In November 2013, when Raamdeo Agrawal announced that he had bought 100,000 shares of Atul Auto at Rs. 260 each, a lot of people were surprised. Atul Auto had been on the boil for quite some time and its stock price was considered quite high. Also, the auto sector was undergoing a slow down. “Is there any more juice left in the stock” investors wondered.
Raamdeo Agrawal did not say anything though his firm Motilal Oswal issued a research report explaining that Atul Auto was a great buy owing to its’ high revenue and volume CAGR of 20%, high margins, negative working capital and high dividend payout. It exhorted investors to tuck into the stock.
The analysis was spot on because at today’s CMP of Rs. 500, Raamdeo Agrawal is looking at a fabulous gain of 92% over his investment of just about 6 months.
Now, the important point is that if you don’t have a chunk of Atul Auto in your portfolio, you need to urgently ponder over it. Atul Auto is still a micro-cap with a market capitalisation of only Rs. 566 crore. It is, as Motilal Oswal’s research report calls it, “India’s fastest growing three-wheeler company” and the drivers for its future growth are “Geographical expansion, widening product portfolio and exports”.
The other point that you should bear in mind is that Vijay Kedia, the savvy investor, is the single largest shareholder of Atul Auto with 18L shares worth about Rs. 90 crore. Vijay Kedia is also the largest individual shareholder of Cera Sanitaryware, another top-favourite multi-bagger stock.
Speaking for myself, I followed Raamdeo Agrawal’s footsteps and bought a chunk of Atul Auto. I intend to keep nibbling on the stock at every opportunity.