FIIs Bought 26,82,759 Shares: Ashish Kacholia’s Portfolio Multibagger Jumps 3 Per Cent On Major Updates; Detail Inside

The stock gave multibagger returns of 391 per cent from its 52-week low is Rs 154.55 per share.  

On Tuesday, shares of Balu Forge Industries Ltd (BFIL) jumped 3 per cent to Rs 758.95 per share from its previous closing of Rs 736.60 per share. The stock gave multibagger returns of 391 per cent from its 52-week low is Rs 154.55 per share.  

Balu Forge Industries Ltd. (BFIL), a prominent player in the manufacturing of fully finished and semi-finished crankshafts and forged components, has been operating since 1989. With a rich history of 35 years, BFIL is renowned for its specialized engineering solutions and precision-machined components. Currently, the company operates three advanced plants across 8 acres and is actively expanding with a state-of-the-art integrated forging and machining complex in Belgaum, Karnataka, spanning 46 acres.

BFIL's impressive machining capacity of 32,000 TPA for machined components has been further augmented by the acquisition of specialized assets, adding 72,000 TPA of forging capacity. The expansion project includes a 16-ton, 10-ton closed-die forging hydraulic hammer line and an 8,000-ton capacity mechanical forging press, enabling the production of 72,000 tons of forged components. This fully automated facility, incorporating advanced technology and adhering to Industry 4.0 standards, will significantly enhance BFIL's manufacturing capabilities.

Additionally, BFIL and Swan Energy Ltd formed SPV to tap the global defence sector, focusing on aerospace, railways, and nuclear. The SPV will acquire target entities like Esbe Heavy Industries to expand offerings. BFIL and SEL will hold 40% each, with the remaining 20% for strategic investors. The SPV will operate independently with strategic guidance from BFIL and SEL.

BFIL's diverse product range caters to a wide array of industries, including automobiles, industrial vehicles, earthmoving machinery, wind energy, aerospace, defence, oil and gas, locomotives, railway applications, marine, agriculture, and more. The company's strong export and distribution network extends to over 80 countries, serving more than 25 OEMs globally. With a dedicated R&D team of around 45 professionals, BFIL is committed to new product development and the application of advanced alloys and material chemistries in specialized segments.

Key Highlights and Future Outlook

• Strong Order Book and Capacity Addition: BFIL boasts a robust order book for both its existing and upcoming infrastructure. The 32,000 tons of machining capacity is fully booked, and the initial commercialization of the forging capacity will meet the demand from the Mercedes-Benz production line and the machining capacity expansion. Additionally, the company has secured agreements for 72,000 tons of forging capacity in the railways, defence, and aerospace sectors. Plans include expanding machining capacity to align with the increased forging capacity and exploring further capacity additions in specialized areas of railways and defence.
• Progress on New Unit in Belgaum: The new unit in Belgaum is progressing steadily, with the first phase on track for commercialization. The Mercedes-Benz plant has already achieved commercialization, and the initial commercialization of the forging capacity will feature three advanced forging lines. The last quarter is expected to witness significant progress due to the commercialization of the forge shop and the arrival of the first 7-axis machine.
• Expansion in Balu Family: BFIL has embarked on an expansive recruitment drive, adding key personnel to new and expanding roles across all major departments, particularly in R&D. These industry experts, hailing from renowned conglomerates, will play a crucial role in driving BFIL's growth and seizing new opportunities. The company aims to increase its workforce by over 1000 personnel in the coming financial year.
• Positive Cash Flow and Improved Working Capital Cycle: BFIL has significantly improved its cash flow from operations, turning positive in H1FY25. The company has also reduced its working capital cycle from 137 days to 106 days on a year-on-year basis, enhancing its financial health and operational efficiency.
• Reduction in Debtor Days: BFIL has successfully reduced debtor days from 177 days to 119 days, improving cash flow and financial health. This positive trend is expected to continue as the company expands into specialized sectors.
• Government Support: The Indian government's initiatives, such as Make in India and infrastructure development, are creating a favorable environment for the growth of the forging industry. These initiatives, coupled with the industry's focus on technological advancements and new materials, are expected to further strengthen India's forging sector.

About the Company

Balu Forge Industries Ltd (BFIL) was incorporated in 1989 and manufactures fully finished and semi-finished Forged Components. It can manufacture components conforming to both New Emission Regulations & the New Energy Vehicles. The company has a fully integrated forging & machining production infrastructure with a large product portfolio ranging from 1 kg to 1,000 kg. The Company has 80+ global distribution networks and operates in domestic and export segments. The company also caters to the defence, oil & gas, railway and marine amongst other industries.

According to the shareholding pattern, Ashish Kacholia owns 19,90,500 shares or a 1.82 per cent stake in the company and his investment firm Bengal Finance & Investment Pvt Ltd owns 19,03,400 shares or 1.74 per cent stake in the company as of September 2024. Therefore, in just 1 day, Ashish Kacholia in total gains Rs 22,03,94,740 in just 1 day [(19,90,500 shares + 19,03,400 shares) x Rs 57.25 per share gain today]

According to Quarterly Results, the net sales increased by 60.1 per cent to Rs 222.88 crore; EBITDA increased by 116.5 to Rs 65.22 crore and net profit skyrocketed by 106.9 per cent to Rs 48.14 crore in Q2FY25 compared to Q2FY24. Looking at its half-yearly results, the net sales increased by 58.3 per cent to Rs 398.2 crore; EBITDA increased by 108.4 to Rs 108.43 crore and net profit skyrocketed by 105.6 per cent to Rs 82.28 crore in H1FY25 compared to H1FY24. In its annual results, the net sales increased by 14.2 per cent to Rs 326.64 crore and net profit increased by 30.4 per cent to Rs 38.91 crore in FY24 compared to FY23.

In September 2024, FIIs bought 26,82,759 shares and increased their stake to 10.43 per cent compared to 8.51 per cent in June 2024. The company has a market capitalization of over Rs 8,000 crore and the shares of the company have an ROE of 25 per cent & an ROCE of 30 per cent. The stock gave multibagger returns of 215 per cent in just 1 year and a whopping 1,265 per cent in 2 years. Investors should keep an eye on this Small-Cap stock.

Disclaimer: The article is for informational purposes only and not investment advice.