Jhunjhunwala increases stake in DHFL, is cautious on auto holding

Rakesh Jhunjunwala
Ace investor Rakesh Jhunjhunwala has made some changes to his stock positions in the March quarter, which includes increasing stake in the troubled Dewan Housing Finance Corporation (DHFL) and shuffling his stock positions in line with his sectoral views.

In the March quarter, Jhunjhunwala’s stake in DHFL increased by 73 basis points (bps), standing at 3.19 per cent at the end of the March quarter. The stock has been under heavy selling pressure, following allegations of corporate governance lapses and concerns on the housing finance company’s liquidity.

In a period (March quarter) when the stock has corrected close to 40 per cent, the increase in Jhunjhunwala’s stake in DHFL could be a result of buying shares to lower his average buying price. In the previous quarter, Jhunjhunwala had reduced his stake.  

The other company where Jhunjhunwala has cut his position is Autoline Industries. Jhunjhunwala’s stake has reduced by 140 bps to 6.48 per cent in the March quarter.

The cut in stake in the auto ancillary has come at a time when the auto sector is expected to go through a bout of slowdown amid sluggish demand. The liquidity squeeze faced by non-banking financial companies has also led to fear of lower disbursements.

“High channel inventory is forcing auto companies to resort to production cuts. Tight liquidity conditions and weak sentiment are also weighing on demand,” said Edelweiss analysts in a note.

The other stocks where Jhunjhunwala has reduced his stake include Jubilant LifeSciences (25 bps), Titan (4 bps), Agro Tech Foods (10 bps), Federal Bank (13 bps), and TV18 Broadcast (93 bps).

While auto may not appeal to Jhujhunwala right now, pharma seems to be on his radar. His stake in the drugmaker Lupin has gone up by 16 bps to 1.9 per cent in the March quarter. 

“Pharma is one sector where demand cannot go down. Most medicines used in US are made by Indian players. It is a sunrise industry, and it cannot become a sunset industry,” Jhunjhunwala said recently, while speaking at the launch of ITI Mutual Fund.

Jhunjhunwala has also entrenched his position in the luggage maker VIP Industries. His stake went up by 130 bps to 5 per cent in the March quarter. Luggage is another industry that analysts expect to do well as they see consumers shifting to organised players and also move towards premium luggage products.

Firstsource Solutions is the other stock where Jhunjhunwala increased his stake (36 bps) in the March quarter.

At the end of the March quarter, Jhunjhunwala held positions in 29 companies. Some of these include Rallis India (9.2 per cent stake), Escorts (8.16 per cent), NCC (10.7 per cent), SpiceJet (1.25 per cent), and CRISIL (5.49 per cent).

The data analysis took into account companies where Jhunjhunwala’s name was disclosed as an investor with more than 1 per cent shareholding.