It is remarkable that out of the thousands of stocks, the Motilal Oswal’s 19th Wealth Creation Study has homed in on seven stocks that qualify as potential 100-baggers and that Atul Auto is one of the seven to be conferred the distinction.
Atul Auto fits in nicely with the five salient qualities identified in the Wealth Creation Study:
|(1) Size: The company should be small and relatively unknown;||Atul Auto has a market capitalisation of only Rs. 1400 crore|
|(2) Quality: The company should have a high-quality business run by a high-quality management (i.e. one with integrity, competence and growth mindset);||This is brought out by Vijay Kedia’s assertion a few days ago that the promoters are honest, hardworking and god-fearing.|
|(3) Growth: There should be healthy growth in the company via a combination of sales volume and/or price and/or margins;||This is brought out by the past record which shows a sustained growth of top-line and bottom-line|
|(4) Longevity: The company should be likely to sustain its quality and growth for a long time;||No reason to doubt this given the quality of the products and the competence of the management|
|(5) Price: The stock should be favorably valued.||The stock has run up considerably in a short time (622% in 2 years and 332% in one year). It is quoting at a P/E of 36 which is not cheap. However, if the growth trajectory continues, the present P/E will look cheap in future|
In my last piece, I have explained how Vijay Kedia, Atul Auto’s largest shareholder, has made a phenomenal 5700% gain in the past nine years. There is no reason why this spectacular performance cannot be replicated in the next several years to come.
In fact, a number of super-savvy investors like Raamdeo Agrawal and Prashant Jain are confident that Atul Auto will attain the exalted status of a 100-Bagger if you go by their massive holdings of the stock.
So, if you don’t have Atul Auto in your portfolio, you need to quickly research it and consider whether a SIP is the appropriate manner to tuck into it.