Now Even Porinju Veliyath Falls For NAMO’s Charm And Grabs A Truckload Of A Micro-Cap NAMO Stock

Basant Maheshwari, our friendly neighbourhood stock wizard, has a pet concept which is that every Bull market has a “theme”. He says that investors should identify that theme and latch on to the leading stocks of the theme.

Basant’s theory is that the present Bull market will be driven by NAMO stocks i.e. stocks that benefit from NAMO’s thrust on ‘Swachh Bharat’, “100 cities” and mass/ affordable housing. He claims that all companies engaged directly or indirectly in the ‘Swachh Bharat’ campaign or in the realty sector (such as affordable housing and development of townships) will benefit immensely.

It is on this basis that Basant advised investors to pile on to stocks like Cera Sanitaryware, Kajaria Ceramics and Symphony Coolers. This is also why Basant declared recently that “stocks of housing finance companies are a blind buy”.

Basant’s logic regarding housing finance stocks is supported by Nomura, the mighty global powerhouse brokerage. Nomura has recommended an investment in the best HFCs on the logic that the “structural story continues” and HFCs will enjoy “strong returns with low asset quality risks”.

Of course, Rakesh Jhunjhunwala, the Badshah of Dalal Street, was way ahead of everyone else. He bought a massive truckload of Dewan Housing Finance when it was out of favour and available at throwaway valuations.

Dolly Khanna, Vijay Kedia, Ashish Kacholia and Mohnish Pabrai were right behind the Badshah with their shareholdings in Cera Sanitaryware, Asian Granito, Pokarna, GIC Housing etc in their portfolios.

Prof. Sanjay Bakshi, Brahmal Vasudevan and Kenneth Andrade have also followed suit by loading onto stocks like Ashiana Housing and Poddar Developers, both of which are top-quality power-house stocks engaged in affordable housing projects.

Porinju Veliyath is a little late in joining the party. However, he has made good the deficit and jumped into the fray with the purchase of 50,000 shares of Sahyadri Industries Ltd on 9th July 2015 at Rs. 86.42 per share.

Porinju’s total investment in Sahyadri Industries is about Rs. 43.21 lakhs.

Sahyadri Industries is an ultra micro-cap with a market capitalisation of only 96 crore. It is engaged in the manufacture of fiber cement corrugated roofing sheets which are sold under the popular “Swastik” brand name.

Sahyadri Industries appears to have charted out a high growth trajectory for itself. It recently announced the decision to invest Rs. 140 crore to set up a plant to manufacture cellulose fibre boards and toilet blocks. The plant will manufacture 100,000 tonnes of non-asbestos flat sheets (NAFS).

Sahyadri Industries also revealed that it is taking advantage of the “Swachh Bharat Abhiyan” to produce “green toilets”. These are factory made modular toilets which can be erected on site within a span of one hour. These are “green” because they use a large component of “fly ash”.

The company has revealed that it has started receiving orders for the “green toilets” under Corporate social responsibility (CSR) spending by corporates, as well from NGOs. The business is stated to be worth about Rs. 100 crore.

There is also an “Investors’ Presentation” (pdf) which gives the nitty gritty of the company’s present and future business plans.

Sahyadri Industries also reported good Q4FY15 results with a healthy increase in the topline (13%). There was a sharp reduction (90%) in the loss from Rs. 4.86 crore to Rs. 0.44 crore.

The stock is also reasonably valued at a TTM P/E of 13x the EPS of Rs. 7.44.

So, we have to admit that Porinju Veliyath has chosen his stock well. Sahyadri Industries does appear to be having the potential to give mega gains to investors in the near future.