Bulk Deal Alert: Ashish Kacholia Picks 5% Stake in this Multibagger Microcap Stock

When I first started analysing and studying stock markets in 2018, a well-known investor gave me a great piece of advice.

It went something like - Follow the money, follow the talent.

The idea was to follow the best talent out there and where their money was flowing. You track what the big names in the investing world are buying and selling.

Historically this has proven to be a great strategy.

This week on Monday, one of the top investing gurus in India, Ashish Kacholia, picked stake in a microcap company via a bulk deal.

Before we delve deep into the stock details, let's take a look at who Ashish Kacholia is and what are some of his top stock 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.

Which microcap stock did Kacholia buy and why?

According to bulk deal data on the Bombay Stock Exchange (BSE), Ashish Kacholia bought 546,178 shares of Dhabriya Polywood on Monday.

This translates into 5.04% stake in the PVC & UPVC profiles manufacturer.

The average price for this purchase was Rs 280.9 per share.

On the other hand, promoter Digvijay Dhabriya was the seller in this deal. Promoters held 74.2% stake in the company as of June 2023.

Coming back to Kacholia's buying...

While we don't know the exact reasons why he bought stake in the company, there are some reasons we can guess...

First reason being multiple orders secured by the company in recent weeks. Earlier this month, the company secured orders worth 99.3 million (m) from real estate mogul - DLF group.

The order is for the supply & installation of uPVC windows & doors, to be executed in 12 months.

DLF group has contributed to a large chunk of the company's orders in the recent past. Prior to this, the company received two orders worth Rs 365.5 m were from DLF Group for kitchen, wardrobes, vanity, medicine cabinets, uPVC windows and doors.

It has also secured two more orders, one from the Airforce Naval Housing Board for uPVC windows & doors.

While the second order if worth Rs 52.6 m order from Godrej Group for modular kitchens.

All these orders provide revenue visibility for the near term and the company is able to make its mark as an established player in the segment.

The second reason why Kacholia turned bullish on the company could be its stellar financial performance for FY23 and for the quarter ended June 2023.

The company registered its best turnover in financial year 2023 while profit also topped Rs 80 m for the first time, compared to Rs 51 m in the year ago period.

The microcap company also paid out a dividend to shareholders for the first time in FY23.

The company could register good growth this year as the first quarter results have already started with a bang.

Its net profit for the quarter under review surged nearly five-fold to Rs 31 m as compared to Rs 6.5 m in the same quarter a year ago.

Revenue spiked to Rs 502 m compared with 368 m in the year ago period.

What next?

PVC is a derivative of crude oil so any volatility in crude prices could lead to business disruptions for the company.

In the meantime, the company's performance is largely linked to the real estate sector, which is highly cyclical in nature.

For now, the company remains in a sweet spot as it has a strong order book position and backing from renowned investors.

Apart from Ashish Kacholia, another prominent name in the Indian landscape, Mukul Agarwal, already owns around 9.3% stake in the company.

Dhabriya Polywood has an established track record in manufacturing PVC and UPVC based products.

Along with its subsidiary, Dynasty Modular Furnitures, the company has a healthy order book to be completed in the coming two years.

How Dhabriya Polywood shares have performed recently

On Monday this week, shares of Dhabriya Polywood were locked in the upper circuit band of 2% at Rs 280.9.

In the past five days, the stock has fallen 5% while in 2023 so far, the stock is up 120%.

Dhabriya Polywood has a 52-week high of Rs 297 touched on 8 August 2023 and a 52-week low of Rs 87.7 touched on 20 October 2022.

In the past one year, the stock has rallied 141%.

About Dhabriya Polywood

Dhabriya Polywood is engaged in the manufacturing of PVC and UPVC based products for a wide range of building interior and exterior applications.

The company mainly supplies its finished products in India to customers who are engaged in real estate activities, universities, office buildings, etc.

L&T, Emaar Group, AIIMS, Adani Group, DLF Ltd, OMAXE, JW Marriot, among others are some of its clients.

To know more, check out the company's 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...