Ace Investor Ashish Kacholia Continues to Trim Stake in Smallcap Stock

It could be out of interest or just burning passion. Everyone joins into stock market investing for a reason.

However, Investing is hard.

Even if you had all the time in the world, you simply can't match the experience and skill of more successful investors.

India's top investors, like Ashish Kacholia and Vijay Kedia, have achieved remarkable multi-bagger returns on their portfolios, consistently outperforming the market.

So why not follow in the footsteps of the successful investors who have already made it?

Many investors mimic their portfolio holdings in hopes of replicating their exceptional returns.

In this article, we delve into a recent market move by Ashish Kacholia. He has recently trimmed down his stake in this smallcap company.

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.

As per the bulk deal data available with the stock exchanges, the ace investor Ashish Kacholia on 26 August 2024 sold a total of 1.75 lakh equity shares in Repro India, representing a 1.2% stake, at an average price of Rs 625 bringing the total deal value to nearly Rs 109.3 million (m).

Before this in June 2024 quarter Ashish Kacholia trimmed his stake by 0.35% to 2.45%.

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

#1 Sectoral Challenges

One of the major challenges facing the printing industry is the imposition of a 5% customs duty on newsprint.

This duty has significantly increased operational costs for newspapers, which are already under pressure due to other global factors.

The ongoing Russia-Ukraine conflict, for example, has disrupted imports and strained the availability of newsprint supplies, leading to a surge in newsprint prices.

In recent quarters, newsprint costs have risen by 7-8%, surpassing US$ 600 per metric tonne, compared to around US$ 400 before the pandemic.

This dramatic increase has severely impacted the printing and publishing sector, which had already been hit hard when most printing presses and newsprint mills across India and abroad were forced to shut down due to the pandemic.

Additionally, the depreciation of the Indian rupee has added another layer of pressure on the print media industry, which relies heavily on imports.

These compounded challenges have created a difficult operating environment for companies in the sector, potentially influencing investors to reconsider their positions.

Notably, these issues may have contributed to Ashish Kacholia's decision to reduce his holding in the company.

#2 Consecutive Poor Quarterly Results

The company's recent financial performance has been disappointing, marked by consecutive poor quarterly results.

In Q1 FY25, the company reported a decline in revenue from operations, falling 6% year-on-year (YoY) from Rs 1.2 billion (bn) in Q1 FY24 to Rs 1.1 bn.

The situation was even more concerning on the profitability front, with net profit plummeting by 95.7% YoY, from Rs 30.8 m to a mere Rs 1.4 m during the same period.

This downturn follows a similarly challenging quarter in March 2024, where Repro India recorded a marginal revenue increase to Rs 12.7 bn, reflecting only a modest growth of 5.1%.

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

These adverse financial results, coupled with ongoing operational challenges, likely played a role in Ashish Kacholia's decision to trim his stake in the company, as the outlook for recovery remains uncertain.

A Look at Repro India's 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'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

Data 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 bn 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 27% in the past six months.

Over the past one year, shares of the company have declined 26.1%. In 2024, the share price of the company is down 30%.

The company touched its 52-week high of Rs 980 on 20 December 2023 and its 52-week low of Rs 561 on 14 August 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

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