Big Whale Ashish Kacholia Trims Stake in this Smallcap Stock

Stock market participants all have the same hopes and aspirations. Almost everyone aspires to achieve financial success, like the world's wealthiest investors, including Warren Buffett, Rakesh Jhunjhunwala, and Jeff Bezos.

Long-term, everyone wants multi-baggers with stock returns of 5x, 10x, or 20x.

Identifying such stocks or items is critical. However, this isn't something that everyone can do.

As a result, many aspiring investors closely study the investment strategies and portfolios of these seasoned professionals, hoping to emulate their success.

In the Indian stock market, Ashish Kacholia is recognised as one such expert.

Recently, he made headlines by reducing his investment in a promising smallcap stock. This editorial explores the implications of his strategic move.

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 Sell and Why?

The company in question is Repro India.

It offers printing services in India and internationally.

The latest shareholding of Repro India shows that Ashish Kacholia trimmed his stake by 0.35% to 2.45%.

Before this, in the March 2024 quarter, Ashish Kacholia held a 2.8% stake in the company.

While we don't know why he sold shares of Repro India, there are some reasons that we can guess.

#1 Weak Earnings

For the March 2024 quarter, repro India reported a marginal revenue increase to Rs 12.7 billion (bn), reflecting a modest growth of 5.1%.

Despite this slight uptick, the company's net profit plummeted by a staggering 39.2%, dropping to Rs 31 million (m) from Rs 51 m in the previous year.

The publishing industry has long been weighed down by outdated and inefficient processes. Issues like excessive inventory, wasteful transportation, and the obsolescence of printed books, along with the resulting paper waste, have been ongoing challenges.

These issues not only put pressure on publishers but also negatively impact the environment due to the excessive use of precious natural resources.

Besides this, a high level of returns, often involving damaged books from unsold stock, also pose additional challenges.

These adverse financial results and operational challenges may have influenced the decision of ace investor Ashish Kacholia to trim his stake in the company.

#2 FII selling

Another potential reason for Ashish Kacholia's concern could be the selling by foreign institutional investors (FIIs).

In the June 2024 quarter, FIIs reduced their stake in Repro India down to 4.2% from 4.3% in the previous quarter.

Prior to this, FIIs had reduced their holdings by in the December 2023 quarter.

A Look at Repro India Financials

Repro India has shown a steady increase in operational revenue over the three-year period. From FY22 to FY23, the revenue grew by approximately 45.9%, indicating a significant recovery and expansion in business activities.

The compound annual growth rate (CAGR) of Repro India's revenue over the three-year period from FY22 to FY24 stands 29.8%.

Repro India has shown a steady increase in operational revenue over the three-year period. From FY22 to FY23, the revenue grew by approximately 45.9%, indicating a significant recovery and expansion in business activities.

Repro India's net profit margin has improved significantly, moving from a negative margin in FY22 to positive margins in FY23 and FY24.

Repro India Financial Snapshot (FY22-24)

(Rs m, Consolidated)	FY22	FY23	FY24
Operational Revenue	2,765.10	4,033.70	4,662.80
Growth (%)	-
Net loss	-23.2	8.7	12.1
Net Profit Margin (%)	-8.1	2.1	2.5

Source: Equitymaster

What Next?

Repro India has developed a diversified and customised product mix in its digital business, catering to a variety of segments.

This includes import substitution offerings for specialised international publishers, Print on Demand (POD) services for publishers, multiple e-distribution channel offerings for new-age YouTube educators and influencers, and top academic and fiction/non-fiction/self-help publishers.

Several dedicated teams focus on personalisation and customisation for each segment, creating tailored solutions for customers' long-term holistic needs.

The company is expanding its sales teams across different segments to penetrate regional markets in India and capture international opportunities, driving growth in both the global and Indian book publishing markets.

Additionally, the Indian print media industry is poised for robust growth in 2024. Advertising revenues are projected to return to pre-pandemic levels, and profit margins are expected to improve amid the softening of newsprint prices.

According to the Media Report 2024, print ad revenue is anticipated to rise by 7%, reaching Rs 206.1 billion this year, surpassing pre-COVID figures from 2019.

This positive outlook is set to benefit printing and publishing companies, including Repro India.

How Shares of Repro India have Performed Recently

The share price of Repro India has dropped 25% in the past six months.

Over the past one year, shares of the company have declined 16.9%. In 2024, the share price of the company is down 30%.

The company touched its 52-week high of Rs 980 on 20 February 2023 and its 52-week low of Rs 605 on 22 July 2024.

About Repro India

Repro India was established in 1990. It is headquartered in Mumbai, India.

It offers printing services in India and internationally. It publishes magazines and other periodicals, books and brochures, maps, posters, and other materials.

It has a presence spanning four continents from Asia and Africa to the United States and the United Kingdom since 30 years.

Repro has plants in Surat, Navi Mumbai, Bhiwandi, and Chennai. It produces millions of books per year.

For more details, see the Repro India company fact sheet and quarterly results.

You can also compare Repro India with its peers:

Repro India vs Diligent Media

Repro India vs Navneet Education

Since small-cap stocks interest you, here's a proven approach on investing in small-cap stocks

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

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...