INSUBCONTINENT EXCLUSIVE:
yield-hungry ultra-rich investors, and even some mutual funds, as an indecisive stock market dries up options in the mainstream
market.
Available data shows several well-known names and value investors from Dalal Street, including the likes of Ramesh Damani, Anil
Kumar Goel, Nikhil Vora, Kenneth Andrade and Madhusudan Kela, have been busy picking up stakes in SMEs in recent times.
SME platforms run by
domestic stock bourses BSE and NSE have in recent times thrown up many a gem, some of which have delivered mouth-watering returns to
investors in last six months.
For instance, supermarket chain manager Aditya Consumer Marketing delivered nearly 300 per cent return in just
six months; while others like Meera Industries, Lancer Container Line, Loyal Equipments, RB Denims and Prabhat Telecoms have more than
doubled investor wealth in the six months till April 25, 2018.
SME stocks present a wide variety of opportunities with high growth
potential, and hence, they have emerged as attractive portfolio diversification tools, says Mahavir Lunawat, Group Managing Director at
Bandra, Mumbai-based Pantomath Advisory Services Group.
By nature, SMEs are small in size, and can be brought at relatively lower valuations
at an emerging stage.
Given the large business growth potential and smaller market capitalisations, some of these are tailor-made
opportunities to deliver handsome returns
Even domestic mutual fund managers have started tracking this space closely
Alternative investment funds are investing in them at both primary and secondary levels, Lunawat said.
Data available shows several
instances where market veterans have taken good exposure to select SME stocks.
Structured data solutions provider IRIS Business Services,
which got listed on the BSE SME platform in October, 2017, has Madhuri Kela among key investors holding over 5 per cent stake
Madhuri is the wife of Madhusudan Kela, a Dalal Street veteran who recently quit the Anil Ambani-led Reliance Capital as chief investment
The stock traded at Rs 54.80 on April 30, 2018, up more than 60 per cent from its listing price of Rs 35.35
Renowned investor Anil Kumar Goel held over 2 per cent stake in bullion trader OP Chains as of March 31, 2018
The stock is, however, down over 40 per cent since the beginning of this calendar in the wake of multiple loan scams in the industry.
Value
He was holding 11,29,032 equity shares on the date of filing of the DRHP.
Nikhil Vora, former star analyst at IDFC Securities, held 1.24
lakh shares, or 1.19 per cent stake, in luxury salon and spa operator Sanghvi Brands as of March 31, 2018.
Sixth Sense India Opportunities
II, a fund Vora promotes, fully subscribed to the entire anchor portion of the SME IPO of AVG Logistics, a new-age logistics player
Old Bridge Vantage Fund and HSBC Midcap Equity Fund held over 7 per cent and 4 per cent stakes in Macpower CNC Machine, an SME that claims
Shares of the company have risen over 50 per cent since listing on March 22 this year
Ramesh Damani, member, BSE, and a prominent investor,
picked up 99,000 shares in Vadivarhe Speciality Chemicals in June last year at Rs 90 per share
The nine-year-old company manufactures organic chemicals with a core focus on intermediates, personal care products, speciality chemicals
The stock has since climbed over 50 per cent in last one year
It could not be ascertained whether Damani still holds those shares.
Among mutual funds, HSBC Midcap Equity Fund has a substantial exposure
to Worth Peripherals, an SME engaged in the manufacturing of corrugated boxes
The stock has risen more than 80 per cent since its listing in September last year
As per latest shareholding data, the fund held 3 per cent in the company as of September 2017
Shareholding data for December and March quarters was not available till April 25
Sundaram Mutual Fund, a fund house that claims to specialise in midcaps, and DSP Black Emerging Star Fund held over 7 per cent and 4 per
cent, respectively, in Jash Engineering as of March 31, 2018.
Share price of the company is down 2 per cent in last one year, but touched a
high of Rs 218.10 on January 10, 2018
tea, Lunawat warns as a caveat emptor
SME stocks are high risk-high reward bets and can be looked at only as long-term wealth creation tools
Investors with a short-term horizon should stay away from these options
Only those with the capability to hold these stocks for the medium to long term can look at these companies, he said.
