In stock markets, being groundbreakers or path makers requires a lot of hard work and expertise to survive economic downturns.
In stock markets, being groundbreakers or path makers requires a lot of hard work and expertise to survive economic downturns.
Investors must have a robust understanding of market knowledge, volatility, and effective risk management strategies to succeed.
In light of this challenging nature of financial markets, many follow in the footsteps of investing gurus.
That's because they are well-known for their popular strategies. They have a successful track record of beating market-like returns and have a knack for identifying multibagger stocks.
Consequently, their every move in the market, including their decision to buy or sell stakes in specific companies, garners significant investor attention.
One such prominent guru is Ashish Kacholia, also known as the "Big Whale".
On Tuesday, he made a fresh entry in a multibagger steel stock.
Before we delve deep into the reasons for which stock he bought and why, let's take a look at who Ashish Kacholia is and what are some of his top picks.
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.
To dwell deep into his portfolio, check out Ashish Kacholia portfolio: top 5 stocks.
Which multibagger stock did Ashish Kacholia buy and why?
The latest shareholding pattern of Venus Pipes and Tubes shows that Ashish Kacholia picked up around a 2% stake in the small-cap company through a bulk deal on 11 April 2023.
Ace investor bought four lakh shares, or 1.97% stake, in the company for Rs 288 million (m).
According to bulk deal data from the exchanges, the deal was executed at a weighted average price of Rs 720 a share.
Data suggested that Nuvama Wealth Finance Limited sold 1.3 lakh equity shares at Rs 750 per share. The names of the other sellers are yet to be ascertained.
Other prominent shareholders in the company include veteran investor Madhulika Agarwal, who holds a 2.5% stake.
While we do not know the exact reason why the investing guru decided to buy the counter, there are some explanations.
#1 Strong financial performance
For the first nine months (April to December) of the financial year 2022-23, Venus Pipes reported a 35.9% YoY jump in revenue from operations at Rs 3.7 bn.
Net profit during the same period rose to 30.4% YoY at Rs 308 m. While its EBITDA (earnings before interest, taxes, depreciation, and amortization) grew by 33.8% YoY to Rs 475 m.
This growth in earnings was supported by increased capacity, successful ramp-up in operations, and higher demand for its products.
From April 2022 to December 2022, the company saw a 107% YoY surge in direct domestic sales, driven by a focus on productivity and quality.
Furthermore, in the December 2022 quarter, the company upgraded the tube mill, which will further increase the efficiency of tube mills.
This remarkable growth in earnings could be a contributing factor to the bullish sentiment of Ashish Kacholia towards the company.
#2 Favourable government policies
The Centre has imposed anti-dumping duty on stainless steel seamless tubes and pipes imported from China up to 2027 to prevent harm to the domestic industry.
The recommended anti-dumping duty ranges from US$ 114 per ton to US$ 3,801 per ton of stainless pipe and tubes of different grades.
The company is set to benefit from this favourable government policy and the expansion of product offerings by the pipe maker.
In addition to this, import substitution will also aid the company in capturing the market share of unorganised players.
These positive tailwinds can be another reason that may have influenced Ashish Kacholia's bullish stance on the stock.
How stock of Venus Pipes and Tubes has performed recently
Venus Pipes and Tubes shares hit an all-time high of Rs 867.6 in early trade today.
The stock has given multibagger returns of 135.2% since its listing in May 2022. Despite weak sentiment in the overall market, the stock has rallied 14% in the past month.
The stock has a 52-week high quote of Rs 867.6 touched on 12 April 2023, while it touched its 52-week low of Rs 321.1 on 30 May 2022.
Venus Pipes and Tubes Share Price Since Listing
Data Source- BSE
Venus Pipes and Tubes currently trades at a price-to-book value multiple of 5.3 times and a price-to-earnings multiple of 13. The company has a marketcap of Rs 16.9 bn.
As of December 2022 quarter, promoters hold a 48.2% stake in the company while FIIs increased their stake to 5.8%.
About Venus Pipes and Tubes
The company is one of growing stainless-steel pipes and tube manufacturers and exporters in India.
It produces a wide range of products, including stainless steel welded pipes and tubes, stainless steel flanges, and much more.
These products find application in various industries such as oil and gas, petrochemicals, pharmaceuticals, food and beverage, and construction.
The company has a strong focus on research and development, with its in-house R&D centre continuously working on developing new products and improving existing ones.
This has helped Venus Pipes and Tubes maintain its position as a leading player in the stainless-steel pipes and tubes market.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
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