By Suhel Khan
In an interesting development, PPFAS (Parag Parikh Financial Advisory Services) has just revealed in their December 2024 factsheet a significant move that’s got everyone talking about it. The fund house, known for its conservative stock selection and value-focused philosophy, has acquired a substantial 2% stake in a well-known stock, which the market considers a momentum stock… Thus, raising a lot of questions.
PPFAS along with its lead fund manager, well known Rajeev Thakkar, has built its reputation following the principles of value investing – focusing on fundamentally strong companies trading below their intrinsic value. While the fund has also simultaneously picked up a 0.2% stake in a healthcare company further diversifying its portfolio, it’s the first pick that has warmed up the discussion groups.
The momentum stock in question is a well-known company playing across Logistics, Hospitality, Real Estate, Technology, Farm Equipment, Automobiles and more…
While the healthcare company is a leader in providing economical healthcare services, with a network of multispecialty and super specialty hospitals spread across multiple locations. In December 2023, it also incorporated a wholly owned subsidiary that marked its foray into the IT sector.
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Let’s take a closer look at the two stocks PPFAS has added to their strategy.
Mahindra & Mahindra Ltd (M&M)
One of the most admired companies in India, M&M is a well diversified company with presence across various sectors. It has presence in automobiles, financial services, hospitality, infrastructure, logistics, IT businesses, and defence among others through its subsidiaries. Recently M&M has been in the news for the launch of its new electric vehicles.
With a market cap of Rs 3,84, 605 cr, the company’s stock is considered by most in the market as a “momentum stock” as it exhibits strong price momentum, with its stock price trading above key moving averages and showing significant recent gains, indicating positive market sentiment and potential for further upward movement.
The company has shown exceptional efficiency in using both its capital and shareholders’ money, generating returns that are significantly higher than most peers.
M&M delivered a ROCE (Return on Capital Employed) of 13.6% which means for every Rs 100 invested in the business (capital),
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