Manufacturing’s Smart Money Exodus
Manufacturing has been one of the most followed verticals when it comes to the stock markets. With governments pushing for Make in India and strong incentives, the sector has been on the radar for many investors.
However, two manufacturing stocks just fell out of favour for 2 of the most followed investors of India. Sunil Singhania’s Abakkus fund fell below one per cent in a steel and power company from Chhattisgarh. And Dolly Khanna, the Chennai investor with a long record of spotting small cap value, dropped below one per cent in a maker of carbon products and cement. Both names are followed closely by retail investors who like to track where the smart money is going.
Two exits, same quarter, same broad sector. Yet they are not the same story at all. One is a patient goodbye to a stock that has already made its money. The other is possibly a quick change of heart on a bet that was only a few months old. Here is what the numbers say, and what may have driven each decision.
#1 Sarda Energy & Minerals Ltd: From Pure Steel to Zero-Debt Energy Dominance
Incorporated in 1973 as the flagship of the Raipur based Sarda Group, Sarda Energy and Minerals began life as a steel and ferro alloys maker. It still rolls long steel products and remains one of India’s larger exporters of ferro alloys. But the business investors are paying for today is a very different one.
With a market cap of Rs 17,505 cr, over the last few years the company has turned itself into an energy and mining group. It runs captive thermal and hydro power, owns iron ore and coal mines, and feeds much of its own raw material needs. The defining move was the purchase of SKS Power Generation, a 600 MW plant in Chhattisgarh, picked up through the insolvency process.
In February 2026 the Supreme Court cleared the last legal challenge to that deal, and the company now plans to take the site towards 1,200 MW by the end of the decade. Add a new 24.9 MW hydro unit commissioned in 2025 and a 66 MW hydro project in Arunachal Pradesh, and energy now throws off close to two thirds of the company’s operating profit.
That shift has done wonders for the accounts. Thermal generation touched a record level in FY26, hydro output hit an all-time high, and net debt fell to just Rs 215 cr by March 2026, down from Rs 1,566 cr a year earlier. In plain terms, the balance sheet is now close to debt free.
Decoding the Abakkus Exit: Why Singhania Cashed Out
Sunil Singhania’s Abakkus Fund held a stake in the company since March 2021 per Trendlyne, which, according to recent June 2026 filings, has dropped below 1%. This could mean a partial or complete set off.
Let us look at the financials of the company to see if we can spot a reason for Singhania’s exit.
| Financial Year | FY21 | FY22 | FY23 | FY24 | FY25 | FY26 | 5-yr CAGR |
| Sales (Rs Cr) | 2,199 | 3,914 | 4,212 | 3,868 | 4,643 | 5,690 | 21% |
| EBITDA (Rs Cr) | 520 | 1,355 | 1,060 | 798 | 1,237 | 1,787 | 28% |
| Net Profit (Rs Cr) | 376 | 807 | 604 | 524 | 702 | 1,109 | 24% |
The five-year record is the kind that turns heads. Sales have compounded at about 21% compounded rate, operating profit at about 28%, and net profit at about 24%. Profit has nearly tripled over the period.
In FY26 alone, profit after tax jumped 58% to Rs 1,109 cr. Return on equity and return on capital employed (ROCE) both sat near 18 to 19 per cent, and the board pushed through a record dividend. Promoters hold 73.16 per cent of the company and have pledged none of it. For a firm once seen as a small, cyclical steel maker, that is a big jump in quality.
So why would a sharp investor sell into a story this good? Look at how Abakkus went about it. Its Emerging Opportunities Fund held 2.19% of Sarda back in September 2023. Quarter after quarter, it trimmed, first to 1.89%, then 1.73%, then 1.46%, and down to 1.03% by March 2026.
By June it had slipped below the 1%. This was not a rushed exit. It was a slow, deliberate sale into a rising price, spread over more than two years. As the energy story played out and the stock re-rated, the fund appears to have banked its gains in stages. In all probability, that is a feature of good investing, not particularly a warning about the business.
660% Run and the Looming Cyclical Cooling
The share price of Sarda Energy was about Rs 65 in July 2021 and as on 8th July 2026 it was Rs 497, which is over a 660% jump in 5 years.
At the current price of Rs 497, the stock is trading at a discount of 22% from its all-time high of Rs 640.
Regarding valuations, the company’s share is trading at a PE of 16x against the current market median of 18x. The 10-year median PE for the company is 10x while the industry median for the same period is 14x.
That is not demanding for a business growing this fast. But it is well above the modest multiples the stock wore in its plainer, steel only years, when investors treated it as a pure commodity play. Put simply, buyers today are paying for the energy transition, not the old cycle.
The risks however are also real, and the company is honest about them. Steel is still cyclical, and margins slipped through the second half of FY26 as steel prices stayed soft and cheaper imports weighed on the market. One 300 MW power turbine went in for planned maintenance, which trimmed output.
