The Super Investors of India: Stocks to Watch

In the world of investing, a select group of individuals stands out not just for their wealth but for their remarkable ability to identify tomorrow’s winners today. These super investors, often likened to Warren Buffett, have spent decades honing their skills, developing an uncanny knack for spotting opportunities that many overlook. While the average investor may chase headlines and ride market trends, these seasoned professionals often make unconventional moves that frequently pay off. Their portfolio decisions are closely monitored, not just for the massive sums involved, but for the insights they provide into deeper market opportunities on the horizon.

Today, we delve into five stocks that have captured the attention of India’s most astute wealth creators. These stocks, ranging from established names to rising stars, each boast at least a 1% holding in the portfolios of these super investors. Let’s explore why these stocks may be worth a closer look.

TAC Infosec Ltd

First on the radar is TAC Infosec Ltd, where prominent investor Vijay Kedia has made a strategic move by acquiring a 10.95% stake valued at ₹103 crore. With a market capitalization of ₹720 crore, TAC Infosec is not just a high-growth stock; it is pioneering risk-based cybersecurity solutions through a Software as a Service (SaaS) model.

Since its listing on the NSE in April at ₹304, the stock has more than doubled to ₹687, signaling growing confidence in its future. TAC specializes in vulnerability management, cyber risk assessment, and penetration testing, positioning itself as a key player in the ever-expanding cybersecurity sector.

The company’s sales have shown impressive growth, increasing from ₹4.36 crore in FY20 to ₹11.62 crore in FY24, reflecting a compounded growth rate of 27.76%. Moreover, profits after tax (PAT) have surged at a compound rate of 95%, from ₹43 lakh in FY20 to ₹6.3 crore in FY24. With ambitious plans to reach $5 million in revenue by 2026, particularly in the Gulf Cooperation Council (GCC) region, TAC Infosec is certainly one to watch.

ASM Technologies Ltd

Next up is ASM Technologies Ltd, where investor Mukul Agarwal holds a significant 6.48% stake valued at ₹108.9 crore. The company provides consulting and product development services in engineering and research & development, with a global presence that includes the US, UK, Singapore, and Canada. Recently, ASM acquired Semcon Engineering UK Ltd, broadening its customer base in Europe.

Despite impressive revenue growth—sales surged from ₹88 crore in FY19 to ₹202 crore in FY24 (an 18% CAGR)—ASM faces profitability challenges, with a negative return on capital employed (ROCE) of 0.91%. However, the stock price has skyrocketed from ₹36 to ₹1,440 over the past five years, translating to a staggering 110% CAGR. While traditional valuation metrics may not fully capture ASM’s potential, its investment arm is strategically focusing on future growth opportunities in cybersecurity and smart manufacturing.

Baazar Style Retail Ltd

Renowned investor Rekha Jhunjhunwala has recently acquired a 3.65% stake in Baazar Style Retail Ltd, a leading value fashion retailer in Eastern India. The company operates a network of 162 stores across 146 cities, capitalizing on the growing demand for affordable fashion.

Baazar Style Retail has achieved impressive growth, with sales increasing by 23.5% from ₹788 crore in FY23 to ₹973 crore in FY24. Its profitability has also improved significantly, with net profit soaring 340% from ₹5 crore to ₹22 crore during the same period. However, the stock trades at a high PE of 115x, which is the second highest in peer comparison, suggesting that investors should carefully assess the company’s ability to maintain profitability and execute its growth strategy effectively.

Emkay Global Financial Services Ltd

Dolly Khanna, another prominent investor, has recently acquired a significant stake in Emkay Global Financial Services Ltd, a leading financial services firm. Emkay offers a comprehensive range of services, including institutional broking, asset management, and investment banking.

With a ROCE of 17%, close to the industry median of 19%, Emkay has shown robust growth, with net profit increasing at a compound rate of 32% from ₹9 crore in FY19 to ₹32 crore in FY24. The stock trades at a relatively low PE of 10x, below its 10-year median of 13x and the industry average of 16x, suggesting that it may be undervalued if it sustains its recent earnings growth.

Protean eGov Technologies Ltd

Finally, we have Protean eGov Technologies Ltd, where prominent investor Ramesh Damani has acquired a 1.04% stake. As a leading provider of e-governance solutions, Protean holds over 45% market share in new PAN card allotments in India.

Despite its strategic position, the company has faced challenges, with revenue growth modestly increasing from ₹755 crore in FY19 to ₹882 crore in FY24. However, net profit has declined from ₹124 crore to ₹97 crore during the same period. The company’s shares were listed on BSE in November 2023 at ₹883, and have jumped by 108% to the current ₹1,856. Investors should evaluate its future growth prospects and potential risks carefully.

Should These Stocks Be on Your Radar?

When India’s own Warren Buffetts make their moves, the entire investment community takes notice. These seasoned investors have proven their mettle time and again, with decades of successful investing behind them. The five stocks highlighted today have piqued the interest of these top-tier investors, making them well worth adding to your watchlist.

Whether you’re observing from the sidelines or considering an investment, tracking the future of these stocks promises to be an intriguing journey. As always, it’s crucial to conduct thorough research and consult with a financial advisor before making any investment decisions.

Disclaimer

The purpose of this article is to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.

Suhel Khan has been a passionate follower of the markets for over a decade, previously serving as the Head of Sales & Marketing at a leading Equity Research organization based in Mumbai. He now dedicates his time to dissecting the investments and strategies of India’s super investors.

Disclosure: The writer and his dependents do not hold the stocks discussed in this article.