We have been tracking Porinju Veliyath’s portfolio closely for the past several months. We have seen that Porinju has the knack of finding stocks that are at inflection point and can become multibaggers within a short period of time. It is for this reason that tracking his portfolio and keeping an eye on his buys and sells becomes very important for all investors and traders in the stock market.
Bulk Deal purchase of Cimmco Ltd
Ayesha Faridi of ET announced that Porinju has bought 2.2 lakh shares of Cimmco at Rs. 69.95 per share. This is the latest bulk deal of Porinju’s investments. The shares were purchased in the name of Equity Intelligence, the Portfolio Management Scheme (PMS) of Porinju.
Cimmco: Equity Intelligence buys 2.2 lk shares at Rs 69.95 @porinju
— Ayesha Faridi (@AyeshaFaridi1) March 24, 2017
Why Cimmco Ltd?
There are several reasons why Cimmco Ltd is a good investment and has the potential to become a multibagger in the near future.
(i) Cimmco is diversifying into the manufacture of tractors. According to the ET, a pilot run of the models was recently completed and preparations are on for a limited commercial launch. The brand of the tractor is called ‘Titagarh’. The manufacture will be by a division called Titagarh Agrico. The tractor project has received an investment of Rs 150 crore. The manufacture will be from a 76-acre facility at Cimmco’s 250-acre plant at Bharatpur in Rajasthan.
The tractors will range from 12 horsepower (hp) to 90 hp. The production capacity is 50,000 tractors over 5 years.
Pranab Ghosal, who was earlier the CEO of Sonalika Group, will head the tractors’ division. Pranab Ghosal was earlier instrumental in creating brand Sonalika and getting it to achieve robust growth in sales.
(ii) The traditional business of manufacturing of wagons will see improvement as the Railways are expected to release new orders. The Railways currently has 2.5 lakh wagons at present and carries 30% of freight traffic. It has declared the objective to take the share to 50%. So, the requirement for wagons will double.
(iii) An improvement in the GDP will mean an increase in the demand for wagons. There will also be replacement demand for wagons.
(iv) Cimmco is also diversifying into the manufacture of defence related equipment such as armoured trucks. It is likely to prosper as a result of the increases spending on defense and the Make in India indigenisation programme.
(v) The holding of the promoters in Cimmco is 74.93 per cent. This means that the promoters have high confidence in the business prospects of the Company.
Even Ashish Tater is bullish about the prospects for Cimmco
Ashish Tater is also well known for his ability to pick multibagger stocks when they are at inflection points. He recommended a buy of Cimmco Ltd by pointing out that the wrong public perception that the Company belongs to the Yash Birla group had kept the price subdued. However, because the management is the Titagarh group, the concerns of the investors are baseless.
Multibagger prospects for Cimmco Ltd?
From the explanation given by Ashish Tater and Porinju Veliyath about the prospects for Cimmco Ltd, it can be said that the stock is at an inflection point. If the tractors division takes off and the company gets defence deals of a large magnitude, it can become a multibagger stock in the near future.
Other stocks recommended by Porinju Veliyath
Porinju has been periodically recommending stocks which are a good investment bet. Some earlier stocks recommended include Saksoft, Century Textiles, Virinchi Ltd, Kalyani Steels, Tata Chemicals, Jubilant Life Sciences etc.
He has also recommended an investment in TCI and TCI Express. All of these stocks have a good track record of growth and profitability and good levels of corporate governance.