JP Associates a ‘poor quality’ stock? What Rakesh Jhunjhunwala bought may not be good bet for you

By: |
Updated: July 28, 2017 5:46:21 PM

Ashwani Gujral, the investment advisor believes that JP Associates is not a very good pick for the long term. Earlier last week, Jaiprakash Associates shares spiked 15% after the news broke out that the Indian investment maestro Rakesh Jhunjhunwala bought over 1% stake in the company.

JP Associates a poor quality stock, says expert Ashwani Gujral. Rakesh Jhunjhuwala had picked up 1% stake in the company (Image: Reuters)

Ashwani Gujral, the investment advisor believes that JP Associates is not a very good pick for the long term.  In conversation with CNBC TV-18, he observed that investors are buy poor quality stocks and get stuck, looking for answers. The expert said that such stocks are “trades”, and pegged the target at Rs 26. He added that one may end up with Rs 34, and if the investors make JP associates their core portfolio it will end up hurting them. At Friday’s close the stock was trading at Rs 29.5, up by more than 2.5% since the previous close.

Earlier last week, Jaiprakash Associates shares spiked 15% after the news broke out that the Indian investment maestro Rakesh Jhunjhunwala bought over 1% stake in the company in the April-June quarter as reported by The Economic Times and Dalal Street Investment Journal.

According to the news reports, Rakesh Jhunjhunwala’s total holding is worth Rs 57.5 crore. Rakesh Jhunjhunwala has picked up 2.5 crore shares in Jaiprakash Associates which accounts for 1.03% of the shareholding in the company, however, it is not known whether Jhunjhunwala owned any stake prior to the quarter as individual shareholding details show up in exchanges only if the total stake held is more than 1%.

Jaiprakash Associates is a reasonably diversified conglomerate with interests in engineering & construction, power, hospitality, roads & highways, IT, sports, etc was brought down by its real estate business following the burst of the housing bubble in 2008 and was further weakened due to considerable pressure on its cement business as well. The pause in the sale of its housing properties led to the company getting stuck in a vicious cycle of revenue loss, lack of funds, projects stuck midway, and failed debt repayments leading to further shortage of financing.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Gold futures slide, silver futures fall Rs 133 as global cues hurt
2What made Jeff Bezos trump Bill Gates as world’s richest person
3NPA woes continue at ICICI bank, GNPA at 8%