Bulk Deal Alert: Sunil Singhania Buys Fresh Stake in this Multibagger EV Stock

In the Indian stock market, Ashish Kacholia, Rakesh Jhunjhunwala, and Vijay Kedia stand out as prominent investors whose expertise and achievements have made them synonymous with successful investing.

These ace investors have not only accumulated vast fortunes but have also become icons in their field.

As a result, many investors seek to replicate the stock investments of these ace investors to achieve exceptional long-term returns.

In this article, we will focus on the recent activities of one such investing guru - Sunil Singhania.

According to the latest exchange data, the ace investor recently acquired a substantial stake in an auto-ancillary stock that is also into EV space.

Data shows that Sunil Singhania bought shares in this company via 11 block deals!

Before we delve deep into the reasons why Singhania made such a move, let's look at who Sunil Singhania is and what are some of his top picks.

A Word About Sunil Singhania

Sunil Singhania is founder of Abakkus Asset Manager, an investment management company.

Sunil Singhania has a track record of over two decades in equity markets, and he played a significant role in building Reliance-Nippon MF into one of India's largest asset management companies (AMCs).

To dwell deep into his portfolio, check out Sunil Singhania Portfolio: top 5 stocks.

Which Stock did Sunil Singhania Add and Why?

The stock in question is Shriram Pistons & Rings.

According to the data available on exchanges, Sunil Singhania, through Abakkus Emerging Opportunity added huge stake in the company on 20 December 2023.

Shriram Pistons & Rings is engaged in the manufacturing of pistons, piston pins, piston rings and engine valves for various automotive companies in the domestic and export markets.

This stock will become mainstream once more data is out and people get to know at what price Singhania entered the stock.

While we do not know the exact reasons why the investing guru decided to buy into the counter, there are some explanations.

Shriram Pistons & Rings recently acquired a majority stake in a component design and specialist manufacturing company.

In late October 2023, the company, via its subsidiary, acquired an additional 62% stake in Takahata Precision India for Rs 2.2 billion (bn).

After this acquisition, the company holds 75% stake in Takahata.

Takahata Precision India is a precision injection-moulded component design and manufacturing specialist company, backed by Takahata Group, Japan.

This acquisition gives Shriram a chance to diversify its market presence into certain segments, which adds another avenue for revenue.

So that could be one reason behind Singhania's bullishness.

The other reason could be the company's presence in the EV space.

Auto component maker Shriram Pistons & Rings has a majority stake in electric motor design and manufacturing firm EMF Innovations.

Shriram had acquired this stake back in December 2022 to foray into the emerging electric vehicle (EV) mobility space.

This acquisition expanded Shriram's presence in the EV space to supply electric powertrain components such as motor and controller, covering all the vehicle segments from two-wheelers, three-wheelers, passenger vehicles and commercial vehicles.

That's not all. Over the years, Shriram has successfully acquired stakes in multiple small companies to diversify and strengthen its product portfolio.

Back in 2020, it acquired key businesses for BS-6 models requiring the latest technology and stringent quality requirements. This also resulted in higher market share with the key OEMs in India.

According to experts, the recent two acquisitions that it made in the past one year would results in incremental revenue of over Rs 3 billion in the current financial year.

Shriram Pistons also has technical collaborations in different areas with multiple foreign companies including Germany's KS Kolbenschmidt Japan's Honda Foundry, etc.

Due to all the acquisitions and the collaborations, it can cater to the entire auto spectrum of two-wheelers, three-wheelers, PVs, CVs and tractors with a healthy market share in each segment.

If all these reasons weren't enough, here's more...

{nlineads3}

The company posted a stellar set of results in the latest September 2023 quarter.

It posted revenue of 7.5 bn compared to Rs 6.4 bn posted in the same period last year while net profit came in at Rs 1.1 bn compared to Rs 730 million (m) a year ago.

The company has registered strong numbers in the recent quarters on the back of cost-cutting measures and due to better sales mix.

Financial Snapshot

Rs m, consolidated	FY19	FY20	FY21	FY22	FY23
Net Sales	19,549	16,068	15,966	20,647	26,093
Growth (%)	13%	-18%	-1%	29%	26%
Operating Profit	3,175	2,018	2,351	3,337	5,070
OPM (%)	16%	13%	15%	16%	19%
Net Profit	1,385	730	888	1,636	2,935
Net Margin (%)	7%	5%	6%	8%	11%
ROE (%)	14.4	7	8.1	13.7	21.3
ROCE (%)	20.1	8.6	10.9	17.6	25.8
Dividend (Rs)	10	6	6	10	15
Debt to Equity (x)	0.1	0.1	0.1	0.1	0.2

Data Source: Ace Equity

How Shriram Pistons & Rings Share Price has Performed Recently

The stock has been locked in 5% circuit for the past two days.

In the past one year, the stock has delivered multibagger returns of 104%.

Here's a table comparing Shriram Piston with its peers.

Comparative Analysis

Company	Shriram Pistons	GMM Pfaudler	ION Exchange	Praj Industries	Skipper
ROE (%)	21.3	32.2	26.2	24.1	4.7
ROCE (%)	25.8	25.9	34.1	32.4	12.1
Latest EPS (Rs)	86.6	40.8	14.1	14.8	6.8
TTM PE (x)	13.4	38.2	42.9	36.4	31.8
TTM Price to book (x)	2.9	7.5	9.9	8.9	2.8
Dividend yield (%)	1.3	0.1	0.2	0.8	0.1
Industry PE	43.3
Industry PB	5.1

Data Source: Ace Equity

About the Company

Formed in 1972, Shriram Piston & Rings has three manufacturing facilities.

It caters to OEMs across the diverse segments of the automotive industry, aftermarkets and export markets.

To know more, check out Shriram Pistons' financial factsheet and its latest 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...