The plan to expand SKS Power still needs environmental clearances. Mining volumes keep bumping against approved annual limits. None of this breaks the story, but it does explain why an investor sitting on large, multi-year gains might choose to take money off the table while the steel side cools.
#2 Rain Industries: A Fragile Cyclical Under Pressure
Incorporated in 1974 and based in Hyderabad, Rain Industries was known as Rain Commodities until 2013. It is a global maker of carbon products such as calcined petroleum coke and coal tar pitch, along with speciality chemicals and cement sold under the Priya Cement brand.
With a market cap of Rs 6,865 cr, the company’s customers sit in aluminium, graphite electrodes, chemicals and construction, and it runs plants across the United States, Europe and India. It is, in short, a classic cyclical, tied to heavy industry and the ups and downs of global commodity spreads.
The 90-Day Flip: Dolly Khanna’s Unexpected Reversal
Dolly Khanna’s link with Rain is not new. She first bought in around 2017, built the holding to more than two per cent, and later sold out. So, it wasn’t much of a surprise when her name appeared again onto Rain’s share register in the March 2026 quarter, with a 1.05 per cent stake worth about Rs 43 cr. The stock rose nearly six per cent the day that filing showed up. Retail investors watch her moves closely, and a fresh Dolly Khanna name tends to move the needle.
However, per the June 2026 quarter filings, her holding has slipped back below 1%, hinting at a partial or complete sell off. The position was only one quarter old and was already being cut. For an investor known for her patience, that is a surprisingly short stay, and it is the part of this story worth thinking hardest about.
Before the financials, one note. Rain reports on a calendar year, from January to December, rather than the usual April to March. So, the columns below run by calendar year.
| Calendar Year | CY20 | CY21 | CY22 | CY23 | CY24 | CY25 | 5-Yr CAGR |
| Sales (Rs Cr) | 10,465 | 14,527 | 21,011 | 18,141 | 15,374 | 16,946 | 10% |
| EBITDA (Rs Cr) | 1,677 | 2,360 | 3,537 | 933 | 1,274 | 2,137 | 5% |
| Net Profit (Rs Cr) | 588 | 694 | 1,577 | -796 | -450 | 136 | Drop |
Rain lost money in 2023 and again in 2024, so a five-year profit growth number would not be of much use here. The company only clawed back to a small profit of Rs 136 cr in 2025, Sales have grown at roughly 10% on a compounded basis, but the ride has been bumpy, swinging from a boom in 2022 to two hard years and then a fragile recovery. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) tells the same jumpy tale, collapsing from Rs 3,537 cr in 2022 to Rs 933 cr in 2023 before crawling back.
Debt, Baggage, and the Russian Re-domiciliation Overhang
The share price of Rain Industries was about Rs 235 in July 2021 and as on 8th July 2026 it was Rs 204, which is again a drop in 5 years.
The stock trades at roughly 0.9 times its book value, which hints at a good bargain. Currently the share is trading at a PE of 23x while the industry median is just 16x. The 10-year median PE for the company is 9x and the industry median for the same period is 13x.
Return on equity has been negative on a three-year view. Debt is high and interest cover is thin. And the big institutions have been leaving, with ICICI Prudential through its various schemes held over 4% in the stock per the filing for the quarter ending December 2025. The June 2026 filings reveal that this holding has now dropped to 1.5%.
The March 2026 quarter however brought a 20% jump in sales and a swing back to profit, and the stock has more than doubled off its December low near Rs 100 to its current Rs 204. But the company still carries the baggage of a cyclical carbon business, heavy debt, and a web of overseas units, including entities tangled up in Russia related re-domiciliation issues that management is still sorting out.
For a nimble investor, a stock that has already doubled, with risks like these still on the table, is an easy one to book and walk away from. That may be all Dolly Khanna’s quick exit is really telling us.
Discipline vs. Doubt
These two departures carry very different lessons. Singhania’s step back from Sarda looks like textbook discipline. A long-run winner whose profit nearly tripled, sold down slowly over more than two years as the price ran ahead and the steel cycle cooled. It says little that is bad about the company and a lot about valuation sense.
Dolly Khanna’s exit from Rain is the opposite in spirit. A quick in and out that suggests the original idea either played out fast or looked shakier on a second read.
For the rest of us, the takeaway is simple. A big investor leaving is a clue, not a verdict. Sarda is a strong operator that has become a good deal pricier. Rain is a cheap looking cyclical that is cheap for solid reasons. Neither exit tells you what to do next. It only tells you to ask sharper questions before you act, because the same three words on a filing, sold below one per cent, can mean two completely different things. A smart idea would be to add these to stocks to a watchlist and keep an eye on them.
Disclaimer:
Note: We have relied on data from http://www.Screener.in and http://www.trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, he was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein.