Dolly Khanna Gives Clean Chit To Mohnish Pabrai’s Fav Multibagger Stock

Ambush of the Bears flops

Today, at 0915 hrs IST, we ambushed the Bears outside Dwarka Restaurant by using one of the finest guerrilla techniques.

I fired rockets from my trusted RPG-7 launcher while Mukeshbhai let loose a ferocious volley from his AK74 machine gun.

Jigneshbhai grabbed a couple of Bears with his bare hands and throttled them.

Unfortunately, we had underestimated the resilience of the Bears.

They fought back viciously and forced us to retreat.

By the EOD, the Nifty had been dragged down to new lows.

#MarketAtClose | Sensex falls over 400 points from highs; Nifty Bank ends near 24,500 while Midcap Index ends at fresh 20-month closing low pic.twitter.com/GxmGnRYeyL

— CNBC-TV18 (@CNBCTV18Live) October 9, 2018

Nifty has fallen 13% in past 26 days which is even worse than the fall post demonetisation that happened in Nov 2016. The worst drop in past 5 years was 245 days for a 25% drop in March 2015 (Markets recovered all that lass in 127 days) pic.twitter.com/rFoDi5E6hw

— Darshan Mehta (@darshanvmehta1) October 9, 2018

New victim claimed

The Bears claimed a new victim in the form of Tata Motors, the blue-chip behemoth.

The stock lost a colossal market capitalization of Rs. 10,500 crore within a few seconds of the deadly Bear attack.

The stock is down 59% on a YTD and YoY basis and is at the lowest level since Dec 2011.

. @TataMotors trading at a 7-year low; Stock below Rs 180/sh pic.twitter.com/86bIW75VY7

— CNBC-TV18 (@CNBCTV18Live) October 9, 2018

TATA MOTORS
MCap at 51000 Cr
Loses 10500 Cr in Market Cap Today
Market Cap Now below all 3 2Ws: Bajaj Auto, Eicher & Hero Moto @TataMotors @CNBCTV18Live

— Mangalam Maloo (@blitzkreigm) October 9, 2018

Tata Motors is down 59% on YTD and 1 year basis

Its at lowest level since Dec 19 – 2011 (Intraday price level)

70% of analysts have a buy rating and average target price is Rs 353/sh

Reason for the Fall: Slowdown in China & Europe Sales, Production cuts

— Yatin Mota (@YatinMota) October 9, 2018

It is unbelievable that just a few months ago, Tata Motors had been described as a “screaming buy” by intellectuals on the basis of its powerhouse credentials.

Tata Motors is a prime example of why one shouldnt buy a stock because its fallen over 50% from all time highs, or because its trading at cheap PE multiples.

Please study the business and the headwinds/tailwinds – and not the price alone

— Niraj Shah (@_nirajshah) October 9, 2018

However, some experts claimed that the low valuations of Tata Motors are not sustainable and that there is deep value in the stock, waiting to be harvested by intrepid investors.

#Tatamotors Market Capitalization now reflects an almost zero valuation of #JLR.
Two listed companies would be worth at least 60% more.
Not sure why #Tatasons is not buying from markets to increase stake.@RNTata2000
PS I have no positions long or short

— sandip sabharwal (@sandipsabharwal) October 9, 2018

Dolly Khanna hikes stake in Rain Industries

The biggest story of the day is that Dolly Khanna has increased her holding in Rain Industries.

It may be recalled that in the April to June 2018 quarter, there was apprehension that Dolly has lost confidence in Rain because she unceremoniously dumped a chunk of 295,105 shares (see Dolly Khanna & Mohnish Pabrai Baffle Cloners By Taking Contra Views On 10-Bagger Stock).

Her holding dipped from 89,47,515 shares as of 31st March to 86,52,410 shares.

What compounded the fear was the aggressive dumping of the stock by Mutual Funds.

BULK DEAL
Rain Industries
BNP Paribas Arbitrage sold 18.90lk shares (0.6%) at Rs 277.43 each

— Avinash Gorakshakar (@AvinashGoraksha) May 11, 2018

In addition, the stock price plunged like a stone in the wake of the Supreme Court’s ban on CPC Pet Coke and lost a colossal 65% of its value over 9 months and 58% over 6 months.

Naturally, novice cloners were at their wits end about what they should do with the stock.

However, Mohnish stood steady like a rock. He held our hands and comforted us that mega multibagger gains are yet to be harvested from the stock.

“I wish I could buy more of Rain Industries,” Mohnish said in his trademark drawl, implying that it is sheer buffoonery for anyone to want to sell the stock.

