Stalwart Advisors

Exit Note

The key reason for us to get interested in CESC demerger was distribution segment on the back on mega privatization opportunity in transmission space. However, that seems to have been cancelled/delayed for now.

Today the stock went ex-demerger and soon we will be getting shares of CESC Retail (Spencers) & Ventures (First Source, FMCG) both of which have optionalities. We will revise allocation strategy once these get listed. For now they are shown under hold list with arbitrary price, till the time they get listed.

Meanwhile there has been a serious correction across broader markets and some high-quality businesses have come to attractive valuations. Accordingly, we are exiting remaining CESC (Generation & Distribution) which will free up 7% capital (out of 10% originally invested) and deploying this capital in a promising opportunity which provides better risk-reward and longevity.


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Exact weightage will depend on each subscriber’s risk appetite & comfort. However, as a thumb rule, any position size under 3% is little insignificant to move returns at portfolio level whereas beyond 10% it gets riskier from a concentration standpoint. Accordingly, low could indicate 3-4% weightage, medium 5-7% and high 8-10%.
Structural are those portfolio businesses where earnings are relatively stable (less volatility) and further are expected to rise in a steady fashion. Cyclicals are businesses which experience periods of upcycle followed by downcycle and have large variation in their reported earnings based on industry demand and supply. The mix between the two depends on available opportunities and respective valuation of the two pockets.