Under Renuka Ramnath’s able stewardship, Multiples Equity has put up a stellar show and delighted investors with mega returns. It is, therefore, no surprise that investors are beating a path to her door and are eager to pump in mega bucks into the Multiples Fund.
ET has reported that Multiples has now raised a treasure trove of $400 Million (Rs. 2400 crore) from marquee investors like Canada Pension Plan Investment Board, large Dutch pension fund PGGM, British fund CDC, a US based fund of funds etc.
The fund raising activity has put Renuka Ramnath in the difficult but enjoyable task of picking winning stocks.
We need to chip in with our little contribution to the noble cause.
Renuka Ramnath’s investment philosophy:
One thing that is clear from Renuka Ramnath’s earlier stint on Dalal Street is that she is at heart a traditional and conservative investor. She gives primacy to protection of capital over returns. Broadly, a stock has to meet the following criteria before Renuka considers it for investment: (i) quality management with good corporate governance, (ii) secular growth opportunities, (iii) leadership position in the Industry, (iv) reasonable valuations etc.
Now, let’s get down to the task of picking stocks which meet these criteria:
Chola is a “no brainer” stock from Renuka Ramnath’s perspective. Its conservative management is to her liking. Chola is in fact the first stock that Renuka bought in her first stint. She bought the stock (along with Brahmal Vasudevan of Creador) in February 2012 at Rs. 160 per share and sold it in January 2015 at about Rs. 500 each.
Renuka Ramnath made it clear that she sold Chola only to return money to investors and not for any other reason. She also stated that Cholamandalam is a “fantastic story of how the new management completely turned around the company and brought them back inline with their core business and brought in a lot of discipline around lending and collections which has resulted in a phenomenal return for us”.
According to a recent report by Religare, the CV cycle is about to turn and Chola will be one of the big beneficiaries of that.
Dipen Sheth of HDFC Sec said the same thing a few days ago. He called Cholamandalam a “high quality company” and said it could give 2x or even 3x returns in the next few years.
So, we shouldn’t be surprised to see Renuka Ramnath walk up to the Chola counter one fine day and scoop up a truckload of the stock.
Repco Home Finance:
Brahmal Vasudevan’s Creador has made a nice little packet from Repco. Creador bought the stock at about Rs. 150 (pre IPO) and sold it in October 2014 at about Rs. 450. Creador made impressive gains of 75% IRR from Repco in dollar terms.
Anand Narayan of Creador came on record to say that “Repco Home is a high quality business that has a great track record and it will continue to perform well”.
Repco is also the stock that Basant Maheshwari said he would “bet his house on”. Basant also said that he sees at least 20 years of growth for the housing finance sector.
Value investors have always had a soft corner for Balkrishna Industries. It is supposed to have a ‘moat’ because it operates in a niche area (off-highway tyres) where there are few competitors.
Sanjoy Bhattacharyya, the doyen amongst value investors, paid rich tribute to Balkrishna Industries in his latest talk.
Akash Prakash of Amansa Capital (who is also invested in Cholamandalam Finance) also showed confidence in Balkrishna Industries by scooping up Rs. 100 crore worth of stock recently.
So, there you have it. Three top-quality no-brainer stocks for any value investor’s long-term portfolio.
Whether Renuka Ramnath buys all or any of these stocks has to be eagerly watched.
In the meanwhile, if you have any stock ideas that you think will interest Renuka Ramnath, feel free to chip in with your contribution.