Four stocks where Rakesh Jhunjhunwala holds half his wealth; did you invest in them? They are multibaggers going forward
Just like every other stock, Jhunjhunwala’s portfolio also could not do the impossible and rise. However, as time turns around all that Jhunjhunwala needed is his favorite stock to shine to retain gains this year.
There are many inspirational quotes made by big bull of Dalal Street, Rakesh Jhunjhunwala, but one that stands out goes like this: “Respect the market. Have an open mind. Know what to stake. Know when to take a loss. Be responsible.” Jhunjhunwala also believes growth comes out of chaos, and his investment strategy lies in investing in a 'business rather than a company'. So, how has his holding performed this year. With just 3 weeks left for 2018 year to end, Jhunjhunwala’s gains from his favorite stocks is noteworthy. However, it also needs to be remembered that, majority of stocks he holds have witnessed decline this year resulting in heavy losses for him. But interestingly, there are 4 stocks, one including his favorite, that have not disappointed the ace investor. In fact, these four stocks involve more than half of his wealth in equities. Simply put, a wise investment can definitely bring growth in chaos too!
Markets are currently correcting so much that both Sensex and Nifty 50 have lost their shine of over 38,500 and 11,500-level. Just like every other stock, Jhunjhunwala’s portfolio also could not do the impossible and rise. However, as time turns around all that Jhunjhunwala needed is his favorite stock to shine to retain gains this year. And this has just become the case.
Let’s find out these four stocks that have returned multibagger gains for Jhunjhunwala this year, as per TrendLyne.com.
To begin with it is VIP Industries that has gained the most in Jhunjhunwala’s portfolio - by as much as 46.2% so far this year. The Dalal Street king holds about 3.69% stake in VIP with 5,215,000 equity shares, which are worth Rs 270.7 crore.
This stock is seen to grow massively in coming months ahead, which means the gains so far for Jhunjhunwala are just the beginning of a rising trend.
Talking about VIP, Mehernosh Panthaki, Research Analysts at Religare Broking said "Leverage free balance sheet, improving return ratios and healthy dividend payouts should provide valuation comfort. We recommend a Buy on the stock with a target price of Rs 540."
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— Zee Business (@ZeeBusiness) December 10, 2018
Now coming to second best stock for Jhunjhunwala. It would be Firstsource Solution which has surged by 30.71% this year. In this company, the ace investor has about 2.90% stake with 20,000,000 equity shares which are worth Rs 103 crore.
Just like VIP, even analysts are optimistic on Firstsource as Emkay in its research report earlier said, “While our revenue growth estimates decrease (by ~2.5% for FY19) on continued curtailment of FY19 growth guidance, our FY20 growth and margin estimates remain unchanged on an expectation of growth revival in the top client, new deal closures, and scope of profitability improvement in the Mortgage (more offshoring and increase in Digital mix) and Healthcare (payer) businesses. We introduce FY21 numbers and build in ~6%/15% CAGR in revenues/earnings over our estimated period. Maintain Accumulate with a TP of Rs70 (based on 10x Sep’19E EPS).”
Going ahead, the third stock which rose in Jhunjhunwala’s portfolio was Jubilant Life Science - by over 14% this year. In this company, Jhunjhunwala holds about 1.57% stake with 2,500,000 equity shares worth Rs 197.4 crore.
Analysts at ICICI Securities said, “We expect overall revenue and adjusted PAT to register CAGR of 10.9% and 17.5% over FY18-21. We also expect free cash flow generation of ~Rs25bn over FY19-21, which would help retire debt. We expect net debt to equity to fall to 0.3x by FY21. The management expects double-digit revenue growth coupled with gradual margin expansion to be driven mainly by pharma business. The IPO of Jubilant Pharma with equity dilution of less than 20% is a priority but its execution depends on market conditions.”
They added, “ We maintain BUY rating on the stock with a target price of Rs1,030/share based on SoTP valuation (EV/EBITDA of 11xSep’20E Pharma business EBITDA and 5xSep’20E LSI business EBITDA).”
Finally, coming to the most favorite stock of Jhunjhunwala, which he holds very dearly. To no one's surprise, the stock, which is Titan, has not failed to give big returns to Jhunjhunwala - it has jumped by over 13.42% so far this year.
In Titan, Jhunjhunwala during September 2018 quarter had raised his holding by 0.06% taking the holding to 7.12% with 63,251,220 equity shares worth Rs 5,973.8 crore. Jhunjhunwala has always been optimistic about Titan and believes this company will touch new milestones ahead.
Jhunjhunwala who is his own expert, has big faith in Titan and this surely is a good news for investors who have invested in this company too. Why? Because analysts also predict that Titan is a money making magnet.
Motilal Oswal last week in its research report said, “Jewelry business growth prospects remain robust, and now Watches and even Eyewear segments have raised their hands to contribute to growth. We believe that premium valuations are fully deserved for a business that has perhaps the best revenue growth potential in the large cap FMCG/retail space (20% CAGR in Jewelry business over the next five years) and also operating leverage-led margins support.”
Analysts at Motilal added, “We maintain our Buy rating on the stock with a target price of INR1,105, based on 47x Dec’20 EPS (~10% premium to three-year average P/E).”
Hence, if you have invested in the above mentioned stocks just like Jhunjhunwala you are set to become rich as well, all you need is patience. From the experts views, it can be said that this is just the beginning for these stocks growth they are going to add many more crores in Jhunjhunwala’s wealth.
Overall, Jhunjhunwala has 32 stocks in his ambit, which are worth over Rs 11,500 crore. Cumulatively, Jhunjhunwala has Rs 6,364.90 crore in these four companies. And thanks to Titan, he is still the richest investor in Dalal Street.