Kacholia's Quiet Bet: Unloved Stocks Face Downturn

Investor Ashish Kacholia is demonstrating significant patience with two small-cap stocks that have been experiencing considerable price declines. Despite market pressures, Kacholia has maintained his positions, indicating a long-term conviction.

DU Digital Global, a visa processing firm, operates 35 centers in 35 countries. However, analysis reveals its core visa business generated negligible profit in FY26 after accounting for interest and depreciation, with 'other income' significantly inflating reported profits. Operating cash flow has also been negative for recent fiscal years.

Gujarat Apollo Industries, a manufacturer of mining and road construction equipment, has faced a decade of negative operating profits. Its bottom line is sustained by income from investments and financial assets, effectively functioning as a treasury rather than an active manufacturer. Despite this, the company maintains a modest dividend payout.

Both companies present distinct challenges: DU Digital Global struggles with converting paper profits into cash, while Gujarat Apollo Industries faces a growth problem in its core business. Kacholia's strategy hinges on his ability to wait out these issues, a trait less common among retail investors facing significant drawdowns.