“Change your thoughts and you change your world.”
— Norman Vincent Peale
Hi, from our experience, in Microcap Investing, it is very normal for the stocks to go down by 50-60%. Having said that, in hindsight, we realised that some companies that we published were not at the right valuations, and to add the icing on the cake, we published them too at the peak of the bull run.
Currently, there are 10 stocks that are down by at least 30% since we published our study. Rather than publish a new idea this month, we wanted to share our thoughts and revisit some of the companies that we find interesting and can be a good bet at the current valuations:
1. Addictive Learnings (NSE: LAWSIKHO): We accept the fact that we published this company at a very high earnings multiple of 95x FY24 earnings, and that too at the peak of the bull market, where if something goes wrong, the effect on the stock would be hugely negative. However, we highlighted this in the Risks section.
Some events that de-rated the stock:
- Defamation case
- DataisGood promoter selling his shares (this was a bad acquisition)
- Market sentiments for the stock have gone really bad, given the market sentiments since September 2024, where smallcap bull run topped out
- Earnings expectations didn’t meet
Going forward, what are our thoughts? Let’s remove every external event and think logically.
Let’s bring a fresh perspective and ask some basic questions: Is the company’s topline growing? Yes. PAT? Yes. Is the balance sheet strong? Very strong. Any debt? No. Cash and Investments? 30 Cr. Any receivables? Wait, it is a negative working cycle business. Cash Flows? Very strong. Management is able to walk the talk. How? Read ahead.
What we believe is that the company is stronger than ever before. They had some issues with their Sales Team, which were one of their growth levers that didn’t go well. However, with their in-house AI tools, they are now optimistic and excited about future growth prospects. They said that they can do more sales, maintaining or lowering the cost rather. Margins expansion is expected starting H1FY26. Let’s see 🤞🏻
In the last concall, Ramanuj talked about the University setup in the US – this will enhance their credibility and bring more high-ticket courses with more margins.
10th July 2025, they released a notification on forming subsidiaries to set up a physical University in the of Arizona, US.
The company is available at a very good valuation, and we find it very logical to take a fresh entry at this valuation.
2. Techknowgreen (BSE: 543991): We published about this company at 30x TTM earnings. We thought, given the market condition (the ongoing bull run), it was available at a decent earnings multiple, and it could be a good buy, but it seems like the market had other plans. The stock got derated from 30x PE to 13x PE in a matter of 6 months. There was no reason for this downfall, just pure market sentiment.
What are our thoughts currently? The business is strong and is in much better shape than ever before.
Are the revenues growing? Yes. H2FY25 topline growth 36% and PAT grew by 34%. How strong is the balance sheet? Virtually debt-free, but have some receivables of 10 Cr (Out of ₹10 crore in outstanding dues, ₹4 crore has already been received, ₹2.5 crore is in the final stage of release, and the remaining is expected within a quarter). Cash Flows? They ended positive CFO of 6.74 Cr
See, this is one company that we feel is very unique and is operating in a future segment. Air and water pollution control is the need of the hour and will get a massive push in the coming times. The management is optimistic about achieving 30-35% topline growth with at least 30% margins. We strongly feel that the stock is highly underrated and ignored by the market
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We are not writing this to change the market sentiments or anything; rather, we are sharing our thoughts and strategy on how we see the fallen angels.
Happy Investing,
Team PrudentParrot
Disclaimer: This article is provided for informational purposes only and should not be considered as an investment advice
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Takes courage to accept. Appreciate your honest views 👍👍
Any Non SME stock in this list u want to add?
SGRL at around 600 Cr Market Capitalisation looks like a good opportunity for the long term.