NOT IndiGo or SpiceJet... Vijay Kedia Picks Fresh Stake in this Multibagger Airline Stock

Microcap megastar Ian Cassel put it beautifully when he said...

"You can borrow someone else's stock ideas but you can't borrow their conviction. True conviction can only be obtained by trusting your own research over that of others.

Do the work so you know when to sell. Do the work so you can hold. Do the work so you can stand alone."

You see, learning from the best investors is invaluable, but blindly replicating their trades can be fraught with pitfalls.

With all this said, in today's article, we'll look at an airline stock that has been buzzing this week after prominent investor Vijay Kedia picked up a MASSIVE stake in it.

It's not IndiGo...

It's not even SpiceJet...

Nor is it the cash strapped Jet Airways.

In fact, the airline stock that Vijay Kedia bought recently is up around 190% in the past one year.

Before we move on to stock specifics, let's look at who Vijay Kedia is first.

Who is Vijay Kedia?

Vijay Kishanlal Kedia is an Indian investor and trader based out of Mumbai. His company - Kedia Securities - is the largest shareholder (after the promoter) in several listed companies.

Kedia has been involved in the Indian stock market since the age of 19. He has been described by many as a 'market master'.

To point out a few of his investments, he bought ACC at Rs 300 in 1992-93 and sold the stock around Rs 3,000 within a year and a half.

During the years 2004 and 2005, he picked several multibagger stocks which gave returns of over 1,000% in the next 10-12 years. Few of these stocks were Atul Auto, Aegis Logistics, and Cera Sanitary.

Which Multibagger Airline Stock did Vijay Kedia Buy and Why?

The stock in question is Global Vectra Helicorp.

Incorporated in 1988, Global Vectra Helicorp provides charter hire of helicopter services.

The company is part of the Vectra group and is engaged in helicopter charter services for offshore and onshore transportation, servicing the oil and gas exploration and production sector in India.

The latest shareholding pattern filed by the company shows ace investor Vijay Kedia's name in the shareholders list.

Every quarter, investors holding over 1% stake in a company must share their portfolio moves as part of their filings.

These filings can be goldmines, providing unique insights into recent decisions made by some of the best money managers.

In the preceding quarter, Vijay Kedia's name was missing from the shareholders list.

But the recent quarterly filing shows that he holds around 2.9% stake in the airline stock.

Kedia holds shares of Global Vectra in two tranches - 1.46% in Kedia Securities Private Ltd. and another 1.46% under his own name.

In total, he holds 409,300 shares worth Rs 65.1 million if we consider the current market price.

Promoters of the company hold 75% stake while the rest is held by institutional and non-institutional investors.

While we do not know for sure why exactly Vijay Kedia bought into this counter, there are some explanations...

The first and foremost reason being the overall bullish sentiment around the sector.

You see, India is set to become the world's third-largest air passenger market by 2030.

The aviation market, estimated at US$ 13.5 billion (bn) in 2024, is projected to reach US$ 23.2 bn by 2029, implying a compounded annual growth rate (CAGR) of 11.4% during 2024-2029.

No nation in the world is buying as many aeroplanes as India.

Now, the first thing to keep in mind here is that the aviation industry is not just limited to players like IndiGo or SpiceJet or unlisted entities like Vistara, Air India and the likes.

There are always some or the other backdoor plays to every sector. In case of Global Vectra, the company is the only entity operating in the niche sector which provides a lot of services related to aviation industry.

It provides services to its clients under long-term contracts. Think about companies involved in offshore exploration using helicopter services extensively.

It also provides support to state governments, helping them in geophysical surveys, powerline inspections, remote location freight services, VIP charter, aerial photography, among other things.

Moreover, the company has an edge in the pilgrim tourism space. You see, people often fly in helicopters as a one-time experience for visiting pilgrim places like Vaishno Devi Yatra, Shri Amarnathji Yatra, Kedarnath Yatra, etc.

Global Vectra has an established presence in this space.

The other reason why Vijay Kedia might have turned bullish on the company is because of the upcoming elections.

Every once in a while, we come across investing themes that affect stocks for a short period of time... say for example a couple of months. Think the world cup investing theme, IPL investing theme, or the Ram Mandir inauguration which helped many stocks scale their business.

For Global Vectra, the company could see a sharp pickup in activity as helicopter charter services usually get a bump during the general elections season.

All being said, the company is still a loss-making entity and has high debt on its books. Most of the debt comprises of lease liability, which is a common thing for airline companies.

Financial Snapshot

Rs m, standalone	FY19	FY20	FY21	FY22	FY23
Net Sales	4,803	4,567	2,953	3,352	4,111
Growth (%)	19%	-5%	-35%	14%	23%
Operating Profit	578	1,207	553	899	779
OPM (%)	12%	26%	19%	27%	19%
Net Profit	70	21	-293	-49	-166
Net Margin (%)	1%	0%	-10%	-1%	-4%
ROE (%)	11.9	2.9	-46.1	-11.1	-48.2
ROCE (%)	8.1	14.2	-21.4	9.7	3.0
Dividend (Rs)	0.0	0.0	0.0	0.0	0.0
Debt to Equity (x)	2.4	0.9	1.2	1.4	1.6

Data Source: Ace Equity

It remains to be seen whether Vijay Kedia's huge bet will pay off or not. In the meantime, you can also check the other stocks in Vijay Kedia's portfolio on Equitymaster stock screener.

How Global Vectra Share Price has Performed Recently

In the past 5 days, Global Vectra share price is up 19%. In the past one month, shares are up around 36%.

Global Vectra has a 52-week high of Rs 159 touched today and a 52-week low of Rs 53 touched on 24 April 2023.

In 2024 so far, shares of the company are up 22% while in the past one year, shares have rallied around 190%.

Here's a table comparing Global Vectra with its peers -

Comparative Analysis

Company	Global Vectra	IndiGo	SpiceJet	Jet Airways	Taneja Aerospace
ROE (%)	-48.2	0.0	0.0	5.7	10.1
ROCE (%)	2.3	0.0	0.0	5.7	15.1
Latest EPS (Rs)	3.7	186.3	-1.3	-58.3	4.5
TTM PE (x)	41.3	20.4	0.0	0.0	91.1
TTM Price to book (x)	11.5	NA	-2.0	0.0	7.9
Dividend yield (%)	0.0	0.0	0.0	0.0	1.0
Industry PE	20.6
Industry PB	NA

Data Source: Ace Equity

About Global Vectra Helicorp

The company is the largest private Helicopter services company in India with a safety record.

It maintains full compliance to DGCA and ICAO Standard Safety Management System, including having over 20 IATA certified aviation auditors on staff.

Company provides helicopter services for the local oil and gas industry and remain the largest operator of this type.

Some of its major clients include ONGC, CAIRN India, Japan Drilling Company, Reliance, Oil India, Schlumberger, Transocean, Dolphin Geophysical and Baker Hughes.

To know more, check out Global Vectra's financial factsheet and its latest quarterly results.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...