Ace Investor Mukul Agrawal Buys Stake in this Multibagger Stock, Dolly Khanna Trims Holding

It's that time of the year again where we get to see the portfolio changes of top investing gurus of India, for the most recent quarter.

Companies have to report the names of shareholders holding more than 1% stake in the firm, every quarter.

You see, there's a massive audience for posts like 'top stock picks of Vijay Kedia' or something similar popping up every day on your feeds. People want to believe that they will be able to beat the market by following a financial guru or that riches are just one stock pick away.

From an Indian market perspective, there's an endless supply of stock pickers out there. Ashish Kacholia, Vijay Kedia, Radhakishan Damani, among others are some of the most famous ones!

This list also includes Dolly Khanna and Mukul Agrawal.

Yesterday, a microcap company from the packaging and plastic industry filed its shareholding pattern for the period ended December 2023 and it was reported that ace investor Mukul Agrawal has bought a significant stake in it.

Before we move on to company details, let's look at who Mukul Agarwal is and what are his top stock picks.

Who is Mukul Agrawal?

Mukul Agrawal is a prominent investor in India, who is known for his microcap stocks and smallcap stock picks.

His style of investment involves a mix of offence and defence, with majority of time an offensive strategy after proper analysis and keeping two separate portfolios for investing and trading.

With over 55 stocks in the kitty, his portfolio is worth over Rs 47 billion (bn).

Which Stock did Mukul Agrawal Buy and Why?

The company in question is Prakash Pipes.

The latest shareholding pattern of Prakash Pipes shows that Agrawal bought over 1% stake in the company after September 2023.

He may already hold a stake in the company prior to this. But in the October-December 2023 quarter, Agrawal upped his stake and took his total holding in the company to 2.5%.

As of yesterday's closing, his stake in Prakash Pipes was valued at Rs 237 million (m).

Mukul Agrawal now owns 6,00,000 equity shares of Prakash Pipes.

Interestingly, ace investor Dolly Khanna also holds a fair amount in the company. But in the quarter gone by, she pared marginal stake from it, primarily to book profits and take some money off the table.

In the quarter under review, Dolly Khanna sold 0.1% in Prakash Pipes, taking her total stake to 3.14%, which is worth Rs 297 m as of yesterday's closing price.

(NOTE: Please don't confuse Prakash Pipes with Prakash Industries. Prakash Pipes is a company created out of a demerger from Prakash Industries... in which Dolly Khanna and Mukul Agrawal already hold stakes)

While we don't know the exact reason why Mukul Agrawal bought huge stake in Prakash Pipes, there are some reasons we can guess...

Prakash Pipes manufactures a wide range of products such as agri pipes, column pipes, plumbing pipes, casing pipes, SWR pipes, garden pipes and their related fittings. Its products are used in irrigation, drainage, housing, and sanitation.

The company has also ventured into flexible packaging with state-of-the-art plants.

Its manufactures high-performance barrier films and laminates. These are used in the packaging of food, beverages, oil, personal care, and pharmaceutical products.

One reason which justified Mukul Agrawal's bullish stance could be the Indian government's continuing focus on various initiatives like Jal Jeevan Mission, Swatch Bharat Abhiyan, sanitation, affordable housing and smart cities.

These initiatives are already driving the demand for PVC Pipes products and are expected to boost demand further in 2024.

The other reason could be sound financial performance. After delivering good numbers in FY23, Prakash Pipes has started the first half relatively better and is expected to surpass previous year's revenue and profit figures.

Financial Snapshot

Rs m, standalone	FY19	FY20	FY21	FY22	FY23
Net Sales	3,410	3,851	4,762	6,168	7,092
Growth (%)	-	13%	24%	30%	15%
Operating Profit	432	425	607	805	1,049
OPM (%)	13%	11%	13%	13%	15%
Net Profit	286	248	358	468	713
Net Margin (%)	8%	6%	8%	8%	10%
ROE (%)	64.3	22.4	22.1	21.9	27.7
ROCE (%)	70.4	29.2	31.7	32.1	35.1
Dividend (Rs)	1.2	1.2	1.2	1.2	1.2
Debt to Equity (x)	0.0	0.0	0.0	0.0	0.0

Data Source: Ace Equity

The company is currently expanding various range by installing new moulding machines.

It's also working on backward integration and increasing value-added products like printing inks, printing cylinders, etc. which helps the flexible packaging segment.

Organized players like Prakash Pipes have a big advantage here as the plastic sector is currently in a consolidation phase.

How Prakash Industries Share Price has Performed Recently

Reacting to the news of ace investor buying stake in it, Prakash Pipes share price gained over 6% today to touch a high of Rs 424.

It has a 52-week high of Rs 480 touched on 5 December 2023 and a 52-week low of Rs 134 touched on 17 January 2023.

In the past five days, the stock has gained 5%. In the past one year, the stock is up over 150%.

Here's a table comparing Prakash Pipes with its peers -

Comparative Analysis

Company	Prakash Pipes	Caprihans	Mold-Tek Packaging	Texmo Pipes	Nahar Poly Films
ROE (%)	27.7	-	16.1	0.9	5.8
ROCE (%)	35.1	35.3	19.3	13.2	7.6
Latest EPS (Rs)	31.1	55.8	22.2	3.2	1.1
TTM PE (x)	12.7	3.5	40.9	25.4	201.7
TTM Price to book (x)	2.9	-2.2	5.1	1.8	1.1
Dividend yield (%)	0.3	0.0	0.7	0.0	0.7
Industry PE	38.9
Industry PB	4.7

Data Source: Ace Equity

About Prakash Pipes

Prakash Pipes is engaged in the manufacturing of PVC pipes & fittings and packaging products.

As of FY23, the company has a production capacity of 60,000 TPA (pipes & fittings) and 19,200 TPA (flexible packaging).

To know more, check out Prakash Pipes 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...