Diwali Gift! Vijay Kedia & Porinju Veliyath Recommend Potential Multibagger Stocks

Diwali Gift of 2015

In Diwali 2015, Vijay Kedia generously recommended that we buy Heritage Foods. We have to acknowledge our gratitude for this because since then the stock is up nearly 100%.

In hindsight, Heritage Foods was a classic “no brainer” buy given that it also had the backing of Dolly Khanna and Kamal Kabra and was quoting at a rock bottom valuation in comparison to its arch rival, Hatsun Agro.

The best part is that Heritage Foods is still a great buy. Ambit Capital has recently conducted an in-depth study of all dairy companies like Hatsun Agro, Heritage Foods, Parag Milk and Prabhat Dairy and concluded that the process of conversion of milk into branded cheese, paneer and butter products results in enormous value addition and that most of this will reflect in the bottom line of the companies. It is also pointed out that the changing dietary habits and growing consumption of cheese and butter augers well for these companies.

Mahindra Holidays – Diwali Gift No. 1 for 2016

For Diwali 2016, Vijay Kedia has recommended Mahindra Holidays as being investment worthy. He revealed that he has invested in the stock of Mahindra Holidays a few days back though he did not reveal how many shares he has bought.

Mahindra Holidays is also a no-brainer stock pick.

The small-cap (Rs. 3900 crore) was first recommended in 2014 by UR Bhat of Dalton Capital as his “best pick of 2014”.

UR Bhat echoed Vijay Kedia’s wisdom. He emphasized that Mahindra Holidays is a great buy because it has “a growing addressable market; a sustainable and unique competitive advantage in the market place demonstrated by robust pricing power; good execution capabilities; and a quality management with integrity, committed to the stakeholders of a company”.

This has played out as per plan because Mahindra Holidays has since then given a hefty gain of 83%.

[*C] Consolidated     [*S] Standalone

(Source: Business Standard)

Stock recommended by Karvy

Karvy recommended a buy of Mahindra Holidays in May 2016 on the logic that its strong inventory will drive growth coupled with the good membership base of nearly 200,000 members.

Stock recommended by Anand Kalyanraman

The stock has also been thoroughly researched by Anand Kalyanraman of Business Line. He has recommended a buy on the logic that the healthy earnings growth aided by an increase in membership and additions to room inventory make the valuations reasonable.

Stock recommended by Nilesh Shah of Envision Capital

Nilesh Shah of Envision Capital recommended Mahindra Holidays on the logic that as the economy grows consumer discretionary stocks will do very well. He emphasized that the Company has positive cash flows, the management pedigree is great, the future prospects are great and the valuations are reasonable.

@porinju stock Century Textiles@VijayKedia1 stock Mahindra Holidays

— Darshan Mehta (@darshanetnow) October 21, 2016

Find stocks where there is a “restructuring” of the management and a change in the public perception of them

Porinju explained that there are a number of top-quality stocks with high growth rates and valuable assets which are going a-begging because their management is perceived to be “chors”.

He opined that whatever may have been the compulsions of the managements of these companies in the past, it will no longer be possible or worthwhile for them to continue their nefarious activities.

The low tax rates coupled with the heightened surveillance of the Governmental authorities’ means that such managements will willy-nilly have to reform themselves and this will lead to a re-rating of their companies.

.@_nirajshah speaks w/ @porinju at #MarketMasters about the art of stock picking. Listen in: pic.twitter.com/9wniaNFvZq

— ET NOW (@ETNOWlive) October 21, 2016

Century Textiles – Diwali Gift No. 2 for 2016

Consistent with his investment philosophy of finding good companies with not-so-good managements (Birla), Porinju has recommended Century Textiles. The management is renouncing its bad habits and doing the right things and making the right noises, he said.

[*C] Consolidated     [*S] Standalone

(Source: Business Standard)

“Deep value” stock pick of Rahul Saraogi of Atyant Capital

Rahul Saraogi of Atyant Capital had earlier recommended Century Textiles on the same logic as that propounded by Porinju.

Saraogi explained that the public perception is that management of Century Textiles is “sub-par” and that there have been several cases of embezzlement of funds by the top management. He opined that a change in management is “imminent” and a “turnaround” is around the corner.

Saraogi also emphasized that Century Textiles is a “deep value” stock because it has a treasure trove of assets including a paper mill in Uttarakhand which is the only one of its scale in the whole of Northen India.

Century Textiles will see “operating leverage” and there will be “big value unlocking cycle” in it, Saraogi opined with great confidence in his voice.

Radhakishan Damani’s favourite stock

Radhakishan Damani, the legendary Billionaire investor, has given his vote of confidence to Century Textiles, though he has pared his holdings substantially. As of 1st April 2015, Radhakishan Damani held 13,06,741 shares. He has sold a big chunk and brought his holding down to 9,43,087 shares as of 31st March 2016. His present holding is not known.

Ex-fav stock of Prof Shivanand Mankekar

Prof Shivanand Mankekar held a massive chunk of 20,00,000 shares of Century Textiles as of 1st April 2015. For reasons that are not known, he visited Dalal Street on two occasions and dumped his entire holding. It is not known whether he has re-bought the stock as of date.

Century Textiles is a “screaming buy”: S. P. Tulsian

S. P. Tulsian, the veteran stock picker, has opined that Century Textiles is a “screaming buy” because all of its four verticals, textiles, cement, paper and real estate are firing.

In his typical style, Tulsian reeled out impressive facts and figures to support his recommendation. He pointed out that Century Textiles has the “best operating leverage” and that the paper division will alone have a turnover of Rs. 2400 crore for FY17 with an EBIT of about Rs. 300 crore. The paper division will itself generate an EPS of Rs. 16-18 and there is “huge value” at the present market capitalisation of sub Rs. 11,000 crore, Tulsian said.

Conclusion – low expectations make both stocks “safe”

It is notable that both stalwarts, Vijay Kedia and Porinju Veliyath, have been careful to recommend stocks which are presently in the doldrums and do not have too many investors expectations.

Mahindra Holidays, for instance, has been virtually flat over the past year despite the raging bull market we are presently in. This makes the stock a “safe” one because there is no risk of the stock plunging owing to disappointments. On the other hand, even a slight uptake is growth will send the stock surging into orbit.

Century Textiles has also been largely ignored by investors though it has given a respectable return of 66% on a YoY basis and 73% over 24 months. These returns are muted when one bears in mind the true potential of the Company.

So, we have to compliment both stalwarts for generously handing over “Diwali gifts” which will enrich our portfolios and brighten over lives!