Porinju Veliyath’s investment philosophy and stock picks always evoke curiosity, comment and criticism. His game plan of buying stocks which are backed by promoters of “low quality” (his words), which have a dubious track record of corporate governance and are suffering from poor operating performance flies in the face of conventional logic that one must only buy “high quality” companies, even if there is a premium to be paid for that.
Porinju’s latest stock pick, Jubilant Industries, is in the same mould. It has suffered heavy losses in the past few quarters including Q4FY15 and a recovery seems nowhere in sight.
Now, in a chat with NDTV, Porinju has now revealed his rationale behind buying Jubilant Industries.
Porinju explained that Jubilant’s core business of manufacturing polymers is an “excellent” one and is worth nearly Rs. 500 crore on a standalone basis. However, the recently acquired retail business is the sole reason for the Company’s woes. The retail business is guzzling cash and spewing out heavy losses. It is a mill stone around Jubilant’s neck and will drag the Company into insolvency sooner or later.
Porinju theorized that as per his common sense approach, the management of Jubilant would not allow the Company to sink like this. They would take the call to either shut down the retail business or sell it for whatever they can get.
When that event happens and Jubilant gets rid of the retail business, it will surge and could give multi-bagger gains, Porinju reasoned.
Porinju disclosed that he has bought the stock for his personal portfolio and not for the PMS, implying that the stock is a “high risk, high reward” sort of stock.
Porinju also candidly admitted that he loves “gambling once in a while” and that he is “taking a chance” that the management will act in a rational manner to save Jubilant Industries.
Now, whether Jubilant Industries lives upto Porinju’s lofty expectations and whether he will in fact get the multibagger gains that he is fantasizing about requires to be seen.
Thanks, it seems to be you have seen the video. He is talking about Gamble, sometimes he likes this. Also he expect management to take out retail as it is loss making. Frankly i did not like this approach, value investing is more like based on what is there in balance sheet not what can happen. Also, another thing he told he is out of DLF. sometimes back i read he is betting on DLF so that may be something reader can know.
His bet are always a gamble..by creating a kiosk in market and gets away with 40-50 % profit while leaving rest retails investor to dismay.
He is a gambler and not a value investor. Gambler may get a multibagger by luck but not always.
If this he is doing them he is making multibagger always as 30-40% percent comes quickly for him.
@ kRISH hE NEVER PURCHASE RAIN INDUSTRIES. IT WAS PURCHASED BY mOHNISH pABRAI..AND HE IS INCREASING STAKE EVEN AT UPSIDE RATE HIS PURCHASE IS FROM 35 TO 48.
If someone is gambliing and provoking other to follow him by coming live, we atleast me will take corner from him and even his voice.He cannot be trusted.
One should see his bet on Rain Industries. By the way it got back to his original purchase price or even below his pp.
@ kRISH hE NEVER PURCHASE RAIN INDUSTRIES. IT WAS PURCHASED BY mOHNISH pABRAI..AND HE IS INCREASING STAKE EVEN AT UPSIDE RATE HIS PURCHASE IS FROM 35 TO 48.
Isn’t this heights of insider trading!!!
He has bought the stock on 100% inside news…it is not what ever he said the management executed in a week. he has got inside information and bought the stock.