Why Did Ashish Kacholia Buy More Even as Mukul Agrawal Sold his Entire Holding in this Microcap Stock?

One of the earliest and most important lessons that successful investors learn is the value of looking beyond the headlines.

While popular stocks often capture the attention of average investors, under the radar companies can sometimes act as siren songs, enticing many into unwise investments and diverting their focus from proven winners.

To find the compelling stocks that others are missing, many people look to portfolios of seasoned investors. These investing gurus ace the market test and earn high returns.

For investors seeking such insights, there is noteworthy stock market news: renowned investor Ashish Kacholia has upped his stake in a microcap plastic stock. Meanwhile, Mukul Agrawal has cut down his stake in that very stock.

About Ashish Kacholia and Mukul Agrawal

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.

Meanwhile, Mukul Agrawal is a prominent investor in India known for his microcap stocks and smallcap stock picks.

His style of investment involves a mix of offence and defence, with the majority of the time an offensive strategy after proper analysis and keeping two separate portfolios for investing and trading.

Which Stock Saw Buying and Selling by these Ace Investors?

The stock in question is Dhabriya Polywood.

The company is engaged in the manufacturing of PVC and UPVC-based products for a wide range of building interior and exterior applications.

The latest shareholding pattern of Dhabriya Polywood reveals that Ashish Kacholia and Mukul Agrawal executed trades in the company during the June 2024 quarter.

Notably, in the June 2024 quarter, Ashish Kacholia acquired a 0.2% stake in the company, while Mukul Agrawal's name was missing from the list, indicating a stake sell during this period.

Why Did Ashish Kacholia Increase His Stake?

According to the data available on exchanges, Ashish Kacholia acquired 26,176 shares, representing a 0.2% stake in Dhabriya Polywood, during the June 2024 quarter.

In the March 2024 quarter, he held a 6.4% stake in the company, which has now increased to 6.6%.

As of 8 July 2024, his stake in Dhabriya Polywood is valued at Rs 275 million (m).

While the exact reasons for Kacholia's decision to increase his investment in Dhabriya Polywood are not publicly known, several plausible factors could have influenced his choice.

One possible reason for Kacholia's stock purchase could be the company's consecutive order wins, which indicate strong business prospects and future revenue potential.

According to company filings, Dynasty Modular Furnitures Pvt. Ltd., a wholly owned subsidiary of Dhabriya Polywood Ltd., received a significant new work order from the Godrej Group. This order, valued at Rs 22 m, is for the supply and installation of modular kitchens.

Additionally, during the June quarter, Dhabriya Polywood secured a work order from the Radiance Realty Group for the supply and installation of uPVC windows and doors. This contract, valued at Rs 56.6 m, is scheduled to be executed in various tranches over 12 months.

Moreover, Dhabriya Polywood also received an order from the M3M Group for the supply and installation of wardrobes, worth approximately Rs 36 m. This project is expected to be completed within 9 months.

As of March 2024, the company boasts a robust order book valued at Rs 1.4 billion (bn). These substantial order wins and the overall healthy order book could be a why Ashish Kacholia chose to increase his stake in Dhabriya Polywood.

Why Did Mukul Agrawal Trim His Stake?

According to the latest shareholding pattern of the June 2024 quarter Mukul Agrawal's name went missing from the list of shareholders.

This means perhaps his holding might have slipped less than 1% or he has sold the entire stake in the quarter.

In the March 2024 quarter, Mukul Agrawal held a 2.8% stake in Dhabriya Polywood.

While the exact reasons behind Agrawal's decision to sell his shares are not publicly disclosed, there are several plausible explanations we can consider.

One potential reason for Agrawal's move could be profit booking. The shares of Dhabriya Polywood have experienced a significant uptrend over the past month, rising by 25%.

Over the past year, the stock has surged by more than 75%, reflecting the company's strong performance and robust order book.

Additionally, the influence of Foreign Institutional Investors (FIIs) might have played a role in Agrawal's decision.

During the June 2024 quarter, FIIs sold their entire holding in the company, reducing their stake from 0.1% in the March 2024 quarter to zero.

The withdrawal of FIIs, which often have a significant impact on market sentiment, could have further influenced Agrawal to reduce or liquidate his position.

A Close Look at its Financials

The company has demonstrated revenue growth of 25.8% on a compounded annual growth rate (CAGR) basis over the period spanning from FY22-24.

This can be credited to continuous growing demand.

The net profit also saw a significant increase, rising from Rs 50. m in March 2022 to Rs 140.8 m in March 2024, reflecting a CAGR growth of 66.4%.

Dhabriya Polywood Financial Snapshot (2022-24)

Particulars	31-Mar-22	31-Mar-23	31-Mar-24
Revenues (Rs in m)	1,336.40	1,711.70	2,116.30
Revenue Growth (%)	-	28.1	23.6
Net Profit (Rs in m)	50.8	84.8	140.8
Net Profit Margin (%)	3.8	5	6.7

Source: Equitymaster

Additionally, in Q4FY24, the company's sales increased by 8.5% year-on-year (YoY) to Rs 547.8 m. Net profit for the quarter ended March 2024 was Rs 40.6m, up 3.5% from Rs 34.5 m in the previous quarter ended March 2023.

Strong Expansion Plan

Looking ahead, Dhabriya Polywood has set an ambitious target to grow by 25% year-on-year for the next four years.

The company aims to achieve this growth with increased margins each year, driven by operational efficiencies, new product launches, and an expanding geographical presence, ultimately leading to a substantial increase in Return on Capital Employed (ROCE).

The company is planning to set up another Arezzo store in the Delhi NCR region by the first half of FY25.

This new store aims to tap into the significant market potential of the region and cater to the growing demand for Dhabriya Polywood's products.

Dhabriya Polywood is aggressively expanding its sales team to increase market penetration across PAN India. This strategic move is expected to enhance the company's market spread and drive higher sales.

The manufacturing of PVC/uPVC profile extrusion at the Bangalore unit will be fully operational by the first quarter of FY25. This facility will significantly boost the company's production capacity and meet the rising demand for its products.

The company is also setting up four new extrusion lines at the Bangalore unit for producing door profiles and uPVC window profiles. This expansion is aimed at catering to the growing market demand and ensuring a timely supply of high-quality products.

About Dhabriya Polywood

Dhabriya Polywood is engaged in the manufacturing of PVC and UPVC based products for a wide range of building interior and exterior applications.

The company mainly supplies its finished products in India to customers who are engaged in real estate activities, universities, office buildings, etc.

L&T, Emaar Group, AIIMS, Adani Group, DLF Ltd, OMAXE, JW Marriot, among others are some of its clients.

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

You can also compare Dhabriya Polywood with its peers:

Dhabriya Polywood vs Aadi Industries

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