Rakesh Jhunjhunwala has increased his stake in commercial vehicle manufacturer Escorts.
Rakesh Jhunjhunwala has increased his stake in commercial vehicle manufacturer Escorts. According to the latest shareholding data available on the stock exchanges, as of February 18 this year, Rakesh Jhunjhunwala owned 75 lakh equity shares of the company. The ace investor has had a stake in Escorts since at least 2015. Shares of Escorts were up in the green on Monday morning, outperforming benchmark indices that were deep in the red. Escorts shares were trading at an intraday high of Rs 1,846 per share on Monday morning.
Rakesh Jhunjhunwala adds more shares
Often called the big bull of domestic stock markets for his bullish calls on Indian equities, Rakesh Jhunjhunwala has upped his stake in Escorts to 5.68% from 5.22% earlier. Rakesh Jhunjhunwala now owns 75 lakh equity shares of the company, up 11 lakh from what was held at the end of the October-December quarter. The billionaire investor has owned a stake in the company since at least 2015. Earlier in the January-March quarter of 2020, stuck with the initial covid wave, Rakesh Jhunjhunwala had trimmed his holding in Escorts to 7.4% from 7.7% earlier. The big bull then trimmed his stake to 5.6% in the July-September quarter of 2020 and further to 4.8% in the October December quarter of 2021.
The value of Rakesh Jhunjhunwala’s stake in Escorts at today’s high stands at Rs 1,385.5 crore. Before raising his stake in the company, Rakesh Jhunjhunwala owned 64 lakh equity shares in Escorts.
Kubota stake increased
So far this year, Escorts’ share price has fallen 3.04%. The stock has fared better than the benchmark indices, Sensex and Nifty, both down nearly 7% each. Escorts, earlier last year, said that Japanese agricultural machinery manufacturer Kubota will take over as the co-promoter of the company, subject to a preferential issue of equity shares and an open offer. Kubota has also increased its stake in Escorts, according to the latest shareholding pattern. As of February 18 this year, the Japanese company owned a 16.73% stake in Escorts. Kubota has upped its shareholding by 6.73%. The Japanese firm has acquired more shares of Escorts through a preferential issue of shares. Kubota will further increase its stake through an open offer that is expected to be completed by March.
Should you buy?
Domestic brokerage firm Nirmal Bang reiterated its “Maintain” rating on the stock with a target price of Rs 1,900 per share. “We note that ESC is undergoing a significant change in its shareholding structure, with global company Kubota Corporation poised to become the major shareholder. This partnership could potentially lead to material benefit,” they said in a note. The brokerage firm, however, believes that execution risk persists and anticipated tangible benefits are likely to flow only in the medium to long term. “While the open offer price by Kubota at Rs 2,000 per share could provide some headroom for valuation catch-up, we believe that cyclical risks (moderating rural growth and peaking tractor demand cycle) could restrict outperformance in the near term.”