We’re talking about Mukul Agarwal, a well-regarded investor who, per Trendlyne.com, currently holds 56 stocks in his portfolio valued at ₹6,739 crore. As the founder of Param Capital Group in 1993, Agarwal has become one of the most respected names in the market. This latest addition to his portfolio has already stirred speculation among market watchers about the potential this company may hold.
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While this new buy has drawn attention, it’s worth noting that the backbone of Agarwal’s portfolio consists of small and midcap stocks with promising returns. Today, we’ll look not only at this new addition but also at his top three holdings by portfolio weight. These are the stocks in which Agarwal holds the largest stakes.
While examining his entire portfolio would be insightful, we’ll focus on these four stocks: the new addition and his top three holdings by percentage. Let’s begin with the new buy, followed by the three stocks in descending order of holding size.
#1 ASM Technologies Ltd
The first on the list is ASM Technologies Ltd, the latest addition to Agarwal’s portfolio. The company offers consulting and product development services in engineering and product R&D, with offshore development and support centres in India and overseas. According to screener.in, Agarwal purchased a 6.48% stake in the company by the end of September, with ASM now holding a market cap of ₹1,645 crore.
This investment might surprise some investors. The company’s current Return on Capital Employed (ROCE) is -0.91%, well below the industry average of 17%. However, its 10-year average ROCE stands at 11.44%, while the industry median is 16.88%. In peer comparison, Tata Elxsi leads with a ROCE of 42.74%.
On valuation, ASM’s current Price to Earnings (P/E) ratio is an unusually high 800x, compared to an industry average of 41x. Its 10-year median P/E is 36.2x, while the industry median for the same period is 25x. The company’s Ebitda (earnings before interest, taxes, depreciation, and amortization) showed growth up until FY23 but fell sharply in FY24, with a CAGR of 3.7% over the past five years.
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Despite mixed profitability, ASM’s sales grew substantially from ₹88 crore in FY19 to ₹202 crore in FY24, reflecting an 18% CAGR. However, the company reported a net loss of ₹7 crore in FY24, compared to a net profit of ₹7 crore in FY19.
The stock price saw rapid growth from ₹1,155, when Agarwal bought his stake, to ₹1,790 within 75 days, before settling back at ₹1,380. Five years ago, the stock price was just ₹30, marking an absolute growth of 4,533%, or a 113% CAGR.
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Promoter holding in the company declined from 61.54% to 57.09% between June and September 2024, and no domestic institutional investor (DII) currently holds a position. ASM’s sales growth likely played a role in attracting Agarwal, though any conclusions are speculative.
With ASM’s recent expansion into areas like virtual reality, IoT, and open edX platform management, it is a stock worth watching closely for future developments.
#2 TAAL Enterprises Ltd
Following the recent addition, the next highlight in Agarwal’s portfolio is TAAL Enterprises Ltd. Originally focused on providing aircraft charter services, TAAL shifted its direction after an aircraft accident, discontinuing the charter business. The company is now merging its wholly owned subsidiary, TAAL Tech India Pvt. Ltd, which will expand its offerings to include engineering services, embedded systems, and IoT solutions alongside air charter services.
Agarwal holds an 8.92% stake in TAAL, the highest in his portfolio, and has steadily increased his position over the years, rising from 3.66% in March 2017 to 8.92% by March 2022. The company’s current market cap is ₹850 crore.
TAAL’s ROCE stands at 31.31%, well above the industry median of 24.53%, with a 10-year average ROCE of 52.20% compared to an industry median of 32.06%. In terms of valuation, TAAL’s P/E ratio is 19.8x, slightly below the industry average of 23.2x, and its 10-year median P/E is 13.3x against an industry median of 12.8x.
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The company’s financials have shown consistent growth: Ebitda rose from ₹31 crore in FY19 to ₹47 crore in FY24, reflecting a CAGR of 8.5%. Sales grew from ₹149 crore to ₹187 crore over the same period, at a CAGR of 5%, while profits increased at a compounded rate of 13%, from ₹22 crore to ₹37 crore.
TAAL’s stock price has grown at a remarkable CAGR of 71% over the last five years, climbing from ₹180 to the current ₹2,726.
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Although no domestic institutional investors (DII) are currently invested, Aegis Investment Fund PCC, a foreign institutional investor (FII), holds a 1.87% stake, contributing to an overall FII holding that has risen from 0% in FY19 to 2.21%.
One likely reason for Agarwal’s continued interest in TAAL is its strong financial health, with the company being almost debt-free, maintaining a robust Return on Equity (RoE) of 28%, and offering a dividend yield of 0.92%.
#3 Capacite Infraprojects Ltd
Capacit’e Infraprojects Ltd is the second-largest holding in Agarwal’s portfolio, with a 6.21% stake as of September, according to screener.in. A leader in the EPC (Engineering, Procurement, and Construction) sector in India, the company provides turnkey solutions for housing, high-rise buildings, and urban infrastructure, serving both private and public sector clients, including CIDCO, MHADA, Oberoi Realty, and K Raheja Corp. Capacit’e’s market cap currently stands at ₹3,078 crore.
