Category: Equity

Back in 2019, I applied for Polycab’s IPO—more out of curiosity than conviction—and to my surprise, I landed an allotment. The stock listed at a 21% premium on day one. Not a bad start for what would become one of my most profitable investments.

Over the years, Polycab turned out to be more than just a lucky bet. The wires and cables space might not sound glamorous, but Polycab made it exciting for me. By mid-2023, my investment had returned close to 500% (Figure 2), and the XIRR (Figure 1) was hovering around 70%—the kind of performance I’d only dreamt about.

Then came the curveballs.

First, in late 2023, Polycab got hit with allegations of a ₹200 crore tax evasion. The stock corrected sharply. Overnight, my paper profits shrank, and my XIRR dropped from 70% to 55% (Figure 1), while total gains fell from 500% to around 350% (Figure 2). That wasn’t easy to watch, but I decided to hold on. Why? Because these were just allegations, and investigations were still ongoing. I had no clue whether they were true or not—and to be honest, I still don’t. So, I chose to do nothing.

Second, big names like the Aditya Birla Group and Adani Group have thrown their hats into the wires and cables ring. This kind of competition will almost certainly eat into Polycab’s market share. The share price has been under pressure, and along with FII sell offs, it’s eroded a significant portion of my paper profits.

One good thing about my investment in Polycab is the dividend yield (Figure 3). In FY 2024–25, it offered a yield at cost of 3.2%, which is quite decent.

When I reflect on the last six years, Polycab has taught me a lot—about patience, conviction, and that at times being ignorant helps. But the real test lies ahead.

When I started investing in TCS, I’d already held L&T Infotech—before its merger with Mindtree—as another IT services company in my portfolio. The rationale behind investing in TCS was twofold. First, I wanted to diversify within the IT services sector. With L&T Infotech being a Nifty Next 50 company, TCS was a good choice as a Nifty 50 company. Second, TCS was available at a discount because I started investing right in the middle of the COVID pandemic market crash.

My hope was that TCS would outperform the index. Unfortunately, it’s been an underperformer for the last three years against both the Nifty 50 and the Nifty IT index.

This trend isn’t unique to TCS—I’ve noticed it across my equity investments made during the COVID pandemic market crash. The first one to two years are great—I’m either beating or matching the index. And even if I’m not beating the index, the returns are still strong. I start daydreaming about making a fortune after 20 years, only to get sucker-punched in the subsequent years. Two years into my investment in TCS, I was at a 30% XIRR. Now, I’m at just 4.4% (Figure 1).

What’s even more surprising is that TCS has significantly underperformed the Nifty IT index. In fact, the Nifty IT index has even outpaced the Nifty 50. I was so surprised that I headed over to Google Finance (Figure 2) to double-check my calculations. Nope—Nifty IT has beaten both TCS and Nifty 50 over the last five years. It also goes to show my lack knowledge on how Nifty indices work. 

That said, I have to give TCS credit for two key points. First, I haven’t seen a negative XIRR on my investment yet. At a measly 4.4% XIRR, it’s still positive. But with the FII sell-off, I think I might finally see a negative return. Second, dividends (Figure 3) are another area where it does good. The special dividends for FY 2022-23 and FY 2024-25 have boosted my dividend yield at cost. In my portfolio, only ITC beats TCS in terms of dividend yield.

When I first started investing in equities, I decided to follow buy and hold strategy. I will buy quality companies and hold them for long term. There will be periodic reviews and some exceptions, but more or less very limited selling. Rather, slowly build position in quality companies. 

Thanks to Birla, this strategy is now being put to the test.

Birla first targeted Asian Paints with the launch of Birla Opus Paints. The mere announcement of their entry into the paints business—and their subsequent doubling of investment—sent Asian Paints’ stock price tumbling. And with it, my returns in Asian Paints. Asian Paints is part of my buy and hold portfolio, a decision which was made looking in the rear view mirror. Not the best way to make investing decisions.

And today, Birla announced that they will be entering wires and cables business, directly competing with Havells and Polycab—two stock I own. Both, Havells and Polycab, have been consistent outperformers against Nifty indices, though my investment in them was relatively small. But it still stings that this news wiped off 6% and 18% of their market caps, respectively. I stayed put with Polycab even amid reports of a ₹200 crore tax evasion. But Birla’s latest move unnerves me.

I thought buy and hold will be simple. But it is now that I realise—in buy and hold, taking no action is also an action in itself. And more often than not, you will be taking no action.