The Hindu Business Line : A level-headed investor

Dinesh Kumar Bansal has invested about half his savings in equity, and spends three hours before his terminal daily. His strategy: To get out of a share once it gives him a 30 to 40 per cent profit.

When asked if he gets 20 to 25 per cent annual return on his equity investment, he says, "In the last two years, an equity investor... even if he was a gadha (idiot) would have got at least 50 to 60 per cent annual returns, and would have doubled his money. So if I have done that, it doesn't make me a very bright or intelligent investor."

But a smart and level-headed investor he certainly is. Dinesh Kumar Bansal, who retired as chief electrical engineer from Southern Railway in 2003, has invested in equity from 1982 and thanks to good control over the two commonest enemies of equity investors... greed and fear... has got "good returns."

Now in Delhi, "enjoying the money I had earned in 40 years... and anyway, the Railways looks after us well," he recalls that in 1982, like many investors, he too would apply for IPOs. "Those with allotment got an appreciation of 50, 60 or even 100 per cent within a year. I first applied for Vam Organics, got an allotment and sold it when it doubled in less than a year."

When asked the mandatory question on HLL, Bansal recalls that he did buy the share about three years ago at around Rs 205, and made some money in it too. But after a while, "I found it to be stagnant. When I studied the company profile, I felt its financials were not good. It was facing stiff competition from other FMCG companies, cutting prices of its products and, above all, its good old strategy to sell Surf and other soaps and make money was not working anymore. So I got out of it, after booking a loss."

He is one of those lucky investors who did not burn his fingers in the technology crash in 2000. On the contrary, he made good money in stocks like Infosys. In 2003 he picked up about 20 shares at Rs 2,600 (before the bonus). "I had confidence in the company and so invested even though I did not have much money... my retirement money had not come in."

After holding it for a year, he recently sold his Infosys shares, having doubled his money. TCS too has fetched him good profits, which he is yet to book. He was allotted 33 in the IPO and after the last quarter results when the price fell to around Rs 1,100, "I picked up more shares to make the total 100. It is already Rs 1,300; but I'm holding on to it because it's a good company."

In 2000 he did get into some speculative IT scrips, "but after losing some money, got out; I don't even remember their names... they're forgettable." But this experience taught him to get into mostly A-group shares. "I'm heavily invested into Tata Steel, which I've bought at different prices. I thought it attractive because my research showed it had a price earning ratio of 5.8 which is ridiculous for a company like this."

But in the recent past he has become apprehensive about holding on to Tata Steel, not too happy with the financials of the company. "In 2004-05, Tata Steel made money not by increasing production but by raising prices of steel. This is not a good sign. So if it goes to Rs 375, I plan to exit."

Bansal trades through ICICI Direct ("it saves me the hassle of filling forms or running to banks") and swears by Business Line's Investment World. "But I only take tips from it; I follow up your recommendations with my own reading on the company and buy a stock only after being convinced of its strong financials. After all it's my money."

His strategy is to get out of a share once it gives him a 30 to 40 per cent profit; "oh yes, I'm able to get that kind of return." A retired person he spends three hours every day before his terminal, but has kept far away from day trading, even while actively trading in a few scrips like Finolex Industries. "I keep a track of it and buy it around Rs 60 and get out at Rs 75. I've found this share to remain in that range." SBI, Voltas and Godrej Consumer Products are other shares that have given him good returns.

About half of Bansal's savings is in fixed instruments such as tax-free bonds and the other half in equity, with about 15 per cent in equity mutual funds, which have also given him decent returns. He doesn't think that it is risky for a retired person to have half his money in equity. "It keeps me busy and active. The important thing is to do your own reading and not get carried away by media reports or some analyst saying: `Get out of metal stocks', and dumping your metal stocks like hot bricks. That is not the right thing to do. And never jump in and out of stocks."

His advice to small investors is not to "get attached to any particular share; there is no place for emotion in equity investment. Wherever you're losing money, get out from the stocks before the haemorrhage begins in a big way. It is also important to make your own decisions and keep your head because nobody will make money for you; you will have to do it yourself. Take everybody's advice and then do what you think is best for your money. Sometimes you'll be wrong, but then it'll be your decision."

Bansal doesn't believe in looking back at a share or regretting if it goes up further after selling. "I forget a share I've sold; I need to make about 25 per cent returns in a year and if I can do that, I'm happy," he says.

His successful run in the equity market has made his elder son — both his sons work in the US — seek his advice on stocks trading on the NYSE. "I read, check up and advise him; sometimes he takes my advice, sometimes not... because after all it is his money."

So has he invested in the NYSE or Nasdaq? "Not at all; I'm an Indian with only rupees and not dollars. And there are enough good companies in India giving me good returns, so why should I invest anywhere else," is his response.

But he doesn't invest only in blue chips. "I take risk with smaller companies such as Jindal Stainless; but the important thing is I know I'm taking a risk and put in only 1 or 2 per cent of my money in such scrips. Like I bought Berger Paints at Rs 30, and sold at Rs 42." After that it went up further but "I had no cause for regret, because I had pumped in that money to make profits elsewhere!"

His wife shares his interest in equity, to the extent that "she looks at the money and says: `Very good, you've made Rs 1 lakh, so let's go and buy jewellery'."

So does he follow her advice?

"Never; we've taken a joint pledge that we will not buy anything that we don't require. Because throughout our lives we've purchased all kinds of things thinking kabhi kaam mei ayenga. So no more of that!" But both of them took a decision two weeks ago... that 10 per cent of his profits from equity would go to charity.

The first such instalment (Rs 1,200) went to Akshay Patra that feeds children in schools. "We'll continue to give to organisations like this or SOS that works with children. The rest will be ploughed back into equity," he says cheerfully.

Response may be sent to rasheeda@thehindu.co.in

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