Dolly Khanna, Sunil Singhania Trim Stake in Multibagger Infra Stock; Ramesh Damani Books Profit in Leading Shipbuilder

With the right strategy and tactics, a Rs 5,000 worth of portfolio investment can be made as big as Rs 2 billion (bn) worth of portfolio.

The above statement might seem unbelievable, but people like Rakesh Jhunjhunwala, Dolly Khanna (Rajiv Khanna), Ashish Kacholia, and Vijay Kedia, who are known to be one of the most successful investors in India, have turned the tide and have created phenomenal fortunes from the market.

These investors are always on the radar of retail investors as they try to copy investment calls made by these savvy investors.

As we enter Q2, these star investors have made significant changes to their portfolios. In this article, we'll dive into their latest portfolio reshuffles.

# Dolly Khanna & Sunil Singhania's Infra Stock Moves

The infra stock in question is J Kumar Infraprojects.

The company is engaged in the execution of contracts for various infrastructure projects, including transportation engineering, irrigation projects, civil construction, and piling work.

The latest shareholding pattern of J Kumar Infra shows that Dolly Khanna & Sunil Shinghania have trimmed down their stake in the September 2024 quarter.

Sunil Singhania's stake (through his investment firm Abakkus Asset Manager) decreased from 2.6% in June 2024 to 2.5%, now holding 1.9 million shares.

Dolly Khanna's stake dropped from 1.1% in June to 1% in September, leaving her with 768,342 shares.

Who Are the Investors Behind the Move?

To understand the significance of these portfolio adjustments, it's important to consider the backgrounds of both investors.

• Sunil Singhania, the founder of Abakkus Asset Manager, is a veteran with over two decades of experience in equity markets. His time as CIO of Reliance Mutual Funds saw him build it into one of India's largest asset management companies.
• Dolly Khanna, meanwhile, is renowned for her knack for picking lesser-known midcaps and smallcaps that deliver strong returns over time. Her portfolio, managed by her husband Rajiv Khanna, typically favours more conventional industries like manufacturing, textiles, chemicals, and sugar. She has been investing in stocks since 1996.

What Triggered the Stake Reduction?

One of the immediate reasons for the stake trimming appears to be the company's performance in Q2.

Compared to the previous quarter, J Kumar Infraprojects saw its revenue drop by 10.1%, down to Rs 12.8 bn. More critically, its net profit decreased by 13.3%, down to Rs 364.2 m. The decline is largely attributed to a fall in sales.

Another factor that may have influenced their decision is the overall activity of institutional investors.

During the September 2024 quarter, mutual funds reduced their stake in the company from 9.6% to 9.5%, and foreign institutional investors (FIIs) also sold off a portion of their holdings, which decreased from 10.5% to 9.95%.

This wave of selling by institutional investors may have contributed to the decision by Khanna and Singhania to reduce their stakes, as such moves often indicate a shift in market sentiment.

Long-Term Outlook for J Kumar Infraprojects

Despite the short-term challenges, J Kumar Infraprojects' long-term fundamentals remain strong. Over the past five years, the company has grown its revenue at a CAGR of 11.9%, while net profit has grown even faster, at 13.2%.

J Kumar Infra's Snapshot (FY22-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Net Sales	29,705.00	25,708.00	35,272.00	42,031.00	48,792.00
Growth (%)	6.6	(-13.5)	37.2	19.2	16.1
Net Profit	1,836.00	639	2,059.00	2,744.00	3,286.00
Net Profit Margin (%)	6.2	2.5	5.8	6.5	6.7
Return on Equity (%)	10	3.4	9.9	11.7	12.4
Return on Capital (%)	17.2	9.9	18.1	19.5	20.5

Source: Equitymaster

The company has also received significant urbanization orders in FY24, positioning it well to benefit from India's infrastructure development.

As India continues its push toward urbanization, the company stands to benefit from a robust capital expenditure cycle in infrastructure. This might be one of the reasons why both investors have opted to trim their stakes rather than fully exit the stock.

# Ramesh Damani Books Profit in Leading Shipbuilder

In another market move, ace investor, Ramesh Damani booked profit in the defence company. The stock in question is Garden Reach Shipbuilders and Engineers.

