Rakesh Jhunjhunwala bets on these four stocks, adds more money in them; Should you invest?

Every quarter end, many investors start to calculate how much they have earned, invested and sold in their portfolio. Similar was the case of ace investor Rakesh Jhunjhunwala, in fact he made quite an interesting buying during December 2018 (Q3FY19) quarter. The name does not need any introduction, many investors refer Jhunjhunwala as big bull of Dalal Street. Make no mistake, he has definitely mastered the art and secrets of equities, after all his entire living depends upon stock market returns. However, the year 2018 was dreadful for benchmark indices, as many stocks including Sensex and Nifty witnessed massive price correction. Hence, even Jhunjhunwala could not survive the fire of bearish sentiment in the stocks he had invested hefty money. The result of the impact was that Jhunjhunwala removed his some portion of money from a list of five stocks so far in Q3FY19, while he made more buyings in just four stocks.

So far, stocks which Jhunjhunwala holds on exchanges, only few have reported their shareholding pattern. Hence one can expect the buying to be more once all the entire holdings in Jhunjhunwala’s portfolio have announced their pattern. 

For now, let’s find out which are these four stocks and whether you should think of investing in them.

The major buying by Jhunjhunwala so far was done in Federal Bank where he increased his holding by 1.71%. Now he has about 3.45% stake in this bank with 67,471,060 equity shares worth Rs 607.2 crore. This bank is one of the biggest holding of the ace investor. 

Federal Bank has announced its Q3FY19 result, and many analysts are optimistic on its share price, which means Jhunjhunwala is bound to get rich from this bank. If you have invested in Federal Bank just like Jhunjhunwala, then you might want to know how far this bank has potential to go. 

Talking about Federal Bank, Anusha Raheja analysts at LKP Securities said, “We see PAT to grow at 30% CAGR over the next 2 yrs FY19-21E. Over the years, the bank has strengthened its balance-sheet, gained market share in good quality rated assets, made sizeable digital investments in-line with larger peers and is growing assets at much higher pace than industry average. We are optimistic about the future growth outlook of the bank. In our view, current valuations of the bank offer decent upside. It is trading at 1.3x and 1.1x FY20E & FY21E ABV resp. Retain BUY with TP of Rs 121 giving upside of 38% from current levels.”

On the other hand, Yuvraj Choudhary, Research Analysts at AnandRathi said, “ We expect the strong momentum in its balance sheet to persist and, now, with lower stable credit costs, profitability would improve gradually in the medium term. We retain our Buy recommendation.”

A price  target of Rs 105 is given on Federal Bank from Anand Rathi. 

Going forward, the second biggest buying by Jhunjhunwala so far is in NCC Ltd, where he bought about 1.33% stake in the company. Following which, he now holds about 10.78% with 64,708,266 equity shares worth Rs 569.1 crore. 

On NCC, Rohit Natarajan, analysts at Antique Broking Limited said, "Over the past six months, NJCC has outperformed the infrastructure sector.

On earnings front, too, the company may outperform its peers. Here is the reason why: for road projects won towards the fag end of FY18, appointed dates, a prelude to construction, is moving at a tepid pace. Land acquisition, after all, remains the key bone of contention."

Natarajan further added, "NJCC has achieved INR110bn in inflows, so far. With revenue lower than inflow, accretion to order backlog is clear on the cards. Notwithstanding the higher growth in this fiscal, we have penciled in 13% CAGR in earnings for the next two fiscals. Even then, for (a) 10x FY21 PE and (b) investment of equity and loans and advances valued at INR14bn, the stock offers a target price of INR125. We continue to maintain BUY."

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Apart from Federal and NCC, Jhunjhunwala however made a very gradual buying in Jubilant Life Science. He bought 0.31% stake in Jubilant taking his overall holding to 1.88% with 3,000,000 equity shares worth Rs 212.7 crore. 

Macquarie and ICICI Securities are very optimistic on Jubilant. 

In Macquarie’s view, “We expect strong momentum in Jubilant’s pharma segment to sustain, with an improved 2HFY19 for the LSI business. Jubilant continues to gain share in the US$2bn US radiopharma market (split equally b/w manufacturers and distributors). Even as most pharma cos are struggling for profitable growth, Jubilant has been delivering robust profitability (25% EPS CAGR over FY16-21E).” Thereby, analysts here have set  TP of Rs1,068 implies an upside of ~53%.

Meanwhile, ICICI Securities said, “ pharma business, gradual ramp up of Ruby fill in US, improving margin trajectory with higher contribution of pharma business, reduction in interest cost with de-leveraging of balance sheet, and attractive valuations.”

Finally it was Aptech stocks which was picked by Jhunjhunwala in Q3FY19. He increased his holding by 0.19% in Aptech taking it overall to 24.24% with 9,668,840 equity shares worth Rs 186.6 crore. Aptech is the largest holding of Jhunjhunwala in terms of percentage. 

Looks like Jhunjhunwala is in for treat in his newly added money in the above mentioned stocks.