Over the past few months, value investor Rakesh Jhunjhunwala has added companies like IIFL and JP Associates to his portfolio. The stocks of these companies have since fallen over 25%. In this article, we will take a look at 5 stocks from Rakesh Jhunjhunwala’s portfolio that tumbled along with an analysis of why their prices fell over the past few months and what to expect going forward. 5 Stocks from Rakesh Jhunjhunwala’s Portfolio That Tumbled
Nifty Midcap
The Nifty Midcap 50 Index is a market capitalization-weighted index that tracks 50 mid cap stocks on the National Stock Exchange of India. It is a part of broader Nifty family, along with other indices such as: Nifty Next 50 and Nifty Junior. The constituents are chosen based on their liquidity, market capitalization and average daily turnover in accordance with certain parameters determined by BSE.
Nifty Bank
The Nifty Bank index (NIFTYBANKINDEX) is a free-float market capitalization-weighted index that tracks one of NSE’s bank sub-indices. It includes stocks of companies whose primary business is banking, excluding financial institutions not classified as banks and investment companies. The benchmark index value was taken as 100 at February 4, 2005, and it started trading on May 31, 2005.
Nifty Realty
Based on its market capitalization, Nifty Realty Ltd. is an emerging player in a very fragmented industry in India. The company has a debt-equity ratio of 0.51, an operating margin of 21.2%, and a return on equity of 12%. Based on its strong fundamentals, I would be comfortable paying a premium for Nifty Realty at current prices (55% above my entry price).
Auto Ancillaries
Auto ancillary companies provide services to car owners. These include tyre makers, glass manufacturers, battery manufacturers and even petrol pump operators. Auto ancillaries is a defensive sector, but it has low gross margins that make it unattractive for most investors. Therefore, investors should look at companies with high growth and healthy gross margins instead of pure-play auto ancillary stocks.