Ashish Kacholia Invests in a Smallcap Stock that has Rallied 1,000% in 5 Years

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 investing gurus of the stock market is one of the investment strategies which many follow.

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. 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?

Last week on Friday, bulk deal data revealed that Kacholia purchased shares of a smallcap company involved in the refractory segment.

The stock in question is Raghav Productivity Enhancers (erstwhile Raghav Ramming Mass).

On Friday, Kacholia bought 231,683 shares of Raghav Productivity Enhancers, representing a 2.13% stake through a bulk deal on the BSE.

According to the data, Kacholia bought these shares at Rs 842 apiece.

Soon after the news broke, shares of the company surged over 10% on Friday and ended the day 12% higher at Rs 954 on the BSE.

Today, the stock is up another 4%.

Why did Ashish Kacholia buy Raghav Productivity?

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

Raghav Productivity Enhancers is engaged in the manufacturing of quartz based ramming mass, quartz powder, and tundish board.

Over the past five years, the company has steadily growth its revenues and profits. Financial year 2022 was the best year for the company where it reported a record high profit on the back of a 56% growth in revenues.

Financial Snapshot

Rs m, standalone	FY18	FY19	FY20	FY21	FY22
Revenues	476	564	665	646	1,007
Growth (%)	12%	19%	18%	-3%	56%
Operating Profit	103	134	157	150	277
OPM (%)	22%	24%	24%	23%	28%
Net Profit	59	80	94	92	186
NPM (%)	12%	14%	14%	14%	18%
Total Debt	103	78	63	-	59
Debt to Equity (x)	0.42	0.24	0.15	0	0.05
ROE (%)	27.4	28.4	25.4	17.2	21.3
ROCE (%)	28.2	31.5	31.5	22.8	28.1

Data Source: Ace Equity

In its most recent quarterly results, the company recorded a 42% year-on-year (YoY) growth in profit on the back of strong revenues as well as overall operating performance.

The company's EBITDA jumped 55% to Rs 88.1 m, compared to the year-ago period. EBITDA margin expanded by 77 basis points (bps) to 24.55%.

The company also has good return rations as can be seen in the table above.

So financial performance has to be one reason.

Another reason can be the company's established market position. Ashish Kacholia has often looked at market leader stocks from various industries.

In the September 2022 quarter, Kacholia had bought stake in Agarwal Industrial Corp, which is a market leader in bitumen space and a proxy play to infrastructure.

Another stock Kacholia bought recently was D-link, which is a leader in shipment of switches and wireless local area network products with a market share of 30% and 40% respectively.

Raghav Productivity is a market leader in the ramming mass manufacturing segment, with a track record of good product quality, which has helped it attain higher-than-average realisations.

The company also exports to over 30 countries.

How Raghav Productivity Enhancers has performed on the bourses lately

The performance of the company in the past one month has been spectacular. It has gained over 65% under a span of one month!

On Friday last week, the stock erased gains in latter half and zoomed 12% to end at Rs 954. Today, the stock surpassed its previous high and rallied another 5%.

It hit a high of Rs 1,020 in early trade today. The stock has a 52-week low of Rs 434 touched on 12 May 2022.

In 2022 so far, shares of the company have gained 33%.

If we take into consideration its 5-year performance, the stock has rallied over 1,000%.

Here's a table comparing the company with its peers on various parameters as of financial year 2022.

Comparative Analysis

Company	Raghav	Ashapura Minechem	OMDC	GMDC	KIOCL
ROE (%)	21.3	-37.0	-410.6	9.2	15.2
ROCE (%)	28.1	12.3	12.5	16.9	20.5
Latest EPS (Rs)	20.1	-4.2	1.7	25.8	0.9
TTM PE (x)	47.6	-	-	5.9	203.9
TTM Price to book (x)	8.6	29.1	996.0	0.9	5.2
Dividend yield (%)	0.1	0.6	0.0	2.8	1.0
Industry PE (x)	9.9
Industry PB (x)	3.2

Data Source: Ace Equity, Equitymaster

About Raghav Productivity

The company sells its products under the brand name of "Raghav". It has presence across 30 countries in addition to India, and in FY22, the company earned close to 41% of its revenues from export sales.

The company is currently planning to expand ramming mass production capacity by 108,000 TPA through a 100% fully owned subsidiary Raghav Productivity Solutions, which is adjacent to their existing plant in Rajasthan.

To know more, check out Raghav Productivity's financial factsheet and its latest quarterly results.

You can also compare it with its peers:

Raghav Productivity vs Ashapura Minechem

Raghav Productivity vs OMDC

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...