Sharekhan’s earlier recommendations yielded magnificent gains
It is well known that novice investors never take advice from anyone unless if that person has a proven track record for finding multibaggers.
Sharekhan qualifies to give us advice because we saw earlier that their model portfolio of blue-chip stocks has yielded a return of 34% YoY and 46% YTD (see Sharekhan Delights With 46% YTD Gain From Model Portfolio Of Blue-Chip Stocks).
In fact, the model portfolio has outperformed several mutual funds.
This outperformance has given rise to the seminal question whether investors are better off investing on a DIY basis rather than incurring hefty costs by investing through mutual funds and suffering underperformance.
The performance of the stocks recommended by Sharekhan for Diwali 2016 has been equally impressive.
|Company name||Reco* (Rs.)||CMP# (Rs.)||Return (%)|
|Rico Auto Industries||67.6||100.2||48.2|
|Sharekhan Diwali Picks||42.1|
• Reco price as on October 20,2016
# CMP as on October 06, 2017
As one can see, out of the ten stocks recommended, two have disappointed with a flat return.
However, the other eight have made up for the disappointment by posting hefty gains.
L&T Finance Holdings stunned with a 94% gain followed by a 68% gain from TVS Motors and Natco Pharma. RBL also thrilled with a 57% gain.
The average gain from the ten stocks is 42% which is highly impressive by any standards. It heavily outperforms the return of 15.8% given by the CNX Midcap Index as well as the return of 13.1% and 14.7% given by the Sensex and the Nifty respectively.
Stock recommendations for Diwali 2017
Now, let us turn our attention to the ten stocks recommended for Diwali 2017.
Sharekhan’s Diwali Picks 2017 (Samvat 2074)
|Company||CMP (Rs.)||EPS (Rs.)||PER /PBV (x)||RoE (%)|
|Bata India||739. 5||16 . 4||19 . 7||45 . 1||37 . 5||14 . 7||15 . 3|
|Mahindra & Mahindra||1,302.0||63.1||72.9||20.6||17.9||13.9||14.5|
|TV Today Network||360.0||19.0||22.8||18.9||15.8||29.1||29.7|
* PBV multiples are for banks # CMP as on October 06, 2017
As one can see, there is a healthy mix of large-cap and mid-cap stocks in the model portfolio.
There is also proper sectoral diversification with stocks from the Pharma, Insurance, Footwear, Banking, Infra, Auto, Media, consumables, and auto ancillaries making their presence felt in the portfolio.
It is worth noting that all the stocks in the portfolio boast of hefty RoEs. The lowest RoE is 13.9% while the highest is 29.1%.
The high RoEs indicate that the stocks are powerhouses and dominant players in their respective fields.
Sharekhan has also provided a detailed commentary on the merits of each stock and the investment rationale.
Some of the stocks are very familiar to us.
Aurobindo Pharma, for instance, is a no-brainer for us because it is one of the crown jewels in Rakesh Jhunjhunwala’s portfolio.
We saw earlier how the Badshah scooped up the stock when it was languishing unwanted and pocketed magnificent 8-bagger gains from it.
I also reported earlier that Rakesh Jhunjhunwala has been aggressively buying Aurobindo Pharma, which implies that the stock is still grossly undervalued in comparison to its potential.
Also, the stock is a hot favourite amongst the brokerages and almost all have recommended a buy.
I have also diligently reported that all knowledgeable experts which includes Raamdeo Agrawal, Kenneth Andrade, Saurabh Mukherjea, Sanjiv Bhasin, Porinju Veliyath etc have unanimously opined that the time is ripe to buy high quality Pharma stocks.
Bata India has been strongly recommended by Porinju Veliyath. He has already pocketed big bucks from the stock but there are more in store for us to feast on.
— Porinju Veliyath (@porinju) October 11, 2017
KNR Construction also has the privilege of being recommended by Porinju as far back as in April 2014.
KNR Construction @ 97 – MktCap 270Cr. Clean BS, good business, good if you want to bet on Infra in the changing environment.
— Porinju Veliyath (@porinju) April 29, 2014
It is unbelievable but true that KNR Construction has given a mind-boggling gain of 1000% (10-bagger) after Porinju’s recommendation.
10x in 3 yrs! Many more KNRs in making
Trillion Dollar opportunity in Housing & Infra coming up, Grab it! https://t.co/2h7d3HW1Nv
— Porinju Veliyath (@porinju) May 9, 2017
Porinju has assured that infra stocks are still poised to give incremental 5x and 10x bagger returns.
Over a dozen Infra cos at inflection point – stronger balance sheet, better visibility & exciting operating environment; potential 5x & 10x
— Porinju Veliyath (@porinju) July 26, 2017
This implies that KNR Construction is still a good stock to buy.
TV Today Network is also a great stock to have in the media space.
One can see that it has the highest RoE of 29% in the model portfolio. Also, it is also quoting at a P/E of about 15x which is literally throwaway in the present day and age.
The stock has attracted eminent luminaries like Billionaire Radhakishan Damani and Ramesh Damani, which implies that it will deliver multibagger gains upon its lucky investors sooner or later.
We have to compliment Sharekhan for a stellar selection of stocks. There is no doubt that all the ten stocks are blue-chip and fail-safe. Even in the worst case scenario, we are assured of getting our money back in one piece. Of course, in the best case scenario, the sky is the limit for these stocks.