Ashish Kacholia’s Bold Move: Why BEW Engineering is His Top Pick for Q1 2024

The investment community often watches the moves of super investors like Warren Buffett and Ray Dalio. In India, names like Ashish Kacholia, Radhakishan Damani, and Dolly Khanna carry similar weight. These investors’ buying and selling activities are closely scrutinized by market watchers. Recently, Ashish Kacholia made headlines with his latest investment, showcasing his continued interest in the infrastructure sector.

Who is Ashish Kacholia?

Ashish Kacholia is a renowned figure in the Indian stock market, often referred to as the ‘Big Whale’ due to his knack for identifying multibagger stocks. Kacholia has a reputation for picking high-growth companies in the midcap and smallcap segments. His career began at Prime Securities in 1993, and in 2003, he co-founded Hungama Digital Entertainment with Rakesh Jhunjhunwala. Currently, he is the proprietor of Lucky Securities, making significant strides in the investment world.

Kacholia’s Latest Investment: BEW Engineering

On June 27, 2024, Kacholia acquired 276,974 shares of BEW Engineering through a preferential allotment at an issue price of Rs 1,540. This move followed his earlier purchase of 15,500 shares at an average price of Rs 1,450 in September 2023. BEW Engineering, a microcap engineering stock, has caught Kacholia’s eye, aligning with his strategy of investing in high-potential companies within the infrastructure sector.

Robust Financial Performance

BEW Engineering’s recent financial performance has been impressive. The company reported revenue of Rs 1.2 billion for the second half of FY24, up from Rs 1 billion in FY23. Operating margins improved significantly, with EBITDA rising by 64.6% year-over-year. Net profit soared to Rs 136 million, marking an 85.1% increase compared to the previous year. Additionally, BEW Engineering has become net debt-free by prepaying loans and has projected a strong order book for FY25, aiming for Rs 1.5 billion.

The company’s focus on reducing inventory cycles and expanding its product offerings, such as continuous dryers and filtering systems, positions it well for future growth. Management has also indicated strong export growth, particularly in the African market. These factors contribute to Kacholia’s bullish outlook on the stock.

Focus on High-Growth Sectors

BEW Engineering primarily serves the pharmaceutical, agrochemical, and specialty chemical industries—sectors known for their resilience and growth potential. The company has built a strong brand over the past three decades, supplying quality equipment to major clients like SRF and Atul. This focus on high-growth sectors and repeat business from established customers underscores the company’s robust business model.

Key Challenges and Opportunities

While BEW Engineering is poised for growth, it faces competition from established players like HLE Glasscoat and GMM Pfaudler. The stainless steel market, in which it operates, is highly competitive. However, BEW’s ongoing capital expenditure and debottlenecking initiatives have already yielded positive results, with the company achieving an additional 40-50% revenue increase in FY24.

Market Performance of BEW Engineering

BEW Engineering’s share price has shown strong performance recently. Over the past five days, the stock has rallied around 8%. On the announcement of Kacholia’s share acquisition, the stock jumped over 6%. The company’s shares reached a 52-week high of Rs 1,935 on February 16, 2024, and a 52-week low of Rs 1,205 on June 30, 2023. Over the past year, BEW Engineering’s shares have gained 23%, reflecting growing investor confidence.

About BEW Engineering

Established in 2011, BEW Engineering is a leading manufacturer of filtration, mixing, and drying equipment used in pharmaceuticals, fine chemicals, agrochemicals, and other industries. The company has rapidly built a reputation for quality and innovation, becoming a key player in the engineering sector.

In Conclusion, Ashish Kacholia’s investment in BEW Engineering underscores his strategic focus on high-growth sectors and companies with strong financial performance. BEW Engineering’s robust results, debt-free status, and promising growth prospects make it a compelling choice for investors.

As the company continues to expand its capabilities and market reach, it will be interesting to see how this investment pans out in the long term. Market watchers and investors alike will undoubtedly keep a close eye on BEW Engineering’s performance in the coming quarters.