Even veteran investors would have shuddered at the way the markets cracked today. The Sensex plunged 723 points (2.63%) while the Nifty plunged 229 points (2.74%). It was a savage and gory fall.
Most investors had barricaded themselves in their bunkers, afraid to even peep out to look at the state of their portfolios.
However, Mohnish Pabrai did not have even a flicker of worry on his face. He strode confidently to the Rain Industries counter and scooped up yet another truckload of 25,35,000 shares at Rs. 47.94 each, making an investment of Rs. 12.15 crore.
Mohnish’s fascination with Rain Industries is quite intriguing. This is the third time that he has stormed the counter. His first foray was on 20th April when he bought 26,64,000 shares at Rs. 34.52 each. His second foray was on 21st April when he bought another lot of 51,14,568 shares at Rs. 35.44 each. His third foray is today.
Interestingly, the stock is up 38% since Mohnish’s first purchase, a few weeks ago.
Rain Industries reported Q4FY15 results which, to my untrained eye, appear to be so-so. The total revenue for the quarter declined 19% to Rs 2,546.16 crore from Rs 3,143.51 crore in the same quarter of last year. However, thanks to a foreign exchange gain of Rs 45.89 crore (Rs 10.36 crore YOY), the net profit surged 67 per cent to Rs 84.33 crore.
| Rain Industries’ Quarterly Results | |||
|---|---|---|---|
| Particulars (Rs cr) | Mar 2015 | Mar 2014 | %Chg |
| Net Sales | 2538.97 | 3138.82 | -19.11 |
| Other Income | 53.08 | 4.69 | 1031.77 |
| Total Income | 2592.05 | 3143.51 | -17.54 |
| Total Expenses | 2225.48 | 2825.35 | -21.23 |
| Operating Profit | 366.57 | 318.16 | 15.22 |
| Net Profit | 86.2 | 51.63 | 66.96 |
| Equity Capital | 67.27 | 67.27 | – |
Some experts opined that the numbers indicate a “turnaround in financial performance” on a sequential basis since the company had incurred a net loss of Rs 199.71 crore in quarter ended December 2014.
In my earlier pieces, I have drawn attention to the brilliant analysis of Rain Industries by Parry Pasricha at Beyond Proxy. Parry has concluded that in the best case scenario, Rain Industries will give a 4x return. In the worst case scenario, one can still expect to take home an 80% gain. So, Rain appears to be the ideal “high margin of safety” stock that Mohnish Parbrai thrives on.
Dear,
First of all I am very much thankful for your articles because it is a great help for the small investors like me. As per your article related to Rain Industries “Mr.Mohnish Pabrai’s first foray was on 20th April when he bought 26,64,000 shares at Rs. 34.52 each. His second foray was on 21st April when he bought another lot of 51,14,568 shares at Rs. 35.44 each.” His third foray was on 6th May by purchasing another truckload of 25,35,000 shares at Rs. 47.94 each. Then the total quantity purchased is 10313568 shares. But as per the bse listing on 8th May it mentioned a purchase of 3750000 shares at Rs.48 and his total holding after the purchase shown as 26932468 shares.(8% of total number of shares issued). I request you to kindly check this and confirm.
Regards
Sreeraj
Dear Mr. Sreeraj, I have the same question. Did you get a reply on this? If not, can someone (Admin?) please post a rely?
Thanks!