Vijay Kishanlal Kedia, born in Kolkata, is an Indian investor based out of Mumbai. He began investing in the stock market at the age of 19 years and started Kedia Securities in 1992, when he was 33.
Speaking about his investment rationale in an interview, Kedia had said, “One should scout for companies which have good management... find a very good management, a very honest management and see the product in which the management is going to grow, going to outperform its peers and the economy. Invest in those companies for the next 10-15 years, and you cannot go wrong." According to reports, he uses the SMILE approach in investment–‘small in size, medium in experience, large in aspiration, and extra-large in market potential’.
As of end-Q2FY23, Kedia’s net worth is Rs 770.7 crore, and he publicly holds stakes in 16 stocks. The best-performing stock in his portfolio is Tejas Networks, a telecom service company. The stock price of the company has risen 11x since it was added to his portfolio in June 2020.
The marquee investor bought a stake in pharmaceutical company Neuland Laboratories in Q3FY20 and in textile company Vaibhav Global in Q4FY17. Their stock prices have also risen by 308.2% and 285.4% respectively since the purchase. The oldest best-performing stocks in the portfolio are specialty chemicals company Sudarshan Chemical Industries and furnishing company Cera Sanitaryware, both bought in FY16. Their stock prices have increased 243.7% and 164.0% respectively in the past seven years. Kedia also earned approx 181.3% returns from Elecon Engineering, which was added to the portfolio in Q1FY22.
Interestingly, Kedia has held all the negative-performing stocks in his portfolio since before December 2015. It suggests that Kedia doesn’t let go of underperformers easily - perhaps hoping for an eventual recovery.
Kedia sold a part of his stake in Lykis (he held 2.7% Q2FY23 before selling to below 1% in Q3FY23), a personal products company, in Q2FY23. Its stock price has fallen 49.6% since Q3FY16. The second worst-performing stock is Atul Auto (auto components manufacturer). Its stock price has dipped 48.6%, followed by Panasonic Energy India (electronic components company), which fell 29.5%. Stock price of Repro India, a publishing company, has also decreased by 22.4%.
Telecom services, general industrials and textile among Kedia’s preferred sectors
The marquee investor has 30.1% of his portfolio invested in the telecom services sector, aggregating to Rs 218.4 crore. He has 16.8% in general industrials, 13.1% in textiles, apparels and accessories, and 9.7% in diversified consumer services. Hotels, restaurants and tourism amounts to 7.4%, and chemicals and petrochemicals amounts to 5.2%.
Commercial services and supplies, automobiles and auto components, pharmaceuticals and biotechnology, FMCG, cement and construction, and software and services occupy less than 5% each of the portfolio.
Kedia’s portfolio has been dormant in terms of new buys or additions during Q2FY23 except for a minor stake addition in Elecon Engineering, an industrial machinery company. In Q3FY23, from the data available, he has not made any additions yet.
As for cutting stakes, Kedia sold a 6.6% stake in Lykis, an FMCG company, in Q2FY23, while the company announced a 113.1% YoY rise in profit and 28.2% increase in revenue for the same quarter. He reduced his Affordable Robotic & Automation stake to 12.3% in Q2FY23 from 14.2% in Q4FY22. He also cut a 0.3% stake in Ramco Systems and a minor stake in Tejas Networks.
n Q3FY23 (from the most recent available data), Kedia has sold a 0.3% stake in Tejas Networks (now holds 2.3%), a 1% stake in Talbros Automotive Components (now holds 1.3%) and cut his stake in Lykis to below 1%.
Most companies in Kedia’s portfolio were profitable last quarter
Only three companies in the portfolio have reported a loss for Q2FY23–Ramco Systems, Panasonic Energy India and Atul Auto. Even while reporting profit, seven companies have fallen YoY in net profit and two in revenue. Ramco Systems has dipped 15.7% YoY in revenue and suffered a loss of Rs 60.3 crore. Neuland Laboratories reported an 88.8% rise in net profit and Elecon Engineering had an 82.3% growth in profit during the same period.
From the portfolio, eight stocks that outperformed their respective industries, include Affordable Robotic & Automation, Elecon Engineering, Atul Auto and Tejas Networks. Ten companies have outperformed their industry over a quarter and eight outperformed over a month.
Cera Sanitaryware has the highest basic annual EPS of Rs 116.2, followed by Neuland Laboratories (Rs 49.74), Talbros Automotive Components (Rs 36.36) and Heritage Foods, a packaged foods company, (Rs 20.81).
Around 11% of the companies in the portfolio trade in the PE Buy Zone and PE Sell Zone each. Neuland Laboratories trades in PE Buy Zone, while Vaibhav Global trades in PE Sell Zone. The rest of the companies trade in PE Neutral Zone.
Meanwhile, the PE of all stocks in Kedia’s portfolio is above their respective sectors, proving that he prefers stocks with good valuations relative to their sectors.
How volatile is Kedia’s portfolio?
The beta for 10 stocks in Kedia’s portfolio is below 1 for a year, and 6 stocks are greater than 1. However, six stocks have a beta below 1 for a quarter. The average beta of the portfolio for a year is 0.89, whereas it is 1.14 for a quarter.
To conclude, Kedia prefers stocks that are not as volatile as the benchmark index in the long run. He also prefers stocks with strong valuations. Kedia’s portfolio doesn’t see frequent changes, and he holds on to stocks for long periods. To quote the marquee investor, while luck plays a big part in stock market investments, knowledge, courage and patience are the cornerstones.
