Rakesh Jhunjhunwala rejigs portfolio in Q2; ups stake in Lupin, Tata Motors

The duo bought additional shares in pharmaceutical companies Lupin and Jubilant Life Sciences, along with Agro Tech Foods and NCC during Q2FY21.

Stocks of pharmaceutical and fast moving consumer goods (FMCG) companies found favour with ace investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala in the July – September 2020 quarter of the current fiscal (Q2FY21).

The duo bought additional shares in pharmaceutical companies Lupin and Jubilant Life Sciences, along with Agro Tech Foods and NCC during Q2FY21, as per shareholding pattern filed by 28 companies till October 21, 2020.

In Tata Motors, Rakesh Jhunjhunwala has picked up a 1.29 per cent stake.

The shareholding pattern disclosed by the Tata group automaker showed Jhunjhunwala holding 40 million shares.

However, it couldn’t be ascertained if he had bought the entire stake during the recently concluded quarter.

Most analysts expect the auto sector to bounce back sharply from the lows seen in the first quarter of the current fiscal (Q1FY21), which was impacted by the nationwide lockdown to check the spread of Covid-19.

“Auto companies should see a big turnaround in financial performance in Q2FY21, led by the sharp recovery in volumes after a dismal Q1FY21.

“The sector should turn profitable again in the recently concluded quarter, although recurring net profit is still likely to be down 15 per cent YoY on lower financial incomes and the exceptionally low tax rates in Q2FY20,” wrote Nitij Mangal of Jefferies in an October 8 note with Sagar Sahu.

And the data does support this belief.

Passenger vehicle wholesales in India, as per auto industry body SIAM data, increased by 26.45 per cent to 272,027 units in September as against 2,15,124 units in the same month last year.

Among companies, Tata Motors clocked a 5.09 per cent YoY growth in total sales to 110,379 units in the September 2020 quarter.

Total domestic sales were up 13 per cent to 106,888 units from 94,454 units in July-September period last year.

On the other hand, Jhunjhunwala and family pruned their stake in Titan Company along with tractor-maker Escorts and private lender Federal Bank during Q2FY21.

Among their other holdings such as Rallis India, Crisil, Indian Hotels Company, Delta Corp, VIP Industries and Multi Commodity Exchange of India (MCX), the stakes remained unchanged.

Among pharma stocks, the ace investor upped his stake in Lupin to 1.53 per cent in the September 2020 quarter from 1.47 per cent in the June quarter.

After offloading pharma shares in the past five consecutive quarters, Rakesh Jhunjhunwala bought an additional 300,000 equity shares of the company during the recently concluded quarter. His holding in Lupin is now back to the level last seen in December 2019.

The pharma sector, analysts say, is expected to report a better earnings traction during Q2FY21, gaining from revival in domestic market and new product launches in US followed with recovery in some business segments.

“Promotional, marketing and travelling spends still continuing to be lower than the pre-Covid-19 levels companies are expected to deliver better EBITDA margins.

“Lupin also should deliver better earnings backed by the launch of gAlbuterol – a drug used to treat difficulty breathing, wheezing, shortness of breath, coughing, and chest tightness caused by lung diseases such as asthma,” says Cyndrella Carvalho, an analyst tracking the sector at Centrum Broking.

Photograph: Shailesh Andrade/Reuters

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