Brahmal Vasudevan’s Fav Micro-Cap Stock Attracts Billionaire Anil Ambani’s Reliance Wealth

Anil Ambani’s latest stock pick

Anil Ambani, the illustrious Billionaire of the ADAG group, has such a flamboyant personality that it is impossible for him to sneak in unnoticed.

Yet, the baffling aspect is that his visit to Dalal Street a few days ago went unnoticed by the punters who loiter around the main gate, chewing Gutka and sipping Kadak chai.

The Billionaire’s luck ran out as he neared the counter of Veto Switchgears, a micro-cap (Rs. 390 crore) engaged in the manufacture of switchgears and other electrical goods.

The MMB punters who police the counter 24×7 spotted him and raised a hue and cry.

I immediately rushed to the scene and spotted the Billionaire tucking into 260,000 shares of Veto Switchgears. He bought the stock in the name of Reliance Wealth, his investment arm.

The Billionaire paid the sum of Rs. 5.59 crore with a big smile on his lips even as he cheerfully exchanged high-fives with the punters and signed autographs.

Brahmal Vasudevan also aggressively hikes stake in Veto Switchgears

Brahmal Vasudevan, the illustrious founder of Creador, a PIPE fund, has also been busy secretly visiting the Veto Switchgears counter.

I first reported in October 2016 that Brahmal has invested his own funds in buying 223,518 shares of Veto.

Since then, the stock price has ascended from Rs. 119 to Rs. 216, giving Brahmal massive gains of 81% in just a few months.

Naturally, Brahmal knows that he is onto a good thing and his appetite has been whetted.

As of 30th June 2017, Brahmal’s personal holding stood at 4,13,457 shares.

Senna Pendula is Brahmal’s PAC

The mystery as to the identity of ‘Senna Pendula’, an investor who holds a chunk of 4,97,000 shares of Veto, has been solved.

Brahmal has come clean and revealed that the said ‘Senna Pendula’ is a PAC (person acting in concert) with him.

Insatiable appetite for the stock

To the said massive holding of 910,457 shares, Brahmal has added a further 1,80,000 shares on 14th July 2017.

This means that the collective holding of Brahmal and Senna stands at 10,90,457 shares as of date, comprising 5.95% of the total paid up capital.

The investment is worth Rs. 24 crore at the CMP of Rs. 216 per share.

Why is Veto Switchgears so alluring?

Prima facie, it appears that Veto will be a big beneficiary of GST because all dubious suppliers of electrical goods in the grey market will perforce have to comply with the law, giving Veto a competitive edge.

Veto Switchgears has also recently received an order of 6 lakh pieces per annum and is in the process of establishing an LED factory in its existing factory area in Vasai, Maharashtra. The production is estimated to start from October 1st 2017, with an estimated CAPEX of 2.5 crore for the production of panel lights, tube lights, flood lights etc. The estimated turnover will be Rs. 30 crore per annum.

Veto also reported robust Q4Fy17 results which shows that it has the wherewithal to shower hefty gains upon investors.

[*C] Consolidated     [*S] Standalone

(Source: Business Standard)

MMB punters solve mystery as to why promoters are dumping the stock

One aspect that has baffled me and the other astute watchers is why the promoters are going on a selling spree.

As one can see from the chart, the promoters have been frequent visitors to Dalal Street with the avowed objective of dumping their holding.

The MMB punters pointed out that the promoters have allotted to themselves 45,00,000 warrants which are convertible into equivalent number of equity shares at any time within a period of 18 months from the date of allotment at an exercise price of Rs. 170 per equity share.

This means that the promoters are cleverly selling their existing holding to illustrious investors like Billionaire Anil Ambani and Brahmal Vasudevan, whilst ensuring that they will be able to replenish their quota whenever they want.

The best part is that while the illustrious investors are buying the stock at the CMP of Rs. 216 and thereabouts, the promoters are assured of replenishment at the fixed price of Rs. 170 per share.

Clean chit by eminent experts

In my earlier piece, I pointed out that eminent experts like DD Sharma, Ashish Maheshwari of Blue Ocean Strategic Advisors, Nirmal Bang, HDFC Securities, ICICI-Direct have carefully dissected the innards of Veto and given it a clean bill of health. This status continues as of date.

Conclusion

It is obvious that we cannot remain mute bystanders when illustrious investors are aggressively pocketing the stock. We have to keep alert for the opportune moment to pounce on the stock and give it pride of place in our portfolios!