How real estate helps Vijay Kedia invest in stocks

Mint

11 hours ago

MUMBAI
:
Vijay Kedia, known for spotting multibaggers in the small- and mid-cap space, keeps a small portion of his portfolio in real estate to create passive income through rentals.
This allows the Kedia Securities founder, who is also the largest shareholder in several listed Indian companies, to freely invest and hold his stock positions.
In his interaction with Mint for the Guru Portfolio series, Kedia shares how he invests in different asset classes, apart from equities, and why he is bullish on sectors like tourism and hospitality. Edited excerpts:
What's your asset allocation split?
Around 6% is in gold and silver, around 10% in real estate, 11% in cash and the balance 73% is in equities. Within equities, I have moved 20% of my investments into more liquid stocks. These are not necessarily large-cap stocks, but just stocks with more liquidity. I had sold some old holdings and found these stocks at attractive valuations, with decent liquidity. If I find attractive opportunities in illiquid small- and mid-cap, I will move this money there. I love illiquid shares because they force me to hold shares in bad market sentiment. A large part of my equity portfolio, 80%, still remains in mid- and small-cap stocks. The gold exposure is through Sovereign Gold Bonds, and the silver exposure is through silver exchange-traded funds (ETFs).
How has your portfolio performed?
In the last one year, it is down 30%. Over the last five years, it is up 3-4X.
Is there froth in the mid- and small-cap space?
The mid- and small-cap space is a large universe of stocks. There is froth in some of those names and also there is value. There are some stocks, some sectors, which are still very cheap. So, I think there is a mixed trend.
How has your experience been investing in international stocks?
I have invested a little bit in the last three years in two stocks in the US, but I have not increased my investments. They are just small investments and are not going to move the needle for my portfolio. Besides this, I have invested in a Chinese ETF listed on Indian stock exchanges over the past year.
Initially, the ETF went up by around 30% within six months of my purchase. But now it's down nearly 10% from the peak, so maybe it's still up 15-20%. But I don't measure it that way. I bought it with a holding period of four to five years—or maybe longer. I believe it should do well in the long term. That said, there are uncertainties due to tensions with US President Donald Trump and the US. It's a bit risky, but I'm comfortable with risk. I feel the US will ultimately enter into a good relationship with China.
What's your view on tariff-related feuds between China and the US? What's your outlook for India and China?
Honestly, anything I say would just be speculation. No one knows what's going on in Trump's mind—or China's, for that matter. But I think it'll settle down eventually. It already has, to some extent; tariffs that were once as high as 140% have come down. Both sides will realize the need to meet halfway. Ultimately, everyone is a businessman—they'll find common ground. Whatever escalation was supposed to happen, I think it has happened.
Have you added to your real estate portfolio?
In the last one year, I have added to it; bought two warehouses. In every bull market, I take some money out of stocks and buy real estate. The idea is to create passive income, as I don't want to be dependent on the stock market for regular income. I want to remain free even when the market falls. Since I can sustain my lifestyle from the rental income alone, I can keep investing in stocks whenever I get dividends or sell other stocks. Within my real estate portfolio, 80% is in commercial real estate and 20% is in residential real estate.
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What's your view on silver?
I expect silver to outperform gold from here on. But I don't give much attention there. I didn't intend to buy more there. I am happy when I am buying stocks, not gold or silver.
Why have you kept some cash in your portfolio?
I have around 11% in cash, which I am looking to deploy if there are any opportunities. I sold some shares in the last three to four months, but I did not get any good idea to invest that money at these valuations. So, I have kept them in a bank and am looking for opportunities.
Do you have any health cover?
I have around ₹40 lakh of medical cover.
Retail investors accounted for 35% of premium turnover in FY25. It seems your warning to retail investors to stay away from futures and options is falling on deaf ears.
Trading in futures and options (F&Os) without understanding is like driving an F1 car without a seatbelt—speed thrills, but it also kills. I have said this on various platforms. I have made many songs on this, but it appears that people do not understand. So, now I have realised that you have to pay a price for paradise. Anybody indulging in F&Os without understanding it, should realize that it is not for them. It is alright, if it is suiting you. Otherwise, the market teaches everybody one way or the other.
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What's your view on the Indian stock market going forward?
Bull markets are longer and bear markets are shorter. I think bear phase is over. However, it will be a mixed bag. The indices like the Nifty and the Sensex have recovered smartly—beyond my expectations, actually. But none of my investments are in index-linked stocks, so that rally hasn't benefited me much. My focus is bottom-up—I invest in companies, not in the index. Some stocks might hit new highs, while others may underperform for sometime.
Are there any particular sectors you're bullish on?
Tourism could be a sunshine sector, especially with the government focusing on boosting domestic tourism. So airlines should do well—I'm holding shares in one airline. Hotels might benefit too, though I don't own any hotel stocks. Hospitals are another area. With population growth and greater health awareness post-Covid, people now realize that health is the greatest asset. There's a saying: pahla sukh ..Nirogi kaya, dusra sukh ghar mein maya—good health comes before wealth. Hospital stocks are expensive right now, but I think they'll do well. Also, EV and power-related sectors have promise but are still playing out.
What's your stock selection process?
I follow a bottom-up approach. I look at individual companies first. There are usually only 3-4 good companies in any sector. If the sector is doing well, I try to find a small company that can scale quickly. But even if the sector isn't doing well, a strong company can still grab market share from others. So, I start with the company and then look at the sector. While right now, I have invested in companies that offer value with moderate growth, I personally like growth companies. So, I may gradually switch back to those opportunities as and when they arise.
What is a good hunting ground to find stocks?
The best stock ideas aren't always found on TV or newspapers—they're often hiding in plain sight, around your own life. When you board a plane, the air hostess points out six emergency exits—front, middle, and rear—because your nearest exit may be right where you're sitting. The same applies to stock ideas: your next big opportunity might be closer than you think.
For example, I invested in an airline company after noticing how crowded airports were getting in 2022–23. Flights were beginning to feel like buses. That observation led to my investment. Similarly, I invested in telecom after seeing the surge in data consumption. These are life signals. You just need to be observant.
Once you have identified a stock. How do you decide how much to invest in that stock?
There's no fixed formula. Invest only what lets you sleep peacefully at night. Even great companies will have bad quarters or tough phases. If a downturn gives you anxiety, you've over-invested. Also, for newcomers, I suggest a portfolio of no more than 20 stocks. That way, you can track all of them properly. Remember, it's usually just one or two stocks in your portfolio that will create the real wealth.
What percentage of your equity portfolio is in your top five stocks?
It should be around 50%.
What's your advice to investors who want to take up direct stock investing?
New investors should actually take the mutual fund route. By just selecting a systematic investment plan (SIP) and keeping that discipline, investors can compound their wealth. For instance, ₹50,000 invested every month in mutual funds for 20 years gives you a return of ₹5 crore with 12% annualized returns. Direct stock investing is not everyone's cup of tea. It has a steep and often rough learning curve. But still, if one wants to try direct stock investing, remember that volatility is not a threat; it's the tuition fee the market charges to teach you knowledge, courage, and patience.Also Read | The ONDC mutual fund pipeline has arrived. Will it take over the industry?
Sashind Ningthoukhongjam in Mumbai contributed to this story.