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Portfolio: Exiting Aarti Drugs and GSFC From Momentum


Markets have been seeing red continuously. Nifty is down by 2.6% in last five trading sessions. We got rid of two positions from momentum portfolio as they were breaking down.
On 23-Sep we added Aarti drugs to our momentum portfolio.
Fundamentally the company had decent results. Revenue was up by 2.17% and PAT was remarkably up by 37% YoY. Aarti Drugs has generated 80.68% of revenue from speciality chemicals, 13.87% from pharmaceuticals and and rest from home and personal care chemicals. The company has recently commenced production of agrochemicals at its Ethylation unit at Dahej, Gujarat.
This was a momentum entry, so the financials were just a validation point. The main reason for the entry in momentum portfolio was the strong breakout it has shown and also that it bounced back with a higher low after a downtrend at 460 levels. Even at the current market price of Rs 569, the stock is having a trailing P/E of 17.30. We were little late to take it, but not too late!
We took a full position at Rs 569, we kept a stop loss at 20 day moving average i.e. Rs 509.
Today, we got out of Aarti drugs as it was breaking down the intermediate low. Pharma stocks are down after US begins probe into alleged price cartelization by Indian pharma companies. We made 6.14% profit on the stock. We exit at 605.
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On 20-Oct we added Gujarat State Fertilisers and Chemicals (GSFC) to our portfolio.
Fertilisers stocks have been zooming for quite some time now and the momentum shows. GSFC is an agro chemical company, which is into manufacturing of fertilizers and industrial chemicals. Fundamentally, it’s seeing some weakness. In Q1, Revenue witnessed de-growth of 4.85%. Profit plunged by 54.13%. But then again, the monsoon impact is usually later.
GSFC has shown a breakout at Rs 80 levels and is currently graded at 7 out of 10 in Snap Outliers. The stock is currently trading at trailing P/E of 11.77.
We kept the stop loss at Rs 82. We were in at 96.
Today, we got out of GSFC. We entered the stock before the results which did not turn out to be great and the market has not been conducive for an uptrend. The stock is breaking down and we are exiting the stock at Rs. 89.5 with a loss of 6.77%.
Note: This is not portfolio advice. Consider this a very risky portfolio and proceed at your own risk. At Capital Mind Premium the reason we have a portfolio is to demonstrate our commitment to our analysis, and we track it closely. It is not meant to be a recommendation for anyone in particular, primarily because we don’t know your risk profile.
Holdings: Analyst and family do own some of the positions listed above. Please assume we are biased.


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