Space Stock Locked in Upper Circuit After Ashish Kacholia Buys 17,54,385 Shares

Consider this example.

I'm buying dogecoin at 20 cents on Robinhood, when it's at the peak of the market.

And the taxi buyer's buying it.

No offence to the taxi driver but he's at the bottom of the totem pole when it comes to financial literacy.

The narrative has already been constructed.

The main funds and institutions have already bought it.

They've already shilled it to you.

You're the executioner.

Do you know what your job is here? It's not to figure out what position you're holding it in... or what allocation you should have for that stock.

Your job is to figure out how can you move from this side of complete ignorance... close to the source of information.

Once you move close to that information... you have a higher chance of earning market beating returns.

We at Equitymaster constantly try to learn as much as possible about the best capital allocators in the world.

We track the buying and selling activities of the top investing gurus in India like Vijay Kedia, Sunil Singhania and the likes.

One such interesting development that came out recently was Ashish Kacholia buying over 45 lakh shares of a space stock.

Before we delve deep into the stock details, let's take a look at who Ashish Kacholia is and what are some of his top stock 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.

Which Space Stock did Kacholia Buy and Why?

The company in focus is none other than Walchandnagar Industries.

It provides engineering, procurement, and construction solutions as well as machinery and equipment to the aerospace and defence sectors.

According to the latest shareholding pattern of Walchandnagar, as of March 2024, Ashish Kacholia held around 3.2% stake in the company or 1,754,385 shares in total.

Prior to this in the December 2023 quarter, his name was missing from the shareholders' list.

In fact, Kacholia initially bought stake when the company decided to issue share warrants, which are fully convertible.

Back in November 2023, it had raised around Rs 2.5 billion (bn) through a share warrant issue.

Out of this, Ashish Kacholia was allotted 1,745,385 shares at a price of Rs 114 per share aggregating to Rs 198.9 million (m).

The stock currently trades at Rs 242 which means Kacholia has already doubled his money in less than 6 months.

Coming back to Kacholia's buying...

While we don't know the exact reasons why he bought a huge stake in the company, there are some reasons we can guess...

First reason being the company's involvement in the red-hot space sector.

When it comes to missiles, Walchandnagar Industries has a lot going on. In FY23, it was involved in 4 missile programs, thereby qualifying for a total of 10 missile programs of DRDO.

During the year, it also received the first sample batch order of ASTRA missile. Large-scale production of these missiles will be executed in the coming years.

It was also involved in manufacturing and delivery of key sub-assemblies of crew escape system for Gaganyaan.

Moreover, it also had a lot of things working in manufacturing, delivery and assembly of core equipment for the first ultrasonic wind tunnel for ISRO.

The other reason we believe Kacholia might be interested in this company is because it's a perfect turnaround stock to play the space boom.

After 4 years of losses, the company is now generating profit, all thanks to the increase in the number of orders executed.

Financial Snapshot

Rs m, standalone	FY19	FY20	FY21	FY22	FY23
Net Sales	3,641	2,981	3,256	2,992	3,221
Growth (%)	-9%	-18%	9%	-8%	8%
Operating Profit	1,065	550	452	556	-119
OPM (%)	29%	18%	14%	19%	-4%
Net Profit	-21	-655	-572	-381	196
Net Margin (%)	-1%	-22%	-18%	-13%	6%
ROE (%)	-0.6	-21.7	-23.8	-19.6	9.0
ROCE (%)	10.2	3.0	3.4	5.3	12.7
Dividend (Rs)	0.0	0.0	0.0	0.0	0.0
Debt to Equity (x)	1.4	1.5	1.9	2.5	1.1

Data Source: Ace Equity

For FY24 as well, the company is expected to post a profit. Although the profit may be lower compared to year ago period as the company's labours had called a strike for 43 days between November 2023 and January 2024.

Some of its plants, however, were operating at full capacity.

Going forward, the company is sitting on a heavy order book especially from the nuclear power segment.

It had unexecuted orders worth Rs 9.3 bn as of December 2023.

How the Stock of Walchandnagar Industries has Performed Recently

In the past 5 days, Walchandnagar Industries share price has rallied around 13%.

In a month, the stock is up 20%. It was locked in the upper circuit band for the past two trading sessions.

Walchandnagar Industries has a 52-week high of Rs 269 touched on 27 February 2024 and a 52-week low of Rs 61 touched on 24 April 2023.

In the past one year, share price of the company has shot up by 295%!

Here's a table comparing Walchandnagar with its peers.

Comparative Analysis

Company	Walchandnagar	Disa India	Jash Eng.	Patels Airtemp	Yuken India
ROE (%)	8.9	13.7	4.4	24.2	21.1
ROCE (%)	12.7	18.8	6.2	31.9	27.7
Latest EPS (Rs)	3.3	266.1	3.7	16.1	27.8
TTM PE (x)	70.1	168.1	30.2	34.1	15.7
TTM Price to book (x)	5.7	29.6	1.8	5.1	3.3
Dividend yield (%)	0.0	0.1	0.3	1.2	2.9
Industry PE	30.5
Industry PB	5.7

Data Source: Ace Equity

In Conclusion

While it might be tempting to follow the investment moves of successful investors, it is crucial to conduct thorough research and analysis before making any investment decision.

Focus on investing in fundamentally strong companies that align with your individual goals and risk tolerance level.

Happy Investing!

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...