#ChaiWithPabrai | Have a higher position in Rain Industries today than 3 months ago; Wish I could buy more in Rain Industries but close to breaching limits, says @MohnishPabrai in an #Exclusive chat with @nikunjdalmia @tanvirgill2 pic.twitter.com/hHHccYi2s5

— ET NOW (@ETNOWlive) June 1, 2018

#MarketView | Ace Investor @MohnishPabrai on Rain Industries!#ChaiWithPabrai @WarrenBuffett @tanvirgill2 @nikunjdalmia pic.twitter.com/DsiCLZMmSV

— ET NOW (@ETNOWlive) June 1, 2018

Dolly has endorsed Mohnish’s theory.

She has increased her stake in Rain Industries to 94,43,702 shares as of 30th September 2018.

Mohnish’s holding in Rain, spread out over three assorted funds, stands steady at 3,28,84,427 shares.

At the CMP of Rs. 159, Mohnish’s holding is worth Rs. 521 crore while Dolly’s holding is worth Rs. 150 crore.

Supreme Court also gives clean chit to Rain Industries and Goa Carbon

Today, there was jubilation at the counters of Rain Industries and Goa Carbon because the Supreme Court relaxed the ban on the import and use of pet coke.

SC allows import of 0.5 mt petcoke for aluminum industry. SC also allows import of 1.4 mt for calciners. ET NOW's @abhhimanyus joins us with more details pic.twitter.com/NIpLFQvD1m

— ET NOW (@ETNOWlive) October 9, 2018

#JUSTNOW | SC limits petcoke import by aluminium industry. SC says calciners can import up to 1.4 mn tn/year petcoke: Agencies pic.twitter.com/BGxdcfbSSm

— ET NOW (@ETNOWlive) October 9, 2018

Goa carbon and Rain Inds trade higher more than 5% ahead of SC hearing on usage of petcoke by other industry players like calcination industry. keep an eye out.
On July 26, the Supreme Court ordered a ban on import and use of petcoke as fuel, exempting only a few industries.

— nickey (@OnlyNickey) October 9, 2018

Its a sad situation.. if there is no relief in the SC hearing on petcoke usage on Oct 9, Goa Carbon will only be able to keep their plants open till november. they have about Rs 100 cr of orders on hand #Q2WithCNBCTV18 #harshrealities https://t.co/ZKps5EXrFk

— Sumaira Abidi (@SumairaAbidi) October 5, 2018

#GOACARBON recovered 40%+ from day's low of Rs.396.55. Now trading near upper circuit of Rs.559.20#petcoke#SupremeCourt pic.twitter.com/SVNf779ub5

— Thota Srikanth (@srikanth9006) October 9, 2018

Now, Sunita Narain trains guns on Graphite India

Sunita Narain, the distinguished environmentalist, is feared by the captains of Industry.

In 2003, she had single-handed torpedoed the fortunes of Coke and Pepsi over allegations of “toxic pesticide residue” in the soft drinks.

In fact, Indira Nooyi of Pepsi, who is herself a tough nut to crack, candidly admitted that she was intimidated by Sunita Narain and did not take her head on.

Sunita Narain is also the spearhead behind the crusade against pet coke.

Read why #petcoke is problem. #US is dumping dirty #fuel on world. We are buying in vast quantities. No care https://t.co/RpZIkzqS19

— Sunita Narain (@sunitanar) October 24, 2017

For one year we have been fighting to ban #petcoke. All opposed including @moefcc. Stop pollution threatre

— Sunita Narain (@sunitanar) November 12, 2017

Now, she has revealed that she is targeting Graphite India, a mega multibagger, over pollution charges.

@WFRising EPCA raised pollution issue by #GraphiteIndia in SC today. Urgent notice issued to company why its permit to import #petcoke should not be cancelled @VishnuNDTV

— Sunita Narain (@sunitanar) October 9, 2018

Fantastic news! We await the response from Graphite India on the notice. The black layer of soot all around the factory has been troubling residents, and the company is yet to take corrective action after 10+ years!

— Whitefield Rising (@WFRising) October 9, 2018

@sunitanar ma'm please help highlight the plight of neighborhood communities. Right from the time the factory is setup neighborhood farming communities lost their crops and yields due pollution from Graphite. Toxic pungent smells causing severe breathing difficulties & allergies.

— WFCitizen (@CitizenWf) October 9, 2018

Prima facie, investors in Graphite India will have to pay heed to the warning bells and take appropriate action. Otherwise, Graphite India may meet the same fate as Rain Industries and multibagger gains may evaporate into thin air!