When Porinju Veliyath bought a truckload of Jubilant Industries’ shares on 5th May 2015, most investors turned their nose up in disgust. Jubilant had reported dismal Q4FY15 results (net loss of Rs 54.39 crore as against a net profit of Rs 75.52 crore in Q4FY14) and there was nothing investment-worthy about the stock, they thought.
Later, Porinju came on record to explain the rationale behind his investment. Porinju pointed out that Jubilant’s core business of manufacturing polymers is an “excellent” one, worth at least Rs. 500 crore. The sole reason for its woes is the recently acquired retail business which is notching up heavy losses.
Porinju speculated that the heavy losses would force Jubilant’s management to jettison the retail business, sooner or later.
“When that happens, Jubilant Industries will give multibagger gains” Porinju exclaimed, with a glint in his eye.
Today, just a few days later, in an incredible coincidence, Porinju’s gamble about what Jubilant’s management might do has turned out to be a prophetic declaration.
Jubilant issued a press release today morning stating that its wholly owned subsidiary, Jubilant Agri and Consumer Products, will transfer its retail hypermarket business including four hypermarket stores in Bengaluru to Aditya Birla Retail via a slump sale.
As expected, there is great jubilation in the Jubilant counter. The stock is locked in upper circuit at Rs. 164. It is expected that the UC will continue for the next couple of days and that the stock will coast in an upward trajectory even thereafter.
Porinju was last spotted with a big grin on his face as he was being congratulated by his vast legion of fans. Porinju stands to make a personal fortune from the stock, given that he bought it at the throwaway price of Rs. 100.
Now, what we have to see is whether Porinju’s brilliant stock picking leads him to be taken more seriously by the investor community.