Sanjoy Bhattacharyya’s stock portfolio and best buys

Sanjoy Bhattacharyya is one of our favourite stock pickers because his hallmark of is that he is a no-nonsense old-fashioned investor who doesn’t hesitate to call a spade a spade. Sanjoy Bhattacharyya prefers to stick to the tried and tested path much like other master stock pickers Rakesh Jhunjhunwala, Ramesh Damani & Ramdeo Agarwal. His acute focus on the long-term fundamentals of the stock has held in good stead in the several decades that he has been investing.

We have been following Sanjoy Bhattacharyya‘s stock picks for a long term and have benefited immensely from his recommendations to buy stellar stocks like Swaraj Engines, Indraprastha Gas, Allied Digital, Deepak Fertilisers, Union Bank of India, Tidewater Oil, GRUH Finance, Balkrishna Industries, Voltamp Transformers, IL&FS Investment Managers, Hyderabad Industries and VST Tillers & Tractors. As we have said earlier, the best thing about his stock picks are that they are all solid companies, with reputed managements, a great business model, growing at a rapid pace and available at reasonable valuations. No sleepless nights worrying about dubious and fly-by-night companies with Sanjoy Bhattacharyya‘s stock picks.

But frankly, when Sanjoy Bhattacharyya put in a glowing tribute for Central Bank of India in August 2010 and called buying its shares “a childishly simple proposition”, we had our doubts because Central Bank of India was known to be a laggard and we thought there were better picks in the market than Central Bank of India (See Central Bank of India: Choice Of Two Master Stock-Pickers). But fortunately, we have better sense than to second-guess the wisdom of a master stock picker and this kept us in good stead because at the CMP of Rs. 237, Central Bank of India is up 35% in just 2 months!

Truly, is it said that just following the stock picks of master stock pickers may be all that you need to do to make a fortune! (See When Rakesh Jhunjhunwala Buys … Just Buy, Don’t Think!!)

Sanjoy Bhattacharyya, in his latest article in Forbes India, comes down heavily on the “business” of forecasting results. He calls such forecasting “futile” and “hopeless” and says the investor is better off betting on the fundamentals rather than market direction.

Sanjoy Bhattacharyya, as usual, backs his arguments with solid and compelling logic. He quotes Mario Gabelli who pithily said “Buy what is, not what will be.” He argues that relying on worthless forecasts of an essentially unpredictable future is akin to gambling on events outside your control. Nothing adds more risk to an otherwise prudent investment approach, he cautions.

Sanjoy Bhattacharyya emphasizes that rather than bet on market direction, it is better for investors to stick with the fundamentals.

He recommends two stocks that according to him are “unsung worthies” which merit “serious consideration”.

Sanjoy Bhattacharyya‘s first stock pick is Tata Sponge Iron which at the CMP of Rs. 380 is languishing at the PE of 6.92 on the basis of the FY 2010 EPS of Rs. 54.88. One can see why he likes this stock. First, Tata Sponge Iron is a Tata company which means that one has a management of impeccable integrity at work. Second, Tata Sponge Iron had good Q1 FY 2011 results in which its sales and profits grew 17% and 59% on a YOY basis. Tata Sponge Iron is likely to post good results in the next few quarters as well so there is no anxiety on that score. Tata Sponge Iron is a zero debt company, always a comforting factor. In addition, Tata Sponge Iron has a 3 Year CAGR sales of 23% and a 3 year CAGR profits of 74%. Tata Sponge Iron offers a return on equity of 21%. Tata Sponge Iron also is a regular dividend paying company offering a yield of about 2.1% at the CMP of Rs. 380.

Sanjoy Bhattacharyya‘s second stock pick is Taj GVK Hotels which at the CMP of Rs. 160 is trading at a PE of 27 on the basis of FY 2010 EPS of Rs. Rs. 5.78. While Taj GVK Hotels is certainly not cheap, he gives solid logic on why he recommends this share. First, of course, is the impeccable quality of the Tata management which has obviously rightly impressed him. Second, Taj GVK Hotels has low debt with a debt-equity ratio of only 0.47 which always provides comfort. Third and most important, Sanjoy Bhattacharyya exhibits his visionary charetrer when he points out that the high PE is on account of the fact that the entire hotel industry had undergone a harrowing time owing to the global terrorism and the terrorist attacks. It makes sense that once Taj GVK Hotels begins to recover its business, the profits will start to flow in as ususal and the stok price will rise.

So, once again, we have to agree that Sanjoy Bhattacharyya‘s stock recommendations in Tata Sponge Iron & Taj GVK Hotels are absolutely top-class & investment-worthy. One will not have sleepless nights worrying about investments with these stellar stocks picks of Sanjoy Bhattacharyya.