First, the record has to be set straight. A number of investors appear to have assumed that because the official announcement regarding the sale of Jubilant’s loss-making retail division came immediately after Porinju bought a truckload of the stock, Porinju must have acted on insider information.
The allegation has obviously hurt Porinju’s sentiments and he has rushed to clarify that it is not so.
In his latest interview to ET, Porinju suo motu clarified that his purchase of the Jubilant Industries stock was dictated by common sense as to how the management would act with respect to the loss-making retail division and that he had no inkling that the management had in fact taken a decision to sell the retail division. “I bought the stock and am a bit embarrassed looking at the announcement by the management … people will misunderstand that I bought the stock on insider information .. I don’t know the management and have never interacted with them” Porinju stated. He emphasized that it is sheer luck that things happened the way they did and the gains flew in thick and fast.
Porinju’s claim appears to be plausible because no person buying the stock with the sinister motive of benefiting from insider info will broadcast the fact of his purchase to the public. Instead, he will keep total radio silence and also fly under the radar to avoid detection. In Porinju’s case, the purchase was by a bulk deal reported to the stock exchanges. Also, the rationale for the purchase was also announced to the public by Porinju.
So, it does appear that Porinju has to be given the benefit of doubt and a clean chit in the matter.
Anyway, as if to prove the point, Porinju showed up again today at the Jubilant counter and scooped up yet another chunk of 60,000 shares at Rs. 169.97 each.
Interestingly, two other heavy-duty investors joined Porinju in the buying spree. Rajasthan Global Securities Ltd bought 299,589 shares at about Rs. 169 each while Trapu Investments Pvt. Ltd bought a chunk of 69,000 shares at Rs. 169.25 each. However, the aggressive buying action did not result in the stock price spiraling out of control because Samena Special Situations Mauritius sold a large part of its holding.
Jubilant Industries’ current market capitalisation stands at about Rs. 200 crore. According to Porinju, the stock is still grossly under-priced. He says that the core standalone business enjoys high margins and is worth at least Rs. 500-600 crore. If Porinju is right in his estimate then there are much more gains waiting to be harvested from the stock.