Rakesh Jhunjhunwala & Associates Trims Stake in Smallcap Mining Stock

The deluge of retail investors in Indian equities in the recent years marks a major shift away from traditional investments such as gold, real estate, and bank deposits.

For perspective, the number of stock trading accounts zoomed from 41 million (m) in 2019 to 140 million in 2023.

However, many these investors are new to the market.

For actively keeping track of the market, these investors could closely track the investments of superstar investors in India like aRekha Jhunjhunwala, Ashish Kacholia, Sunil Singhania, and Vijay Kedia.

These investment gurus share valuable market insights from time to time in the market. Their buy and sell transactions also tells us where the market can be headed or how the overall sector could perform.

In today's article, we'll focus on one such sell transaction from none other than Rekha Jhunjhunwala, the wife of late Rakesh Jhunjhunwala. The transactions of Jhunjhunwalas are now carried under the name of Rakesh Jhunjhunwala & Associates.

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 Stock did Rakesh Jhunjhunwala & Associates Trim Down on and Why?

The stock in question is Raghav Productivity Enhancers.

The company manufactures and exports ferro alloys, ramming mass, silica ramming mixes, and pig iron.

According to data available on the exchanges, Rekha Jhunjhunwala, wife of late Rakesh Jhunjhunwala via Rakesh Jhunjhunwala and Associates, sold 41,000 shares or 0.2% stake in the company.

According to the latest shareholding pattern of Raghav Productivity Enhancers, Rakesh Jhunjhunwala and Associates now hold a 4.8% stake in the company or 1.1 m shares of the total equity.

Interestingly, the recent stake decrease marks the third consecutive quarter where Rakesh Jhunjhunwala & Associates have trimmed their stake in mining stock.

While we don't know the exact reason why they trimmed their stake in Autoline Industries, here are some reasons we can guess...

#1 Profit Booking

One possible reason behind the ace investor's stake sale could be profit booking, especially after the significant rally in the company's stock.

In 2024 alone, the stock has surged by 50%, with an impressive 73% rise in the last six months.

Adding to the company's success, Raghav Productivity Enhancers Ltd, the world's largest producer of silica ramming mass, recently received significant recognition by winning the prestigious 'SME Champion' award for "Entrepreneur of the Year (Medium Enterprise)."

The award ceremony took place on 26 July 2024, in Delhi, where the Chairman, Mr. Sanjay Kabra, accepted the accolade from Union Minister Nitin Gadkari.

This honour further solidifies Raghav's standing in the industry and underscores its relentless focus on innovation, operational excellence, and contribution to economic growth.

The recognition not only enhanced its market reputation but also created positive market sentiment, resulting in the stock hitting the upper circuit.

Further, the company posted impressive financial results. In the June 2024 quarter, the company achieved a revenue of Rs 448.4 million, representing a 49% increase compared to Rs 300.8 m in Q1 FY24. This strong growth is a testament to its expanding market share and operational efficiency.

The operating profit for the June 2024 quarter also improved significantly, reaching Rs 123.1 m from Rs 83.8 m in the same period the previous year.

This reflects an enhanced operating profit margin of 24.45%, showcasing Raghav's ability to manage costs while driving higher revenues.

Additionally, the net profit surged by over 44% YoY to Rs 82.9 m, compared to Rs 57.4 m in Q1 FY24, demonstrating the company's consistent growth trajectory and solid financial health.

#2 FII Selling

Another possible reason could be FII selling. In the June 2024 quarter, FIIs increased their stake by acquiring 0.04% of the company. However, by the September 2024 quarter, they had reduced their holding to 0.01%.

Although the figures are relatively small, the reduction in FII ownership might have influenced the ace investor's decision to trim their stake in the company. This decrease in foreign institutional investment, even if modest, could be seen as a signal to reduce exposure.

A Close Look at the Financials

The company's revenue has grown at a 15.3% CAGR in the past 3 years, rising from Rs 665 m in FY20 to Rs 1,148 m in FY24.

Raghav Productivity Enhancers' net profit growth follows a similar impressive trajectory, increasing at a 39.4% CAGR from FY20 to FY24.

Net profit margins have also improved, reaching 22.6% in the last financial year.

Raghav Productivity Enhancers' Snapshot (FY22-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Net Sales	665	557	875	1,214.00	1,148.00
Growth (%)	17.9	(-16.3)	57.2	38.7	(-5.5)
Net Profit	94	91	178	252	260
Net Profit Margin (%)	14.2	16.4	20.4	20.8	22.6

Data Source: Equitymaster

What Next?

Raghav Productivity Enhancers is well-positioned to benefit from India's ongoing construction boom and the government's emphasis on infrastructure development.

With the country's construction market projected to become the third largest globally, the demand for materials like steel, in which quartz-based products such as ramming mass play a vital role, is set to increase significantly. Raghav, a leading manufacturer of quartz-based ramming mass, caters to steel producers, both domestically and internationally.

The company is likely to see higher demand as infrastructure projects grow under initiatives like Smart Cities, rural electrification, and renewable energy projects.

The secondary steel producers, who account for over 40% of India's crude steel production, are key customers for Raghav's products. This segment is crucial for infrastructure and housing development, giving Raghav a solid growth trajectory.

Moreover, the export duty hikes on iron ore and steel products may drive local producers to increase domestic output, further boosting the demand for Raghav's ramming mass products.

With its strong client base and a robust presence in over 26 countries, the company stands to capitalize on the growing global and domestic demand in the metals and mining sector.

These strategic growth initiatives could highlight why Rakesh Jhunjhunwala and Associates remains invested in the stock.

About Raghav Productivity Enhancers

Raghav Productivity Enhancers Ltd specializes in the production of quartz-based ramming mass, quartz powder, and tundish boards, marketed under the brand name "Raghav."

The company's key clients include R.L. Steel, Mahalakshmi TMT, and Varsana SPA, who receive products such as ramming mass, silica ramming mixes, and quartz.

It serves both domestic and international markets, with a presence in 26 countries beyond India.

The company operates a manufacturing facility in Nevai, Rajasthan, which boasts a total production capacity of 180,000 MT per annum.

To know more, check out Raghav Productivity's financial factsheet and its latest quarterly results.

You can also compare it with its peers:

Raghav Productivity vs Ashapura Minechem

Raghav Productivity vs OMDC

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

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