Markets
Super investor vs super investor: 5 stocks over which top investors disagreed
Summary
- The details of five stocks that were sold by at least one super investor while still being held by others.
In one of my recent pieces, I wrote about some stocks that the Warren Buffetts of India bought. A lot of data mining was done to zero in on the names of the stocks. But here’s the thing: The research threw up another set of interesting data points.
On the one hand, while fund houses including Nippon India Value Fund, Clarus Capital I, LIC Small Cap Fund, Quant PSU Fund, and ICICI Prudential Smallcap Fund were either buying in or holding some stocks, some super investors were selling those very same stocks.
For a beginner in the markets, it would be difficult to decode such transactions. After all, why would investors Ashish Kacholia, Rekha Jhunjhunwala, Vijay Kedia and Hitesh Doshi sell stocks that fellow-super investors and funds were either holding or buying?
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Now that’s a question for the super investors to answer. But we can try to make sense of the situation by diving deep into the companies whose stocks are in question. Here are the details of five such stocks that were sold by at least one super investor while still being held by others.
These are not recommendations or opinions on the companies - they are simply a look at the data.
Ador Welding Ltd
Ador Welding is a leader in welding products and services, offering tailored solutions for sectors including refineries, oil & gas, and petrochemicals. Its expertise spans sectors such as railways, automobiles, and construction.
Known for plasma cutting and high-end welding equipment, Ador serves clients including the Defence Research and Development Organisation (DRDO), the Tatas, and Reliance Industries. With a presence in over 15 countries and more than 250 distributors, Ador maintains a strong market position.
The company allocated ₹15 crore in FY25 and plans an additional ₹28-35 crore of capital expenditure for modernisation, expansion, and R&D, aiming to enhance production capabilities.
Ador’s sales have increased at a compounded growth rate of 25% in the past three years and 12% in the past five years.
EBITDA for the year ended March 2021 was ₹22 crore and for the year ended March 2024, it was ₹91 crore. Over the past five years, EBITDA has grown at a CAGR of 15.11%. Profit after tax was ₹63 crore at the end of March 2024, having grown at a compounded rate of 21% over the past five years.
The share price for Ador Welding was ₹1,304 in August, compared with ₹285 in August 2019, which is a 357% jump. That’s a big rally.
As for valuations, Ador Welding is trading at a price to earnings multiple of about 26.4x.
Ashish Kacholia, director of Lucky Investment Managers Pvt Ltd, sold 3.88 lakh shares of Ador Welding during the first quarter this year. Based on the share price at the end of the first quarter, the total transaction value was about ₹54.75 crore. However, this was a partial exit as Kacholia still holds 1.79 lakh shares of Ador Welding.
What’s interesting is that Kacholia sold Ador shares when some leading funds showed interest in the stock. If you look at the shareholding pattern, the Quant PSU fund bought a 2.79% stake in the company and LIC MF Small Cap Fund owned 1.47% at the end of June 2024. Nippon India Value Fund has held its 2.49% stake steadily since the quarter ended September 2022.
Why Kacholia decided to sell Ador Welding is something we will know in due course, or probably, never.
Beta Drugs Ltd
Beta Drugs makes a range of anti-cancer (oncology) drugs in India for the domestic and overseas markets. Beta operates and owns manufacturing facilities at Baddi in Himachal Pradesh, Mohali in Punjab, and in Uzbekistan. It has a pipeline of 23 products that will go off-patent in the next five years.
Beta serves corporate and government hospitals, including HCG Hospitals, Apollo Hospitals, Fortis, and Max Healthcare. It provides contract manufacturing for pharmaceutical companies such as Intas, Zydus, Torrent Pharma, and Reliance Life Sciences.
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The company plans to expand its network to 27 countries across Latin America, Asia, Africa, and CIS by 2025. All this while retaining focus on new hospital entries and millennial doctors. It plans to increase its presence in tier 2 and tier 3 cities in India.
Beta Drugs posted a compounded sales growth of 37% in the past three years and 35% in the past five years.
