Why Did Ashish Kacholia Buy Stake in this Smallcap Agrochemical Stock?

Say, you want to learn more about investing in the stock market, but don't know where to begin.

For over a century now, the stock market has fascinated people. Stocks are even seen by many as the quickest way to get rich.

Following the investing approach of top investing gurus in India can be a good source. These investing gurus ace the market test and earn high returns. Hence following their footsteps may result in gains.

However, it's important to take things with a caution. There are other things to consider before following what the gurus say.

Keeping that in mind, we will talk about what ace investor, Ashish Kacholia bought recently. But before knowing what he bought, let us first talk about who Ashish Kacholia is.

Who is Ashish Kacholia?

When we talk about successful investors in India, it's impossible not to mention Ashish Kacholia. He has generated a net worth of 17 bn by investing in Indian stock markets.

Ashish Kacholia is known for identifying the best multibagger stocks. Hence, 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.

What did Ashish Kacholia buy recently?

On Tuesday this week, 30 August, Ashish Kacholia purchased 318,000 equity shares of Best Agrolife, a pesticides and agrochemicals company.

The shares mentioned above represent 1.3% stake in Best Agrolife for Rs 300 m on the NSE, the bulk deal data shows. Ashish Kacholia bought these shares at Rs 940.88 per share.

This means, within two days, he has made a killing. The stock went up to Rs 1,106 from Rs 922 on Tuesday after the news spread out to retail investors. Today, the stock soared another 17% from Rs 1,106 to Rs 1,294 yesterday.

Why did Ashish Kacholia buy Best Agrolife?

While we can't know for sure why the star investor bought into it, there are some reasons that we can guess...

#1 Solid Financials

The first and primary reason could be the company's profitability. Over the years, Best Agrolife has improved its financials and also has debt metrics covered.

Financial Snapshot

Rs m, consolidated	2018	2019	2020	2021	2022
Revenues	1,332.80	6,653.90	6,949.20	9,127.40	12,108.00
Growth (%)	34%	399%	4%	31%	33%
Operating Profit	10.9	135	193	584.8	1,676.00
OPM (%)	1%	7%	10%	29%	14%
Net Profit	-0.2	46.9	82.6	370.7	1,048.00
Total Debt	83.5	392.3	323.1	266.3	2,644.00
Debt to Equity (x)	0.18	0.23	0.41	0.21	0.8

Data Source: Ace Equity

As can be seen from the table above, the company has seen a good growth in revenue and profits over the years.

On a quarterly basis too, the company has done well. It reported a 55% growth in its consolidated net profit for the quarter ended June 2022, mainly driven by better sales. Total revenue increased to Rs 4.6 bn in the first quarter of this financial year from Rs 3.4 bn in the year-ago period.

EBITDA at Rs 659 m, was up 82.7% year-on-year (YoY), as against Rs 360.6 m in Q1FY22. Margins, too, improved 14.2% from 10.5%, in the year ago quarter.

In a statement, the company's MD Vimal Alawadhi said the company has maintained its upward growth momentum in the first quarter of the current financial year.

It's also notable that in the quarter gone by, the company launched first-of-its-kind proprietary ternary insecticidal combination Ronfen. This is a single-shot solution that controls all sucking pests in various crops like cotton, chilly, vegetables, and many other segments.

According to the management, the initial response has been good. A pick-up is expected in the current quarter. Also, post the acquisition of Best Crop Science last year, the company is expected to enjoy synergies and added market share.

Recent launches

In an exchange filing, the company informed yesterday that it has introduced two new CTPR-based formulations. These are intended to combat harmful insects in various crops including sugarcane, atta, etc.

So, the stock could be rallying because of two reasons, one being Ashish Kacholia buying stake and the other, this recent launch.

How the stock of Best Agrolife has performed recently

If the performance of past two days is considered, Best Agrolife has been the fastest growing stock of 2022. In the past two days, the stock has zoomed over 35% after Kacholia bought stake.

Best Agrolife has a 52-week high of Rs 1,400 touched on 4 November last year. It has a 52-week low of Rs 712 touched last year on 16 September.

Over the past one year, the stock has gained over 80%.

Share price of Best Agrolife is currently trading a tad lower from its all-time high price.

At the current price, Best Agrolife is trading at a PE multiple of 25.7 and a price to book multiple of 7.5. The stock is overvalued if compared with an industry PE of 23 times and a price to book multiple of 4.9.

Coming to the company's shareholding...

Promoters of the company recently increased their stake in the company while foreign investors have also shown an interest.

To know more, check out the latest shareholding pattern of Best Agrolife.

About the company

Incorporated in 1992, Best Agrolife is engaged in the trading of agrochemical products such as insecticides, pesticides, herbicides, fungicides and plant nutrients.

The company's crop protection chemical products are sold through distributers and comarketing alliances with leading Indian companies throughout the country. They have distribution network with more than 3000 distributers and direct dealers and over 1,500 retail points across the country.

To know more, check out Best Agrolife's financial factsheet and its latest quarterly results.

You can also compare Best Agrolife with its peers:

Best Agrolife vs BASF

Best Agrolife vs Bharat Rasayan

Best Agrolife vs UPL

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...