Shriram Transport Finance Co

Reasons for buying:

Buy PE was reasonable at 8.05 and below 10 years PE median of 13.62.

Earnings have doubled in the last 5 years.

Return on equity is ok at 12%.

Return on assets is 2.21%

The market cap of the company is ₹36,037.22cr.

Buy date: 29-Oct-2020

Qty: 14   Buy Price: ₹698.3   Buy EPS: 86.7   Buy PE: 8.05

Q4 results were released on 29th April and the current EPS is 98.74 up about 13.89% from my buy EPS.

The price of the stock is up about 103.41% from my buy price.

I have 10 financial sector stocks, this is the first multi-bagger stock in this space. I try to buy financial companies based on ROE and ROA. The PE and growth should be decent too. The price return of this stock is 7.63% in the last decade, the companies earnings went nowhere between 2012 and 2016. This is the reason I believe buying relatively lower valuations and adding when stock falls can make up for poor earnings. There can also be value traps when averaging so my buy price/current EPS of no more than 20 should take care of traps to some extent. I expect to make money on the whole portfolio and not on individual stocks.