Team Saurabh Mukherjea exits from this multibagger stock; Smallcap gives over 500% return post-Covid

Team Saurabh Mukherjea has recently exited Gujarat Ambuja Exports (GAEL), a company involved in the agro-processing business. Marcellus Investment Managers announced the information in its latest newsletter on the Little Champs model portfolio. Notably, Mukherjea is the founder and CEO of Marcellus. By exiting GAEL, Marcellus added Vijaya Diagnostic Centre which debuted on the stock market last year. Despite Marcellus offloading of shares in GAEL, the small-cap is a multi-bagger on Dalal Street. GAEL has multiplied investors' wealth by 6-folds in post-pandemic.

In the Little Champs newsletter, Marcellus said, "In order to allocate space for Vijaya Diagnostic Centre as warranted by the Little Champs position sizing framework, we decided to exit from Gujarat Ambuja Exports."

It added, "Gujarat Ambuja Exports had the lowest score in our position sizing framework for the portfolio and also ranked lower compared to Vijaya Diagnostic Centre."

Marcellus' note highlighted the key objective of its Little Champs portfolio is to invest in market-leading franchises.

In most industries in India, the top players command disproportionately higher volumes, pricing power, and thereby industry profit share. This explains the significant gap between the industry leaders and laggards on key metrics like margins, return on capital, and debt. By virtue of the above advantages, market leaders are able to withstand the stressed market conditions much better than weaker peers, as per Marcellus' note.

Little Champs' philosophy is to invest in small caps which are market-leading franchises. That said, the portfolio has a preponderance of niche B2B names. The objective is to own a portfolio of about 15-20 sector-leading franchises with a track record of prudent capital allocation, clean accounts & corporate governance, and at the same time healthy growth potential.

"We intend to keep the portfolio churn low (not more than 25-30% per annum) to reap the benefits of compounding as well as minimize trading costs," Marcellus note said.

Little Champs portfolio went live on August 29, 2019. Since its inception, the portfolio garnered a return of 32.30% almost alongside the returns given by BSE SmallCap by 32.93%.

GAEL is a small-cap stock traded under the 'A' group on BSE.

On Wednesday, GAEL's shares dropped by 4.87% to close at ₹275.65 apiece. The company's market valuation is around ₹6,321.63 crore.

In the long run, GAEL shares have made many investors rich. In a year, GAEL shares jumped by more than 59%. The stock was near ₹173 apiece level on September 28 last year.

Noteworthily, the stock has scaled up massively since the time the first nationwide lockdown hit India due to the spread of Coronavirus. The first lockdown came into effect from midnight of March 24, and just like every other stock GAEL too witnessed a steep bearish tone. GAEL shares were merely ₹44.03 apiece on March 24, 2020.

Since then, the shares have skyrocketed by a breath-taking 526% on D-Street. Investors' wealth in this stock has climbed by over 6-folds in less than 2 and half years.

In 5 years, GAEL shares have soared by a huge nearly 286% on D-Street. The shares were near ₹71 level on September 28, 2017.

GAEL touched an all-time high of ₹393.85 in April 2022. The shares traded are volatile so far in the current fiscal as overall markets condition have been volatile as well due to macroeconomic conditions.

The first quarter of FY23 has been stable for GAEL. In Q1FY23, GAEL posted consolidated revenue of ₹1,272.86 crore compared to ₹1,025 crore in Q1FY22. PAT stood at ₹114.60 crore versus ₹113.83 crore in Q1FY22.

During FY22, GAEL's revenues from operations stood at ₹4,670.31 crore, while the company achieved EBITDA and PAT of ₹741.18 crore and ₹475.44 crore, respectively with strong margins.

GAEL has a consistent track record of dividend payment. For the fiscal year FY22, the company paid a dividend of 65%, higher than 60% and 50% paid in FY21 and FY20.

In the annual report FY22, Manish Gupta Chairman & Managing Director said, "Our growth philosophy lies on making India a self-sufficient country in all aspects. We continuously strive to

diversify our product range and expand our existing capacities to make sure that we meet the national as well as international demand."

Going forward, Gupta said, "The Company has consistently maintained our diversified corporate identity while delivering a wide range of agro-ingredients and strengthening the supply chain of the Food, Pharmaceutical, and Feed industries."

The chairman added, "We have been in this industry on a small scale for the past 30 years. We now envision ourselves in diversifying growth opportunities and growing into a national brand."

Gujarat Ambuja Exports Limited (GAEL) is principally involved in the manufacturing of Corn Starch Derivatives, Soya Derivatives, Feed Ingredients, Cotton Yarn, and Edible Oils.

Since its incorporation in 1991, GAEL strives to serve the Food, Pharmaceutical, Feed, and many other industries with a long-term growth strategy in the Agro-Processing sector.