Lashit Sanghvi and his colleagues at Alchemy Capital, Hiren Ved and Ashwin Kedia, have mastered the fine art of spotting winning stocks in their infancy.
If you track the stock picks of this team of ace stock pickers, you will find that they steer clear of ‘tried and tested stocks’. Instead, they keep a look out for ‘tomorrow’s winners’ and when they do spot one, they pounce on it with full conviction.
Ashapura Intimates Fashion, a micro-cap engaged in manufacture of innerwear and lingerie, is Lashit Sanghvi’s latest stock pick.
The best part is that this time the wily stock picker is not hunting alone. Instead, he is accompanied by Nikhil Vora, the former head of IDFC Securities.
Nikhil Vora is an ace stock picker in his own right. He was co-head of research at IDFC Securities and is now the head of “Sixth Sense Ventures”, a “pure consumer centric venture capital fund”. You can read about Nikhil Vora’s profile here.
While Lashit Sanghvi and Neha Sanghvi bought 1,25,000 shares each of Ashapura Intimates Fashion on 10th April at Rs. 145 each, Nikhil Vora bought 1,75,000 shares at Rs. 147 each on the same day. The investment by Lashit & Neha Sanghvi is Rs. 3.62 crore and Nikhil Vora’s investment is Rs. 2.57 crore.
|Ashapura Intimates Fashion’s financial overview|
|Figures in Rs crore||2014||2013||2012|
|Profit After Tax||5.41||4.73||3.41|
|Operating Profit Margin (%)||12.11||11.03||9.45|
|Net Profit Margin (%)||3.26||3.62||3.36|
|Earning Per Share (Rs)||2.65||3.21||63.50|
|Return on Capital Employed (%)||19.07||20.92||24.62|
|Return on Net Worth (%)||17.72||32.43||37.29|
What appears to have caught the eye of these ace stock pickers is Ashapura Intimates’ rapid growth trajectory. The sales have been growing at a CAGR of 48% over three years while the profit has grown at a CAGR of 57% in the same period. The three year average ROE is an impressive 24%. The company has a bit of debt (presently 1:1) on its books though that is to be expected given the high growth rate.
There is an interesting write-up in NDTV Profit about how Harshad Thakkar, 38, chairman and managing director of Ashapura Intimates Fashion, started his journey in the lingerie industry. The report points out that the products manufactured by the company (kids’ nightwear, ladies nightwear, men’s nightwear, undergarments, slips, leggings, sportswear etc under the ‘Valentine’ brand) is a “major revenue churner”. It is also pointed out that Ashapura is a pan-India brand and that it also exports to Gulf countries.
Harshad Thakkar also came on CNBC TV18 a few days ago to explain the Company’s growth plans and drivers. He pointed out that the company was moving out of MBOs (Multi Brand Outlets) into EBOs (Exclusive Brand Outlets) and that this would result in an increase in margins. He also stated that there are plans to open 26 retail stores in Mumbai which would require capex of about Rs 7-8 crore. The capex would be funded by internal accruals. On the all-important issue of future financial performance, Harshad Thakkar declined to give figures though he made it more than clear that the results would be “very good”.
Ashapura’s present market capitalisation is only Rs. 460 crore. It has a long way to go. If its brand and product line catches the consumer’s fancy, it would not be an exaggeration to expect Ashapura to match the performance of other garment stocks like Page Industries, Indian Terrain and Kitex Garments over the next several years.