Brahmal Vasudevan, Anand Narayan and the ace team of stock pickers at Creador/ Idria home in on only a handful of stocks. However, they make sure that their stock picks count and give bumper gains.
Past examples of Creador’s stock picks include Repco Home Finance and Cholamandalam Finance. Both stocks have given Creador multi-bagger returns in a short period of holding.
PC Jeweller is the latest stock to shine in the portfolio. Idria bought 44.79 lakh shares of PC Jeweller on 24th February 2015 at Rs. 244 each. The total investment was Rs. 110 crore.
The logic for investment in PC Jeweller was/ is very sound. The market is growing at a CAGR of 16% and there is a shift from the unorganized sector to the organized sector.
PC Jeweller is itself on a rapid growth expansion. The five year CAGR in revenue is 52.5%, the PAT CAGR is 46% and the average ROE is 34.7%. In addition, the company intends to open 20 new showrooms every year.
Anand Narayan, Sr. MD at Creador, explained the logic for investment in PC Jeweller in eloquent words: “PC Jeweller, under the leadership of Balram Garg, is an exceptional company experiencing a phenomenal growth rate. As the organised share in jewellery retail increases, PC Jeweller is bound to benefit from this trend and we are delighted to have this opportunity to partner with Balram and his team in shaping its next phase of growth.”
| PC Jewellers Quarterly Results | |||
| Particulars (Rs cr) | Sep 2015 | Sep 2014 | % Chg |
| Net Sales | 1669.59 | 1183.61 | 41.06 |
| Other Income | 4.86 | 9.43 | -48.46 |
| Total Income | 1674.45 | 1193.04 | 40.35 |
| Total Expenses | 1480.94 | 1013.1 | 46.18 |
| Operating Profit | 193.51 | 179.94 | 7.54 |
| Net Profit | 93.22 | 79.21 | 17.69 |
| Equity Capital | 179.1 | 179.1 | – |
These projections have come true because PC Jeweller has reported blockbuster Q2FY16 results. The net profit surged 17.7% to Rs 93.22 crore in Q2FY16 as compared to Rs. 79.21 crore for Q2FY15. The revenue surged 41% to Rs 1,669.59 crore for Q2FY16 as compared to Rs 1,183.61 crore in Q2FY15.
Not surprisingly, the stock price has kept pace with the surging growth. At the CMP of Rs. 452, Idria has a gain of about 86% on its eight month old investment.
At this stage, we must note that there is only one stock in the portfolio of Creador/ Idria that is underperforming. That stock is Ashiana Housing. Idria invested Rs. 100 crore in Ashiana in February 2015 at Rs. 215 per share by way of a QIP. At the CMP of Rs. 172, there is a loss of about 20%. The poor performance of the stock is not attributable to the company but to the sluggish sentiments in the real estate sector. Given that Ashiana Housing is a top-quality stock and is backed by well known investors like Prof Sanjay Bakshi, Ashish Kacholia, Westbridge/ Jwalamukhi etc, we need to consider whether we should turn contrarian and dip our toes into the stock also or not!
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