@Srini: Comments on your portfolio

General Comments

• Too much diversification. It's true that one should diversify to spread risk. But diversification on 49 stocks is a bit too much. Just as the risk is spread, so are your gains. Even if a stock which you have assigned only 0.5 % increases 5x (which is a bit of a really long shot), the impact on the portfolio would be about 2.5 %. Obviously, then it also depends on what you are expecting from the investment. I realize I also have too many stocks. I am trying to reduce them.
• On specific stocks I will write my comments later.

Guidelinea for self

1. Never assign more than 10% of the portfolio to a particular stock.
2. Choose to assign stocks with one of the following weigtages: 1%, 2%, 5%, 10%
3. Ideally I would like to have 75% in large-cap/mid-cap stocks and 25% in small-caps. Obviously this will vary. Could be 70-30 as well.
4. No more than 2% to each stock in the small-caps to begin with. Keep adding if the financial results of the business are always improving or at least stable.
5. I would aim for 5% for each stock in the large-cap/mid-cap combinations and in combinations of 1%, 2% in small-cap stocks. So, that would get me to about 15 stocks in large-cap/mid-cap and to another 15 for the small-caps.

1. Cox & Kings: Expensive valuations. I would be skeptical to invest in companies witha P/E of more than 15. 20 would be my soft limit and 25 would be a hard limit. There anyways are always exceptions. Check out MoneyChimp for various valuation methodologies.
2. Maruti Suzuki: Seems to be at fair value.
3. Nifty Junior ETF: As of now fair value I guess.
4. OnMobile: There seem to be no dividends. EPS is more or less stagnant. I would expect a P/E of 10 to be fair.
5. Petronet LNG: Looks fine.
6. GAIL: Stagnant EPS. But looks fine.
7. Sun TV: Fairly valued. But I didn't consider it because of all the politics surrounding it.
8. Glodyne Technoserve: Looks good.
9. Punjab National Bank: I also have it in my portfolio. Just a default stock. Think SBI is expensive, so just chose PNB and Corp. Bank as my investments in the financial space along with LIC Housing Finance.
10. SpiceJet: No airlines for me. Too much competition. Until the subsidies for Air India are removed there's no way there would be a level playing field for any of the players. -ve operating cashflows in four out of the past five years. A negative cashflow from operations implies that one is spending more on expenses than one is getting back from sales (I think) which is never good for a business.
11. Ashoka Buildcon: I have no idea. But one should really have a good look at the financials of all these infrastructure companies. I am also not sure if all of them report their financials honestly.
12. Gujarat State Petronet: Looks like a good one.
13. NMDC: Looks like a good one.
14. SBI: Too expensive I guess compared to the next biggest public sector bank which is PNB. PNB has P/E of about 7 and SBI has 19.
15. ICICI Bank: Don't have a very good opinion on this one. Would stay away from it. Expensive as well.
16. Andhra Bank: Looks Ok.
17. Magma Fincorp: Business seems Ok. But the price seems to be high.
18. Bank of Baroda: Why so many banks? I can understand that it's hard to choose between so many banks. At the same it does not make sense to buy so many of them. Maybe a better idea might be to just buy one of the PSU Bank ETFs.
19. Larsen Toubro: Right now, fairly valued I would say.
20. Dewan Housing: Looks good. I also have +ve view about housing finance. One reason for my choice of LIC Housing Finance.
21. Indian Bank: Again, another bank. I have no idea.
22. South Indian Bank: Same thing. Looks a bit expensive.
23. Federal Bank: Same thing.
24. City Union Bank: I have seen one close to my house in Hyd. Was good. Looks good right now as well. But I might be having a familiarity bias. ;)
25. Hindalco: Tata Steel sells at 7 P/E. Hindalco sells at 11 P/E. All metal stocks that I know always have been selling around 6 P/E. So, I would be suspect about Hindalco.
26. Allahabad Bank: Same
27. Maharashtra Seamless: Fairly priced I think. The sales haven't grown much in the past 5 years.
28. Karur Vysya Bank: Fairly priced I think.
29. Gateway Distripark: 18 P/E. Hmm... alarm bells. But I like the business though. There is growth in sales but no proportional increase in the EPS. Maybe other companies in the same line of business might be attractive.
30. Gujarat Gas Company: Looks fairly priced. Like the business. Might buy around 12 P/E.
31. Tata Power: 18 P/E. Expensive in my opinion. At least fairly valued.
32. Jagran Prakashan: Fairly priced.
33. Transformers & Rectifiers: For a market cap of 200 Cr. a 10 P/E sounds expensive. But looks like they are having a tough year. 30 EPS in the past two years has come down to 18 in the trailing twelve months (TTM). Hmm... should consider this carefully.
34. Essar Oil: Profit in only of the last five years. How did you buy this one?
35. Rain Comm: Interesting one. The consolidated EPS is close to 30 while the standalone EPS is only 0.83. Taking the consolidated EPS of 30, the stock is selling for cheap. Has a high debt/equity ratio of about 2 though.
36. Dena Bank: Looks Ok.
37. Tata Chem: With respect to the Consolidated EPS (CEPS), it's good.
38. Sundaram Finance: Looks good.
39. Vardhman Textiles: I like this one as well. Good one.
40. Sterlite Industries: Looks Ok wrt CEPS. But the EPS always seems to be going down.
41. Shriram Transport: Is good.
42. Union Bank: Hmm... one more bank.
43. Tata Steel: Good to buy I guess.
44. Canara Bank: Looks Ok.
45. Reliance Banking:
46. Corporation Bank: I have this one. Think is Ok.
47. Petron Engineering Construction: Hmm... Sales double but EPS becomes 4x in the past 4 years. At the present valuation, it looks good though.
48. Kotak PSU Bank: So many banks and again the ETF?
49. Nifty ETF: Valuation close to historical average. So, guess not really a strong buy at this time.

Ok, that's the end of my comments. ;)