The Nifty 50 has corrected nearly 15% from its peak in September 2024, before the recent recovery. The correction in smallcaps has been larger.
As stocks decline and investors grow cautious, some promoters—the founders and largest stakeholders of companies—are actively buying more shares in their own companies.
The insiders are seeing an opportunity where others see risk. Their increased stakes signal confidence in the business’s fundamentals and undervalued potential.
In this article, we analyse five stocks where promoter buying has surged amid the downturn, offering insights into where those closest to the action—and why investors should take notice.
Take a look…
#1 Kiri Industries
First on the list is Kiri Industries, a prominent Indian manufacturer and exporter specialising in dyes, dyes Intermediates, and basic chemicals.
Coming to its financial performance, the company has not delivered growth over the last 3 years while its net profit has fallen at a CAGR of -19%.
The last 3-year return on equity (ROE) has been 8%.
The reasons for such a lacklustre performance are many. The past several years have been challenging for the global chemical industry due to declining demand and volatile raw material prices.
The global textile industry faced a turbulent 2023, marked by a dramatic downturn in investment due to a precipitous decline in demand, particularly in key consumer markets like the US and Europe.
Textile manufacturers faced soaring production costs and tepid consumer spending, leading to a significant buildup of unsold inventory.
Due to this, there was slow demand for dyes and chemicals, impacting the company’s ability to increase sales. Consolidated total revenue remained largely at the previous year’s levels due to muted customer demand.
In addition, the company had to navigate volatile raw material prices and high energy costs, which impacted profitability.
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Aside from industry headwinds, the company had to face some internal challenges.
A major factor impacting Kiri’s financial performance has been the significant litigation costs incurred to protect their economic interest in the investment in DyStar Global Holdings. Legal costs remained high in the second quarter of FY25 as well.
Finance costs also scaled up due to increased borrowings in FY24.
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