If you ponder over it, you will realize that Prof. Sanjay Bakshi, the authority on value investing, and Dolly Khanna, our favourite stock wizard, appear to be thinking alike with regard to their stock picks.
The first indication of this came when the Prof issued a “lecture note” on Relaxo Footwears, which was known to be one of Dolly’s favourite stocks. At that stage, Dolly held a treasure trove of 120,342 shares in Relaxo. The Prof did well by backing Dolly’s favourite stock. He has taken home a 7-Bagger in Relaxo.
The second indication is when the Prof’s ValueQuest India Moat Fund bought a chunk of a textile company called Ambika Cotton, probably on the logic that the textile sector is going to see a turnaround. Dolly followed the Prof’s action by buying two textile stocks in quick succession, Nandan Denim and RSWM.
The third indication is today when it was revealed that ValueQuest India Moat Fund has bought 64,200 shares in Wim Plast Ltd in the April-June 2015 Quarter.
Dolly Khanna is one of the oldest and most loyal shareholders of Wim Plast. She bought a chunk of 61,399 shares in the September 2012 quarter and has held onto it tight since then. Her present holding is 64200 shares.
Wim Plast has rewarded Dolly handsomely. Since September 2012, the stock has given her a 700%+ gain (not counting the generous dividends). This means that the stock has grown at a mind-blowing CAGR of 100%!
|Wim Plast’s Financial Statement|
The other interesting aspect is that Prof. Sanjay Bakshi has matched Dolly’s holding of shares. While Dolly holds 64200 shares of Wim Plast, the ValueQuest India Moat Fund holds 64,752 shares. The holdings are each worth about Rs. 12.80 crore at the CMP of Rs. 2002.
Incidentally, Wim Plast is presently engaged in a conflict with another of the Prof’s favourite stocks, Symphony Ltd, over the launch of air coolers. Symphony has won the first round by securing an ad interim injunction against Wim Plast.
Wim Plast has all the attributes that the Prof looks for in a winning stock. It has an enviable five year sales growth of 25% and a profit growth of 31%. The five year average ROE is about 25%. Needless to say, Wim Plast also has top-quality management, a strong brand (“Cello”) and is debt-free.
Of course, the Prof knows better than anyone else that such top-quality stocks never come cheap. Wim Plast is currently quoting at a P/E of about 30x its TTM EPS of Rs. 63. However, the stock is still a small cap with a market capitalisation of only Rs. 1200 crore and has a dominant market presence.
Will Wim Plast be another 7-Bagger (like Relaxo Footwears) and delight Dolly Khanna and the Prof is the question on everybody’s mind!