Two days ago, I reported on how Prof. Sanjay Bakshi and Ashish Kacholia have taken home spectacular gains of 300% (in less than one year) from their fantastic stock pick, Kitex Garments.
The good news continues today as well because the stock surged another 20% today to rest at Rs. 790.
Amongst the other stalwarts who spotted the potential of Kitex Garments, Ravi Dharamshi of ValueQuest deserves to be singled out for praise. In an interview given in November 2014 (when Kitex was quoting at Rs. 490), Ravi Dharamshi recommended a buy of Kitex and promised that it would give “fantastic returns”. He gave detailed reasons in support of his call. “We have lots of conviction and belief in promoter Mr. Sabu Jacob and he knows his game better than anybody else and he is very confident of achieving that” Ravi Dharamshi said.
Vikas Sethi of Finmart was also very direct in his recommendation. “Kitex Garments is a Page Industries in the making” he declared with immense confidence in his voice.
Motilal Oswal also got it right. In their ‘Initiating Coverage’ report issued in September 2014, Motilal Oswal recommended a buy on the basis that Kitex Garments has an “unique business model” and that there are “promising times ahead”. Motilal’s target price of Rs. 615 has long been breached by Kitex.
At this stage, we must note that if Kitex Garments is indeed to be the next Page Industries, then it has a long way to go even from here. Kitex has a market cap of Rs. 3,700 crore while Page Industries has a market cap of Rs. 15,600 crore.
So, maybe, one can look to starting a SIP in the stock even now.
Motilal Oswal has issued an update dated 6th April 2015, recommending a buy with a target price of Rs. 850.
GEPL has also recommended a buy though it has listed the merger of Kitex Garments and Kitex Childrenswear (an unlisted entity) as a “key risk”. It points out that the swap ratio pf the merger is unknown and that it can lead to “substantial equity dilution” in Kitex Garments, thereby dragging the EPS lower and the stretching the valuations higher.