Dolly Khanna, whose portfolio value tops Rs 600 crore, is known for her ability to spot multi-baggers. One such mid-cap Rain Industries Ltd, picked by Rajiv Khanna, who invests in the name of his wife Dolly, has given more than 520% returns since January. Even as some investors might rue the missed opportunity, Motilal Oswal has come out with a buy rating on the shares, after the company reported very strong earnings growth in the September quarter, driven by structural changes in market dynamics for its carbon business. Profit during the quarter grew by 93.3 percent to Rs 253.4 crore and revenue increased 36.5 percent to Rs 3,050.8 crore, both compared to figures in the previous fiscal.
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Motilal Oswal has raised its target price on the shares to Rs 492 (from Rs 362 per share) following increase in EBITDA (earnings before interest, tax, depreciation and amortisation) estimates and carbon margins. Interestingly, Dolly Khanna had increased her stake to 2.04% as at the end of September 2017, from 1.27% in the June quarter.
Motilal Oswal said the market is now facing shortage of calcined petroleum coke (CPC), while the GPC (green petroleum coke – the key input) market is not as tight. Further, Rain Industries has invested in desulfurisation plants and mixers, which allow it to use higher sulfur GPC relative to competitors.
Rain Industries Ltd shares were trading at Rs 353.8, up by more than 3.5% since the previous close. Motilal Oswal’s target price implies an upside of more than 30% from the current market prices. Rain Industries Limited formerly known as Rain Commodities Limited is mainly engaged in the production of Cement, Calcined Petroleum Coke and Power and high-quality basic and specialty chemicals. In the last one month alone, the scrip has risen by more than 87%. Notably, the BSE Midcap index, which is at near all-time high levels, has returned 36% in the year so far.