Sumeet Nagar Portfolio: Top 5 Stocks

Spotting the next multi-bagger or undervalued stocks with promising futures is not an easy job. It requires a lot of effort, data analysis abilities, and most importantly, information availability.

Most retail investors lack the expertise necessary for such analysis, lack time to do their study, or are not authorized to access privileged information.

However, a widely used investment technique known as copycat investing, coat-tailing, or sidecar investing can help to offset this disadvantage.

Coattail investing is an investment strategy that imitates the deals made by renowned and historically successful investors.

Under this investment strategy, retail investor blindly follows the investment pattern of star investors who have made a mark for themselves in the markets by producing exceptional returns in their investment portfolios.

Sumeet Nagar, the co-founder of Malabar Ventures LLC, is one such expert with a stellar track record.

Malabar is a foreign portfolio investor (FPI) with a particular emphasis on India's small and mid-cap stocks.

Publicly available data shows that he holds 18 stocks, with a net worth of Rs 30 billion (bn).

Also, these five stocks account for almost 60% of Malabar India's portfolio and are their biggest investments in value terms.

#1 Aptus Value Housing Finance India

The first stock on this list is Aptus Value Housing Finance India.

Sumeet Nagar holds a 3.9% stake in the finance company or 19 million (m) shares as of December 2022's shareholding pattern of Aptus Value Housing Finance India.

Considering the company's current market price of Rs 246 as of 15 March 2023, Sumeet Nagar's total value in Aptus Value Housing Finance India comes to around Rs 4.8 bn.

His rationale for buying into the counter?

• It has been both one of the most profitable financial companies in India and the fastest growing from a profit perspective. Aptus has a RoA (return on asset) of 8.8%, the highest ROA of any financial company in India.

Since his investment in the company, he has not made any changes to his holding in Aptus Value Housing Finance India.

Since his investment, shares of the company have eroded by 30%.

He has kept his stake in the finance company constant since he initially bought the stake in September 2022. This can be due to its rising profitability over years.

Since its inception over a decade ago it has had hardly any write-offs or losses, given the default that is supreme underwriting.

For the December 2023 quarter, Aptus Value Housing Finance reported a 27% YoY rise in interest income at Rs 81.5 bn, while net profit rose by 38.7% YoY at Rs 48 bn.

Return on assets (ROA) was 8.71% and return on equity (ROE) stood at 15.83% in December 2022 quarter.

For the coming quarters, the business plans to continue its expansion in the south because of limited competition in south India.

#2 Affle India

The second company on this list is Affle India.

According to the latest shareholding pattern of Affle India, Sumeet Nagar holds a 6.72% stake or 4 m shares of the total equity.

Considering the company's current market price of Rs 949.8 as of 15 March 2023, Sumeet Nagar's total value in Affle India stands at Rs 3.9 bn.

Explaining the rationale behind the buying, Sumeet said,

• Affle has been a great investment, and it was only about four years ago but it is the quality of the company that continues to always outperform the expectations they have set.

Here's how Sumeet Nagra's holding has varied since September 2022.

Quarter Ending	No of Shares	stake (%)
Sep-22	4,123,312	3.09
Dec-22	4,188,312	3.14

Data Source: BSE

After his investment in the company, the shares have eroded over 55% of his investment.

Even after falling profit, his bet in the company can be explained by strong topline and EBITDA growth due to rising data traffic and increased internet penetration.

The firm has an in-house database vs peer who outsource. This strengthens its tech offerings and M&A, which result in better conversion user rates than peers.

For the December 2022 quarter, it reported a 10.8% YoY increase in revenue at Rs 3.7 bn, while the net profit came in 14.8% YoY higher at Rs 690 m. This was due to strong momentum in the cost-per-converted user (CPCU) business.

Over the next five years considering robust demand and rising mobile consumption, the company plans to grow its revenue at a CAGR of 25-30%.

#3 Safari Industries

Third on this list is Safari Industries.

As of December 2022, the shareholding pattern of Safari Industries shows that Sumeet Nagar holds an 8.6% stake in the company or 2 m shares in total.

