Vijay Kedia baffles punters by not buying HFC stocks
Vijay Kedia made the solemn proclamation in January 2017 that the housing finance sector will be the “next market leader”.
In my view, 'Housing Finance' sector could be the next market leader.
— Vijay Kedia (@VijayKedia1) January 30, 2017
Since then, all ace sleuths of the RJ Fan Club as well as the local punters at Dalal Street have been closely monitoring all HFC stock counters to see which stock he buys.
However, Vijay Kedia outwitted all of us by not turning up at any HFC stock counter.
Vijay Kedia later publicly recommended Everest Industries as one of his Diwali Dhamaka stock picks and meticulously explained why it has multibagger prospects.
Vijay Kedia aggressively buys Aries Agro in bulk deal
On Monday, 16th October 2017, Vijay Kedia stormed the counter of Aries Agro, a micro-cap (Rs. 311 crore) and bought a massive chunk of 260,000 shares at Rs. 199.93 each. He paid Rs. 5.20 crore for his purchase.
Sonam Mehta, the charming journalist with CNBC Awaaz, spotted him and sounded the red alert.
Aries Agro Limited – fund action
VIJAY KISHANLAL KEDIA buys 2.60 lk shares @ Rs 199.93/- (big investor)
— SONAM MEHTA (@sonamcnbcawaaz) October 17, 2017
Huge allocation to Aries Agro
It is notable that Vijay Kedia already holds a massive chunk of Aries Agro in his portfolio.
As of 30th September 2017, he held 2,38,091 in his name and 4,10,921 shares in the name of his firm.
The cumulative holding in Aries Agro, after taking into consideration the latest bulk deal, is 9,09,012 shares.
The investment is worth Rs. 21.30 crore at the CMP of Rs. 240.
No doubt, Aries Agro is now one of the crown jewels of Vijay Kedia’s portfolio.
Shyam Sekhar also hikes stake in Aries Agro
Shyam Sekhar, the noted value investor, has publicly declared his bullishness for stocks in the agriculture sector.
He pointed out that there is a “bumper crop” in several products and that agriculture is doing well. He, however, raised a grievance that farmers are not getting a fair deal.
Bumper crop in Soya, maize, onions, potato. Agriculture is doing well. It is markets that are not giving the farmers a fair platform. #eNAM
— Shyam Sekhar (@shyamsek) July 13, 2017
Farm sector is growing. It is not growing profitably. That is the crisis. It is a happy crisis. But still a grave crisis.
— Shyam Sekhar (@shyamsek) July 13, 2017
Shyam Sekhar appears to have chosen Aries Agro as the ideal candidate to ride the boom in the agriculture sector.
As of 30th September 2017, he has increased his stake to 3,40,818 shares from 2,96,775 shares held as of 30th June 2017.
In addition, S Vijaya, who prima facie appears to Shyam Sekhar’s PAC, holds 2,00,000 shares as of 30th September 2017.
It is notable that Shyam Sekhar also holds a big chunk of Rama Phosphates and Khaitan Chemicals and Fertilizers, both of which are supposed to be arch rivals of Aries Agro.
Vijay Kedia explains why he bought Aries Agro
In June 2016, Vijay Kedia was comprehensively grilled by Nikunj Dalmia and two of his charming colleagues. He was requested to explain the investment rationale of all the stocks in his portfolio.
Vijay Kedia revealed (@ 12.00) that he had bought a small quantity of Aries Agro for “testing” purposes.
“They are in a good business but they need to change their strategy,” he said.
“It will take some time and that is why I don’t recommend it,” he added.
It is obvious that Aries Agro has now adopted a strategy that has Vijay Kedia’s approval.
Hefty margins from micro nutrients + huge export market developing
Rahul Mirchandani, the CMD of Aries Agro, provided important insights into the workings of the Company.
He revealed that micro nutrients are the highest revenue generating segment of the company and that the margin on micro nutrients is presently at around 16 percent.
He also stated that the export markets are developing in a healthy manner.
Aries Agro is a “value buy”: HDFC Securities
As far back as in November 2014, HDFC Sec had recommended Aries Agro as a “value buy”. The logic was flawless:
“AAL is a leader in nutritional products for plants, manufactures a wide range of products under 65 Brands of plant nutrients crop protection chemicals. It’s diversified product portfolio and wide distribution network enables it to have an upper edge over its peers. Its product mix with multiple products targeting various strata of farmer is a huge entry barrier. The strategy of billing only the distributors and maintaining a relation with the farmers only on non financial parameters have been working pretty well for AAL over the past few years. This is expected to continue going ahead and ensure smooth flow of business for the company.
Despite its slow growth in topline and bottomline over the last few years, we feel that this could accelerate going forward and the stock remains a value buy.”
Prima facie, it appears that the logic formulated by HDFC Securities with respect to Aries Agro being a “value buy” continues to hold good today as is shown by the bullishness of Vijay Kedia and Shyam Sekhar!