Top 3 Stocks Promoters Bought During the Election Stock Market Crash

From election induced volatility to Modi's ultimate victory... a lot has changed in the past two trading sessions.

On Monday this week, Indian benchmark Nifty 50 surged past the 23,000 level while the BSE Sensex crossed the 76,000 level.

Buoyed by exit polls predicting a third term for Modi, everything felt good when stocks were going up on Monday.

Little did investors know that the actual counting results on the next day would be so nail biting.

As I write this, the BSE Sensex has crashed more than 5,000 points while the Nifty registered one of the biggest falls in its history.

A stable government at the Centre bodes well for economic reforms and some bold steps. However, with exit polls predicting a very close victory for Modi, it's better to take the reform theme with a pinch of salt.

For the next few days, everyone and their uncles would be looking for stocks to buy in this severe market crash.

While we've mentioned the beneficiaries of Modi 3.0 in many of our previous editorials leading up to the June 2024 elections, it's now time to focus on 'apolitical stocks'.

Keeping the bottom-up investing approach in mind, let's look at the top stocks that promoters or insiders of the company bought during the sharp fall.

This data is sourced from the official BSE website where promoters or insiders have to disclose their day-to-day transactions.

#1 Ester Industries

First on this list is Ester Industries.

The company is engaged in the manufacture of polyester films, specialty polymers, and polyester chips. It manufactures and markets its polyester films under the brand 'UmaPET'.

The company serves varying markets like food packaging, processed food, fresh food, food on the go, shelf-stable, ready to eat, liquids, beverage packaging, and beverage packaging.

Ester Industries generates 88% of its revenues from the sale of BOPET films while the remaining 12% of revenues come from selling specialty polymers which is a high-margin business.

Now according to the data released by the Bombay Stock Exchange, one of the company's director Atul Aggarwal acquired 22,000 shares of the company from the open market.

Prior to this, he did not have any holding in the company.

The approximate purchase value comes to a little over 2.5 million (m).

Note that Ester Industries share price has underperformed since the past three years owing to sectoral headwinds.

In the year gone by, the company's performance was dampened due to pricing pressure and due to the slowdown in the US markets.

Its film business experienced demand-supply imbalance and had subdued demand in overseas markets.

Ester Industries could be a perfect turnaround candidate as it expects a revival in demand for specialty polymers.

The company has set up a subsidiary in Telangana to manufacture BOPET films and is expected to generate peak revenue of Rs 5 billion (bn). The current capacity utilization is at less than 50%.

Ester closed FY24 with Rs 1 bn in revenue coming from the specialty polymer business. It is expected the specialty polymer business, which is used in chemicals to make carpets and electronics, can achieve peak revenues of Rs 2.8-3 bn.

The company has been generating operating losses of Rs 3.5 bn, Rs 5 bn, and Rs 2.7 bn over the past 3 quarters.

Ester also raised Rs 1 bn from marquee investors in FY24 to make debt repayments as well as for working capital requirements.

Recently, the company ventured into chemical recycling by tying up with Loop Industries. Loop and Ester will set up a 50:50 JV which will make recycled chips from plastic bottles. The plant is expected to commence operations in FY27.

Moreover, the new plastic waste management rules requiring 10% recycled content in packaging materials are expected to boost demand for polyester film.

All these factors put Ester Industries in a sweet spot.

As of March 2024, promoter holding in the company stands at 62.5%. To know more, check out the detailed shareholding here.

#2 Crestchem

Next on the list is Crestchem.

The company's business comprises manufacturing, processing, marketing, and exporting products derived from nutraceutical ingredients from conventional chemical, food, and pharma fields.

The company's products are used in the health food industry like personal care products, and as specialty chemical ingredients.

During today's trading session, the company's promoter and director Dipak N Patel bought 2,100 shares from the open market. His transaction was valued at around Rs 3 lakhs.

Prior to this, his holding in the company stood at 28.46% (853,804 shares).

With this purchase, his holding now stands at 28.53%.

To put things into context, promoters have been buying shares of the company from the open market since the past 5 quarters.

In the March 2024 quarter, the company posted a substantial jump in its net profit which came in at Rs 6.6 million compared to Rs 0.7 million in the year ago period.

The company's EPS shot up from 0.23 to 2.2!

With constant promoter buying and solid results, things seem to be turning around for this company.

#3 STEL Holdings

Promoters of STEL Holdings - Secura India Trust bought 27,563 shares and 6,454 shares in two tranches from the open market today.

Prior to this acquisition, the trust held 6.5% which has now gone up to 6.69%.

Interestingly, promoters have been constantly buying stake from the open market for more than 8 quarters now.

Have a look at the table below -

If we chart a longer picture, the company's promoters have bought more than 15% from the open market in the past three years.

STEL Holdings is part of the RPG and RPSG group. It's an investment company which invests in a diversified portfolio of quoted and unquoted securities of RPG and RPSG group companies.

Dividends received from investee companies constitutes as its main source of income.

As of March 2024, the company has investments of market value exceeding Rs 5 billion (bn) across its various group companies.

This is almost close to its marketcap of Rs 7 bn.

Trading at a price to book value ratio of less than 0.5x, the company enjoys profit margins of over 90% and remains debt free.

To know more, check out its latest financial factsheet.

Some More Insider and Promoter Transactions

Apart from the above, here are a few more buy and sell activities of company promoters and insiders that took place during the election results day.

Company	Promoter/Insider	No of shares	Holding post acquisition (%)
Buy Activity
Shivalik Bimetal	TSL Holdings Private Limited	3,370,600	5.86
Manappuram Finance	Nandakumar V P	245,454,221	0.29
Quick Heal Technologies	Netra Deshpande	9,000	0.04
IFL Enterprises	Nishant Subhashchandra Gandhi	5,655,006	2.76
Sell Activity
Alstone Textiles (India) Ltd	Babita Jain	25,400,000	1.12
Alstone Textiles (India) Ltd	Babita Jain	14,400,000	0.65
Alstone Textiles (India) Ltd	Virendra Jian	4,127,520	0
Titagarh Rail Systems Ltd	Dinesh Arya	43,700	0.03
Astral Ltd	Viral Maheshbhai Jhaveri	1,777	0
D-Link (India) Ltd	Mukesh Lulla	2,605,496	7.33

Data Source: BSE

In Conclusion

This trend of promoter buying is typically associated with a positive outlook.

However, despite the tempting signals, it is crucial for investors to approach such situations with careful consideration and conduct comprehensive research.

Promoter buying is just one aspect of the overall investment landscape, and a thorough analysis of market conditions, company fundamentals, and industry trends remains essential for making informed decisions.

For more, check out my colleague Richa's video as she talks about stocks where promoters are increasing skin in the game.

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...