Ashish Kacholia and Mukul Agrawal Trim Stake in this Multibagger Stock

Equity benchmark indices Nifty and Sensex are recently facing a tough time, declining for the second consecutive day on Thursday.

Global market weakness and a notable outflow of foreign funds have contributed to this decline, and the disappointing earnings report from IT services company, Wipro, has only exacerbated the situation.

For investors, navigating this landscape is like a tightrope walk. They face foreign institutional divestments, the Israel-Palestine conflict, lackluster corporate performance, rising US treasury yields, and await Jerome Powell's speech.

In such a challenging market environment, what sets seasoned investors apart from the rest is their remarkable ability to not only navigate these turbulent waters but also thrive amid adversity.

Their success in these conditions has turned every moment into a closely tracked and revered one.

In this article, we delve into some of those pivotal moments experienced by two prominent market veterans, Ashish Kacholia and Mukul Agrawal.

A Few Words About Ashish Kacholia and Mukul Agrawal

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, Mukul Agrawal is a prominent investor in India known for his microcap stocks and smallcap stock picks.

His style of investment involves a mix of offence and defence, with the majority of the time an offensive strategy after proper analysis and keeping two separate portfolios for investing and trading.

Which stock did they sell and why?

The stock in question is SG Finserve.

The latest shareholding pattern of SG Finserve shows that Ashish Kacholia and Mukul Agrawal have trimmed their stake in the company in the September 2023 quarter.

Notably, in the September 2023 quarter, their names were missing from the list of shareholders.

This means perhaps their holding might have slipped less than 1% or they could have sold the entire stake in the quarter gone by.

Prior to this in June in 2023 quarter, Ashish Kacholia held 1.2% stake in the company while Mukul Agrawal held 2.4% stake.

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

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 56.4%. Over the past one year, the stock has given multibagger returns of over 190%.

This can be attributed to a strong 32% growth registered in loans and advances of approximately Rs 16.4 billion (bn).

Furthermore, the addition of a net loan book of approximately Rs 3.9 bn during the quarter demonstrates the company's ability to not only grow but also manage its loan portfolio efficiently, which can result in increased revenue and profitability.

Additionally, it raised a cumulative capital of Rs 3.2 bn, comprising Rs 1.8 bn in bank debt and Rs 1.4 bn in equity through the conversion of warrants.

The rally in stock of SG Finserve was further fueled by its robust financial performance.

The company achieved impressive results, with net sales reaching Rs 439 million (m), marking a 2,826.7% increase from the previous year's figure of Rs 15 m.

Quarterly net profit surged to Rs 175 m in September 2023, a substantial growth compared to the Rs 6 m recorded in September 2022.

This exceptional performance can be attributed to an improved business outlook and loan book growth.

SG Finserve has not only exhibited strength in the current quarter but has also consistently displayed strong financial growth over the years.

Over three years, the company achieved a remarkable compound annual growth rate (CAGR) of 189% in revenue, and the net profit grew by 125.7%.

This impressive growth can be attributed to the company's expansion and customer base growth.

Strong Sectoral Outlook

It would be premature to conclude that Ashish Kacholia and Mukul Agrawal have completely divested from the stock; there remains a possibility that they still hold a stake below 1%.

According to the National Council of Applied Economic Research (NCAER), the Indian finance sector is expected to grow at a compound annual growth rate (CAGR) of 12.7% from 2022 to 2027.

This will create new opportunities for financial services companies to provide products and services to businesses and consumers.

Further, the government is committed to increasing financial inclusion in the country. This will lead to more people having access to financial services, which will boost the growth of the financial sector.

Additionally, the digital transformation in the finance sector will lead to more efficient and convenient financial services, which will attract new customers and boost the growth of the sector.

Going forward, the company plans to enhance its operations, expand its product portfolio, and strengthen its position.

How Shares of SG Finserve have Performed Recently

Over the last one year, the share price of SG Finserve has gained over 190%. In 2023 so far, the stock is trading higher by 56.4%.

The company touched its 52-week high of Rs 748 on 26 May 2023 and its 52-week low of Rs 191.6 on 31 October 2022.

About SG Finserve

SG Finserve originally incorporated as Moongipa Securities was incorporated on 18 March 1994. The company is engaged in the business of investing activities, investment research, investment banking, and wealth management.

The company's range of services is associated with broking, distribution, investment, research, online trading, wealth management, investment banking, and insurance.

To know more about the company, check out its factsheet and 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...