The company boasts a strong ROCE of 16.20%, significantly higher than the industry average of 8.56%, and a 10-year median ROCE of 22.30%, compared to the industry median of 6.79%. Despite a recent dip in Agarwal’s holding from 8% in September 2023 to 6.21%, his position has remained steady over the past four quarters.
Capacit’e’s financials have seen modest but consistent growth. Ebitda increased from ₹251 crore in FY19 to ₹334 crore in FY24, with a 5-year CAGR of 5.7%. The company’s sales have recorded a compounded growth rate of 1% over the last five years, though a recent acceleration has driven a 30% CAGR over the last three years. Profit after tax stood at ₹120 crore for the year ended March 2024, representing a 4% compounded growth over the past five years.
The stock has performed well, with the current price at ₹365, up 87% from ₹196 five years ago, achieving an 11% CAGR over that period.
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Capacit’e trades at a P/E multiple of 17x, lower than the industry average of 30.5x, with a 10-year median P/E of 17.9x versus the industry average of 23.29x. Despite sustained profitability, the company does not currently pay dividends.
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Capacit’e’s debt levels have risen from ₹274 crore five years ago to ₹346 crore, marking a 26% increase. Alongside Agarwal, Vikas Khemani holds a 1.74% stake, and Quant Small Cap Fund holds 2.4%. While domestic institutional investment (DII) in Capacit’e surged to 24.5% in FY20, it has since dropped to 7.24% as of September. However, foreign institutional investor (FII) interest has steadily increased, from 7.6% in FY19 to 14.29% currently.
#4 Oriental Rail Infrastructure Ltd
Oriental Rail Infrastructure Ltd (ORIL) rounds out the list, specializing in the manufacture and supply of various products for the Indian Railways and other industries. ORIL’s offerings include seats and berths, densified thermal bonded blocks (DTBB), compreg boards, ORVIN, Recorn, coated upholstery fabric, plywood, rubber flooring, and other allied products. The company holds a leading position with over 30% market share in seats and berths for Indian Railways and has a current market cap of ₹1,431 crore.
Agarwal holds a 5.53% stake in ORIL, making it his third-largest holding. His position, reported as of March 2024, has remained steady since then. ORIL’s current ROCE is 12.26%, slightly below the industry median of 12.66%. Over the past decade, its average ROCE has been 11.82%, close to the industry median of 13.5%.
The company trades at a Price-to-Earnings (P/E) ratio of 43.1x, higher than the industry average of 30.7x. Its 10-year median P/E stands at 36.5x, compared to the industry median of 25.9x. ORIL’s Ebitda rose from ₹20 crore in FY19 to ₹67 crore in FY24, achieving a compounded growth rate of 26%. Sales increased from ₹139 crore to ₹526 crore over the same period, reflecting a CAGR of 30%, while net profits grew at a compounded rate of 21%, from ₹12 crore to ₹30 crore.
The stock price has appreciated significantly, rising from ₹55 five years ago to the current ₹233, marking a 322% absolute growth and a 34% CAGR.
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As of the latest data, no DIIs hold a stake in the company, and overall foreign FIIs holding remains below 1%. Promoter holding has declined from 57.85% in FY19 to 54.81% in FY24.
In March 2024, ORIL secured orders worth ₹1,249 crore, followed by an additional ₹432 crore order in July 2024, both from Indian Railways. The company’s order book currently exceeds ₹1,700 crore, positioning it for continued growth in the rail infrastructure sector.
A trail to follow?
While Agarwal’s stock picks may not seem like obvious choices to many investors, his track record in identifying strong small and midcap performers speaks volumes. The market cap of the stocks we reviewed today ranges from ₹850 crore to ₹3,078 crore—squarely within the small to midcap space where Agarwal has consistently excelled.
For more such analysis, read Profit Pulse.
The financials of these companies may not rank among the best when compared to more established firms, but this is precisely what distinguishes India’s Warren Buffetts. They often spot potential in places the average investor overlooks. The exact reasoning or strategy behind these picks may remain a well-kept secret, but keeping an eye on their moves can offer valuable insights.
Note: This article relies primarily on data from Screener.in and Trendlyne.com. Where data was unavailable, we have used alternative sources that are widely recognized and accepted.
This article aims to present intriguing charts, data points, and thought-provoking insights. It is NOT an investment recommendation. Please consult a financial advisor if you are considering any investment. This article is intended solely for educational purposes.
About the author: Suhel Khan, a seasoned market enthusiast, has over a decade of experience. Previously, he led sales & marketing at a prominent equity research firm in Mumbai. Currently, he dedicates his time to analysing the investments and strategies of India’s super investors.
Disclosure: The writer and his dependents do not hold any of the stocks discussed in this article.
