India's Warren Buffetts are betting on these five under-the-radar stocks

Let’s be honest; we have all thought that at least once.

Every time we see names like Jhunjhunwala, Damani or Kedia on screen, we think the same thing. What is it that these super investors do differently?

You see, there seems to be some perverse human characteristic that likes to make easy things difficult. And it is not me saying this. These are the words of the world’s biggest and best super investor, Warren Buffett.

What he said holds deep meaning and a kind of hidden strategy for investors of all types.

Most investors, perhaps you too, keep looking for comets when the stars shine bright in plain sight.

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That, perhaps, is the big difference between ordinary and super investors.

In the words of Warren Buffet, once again, they don’t look to jump over seven-foot bars; they look for one-foot bars they can step over.

In simple words, they find them young when barely anyone knows about them and often laugh their way to the bank.

Today, I will share details of five stocks in which India's super investors are piling up money as you read this.

Now, these aren’t the big tech startups or established brands, but some great businesses with potential that many in the market perhaps haven’t noticed yet.

Here we go:

Raghav Productivity Enhancers Ltd

Selling under the brand name “Raghav", this first under-the-radar stock in the list manufactures quartz-based ramming mass, quartz powder and tundish board.

If you had difficulty understanding what all this is, you are not alone. I, too, had to look it up. These are mainly used in metal industries, especially in steel manufacturing. They're crucial for handling extremely hot metals safely and efficiently. You'll find them in steel mills, foundries, glass factories, ceramic production facilities, etc.

Raghav is essentially a multinational with a presence in 26 countries, other than India. Its manufacturing plant in Nevai, Rajasthan, has a production capacity of 180,000 metric tonnes per annum.

Raghav has big expansion plans to boost its ramming mass production capacity by 108,000 metric tonnes per annum through a 100% fully owned subsidiary, Raghav Productivity Solutions Pvt. Ltd, at a total capital expenditure of around ₹40 crore.

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The expansion is aimed at penetrating the foundry and quartz processing markets and developing certain high-value-added refractory items, such as tundish boards and castables. 

With a market capitalization of ₹2,245 crore, the company has an impressive growth record over the past few years. The five-year stock price compound annual growth rate (CAGR) stands at an astounding 79%.

As for other key numbers, Ebitda (earnings before interest, taxes, depreciation, and amortization) for the year ended 31 March 2021 was ₹15 crore and for the year ended 31 March 2024, it was ₹40 crore. Over the last three years, Ebitda has grown at a CAGR of 39%.

The profit after tax (PAT) was ₹26 crore for the year ended 31 March 2024, with a three-year CAGR of 41%.

Raghav’s almost debt-free status and smart working capital management make it appealing to value investors.

The current share price for Raghav is ₹1,008, which is almost a 1,900% jump from its price in early August 2020. So yes, it’s already rallied a lot.

When it comes to valuations, Raghav currently trades at a price-to-earnings multiple of about 81X. Now, that’s high by any stretch of the imagination.

Even so, some of India’s top super investors own the stock. These include Rekha Jhunjhunwala, Utpal Sheth, Ashish Kacholia and Mukul Mahavir Agarwal.

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It’s important to note, however, that these super investors built up large positions before the recent sharp rally.

So, it remains to be seen what the stock price does from here on. Nevertheless, this is a classic example of multiple super investors getting into a stock, and it doing very well for them.

J Kumar Infraprojects Ltd

J Kumar Infraprojects Ltd specializes in building essential infrastructure. Their expertise covers a wide range of projects like building transportation systems, i.e., roads and railways, water management and irrigation networks, large-scale civil construction, foundation work and piling.

The company takes on contracts to design, plan and construct these vital public works projects, helping develop and modernize communities across the country.

Mumbai Metro, Delhi Metro, Ahmedabad Metro, Navi Mumbai Metro, Mumbai Monorail, multiple flyovers and roads across the country… And many more are some of the company's marquee projects.

As far as future plans go, the company aims to be a $1-billion revenue business by 2026-27. It forecasts its order book to be around ₹25,000 crore by 2026-27, up from ₹19,820 crore at the end of 30 June 2024.

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The major contributor, according to J Kumar Infraprojects, towards this growth will be the metro line projects.

The company's finances are healthy, with a solid balance sheet and strong operations. The company’s expertise and experience in city projects put it in a front-row spot to grab a big chunk of this growing market.

The five-year stock price CAGR stands at 45%.

Their Ebitda for the year ended 31 March 2019 was ₹436 crore, and for the year ended 31 March 2024, ₹704 crore. Ebitda grew at a CAGR of 10.05% in the last five years.

The company’s current share price is ₹851, which is almost an over 800% jump from its August 2020 price. At the current price, the stock gives a dividend yield of 0.47%.

As for valuations, J Kumar Infraprojects currently trades at a price-to-earnings multiple of about 18.8X.

No wonder super investors like Dolly Khanna, Mukul Agarwal and Sunil Singhania (via his PMS) are invested in this company. Even famed fund manager Prashant Jain, via his PMS 3P, has picked up a stake in the company.

However, only time and the markets will tell how well this stock does for the super investors in the long run.

Jubilant Pharmova Ltd

Jubilant Pharmova Ltd is an integrated global pharma company spread across three different business segments of pharmaceuticals, contract research and development (R&D) services, and proprietary novel drugs.

