The first sign that a stock is likely to be a winner comes when the super-savvy investors start tucking into in a quiet manner and without alerting anyone.
Lashit Sanghvi and Nikhil Vora qualify as super-savvy investors because of their stellar track record in finding winning stocks. The duo teamed up on 10th April 2015 to buy Ashapura Intimates Fashion, a micro-cap (Rs. 540 crore) manufacturer of lingerie and similar garments which are sold under the brand name “Valentine”.
While Lashit Sanghvi and Neha Sanghvi bought 1,25,000 shares each of Ashapura Intimates Fashion at Rs. 145 each, Nikhil Vora bought 1,75,000 shares at Rs. 147 each on the same day. The investment by Lashit & Neha Sanghvi is Rs. 3.62 crore and Nikhil Vora’s investment is Rs. 2.57 crore.
Ashapura Intimates is presently at Rs. 278, giving gains of 60% to the duo.
Another of Nikhil Vora’s stock picks that requires mention is Vidhi Dyestuffs. I reported that he had pumped in Rs. 2.35 crore on 05.08.2015 in buying 497,114 shares at Rs. 47.40 each. Vidhi Dyestuffs is presently at Rs. 75, giving gains of 58% in just about 5 months.
Ajay Relan of CX Partners has a chequered history when it comes to picking stocks. MPS, his stock pick of 2014, thrilled investors by surging like a rocket and giving multibagger returns. However, Career Point, his stock pick for 2015, has not lived up to expectations (so far).
Ajay Relan has given a detailed explanation about the criteria that he looks for when picking a stock. The criteria stipulated by Ajay Relan are very well thought of and ought to be adopted as a check-list by every investor wanting to invest in potential multi-bagger stocks.
Ashapura Intimates fits Ajay Relan’s criteria like a glove. In the latest issue of Outlook Business, Ajay Relan has given a detailed explanation on why he is willing to trust Ashapura Intimates with his money. The essence of the analysis is that Harshad Thakkar, Ashapura’s promoter, has done all the right things so far and has grown the business in a systematic and sustainable manner.
Ajay Relan also emphasizes that while Ashapura’s valuation at 15x expected FY16 Ebitda is not cheap, if Ashapura does the right things, going forward, it can triple Ebitda in the next three years, with a concomitant increase in its stock price. He also points out that the market for the sort of products that Ashapura is into is worth a gigantic Rs.50,000 crore. He explains that as consumers become more quality- and brand-conscious, Ashapura can capitalise on this trend and grow disproportionately quicker than the secular organic growth rate of 10% in its product categories.
Ajay Relan cautions that Ashapura would need to exhibit “flawless execution and the highest standards of corporate governance” and that it would have to procure “the best management talent to run the company, implement the best management information systems that can generate actionable business intelligence, relentlessly pursue efficiency in both operations and working capital management and put in place a truly distinguished and independent set of directors to provide inputs about the company’s strategic initiatives, corporate integrity and transparency”.
At the end, Ajay Relan advises investors to “hold this stock and forget about it” and promises that it will offer a “pleasant surprise” when they revisit it three years later.