Ace investor Rakesh Jhunjhunwala must have kept himself busy in the December quarter going by the several adjustments India’s Warren Buffett made to his multi-billion-dollar portfolio.
Jhunjhunwala raised his stake in Titan by 20 basis points sequentially to 5.1 percent; in Tata Motors 10 bps to 1.2 percent; in Escorts 40 bps to 5.2 percent; and in Indian Hotels 10 bps to 2.2 percent. A basis point is equal to 0.01 percent.
Below we take a look at some of the reasons that may have prompted Jhunjhunwala to raise his stake in these four companies:
The veteran investor had been reducing his stake in the company for the four quarters prior to Oct0ber-December. So, it is not surprising that the Big Bull raised his stake in the quarter ended December given the stellar performance of the stock as well as the business.
“Titan’s December quarter business update highlights robust growth momentum, indicating healthy market share gains,” said Emkay Global Financial Services in a recent note. The brokerage firm raised its earnings estimate for the stock by 8-9 percent after the quarterly update showed the jewellery business of the company reporting 37 percent year on year growth.
Jhunjhunwala’s increase in his stake in the tractor maker was timely as it came ahead of the announcement of Japanese company Kubota Corporation taking a controlling stake in Escorts through a preferential allotment of shares and an open offer to acquire a 26 percent stake.
Brokerage firm Nirmal Bang Equities believes tangible benefits will only be seen in the medium term.
That said, it won’t be surprising if investors like Jhunjhunwala tender a part of their shares in the open offer priced at Rs 2,000 per share as analysts see weakness in earnings of the company over the next two years due to muted demand.
Jhunjhunwala raised his stake in the automobile maker for the first time since entering the stock in the September quarter of the previous financial year. The increase came at an opportune time as the stock rallied 45 percent in the December quarter under review following the announcement of TPG’s investment in the company’s e-mobility arm.
The induction of a strategic investor in the electric vehicle subsidiary has boosted investors’ confidence in Tata Motors' prospects in that space. Also aiding the stock were persistent gains in the domestic passenger vehicle market and easing concerns around the semiconductor crisis.
For some analysts, Indian Hotels is a no-brainer for investors looking to benefit from the re-opening of the pandemic. The December quarter earnings of the company are expected to be healthy boosted by a surge in tourism.
Brokerage firm Motilal Oswal Financial Services, in a report today, reiterated that the stock is their top pick in the sector due to a transition in strategy from asset-heavy to asset-light.
“Though the ongoing third COVID wave poses a threat to near-term earnings of the hospitality sector, higher vaccination and lower hospitalisation rates will lead to a much stronger rebound than the second wave. Thus, we view this weakness as a buying opportunity,” Motilal Oswal Financial said.
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