Top 5 Stocks owned by the Big Bull

If we look around searching for investing legends globally, names like Warren Buffett, Benjamin Franklin, and many such geniuses pop up. When we talk about it in the Indian context, one name that invariably had its place in the top 5 for the past three decades is Rakesh Jhunjhunwala - the Big Bull of India.

He is one of the most highly rated gems when talking about the marquee investors to which our Indian motherland has given birth. Jhunjhunwala believes in having alternate sources of income, and hence he keeps on adding to his matrix time and again.

In the recent past, he was seen earning huge gains by coproducing many Bollywood films, one such being amongst the last few films of another legend Late Sridevi's – “English Vinglish”.  As per Forbes, RJ currently ranks 54th in the list of Richest Indians and 665th in Billionaires 2021.

In this blog, we shall look at some of the good stocks in Rakesh Jhunjhunwala’s portfolio. So, hop in.

The Big Bull’s Portfolio

(Source: Super Investors)

Let’s do an extensive review of a few stocks from his portfolio:

Agro Tech Foods Ltd (ATFL)

It is a public limited company engaged in the business of marketing food and food ingredients to consumers and institutional customers. The company is affiliated with ConAgra Foods Inc of the USA, which is one of the world’s largest food companies.

The company is engaged in the production of agricultural products. It operates in three segments: Sourcing and Institutional Business, Branded Foods, and Others. The sourcing and Institutional Business segment include oils and agricultural raw materials procurement, crystal and rath bulk packs, seed buying and processing operations, food service, and poultry feed ingredients. The Branded Foods segment includes products sold under the brands Sundrop, Crystal, Rath, Sudham, and Healthy World. One famous brand under its regime is ACT II Instant Popcorn.

This small-cap company has an impressive business model around which it blends money. However, the current valuations of its shares seem distorted as it is trading at a PE of 96.42 as of the last trading session. Also, over the years, the company has failed to portray a sustainable growth in its sales and profit, and hence the ROE and ROCE have also risen negligibly. However, a strong point about the company is that it is debt-free and liquidity sound having a current ratio of 2.34.

(Source: Agro Tech Ltd)

CRISIL

It is a leading, agile and innovative global analytics company that is India’s foremost provider of ratings, data, research, analytics, and solutions. A strong track record of growth, a culture of innovation, and a global footprint set it apart. The company has delivered independent opinions, actionable insights, and efficient solutions to customers. The company’s businesses operate from India, the United States (US), the United Kingdom (UK), Argentina, Poland, China, Hong Kong, Singapore, and the United Arab Emirates (UAE).

This stock has delivered a healthy ROE and ROCE consistently over the time horizon of the last five years, and the company is virtually debt-free, which adds a pinch of flavor to its offerings. However, entering at current prices seems a bit unreasonable because currently, the stock is trading at a PE of 56.24 and EV/EBITDA of 32.86, which seems a bit overvalued given its peers ICRA and CARE.

(Source: Crisil)

Jubliant Pharmova Ltd 

Healthcare has become one of India’s largest sectors - both in terms of revenue and employment. The Indian healthcare sector is expected to reach US$ 372 billion by 2022, driven by rising incomes, greater health awareness, lifestyle diseases, and increasing access to insurance. Jubliant Pharmova Ltd is engaged in the manufacturing and supplying APIs, solid dosage formulations, radiopharmaceuticals, allergy therapy products, and contract manufacturing of sterile injectables.

Over a five-year time horizon, the stock has given a return of 15.1% CAGR. The company has a Debt/Equity ratio of 0.75 with an ICR of 5.21, which any analyst would refer to as “rarely had it so good kind of fundamentals!”. The consolidated figures have a PE of 11.71, profit growth of 55.6%, and an ROE of 17.25%.

(Source: Jubliant Pharmova Ltd)

NCC Ltd

Established in 1978 as a partnership firm and converted into a limited company in 1990 has progressed consistently for more than four decades. Today it is the second-largest listed construction company in India in terms of revenue. NCC was born from a vision to provide world-class construction solutions focusing on quality, timely completion, customer satisfaction, continuous learning, and enhancement of stakeholders’ value. The company is primarily engaged in segments like construction of buildings and housing, roads, electrical, railway, power, mining, etc.

Who wouldn’t adore borrowing money for free? ….. NCC has an efficient Cash Conversion Cycle of -51.35 days long with good cash flow management; CFO/PAT stands at 1.24. Plus, it has an excellent free cash flow. Investors can generally make sound investments with companies that have high FCF. The only area that concerns us is low promoter holdings and high pledging of those promoter holdings. Promoter holdings stand at 19.68, out of which 16.65 are pledged.

(Source: NCC Ltd)

Delta Corp Ltd (formerly Arrow Webtex Limited)

It was engaged in textiles and real estate development/consultancy business and is now the only listed company engaged in the casino (live, electronic and online) gaming industry in India. The Company is involved in three business segments, i.e., Casino Gaming, Online Skill Gaming, and Hospitality. Some famous names from its Online Skill Gaming: Adda52.com - Poker; and Adda52.com – Rummy. Its Cash-cow has been its online skill gaming segment.

The company is virtually debt-free, maintaining an adequate average operating margins of 31.08% in the last five years, an efficient Cash Conversion Cycle of 58.97 days, and has a healthy liquidity position with a current ratio of 4.57. However, entering at the current level seems a bit irrational because PE stands at 0 and EV/EBITDA at 98.72, which seems slightly on the expensive side.

(Source: Delta Corp Ltd)

Summing it up

Rakesh Jhunjhunwala’s investing saga, from Rs 5000 to having a net worth of more than Rs 34,000 Crores, has left a profound impact on many young investors of our country. His portfolio has many buzzing stocks which investors can look up to, but merely replicating it comes at its consequences which even Rakesh Jhunjhunwala cautions investors about.

Invest wisely!