Both Ashish Kacholia and Dolly Khanna are Bullish on This Stock

Investing

Ashish Kacholia and Dolly Khanna are ace investors  and they are known for his stock ace-picking. Their portfolio has delivered huge return in the last one year. However, one chemical stock features in the portfolio of both of these investors and it has also brough mega gains for them.

Interesting thing is that Ashish Kacholia has been consistently increasing its weightage in the portfolio. He has started with 2.82% holding in March 2017 to 4.04% in March 2018.

We are talking about NOCIL. It is the most significant investment of Ashish Kacholia’s portfolio and comprises a significant weight of 13%. It has delivered 62.5% return in the last year.

Even Dolly Khanna is quite bullish on the stock and it consists 7.8% of the total portfolio. Nocil is a leader in the speciality  rubber chemical space and maintains strong margins despite rise in the price of petroleum products.

Mutual funds are constantly increasing the stock holding on the monthly basis.

January 2018–53 lakh

February 2018–59 lakh

March 2018–68 lakh

April 2018–69.26 lakh

No mutual fund has sold it in the last four quarters and BNP Paribas has added in its scheme recently.

 

 

This Brilliant Young Investor Has a Secret Stock Picking Formula That Even Rakesh Jhunjhunwala, Dolly Khanna, and Ramesh Damani Didn’t Know—But Now You Can Know For Free

Investing

Lies, damn lies and statistics is a famous saying. Rahul Rathi, the ace investor from the house of Puranartha, has a different take.

“Numbers don’t lie as they are outcome of your actions over a long time.” says Rahul to Ramesh Damani in a free-wheeling chat.

Look the companies such as HDFC, Asian Paints, and Infoys in the Sensex, they have returned more than 250 times since inception. So, observing numbers carefully is very important.

A Puranartha Equity Investment advisor has an enviable track record of generating higher alpha. How do they choose their picks—asked Ramesh Damani who has a great knack for extracting hard-kept secrets.

All novice investors looking to do well in the market should be thankful to him for hiss kind efforts. If you still get loss in the market by investing in low quality stocks in the hope of getting high-returns—only you’re to blame for your miseries.

So let’s come to know his stock selection strategy.

1.High Operating Cash-flow

Any stock that wants to pass the stringent criteria should have at least 11 years of track record, which is a typical GDP cycle in which it has increased, decreased and drifted. A good company should be able to grow its operational cash-flow successfully.

But what about the businesses that generally require high-CAPEX or dividend payment?

The operating cash-flow should be sufficient enough to meet all working capital needs and capex related requirements since this is when ideal debt-free scenario is created.

Amazing! Isn’t it?

2.Strong Volume Growth

After analyzing 160 companies over a period of 30 years, Purantha Capitals found that those companies that doubled their operating cash flow in three years offered maximum return in this period.

3.Invest in Consumer Led Companies

They offer more secular growth and are relatively insulated from the vagaries of GDP growth. They are less volatile.

However, Rahul Rathi was candid to accept his mistake in the J&K Bank. They selected the company because of their monopoly in the state, but soon they come to know this hard truth that recovery mechanism doesn’t work.

So they learned the hard truth that data alone is not sufficient and it should be viewed in the current context.

(This article has been written based on the interview of Mr. Rahul Rathi in Market Wizards by Ramesh Damani )

Why Rakesh Jhunjhunwala and Dolly Khanna Are  Bullish on Prakash Industries

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From the badshah of D-street Rakesh Jhunjhunwala to Dolly Khanna, all of them are rushing to buy the stock of a small cap company, which is on the cusp of a major turnaround. What is that in the stock that has made these stalwarts make a beeline for this counter. Dolly Khanna has purchased 400000 shares of this company. This is touted as  a potential multibagger stock in 2018.

Letl’s Understand the Business

Prakash Industries Limited is a fully integrated steel company. It works in mainly two segments:   Firstly, it makes TMT bars, coils, and rods and secondly, it manufactures PVC pipes and fittings that are used in residential buildings for plumbing needs and in irrigation. It has its own captive iron ore mines and 100% linkage from coal mines.

Now Understand How It’ll Benefit

# 1 Captures Margin at Each stage

Because of being a 100% backward integrated steel company, it captures the margin at each stage. For example, for most non-integrated steel companies, the price of coal has gone up, whereas for Prakash Industries it has gone down because it has own captive mines. Similarly, they have now better sourcing of iron ore mine that helps it produce sponge iron at the lower cost than its competitors. This sponge iron is later used in manufacturing of TMT bars and rods.

The fifth Sponge Iron Rotary Kiln has been successfully commissioned. With this, the Company has become self-reliant with respect to its requirement of Sponge Iron in its Steel Melting Shop Division. The new Rotary Kiln has also enhanced the power generation capacity by additional 15 MW through the Waste Heat Recovery route by harnessing the effluent gases of the Kiln. The price of coal will further go down for the company. (Annual Report: 2017)

Further the Sirkaguttu Iron Ore Mine was allotted to the Company in the state of Odisha and the Company has already executed the mining lease with the State Government during the last quarter of the financial year under review and the mine is expected to be operational in the current year, which shall improve the performance quotient of the Company to a significant extent. (Source: Annual Report: 2017)

All of this has helped the company improve margins from 9% to 12 % in 2017 from 2016 and in 2018, this will improve even further once iron ore lease process will be over. EBITDA and Net Margins should improve further.

# 2 No More Tag of a Shell Company

The company suffered a lot because of the tag of a shell company, which has been revoked now. That has helped restore its respect in the market.

# 3 Further FCCB Restructuring

$36 million of total $60 million FCCB loan has already been restructured. The company is trying to restructure remaining loan. Once the loan is fully restructured, the price will further increase.

# 4 Demerger of PVC Pipes Business

Demerger of the pipes business is expected to take place. Company has deputed Price Water House Coopers. It’ll help unlock values of these two segments. However, it’s not going to happen soon as they’ll have to take approval from SEBI as well, which is time-consuming.

# 5 Ride on Faster Sales Growth

Company has witnessed sharp increase in both segment sales because of the boom in the steel and affordable housing sector. The growth in the pipe segment has been even higher (45%) in the latest quarter, along with the fact that profit has jumped from 27 crore to 124 crore.

The Company is targeting 30% volume growth, which is not difficult to meet considering strong demand for the product. The supply disruption caused by cut in the production of steel from China will continue that ensures steel sector will be in the multi-year upcycle.

All of these positive developments have made these ace investors optimistic about the future of the company and that’s why they are sitting tight on it.