Alchemy Capital is run by ace stock pickers like Lashit Sanghavi, Hiren Ved and Ashwin Kedia. Rakesh Jhunjhunwala, the Badshah of Dalal Street, is also credited as a co-founder of Alchemy Capital, though he does not participate in its day to day activities.
Alchemy Capital enjoys an impeccable reputation for picking winning stocks. Its portfolio boasts of winners like Bata India, Bajaj Finance, Tata Motors, ING Vysya Bank, Federal Bank, Maruti Suzuki, Motherson Sumi etc.
Alchemy Capital’s latest stock pick is Axiscades Engineering Technologies Ltd. Today, it bought 715000 shares at Rs. 235 each, worth Rs. 16.80 crore.
Axiscades was earlier known as Axis IT&T and was formed by a merger of Axis and Cades. It is a small cap (market capitalisation of Rs. 640 crore) engaged in providing technology solutions to the Aerospace, Defense, Heavy Engineering, Automotive and Industrial Production sectors.
Axiscades has been thoroughly analyzed by Wellworth Wealth Management in its ‘initiating coverage’ report of October 2014.
Wellworth recommended a “strong buy” on the basis that Axiscades would get several long-term “multi-million dollar deals” owing to its niche areas of aviation/defence and “fantastic management team”.
Wellworth also predicted that the EBIDTA margins would improve drastically after the consolidation of Axis IT&T and CADES. It pointed out that the advantages of consolidation will be evident from FY16 onwards, being first full year of operations after merger/consolidation.
Apart from all the points made by Wellworth, what also appears to have caught the attention of Hiren Ved and the other wizards at Alchemy Capital is the fact that Axiscades recently signed an MOU with the Airbus Group for providing “value addition” for Airbus’ projects. The fact that a big-ticket OEM like Airbus trusts Axiscades is a pointer to the fact that the Company is on the right trajectory.
Axiscades top brass, Sudhakar Gande, came on record to state that the sector that the Company is engaged in, namely, “niche engineering precision technology, focussing on aerospace defence” is like what the software sector was 20 years back. He promised that the sector would see “very high growth” and that there would be a “lot of opportunities in the sector” in the next couple of years.
Sudhakar Gande also stated that Axiscades is expected to report a top line of Rs. 500 crore, up from Rs. 300 crore of the last fiscal. He also emphasized that the industry is “highly profitable” with normal EBITDAs in the range of about 20 percent. Sudhakar Gande also pointed that there are high entry barriers and that it is difficult to gain the trust of companies like Airbus. However, once the business starts flowing, there are a lot of repeat orders. He also stated that Axiscades is well placed to capitalize on the “Make in India” policy and would enjoy “very high growth” in the foreseeable future.
Sudhakar Gande’s logic is very persuasive and does fill one with confidence about the prospects for Axiscades. If it does come true, it means that Hiren Ved and the other wizards at Alchemy Capital will have another super-duper multi-bagger in their portfolio.