At first glance, it is difficult to see why any serious investor would be interested in Palred Technologies. It is an ultra micro-cap (Rs. 91 crore) and runs a website called “latestone.com” where one can buy small ticket accessories like pen drives, mobile chargers, power banks, mobile case covers etc. These are low margin items and the competition is intense and cut-throat.
However, the surprising aspect is that a number of savvy investors are sitting pretty in it already. Ashish Dhawan of ChrysCapital fame leads the roster of savvy investors with a holding of 13,42,641 shares as of 31st March 2015. He has increased his holding in the recent past.
Some other well known investors are Six Rivers Group (10,84,742 shares), Parle Biscuits (7,00,000 shares), Amol Chauhan (7,45,000 shares), Passage to India Master Fund (6,38,000 shares) etc.
Ashish Chugh of Hidden Gems sent a cryptic tweet yesterday hinting that he had discovered a new stock.
At time when e-comm startups asking astronomical valuations,a listed e-com startup with "Proven"promoter available for free-0 debt-MCap=Cash
— Ashish Chugh (@hiddengemsindia) May 26, 2015
(At time when e-comm startups asking astronomical valuations,a listed e-com startup with “Proven”promoter available for free-0 debt-MCap=Cash)
Speculation was rife amongst Ashish Chugh’s followers that the reference is to Palred Technologies because Palred appears to meet the parameters referred.
While Ashish Chugh hinted (without confirming) that he is indeed referring to Palred, Porinju Veliyath rushed to the counter today and scooped up a chunk of 2,00,000 shares at Rs. 23.55 each. This sent the stock surging up nearly 10%.
The best way to understand Palred Technologies’ business model is to see the videos of Ameen Khwaja and Srikanth Reddy, Palred’s CEO and Chairman respectively.
Ameen Khwaja stated that the company is following the “inventory” model and not the “market place” model because the former offers higher margins. (It also bears the risk of an inventory loss). He also claimed that the company is seeking to achieve a turnover of Rs. 500 crore in the next three years.
Srikanth Reddy made it clear that he is inspired by Amazon Inc, the e-com behemoth with a market capitalisation of $200 Billion. He, however, emphasized that while Amazon had not made a rupee of profit in its fourteen years of existence, Palred would break the trend and churn out mega profits from the beginning.
How far these aspirations come true will be interesting to watch.