Mukul Agrawal Adds 5% Stake in Railway Stock that Rallied Over 500% in a Year

The most successful investors in the world have been able to outperform the market repeatedly, but they did so with a wide range of investment strategies and philosophies.

Successful investors often follow a disciplined, long-term approach to investing, which helps them avoid impulsive decisions and ride out market fluctuations.

They have accumulated vast fortunes due to their successful investing strategies.

Some relied almost solely on their gut feelings when choosing stocks, while others developed novel and creative approaches to manage their portfolios.

However, the ability to outperform the market continuously is something they all have in common.

Acing this strategy is a challenge, so people usually follow their portfolio to earn such a fortune.

For such investors, ace investor Mukul Agarwal recently added a railway stock to his portfolio.

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 the majority of the time an offensive strategy after proper analysis and keeping two separate portfolios for investing and trading.

Which Multibagger Stock Did Mukul Agrawal Buy and Why?

The stock in question is Oriental Rail Infrastructure.

Oriental Rail Infrastructure specializes in the manufacturing, procurement and distribution of various products, including Recron, seat and berth components, lavatory doors, and compreg boards within the rail infrastructure sector.

The latest shareholding pattern of Oriental Rail Infrastructure shows that Agrawal holds a 5.5% stake in the company as of the March 2024 quarter.

As of yesterday's closing (10 April 2024), his holding of 3.4 million (m) shares is valued at Rs 862 m.

This stake acquisition follows Oriental Rail Infrastructure's announcement on 22 February 2024 regarding the approval of the allotment of equity shares and warrants convertible into equity shares.

Agrawal participated in this allotment, acquiring 3.4 m shares at the price of Rs 169 per share.

Listed companies have to report details of shareholders who own more than 1% stake in a company.

Notably, in the December 2023 quarter, his name was missing from the list of shareholders.

While we don't know why he added shares of Valiant Communications, there are some reasons that we can guess.

#1 Consecutive Order Wins

One of the key reasons behind the ace investor's stake acquisition in Oriental Rail Infrastructure could be the series of significant contract wins and order expansions that the company secured in recent months.

On 13 March 2024, Oriental Rail Infrastructure's subsidiary, Orient Foundry Pvt., renegotiated a contract with Indian Railways, increasing its value to Rs 12.5 bn.

Originally, involving the manufacture and supply of 2,964 BOXNHL wagons, the revised contract now includes 3,055 wagons, indicating a substantial expansion of the project scope.

Before this, on 26 February 2024, the company clinched an order worth Rs 127.9 million (m) from Indian Railways for the manufacturing and supply of 208 sets of 'Seat and Berths' for LWACCN coaches. The expected completion date for this order is 24 December 2024.

Notably, in December 2023, Oriental Rail Infrastructure secured a landmark order from Indian Railways through its wholly-owned subsidiary, Oriental Foundry Private Limited.

The order, valued at a staggering Rs 4,850 m, is significant, representing more than half the size of the company itself. This monumental deal involves the manufacture and supply of 1,200 BOXNS wagons, signifying a substantial milestone and potential game-changer for the company.

The consecutive wins of these high-value contracts and the expansion of project scopes could have significantly bolstered investor confidence in Oriental Rail Infrastructure's growth prospects.

#2 Strong growth Prospects

On 26 February 2024, Prime Minister Narendra Modi inaugurated and laid the foundation stone for over 2,000 railway infrastructure projects valued at approximately Rs 410 billion (bn).

Notably, these projects include the redevelopment of 553 railway stations as part of the second phase of the Amrit Bharat Station Scheme.

This ambitious initiative aims to enhance the infrastructure and amenities of railway stations across the country's network, with a focus on creating integrated 'city centres' that seamlessly connect both sides of urban areas.

The upgraded stations will feature improved passenger amenities such as roof plazas, modern facades, intermodal connectivity, and recreational areas for children.

This will directly benefit Oriental Rail Infrastructure. As a specialist in manufacturing and supplying various railway infrastructure components, including recron, seat and berth components, lavatory doors, and compreg boards, Oriental Rail Infrastructure is poised to capitalize on the increased demand for its products and services.

This can be another reason why ace investor added the stock.

A Look at the Financials

Over the past three years, the company has shown robust revenue growth, with a CAGR of 13.8%, indicating a thriving and expanding business.

However, there has been a notable decline in net profit, dropping from Rs 154 m in FY21 to Rs 32 m in FY23.

This was largely due to the nearly doubled interest expense, which rose from Rs 82 m in FY21 to Rs 160 m in 2023.

Financial Snapshot (2021-23)

(Rs m, Consolidated)	FY21	FY22	FY23
Net sales	2,202.0	1,726.0	3,251.0
Sales growth (%)	-	-21.2	88.4
Net profit	154.0	156.0	32.0
Net profit margin (%)	7.0	9.0	1.0

Source: Equitymaster

Further, in December 2023 quarter, the company reported a 38% YoY rise in revenue at Rs 147.2 m. Meanwhile the net profit for the quarter came in at Rs 125 m, steeply higher from Rs 19.8 m a year back.

How Oriental Rail Infrastructure Shares Have Performed Recently

In the past one year, shares of Oriental Rail Infrastructure have gained 552%. In the past six months, the stock has gained 147%.

It has a 52-week high of Rs 302.4 touched on 5 January 2024 and a 52-week low of Rs 33.5 touched on 3 May 2023.

It is currently trading at a PE (Price to Earnings) multiple of 939x.

About Oriental Rail Infrastructure

Oriental Rail Infrastructure Limited, an India-based company, is involved in the manufacturing, buying, and selling of various products such as Recron, seat & berth components, lavatory doors, and Compreg Boards.

Additionally, the company engages in the trading of timber woods, ferrous and nonferrous metals, casting tools, slabs, rods, and other ferrous and nonferrous products.

Serving both domestic and international markets, its products find application across all types of railway coaches, including premium trains like Rajdhani Express & Duronto Express, as well as regular and local passenger trains.

Furthermore, the company offers artificial leather for consumer products under the brand name ORVIN.

For more details, see the Oriental Rail Infrastructure company fact sheet and quarterly results.

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