EBITDA for the year ended March 2019 was ₹12 crore and for the year ended March 2024, it was ₹60 crore. EBITDA grew at a CAGR of 38% over the past five years.
For the year ended March 2024, profit after tax was ₹36 crore, a compounded growth of 35% over the past five years.
The current share price for Beta Drugs is ₹1,353 compared with ₹76 in August 2019, which is a 1,678% jump. Now that’s a rally that is very rare.
Moving to valuations, Beta Drugs is trading at a price to earnings multiple of about 37.7x.
One point to note is that even after posting a profit repeatedly, the company has still not paid any dividend.
Suryavanshi Commotrade Pvt Ltd, owned by Ashish Kacholia, which held a 6.74% stake in Beta Drugs, exited the company, as per data on screener.in. Kacholia still holds a 5.78% stake in Beta Drugs in his individual capacity. Onkar Singh holds a 1.05% stake.
NCC Ltd
Incorporated in 1978, NCC Ltd takes up turnkey engineering, procurement and construction contracts on a public-private partnership basis. The company works on projects such as buildings, roads, irrigation, water and environment, metals, electrical, mining and railways.
NCC has offices in 13 major cities spanning states including Maharashtra, Andhra Pradesh, Telangana, Karnataka, Gujarat, Uttar Pradesh, West Bengal and Tamil Nadu. It serves a diverse, high-profile clientele across public and private sectors. Its portfolio includes projects for the Airports Authority of India, the Bengaluru and Nagpur metro rail corporations, the Reserve Bank of India, and the National Highways Authority of India.
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The company's expertise extends globally, with projects for Oman's ministry of transport & communication. This client base highlights NCC's capacity to execute complex infrastructure projects across domains and regions.
As of FY24, NCC had an order book of ₹57,536 crore. It was implementing over 12 projects for about ₹32,000 crore as of FY24.
NCC posted a compounded sales growth of 38% in the past three years and 10% in the past five years.
EBITDA for the year ended March 2019 was ₹1,592 crore and for the year ended March 2024, it was ₹1,769 crore. EBITDA grew at a CAGR of a little over 2% over the past five years.
For the year ended March 2024, profit after tax was ₹740 crore, a compounded growth rate of 3% over the past five years.
Trading at ₹324 currently, the share price has increased six-fold from ₹54 five years ago.
NCC Ltd is trading at a price to earnings multiple of 26.5x. However, the company has a low three-year return on equity of 9.34%, and its borrowing costs are high.
Rekha Jhunjhunwala lowered her stake in NCC to 10.64% in the quarter ended March 2024 from 11.24% in December 2023. According to data available on screener.in, the holding in the quarter ended June 2024 was zero. That was also when ICICI Prudential Smallcap Fund and HSBC Multi Asset Allocation Fund bought stakes of about 3.5% and 2.68%, respectively, in NCC.
Talbros Automotive Components Ltd
Set up in 1956, Talbros Automotive Components is in the business of manufacturing gaskets and forged and machined components. Gaskets are seals used to fill the space between two or more surfaces that are joined together, while forging is a manufacturing process that shapes metal using compressive forces.
The gaskets division of Talbros holds 50% of the market share in its vertical, which is three times its nearest competitor. The company is also a single source supplier to five clients.
Talbros operates six facilities across northern and western India. Four of these are dedicated to gasket production - two in Faridabad in Haryana, one in Pune in Maharashtra, and another in Sitarganj, Uttarakhand. The company maintains a materials division at Sohna in Haryana and runs a forging plant in Bawal, located in Rewari district of Haryana.
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The company boasts of marquee clients including Maruti Suzuki India Ltd, Tata Motors Ltd, Jaguar Land Rover Ltd, Bajaj Auto, Hero MotoCorp, Tata Cummins, BMW, Dana Italia S.r.l, JCB, and Honda Motorcycle & Scooter India.
