Ace Investor Ashish Kacholia Exits this Multibagger Engineering Stock

The week gone by was marked by notable losses exceeding 1% for the Indian benchmarks Sensex and Nifty, driven by rising tensions between Israel and Palestine and the subsequent surge in oil prices.

During this period, the Sensex saw a significant drop of 885 points, while the Nifty declined 208 points. This week again, the benchmarks have started on a cautious note with each falling over 1% on Monday.

In the broader market, the BSE Midcap Index registered a 1.3% decline last week, while the Smallcap index remained relatively stable.

With the markets turning bearish, investors are keenly watching the portfolio moves of the market-savvy veterans who consistently outperform the market.

This article provides the latest insights on one such activity by none other than Ashish Kacholia.

He recently exited his entire holding from an engineering stock.

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 Stock did Ashish Kacholia Sell and why?

The stock in question is Bharat Bijlee.

Bharat Bijlee is one of the leaders in the electrical engineering industry in India.

The latest shareholding of Bharat Bijlee shows that Ashish Kacholia's name was missing from the list of shareholders.

This means perhaps his holding might have slipped below 1% or he could have sold the entire stake in the quarter gone by.

Prior to this in the June 2023 quarter, Ashish Kacholia held 1.8% stake in the company.

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

#1 Profit Booking

In 2023, up until 23 October 2023, the engineering stock witnessed a remarkable growth of over 53%, with an outstanding 86% return over the past year.

Shares of the company have rebounded from around Rs 498 to Rs 3,850 apiece in the past three and a half year, rising around 700%.

Take a look at the chart below which shows the stable performance in the year gone by.

The surge can be attributed to increased demand resulting from ambitious electrical engineering projects and rapid expansion.

Furthermore, the company's growing dividend payouts likely bolstered investor confidence, creating a positive sentiment in the market.

Therefore, one potential reason behind Ashish Kacholia's decision to reduce his holding could be to take some money off the table and book profit.

A Look at Bharat Bijlee's Financials

During the June 2023 quarter, the company posted impressive financial results, with net sales surging to Rs 4.4 billion (bn), marking a remarkable 60% increase compared to the previous year.

Simultaneously, the net profit for the quarter witnessed a substantial 55% growth, reaching Rs 253 million (m), up from Rs 163 million in the same period the previous year.

Over the past three years, the company consistently showcased strong financial performance, with its net sales doubling from Rs 7.3 bn in FY 2021 to Rs 14.2 bn in FY 2023.

Net profit also demonstrated remarkable growth, climbing from Rs 261 m in FY 2021 to Rs 832 m in FY2023. The company's revenue experienced a noteworthy compound annual growth rate (CAGR) of 24.7%, while net profit exhibited substantial growth of 50%.

These positive results were due to various factors, including reduced raw material costs and increased demand in the post-Covid period.

Financial Snapshot

(Rs m, Consolidated)	FY21	FY22	FY23
Net sales	7,310	12,657	14,185
Sales growth (%)	NA	73	12
Net profit	261	556	832
Net profit margin (%)	3.6	4.4	5.9

Data Source: Equitymaster

What Next?

Going forward, the company is set to benefit from the government's Production-Linked Incentive (PLI) scheme to bolster the engineering sector's growth and development.

The Make in India initiative seeks to attract foreign investment, foster innovation, and create employment opportunities in the manufacturing sector.

The engineering sector, with its diverse range of products and services, is well-positioned to contribute to this initiative.

The PLI scheme provides incentives to companies that manufacture specific products in India. This scheme is designed to encourage domestic production and reduce reliance on imports.

This influx of capital will enable companies to expand their production capacity, adopt new technologies, and develop innovative products.

The company also has ambitious plans to expand into specialised markets with limited competition and higher profit margins.

About Bharat Bijlee

Bharat Bijlee is one of the leaders in the electrical engineering industry in India.

The company operates in one segment namely industrial products comprising of power and distribution transformers a wide range of standard and customised low-tension motors and variable speed drives.

It also trades in anti-corrosive products and submersible pumps.

The company is a pioneer in the manufacture of electric motors. At a time when most electrical equipment was imported and the company began to manufacture transformers in the year 1954.

For more details, see the Bharat Bijlee company fact sheet and quarterly results. You can also compare Surya Roshni with its peers:

Bharat Bijlee vs ABB India

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...