Meet Porinju Veliyath, the visionary leader of Equity Intelligence India, who stands out in the investment landscape. Known for his contrarian approach, Veliyath has earned a reputation for uncovering undervalued stocks that others often overlook. His bold investment strategies have not only garnered attention but have also proven to be lucrative, solidifying his status in Indian financial circles. He frequently shares insights and updates with his followers through various media channels and social platforms.

Recently, Veliyath has made headlines by acquiring stakes in two intriguing companies, sparking interest among investors. Let’s delve into these firms to uncover what caught his attention.

Praxis Home Retail Ltd (PHRL)

Praxis Home Retail Ltd, established in 2011, specializes in home retailing through its departmental stores. With a market capitalization of ₹195 crores, PHRL operates under the well-known brand HomeTown, focusing on home furniture and fashion in India.

Veliyath’s decision to invest in PHRL through his wife, Litty Thomas, raises eyebrows given the company’s ongoing financial difficulties. PHRL has faced losses for several years, and its liabilities currently surpass its assets.

On February 21, 2025, he purchased 1,000,000 shares at ₹13.10 each, totaling ₹1.31 crores. Previously, Veliyath held a 1.06% stake in PHRL via Equity Intelligence India, which he sold in September 2022.

The company’s sales figures also amplify the skepticism surrounding this investment. Sales plummeted from ₹683 crores in FY19 to just ₹220 crores in FY24, marking a staggering 68% decline. From April to December 2024, PHRL managed only ₹92 crores in sales, raising concerns about its financial outlook.

PHRL’s EBITDA has consistently been in the red, with a negative ₹25 crores in FY24 compared to -₹22 crores in FY19. A glimmer of hope appeared in the quarter ending December 2024, when the company reported a small positive EBITDA of ₹51 lakhs.

The company’s net losses have also widened, from ₹27 crores in FY19 to ₹86 crores in FY24. However, the last three quarters showed a reduction in losses to ₹20.5 crores, significantly down from ₹52.2 crores a year prior, suggesting potential improvements ahead.

As for PHRL’s stock performance, shares have dropped from ₹30 in February 2020 to ₹13.78 as of February 27, 2025. The company is currently trading at a negative PE ratio, which places it off the radar on many stock screening platforms.

In a recent move to strengthen its balance sheet, PHRL initiated a strategic equity conversion on February 14, 2025, issuing 5.288 million shares at ₹23.19 each to five independent entities. This initiative aims to convert ₹12.26 crores of trade payables into equity, thereby reducing debt and improving liquidity. An Extraordinary General Meeting is set for March 13, 2025, to vote on this proposal, signaling a commitment to stabilize the business despite the minor dilution of existing shares.

Greaves Cotton Ltd (GCL)

Founded in 1859 and incorporated in 1947 by industrialist Lala Karamchand, Greaves Cotton Ltd has long been recognized for its durable diesel engines. However, the company is now pivoting towards future mobility solutions, embracing various fuel sources. In FY24, GCL launched the Greaves Eltra City, an electric three-wheeler passenger vehicle, and introduced a new product in the electric two-wheeler segment in Q1 FY25.

With a market cap of ₹5,932 crores, GCL is a key player in India’s three-wheeler engine market, with its Ampere brand holding over 2.8% of the electric mobility market. Veliyath acquired 12,519,900 shares through Equity Intelligence India at ₹234.63 each, signaling his confidence in the company’s future.

Despite a CAGR sales growth of 5% from ₹2,015 crores in FY19 to ₹2,633 crores in FY24, GCL has faced significant financial challenges. EBITDA plummeted from ₹272 crores to ₹91 crores during the same period, illustrating a 67% decrease. Furthermore, net losses reached ₹367 crores in FY24 after the company previously reported profits of ₹70 crores in FY23.

The company’s share price has seen a 96% increase over the past five years, climbing from ₹130 in February 2020 to ₹255 as of February 27, 2025. However, GCL’s PE ratio is currently negative, reflecting ongoing financial struggles.

On a positive note, GCL is nearly debt-free. Its diversified business entity, Greaves Finance Ltd, has launched Evfin, a 100% EV-focused lending platform that collaborates with Muthoot Capital to finance electric two-wheelers across India, with a total deal size of up to ₹150 crores.

With ambitions to achieve ₹15,000 crores (approximately $2 billion) in revenue by 2030, Greaves Cotton is strategically positioning itself for future growth through organic expansion and acquisitions.

What Lies Ahead?

Porinju Veliyath’s recent investments in Praxis Home Retail and Greaves Cotton are intriguing, given the challenges both companies currently face. While PHRL grapples with a deteriorating financial position, Greaves is experiencing substantial losses despite decent sales growth.

Yet, Veliyath’s strategic moves may signal a keen insight into potential turnaround opportunities. With PHRL restructuring its balance sheet and Greaves innovating in the electric mobility space, these companies could emerge as success stories in the near future.

Are Veliyath’s investments a stroke of genius or a calculated risk? Only time will tell, but both firms are now on many investors’ radars.

Conclusion

Investors should carefully consider the unique challenges and opportunities presented by these companies. For those contemplating investment decisions, consulting with financial advisors is strongly recommended to align choices with individual objectives and risk tolerance.

Porinju Veliyath’s recent actions remind us that in the world of investing, sometimes it pays to look beyond the surface.