Why Did Ashish Kacholia Buy Stake in this Small-cap Stock?

The stock market is a difficult place for an average investor to survive. There is too much noise, confusion, and financial jargon. To steer clear of this dilemma, it's important to learn from the best.

Following the footsteps of superstars in the stock market is one of the best investment strategies.

Everybody has their eyes and ears wide open when the top investing gurus buy or sell stake in a particular company.

Today we bring to you one such activity of ace investor Ashish Kacholia.

Before we get into the details of the stock, let us first get to know Ashish Kacholia.

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 Rs 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?

Recently, Ashish Kacholia's name appeared in the list of key stakeholders of Shankara Building Products.

However, in the quarter that ended in June 2022, his name did not appear in the list of shareholders who own more than 1% of the share capital.

Ashish Kacholia must have bought the stock between July 2022 to September 2022. It cannot be ascertained whether he picked up the share gradually or in a single trade.

At the end of September 2022, he owns a 1.9% stake in Shankara Building Products.

Why did Ashish Kacholia buy Shankara Building Products?

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

Owing to the nature of its business, Shankara Building Products is directly impacted by the growth prospects of the realty sector.

With covid-19 finally slowing down, India is back on its feet again and is all set to become one of the fastest-growing economies in the world.

Reportedly, realty sector will contribute around 13% to India's GDP by 2025, it is expected to reach the US$ 1 tn in market size by 2030.

Hence it seems that India is building fast and it's expected that the realty sector will boom in the future.

Apart from that, another reason could be the company's financials which look promising.

Due to the lockdown, all construction activities were halted. Hence an obvious impact of that can be seen in the revenues of Shankara Building Products.

However, the company did not run into losses.

The company's financials have seen a sharp improvement in the financial year 2022. Its net profit margin is back to pre-covid-19 levels.

Financial Position

Particulars (Rs in m)	FY18	FY19	FY20	FY21	FY22
Total Income	25,493.1	31,793.7	27,560.3	20,445.9	24,215.0
Growth	10.3%	24.7%	-13.3%	-25.8%	18.4%
Operating profit	1,758.3	1,238.5	1,139.4	772.0	876.7
Operating profit margin	6.9%	3.9%	4.1%	3.8%	3.6%
Net profit	738.0	327.4	398.8	138.5	343.2
Net profit margin	2.9%	1.0%	1.4%	0.7%	1.4%

Data Source: Ace Equity

How Shankara Building has performed on the bourses lately

On a YTD basis, Shankara Building share price has seen a sharp rise of 38%.

It has a 52-week high of Rs 843 touched on 22 March 2022. It has a 52-week low of Rs 477.5 touched last year on 20 December 2021.

Over the past one year, the stock has gained over 23%.

About the company

Shankara Building was originally incorporated in the name of Shankara Pipes India.

Shankara Building Products retails home improvement and building products. The company offers steel pipes and tubes, roofing sheets, hollow blocks, primers, etc. It's a one-stop solution for home improvement products.

The company offers over 70 product categories spanning over 20,000 SKUs.

To know more about the company, refer to its factsheet and quarterly results.

You can also compare the company with its peers.

Shankara Building Products vs Venus Pipes and Tubes

Shankara Building Products vs Crimson Metal

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...