Rakesh Jhunjhunwala finds some more love for Jaiprakash Associates; raises holding by 2 crore shares

An interesting way to invest has just been revealed by Rakesh Jhunjhunwala. He is continuing to raise his shareholding in debt-laden Jaiprakash Associates. In the latest move, Jhunjhunwala has increased his holding by as much as 2 crore equity shares in the construction company. Current situation of Jaiprakash is not that great, as the company is making rounds of NCLT offices and Supreme Court over its real estate arm Jaypee Infratech, which has been named as a wilful defaulter by a consortium of banks led by IDBI Bank. The case of Jaypee has created a crisis for homebuyers who have taken loans from banks and invested in the housing project of the company that lies unfinished and it is not being able to pay back the amount. This has led government to modify the entire IBC norms giving home buyers as well an opportunity to recover their amount from such defaulters. Now, the question arises as to why, ace investor Rakesh Jhunjhunwala, who has been referred to as the 'King of Dalal Street', would want to pull of this surprise and invest in a crisis-hit company. 

Today, Jaiprakash released the shareholding pattern of the company on stock exchanges, under which it was revealed that Jhunjhunwala’s holding now stands at 5 crore equity shares as on June 2018 which comes to 2.06% share capital of Jaiprakash. 

This holding has risen by 2 crore equity shares, as Jhunjhunwala held only 3 crore equity shares as on March 2018, which was then 1.23% of share capital. 

Jhunjhunwala is definitely booking losses for now from his Jaiprakash Associates investment.  

By end of March 2018, share price of Jaiprakash stood between Rs 17 to Rs 20 per piece, this would be mean he paid between Rs 51 crore to Rs 60 crore for 3 crore equity shares. Now the stock price is trading near Rs 15 per piece. 

Although, Jaiprakash is currently trapped and loss making company, it still has more assets than liabilities. As on March 2018, total assets of Jaiprakash stood at Rs 36,396.06 crore compared to a liabilities of Rs 26,064.93 crore. 

Despite losing money while taking care of Jaypee Infratech crisis, Jaiprakash has still managed to recover some losses in its financial performance. As on March 2018, Jaiprakash narrowed its net loss to Rs 78.70 crore versus loss of Rs 1,481 crore Q3FY18 and loss of Rs 1,882.40 crore in Q4FY17. Revenue also rose to Rs 1,674.28 crore compared to Rs 1,139.21 crore in Q3FY18 but lower by Rs 1,834.11 crore. 

Jhunjhunwala 58, is said to be one of the most successful equity investors in India, as he turned his investment of just $100, when he began trading, into a massive $2.9 billion. He belongs to a middle class family and began his first trading on BSE in 1985. Since then he has selected trading as a full-time profession. 

With such a long experience, for Jhunjhunwala making money from stock exchanges is seemingly, like a child's play. However, it should also be known, that he has mastered the word patience in stock market. That is a virtue that everyone in stock markets needs plenty of.  And this applies especially to a stock like Jaiprakash Associates.