Mudar Patherya Recommends Three Top-Quality Small-Cap Stars

APL Apollo Tubes, the favourite of eminent stock wizards

In my piece of March 2015, I reported with my usual diligence that three eminent stock wizards, Kenneth Andrade, Prashant Jain and Ajay Relan, are aggressively buying the stock of APL Apollo Tubes “like there is no tomorrow”.

Today, barely 18 months later, APL Apollo Tubes has spurted from Rs. 350 to Rs. 937, making the wizards richer by a fabulous 165%.

The best part is that two other eminent stock pickers, Ashish Kacholia and Narendra Kumar Agarwal, have also stormed into the small-cap and gobbled up 5,49,587 and 5,35,957 shares respectively.

Mudar Patherya now says that he cannot “stop gushing” about APL Apollo. His rationale is that APL has discovered a “sweet spot” and is “protected from competition”.

Mudar has cited the steady growth in EBDT (earnings before depreciation and tax) and rise in interest cover as proof of this concept. He also claims that APL Apollo is a “dynamic proxy of a modern India” and will prosper irrespective of whether the GDP grows seven per cent or eight per cent.

Ebitda breakout will send Phillips Carbon Black soaring

Phillips Carbon Black, Mudar Patherya’s second stock recommendation, shot into fame when ICICI-Direct showcased it as a “Nano Nivesh” stock, implying that it has dynamic potential despite its diminutive size.

ICICI-Direct recommended a buy on the basis that Phillips Carbon Black enjoys “growth momentum”, “operating leverage”, “declining debt” and that the “earnings trajectory warrants a re-rating”.

Mudar has endorsed this proposition by emphasizing that Phillips Carbon Black is witnessing a “breakout” in EBIDTA and margins. There is also an increase in interest cover which signals an improvement in financial health, he says.

‘Deeper transformation’ will catapult Polyplex to new heights

Polyplex Corporation, Mudar Patherya’s third stock pick, has reported equally stellar financial performance. He calls its quarterly results “an absolutely outstanding performance”. He explains that Polyplex is no more just a “raw material play” but that it is witnessing a “deeper transformation” as is evident from the “absolutely stunner of a quarter”. He emphasizes that Polyplex converted a net loss of Rs 33 crore-plus in three successive quarters into a net profit of Rs 62.7 crore in a single quarter during the current financial year. He also explains that the interest cover has surged to 15 for Q1FY17 which shows great improvement in financial parameters.

Don’t miss the ‘hidden gems’, ‘underdog’ and ‘dark horse’ multibagger stocks

At this stage, we must recollect that Mudar Patherya has also recommended three “hidden gems” stocks, four “underdog” stocks and four “dark horse” stocks on the theory that these stocks are quoting at such “ridiculous valuations” that the risk-reward ratio favours an investment.

Basket approach recommended by Saurabh Mukherjea

It must also be remembered that given the high mortality rate which such stocks are subject to, investors desiring to invest in such stocks should adopt a “basket” approach where the gains from a few will absorb the losses of the others. It should be noted that the “basket” or “portfolio” approach has also been endorsed by Saurabh Mukherjea in his latest bestseller “The Unusual Billionaires”!