It is one of the paradoxes of life that the so-called ‘low-quality’ stocks are outperforming while the so-called ‘high quality’ stocks are languishing.
All realty stocks, including top-quality ones like Ashiana Housing and Poddar Developers, which are backed by ace investors of the caliber of Prof. Sanjay Bakshi, Jwalamukhi, Brahmal Vasudevan, Kenneth Andrade etc, have taken it on the chin and have sunk to the bottom of the barrel with 52-week lows.
However, Porinju Veliyath’s favourite realty stock, Ansal Buildwell, is surging and tripping the upper circuits.
On Friday, Ansal Buildwell reported blockbuster Q1FY16 results. The revenue surged to Rs. 46.61 crore as compared to Rs. 30.30 crore YoY and Rs. 29.46 crore QoQ. The PAT surged to Rs. 13.03 crore as compared to Rs. 0.33 crore YoY and Rs. 3.05 crore QoQ. The EPS shot up to Rs. 17.66 as compared to Rs. 0.44 YoY and Rs. 4.14 QoQ.
Within seconds of the results being announced, delirious punters laid siege on the Ansal Buildwell counter, sending the stock price surging 20% and tripping the upper circuit.
In just the last one year, the stock has given a return of 101%. The two-year return is a fabulous 241%.
Porinju had anticipated this state of affairs very early on and carefully prepared himself by hoarding a huge truckload of the stock.
His PMS, Equity Intelligence India Pvt Ltd, bought 55,000 shares on 23rd March 2015 at Rs. 64.25 each, 45,000 shares on 16th April 2015 at Rs. 99.41 each and 50,000 shares on 28th April 2015 at Rs. 113.45 each. Equity Intelligence’s total holding is 150,000 shares as of 30.06.2015, comprising of 2.03% of Ansal Buildwell’s total equity.
To Porinju’s credit, he has been explaining his rationale about his bullishness for Ansal Buildwell to us as well.
Ansal Buildwell – Why 100 Cr EV for 5000 Cr wealth? http://t.co/hQuXt2Qosl
— Porinju Veliyath (@porinju) April 17, 2015
Porinju’s theory is that Ansal Buildwell is sitting on a land bank which has a development potential of Rs. 5,000 to 10,000 crore. This was confirmed to some extent by Ansal’s top brass who also promised that the Company is preparing to monetize its assets.
Now, given that Ansal Buildwell is quoting at a market capitalisation of only Rs. 76 crore, there are mega bucks to be made even if Ansal’s land bank is worth only a fraction of what Porinju claims it to be!