Vineeta Mahnot’s Stock Pick, Vaibhav Global, Attracts Mathews India Fund

When Vineeta Mahnot of Hem Securities put a buy on Vaibhav Global in August 2013, nobody paid any attention. Who wants to mess around with a company which sells jewellery over TV Channels and the internet, they thought. However, when the price surged from Rs. 176 to Rs. 288 and then to Rs. 700 (a 3-Bagger) in June 2014 (less than a year), investors realized that they had to take Vaibhav Global seriously.

A look under Vaibhav Global’s hood reveals that Pulak Chandra’s Nalanda Capital is the single largest shareholder with a massive holding of 12.74% of the equity (41,10,600 shares), worth Rs. 307 crore at the CMP of Rs. 748.

We are very familiar with Nalanda Capital’s portfolio of winning stocks like Cera Sanitaryware, Page Industries, Mindtree, AIA Engineering etc.

Mathews India Fund has now bought a chunk of 500,000 shares of Vaibhav Global.

Mathews India Fund is also a familiar name. It is run by Sharat Shroff and Sunil Asnani and boasts of several winning stocks like Symphony, AIA Engineering, Mindtree, etc.

One thing we can be sure about is that neither Nalanda Capital nor Mathews India Fund will touch a stock if they are not convinced about its valuations and fundamentals. Nalanda Capital in fact takes pride in stating that it subjects a potential investee to the same rigorous screening process that a private equity investor seeking to invest in an unlisted company does.

Coming back to Vineeta Mahnot, she has predicted a target price of Rs. 1050 for Vaibhav Global, which amounts to a potential gain of 40% from the CMP of Rs. 748.

Nirmal Bang has expressed the same view in its report of August 2014 (pdf) (when the price was Rs. 850):

“We continue to like asset light business model of VGL which can generate high ROCE and free cash. VGL has stabilized itself as a retailer of discount fashion accessories through TV channel in US and UK market with access to over 100 million households and also trying to monetize its TV channel through development of web sales. We expect VGL to report an EPS of Rs. 45.2 and Rs. 58.8 in FY15E and FY16E respectively. At CMP of Rs. 850, VGL is trading at a PE of 18.8x FY15E and 14.5x FY16E. On 16x FY16E earnings our target price comes to Rs. 925 per share.”

Vaibhav Global’s Q2FY15 results are due to be announced soon. We need to keep a hawk eye on the results to decide our course of action.