The company is a Miniratna PSU under the Ministry of Defence, Government of India, primarily catering to the Indian Navy and Indian Coast Guard. But what led Damani to reduce his stake?

About Ramesh Damani

Ramesh Damani has been known for his investments in unlisted and listed companies.

Damani is known for high-quality value picks that can be retained in the portfolio for long periods.

He follows the Warren Buffett model of investing that favours companies with strong management credentials and processes.

Why did Ramesh Damani Exit GRSE?

The latest shareholding pattern of Garden Reach Shipbuilders shows that Ramesh Damani's name was missing from the list of shareholders for the September 2024 quarter.

This means his holding might have slipped below 1%, or he could have sold the entire stake in the quarter gone by.

Before this, in the June 2024 quarter, Ramesh Damani held a 1.1% stake in the company.

He has kept his stake in the engineering and shipbuilding company constant since December 2021.

However, with the stock having rallied over 115% in the past year, this likely presented an opportune time for profit-taking.

What Drove GRSE's Rally?

The significant stock rally can be attributed to GRSE's strategic initiatives and successful partnerships aimed at enhancing India's self-reliance in shipbuilding.

GRSE has teamed up with Medha Servo Drives to develop advanced electrical systems for naval and commercial vessels. This collaboration combines GRSE's shipbuilding capabilities with Medha's expertise in control systems and electric propulsion, positioning the company for future growth.

Further, GRSE's recent Rs 8.4 bn contract with the National Centre for Polar and Ocean Research (NCPOR) for an ocean research vessel further underscores its growing capabilities.

Additionally, it has secured a US$ 54 m contract with a German shipping company to build four multi-purpose vessels, each with a deadweight tonnage (DWT) of 7,500.

This order, which includes an option for four additional ships, represents a significant step in GRSE's expansion into international markets.

Further, as India is set to witness a massive boost in its maritime infrastructure, with container handling capacity expected to double in the next five years to 40 million 20-foot equivalent units (TEUs), GRSE stands to benefit from the increased demand for shipping infrastructure and vessel construction.

With its expanding portfolio of large international contracts and supportive government policies, GRSE is emerging as a promising force in the defence shipbuilding sector.

Long Term Outlook

Over the past five years, GRSE has delivered solid financial growth, with a CAGR of 20.4% in sales and 26.6% in net profits. Its Return on Capital Employed (RoCE) and Return on Equity (RoE) stand at impressive five-year averages of 22.7% and 17.2%, respectively.

Graden Reach Shipbuilders' Snapshot (FY22-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Net Sales	14,333.00	11,408.00	17,544.00	25,611.00	35,926.00
Growth (%)	3.4	(-20.4)	53.8	46	40.3
Net Profit	1,635.00	1,535.00	1,895.00	2,281.00	3,573.00
Net Profit Margin (%)	11.4	13.5	10.8	8.9	9.9
Return on Equity (%)	15.7	13.5	15.1	16.1	21.3
Return on Capital (%)	21.8	19.1	20.6	22.3	29.7

Source: Equitymaster

The company's order book, as of June 2024, stood at Rs 252.3 bn, reflecting a strong pipeline of future projects.

Going forward, the company anticipates a promising future with the initiation of Next-Generation Offshore Patrol Vessels (NGOPVs) and deliveries for naval projects.

Conclusion

When prominent investors like Ramesh Damani, Dolly Khanna, or Sunil Singhania sell or reduce their stakes in companies, it often raises the question of whether retail investors should follow suit.

While it's tempting to mimic their moves, it's essential to remember that their decisions may not necessarily reflect a negative outlook on the company's future.

These investors may sell for a variety of personal reasons, such as portfolio diversification, profit booking, or liquidity needs, none of which are directly tied to the company's long-term potential.

Before deciding to sell, it's crucial to consider your own investment goals, the company's financial health, and its future potential.

Blindly following the moves of high-profile investors can be risky, especially if their decisions don't align with your personal strategy. It's better to focus on long-term fundamentals and how the stock fits into your broader investment plan.

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