Weekly Portfolio Review –25 July 2010

With another week of positive closing for Indian market, BSE sensex closed 0.98% and NSE Nifty 1.02% higher. Total return in the Drops Model Portfolio now stands at 7.92% with an average investment period of 1.77 months. Top gainers are Geometric Software, Cadila Healthcare, Bharti Airtel, Crompton Greaves and HUL and no losers!

Good buys in my watch list

Company Sector Current price 3 years Target Expected Return
Maharashtra Seamless Metal 396.55 707.00 80%
Hindustan Unilever FMCG 261.50 456.00 76%
Bharti Airtel Telecom 313.70 531.00 69%
Hero Honda Auto 1957.90 3013.00 55%
Dr. Reddy’s Pharma 1364.90 2,104.00 54%

Reports shows that with the hike in price on detergents by P&G, the pricing power return to the detergent market after a price war in this segment which help Hindustan Unilver to enhance its margin on these product.

Bharti will make a mandatory open offer for 22% stake in Celtel Zambia, the only public entity in the Zain family. Bharti Airtel has revealed its plans to launch iPhone 4, the latest product from Apple Computers’s stable, by October. With the launch of third generation mobile services in the country by the end of this year, the sale of such high end devices are likely to get a boost.

Mahindra & Mahindra Ltd. plans to introduce its first motorcycles in India within the next few months which will create challenges to Hero Honda Motors Ltd. It intends to add motorbikes ranging from low-cost entry models to premium products.

Dr. Reddy’s Laboratories Ltd reported 14% drop in first-quarter consolidated net profit, dragged mainly by lower sales in the North American market. Chief Financial Officer Umang Vohra said a voluntary recall of some products last year and slower-than-expected ramp-up in some recently launched drugs weighed on the U.S. business. But he expects sales in the market to pick up pace in the second half of this fiscal year. Vohra said the company expects regulatory approval in the U.S. for selling generic Arixtra as well as resolution of the legal issues related to generic Allegra-D 24 toward the end of 2010. The company plans to launch 8-10 products in the U.S. this fiscal year, of which three-four drugs are expected to have limited competition, he told Dow Jones Newswires. The company has received the manufacturing approval for Darbepoetin, its third biosimilar product in India, and expects to commercialise it shortly. Company’s share price dropped 6.01% in the month to date.

NIIT Technologies reported two-fold jump in its net profit for the quarter ended June 30, 2010 on account of reduced hedging losses and improved operational efficiency. India accounted for 16 per cent of the company’s total revenues, US and Europe, Middle East and Africa (EMEA) region contributed 36 per cent and 35 per cent, respectively. It said volume growth in Europe remains strong. Although the firm remained optimistic about its business outlook, it said its margins may come under pressure in the coming quarters from currency risks due to the Euro zone crisis.

Crompton Greaves has declared its first quarter results of FY11. It has reported net profit at Rs 191 crore as against Rs 160 crore, a growth of 16.23% (YoY). Net sales rose 4.8% to Rs 2,302 crore versus Rs 2,197 crore, (YoY). The outlook still remains quite reasonable, although less optimistic than that after fourth quarter results and looks more dependent on how the global economy shapes up. Crompton Greaves is witnessing significant cost pressure in its domestic businesses, even though there is no immediate threat to the top line growth. This has weakened its ability to support the international operations, which account for half of the consolidated sales and have been witnessing fluctuating performance in terms of both top line and profits.

On the back of 5.9% volume growth, Geometric reported 7% rise in operating revenues at Rs 135.45 crore for the quarter ended June 2010.

NTPC has added 490 MW, commissioning the second unit of its Dadri plant near here, to power the 2010 Commonwealth Games.

Drops Model Portfolio

Drops Model Portfolio is built up based on the top buy list in my weekly portfolio review.If you have been investing following my Good Buy List as above, now you would have accumulated shares of 14 companies. By investing weekly with an amount of Rs. 5,000 per transaction, we are building a portfolio of 15-20 companies! As on end of the past week, the average investment period is 0.15 year and gave a return of 7.89%. Download the spreadsheet for more information.

The top 5 companies

Company No. of Shares Market Value Return % Weight Rank
Bharti Airtel 36 11,293.20 12.29% 12% 1
NIIT Tech 58 10,996.80 11.34% 11% 3
Crompton Greave 39 11,247.60 11.89% 12% 2
Geometric 80 6,188.00 25.12% 6% 5
NTPC 50 10,090.00 0.86% 10% 4

Latest Buy Transactions

Date Company No. of Shares Buy Price Investment
17 Jul 2010 GAIL 11.00 441.75 4,859.25
17 Jul 2010 Mahindra & Mahindra 8.00 604.10 4,832.80
10 Jul 2010 NTPC 25.00 198.15 4,953.75
02 Jul 2010 Crompton Greave 20.00 252.30 5,046.00
02 Jul 2010 NIIT Tech 30.00 169.25 5,077.50

My Portfolio

In my personal portfolio top 5 holdings are Infosys, Tata Global Beverages (Tata Tea), Bharti Airtel, NTPC and Maharashtra Seamless. These top five stocks are in my hand for an average 1.40 years and have gained 26.39%. Dabur India is oldest in my portfolio with an average holding period of 3.4 years and its gain stands at 166%. Overall gain in my portfolio this year to date is 8.67%

Archive of previous portfolio reviews

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