Kenneth Andrade’s top-secret investment template helps snare megabagger stocks like Page Industries, Blue Dart etc
Kenneth Andrade, the visionary founder of Old Bridge Capital, has a distinguished track record for finding mega multibagger stocks.
In the course of his illustrious career, he has snared stocks like Page Industries, MRF, Blue Dart, Kaveri Seeds etc which have filled his pockets with incalculable riches.
This track record has earned him the prestigious sobriquet of ‘Midcap Mogul’.
Normally, the template for finding such stocks is kept a top-secret for obvious reasons.
However, in a moment of candour, Kenneth revealed all of his secrets.
The template is as follows:
(i) Find stocks that are a dominant franchise and have powerful brands and trade names with pricing power;
(ii) The size of the opportunity should be very large and
(iii) There should be a shift from the unorganized to the organized sector.
Thangamayil Jewellery, textbook example of the template
On Thursday, 16th November 2017, Kenneth and the top officials of Old Bridge Capital came to Dalal Street. They made a beeline for the counter of Thangamayil Jewellery, a micro-cap (Rs. 598 crore) retailer of jewellery, where Balusamy Ramesh, the promoter, was waiting for them.
After exchanging pleasantries, Balusamy handed over a consignment of 489,427 shares of Thangamayil, which Kenneth accepted with a big smile on his face.
He knew that the price of Rs. 410 paid by him for the stock was a bargain and that it would soon churn out multibagger gains.
The transaction was witnessed by Sonam Mehta, the charming journalist with CNBC Awaaz, and she sounded the red alert.
Thangamayil Jewellery Ltd – FUND ACTION
BALUSAMY RAMESH sells 5 lk share s@ Rs 410/- (promoter)
OLD BRIDGE CAPITAL MANAGEMENT PRIVATE LIMITED – ALL CAP STR buys 4.89 lk shares @ Rs 410/-
— SONAM MEHTA (@sonamcnbcawaaz) November 17, 2017
|THANGAMAYIL JEWELLERY LTD – KEY FUNDAMENTALS|
|MARKET CAP||(Rs CR)||599|
|EPS – TTM||(Rs)||[*S]||14.26|
|LATEST DIVIDEND DATE||18 JUL 2017|
|BOOK VALUE / SHARE||(Rs)||[*S]||116.98|
[*C] Consolidated [*S] Standalone
|THANGAMAYIL JEWELLERY LTD – FINANCIAL RESULTS|
|PARTICULARS (Rs CR)||SEP 2017||SEP 2016||% CHG|
Fav stock of Billionaire Radhakishan Damani, Ramesh Damani and Akash Bhanshali
Thangamayil Jewellery’s roster of shareholders reads like a who’s who of India’s best investors.
Billionaire Radhakishan Damani had stormed into the counter on 21st July 2016 and bought a chunk of 244,584 shares at Rs. 278.05 each.
Thereafter, the Billionaire appears to have pared his holdings a bit because his name does not appear in the list of shareholders as of 30th September 2017. Presumably, he sold of the whole or part of the holding to finance investment in D’Mart.
Ramesh Damani and Akash Bhanshali are the other illustrious shareholders of Thangamayil with a holding of 84,138 and 1,00,000 shares respectively as of 31st March 2017. Their present holdings are not known.
Aadi Financial Advisors Llp, which is the investment vehicle of Vallabh Bhanshali and family, holds 153,260 shares as of 30th September 2017.
Brahmal Vasudevan makes multibagger gain from PC Jeweller
Brahmal Vasudevan, the illustrious founder of Creador/ Idria, was amongst the first to recognize the potential of jewellery stocks.
On 24th February 2015, Idria Ltd bought a massive chunk of 44.79 lakh shares of PC Jeweller at Rs 244 each, laying down an investment of about Rs. 110 crore.
The investment has worked out well with hefty gains of 176% waiting to be harvested.
The logic for investing in PC Jeweller was explained in the following cogent terms:
(i) The size of the domestic gems and jewellery business is a mammoth Rs. 3000Bn. The market is growing at a CAGR of 16%. The organized players have a 27% market share. PC Jeweller is the second largest national player and enjoys a 7% market share amongst the organized players;
(ii) The Company is on a strong growth trajectory. It has 49 showrooms across 41 cities and 17 States. The five year (2010 to 2014) CAGR in revenue is an impressive 52.5%. The CAGR in PAT is 46% while the average ROE is 34.7%. However, FY15 performance is impacted by a slowdown in discretionary consumption;
(iii) The Company has an aggressive expansion plan in Metros, Tier I and Tier II towns and intends to open 20 new showrooms every year over the next 5 years;
(iv) The Company has low debt and intends to finance the expansion with internal accruals;
(v) It is also tying up with Flipkart and Snapdeal for online jewellery sales. Even if only 2% of the overall Indian Jewellery market gets online, it would create a potential market of Rs. 110Bn for online sales;
(vi) One of the biggest risks in the business is that of fluctuation in the gold prices. However, the business is de-risked from gold price fluctuations owing to the gold-on-lease model.
PC Jeweller was described as 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”.
Prima facie, whatever applies to PC Jeweller applies to Thangamayil Jewellery as well given the several similarities between the two.
It is obvious that when a stock has the green signal from eminent luminaries like Radhakishan Damani, Ramesh Damani, Kenneth Andrade, Akash Bhanshali etc, there is no need for us to sit on our haunches. We can dive in head first!