Ashish Kacholia's New Bet is this Smallcap IT Stock

The share price of D-Link India has gained 40% in the past nine trading sessions.

Yesterday, in the hour long Muhurat session, the company registered strong gains and rallied 19% to end at Rs 241 on the BSE.

That begs the question of what's driving the rally in this tech stock.

One reason behind the rally has to be marquee investor Ashish Kacholia taking a fresh entry in the company. In the September 2022 quarter gone by, Ashish Kacholia has entered this small-cap stock.

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.

Why did Ashish Kacholia buy D-Link?

The latest shareholding pattern of D-Link India revealed that Ashish Kacholia has added 1,186,350 shares or 3.34% stake in the company.

He did not hold any stake in the quarter ended June 2022 as his name did not appear in the list of investors holding 1% stake or above.

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

The first reason could be the company's market leading position. Ashish Kacholia has often looked at market leader stocks from various industries.

In the September quarter, apart from D-Link, Kacholia also bought Agarwal Industries Corp, which is a market leader in bitumen space and a proxy play to infrastructure.

In case of D-Link, the company is a leader in shipment of switches and wireless local area network products with a market share of 30% and 40% respectively.

The company's strong distribution network has helped it maintain a market leading position.

Another reason why Kacholia has bought into the counter could be the strong performance D-Link delivered in the year gone by.

The company's operating performance improved in FY22 owing to pent-up demand for IT hardware products post the Covid-19 pandemic. The company benefitted from opening of commercial offices and easing logistics.

Financial Snapshot of D-Link

Rs m, consolidated	FY18	FY19	FY20	FY21	FY22
Revenue	6,437	7,157	7,401	7,265	9,183
Growth (%)	-9%	11%	3%	-2%	26%
Operating Profit	212	480	514	487	626
OMP (%)	3%	7%	7%	7%	7%
Net Profit	127	264	352	313	423
NPM (%)	2%	4%	5%	4%	5%
Total Debt	0	0	0	0	0
Debt to Equity (x)	0	0	0	0	0
Dividend Yield (%)	0.6	1.2	2.5	1.7	2.2

Data Source: Ace Equity

One more reason could be the company being a proxy-play in the telecom space. D-Link is primarily engaged in marketing and distribution of networking products.

In July this year, the company saw a sharp spike in its share price when the government amended the license rules and barred the use of non-trusted telecom gear for the expansion of communications networks in India. This bodes well for D-Link.

How D-Link share price has performed in 2022

In 2022 so far, D-Link share price has gained 38%.

Most of the gains is due to the rally witnessed in the past week.

Today, the stock touched a new high of Rs 251 and rallied 4%.

D-Link has a 52-week price of Rs 251 touched on 25 October 2022, today. It has a 52-week low price of Rs 105.2 touched on 20 June 2022.

About the company

D-Link is primarily engaged in marketing and distribution of networking products. It operates through a distribution network with a wide range of product portfolio and solutions with a nationwide reach across India.

Its portfolio includes different kinds of routers, switches, wireless devices, surveillance, network security, structured cabling, network infrastructure and optical transport network products.

Being part of D-Link Corporation comes with synergies as its promoter is a worldwide leader in designing, developing and providing Wi-fi and ethernet networking, broadband, multimedia, voice and data communications among other businesses.

To know more, check out D-Link's financial factsheet and its latest quarterly results.

You can also compare D-Link with its peers:

D-Link vs Smartlink Net

D-Link vs Tulip Telecom

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