Ashish Kacholia and Sumeet Nagar Trim Stake in this Multibagger Smallcap Stock

Investors look for multibagger stocks which can potentially transform their small investments into substantial amounts.

However, identifying these hidden gems is no easy task as it needs years and years of patience, meticulous research, a deep understanding of the stock market, and a little bit of luck.

Many struggle to master the art of identifying such stocks. But certain seasoned market veterans have honed their skills in this area over the years.

As a result, some people attempt to emulate the portfolios in the hope of discovering similar winning stocks.

Today, we want to highlight one stock which has come under the focus of not one, but two investing gurus of India.

Ashish Kacholia and Sumeet Nagar, both have trimmed their stake in this multibagger stock.

A word about Ashish Kacholia and Sumeet Nagar

Ashish 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.

Meanwhile, Sumeet Nagar is the co-founder of Malabar Ventures LLC. Malabar is a foreign portfolio investor (FPI) with a particular emphasis on India's small and mid-cap stocks.

His amazing track record in the smallcap and midcap space is no fluke.

Which stock did they sell and why?

The stock in question is Safari Industries.

The company manufactures injection moulded plastic articles and vacuum-formed plastic articles. The company is popular for selling travel bags.

The latest shareholding pattern of Safari Industries (India) shows that Ashish Kacholia and Sumeet Nagar trimmed their stake in the company in the June 2023 quarter.

Ashish Kacholia sold a 0.02% stake or 5,000 shares in the quarter under review. He held a 2.31% stake in the company as of March 2023, which has reduced to 2.29% in June 2023.

In Nagar's case, he sold a 0.85% stake or 201,721 shares, reducing his stake to 7.62% in June 2023 quarter. He held 8.47% in the March 2023 quarter.

While we don't know why they sold shares of Safari Industries, there are some reasons that we can guess.

The first and most obvious reason is profit booking.

Shares of the company have been on an uptrend in the past couple of months. So far in 2023, the stock has gained 68.6%. Over the past one year, the stock has given multibagger returns of over 150%.

This performance can be attributed to the growing demand for luggage. The luggage demand has steadily increased in recent years, fueled by factors like rising travel and tourism and the growth of disposable incomes.

These factors have acted as a favourable tailwind for Safari Industries, one of the leading luggage manufacturers in India.

Another significant reason behind the stock's surge is the company's strong fundamentals. During the quarter ending in March 2023, Safari Industries displayed remarkable improvement in its performance. Revenues experienced a substantial 71.7% to Rs 121.2 bn in FY23 from Rs 70.6 bn in FY22.

Overall, the company's net profit surged, concluding FY23 with a total consolidated net profit of Rs 12.5 bn, a remarkable 468% increase over FY22 net profit of Rs 2.2 bn. In FY23, margins have shown remarkable improvement, driven by price hikes, robust tourism growth, and reduced discounts.

Additionally, the company's product mix has improved, and its consistent efforts to enhance its channel mix are beginning to yield incremental margin improvements.

Safari has also ventured into the premium range under the brand name Urban Jungle, making it comparable to the premium luggage categories of VIP Industries and Samsonite.

Strong growth prospects

Neither Ashish Kacholia nor Sumeet Nagar completely exited the stock. They still hold substantial stakes.

Ashish Kacholia's portfolio shows he holds 543,000 shares, while Sumeet Nagar's funds together hold close to 1.8 million shares.

At present, the company operates in 80 stores, but it has set its sights on a remarkable expansion, to operate in nearly 140 stores by the end of FY23.

Such ambitious expansion plans reflect the company's confidence in its growth potential and its desire to tap into new markets and customer bases.

Moreover, the company has laid out an impressive financial target to increase its revenue by a substantial 33% from FY22 to FY25. This ambitious goal showcases the management's vision for sustained growth and financial success over the next few years.

To achieve this impressive revenue target, the company has formulated a well-thought-out strategy to open four new retail sites every month.

Additionally, the company's focus on expanding its product offerings in the premium segment is a smart move to stay ahead in the market. By catering to the discerning needs of premium customers, the company aims to attract higher-value sales, which can significantly improve its profit margins over the next two to three years.

How shares of Safari Industries have performed recently

Over the last one year, the share price of Safari Industries has gained 150%. In 2023 so far, the stock is trading higher by 68%.

Over the three months, the stock has gained over 15%.

The company touched its 52-week high of Rs 3,170.9 on 12 July 2023 and its 52-week low of Rs 1,072 on 25 July 2022.

About Safari Industries

Safari Industries (India) Ltd was incorporated in 1980.

The company is engaged in the business of manufacturing and trading luggage and luggage accessories under the Safari brand.

The company manufactures its hard luggage using PolyPropylene (PP) and Polycarbonate (PC) at its manufacturing plant located in Halol, Gujarat.

The soft luggage is basically imported by the company and is made from a variety of fabrics.

For more details, see the Safari Industries company fact sheet and quarterly results.

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

You can also compare Safari Industries with its peers:

Safari Industries vs VIP Industries

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...