Porinju Veliyath and Madhusudan Kela are household names for many investors. Their portfolio moves are standard discourse for Indian retail investors. So, when they buy into fresh stocks for their portfolio, investors pay close attention to find any hidden signals.
As per the recent exchange filings for the quarter ending December 2025, both Veliyath and Kela have bet on the small cap rally as they picked a small cap each. While Veliyath picked a prominent player in the IMFL (Indian Made Foreign Liquor) space, Kela went for a very well-known financial services provider.
These picks have given air to the hot debate of whether the small cap rally is over or is it here to stay. Let us dive into the two stocks in question to see if we can find a pattern.
Emkay Global: A Contrarian proxy on capital markets
Incorporated in 1995, Emkay Global Financial Services Ltd is in the business of providing
capital market services.
With a market cap of Rs 750 cr, the company is a provider of institutional broking, asset management, wealth/ portfolio management, succession planning, investment banking, currency, depository participant, equity broking, commodity broking, distribution of financial products and investment banking operations.
Madhusudan Kela just bought a 1.1% stake in the company worth over Rs 8 cr under the portfolio of Mahi Madhusudan Kela, his wife, as per the filings for the quarter ending December 2025. Apart from Kela, Dolly Khanna (2.3%) and Sanjiv Shah (1.4%) also hold stakes in the company.
Let us look at the financials of the company to see if we can find out the reason behind this buy decision.
Analyzing the financial turnaround
The company’s sales grew from Rs 135 cr in FY20 to Rs 360 cr in FY25 which is a compounded growth of 22%. And for H1FY26, sales of Rs 145 cr have been logged.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) went from losses of Rs 3 cr in FY20 to profits of Rs 79 cr in FY25, and for H1FY26, the company has logged a figure of over Rs 7 cr.
Now this is a drop of 84% from the figure of Rs 44 cr for the same two quarters in FY25, which does sound like a red flag making Kela’s bet raise some valid questions.
In case of the net profits, the company has recorded a sort of turnaround between FY20 and FY25
| FY | FY20 | FY21 | FY22 | FY23 | FY24 | FY25 |
| Profit/Rs Cr | -13 | 11 | 34 | 14 | 32 | 57 |
However, for H1FY26, profits of a little over Rs 5 cr have been logged which is almost a 88% drop from the figure of 40 cr for H1FY25. Once again, a red flag.
The valuation gap and contrarian rationale
The share price of Emkay Global Financial Services Ltd was Rs 72 in January 2021 which has jumped to Rs 290 as on 19th January 2026.
At the current price of Rs 290, the stock is trading at a discount of over 30% from its all-time high of Rs 419.
The company’s share is trading at a current PE of 34x while the industry median when compared to peers is 20x. The 10-year median PE for the company is 14x and the industry median for the same period is 16x.
Kela’s entry into Emkay Global despite a sharp quarterly profit fall is a classic contrarian Proxy Play on India. He is not focussing short-term volatility but probably betting on the company’s high Promoter holding (70%+), strong historical ROE (25%+). