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Business Standard

'We want to use volatility to our advantage'

Shilpa Johnson  |  Mumbai 

Mehraboon Irani

As part of the introductory phase of Smart Portfolios, Business Standard will be running a series of interviews with each of the of Season 4. This will help gain an insight into their individual investment styles, their views on the market and their unique strategies to cope with the same.

So far, in this season, we have seen marginal changes in net worth. Alex Mathews’ net worth is at Rs 9,95,000, down 0.47 per cent, Ashish Mittal’s net worth stands at Rs 10,05,000 up 0.53 per cent, while Rikesh Parikh’s net worth is Rs 10,00,000, down 0.01 per cent. Ajay Parmar remained on the sidelines yet again this week.

To set the ball rolling for a string of interviews, Shilpa Johnson spoke to Mehraboon Irani, principal & head – private client group, Nirmal Bang Securities, on his investment styles and strategies as the weather a global crisis.

Commenting on his investment style, Irani said: “In a tough market environment, selection of stocks will become an important parameter and will be the single most important factor at any other point in time. My sole aim will be to try and buy or identify stocks which end up going at attractive valuations. The tend to ignore them in the present depressed environment. I will, then, use sharp rallies to book profits and end up making absolute returns, irrespective of how the overall behave over a period of time. However, at no cost will fundamentals be sacrificed.”

Irani’s net worth stands at Rs 10,03,000, up 0.33 per cent. He has been one of the most active participants, since the inception of Season 4 and made 28 transactions. Some of his prominent investments include Delta Corp, and Orchid Chemicals & Pharmaceuticals. The stocks that he has pulled out of, during this period, include Educomp Solutions and S Kumars Nationwide.

In spite of the current volatility in the markets, you have been considerably active since the start of Season 4. What’s your trading plan during such turbulent times?
Our plan is to buy into value stocks and use volatility to our advantage.

You lay considerable emphasis on stocks that are at ‘attractive valuations’. Would you list some of these for us?
Most of them. Vivimed, Autoline and Delta are prime examples. I see them delivering over 50 per cent returns in the next one year.

It’s only the beginning of the season and you have already booked a gain of around seven per cent on your investments in S Kumars Nationwide and Educomp Solutions. Did you exit these stocks because your targets were met or was there any change in your strategy?

A seven per cent gain is good enough in a week, isn’t it? On a serious note, these two are high-beta names and will possibly provide me with the opportunity to enter again at lower levels. Also, in the case of Educomp, I have sold only a small part of my holding and brought down my cost of the holding.

Your investments in Hindalco and Lanco Infratech haven’t worked well so far. What kind of returns do you expect here and on what basis?
Well, I have not bought them for a week or watching their performance over a week. Lanco, I don’t see too much downside and on good days, could end up giving a good decent percentage return. Hindalco is a longer-term bet. Maybe, if I get a better opportunity in the market, I may shift elsewhere later, if Hindalco fails to perform and I need cash.

Given the choppy market scenario, what would you advise our readers to do?
If you can’t use volatility to your advantage (it’s difficult, you bet), stay away for some more time. The world could be a different place over the next two-three months. Opportunity will come for bargains.

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First Published: Fri, September 16 2011. 00:05 IST