Dolly Khanna, also known as the “Queen of Small Caps,” is highly followed and known for having an eye for spotting future multibaggers. Her disciplined, research-backed strategy focuses on long-term value which has made her a household name for many.

With a current portfolio of just 10 stocks worth Rs 261 cr, she has been investing in the stock markets since 1996. As most investors know, her portfolio is managed by her husband Rajiv Khanna, and usually leans towards more traditional stocks in manufacturing, textile, chemicals, and sugar stocks.

And when Dolly’s portfolio shakes, investors take notes. Which is why the 2 stake trims she just did have caught everyone’s attention. What do these stake trims mean?

Portfolio shift 1- Prakash Industries Ltd

Established as Prakash Pipes and Industries Limited in 1980, Prakash Industries Limited is engaged in the business of manufacturing and sale of Steel Products and generation of Power.

With a market cap of Rs 2,436 cr, the company’s product portfolio includes sponge iron, steel billets, Ferro alloys, wire rods, HB wires, and TMT bars.

Dolly Khanna has held a stake in the company since September 2023 (as per data available on Trendlyne.com). As on the quarter ending September 2025, she held a stake of 2.9% in Prakash Industries, which was a jump from the June 2025 figure of 2.3%.

And as per the latest exchange filings for the quarter ending December 2025, the holding is now down to 2.6%, raising questions about what could have been the trigger behind the trim.

Let us look at the financials to try and find out. We analyze standalone numbers to get a long-term perspective.

The sales for Prakash Industries have grown at a compound rate of just 6% from Rs 2,974 cr in FY 20 to Rs 4,014 cr in FY25. For H1FY26, sales of Rs 1,760 cr have been logged.

The EBITDA (earnings before interest, taxes, depreciation, and amortization) has climbed from Rs 350 cr in FY20 to Rs 520 cr in FY25, recording a compounded growth of 8%. For H1FY26, EBITDA of Rs 246 cr has been recorded.

As for the net profits, the company saw a compounded growth of 25% from Rs 118 cr in FY20 to Rs 355 cr in FY25. And for H1FY26, profits of Rs 153 cr have been logged already.

ALSO READ

The share price of Prakash Industries Ltd was around Rs 60 in January 2021 and as on 12th January 2026 it was Rs 136, which is a jump of over 126% in 5 years.

Valuation vs. Performance: The 8x PE argument

The company’s share is trading at a current PE of about 8x while the industry median is 22x. The 10-year median for Prakash Industries is again 8x while the industry median for the same period is 23x.

Peer sentiment: Mukul Agarwal holds steady

Mukul Agarwal, another highly followed and respected super investor also holds a stake in the company since September 2023. He currently is holding 1.72% steadily for the last 3 quarterly exchange filings.

Fundamental headwinds: A 33% top-line decline

While the precise reason for the divestment is unclear, several fundamental headwinds likely contributed. The company’s sales dropped by 33% on a YoY basis for the quarter ending September. While the company was able to maintain operating profits margins of 14%, a big drop in the top line is usually a major red flag for investors like Dolly Khanna.

Plus, if we look at it through a comparative lens, competitors like JSW and Jindal Stainless saw YoY sales growth of around 13%, while Prakash Industries saw a 33% drop. When a company shrinks by 33% while its direct competitors grow by about 13%, it could mean a loss of market share or operational issues pulling down the company.

Portfolio shift 2: GHCL Ltd

Incorporated in 1983, GHCL Ltd (formerly Gujarat Heavy Chemicals Limited) is among one of India’s leading manufacturers of Soda Ash (Anhydrous Sodium Carbonate).

With a market cap of Rs 5,034 cr, the company is the 2nd largest manufacturer of soda ash in India with a market share of over 26%. Its list of clients has names like Hindustan Unilever, P&G, Borosil Renewable, Saint Gobain, Patanjali, Hindustan Zinc, Piramal amongst others.

Dolly Khanna bought 1% stake in the company worth Rs 61.5 cr as per the exchange filings for the quarter ending March 2025. This went up to 1.24% in mid-December after seeing small increments in previous quarters, as she bought more of the stock around that time as per Trendlyne.

However, the exchange filings for the quarter ending December 2025 show that Khanna’s stake in the company has now dropped to 1.1% again.

ALSO READ

Let us look at the financials to try and find out the reason for this.

The figures below show that the company’s sales have been facing choppy weather in the last 5 years. H1FY26, sales of Rs 1,517 cr have been logged.

FYFY20FY21FY22FY23FY24FY25
Sales (Rs Cr)3,3052,4913,0524,5513,4473,183

The EBITDA which more than doubled in FY23, then saw a big drop in FY24. For H1FY26, EBITDA logged was Rs 354 cr.

FYFY20FY21FY22FY23FY24FY25
EBITDA (Rs Cr)7296057301,503851877

The company has not seen any losses in the last 10 years, but in the recent years it has been on a slippery slide. For H1FY26, profits of Rs 251 cr have been recorded already.

FYFY20FY21FY22FY23FY24FY25
Net Profit (Rs Cr)3973266501,142794624

The share price of GHCL Ltd was Rs 200 in January 2021 and as on 12th January 2026, it was Rs 548, which is a jump of about 175%.

The company’s share is trading at a current PE of 9x, and the industry median is 19x. The 10-year median PE for GHCL is 7x while the industry median for the same period is 14x. The company is possibly undervalued at the current valuations.

One notable point is the company’s current dividend yield of 2.2% in an almost flat market. The average yield when compared to peers is 0.3%. Also, the company has reduced its debt from Rs 1,250 cr five years ago to around Rs 96 cr currently.

But despite that, the fact that the company’s sales and profits have been shrinking could not be ignored, as they very much might be the reason for Khanna trimming her stake after steadily increasing for a good part of the last year.

Strategic trims or loss of conviction?

When it comes to small caps, there is always a myth associated with them about the high risk. But as we know risk comes from not knowing what one is doing. Dolly Khanna has proved she knows what she is doing.

So, when she trims stake in her holdings, however small it may be, it must be taken as a well-researched decision. In this case, both the companies have recorded shrinkage in terms of sales and profits, which is a cause of concern for value investors like Khanna.

Having said that, she still has her skin in the game and holds a stake in the companies, which means she still sees potential of a bounce back, which she plans to ride like a pro. Hence, it will be a fascinating ride to watch how these stocks will perform in the coming time. You should add them to a watchlist and follow them closely.

Note: We have relied on data from www.Screener.in and www.trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. 

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only. 

Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.

Disclosure: The writer and his dependents do not hold the stocks discussed in this article. 

The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein.  The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors.  Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.