling and dollar is strengthening,
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