When Nikhil Vora and Lashit Sanghvi teamed up to buy a truckload of Ashapura Intimates Fashion in April 2015, I asked the pertinent question whether their stock pick would be the “next Page Industries + Kitex Garments”.
At that stage, the purists bristled with righteous indignation. “It is sacrilegious to compare an upstart like Ashapura Intimates with stalwarts like Page and Kitex” they said.
Yet, today, since that fateful day, Ashapura Intimates is up 40% while Page Industries is flat and Kitex Garments is down 12%.
Ths gives you an indication of the awesome stock picking ability of Nikhil Vora and Lashit Sanghavi.
Yet another example is ADF Foods where the dynamic duo bought a huge consignment of the stock on 12.06.2014 at about Rs. 48 apiece. ADF Foods touched a high of Rs. 89.45 a few days ago. It is presently at Rs. 71.45, giving Nikhil Vora and Lashit Sanghavi handsome gains of 48%.
Nikhil Vora’s latest stock pick is Vidhi Dyestuffs. On 05.08.2015, he bought 497,114 shares at Rs. 47.40 each, making an investment of Rs. 2.35 crore.
Vidhi Dyestuffs is a micro-cap with a market capitalisation of Rs. 214 crore. According to a press release, it is a manufacturer of “Superior Synthetic Food Grade Colours”. These colours are used in various industries such as Food & Beverage, Confectionary, Pharmaceuticals, Feeds, Cosmetics, Confectionary, Dairy etc. The colours are distributed and consumed in over 80 countries across 6 continents to some of the largest Consumer / Healthcare / Food & Feed companies in the world. It is also stated that Vidhi Dyestuffs is an “ISO 9001:2008, ISO 22000:2005 and HACCP certified company” and that its manufacturing facilities have been audited and found satisfactory by the U.S. FDA.
There are no worthwhile research reports about Vidhi Dyestuffs available. However, the company does appear to be on a strong growth trajectory if you go by the recent results.
In Q1FY16, Vidhi Dyestuffs reported blockbuster results. In comparison to Q1FY15, the revenue was up by 47.23% while the PBT was up by 59.28%. The PAT was up by 55.74%. The Company also declared a generous interim dividend of 20%.
| Particulars (Rs. cr) | Jun 2015 | Jun 2014 | % Chg |
| Net Sales | 60.04 | 40.76 | 47.3 |
| Other Income | 0.71 | 0.25 | 184 |
| Total Income | 60.76 | 41.01 | 48.16 |
| Total Expenses | 52.95 | 35.7 | 48.32 |
| Operating Profit | 7.81 | 5.31 | 47.08 |
| Net Profit | 3.8 | 2.44 | 55.74 |
| Equity Capital | 5 | 5 | – |
| Particulars (Rs. cr) | 2014 | 2013 | 2012 |
| Net Sales | 142.76 | 119.99 | 114.54 |
| Operating Profit | 16.43 | 12.64 | 9.74 |
| Profit After Tax | 5.97 | 4.15 | 3.37 |
| Share Capital | 5.00 | 5.00 | 5.00 |
| Reserves | 30.92 | 27.28 | 24.13 |
| Net Worth | 35.92 | 32.28 | 29.13 |
| Loans | 43.50 | 42.76 | 38.70 |
| Ratios | 2014 | 2013 | 2012 |
| Debt-Equity Ratio | 1.26 | 1.33 | 1.19 |
| Current Ratio | 1.28 | 1.27 | 1.35 |
| Asset turnover ratio | 4.78 | 4.68 | 6.75 |
| Inventory turnover ratio | 6.40 | 7.31 | 9.09 |
| Debtors turnover ratio | 3.77 | 3.68 | 3.96 |
| Interest Coverage ratio | 2.71 | 2.40 | 2.32 |
| Operating Margin (%) | 10.84 | 9.79 | 7.95 |
| Net Profit Margin (%) | 3.93 | 3.21 | 2.75 |
| Return on Capital Employed (%) | 18.72 | 15.27 | 14.63 |
| Return on Net Worth (%) | 17.51 | 13.52 | 12.28 |
Vidhi Dyestuffs’ press release talks of an ambitious “Vision for 2020”. These are:
1. To be a global player of repute on the lines of Sensient, US.
2. To focus on 3Cs – Capacities, Capabilities and Customers. To be 20% of global capacities.
3. To broad base categories and deepen presence in Colors.
4. To increase margins by moving into value add segments; target EBITDA margins of 20%.
5. To be cognizant of all stakeholders and be counted as amongst the most transparent, shareholder friendly company.
It is also stated: “We believe that the building blocks are now in place for us to leapfrog our current base. Our business is modeled on the lines of Global leader Sensient of US. We are at the cusp of explosive growth, with continued and significant increase in capacities, capabilities and customers. Our endeavor is to ensure shareholder reward, remain paramount, and towards that we are pleased to announce the first interim dividend of 20%. We will strive to sustain and improve on the same in coming periods“.
So, prima facie, it does look like Nikhil Vora has got himself a winning stock. If Vidhi does continue to report similar blockbuster results, then it is only a question of time before the other ace stock pickers get interested in the stock and the stock price goes soaring to the skies.
I think the writer has only looked at stock price as being the deciding factor of a stock pick. So speculative bets giving handsome returns, are to be considered as good bets. This logic seems flawed to me.
I think the results are the real decider because the stock price will always catch up sooner or later.
In that context, Ashapura Intimates’ results are nothing to write home about. So for now the stock has run up on hope. We need to see if it is able to bring in the moolah that the stock price portends . 🙂
No. Getting mails from you.
ADF Foods has again jumped today. However point to be noted is that its topline is not growing even at inflation rate.
An equally good stock in the branded segment is Indian Terrain. Would you like to form a view on the basis of parameters used for Ashapura Intimates?