Bulk Deal Alert: Ashish Kacholia Buys 800,000 Shares (27% Stake!) in this Semiconductor Stock

How often do you see a regular investor buy significant stake (in this case 27%) in one particular company?

It's rare, right?

That's why when I looked at the bulk deal and block deal data yesterday, I was shocked to see India's prominent investor Ashish Kacholia buying a 27.5% stake in a stock that listed yesterday.

Before we delve deep into the stock details, let's take a look at who Ashish Kacholia is and what are some of his top stock picks.

Who is Ashish Kacholia?

When we talk about successful investors in India, it's common to mention Ashish Kacholia.

Kacholia is known for identifying the best multibagger stocks. He is known as the 'Big Whale' of the Indian stock market.

Over the years, he has picked the best multibagger stocks by looking at the fastest-growing companies from the midcap and smallcap space.

He started his career with Prime Securities in 1993. In 2003, he started Hungama Digital Entertainment Company along with Rakesh Jhunjhunwala. He is also the proprietor of Lucky Securities.

Which Stock Did Ashish Kacholia Buy and Why?

The stock in question is Aimtron Electronics.

The company caters to diverse clients with diverse offering, but printed circuit boards contribute around 85% of its revenue.

Ashish Kacholia bought around 8 lakh shares of the company for an average price of Rs 241 per share.

The NSE SME stock listed yesterday at a 50% premium against its issue price.

The bulk deal activity was reported post market hours and during the market hours, the stock was locked in the upper circuit at Rs 253.

Chances are... today as well, the stock may be locked in the upper circuit band.

While we don't know why exactly Kacholia bought shares of Amitron Electronics, there are some reasons that we can guess.

First reason could be the company's niche offerings. Aimtron Electronics is a provider of products and solutions for electronics system design and manufacturing (ESDM) services.

The company focuses on high-value precision engineering products.

In its draft red herring prospectus (DRHP), the company has mentioned that it's product portfolio includes printed circuit board assembly, box build assemblies in addition to finding their application in battery management systems, and design solutions.

So basically, it's closely linked to the semiconductor and electronics sector.

Investors are constantly on the lookout for semiconductor stocks as AI revolution takes centerstage and any company with a close link is considered as a big beneficiary.

That may be one reason why Kacholia took such a bold call on a newly listed NSE SME stock.

The other reason? The company's financials have been improving for the past two years. After a setback in 2022, the company is on track to report good numbers for the financial year 2024.

Financial Snapshot

Rs m, standalone	FY21	FY22	FY23
Net Sales	528	263	716
Growth (%)	-	-50%	172%
Operating Profit	217	0	174
OPM (%)	41%	0%	24%
Net Profit	157	-18	86
Net Margin (%)	30%	-7%	12%
ROE (%)	73.3	-8.6	33.4
ROCE (%)	87.5	-5.4	32.8
Dividend (Rs)	0.0	0.0	0.0
Debt to Equity (x)	0.1	0.4	0.7

Data Source: Ace Equity

What Next?

During its IPO, the company's public issue saw strong demand from investors across categories. It was subscribed a whopping 99.24 times!

The company intends to utilize the net issue proceeds from the IPO for repayment of certain outstanding borrowings and for funding capital expenditure towards the installation of additional plant and machinery.

To be honest, it's not surprising for Kacholia to pick such a huge stake in a small company... he's been known for spotting multibaggers where no one else is looking.

Aimtron Electronics' product portfolio seems quite interesting. And it's involvement in new age sectors is expected to provide strong growth levers in the coming quarters.

In the auto sector, the company's involvement spans from onboard chargers, EV chargers, battery control unit, to battery management system.

The company's products also find a place in drones or UAV. Drones require automated guided vehicle, warehouse robotics, water flood sensors and what not. Aimtron Electronics offers all of this.

The company is in the process of establishing an integrated cable assembly line and has acquired the necessary machines to enhance operational efficiency.

It will start producing components in-house, like cable assembly, and delve into PCBA assembly and complete end-to-end solutions.

What's more, several electronics players involved in the same business as the company voiced their thoughts after the election results were out. The one common take away from them was with National Democratic Alliance (NDA) government returning for a third term, industry players are expecting of a further boost to the electronics manufacturing and semiconductor chip sectors in the next 5 years.

All in all, the future looks bright for this newly listed SME stock.

Here's a table comparing Aimtron Electronics with its industry peers -

Comparative Analysis

Company	Aimtron Electronics	Australian Premium	BPL	Cosmo Ferrites	RIR Power
ROE (%)	33.4	26.1	2.9	7.9	22.3
ROCE (%)	32.8	32.1	7.1	9.5	25.5
Latest EPS (Rs)	4.2	3.1	2.8	-1.7	11.4
TTM PE (x)	59.8	106.9	35.1	0.0	141.4
TTM Price to book (x)	3.8	11.5	1.9	6.3	17.5
Dividend yield (%)	0.0	0.0	0.0	0.0	0.1
Industry PE	101.5
Industry PB	5.9

Data Source: Equitymaster, Ace Equity

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...