Ace investor Ashish Kacholia Dumps Stake in This Smallcap IT stock

In the Indian stock market, Ashish Kacholia, Rakesh Jhunjhunwala, and Sunil Singhania stand out as prominent investors whose expertise and achievements have made them synonymous with successful investing.

These ace investors have not only accumulated vast fortunes but have also become icons in their field.

As a result, many investors seek to replicate the stock investments of these ace investors to achieve exceptional long-term returns.

In this article, we will focus on the recent activities of one such investing guru: Ashish Kacholia.

According to the latest exchange data, the ace investor has reduced his stake in an IT company.

Before we delve deep into the reasons why Kacholia made such a move, let's look at who Ashish Kacholia is and what are some of his top picks.

Who is Ashish Kacholia?

When we talk about successful investors in India, it's impossible not 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.

To dwell deep into his portfolio, check out Ashish Kacholia portfolio: top 5 stocks

Which stock did Ashish Kacholia sell and why?

The stock in question is none other than D-Link.

According to the data available on the exchanges, Ashish Kacholia's stake in the company dropped below 1% recently. In the March 2023 quarter, the investor held a 2.1% stake in D-Link with 750,000 shares.

Earlier on 14 June, the ace investor had sold 396,000 shares or 1.04% stake in the D-Link at Rs 227.91 apiece. Through the sale, the ace investor took home Rs 84.3 m.

The company recently filed its shareholding pattern for June 2023, and Kacholia's name was missing from the shareholders' list who own more than 1% stake in a company. It is difficult to ascertain whether he completely exited the company or just sold some shares.

Kacholia entered D link in the September 2022 quarter by adding 1,186,350 shares or a 3.34% stake in the company.

While we don't know the exact reasons why Kacholia offloaded D-Link, here are some we can guess.

#1 Profit booking

The IT stock has witnessed a surge of 16.1% in the past months. While over the past year, the company's shares have delivered an outstanding return of 93%.

This remarkable performance can be attributed to several significant factors. To meet the increasing demands of modern smart homes and offices, the company unveiled its EAGLE PRO AI family of Wi-Fi routers, which leverage Artificial Intelligence (AI) technology.

These advanced routers have been designed to provide enhanced connectivity and meet the evolving needs of consumers.

In line with its commitment to delivering reliable and fast connections, the company also launched the 4G+ Smart Router. This innovative router combines the power of 4G LTE with Gigabit Ethernet, offering users a seamless and high-speed internet experience.

Moreover, the router features AI-powered SmartQoS, which intelligently prioritizes traffic, ensuring optimal performance for activities like gaming, streaming, and more.

Further, recognizing the importance of boosting internet speeds, the company introduced AI-powered WiFi hardware in February 2023. This advancement has further enhanced the overall browsing experience for users, solidifying the company's position as a leader in the industry.

Over the past three years, the stock has proved to be a true multibagger, generating remarkable returns of over 186%.

Considering the steep rally in recent weeks, it appears that Ashish Kacholia opted to book partial profits in the company.

#2 Sectoral challenges

Another reason for Ashish Kacholia's decision to trim his stake in D-Link can be attributed to the prevailing challenges faced by the Indian IT sector.

The sector has been grappling with a notable slowdown in growth, driven by heightened concerns about a potential recession in developed markets.

The Indian IT industry, which relies heavily on international markets for its business, has been adversely affected by uncertainties surrounding global economic conditions. This has resulted in a decrease in order flow, as companies in developed markets have become more cautious with their spending and investment decisions.

Furthermore, the industry has experienced challenges related to the slower execution of projects. Clients have been cautious in finalizing deals, leading to delays in project kick-offs and implementations.

This slowdown in project execution has not only impacted revenue generation but has also created a ripple effect on the overall growth of Top IT companies in India.

Additionally, pricing challenges have added to the difficulties faced by the sector. To remain competitive in a tough market, IT companies have had to navigate pricing pressures and negotiate contracts that are financially viable for both the clients and company.

This has put pressure on profit margins and created a challenging business environment for companies operating in the IT sector.

As a result, the overall sentiment towards the IT sector has been adversely affected.

#2 FII stake sell

Another possible reason for Ashish Kacholia's decision to sell his stake could be the selling by Foreign Institutional Investors (FIIs).

Over the past two quarters, the FIIs have reduced their stake in the company. FII holding stood at 0.4% in the December 2022 quarter. It now stands at 0.1%.

Look at the table below.

Quarter ending	Dec-22	Mar-23	Jun-23
Stake (%)	0.4	0.3	0.1

Data source: Equitymaster

How shares of D-Link have performed recently

D-Link rose around 93% in the past one year. Over a month, the share price has gone up by 16%. So far in 2023, Astra Microwave shares have gained 15%.

D-Link touched its 52-week high price of Rs 311 on 9 November 2022. Its 52-week low was Rs 124.1 touched on 11 July 2022.

The company is currently trading at a PE (price to earnings) multiple of 11.1x.

About D-Link

D-Link is primarily engaged in marketing and distribution of networking products. It operates through a distribution network with a wide range of product portfolio and solutions with a nationwide reach across India.

Its portfolio includes different kinds of routers, switches, wireless devices, surveillance, network security, structured cabling, network infrastructure and optical transport network products.

Being part of D-Link Corporation comes with synergies as its promoter is a worldwide leader in designing, developing and providing Wi-fi and ethernet networking, broadband, multimedia, voice and data communications among other businesses.

To know more, check out D-Link's financial factsheet and its latest quarterly results.

You can also compare D-Link with its peers:

D-Link vs Smartlink Net

D-Link vs Tulip Telecom

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