Here’s why marquee investor Ashish Kacholia is bullish on this stock
Xpro India, a subsidiary of the Birla Group, has emerged as one of the biggest multibagger stocks in 2021. In just one year, the stock has delivered nearly 2,800% returns.
₹ 1 lakh invested in the Xpro India stock last year would have turned into ₹ 29 lakhs today.
On the BSE on Friday last week, the company’s shares gained 5% in early trade to hit a high of ₹ 1,078.1 against the previous close price of ₹ 1,027. The stock price has been rising over the previous three sessions and has climbed 18% in the period.
What sparked the rally in Xpro India today?
The latest shareholding data disclosed that veteran investor Ashish Kacholia increased his stake in the packaging multibagger smallcap - Xpro India.
As per the data available, Kacholia held 341,316 equity shares or 2.89% stake in the company as of 31 December 2021. He bought 44,100 equity shares during the last three months.
At the end of the September 2021 quarter, when he first bought the stock, the Dalal Street veteran held 297,216 equity shares, or 2.52% stake in the company.
Following the news, shares of Xpro India were locked in the 5% upper circuit.
Ashish Kacholia is one of the leading investors in the Indian stock market. He is very well known for his stock picks in the small and midcap space.
Ashish Kacholia co-founded Hungama Digital with none other than the big bull Rakesh Jhunjhunwala and started his own company Lucky Securities in 2003.
He started his career at Prime Securities and also had a brief stint at Edelweiss Capital before establishing Lucky Securities.
As per a report, Ashish Kacholia, who is fondly believed as the 'Big Whale' of the Indian stock market, publicly holds 26 stocks with a net worth of over ₹ 16.3 bn.
What prompted him to buy additional stake in Xpro India?
Since we don't know why he made this decision, we can try to figure it out by breaking down certain facts about the firm and its operations.
- Strong earnings for last five consecutive quarters
For the last five quarters, Xpro India has reported favourable results.
For the second quarter ended September 2021, the Birla group company reported a 105.7% growth in its net profit at ₹ 108.4 m against ₹ 52.7 m during the same period last year.
Net sales grew 29.6% to ₹ 1.3 bn in quarter two of the fiscal 2022, compared to ₹ 976.6 m during the previous quarter.
- Significant presence in polymer processing industry
Xpro India is a strong player in the polymer processing industry operating three manufacturing facilities located across India with two operating divisions: Biax and Coex.
As per the management, the company is the only manufacturer of dielectric films in India (Biax division) and has a market share of about 33% in the domestic market besides exports.
The company is also one of the leading players in the coextruded cast films and sheets (Coex division), with a market share of over 70%.
The company's Coex division manufactures coextruded sheets, thermoformed refrigerator liners, and co-extruded cast films. Its products are used for refrigerator liners, disposable containers, automotive parts, etc.
It’s a leading supplier of sheets and liners in India for white goods of most leading brands.
On the other hand, under the Biax division, the company manufactures a range of co-extruded biaxially oriented polypropylene (BOPP) films and dielectric films. The films are used in food packaging, electronics, print lamination, adhesive tape, and others.
The company generates 76% of its revenue from Coex division while the balance is contributed by the Biax division.
- Experienced promoters with established track record
Xpro India is promoted by Mr. Sidharth Birla, his family members and entities controlled by them hold 50.02% of the shares in the company. Rest is held by the public.
Mr. Sidharth Birla, Chairman, looks after the matters relating to corporate governance, communicating with stakeholders, holding of high level of strategy/plans etc.
Mr. C Bhaskar is the MD and CEO of the company who looks after its overall operations. The board has a majority of independent and professional directors.
Which other stocks does Ashish Kacholia hold in his portfolio?
These are the shares held by Ashish Kacholia as per the information available by the exchanges.
Should you blindly follow the stock market gurus?
People expect stock market gurus to have done their research. So the stocks they buy come 'pre-verified'...right?
If it were only that simple... There are instances in the past where favourite stocks of these gurus have seen a bloodbath.
While keeping track of their purchases and sells is a good thing, following them blindly and replicating their portfolio is not advisable.
Richa Agarwal, editor of Hidden Treasure, agrees on this. Here's what she wrote in one of her editorials while discussing Rain Industries:
If you are blindly following your favourite investors, you are unlikely to make gains.
The reason? You will always get information (and act on it) with a lag. The stock price would most likely be up by the time you hear about it and rush to buy it. And huge gains would have been pocketed by the time you would know your favourite investor has exited.
You are quite likely to end up with the short end of the stick. At times, even losses.
How the stock markets reacted to Xpro India
On Friday last week, shares of Xpro India opened at ₹ 1,078.1 on the BSE and ₹ 1,077 on the NSE.
Its share price closed at ₹ 1,078.1 (up 5%) on the BSE and ₹ 1,087.6 (up 5%) on the NSE.
At its current price, it is trading at a P/E of 40.3.
The share touched its 52-week high of ₹ 1,078.1 and 52-week low of ₹ 35.9 on 7 January 2022 and 18 January 2021, respectively.
Over the last 30 days, the Xpro India share price is up 14.9%. Over the last one year, the company's share price is up 2,865.7%.
Xpro India is a diversified multi-divisional, multi-locational company with a strong commitment to the polymer processing industry.
The company forms an integral part of India's largest and most reputed Industrial House with a global presence in manufacturing and trading activities - the Birla Group, a conglomerate comprising of many divisions, each consisting of a number of publicly-listed companies and headed by a member of the Birla Family.
Xpro India was incorporated in the year 1997.
The company is engaged in the polymers processing business primarily in India. They operate in three divisions namely Biax, Coex, and Thermoset. For more details about the company, you can have a look at Xpro India’s factsheet and quarterly results on our website.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
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