Ace investor Dolly Khanna’s portfolio has seen some quick changes in the latest quarter. According to shareholding data for the latest quarter ended 30th June 2022, the investor has made fresh entries in two stocks. While one of the stocks in Dolly Khanna portfolio is related to petrochemical industry and is already a multibagger, the second one appears to have been purchased to test waters with only tracking quantity.
Dolly Khanna portfolio – Biggest allocation to Chennai Petro
According to the latest disclosures, Dolly Khanna has picked up a 3.3% equity stake in south-based Chennai Petroleum Corporation Limited (NSE: CHENNPETRO). The investor purchased 4,869,474 shares during the quarter amounting to INR129.5 crores, reveals TrendLyne. Interestingly, this was also the quarter when the stock price went ballistic. Even though the stock was caught in a market wide correction in June, it managed to post nearly 50% gains in the latest quarter.
The stock has been a multibagger for early investors and even after a 26% correction in the last month, its 12 month returns stand tall at 95%. Clearly, Dolly Khanna sees more upside from here.
Chennai Petroleum – a subsidiary of Indian Oil Corporation (IOC) – is engaged in oil refining and production and sale of petroleum products including lubricating oil additives. The company has seen anaemic sales in past years but it has posted strong gains in revenue and profits in FY2022.
At the current market price of INR266 per share, the stock is still cheap and trades at a Price to Earnings (P/E) multiple of less than 3 while also boasting of high Return on Equity (ROE) of nearly 56% and high Return on Capital Employed (ROCE) of nearly 20%. Price to Sales (P/S) – another parameter for undervaluation – indicates the stock is available at attractive valuations. Nevertheless, its Debt to Equity (D/E) ratio is quite high at 3.3 and it is worth highlighting that the company operates in a cyclical industry.
With a position of INR129.5 crores, Chennai Petro takes the centre stage in Dolly Khanna portfolio with the biggest position. This even surpasses Polyplex Corporation where the ace investor has been invested for over a year. It’ll be interesting to see how this position develops from here.
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National Oxygen – Another addition in Dolly Khanna portfolio
Another addition to Dolly Khanna portfolio in the latest quarter is an obscure small cap named National Oxygen. During the quarter the investor purchased 51,784 shares which are roughly valued at INR53.8 lakh. With this purchase, Dolly Khanna now owns 1.1% equity in the Chennai-based company.
The company is a manufacturer of industrial gases like Oxygen and Nitrogen and is a supplier to manufacturing industries as well as hospitals. Dolly Khanna, whose portfolio is managed by her husband Rajiv Khanna, is a well-known stock picker in the small cap space and this unique trait is once again highlighted in the latest pick. National Oxygen has a market cap of nearly INR50 crore after posting 125% rally in the last 12 months.
The stock trades at a PE ratio of 6.5 and boasts of high ROCE of 31%. It is also important to note that this ROCE is historically high and is more likely to go down then move up or sustain at current levels. That probably explains the investor’s relatively small position size. Dolly Khanna appears to be testing waters with this tracking position and thus, we may see either a consolidation or complete removal of this position in the coming quarters. Any move to purge the position will not be surprising as the investor is known for high churn in her portfolio.