Talbros plans to invest in its two main divisions over the next year - ₹8 crore to 9 crore in the gaskets division that uses 85% of its total production capacity and ₹7 crore to 8 crore in the forging division, which uses 82-83% of the total capacity.
Talbros posted a compounded sales growth of 21% in the past three years and 10% in the past five years.
EBITDA for the year ended March 2019 was ₹50 crore and for the year ended March 2024, it was ₹115 crore. EBITDA grew at a CAGR of 18% over the past five years.
For the year ended March 2024, profit after tax was ₹110 crore, having grown at a compounded rate of 25% over the past five years.
Trading at ₹359, the share price has jumped by 1662% from the level in August 2019.
Currently, Talbros is trading at a price to earnings multiple of 26.5x. The company has a RoE of 17% over the past three years and 15% over the past three years.
As per an article in the Dalal Street Investment Journal, Vijay Kedia sold 125,000 of his shares (1.01%) in the quarter ended June 2024 and still holds about 625,000 Talbros shares. Dolly Khanna and Sanjiv Parekh have consistently held stakes of 1.24% and 1.16%, respectively.
Since Kedia still has a large holding in the company, perhaps this could be looked at differently. However, if more sales were to follow, this could be one of those conundrums where super investors have contrarian views.
GOCL Corporation Ltd
GOCL Corporation Ltd is a Hinduja Group company that manufactures & markets packaged and bulk explosives and blast-initiating devices. It is a global exporter of CE-certified explosives and blast-initiating devices, with products reaching 21 countries spanning Southeast Asia, North Africa, the Middle East, and parts of southern Europe including Greece and Turkey.
The company operates manufacturing plants in eastern and southern India. Its manufacturing capacities include explosive manufacturing - 270,000 TPA, explosive support silo - 66,000 TPA, and energetics - 192 million units.
GOCL boasts a diverse, high-profile clientele spanning multiple sectors. Its customers include public enterprises Coal India and DRDO, defence organisations such as the Indian Army, and private sector mining, steel, and cement giants like Tata Steel and Ultratech Cement. The company serves key clients in power and aerospace including HBL Power Systems and HAL.
GOCL's strategy focuses on boosting capacity utilisation and expanding into EV battery chargers. It also plans to develop a warehousing project in Bhiwandi and explore monetisation of land in the Kukatpally area of Hyderabad, where the company is based.
GOCL has posted compounded sales growth of 20% in the past three years and 6% in the past five years.
The company's EBITDA declined to ₹-16 cr in FY24 from ₹32 crore in FY19, representing a significant downturn in operational profitability.
For the year ended March 2024, profit after tax was ₹48 crore, having grown at a compounded rate of 6% over the past five years.
The company’s share price jumped 74% to ₹478 in August from ₹275 in August 2019.
Currently, GOCL is trading at a price to earnings multiple of 30.3x. The company had an RoE of 3.75% for the past three years.
According to screener.in and data on tijorifinance.com, Hitesh Doshi exited GOCL after selling his 1.61% holding. Dilipkumar Lakhi’s holding dropped from 1.21% to 1.07%. Quant Mutual Fund sold its 1.44% stake in the quarter ended June 2024. The New India Assurance Company has consistently held a 1.17% holding.
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While the financial numbers for most of these five companies look promising and some funds or super investors have shown trust in them, other super investors have decided to divest/exit partially for reasons only they know. What must be noted here, however, is that we are talking about super investors who have time and again proved their mettle.
In the words of Warren Buffett, “Risk comes from not knowing what you’re doing." The super investors are well aware of what they are doing and why they are doing it. But what might work for them, might not work for all.
Please consult your financial advisor before making any decisions.
Note: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
Manvi Agarwal has been tracking the stock markets for about two decades. During this period, for about eight years, she was a financial analyst at a value-style fund, managing money for international investors. Presently, she devotes her time to writing on potentially ignored, and/or misunderstood investment opportunities in the Indian stock markets.
Disclosure: The writer or his/her dependents may or may not hold stocks mentioned here as per SEBI guidelines.
