Among the stocks the 'Big Bull' recently put his faith on, Lupin has been the star performer
Rakesh Jhunjhunwala hasn't had much luck in some companies in his portfolio, with a number of them tumbling in the recent mid-cap carnage. However, the ace investor has gone ahead and selectively raised stake in some of these, having trimmed in others. A look at his and his family's March quarter shareholdings shows he has increased stake in Mcnally Bharat, Anant Raj, Lupin and recently, in SpiceJet. With the exception of McNally Bharat, the rest of the companies in the list have seen a price uptick in the range of 15-44 per cent in the past month.
Anant Raj Industries
A leading realty company in the National Capital Region, Anant Raj has a slightly different profile, with a focus on lease and rental income, and less reliance on debt funding. It is one of the oldest, having constructed and developed a little over 19 million sq ft area in 30 years, with a good implementation record. The company has a land bank of about 1,100 acres, of which 670 acres is for commercial space; it is currently developing about 500 acres in the latter. This provides good visibility to rental income in the coming years. In the residential space, the company is looking to create 11 million sq ft over the next three to four years, which will boost growth. The company has good earnings and revenue visibility, as analysts are expecting profits to double by FY15, compared to the FY12 net profit of Rs 119 crore. Analysts calculate the net asset value at about Rs 110 a share, significantly higher compared to its current Rs 69 a share.
A small-sized engineering company, McNally Bharat's fortunes are closely linked with the capital expenditure of India's engineering and infrastructure sector. Though the business prospects might remain favourable in the long term, in the short term it has its share of worry. Though the revenue and order book are growing (the latter is at Rs 5,300 crore, a little over 2.2 times revenue), it faces working capital issues. As a result, debt rose 57 per cent to Rs 685 crore in the December 2012 quarter.
"Although the company is currently facing headwinds in terms of tight liquidity conditions and deteriorating working capital, valuations at 3.7 times FY14 earnings per share and 0.5 times the FY14 book value adequately cover all the concerns," said Rohit Agarwal, who tracks the company at SPA Securities. The good part is that given its diverse presence across the sector and service offerings, it has been able to grow and get business. Even in the difficult times since financial year 2008, turnover grew over five times to Rs 2,700 crore in FY12. If economic growth perks, expect good growth in revenue and, more important, profitability.
FinMin officials with direct knowledge of the matter say govt wants to wrap up the stake sales before elections are announced