Today, for private investors, investing in the stock market is like wandering in a dense forest without a map. The forest is filled with tempting rewards and scary traps.
Fortunately for retail investors, the big names in the stock market, or as we like to call it – the top investing gurus in India – have cut through this forest and walked away with handsome rewards.
Observing the chart prepared by these investment gurus can serve as a guide for investors.
We do not recommend replicating their entire portfolio or copying their investment ideas, but keep track of their buying and selling activity.
In today’s article, we take a look at one such investment guru and her recent activity in a small cap stock. The best investor is none other than Dolly Khanna.
Who is Dolly Khanna?
Dolly Khanna is a Chennai-based investor, known for picking lesser-known mid-caps and small-caps. She has been investing in equities since 1996.
Dolly Khanna’s portfolio, which is managed by her husband Rajiv Khanna, tends to lean more towards more conventional stocks in manufacturing, textile, chemical and sugar stocks.
Which small cap stocks has Dolly Khanna sold and why?
KCP’s latest shareholder pattern shows that Dolly Khanna reduced her stake in the small-cap company in the March 2023 quarter.
As of December 2022, her stake in the company was 2.43%. In the quarter ended March 2023, her stake was reduced to 2.25%.
While we don’t know why Khanna reduced her stake in KCP, there are a few reasons we can guess…
The company’s financial performance has deteriorated in recent quarters. For the March 2022 quarter, the company reported a net profit of Rs 592 million (m) and things have been going downhill for KCP ever since.
The company’s profits began to decline over the next three quarters. In the December 2022 quarter, the company reported a net loss of Rs 120 million.
KCP’s total turnover has not suffered in all these quarters. During the last two quarters (i.e. September 2022 and December 2022), the company’s sales increased marginally. However, the marginal sales increase was offset by an increase in costs.
During the March 2022 quarter, the company’s net profit margin was 11.3%, which has dropped significantly to -2.2% as of December 2022.
In the December 2022 quarter, KCP suffered heavy losses in its sugar segment. The losses in the sugar segment depressed overall profit.
The company also derives a large part of its turnover from the cement sector. The cement industry has been struggling for a long time with strong headwinds. The profit margins of cement companies were under pressure due to high electricity and fuel costs.
The price of raw materials such as coke and petcoke also rose. Power and fuel costs increased by 51% to Rs 48,730 m in the December quarter compared to the corresponding period of last year.
In a broader perspective, Dolly Khanna has long divested her interest in the company in small amounts. She began divestments in the June 2021 quarter. See the table below.
How shares of KCP have performed recently
Over the past month, KCP’s share price has risen 6.5%. In 2023, the share is down 9.7% so far.
Over the past year, the KCP share price has fallen by 20.2%.
The company reached a 52-week high of Rs 138.5 on 7 November 2022 and a 52-week low of Rs 91.6 on 16 March 2023.
About KCP
KCP is a diversified business group with interests in heavy engineering, sugar, cement, hydel power, information technology and biotechnology.
KCP’s cement division operates a state-of-the-art cement plant in Macherla, Andhra Pradesh.
It has 9 production sites in different regions of India and Vietnam. KCP Vietnam Industries is a sugar production subsidiary in Vietnam.
disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.
This article is from Equitymaster.com