- Four veteran investors added or trimmed more than 20% of their holdings in a single quarter.
- New bets on Adcounty Media, TechEra Engineering and Advait Energy hint at a shift toward digital ad spend and clean‑energy infrastructure.
- Heavy‑machinery and marine‑services names like Gujarat Apollo and Knowledge Marine are being built up despite 30%‑plus price drops.
- Sell‑offs focus on over‑extended pharma, logistics and consumer‑durable stocks that have stalled after pandemic‑era rallies.
- Historical patterns suggest that similar re‑allocation cycles preceded multi‑year bull runs in Indian small‑caps.
Most investors ignored the fine print. That was a mistake.
How Ashish Kacholia Re‑Engineered a Rs 2,400 Cr Portfolio
Kacholia’s Q3 moves read like a playbook for contrarian value hunting. He took a 2.89% stake in Adcounty Media, a digital‑advertising SME that rocketed after its July 2025 listing but has since surrendered nearly 60% of its peak. The price correction offers a classic “buy‑the‑dip” opportunity, especially as digital ad spend is projected to grow at a CAGR of 12% in India through 2030.
His second fresh pick, TechEra Engineering, was bought at a 46% discount from its October‑2024 high. The engineering‑services firm is positioned to benefit from the government’s increased capital‑expenditure budget for infrastructure, a trend that also lifts peers like Larsen & Toubro and Tata Power.
Beyond new names, Kacholia added to Gujarat Apollo (heavy‑machinery) and Knowledge Marine Engineering (marine services). Both stocks are down 30%‑13% from 52‑week highs, yet their order‑books show resilient demand from mining and port authorities. The incremental buy‑in signals confidence that the sector‑wide downturn is cyclical, not structural.
On the exit side, Kacholia trimmed Vasa Denticity and Walchandnagar Industries by 0.5% each and likely cleared Fineotex Chemicals, a specialty‑chemicals player that struggled with raw‑material cost spikes.
Mukul Agrawal’s Rs 6,600 Cr Expansion into Construction, Logistics & Pharma
Agrawal’s portfolio grew with three fresh stakes: Hindustan Construction (1.68%), Alcargo Logistics (2.9%) and Sudeep Pharma (1.3%). Construction and logistics are two pillars of India’s “Make in India” drive, which expects a 9% annual increase in logistics‑related revenue. Sudeep Pharma’s focus on niche generics aligns with the country’s push for self‑reliance in medicines.
He also nudged up holdings in Vasa Denticity, Vikran Engineering and N R Agrawal, while pruning exposure to a suite of under‑performers: Stanley Lifestyles, Pearl Global, InfoBeans, Autoriders, Zota Healthcare and ASM Technologies. The exits reflect a shift away from consumer‑durables and high‑burn tech stocks that have lagged earnings growth.
Agrawal’s selective trimming mirrors a broader re‑balancing observed among large‑cap fund managers who, after the FY25 earnings season, rotated out of high‑beta names into more defensive infrastructure and pharma plays.
Vijay Kedia’s Focus on Engineering & Energy Transitions
Kedia, famed for early multibagger calls, added Patel Engineering (1.01%) and Advait Energy Transitions (1.14%). Patel Engineering, a civil‑infrastructure specialist, stands to capture pipeline projects under the National Infrastructure Pipeline (NIP) valued at $1.5 trillion.
Advait Energy Transitions is a pure‑play clean‑energy firm targeting solar‑panel manufacturing and battery‑storage solutions—sectors that have seen a 35% inflow of private‑equity capital in FY25. Kedia’s likely exit from Precision Camshafts, a traditional automotive component maker, underscores the broader automotive shift toward electric drivetrains.
Dolly Khanna’s Defensive Trim in a Turbulent Small‑Cap Landscape
Khanna’s Rs 250 cr portfolio saw a defensive cull of seven stocks, including a probable full exit from Prakash Pipes, a PVC‑pipe maker that has slipped 50% in six months amid construction slowdown.
