STOCK
SELECTION AND
PORTFOLIO
Presented by:
Jonathan Patterson
ALLOCATION
CONTENT
1 Sector Selection and Stock Selection
2 Sector Allocation
3 Detail Analysis of Compaies
Sector Selection Process:
--> Chosen sectors: FMCG, Banking, Healthcare, Infrastructure, IT.
--> Diversification across sectors to minimize risk and leverage growth
opportunities.
--> Focus on sectors with strong growth potential and stability.
Criteria for Stock Picking:
-->Fundamental Health:Assessing the financial health of companies.
-->Key Financial Ratios:P/E Ratio, D/E Ratio, ROE, EPS, Revenue
Growth, Profit
Growth.
-->Annual Reports:Reviewing insights and future prospects from the
latest annual
reports
Selection Strategy:
-->FMCG:Defensive sector providing stability in volatile markets.
-->Banking: Crucial for economic growth with opportunities for
capital appreciation.
-->Infrastructure:Long-term growth potential and a hedge
against market volatility.
-->Healthcare: Long-term growth potential and a hedge against
market volatility.
-->IT:High growth potential due to rapid technological
advancements.
Sector Allocation:
-->FMCG:17%
-->Banking:20%
-->Infrastructure:20%
-->Healthcare:18%
-->IT:25%
Healthcare Sector - Sun Pharma
Financial Ratios:
-->P/E Ratios: 28.9
-->D/E Ratio: 0.3
-->ROE: 13%
-->EPS: Rs.13
-->RevenueGrowth: 10%yoy
-->Profit Growth: 8%yoy
Insights:
-->Global Expansion: Increased market presence in international markets, contributing
to revenue growth.
-->R&D Investments: High investments in research and development to introduce new
and innovative products.
-->Regulatory Approvals: Achieved several regulatory approvals for new drugs,
bolstering future revenue prospects
FMCG Sector-Balaji Ltd. P/E Ratio: 30.2
The Price-to-Earnings (P/E) ratio of 30.2 indicates that investors are willing to pay ₹30.2 for every ₹1 of earnings. This suggests a premium valuation,
possibly reflecting strong growth expectations or investor confidence in the company's future prospects.
P/E Ratio: 30.2 ROE: 18%
ROE: 18%
A Return on Equity (ROE) of 18% indicates that the company is generating an 18% return on shareholders' equity. This is a robust ROE, highlighting
EPS: ₹8.5 effective management in utilizing equity to generate profits.
EPS: ₹8.5
Revenue Growth: 22% YoY
Earnings Per Share (EPS) of ₹8.5 reflects the company's profitability on a per-share basis. This figure is critical for assessing the earnings available
Profit Growth: 15% YoY to shareholders.
Revenue Growth: 22% YoY
D/E Ratio: 0.4
Year-on-year revenue growth of 22% demonstrates strong sales performance, driven by expanding market presence and enhanced product
Insights offerings. This indicates effective growth strategies and increasing market demand for Bikaji's products.
Profit Growth: 15% YoY
Revenue Growth:
A 15% year-on-year growth in profit indicates solid profitability. This growth is likely due to efficient cost control measures, enhanced product mix,
and improved operational efficiencies.
D/E Ratio: 0.4
Strong double-digit revenue growth driven by expanding market presence
A Debt-to-Equity (D/E) ratio of 0.4 suggests that the company has a moderate level of debt relative to its equity. This ratio indicates a balanced
and enhanced product offerings.
approach to leveraging, maintaining financial stability while supporting growth initiatives.
Profitability: Insights
Revenue Growth:
Strong double-digit growth: The 22% revenue growth underscores the effectiveness of Bikaji’s market expansion and product innovation
Robust profit margins due to cost control, operational efficiencies, and
strategies. This growth trajectory indicates the company’s successful efforts in capturing a larger market share and enhancing its product
portfolio.
strategic pricing. Profitability:
Infrastructure Sector - PNC Infratech
Financial Ratios:
-->P/E Ratios: 17.4
-->D/E Ratio: 0.4
-->ROE:15%
-->EPS: Rs.11
-->RevenueGrowth: 12%yoy
-->Profit Growth: 9%yoy
Insights:
-->Order Book: Robust order book with several new project wins in the transportation
and urban infrastructure sectors.
-->Revenue Growth: Consistent revenue growth backed by timely project execution
and strong project pipeline.
-->Government Policies: Benefiting from favorable government policies and
increased infrastructure spending.
BANKING-RBL Bank Ltd.
P/E Ratio: 16.8
D/E Ratio: 0.8
ROE: 10%
EPS: ₹9.5
Revenue Growth: 12% YoY
Profit Growth: 8% YoY
Insights
Asset Quality:
Ongoing efforts to manage and improve asset quality, with focus on reducing non-
performing assets (NPAs).
Capital Adequacy:
Maintained adequate capital ratios to support growth and absorb potential losses.
Digital Transformation:
Investing in digital banking initiatives to improve customer service and streamline
operations.
IT Sector - Infosys
Financial Ratios:
-->P/E Ratio: 30.2
-->D/E Ratio: 0.1
-->ROE: 23%
-->EPS: Rs. 45
-->Revenue Growth: 10% YoY
-->Profit Growth: 12% YoY
Insights:
-->Digital Transformation: Strong growth in digital and cloud services,
contributing significantly to revenue.
-->Client Acquisition: Expanded client base with several high-value contract
wins.
-->Talent Development: Continued investment in talent development and training to
stay ahead in technology advancements.
Portfolio Allocation
Balaji Ltd. (FMCG) - Rs. 1,70,000
Balaji Ltd. shows strong revenue and profit growth with low debt levels,
indicating a stable financial position and potential for steady returns. FMCG is
generally
considered a defensive sector, providing stability to the portfolio.
RBL Banking Ltd (Banking) - Rs. 2,00,000
RBL Banking Ltd. demonstrates healthy growth metrics and a moderate debt
level, suggesting strong fundamentals. The banking sector is crucial for economic
growth and offers opportunities for capital appreciation.
Sun Pharma (Healthcare) - Rs. 1,80,000
Sun Pharma's consistent revenue and profit growth, along with a manageable
debt
level, make it a solid pick. The healthcare sector is vital for long-term growth and
provides a hedge against market volatility
PNC Infratech (Infrastructure) - Rs. 1,50,000
PNC Infratech has strong financial health and growth prospects, making it a
reliable
choice in the infrastructure sector. Infrastructure is key to economic development,
offering substantial growth potential.
Infosys (IT Sector) - Rs. 2,50,000
Infosys has an impressive ROE and EPS with strong growth metrics, making it a
top
pick in the IT sector. The IT sector is a growth driver in the modern economy,
providing high returns on investment due to rapid technological. advancements
Conclusion:
Balanced Portfolio
Designed to maximize returns while managing risks.
Diverse and well-researched stock selection.
Strategic Allocation:
Thoughtful distribution of investment across sectors and stocks.
Aim for sustainable growth and wealth creation.
Future Outlook:
Positive outlook based on fundamental analysis and market
trends.
Continuous reassessment to optimize portfolio performanc
