Marico Kaya Enterprises a hot pick with punters and investors, has soared 66% in the past 7 trading sessions

MUMBAI: Marico Kaya Enterprises, the recently demerged entity of Marico, has been a hot pick of investors and punters of late. Marico Kaya shares, which were listed in early June, have gained 66 per cent in the past seven trading days with the stock surging 10 per cent on Wednesday — its highest tradable limit for the day — to Rs 450.65. Various factors in the company have excited well-informed traders and investors

One is that Marico Kaya, which is the holding company of Kaya that owns and operates skin clinics across the country, is the only listed entity in the segment. Also, before the recent run-up in the stock price, the valuations were attractive. “A company with Rs 300 crore turnover for FY14 and Rs 150 crore cash on books had a market capitalisation of just Rs 350 crore a week back,” said a head of research at a leading brokerage. After the recent stock price surge, the company’s market capitalisation has risen to Rs 578 crore.

The company’s strong first quarter results and promoters’ move to raise their stakes in the company also aided sentiment. Investors have been rushing to buy shares of the recently-listed Marico Kaya Enterprises, hoping to enjoy instant profits amid calculations the company has been undervalued. The stock has risen 66 per cent in the past seven trading sessions, one of the biggest gainers among companies with over Rs 500 crore market capitalisatoin. The company has posted strong Q1FY15 results last week.

Harsh Mariwala, Rajendra Mariwala and Kishore Mariwala, the promoters of the company, have purchased over 1.3 lakh shares, or about a percent of the total equity, from the open market last week, according to disclosure made in stock exchange. As of June 30, the promoters held 59.69 per cent stake in the company, the shareholding pattern data shows.

The company reported a consolidated net profit of Rs 15 crore during April-June quarter as compared to net loss of Rs 5.9 crore in the same quarter last fiscal. As analysts are yet to start coverage of the company officially, few are willing to talk about their outlook for the stock. But, the stock’s backers say it is a multi-bagger— a term used in the market to describe a stock that can rise multi-fold. Matrico Kaya was run under Kaya Ltd. The company was listed on the BSE and NSE on July 2. Since the listing, the stock price has doubled.

Last month, leading FIIs, Morgan Stanley Asia (Singapore), purchased 75,156 shares, representing 0.58 per cent stake at Rs 312 per share, according to NSE bulk deal data. Some of the other largest public investors include Arisaig Partners (5.48 per cent), Oppenheimer Developing Markets (4.14 per cent), National Westminister Bank (3.3 per cent) and Baring India Pvt Equity Fund (1.14 per cent).