Rakesh Jhunjhunwala & Associates Increase Stake in this Multibagger Realty Stock

Investing in the stock market to earn multibagger returns requires experience, knowledge, and a profound understanding of market dynamics.

The stock market is a complex and dynamic ecosystem where fortunes are made and lost and getting it right consistently can be a formidable challenge.

This is precisely why so many people turn to the strategies and wisdom of famous investors who have achieved legendary status.

These titans of investing, often referred to as "market wizards," have honed their craft through years, if not decades, of trial and error. Their track records of remarkable gains serve as guiding stars for those who seek to replicate their success.

One such tracked guru was Rakesh Jhunjhunwala.

In today's article we will focus on a real estate stock where Rakesh Jhunjhunwala and Associates have recently added more exposure.

A Word About Rakesh Jhunjhunwala

Rakesh Jhunjhunwala was an Indian billionaire stock trader and investor.

He used to manage his portfolio as a partner in his asset management firm, Rare Enterprises. He invested in both his own and his wife's name, Rekha Jhunjhunwala. He held the designation of Chartered Accountant.

Rakesh Jhunjhunwala was known as "India's Warren Buffett." According to Forbes, Jhunjhunwala was the 36th richest man in the country. He was worth Rs 460 bn when he passed away on 14 August 2022.

He was a director on the boards of several companies, including Viceroy Hotels, Concord Biotech, Provogue India, and Geojit Financial Services.

Which Real Estate Stock did Rakesh Jhunjhunwala & Associates Buy and Why?

The stock in question is DB Realty.

According to data available on the exchanges, Rekha Jhunjhunwala, wife of late Rakesh Jhunjhunwala via Rakesh Jhunjhunwala and Associates, acquired 20 million (m) shares or 4.4% stake in the company.

According to the latest shareholding pattern of DB Realty, Rakesh Jhunjhunwala and Associates now hold a 5.6% stake in the company or 25 million(m) shares of the total equity.

This development comes after the real estate developer DB Realty announced on 18 September that it successfully raised Rs 15.4 bn through a preferential issue of 257.5 m convertible warrants to the promoter group and non-promoter investors.

Notably, in addition to the Promoter Group, which includes the Goenka Family Trust and SB Fortune Realty, non-promoter investors were allotted equity shares by the company at the relevant time.

Among them, Rekha Jhunjhunwala and RARE Investments were allotted 2% of the shares.

Additionally, the funds will be deployed for further investments and the acquisition of new assets, as well as to meet various requirements associated with the ongoing projects and working capital needs.

In addition to this, here are some other reasons we speculate could have motivated them to increase their exposure to DB Realty.

#1 Diversification into Hospitality Sector

DB Realty recently announced its plan to diversify into the hospitality business through a series of acquisitions.

This strategic move will involve the redemption of the company's investments in Marine Drive Hospitality and Realty (MDRHPL).

D B Realty has disclosed plans for significant acquisitions, including a 50% stake in Bamboo Hotels & Global Centre Delhi, 100% ownership of Goan Hotels & Realty Private, and a 75% stake in BD&P Hotels (India).

These acquisitions mark DB Realty's entry into the hospitality industry, with two operational five-star hotels with a total of 504 operational rooms.

Additionally, there is future expansion potential of 187 rooms within these two hotels and a 50% economic interest in another project comprising 779 rooms (990 Bays) currently under construction.

Moreover, the company anticipates a substantial leasable space and business center spanning 615,000 sq ft to be ready by FY2025-26.

According to D B Realty's management, the estimated EBIDTA from the hotel business in FY-25 is expected to reach approximately Rs 1.8 bn.

The funding for these acquisitions comes from the redemption of DB Realty's investment in MDRHPL.

#2 Strong Sectoral Outlook

The real estate sector in India is poised for remarkable growth, with proactive measures taken by the government.

Initiatives such as the Smart Cities Mission and the Pradhan Mantri Awas Yojana (PMAY) have given a substantial boost to the demand for both residential and commercial properties.

The government's strong commitment to achieving 'Housing for All' is set to ignite a surge in the demand for affordable housing, ultimately infusing much-needed liquidity into the sector.

In the Indian economic landscape, real estate stands as the second-largest sector, making a substantial contribution to the country's GDP. In 2020, it accounted for 7% of the nation's GDP.

Looking ahead, the real estate segment is poised for substantial growth between 2022 and 2027, with an anticipated compounded annual growth rate (CAGR) of 15%.

This trajectory could lead the industry to surpass the noteworthy milestone of Rs 650 billion by 2040, a significant leap from its 2019 valuation of Rs 120 bn.

In a grand projection, the industry is expected to cross the US $1 tn mark (equivalent to Rs 82.4 tn) in market size by 2030, a substantial increase from its 2021 valuation of US$ 200 bn. This transformation underscores the sector's increasing importance.

How DB Realty Has Performed Recently

Over the last one month, DB Realty share price is up 15%. In the past six months, the stock has soared 145%.

DB Realty has a 52-week high quote of Rs 179.7 touched on 20 September 2023 while the stock touched its 52-week low of Rs 55.1 on 27 February 2023.

About DB Realty

DB Realty is a leading real estate developer in India, with a focus on developing high-quality residential and commercial projects.

The company's focus is on residential commercial retail and other projects such as mass housing and cluster redevelopment in and around Mumbai, India.

The company's existing product portfolio ranges from upscale buildings to lavish villas and some of the most elite malls in the country with new developments coming up at a fast pace. They undertake most of our projects through the joint-venture model.

The company's business is divided into residential commercial retail and other projects.

You can also compare with its peers:

DB Realty vs Supreme Hold

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...