Ace investor Rakesh Jhunjhunwala is sitting on a profit of over Rs 42 crore from his investment in Escorts share in less than three months. On March 23, 2020, Escorts stock closed at Rs 551.30 on BSE. Jhunjhunwala held 91 lakh shares or 7.42% at the end of March quarter valuing his stake at Rs 50.16 crore. Jhunjhunwala first bought 50 lakh shares of the company in the September 2013 quarter.
Escorts share price climbed to a fresh 52-week high of Rs 1,015 on BSE today, which raised the value of his stake in the firm to Rs 92.36 crore.
That amounted to a profit of Rs 42.20 crore for the big bull since March 23 assuming his shareholding has not changed in the current quarter. Escorts stock gained 84.21% during the period.
Share price of Escorts has gained 85.58% in the last one year and risen 58% since the beginning of this year. The mid cap share has gained 8.29% in one week. Total 1.25 lakh shares changed hands amounting to turnover of Rs 12.47 crore on BSE.
Market cap of the firm stood at Rs 12,127 crore today. The stock hit its 52 week low of Rs 423.30 on June 18, 2020.
Among other investors, 28 mutual funds held 1.21 crore shares amounting to 9.94% stake for the quarter ended March 31, 2020. 198 foreign portfolio investors (FPIs) held 23.63 crore shares amounting to 19.28% stake in Q4. 23 financial institutions and banks held 8,565 shares during the same period.
The farm equipment and engineering products maker reported a 9.71 per cent rise in Q4 net profit at Rs 127.73 crore against Rs 116.42 crore profit in January-March period of 2018-19. Total income of the company fell to Rs 1,415.95 crore during the fourth quarter against Rs 1,668.72 crore in the corresponding period a year ago.
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For the full 2019-20 fiscal, the company posted a consolidated net profit of Rs 471.7 crore compared with Rs 477.9 crore in 2018-19. Total income for 2019-20 fiscal stood at Rs 5,907.69 crore against Rs 6,354.42 crore in 2018-19.
The firm has price to earnings ratio of 25.76 compared to industry PE of 27.73. On the other hand, its peer VST Tillers has PE ratio of 32.72. PE ratio is calculated by dividing the market price of a share by earnings per share. If a stock has PE ratio of 25, it means one needs to invest Rs 25 in the share to earn Rs 1.
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Escorts has a price to book ratio of 3.89 compared to P/B ratio of 1.88 for VST Tillers. P/B ratio compares the price of stock (market value) to its book (accounting value).
Ideally, price to book value of a stock should be higher than 1 but lesser than 3. A stock having book value higher than 1 is considered overvalued and conveys that the market is willing to pay more than each rupee of book value.
Escorts seems overvalued in comparison to VST Tillers when it comes to their price to book value. Book value of a company is measured by the difference between total assets and external liabilities.
Jhunjhunwala lost Rs 249 crore with this stock in a month