Rain Industries dethroned, Sunteck Realty is new Crown Prince of Mohnish Pabrai’s portfolio
When I had last checked Mohnish Pabrai’s portfolio, Rain Industries was ruling the roost with a staggering market value of nearly 900 crore.
Sadly, those days are now consigned to the history books.
Rain Industries is beset with numerous problems arising from pollution control norms imposed by the Supreme Court.
It is now a shadow of its former glorious self, having lost a mammoth 75% of its market capitalisation in just the last 12 months.
The stock continues to be on a free-fall.
In his latest newsletter addressed to the distinguished clients of his PMS Funds, Mohnish lamented not booking profits earlier and taking some chips off the table.
“In hindsight, it was likely a mistake for at least PIF3 not to lighten up when the stock went over Rs. 400/share. We did sell some of PIF3’s Rain position at around Rs. 375, but the stock wasn’t there for very long and as Rain’s stock price declined, our selling ended,” Mohnish gracefully admitted.
However, Mohnish’s statement that he may dump the stock anytime in the future has sparked panic amongst cloners in Dalal Street.
“I will continue to carefully monitor Rain and lighten up our holdings if such a move is warranted,” Mohnish disclosed to his clients.
Some punters sensibly decided to dump the stock now without waiting to see whether Mohnish will in fact exercise the discretion in the future.
Anyway, this is what Mohnish Pabrai’s latest portfolio looks like.
|Stock||CMP (Rs)||Nos of shares||Value (Rs Cr)|
|Kaveri Seed Company||597.00||5,591,983||333.8|
|Indian Energy Exchange||161.00||4,424,320||71.2|
Mohnish also has a big chunk of Oberoi Realty which does not show up in the official records because it is below 1% of the equity capital.
It is notable that two stocks, namely, Repco Home Finance and Health Care Global (HCG), have been shown the door and booted out of the portfolio owing to their disappointing performance.
ETRealty | Mohnish Pabrai's fund sells 9.5 lakh Repco Home Finance's shares https://t.co/hGfjhRWdsh
— ETRealty (@Realty_Et) November 30, 2018
Realty stocks in Mumbai – Fail safe investment opportunity
Mohnish Pabrai has made it clear on a number of occasions that he is very gung-ho about realty stocks which have properties in Mumbai.
This is based on the sound proposition that in a land starved city like Mumbai, with deep-pocketed and affluent citizens, realty companies will be able to effortlessly rake in big bucks.
Mohnish has provided a detailed explanation of the rationale in an interview to CNBC TV18.
He has been aggressively buying high-quality realty stocks like Sunteck Realty, Kolte-Patil Developers, Oberoi Realty.
— Mohnish Pabrai (@MohnishPabrai) October 30, 2018
— Mohnish Pabrai (@MohnishPabrai) May 30, 2017
The merits of Sunteck Realty have been meticulously explained by Nigel D’Souza.
— Nigel D'Souza (@Nigel__DSouza) April 13, 2017
Bonanza coming for realty sector in Budget 2019?
According to Nayantara Rai, the ace investigative journalist with ETNow, NAMO is likely to slash GST on the realty sector with a view to raising demand and reviving the sector.
Plans underway to boost the dead housing mkt with a GST rate cut
Proposal 1: cut gst from 12% to 8% & at par with affordable housing schemes like PMAY
Proposal 2: a bold one. To cut gst on all housing to 5% but no input tax credit https://t.co/r5aVz9d4q2
— Nayantara Rai (@NayantaraRai) December 19, 2018
#EXCLUSIVE | Sources to @NayantaraRai: PMO, FinMin in favour of big ticket GST rate rejig to revive housing market. 2 proposals on reviving housing market may be placed before GST Council @GST_Council @PMOIndia @FinMinIndia #GST @askGST_GoI pic.twitter.com/45jxB9B3hh
— ET NOW (@ETNOWlive) December 19, 2018
Bonanza coming for home buyers? PM @NarendraModi & FM @ArunJaitley in favour of cutting the 12% GST on housing to either 8% or a flat 5% with no input tax credit for builders. Read this #Exclusive by @NayantaraRaihttps://t.co/G96853EchC
— ET NOW (@ETNOWlive) December 19, 2018
It is obvious that if this happens, realty stocks will be locked in upper circuit for days on end.
Phoenix Mills – latest multibagger stock pick
The Phoenix Mills Ltd is Mohnish Pabrai’s latest acquisition.
His ‘The Pabrai Investment Fund IV’ holds 15,75,561 shares as of 31st December 2018.
The investment is worth Rs. 94 crore at the CMP of Rs. 600.
|PHOENIX MILLS LTD – KEY FUNDAMENTALS|
|MARKET CAP||(Rs CR)||9,255|
|EPS – TTM||(Rs)||[*S]||10.81|
|LATEST DIVIDEND DATE||11 SEP 2018|
|BOOK VALUE / SHARE||(Rs)||[*S]||174.28|
|PHOENIX MILLS LTD – FINANCIAL RESULTS|
|PARTICULARS (Rs CR)||SEP 2018||SEP 2017||% CHG|
(Shoppers throng Phoenix Mall in Kurla, Mumbai)
Phoenix Mills is the unique way to play India’s retail growth story: Experts
Experts are unanimous that Phoenix Mills is a sound investment opportunity owing to its positioning as a realty and retail play.
Motilal Oswal has described the stock as “the unique way to play India’s retail growth story“.
“We believe that PHNX provides a unique way to play India’s
retail growth story. We prefer PHNX due to its (a) strong operational performance, (b) scalability (through the CPPIB deal) and (c) robust cash generation. We value PHNX’s retail assets based on DCF-based NAV approach, assuming a cap rate of 8.5% (HSP – 8%) and a discount rate of 13.5%,” it is stated.
(Birds’ eye view of High Street Phoenix Mall in Lower Parel, Mumbai)
This logic is endorsed by Nirmal Bang.
“Our optimism is supported by: 1) Anticipated continued strong growth in rental revenues of operational malls. 2) Steady growth in office space rentals. 3) Strong growth in hotels because of cyclical upturn of the sector,” it is opined.
ICICI-Direct has also come out with all guns blazing in favour of Phoenix Mills.
“Phoenix Mills (PML) is a market leader and owner of prime malls in India. It started the real estate business with its iconic High Street Phoenix mall.
Sailing on its retail-led mixed-use development model, PML has an operational asset portfolio of eight operational retail assets aggregating 5.9 msf and four operational commercial assets aggregating 1.16 msf.
Going ahead, PML plans to almost double its retail portfolio and triple its commercial asset portfolio.
Consequently, we expect its rental income to almost double to Rs 1702 crore in FY18-23E.
We also highlight that PML is well funded for its current expansion plans through CPPIB alliance and strong internal accruals.”