Renowned micro-cap investor Ashish Chugh invests in undervalued micro-cap stock below Rs 30!
The company has successfully maintained a diversified customer base, with its top-five customers contributing to only 14 per cent of total sales
Introduction:
Microcap stocks have always intrigued investors seeking hidden gems that could potentially deliver substantial returns. Renowned microcap investor Ashish Chugh has recently set his sights on Beardsell Ltd (BSL), a company that has caught his attention due to its promising prospects in the microcap segment. With a history dating back to 1936, BSL manufactures insulation products, including prefabricated items, packaging, and molded products. Chugh's investment in BSL, which currently accounts for 1.25 per cent of the company's stake, speaks volumes about his confidence in its potential for growth. The intristic value of the stock is Rs 32.1. The company has a market cap of Rs 112 crore, with a Return on Equity of 15.7 per cent, while the market cap to sales ratio stands at 0.48
A Diversified Customer Base:
BSL operates exclusively in the domestic market, catering primarily to pharma companies, water purifier manufacturers, and government departments. Over the past three years, the company has successfully maintained a diversified customer base, with its top-five customers contributing to only 14 per cent of total sales in FY2023. Additionally, BSL's long-term relationships with certain customers have resulted in repeat business, further strengthening its market position.
Financial Performance:
In FY2023, BSL's operating income soared by 24 per cent to Rs. 232.4 crore from Rs. 187.4 crore in FY2022. This notable growth can be attributed to increased volumes and improved realization from both the prefabricated and packaging divisions. The company's liquidity position has also improved, with working capital limits rising to Rs. 20 crore in March 2023, coupled with an equity infusion of Rs. 4.70 crore in May 2023.
Experienced Leadership:
BSL is headed by Executive Director Mr. Amrith Anumolu, who boasts over two decades of experience in the engineering industry. His leadership, along with the company's established track record and extensive management expertise, has enabled BSL to carve a niche for itself in the expanded polystyrene and engineering sectors. With such experienced leadership at the helm, BSL is well-positioned to capitalize on market opportunities and drive future growth.
Investing Framework of Ashish Chugh:
Ashish Chugh's investing strategy centers around three crucial factors: the quality of business, quality of management, and quality of the balance sheet. By analyzing these aspects, Chugh identifies potential multibagger stocks. BSL's focus on manufacturing insulation products, its diversified customer base, and its strong financial performance align well with Chugh's investment framework, making it an appealing prospect for the Hidden Gem supremo.
Share with us whether you believe this stock has the potential to become a multibagger for the Hidden Gem maverick. We appreciate your comments.