KRBL Limited–Pledged Shares selling creates a Bottom

 

Continuation from previous post - Insider Buying–A good way to hunt for Companies to Research.

A small product offering designed by Harsh – Base Price min Rs 300 Rest - Pay as you want for next 2 months. Will decide cost as after improvisations as per feedback   - ( updated sheet till 15th April and other 2 snapshot on interesting companies sent)

Insider Trading Excel and Quick Snapshots on Interesting Companies

Stock - KRBLLtd - Pledged selling by a veteran value investor.

1) Last 4 years.

 

Stock Name	Dec-15	Dec-16	Dec-17	Dec-18	Dec-19
KRBL Limited	58.81	58.81	58.81	58.81	59.13

 

2) Recent quarters

Stock Name	No. of shares bought (net) in Q3FY20	No. of shares bought (net) in Q4FY20	Total Shares Q3+Q4	Value of securities bought Q3+Q4	Total no. of shares	% equity bought
KRBL Limited	837778	689399	1527177	386145954	235389892	0.65%

 

Comments

·         One of the veteran value investor Anil Kumar Goel has been invested in the company for a long time, current stake (Dec 2019) is at 4.44% (Increased gradually). His stake in Dec 2015 was at 3.67%. Seema Goel holds 1.19% stake. Combined stake at 5.63%. Most of the stake was bought in low double digits. He has a fantastic track record of taking really long term bets.

·         However the stake came down to 4.54% in March 2020 as 10.87 lacs shares were sold as an invocation of pledge on 26^th March 2020 making the 52 week low. Refer Link  

 htps://www.bseindia.com/xml-data/corpfiling/AttachHis/4C7A1A36_57F1_4A43_AF85_3ADB71513D14_193122.pdf . The sharp fall in price led to the invoking of pledge it seems.

·         10.87 lakh  shares sold on 26th March. Total Delivery Volumes = 11.38 lakhs on NSE. Almost 95% of the volumes!!

·         The next day onwards the stock started hitting upper circuits and from a low of 92 the stock is back at 200.

·         The Balsharaf family holds 3.33% stake. ED holds 2.76% stake. There is a litigation going on between Balsharaf family and Enforcement Directorate.

Refer :https://indiankanoon.org/doc/61425710/

·         M/s Pabrai Investment Fund purchased ~65 lacs of KRBL Ltd on 12-02-2018. The counterparty was Balsharaf family and ED nullified the trade which got Mr Mohnish Pabrai saved as the buying price was 594.

• There have been a few concerns on KRBL - https://www.business-standard.com/article/markets/krbl-slips-13-as-ed-attaches-properties-in-embraer-defence-deal-case-119070500346_1.html 
• At a price of 90-100 the market cap was much below the inventory in the company. Promoters have been buyers roughly around the 200 price zone.

Last 10-15 year chart.

• At 100 the stock was back to the price of end of 2014.
• Mohnish Pabrai bulk deal was close to the top and pledge invoking right at the bottom.
• All time high was 670 in Nov 2017
• 52 week low was 92 on 26^th March 2020

Conclusion

• Many a times the stock prices may fall because of margin selling or forced selling due to various reasons. One needs to differentiate is the company leveraged or the investors in the company are leveraged leading to selling.
• One needs to study and be convinced to accumulate the dip as reversals could also be very sharp and may not give an opportunity.
• In Bear markets Investors Balance Sheets decides the prices of microcaps and smallcaps.
• KRBL could still be an interesting company to study given that long term debt is negligible and a strong brand.

Report By - Harsh Doshi and Nooresh Merani

nooreshtech.co.in https://twitter.com/nooreshtech Whatsapp - 7977801488

Disclaimer - This is not a stock recommendation and just a note based on publicly available data. Please do your own research,risk management and consult your adviser.

 

 

 

 

 

DISCLOSURE Nooresh Merani

Securities covered above:  KRBL

SEBI Registration disclosure - Investment Adviser ( INA000002991)

Financial Interest:

Nooresh Merani and his family/associates/ analysts do not have exposure in the securities mentioned in the above report/article.

Nooresh Merani and his family/associates/ analysts do not have any financial interest/beneficial ownership of more than 1% in the company covered by Analyst.

Nooresh Merani and his family/associates/ analysts have not received any compensation from the company/third party covered in the above report/article ever.

Nooresh Merani and his family/associates/ analysts  has not served as an officer, director or employee of company covered in the report/article and has not been engaged in market-making activity of the company covered in the report/article.

The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision

Also read the detailed disclaimer - https://nooreshtech.co.in/disclaimer