Ashish Kacholia Buys 4 Lakh Shares of this SME Stock that Rallied 156% in a Month

While Adani Enterprises may be getting all the traction these days following multiple bulk deals by GQG Partners, there's a small and medium enterprise (SME) involved in the medical equipment and supplies business that made headlines on Friday this week.

This, after ace investor Ashish Kacholia, commonly referred to as the big whale of the Indian stock market, bought more than 4 lakh shares in the company.

Before we move on to the stock details, let's get to know Kacholia a little bit.

A word about Ashish Kacholia

Ashish Kacholia is one of the leading investors in the Indian stock market. He is often referred to as 'Big Whale'. Kacholia is known for identifying the best multibagger stocks.

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?

According to the bulk deals data available with exchanges, Kacholia has bought 439,000 equity shares of dental products supplier Vasa Denticity via open market transactions.

The deal was at an average price of Rs 302.59 per share, which amounted to Rs 132.8 million (m).

The company recently concluded its initial public offer (IPO), which was subscribed 48.67 times. The issue comprised 4,224,000 equity shares.

Shares of the company were listed at Rs 221.6 per share on the NSE, a premium of over 70% from its issue price of Rs 128 per share.

Who were the sellers in yesterday's block deal? Two funds who had bought stake in the company via anchor book at the time of its IPO in May 2023 sold their holding.

Founders Collective Fund sold 120,000 shares at an average price of Rs 301 per share while Maven India Fund offloaded 85,000 shares at an average price of Rs 303.71 per share.

Founders Fund and Maven India had bought 240,000 shares each in Vasa Denticity at Rs 128 per share. So they netted a huge sum already in a little over a month and they still continue to hold some shares.

Coming back to Kacholia, while we don't know the exact reasons why he bought stake in the company, here are some reasons we can guess...

The e-commerce company has over 10,000+ SKUs, 30 brands, and 300 domestic & international brand tie-ups.

Its portfolio includes international brands such as Mani, 3M, Dentsply, Ivoclar, Woodpecker, etc. So the company's business seems established but is still in its initial phase of growth. Thus Kacholia might have seen something in its unique business.

You might be familiar with the name 'Dentalkart'. Well, it's the company's omni-channel distribution network where it sells the products through the online portal and mobile application.

The company's number of orders have grown at a CAGR of 49% from 91,316 in FY20 to 202,335 in FY22. It's yet to report FY23 numbers.

Also, according to the company's draft red herring prospects (DRHP), it recently rented a warehouse in Bengaluru. This exercise is expected to reduce delivery time and transportation costs for the company's product in South India.

Meanwhile, the industry growth prospects also look bright. According to the DRHP, the size of the Indian dental market product segment-wise in the year 2022 was around US$2.1 billion (bn) which is expected to reach US$5.3 bn in the coming decade by 2032. This is around a CAGR of around 9.5%.

And of course, two more reasons why Kacholia might be interested could be the stellar response the company received at the time of its IPO and its financial performance.

Vasa Denticity's IPO was subscribed almost 70 times with robust response coming from non-institutional buyers, whose had subscribed for 115 times. The retail too was subscribed 58 times.

The company comes with high return ratios as it had posted an ROE of 45% in the nine months ended December 2022 and a ROCE of 53% during the same time.

So you see, there are many reasons why Kacholia could have bought such a big stake in the NSE listed company.

How Vasa Denticity share price has performed since listing

Since listing in early June, shares of the company are up around 156%.

In the past five days, shares of the company have rallied 15%. It ended Friday's session 13% higher at Rs 328.

Vasa Denticity has a 52-week high of Rs 345 touched on 30 June 2023.

Conclusion

While it may be tempting to replicate the investment decisions of successful investors, there are several potential drawbacks to consider.

One key concern is the timing of the investment. Replicating investors may end up purchasing a stock at a much higher price than the successful investor who bought it when it was undervalued.

Additionally, successful investors often have different risk tolerances, investment sizes, and horizons compared to retail investors.

Hence, blindly following their moves without considering individual risk profiles and investment goals can be risky.

Therefore, it is crucial to conduct thorough research and analysis, focusing on fundamentally strong companies that align with personal goals and risk tolerance levels.

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...