Considering Safari Industries' current market price of Rs 1,895 as of 15 March 2023, Sumeet Nagar's total value comes to around Rs 3.8 bn.

Initially, he invested in the stock in December 2017 and over the next couple of quarters added more shares consecutively.

Here's how his holding in Safari Industries has varied since December 2017.

Quarter Ending	No of Shares	stake (%)
Dec-17	1,312,525	5.90
Mar-18	1,901,743	8.55
Jun-18	1,901,743	8.53
Sep-18	1,901,743	8.53
Dec-18	1,901,743	8.52
Mar-19	1,901,743	8.52
Jun-19	1,901,743	8.52
Sep-19	1,901,743	8.52
Dec-19	2,164,332	9.68
Mar-20	2,164,332	9.68
Jun-20	2,164,332	9.68
Sep-20	2,164,332	9.68
Dec-20	2,164,332	9.67
Mar-21	2,164,332	9.67
Jun-21	2,164,332	9.67
Sep-21	2,164,332	9.67
Dec-21	2,164,332	9.67
Mar-22	2,164,332	9.67
Jun-22	2,114,332	9.44
Sep-22	2,049,332	8.64
Dec-22	2,026,517	8.55

Data Source: BSE

Since his investment in the company in December 2017, shares of the company have rallied over 340%.

Many factors were responsible for the company's growth trajectory.

The company is popular for selling travel bags. Hence its business was impacted because of the lockdown. However, the travel sector boomed because of demand revival and an increase in consumers' confidence.

The demand for backpacks, ladies' handbags, and school bags rebounded as normalcy resumed, and Safari was a big beneficiary.

The management indicated growth was due to an increase in domestic leisure travel, marriage season, corporate gifting, and gradual re-opening of schools and colleges.

For December 2022 quarter, Safari Industries reported a 48% YoY increase in revenue to Rs 2 bn. Net profit for the quarter came in at Rs 344 m, up 399.6% YoY.

To double the capacity, Safari Industries has announced an increase in its production capacity to 0.3 million pieces a month at its Gujarat plant.

#4 Hatsun Agro Products

The fourth stock on the list is Hatsun Agro Products.

Sumeet Nagar holds a 1.7% stake or 0.6 million (m) shares of this FMCG company as of December 2022, according to the shareholding pattern of Hatsun Agro Products.

Considering the company's current market price of Rs 850 as of 15 March 2023, Sumeet Nagar's total value in Hatsun Agro Products is around Rs 3.1 bn.

Here's how his holding in Hatsun Agro Products has varied since March 2018.

Quarter Ending	No of Shares	stake (%)
Mar-18	2,646,200	1.74
Jun-18	3,105,110	2.04
Sep-18	3,298,874	2.04
Dec-18	3,298,874	2.04
Mar-19	3,298,874	2.04
Jun-19	3,298,874	2.04
Sep-19	3,298,874	2.04
Dec-19	3,298,874	2.04
Mar-20	3,298,874	2.04
Jun-20	3,298,874	2.04
Sep-20	3,298,874	2.04
Dec-20	4,415,026	2.05
Mar-21	4,415,026	2.05
Jun-21	4,415,026	2.05
Sep-21	4,298,561	1.99
Dec-21	4,095,951	1.90
Mar-22	3,700,978	1.72
Jun-22	3,700,978	1.72
Sep-22	3,654,167	1.70
Dec-22	3,654,167	1.70

Data Source: BSE

Since his investment in the company in December 2017, shares of the company have rallied over 60%.

Sumeet Nagar has been disinvesting a stake in the company since September 2021. This can be due to high levels of debt in the books. At present company is trading at Debt to equity ratio of 0.5x.

Due to macro factors affecting the demand-supply, the segment witnessed an increase in input cost.

For the December quarter 2022, the company reported a 7% YoY rise in revenue to Rs 16.9 bn, while the net profit contracted 3% YoY to Rs 464.3 m due to an increase in milk procurement cost.

For the upcoming quarter, the company is planning to ramp up its milk supply in South India.

