When Daljeet Kohli recommended a buy of Pennar Industries on 5th September 2014, most people did not pay attention. “Who wants to mess around with a company manufacturing steel strips and railway wagons” people thought.
However, Daljeet’s logic in recommending the stock is impeccable. He points out that Pennar Industries has “strong fundamentals” and that its “Pre-Engineered Building Systems (PEBS)” will the “major growth driver” and that PEBS is poised for “abnormally strong growth”. He also pointed out that Pennar has low debt and “immense operating leverage” owing to underutilization of capacity.
Daljeet and his followers have already made a packet from the stock. He recommended Pennar at Rs. 47. At the CMP of Rs. 60, gains of 27% are on the table. Not bad at all for an investment of 4 months. If Daljeet’s target price of Rs. 81 is achieved, we are talking of an overall gain of 72%.
Now, the big news is that Ashish Kacholia, the whiz-kid investor, has bought a chunk of 20 lakh shares of Pennar Industries in the September 2014 quarter. The investment is worth Rs. 12 crore at the CMP of Rs. 60.
We know from past experience that Ashish Kacholia’s stock picks are not to be taken lightly. He has glittering multi-baggers like Gati, Kitex Garments, eClerx Services, Ashiana Housing etc to his credit. Even JB Chemicals, which he bought in the June 2014 quarter (also a stock recommended by Daljeet Kohli) has given strong returns and is poised for more gains. Interestingly, Pennar Industries happens to be an old favourite of Ashish Kacholia. A post of September 2010 in equitydesk reveals that he had purchased a big chunk even then. (If you want to learn more about Ashish Kacholia, you will find it here).
Another indication that we need to pay close attention to Pennar Industries comes from the fact that Manish Bhandari of Vallum Capital has recommended the stock on the basis that “it is not just another steel producer but has created a new vertical for itself in the form of the PEBS”. Manish Bhandari made it clear that he is very bullish about Pennar’s prospects.
Incidentally, Manish Bhandari has also written a detailed piece on Pennar Industries in the August 2014 edition of Outlook Business where he advises that “Investors looking for a long haul can hop on to the gravy train”.