It has six manufacturing facilities. The company caters to regulated markets like Europe and the US, among other geographies.

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However, their contract R&D services are based in India, with two world-class research centres in Greater Noida and Bengaluru.

The company's future growth looks strong as it plans to incur a total capex of about $570 million over FY23-FY25, most of it going towards R&D for its specialty pharmaceuticals, generics and CRDMO businesses.

The said capex shall be funded via government grants, internal accruals, and balance through debt.

With a market cap of ₹13,461 crore, the company is a leader in a small but important area like radiopharmaceuticals—a fast-growing field difficult for others to enter.

The five-year stock price CAGR stands at 17%.

Ebitda for the year ended 31 March 2019 was ₹1,744 crore, and for the year ended 31 March 2024, ₹901 crore. The CAGR for Ebitda is a negative 12.82%, meaning it decreased over the five-year period.

What is noteworthy here is that Ebitda and PAT both were falling till the year ended 31 March 2023.

Ebitda for the year ended 31 March 2023 was ₹779 crore, and the company incurred a loss of ₹65 crore for the same year.

But, at the end of 31 March 2024, Ebitda was ₹901 crore and PAT was ₹73 crore, signalling a sharp recovery.

The share price around August 2019 was about ₹357. Now, it is ₹863, a jump of almost 142%. At the current share price, the dividend yield is 0.58%.

As for the valuations, the company is trading at a price-to-earnings multiple of about 59X.

Sunil Singhania (again via his PMS) and Rekha Jhunjhunwala are invested in the stock.

Among the funds, Quantum Small Cap Fund recently took a position in the stock.

PDS Ltd

A leader in its global space, PDS is a customized and integrated solutions provider to global retailers and brands, operating on a global scale and engaging in diverse aspects of the fashion and consumer goods industry.

Its business consists of trading various types of clothing, as well as managing investments in the sector. It is market leaders when it comes to mastering the entire cycle of bringing garments to market, designing new styles to developing products and marketing them effectively.

Be it apparel, accessories, footwear or home products, PDS has its hands in all of it. It boasts a capacity of around 1 million pieces of garments per day from its partners.

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Operating from 50+ offices in 22+ countries, it also has over 6,000 partner factories.

Global sourcing is done from countries like India, Cambodia, Central Europe, Vietnam, Turkey, Indonesia, Latin America, China, Sri Lanka and Bangladesh. Manufacturing is spread across Sri Lanka and Bangladesh.

The company has a market cap of ₹7,517 crore, and its five-year stock price CAGR stands at an impressive 54%.

Ebitda was ₹136 crore for the year ended 31 March 2019 and was ₹414 crore at the end of 31 March 2024—a CAGR of almost 25%.

As for the share price, it was ₹64 in August 2019, which today, after a jump of over 750%, is ₹546. At the current share price, the stock gives a dividend yield of 0.85%.

The company's valuation metrics show a price-to-earnings ratio of roughly 59X.

Noteworthy names holding this stock are Sanjiv Shah, Mukul Agarwal and Vallabh Bhanshali.

TAAL Enterprises Ltd

Established in 2013, TAAL was in the business of providing aircraft charter services, which had to be stopped due to an unfortunate aircraft accident.

It is now in the process of merging its wholly-owned subsidiary, TAAL Tech India Pvt. Ltd, with itself.

This has given birth to a whole new business that provides not only aircraft charter services but also engineering services, embedded systems and IoT solutions.

With a market cap of ₹851 crore, the company is almost debt-free and has a good return on equity track record. For the year ended 31 March 2024, it was 26% and 29% over the last three years.

Ebitda as of the year ended 31 March 2019 was ₹31 crore and ₹47 crore as of 31 March 2024, which means Ebitda grew at a CAGR of 8.7%.

Despite several ups and downs, the share price for Taal Enterprises grew by almost 1,130% in the last five years, making the five-year stock price CAGR 65%. At the current price, the stock gives a dividend yield of 0.76%.

At present, as far as the valuations go, the market is pricing the company's shares at 23 times its current earnings.

It is probably these numbers that drew super investors like Raj Kumar Lohia and Mukul Agarwal towards this company. And also Porinju V. Veliyath, who has invested through his PMS.

Indian Warren Buffets have already invested in them

The five companies we have looked at today are not just stock picks for the Indian Warren Buffetts. In their books, these stocks check several key boxes, which is probably why they have bought stakes in these companies.

Now, we know these super investors have time and again proved why they are in the league they are.

In the words of Benjamin Graham, they are neither right or wrong because others agreed or disagreed with them; they are right because their facts and analysis are right!

How these five stocks will perform is something only time will tell.

Remember, even the best investors don’t succeed with every pick.

It’s a game of the overall strategy, thorough research, patience and looking at the big picture.

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To conclude, the most important lesson we can learn from India's Warren Buffetts isn't about which stocks to buy. It’s more about how to identify potentially lucrative investment opportunities in the stock market.

The purpose of this article is only 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 educative purposes only. 

Manvi Agarwal has been tracking the stock markets for about two decades now. During this period, for about eight years, she was a financial analyst at a value-style fund managing money for international investors. Presently, she is devoting her time to writing on potentially ignored and/or misunderstood investment opportunities in the Indian stock markets.

Disclosure: The writer or his dependents may or may not hold stocks mentioned here as per Sebi guidelines.