Titan, Bajaj Finance, Relaxo: Saurabh Mukherjea explains when to enter, exit stocks

Investors often find it difficult to take decisions on when to buy and sell stocks. Market veteran Saurabh Mukherjea, who has Titan Company, Asian Paints and Bajaj Finance, among his consistent compounders portfolio list, said one should enter a stock when the market is not as bullish on the counter as one is. In an interview to Business Today TV, the Founder and Chief Investment Officer at Marcellus Investment Managers gave examples of Titan Company and Bajaj Finance, saying the market usually discounts 10-15 years of high growth for such companies, expecting growth rates to drop off in later years.

Mukherjea said his research is telling him that Titan Company, for example, would not grow at high rate for just 10-15 years but for 20-25 years, as he does not see credible competition emerging in jewellery, eyewear, expensive saris and online jewellery retailing.  "We are getting Titan at hefty discount to fair value. That's the first case. We enter when we think the market is not as bullish on Titan's future as we are."

The another factor influencing a buy decision is to see if the quality stock comes under pressure. Mukherjea noted that Titan Company shares cracked 25-30 per cent in June 2022 on concerns over import duties on gold. "We knew the government’s of raising import duties on gold imports would not make any difference to Titan's fortunes. And so, we loaded up further on Titan. Similarly, Bajaj Finance cracked about 65 per cent in the first wave of Covid and we tripled our positions," Mukherjea said

You sell a stock, Mukherjea said, when the future prospects of a stock is inferior to what the market is factoring in. Mukherjea said he sold Relaxo Footwears from his midcap portfolio a year ago, as he felt the market was over-optimistic about its growth relative to what the reality was.  Mukherjea said his Marcellus owned Relaxo Footwears for four years and the stock did deliver him three times return.

"Relaxo promoters worked very hard to triple our wealth. But last year, there were reasons for us to doubt that Relaxo's future was as bright as it once was and, therefore, we exited the stock in November-December last year," he said.   

Mukherjea in the same interview suggested that he refrains from buying shares of companies with naughty accounting practices. He said he does not like companies were the requirement of government sign offs are high and where capex requirements are high but likely returns are uncertain. 

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