Mukul Agarwal Doubles Down on this Smallcap Stock in Q1. More Details Inside...

It's that time of the year where companies start reporting their quarterly shareholding and earnings report and the buying and selling activity of guru investors is revealed.

Yesterday post market hours, a civil-construction company filed its June quarter shareholding 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 30 billion (bn).

Which stock did Mukul Agrawal buy and why?

The latest shareholding pattern of Capacite Infraprojects shows that Agrawal bought 2.4% stake in the company in the quarter ended June 2023.

Prior to this, in the March 2023 quarter, he held about 1.9% stake. Companies have to report the names of shareholders, holding more than 1% stake in the firm.

While we don't know the exact reason why Agrawal doubled down on the stock by buying more stake, there are some reasons we can guess...

First reason being the company's well-diversified order book that continues to provide strong revenue visibility.

Capacite Infraprojects' order book mainly comprises of orders from the public sector. With the government turning all its focus on infra in recent years, there are several tailwinds that support the company's long term growth.

The centre has proved that it is willing to go all-in on the housing sector after outlaying a big amount in the recent budget.

The company's order inflow intake for FY23 was Rs 22 bn, translating into about 4 times the FY25 turnover target.

Last week, the company received a major order worth Rs 4.5 billion (bn) from a private sector entity for construction of residential and commercial towers in the National Capital Region (NCR).

In April this year, it received a big order from a Godrej-group firm while in May 2023, it was Raymond who placed an Rs 2.2 bn order with Capacite.

Apart from a growing order book, the other reason could be the company's strong fundamentals.

For FY23, the company almost doubled its profit to Rs 940 million. It reported an EBITDA margin growth of 290 bps to 20%.

Meanwhile, foreign investors continue to remain bullish on the Mumbai-based firm. In the March 2023 quarter, FIIs held 6.5% stake which almost doubled to 12.3% in the June 2023 quarter.

FIIs have started July 2023 with a bang as they invested over Rs 20 bn in Indian stocks on the first day. This could mean more inflows into Capacite from FIIs.

What next?

The company had a meeting last month where it planned to raise Rs 963 million through a preferential issue of equity shares.

It plans to utilize these to support the long-term working capital requirements.

It has guided for a revenue growth of around 20% with the amount expected to reach Rs 18 bn on a consolidated basis.

The company expects to see better operating margins going forward due to a reduction in fixed costs.

How shares of Capacite have performed recently

Shares of the company jumped over 5% today to touch a new 52-week high after it was revealed that ace investor Mukul Agarwal has picked additional stake.

In the past five days, Capacite Infra share price has gained 10% while in the past one month, the stock has rallied 16%.

On a year to date basis, the stock is up 40%.

Capacite Infraprojects has a 52-week high of Rs 221 touched today and a 52-week low of Rs 105 touched on 2 August 2022.

About Capacite Infraprojects

Capacite Infraprojects Ltd is a construction company incorporated in August 2012.

The company offers construction services such as high rise and super high-rise buildings, gated communities, villaments, commercial and office complexes, institutional buildings (schools, colleges, hospital projects etc) and multi-level car parks.

To know more, check out Capacite Infra financial factsheet and its latest quarterly results.

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...