Renuka Ramnath’s USP is that she is a clear headed and focused thinker. She evaluates all pros and cons of an investment in an objective manner and when she is convinced about the merits of an investment, she does not hesitate to back her conviction with serious money.
It is this clear and focused thinking and force of conviction that enabled Renuka Ramnath to convert ICICI Ventures into a powerhouse to reckon with. Now, in her new private equity venture, Multiples Alternate Asset Management, she has raised a treasure chest of $450 Million (Rs. 2700 crore) and is looking for top-quality stocks to buy, both from the listed space and the unlisted space.
In the listed space, Renuka Ramnath has already scooped up Cholamandalam Investment and Finance Company by getting Multiples to invest nearly Rs. 106 crore to acquire a 5% stake in Cholamandalam in March 2012.
Now, as any accomplished investor will tell you, Cholamandalam Investment, arm of the highly respected Murugappa Group, is one of the most sensible investments anyone can make. Cholamandalam is well known for its conservative approach and steady growth. You really cannot go wrong with an investment in such stocks.
Renuka has been well rewarded for her stock picking because the stock was acquired at Rs. 160 per share and Multiples is already looking at a gain of 44% at the CMP of Rs. 230.
The best thing is that it is still not too late to get into Cholamandalam. The stock is quoting at a price to book of 1.69 times, which is very reasonable compared to its peers like Shriram Transport, M&M Finance, Bajaj Finance etc. Also, Cholamandalam is believed to be a contender for a bank license. If that comes through, Cholamandalam will reach another orbit.
Renuka Ramnath’s second stock pick is the highly regarded South Indian Bank. Multiples invested in 20 million shares at a price of Rs. 22 per share via a QIP issue in September 2012.
South Indian Bank is also a sensible investment. It has a strong regional presence and good technology network. It is also a possible acquisition for a big-bulge bank wanting to expand. It has a strong deposit franchise, robust loan growth and improving asset quality.
South Indian Bank has been a little under the weather owing to deterioration in its asset quality (high NPAs). Business growth has also moderated owing to the hostile macro-economic environment. However, all that is factored in the rock-bottom valuations (0.9 times book value) and there will be huge upside once the interest rates ease.
Renuka Ramnath’s third stock pick is PVR, the film exhibitor. In November/ December 2012, Multiples invested about Rs. 153 crore in acquiring 62 lakh shares of PVR (15.8%) at the price of Rs. 245 each.
PVR used the funds to acquire Cinemax and has become the leader in the movie exhibition business, with 351 screens across 85 locations with a total capacity of 84,190 seats. PVR is also the No.1 exhibitor in 10 key markets across the country. It now has a strong presence in the north Indian and western Indian market.
PVR wants to expand to 400 screens by the end of FY 2014 and to enter new territories across India.
Renuka Ramnath & Multiples have made a huge packet out of PVR. In the short period from November 2012 to date, PVR has surged to Rs. 650, giving its delirious shareholders a return of 175%.
Renuka Ramnath’s fourth and latest stock pick is Arvind, the denim manufacturer. She greeted the New Year 2014 by getting Multiples to invest Rs. 146 crore in buying 98 lakh shares of Arvind at Rs. 149 per share.
Arvind is a manufacturer of textiles and branded apparels. It also markets foreign labels such as Tommy Hilfiger, Calvin Klein and Lee in India. Arvind has a network of about 730 stores across the Country.
Arvind has been on fire in the last 3 months with the stock price surging 76% on the back of consistently robust quarterly results and improved margins.
Renuka & Multiples have also been active in the private equity space by scooping up sizeable minority stakes in Sara Sae Pvt. Ltd (manufacturer of hi-tech drilling equipments), Indian Energy Exchange (automated power exchange), Mogae Media Pvt. Ltd (digital media intermediary), Milltec Machinery (manufacturer of agro processing equipment) and Vikram Hospital (200 bed super specialty hospital located in Bangalore).