Sunil Singhania, the founder of Abakkus Asset Manager LLP, is an old-school investor. With a career spanning almost three decades tracking equity markets, he has built a reputation for finding diamonds in the rough – smaller companies with strong financials, the ones that are just starting to see strong growth momentum.
As the head of the Abakkus Fund, Singhania has invested primarily in small and micro-caps, and some mid-cap companies. The fund currently has a net worth of Rs 2,874.6 crore and publicly holds 23 stocks. (You can now invest in a shadow basket based on Singhania’s portfolio, available on Starfolio, which is updated and rebalanced as per the superstar investor’s portfolio).
Mastek, Anup Engineering, and IIFL Securities are among the oldest stocks in the portfolio. The best performing companies in the Abakkus portfolio include Dynamatic Technologies, Anup Engineering, HG Infra Engineering, and Technocraft Industries.
Dynamatic Tech, AGI Greenpac among top performers in Abakkus’ portfolio
Dynamatic Technologies has been a standout gainer for Abakkus as it has surged by 1082.7%, since the time of purchase in Q2FY22. The fund holds a 2.9% stake in the industrial machinery company.
Singhania’s Abakkus Fund bought stakes in industrial machinery company Anup Engineering in Q2FY20, HG Infra Engineering (construction & engineering firm), and Technocraft Industries (iron & steel products maker) in Q3FY21. The share prices of these companies have increased 727.8%, 710.4%, and 663.3% respectively since the time of purchase.
The fund also booked profits in containers & packaging firm AGI Greenpac, with a rise of 732.4% from the time of purchase in Q4FY19 till Q4FY24. However, he reduced his stake in the company to below 1% in the last quarter. Over the past year, the company has underperformed its industry by 22.2 percentage points.
Other top performers include Ion Exchange, Sarda Energy, and Carysil, which have risen by 622.4%, 456.3%, and 358.6%, respectively, since the time of purchase.
Rupa & Co and Uniparts India currently the only losers in Abakkus portfolio
Singhania’s track record of choosing good companies still looks unbroken. Most companies in the Abakkus portfolio have witnessed a share price rise since purchase. The exceptions here are Uniparts India (heavy electrical equipment firm) and Rupa & Co (other apparels & accessories maker), the current worst performers. Rupa has fallen by 13% since the time of purchase, and Uniparts fell marginally by 0.2%. The companies have underperformed their respective industries by 19% and 179.1% over the past year.
Some portfolio stocks are industry underperformers despite gains
Singhania's portfolio includes several companies that have outperformed their industries over the past year. Top outperformers include EMS, J Kumar Infraprojects, and DCM Shriram, outperforming the non-electrical utilities, construction & engineering, and diversified industries by 86.8%, 75.3%, and 52.2%, respectively.
This is followed by capital markets firm IIFL Securities and specialty retail company Ethos, which also surged in the past year. These companies outperformed their respective industries by 47.1% and 44.4%.
Meanwhile, Uniparts India, PSP Projects, Route Mobile, Dreamfolks Services, and Siyaram Silk Mills significantly underperformed the heavy electrical equipment, construction & engineering, internet software & services, travel support services, and textiles industries by 179.1%, 118.9%, 91.9%, 81.4%, and 75.8%, respectively, in the past year.
Software & services, general industrials and cement are among Singhania’s preferred sectors
Sunil Singhania has holdings in companies across different sectors. His most preferred sector currently is software & services with an investment aggregating to Rs 494 crore. This is followed by general industrials, cement and construction, and metals & mining sectors, with holdings aggregating to Rs 484.5 crore, Rs 444.7 crore, and Rs 341 crore, respectively.
Singhania prefers software & services, general industrials, cement sectors
Meanwhile, Singhania’s least preferred sectors are diversified, FMCG, and food beverages & tobacco, with investments of Rs 23.5 crore, Rs 37.6 crore and Rs 58.2 crore, respectively.
Singhania’s Abakkus Fund added three new companies to his portfolio in FY24
The marquee investor made a few additions to his portfolio in FY24. These are Shriram Pistons & Rings (industrial machinery company), EMS (non-electrical utilities firm), and TTK Healthcare (diversified company). Abakkus Fund currently holds 2.3%, 1.4%, and 1.1% stakes respectively, in these companies.
New additions to the portfolio in FY24
Most companies in the Abakkus portfolio were profitable last quarter
Most companies in the Abakkus portfolio that announced Q4FY24 results recorded profits in the quarter. Among them, seventeen companies reported YoY growth in net profit, while ten saw a smaller profit compared to the previous year’s quarter. Industrial machinery manufacturer Dynamatic Technologies profit grew 225.2% YoY to Rs 57.1 crore while its revenue improved 0.7%. Capital markets company IIFL Securities profit increased by 108.3% YoY to Rs 179.9 crore during the quarter. The Anup Engineering saw a 108% YoY growth in profit to Rs 43 crore.
Dynamatic Tech, IIFL Securities, Anup Engineering record profit growth in Q4
Dreamfolks Services (travel support company), Ion Exchange (non-electrical utilities company), and Hindware Home Innovation (household appliances firm) reported a fall in net profit despite a rise in revenue. AGI Greenpac (containers & packaging company), HIL (cement company), PSP Projects (construction & engineering company), and Uniparts India (heavy electrical equipment manufacturer) reported revenue declines as well.
Dynamatic Tech, Technocraft, Shriram Pistons have high EPS TTM
Dynamatic Technologies (industrial machinery company) had the highest basic EPS TTM of Rs 179.4 among the portfolio companies, followed by Technocraft Industries (Rs 115.1), Shriram Pistons & Rings (Rs 100.5), Mastek (Rs 97.3) and HG Infra Engineering (Rs 82.6).
A big chunk (71.4%) of the companies in the ace investor’s portfolio trade in the PE Sell Zone due to rising PEs, while 17.9% are in the Neutral Zone. Only 10.7% are in the PE Buy Zone.
Route Mobile and Stylam Industries are the companies trading in the Buy Zone. Dynamatic Technologies, AGI Greenpac, Siyaram Silk Mills, are among the companies trading in the Neutral Zone.
Most stocks from the portfolio trade in the Sell Zone, few in the Buy Zone
Meanwhile, stocks in the PE Sell Zone include Jubilant Pharmova, Hindware Home Innovation HIL, and Ion Exchange (India).
How volatile is Singhania’s portfolio?
The volatility of Singhania’s portfolio over the year is lower than the benchmark index, and for the quarter it is in line with the index, which indicates that the marquee investor is somewhat risk averse despite his preference for smallcap and midcap stocks. Over the year, the beta for all stocks in Abakkus’ portfolio is below 1. 12 out of 28 stocks have a beta greater than one in a quarter. The average beta of the portfolio for the year is 0.8.
Singhania remains true to his reputation as he continues to prefer small companies with strong fundamentals that are relatively stable.
