Multibagger Alert: Man Industries Stock Drops 13% Since July—Should You Buy, Sell, or Hold This Ashish Kacholia Pick?

Man Industries (India) Ltd, a stock that has surged 161% in the past year and an incredible 973% over the last five years, has seen a 13% correction since reaching its July highs. Given that prominent investors like Ashish Kacholia and Vikas Khemani hold stakes in the company, the question now is whether you should buy, sell, or hold this stock.

Key Investors

Ashish Kacholia holds 13,62,395 shares in Man Industries, which makes up 2.10% of the company’s total paid-up capital as per the Q1FY24 shareholding pattern. Vikas Khemani owns about 2.53% of the company.

Q1 Financial Results

The recent dip in share price followed the company’s Q1 FY25 results, which were slightly weaker compared to the previous quarter. Despite this, the year-on-year performance was strong. Man Industries reported revenue of ₹748.7 crores, up 52.7% from last year, but down 7.4% sequentially. EBITDA stood at ₹58 crores, growing 14.9% year-on-year but declining 20.4% from the previous quarter. Net profit for the quarter was ₹19.1 crores, a 70% year-on-year increase but a 20.7% drop from the previous quarter.

The softer performance on a sequential basis was partly due to a higher contribution from the water segment, which operates on lower margins. However, the company expects to maintain growth and earnings in the coming years.

Growth Outlook

Nikhil Mansukhani, Managing Director of Man Industries, has expressed confidence in the company’s future, projecting a growth rate of 25-30% over the next 2-3 years. This growth is expected to be driven by expansions in Saudi Arabia and Jammu, with the Saudi operations also anticipated to support margins.

Order Book

Man Industries currently has an unexecuted order book of approximately ₹4,000 crores, which will be fulfilled over the next 6 to 12 months. This strong order book could grow further as the company continues to bid on new projects. The demand for the company’s large diameter carbon steel line pipes, used in high-pressure applications across the oil and gas, petrochemical, water, and other sectors, remains strong.

The oil and gas sector, particularly in India and the Gulf countries, is seeing increased demand. The emerging energy sector also holds promise for the company, according to Mansukhani. The water segment, while performing well, involves orders through EPC (Engineering, Procurement, and Construction) contracts, which tend to have slightly lower margins.

Expansion Plans

Man Industries recently announced plans to set up a new plant in Dammam, Saudi Arabia, at an approximate cost of ₹600 crores. This facility will include line pipe manufacturing and a coating facility to meet Saudi Arabia’s growing demand. Another expansion project is underway in Jammu, expected to contribute to the company’s earnings from FY26. The expansion of ERW (Electric Resistance Welded) pipes will support the growing demand for smaller diameter pipes used in City Gas Distribution.

Financial Health

Man Industries has made significant strides in improving its financial health. The company transitioned from a net debt of ₹125.1 crores in FY23 to a net cash position of ₹174.4 crores as of March 31, FY24. This improvement highlights the company’s effective financial and liquidity management.

In summary, while Man Industries has seen a recent dip in its share price, the company remains fundamentally strong with a promising growth outlook, driven by expansions and a robust order book. Investors should carefully consider these factors when deciding whether to buy, sell, or hold the stock.