Ashish Kacholia stock: This small-cap company's shares plunge over 8% on disappointing Q1 margins – brokerages recommend this

Celebrity investor Ashish Kacholia-backed small-cap company – Gravita India shares slumped over 8 per cent to touch the day’s low level of Rs 280 per share on the BSE intraday on Wednesday, mainly after reporting disappointing margins during the June quarter earnings of FY23 (Q1FY23). 

Gravita India’s margins came at 2.7 per cent in Q1FY23 as against 8.2 per cent in a year ago quarter. On the contrary,the company’s profit grew over 95 per cent year-on-year to Rs 42.5 crore in the June quarter versus Rs 21.8 crore in Q1FY22 and revenue almost 30 per cent YoY to Rs 579.6 crore in Q1. 

The renowned investor Ashish Kacholia holds 12,49,608 equity shares, which translates into a 1.81 per cent stake in Gravita India, as per the June 2022 quarter shareholding filing of the company available on the exchanges.  

The investor has added nearly 0.5 per cent extra shares in the company as per the latest holding pattern. Kacholia, who is fondly called as Big Whale of the Indian stock market, publicly 38 stocks with a net worth of over Rs 1,774.9 crore, as per the stock analysis website trendlyne.com. 

A domestic brokerage firm Emkay Research raise FY23E/FY24E EPS by 19/13 per cent, building in a 10 per cent higher unit margin, based on the FY22 run-rate, steady environment, and some support from new verticals, which it has incorporated now.   

Maintaining a Buy stance, the brokerage arrives at a target price of Rs 430 per share, which implies a 53 per cent upside) using Discounted Cash Flow (DCF) method. 

Similarly, Hem Securities expects Gravita India to grow at a decent CAGR (Compound Annual Growth Rate) of 25 per cent in revenue while profit is expected to grow at 35 per cent CAGR from FY22 to FY24E. It initiates a Buy coverage with a target of Rs 600 per share, implying a 115 per cent upside.  

Gravita India is a global leading non‐ferrous secondary metal and one of India’s largest secondary Lead metal producing company. Incorporated in 1992, It is engaged in the recycling of Used Lead Acid Batteries, Cable Scrap / other Lead Scrap, Aluminum Scrap and Plastic Scrap, etc.