#5 Vaibhav Global

The last stock on the list is Vaibhav Global.

As of December 2022,the shareholding pattern of Vaibhav Global shows that Sumeet Nagar holds a 5.4% stake in the company or 8.8 m shares in total.

Considering Vaibhav Global's current market price of Rs 302 as on 15 March 2023, Sumeet Nagar's total value in the company comes to around Rs 2.6 bn.

His rationale for buying into the counter?

• Vaibhav did extremely well during the pandemic and had supreme outperformance in terms of their earnings and as a result of market performance, the price got a little bit ahead of itself. We own it, and we want to add more to it because it is fundamentally a sound business.

Apart from Sumeet Nagar, Vijay Kedia and Ashish Kacholia have exposure to this stock.

Here's how his holding has varied since March 2016.

Quarter Ending	No of Shares	stake (%)
Mar-16	561,585	1.73
Jun-16	708,626	2.18
Sep-16	778,733	2.39
Dec-16	865,334	2.66
Mar-17	865,334	2.66
Jun-17	961,909	2.95
Sep-17	1,131,891	3.48
Dec-17	1,185,468	3.64
Mar-18	1,211,713	3.72
Jun-18	1,605,379	4.92
Sep-18	1,778,337	5.45
Dec-18	2,186,613	6.69
Mar-19	2,286,613	6.99
Jun-19	2,286,613	6.99
Sep-19	2,286,613	6.99
Dec-19	2,244,613	7.00
Mar-20	2,244,613	7.00
Jun-20	2,145,134	6.63
Sep-20	2,081,800	6.40
Dec-20	2,032,042	6.25
Mar-21	1,836,723	5.64
Jun-21	9,138,675	5.60
Sep-21	9,138,675	5.58
Dec-21	9,138,675	5.58
Mar-22	8,898,677	5.43
Jun-22	8,898,677	5.41
Sep-22	8,898,677	5.40
Dec-22	8,898,677	5.40

Data Source: BSE

Since his investment, the share of Vaibhav Global has zoomed over 300%.

His recent reduction in the stock can be due to macro concerns weighing over.

First, sky-high inflation in the US and the UK constrained consumer spending on discretionary items. These markets contributed a large chunk to Vaibhav Global's revenues in 2022.

Another factor which affected the company was revenge travel. As economies opened up, people shifted to in-person shopping.

In its investor presentation, Vaibhav Global's management explained that the last two years of travel restrictions led people to go out for revenge shopping, impacting all digital retailers like Vaibhav Global.

However, despite all these headwinds, the company has made multiple investments in the business.

For December 2022 quarter, the company reported a 3.6% YoY decline in revenue to Rs 7.2 bn, while the profit declined 43.9% YoY to Rs 389.1 m due to lower demand in the international market.

The management further aided sentiment as they are now expecting margins to improve in the second half of the current financial year.

Which other stocks are a part of Sumeet Nagar's portfolio?

Apart from the above five, here are some other stocks which are a part of Sumeet Nagar's Malabar India's investment managers portfolio.

Please note, the source of holdings listed below is from Ace Equity and it may or may not be a complete list of holdings.

Company	Percentage (%)	CMP (Rs in billion)
Saregama India Ltd.	3.5	2.1
Neuland Laboratories Ltd.	9.9	2.1
HLE Glascoat Ltd.	34.0	1.4
Neogen Chemicals Ltd.	3.0	1.1
Laxmi Organic Industries Ltd.	1.5	0.9
AMI Organics Ltd.	2.7	0.8
SIS Ltd.	1.6	0.8
Newgen Software Technologies Ltd.	2.4	0.3

Data Source: Ace Equity

Recently we also wrote about Ramesh Damani Portfolio: Top 4 stocks and Rakesh Jhunjhunwala & Associates Portfolio: Top 5 stocks.

Stay tuned to get more updates on investment gurus as we cover more such pieces in the coming weeks.

Before leaving, we recommend you to check out the podcast below where Sumeet Nagar talks about solid decision-making process on which stocks to buy, how much to buy, and, equally importantly, when to sell.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...