Hello Sir,
Hope you are doing well.
Everyone is looking for turnaround opportunities that can turn out to be multibaggers.
The question is – How does one screen for such stocks?
We believe one good way to screen for such stocks is as follows:
Look for Preferential allotment of warrants to Promoters in companies in which there’s been a decent correction in stock price (40-50% or more)
Let’s look at a case – Himadri Specialty Chemical
- From FY 19 till FY 22, the company’s margins and profits were dropping year after year
- From Rs 560 crore EBITDA in FY 19, it came down to Rs 156 crore EBITDA in FY 22
- Similarly, PAT declined from Rs 324 crore in FY 19 to Rs 39 crore in FY 22
- Stock price also corrected from highs of 170-180 odd levels to around 45-55
- On 11th Jul’22, the company announced that a meeting of Board of Directors will be held on 14th Jul’22 to evaluate proposal for raising of funds
- On 14th Jul’22, Board of Directors approved preferential issue of 7.252 crore warrants at a price of Rs 70 to promoters and non-promoters. Out of 7.252 crore warrants, 6.365 crore warrants to promoters and remaining to others
- What’s interesting is that by then stock had risen to around 80-90 odd levels and the company had not announced its Jun’22 quarter results
- Also, the operating performance for the Mar’22 quarter wasn’t great
- On 11th Aug’22, the company announced its Jun’22 results and reported a substantial improvement in performance both on YOY and QOQ basis
- Probably, the promoters were anticipating a turnaround in the business and thus opted for convertible warrants at Rs 70/- each
- For FY 23, the company reported highest ever annual sales, 155% growth in operating profit in comparison FY 22 and a substantial jump in PAT from Rs 39 crore to Rs 215 crore
- The stock which was languishing around 80-90 odd levels at the time of preferential allotment announcement is currently trading around 400 odd levels
There might be many cases where the business and the stock may not have done well, post allotment of warrants to promoters during low phase. However, the idea is, screening for such stocks can be a good starting point for further research and to catch the turnaround stage early.
1 New Portfolio Stock Recommendation – Released a new stock recommendation for Alpha and Alpha + Members
- Key beneficiary of strong growth in Real Estate segment
- 100% + increase in sales in last 3 years and management targeting 20-30% sales CAGR for the next few years
- Improvement in product mix resulting in higher margins and ticket size
- Improving balance sheet with reduction in net debt and working capital days
- Attractive valuations and value unlocking through demerger
You can get the detailed report on the above stock and other recommendations by signing up HERE
(End)
Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Disclaimer: http://www.
Address – 7, Panch Ratan, 7/128, Swaroop Nagar, Kanpur – 208002, Contact No. – +91-7275050062
Compliance Officer – Mr. Ekansh Mittal, +91-9818866676, ekansh@
Grievance Redressal – Mittal Consulting, grievances@
“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.
Disclaimer: You can access it here – LINK
Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No
Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No
Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No
Whether it or its associates have received any compensation from the subject company in the past twelve months – No
Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No
Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No
Whether the research analyst has served as an officer, director or employee of the subject company – No
Whether the research analyst or research entity has been engaged in market making activity for the subject company – No