October 1, 2025
Saurabh-Mukherjea
Saurabh Mukherjea has announced that he has dumped a blue-chip FMCG stock which has proven to be a laggard. Its place in the portfolio has been awarded to a newcomer which has flawless pedigree and the wherewithal to deliver hefty gains to investors
Saurabh Mukherjea has announced that he has dumped a blue-chip FMCG stock which has proven to be a laggard. Its place in the portfolio has been awarded to a newcomer which has flawless pedigree and the wherewithal to deliver hefty gains to investors




ITC falls from grace, becomes inspiration for memes

At one time in the distant past, ITC commanded such respect in Dalal Street that it used to be referred to with hushed tones by investors and punters.

However, it has now become the butt of ridicule and the subject of memes.

This sorry state of affairs has come about because ITC has failed to live up to expectations and has severely underperformed its peers.

The stock has lost 31% over the past three years despite the raging Bull market.

Saurabh Mukherjea-HDFC-Life-ITC

The woes plaguing ITC have been explained in a simple yet brilliant manner by Finshots.





ITC is over-diversified, such companies can never earn a good ROI

It is notable that Saurabh Mukherjea had himself recommended ITC to us in the past.

ITC is the perfect Coffee Can Investment portfolio stock with 10% revenue growth and 15% ROC,” he had declared.

However, he now explained that the bane of ITC is its over-diversification.

I haven’t yet found a company in India, which manages to do more than two things well,” he said.

They have one or two businesses which shrug out lots of cash, and there are 4 or 5 businesses which guzzle up the cash … It’s difficult for them to generate free cash flow in the modern India paradigm, they are finding it hard to generate cash flows,” he added.

Investors are left none the wiser and so it is better to stay away from conglomerates and focus on companies which do one or two things well, he advised.

Saurabh praised ITC for the stranglehold that it has over the cigarettes business and also the FMCG sector.

However, he opined that the Company would not be able to compound earnings in an attractive way.

We were not able to convince ourselves that even with the twin-cylinder engine, ITC could gun out 20% earnings compounding. That’s the basic test a stock needs to meet for us. We need to see free cash flow generation, which gets further invested in giving us a 20% earnings compounding,” he explained with a tinge of sadness in his tone.




HDFC Life Insurance is a ‘consistent compounder’

Saurabh announced that he has awarded the prestigious title of “consistent compounder” upon HDFC Life and added it to the portfolio.

HDFC Life has a distinguished pedigree. The venerable HDFC Ltd (the mother of all Blue-Chips) is its parent while HDFC Bank and HDFC AMC are siblings.

He pointed out that to qualify as a ‘consistent compounder”, a company should be able to build barriers to entry and its return on capital should be consistently above its cost of capital.

The barrier to entry in HDFC LIfe is around technology and data analytics, he explained.

He also opined that HDFC Life is a great company as is borne out by the financial statements, primary data analysis from distributors, ex-employees and competitors.

HDFC Life passed that assessment, and it entered our portfolio,” he said.

HDFC Life Saurabh Mukherjea
(Image Credit: Business Insider)








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