October 3, 2025
Mohnish-Pabrai-Rain-Industries
Mohnish Pabrai has made it clear that he is holding on to his 10-bagger stock only because it is managed by a "dream manager" who has never made a "dumb decision". The question is whether his departure will now change Mohnish's mind and induce him to dump the stock
Mohnish Pabrai has made it clear that he is holding on to his 10-bagger stock only because it is managed by a “dream manager” who has never made a “dumb decision“. The question is whether his departure will now change Mohnish’s mind and induce him to dump the stock




Patriots on Dalal Street tense after attack by Pakistan

Today was a tense day for Dalal Street after Pakistani jets intruded India’s airspace in an attempt to create terror.

Thankfully, they were foiled by the brave hearts of the Indian Air Force and had to turn tail before doing much damage.

One of their F-16 Aircrafts was shot down.

However, unfortunately, the Indian side also suffered casualties.

Wing Commander Abhinandan Varthaman‘s MIG-29 aircraft was damaged. He brought it down inside Pakistani territory and was taken into custody.

One can see Wing Commander Abhinandan Varthaman with a calm and confident demeanor in a video show with Rocky and Mayur.

Surabhi Upadhyay succinctly summed up the sombre mood on Dalal Street.

Thankfully, by the EOD, both sides decided to de-escalate the situation and ensure return to normalcy as soon as possible.





Nifty & Sensex show resilience while KSE faces “big breakdown

Investors hate uncertainty and so it is natural that the Nifty and Sensex took it on the chin.

However, the two indices demonstrated admirable resilience and bounced bank into strength, posting minor losses by the EOD.

Investors in the Karachi Stock Exchange faced a harrowing time because the Index crashed nearly 1500 points.

Some technical experts predicted that a “big breakdown” is on the way.

This weakness in the KSE is not surprising given that the Pakistani economy is quite puny.

In fact, the entire stock exchange’s market capitalisation is smaller than that of HDFC Bank/ Reliance Industries.

In fact, a Pakistani TV show named ‘Dunya News’ candidly admitted that the Ambani Brothers alone can buy every company on the Karachi Stock Exchange and still have $30 billion to spare.

Rain Industries tanks after reporting poor Q3FY19 results

Investors in Rain Industries also had a harrowing time because the stock tanked like a ton of bricks and tripped the lower circuit of 10%.

rain industry share

This happened because the company reported a whopping loss of Rs. 139 crore versus a profit of Rs. 310 crore on a YoY basis.

According to the investors presentation, the reason for the grim state of affairs is the following:

• Carbon segment affected due to petroleum coke import ban in India

• Earnings impacted due to lag in price resets of finished products versus raw materials

• One-time events such as provision for bad debts, severance payments in Germany and strategic projects

• Although realisations improved, performance reduced due to lower volumes and increased raw material costs

It is worth recalling that S. Venkat Ramana Reddy, the Company Secretary of Rain Industries, had already sounded the warning that the results would be poor owing inter alia to the bad debt from a Venezuelan client and lower prices for finished products (see When It Rains, It Pours: MiLords Bring Gloom To 10-Bagger Stock Of Mohnish Pabrai & Dolly Khanna)



Dream Manager” Jagan Mohan Reddy quits abruptly

However, what spooked investors in Rain Industries the most is the fact that Jagan Mohan Reddy, the promoter, abruptly quit from his post as Managing Director.

The official statement on his resignation is as follows:

Mr. Jagan Mohan Reddy Nellore, Managing Director is also the Chief Executive Officer of Rain Carbon Inc., a wholly owned Subsidiary. Considering that the Carbon business is requiring more attention due to the current global uncertain environment, Mr. Jagan Mohan Reddy Nellore has submitted his resignation from the position of Managing Director but will continue to be the Director & Vice Chairman of the Company with effect from March 31,2019.

It is to be noted that Jagan Mohan Reddy is not an ordinary run-of-the-mill manager.

Instead, he has been described as a “dream manager” who has not made “even one dumb decision” by Mohnish Pabrai.

In fact, Mohnish made it amply clear in his investors’ letter that Jagan Reddy is the only reason he did not sell Rain Industries when the going was good.

In the last 3+ years that we have owned Rain, I have seen Jagan Reddy (Rain’s Managing Director and 40+% shareholder) make one smart decision after another. In fact, I have never seen Jagan make even one dumb decision. He has made very large capital allocation calls over the last 12+ years and they have been flawless. It is a remarkable record. He is a dream manager,” Mohnish gushed (see It Was Mistake To Not Sell 10-Bagger Stock, Mohnish Pabrai Admits, While Revealing Performance Of His Funds).

Rajiv Khanna, the alter ego of Dolly Khanna, paid similar tribute to Jagan Reddy when describing the stock as a “no brainer” (see Dolly Khanna discusses the prospects of Rain Industries and whether it will be multibagger).

Naturally, Jagan Reddy’s abrupt departure sparked fear amongst cloners.

It is a drain industries, it can go to any price downward as performance cycle is downward, better to avoid at present, further jagan mohan reddy considered to be very efficient had to resign, then who can save the company having huge debt, this is a gone case it looks, up cycle may take years to come back,” a punter at MMB said.

However, some kept a brave face.

So many companies posted negative results..that doesn`t mean it is permanent…business cycle of rain will be improved soon within 1-2 quarters,” one said.

Result is bad but not as bad as I was expecting. it may not touch skyhigh but will be stable in next couple of quarter. it may touch 70 in between on the lower side. the most important thing promotors have not yet reduced their stake %. can be invested until promoters feel that it will not recover,” another added.

Some had studied the results in-depth:

hey guys, i too had a chance to look at the results…i m happy to see that revenues have held steady inspite of pet coke ban…this implies to me that probably the company enjoyed uptick in average selling prices so as to offset downtick in volume due to pet coke ban .. .on the expense side, raw material cost was higher by 300 crores, while provision of 250 crores was made for venezuela customer, and penalties towards environmental issues …. if the coy had not made these 2 provisions, it could have shown a no profit quarter …. further, coy had already advised that raw material cost is higher as they are using earlier inventory which was purchased at higher price that they havent been able to pass on to customers …. if they are able to maintain the same revenues, i believe they will show EPS of 5 atleast for the Q1 of 2019 bcos no need to make additional provisions and also raw material cost would be that of prices that are current …. the very fact coy making provisions and not trying to manage shareholder desires by showing a profit shows that we are dealing with an ethical and prudent management …. it is this trait that gives me confidence to remain invested and not book a loss due to head winds of 3 to 4 quarters,” a distinguished bronze member opined.

Conclusion

Obviously, the situation in Dalal Street is quite grim at the moment. We will have to await Wing Commander Abhinandan Varthaman’s return coupled with a total de-escalation of hostilities before we can think straight about investment matters. We can then seek Mohnish Pabrai’s counsel as to what to do with Rain Industries!








6 thoughts on “Mohnish Pabrai’s “Dream Manager” Abruptly Resigns From 10-Bagger Stock | Cloners Worried

  1. Seems nothing is going right for Rain. Supreme Court ban, Current loss, Debt repayment burden and Dream Manager resignation. Hardly any uptick in sales turnover inspite of CAPEX. Rain needs atleast 300 Crores for debt servicing and with the current loss, situation is going to be very very tough for Rain going forward. It is next Suzlon in making.

    1. In the last few months, much has been written about the fate of Rain Industries.
      Heydays are over.
      Next Suzlon in the making is a chilling warning.

  2. Mr. Pabrai’s lack of experience in dealing with promoters at home is evident. One after another his bets are falling! Sadly he has much to learn, perhaps not in America, but back home!

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