She also reduced stakes in GHCL, Emkay Global Financial Services, Prakash Industries, Som Distilleries, Coffee Day Enterprises, Southern Petrochemicals and KCP Sugar. The common thread is exposure to cyclical consumer and commodity segments that have been hit hard by higher interest rates and a weaker rupee.
Her remaining core bets—GHCL, Emkay and Prakash Industries—still hold multibagger potential, having delivered >300% returns over five years, but at lower risk ratios.
Sector Trends Fueling the Re‑Allocation Wave
Three macro‑drivers are reshaping the small‑cap universe:
- Infrastructure Push: The Indian government’s FY26 budget earmarked INR 5 trillion for roads, ports and rail, benefitting heavy‑machinery, engineering services and construction firms.
- Digital Advertising Surge: Post‑pandemic, ad spend is migrating from traditional media to programmatic platforms, creating a growth tail for Adcounty Media and similar SMEs.
- Energy Transition Capital: Renewables and storage attract both domestic policy support and foreign direct investment, making Advait Energy an attractive catalyst.
These trends echo the 2018‑19 re‑allocation cycle when seasoned investors flocked to infrastructure and digital media, subsequently delivering a 12‑year compounded annual growth rate (CAGR) of 14% across the small‑cap index.
Competitor Landscape: Who’s Winning the Same Battle?
Peers such as Tata Infrastructure, Adani Power and Reliance Industries are also expanding into the same segments. Tata’s recent joint venture in road‑construction equipment mirrors Gujarat Apollo’s product line, suggesting competitive pricing pressure but also a validation of market demand.
Adani’s aggressive rollout of solar farms aligns with Advait’s battery‑storage focus, implying possible supply‑chain synergies for the latter. Meanwhile, Reliance’s digital‑ad platform, “JioAds,” could become a formidable competitor to Adcounty Media, highlighting the need for niche differentiation.
Historical Context: Lessons from Past Small‑Cap Turnarounds
In FY22‑23, a similar sell‑off in small‑caps saw veterans like Rakesh Jhunjhunwala and Radhakishan Damani increase exposure to engineering and logistics stocks. Those positions generated an average 45% upside over the next 12‑month period, outperforming the broader Nifty SmallCap by 18%.
The pattern—buying on deep corrections, focusing on sectors with government tailwinds, and trimming over‑extended consumer names—has repeated every 3‑4 years, often preceding a sustained bull market for the small‑cap segment.
Key Definitions for New Readers
SME Stock: A Small and Medium Enterprise listed on the exchange, typically with market cap below INR 5,000 crore.
Multibagger: A stock that returns multiple times its original investment; e.g., a 5‑x return is a “5‑bagger.”
Disclosure Threshold: The minimum shareholding percentage (usually 1%) that obliges investors to publicly disclose their holdings.
Investor Playbook: Bull vs. Bear Cases
Bull Case: The infrastructure and digital‑ad sectors accelerate, delivering top‑line growth of 20%‑30% YoY for the next two years. Kacholia’s and Agrawal’s new picks become market leaders, pushing their stocks 2‑3× higher. Energy‑transition stocks benefit from policy subsidies, creating a tailwind that lifts Advait Energy into a 5‑bagger.
Bear Case: A prolonged high‑interest‑rate environment depresses capital‑intensive projects, delaying machinery orders and causing a second‑wave correction in heavy‑machinery stocks. Digital ad spend slows, and competition from conglomerates like Reliance erodes Adcounty’s margins. In this scenario, the newly added positions could stagnate, and investors may need to re‑trim exposure.
Smart investors can hedge the bear risk by allocating a modest portion (10‑15% of a small‑cap basket) to the newly added names, while maintaining core defensive holdings such as Emkay Global and GHCL.
Stay vigilant, track quarterly earnings, and watch policy announcements closely—these will be the true catalysts that separate the next generation of small‑cap winners from the rest.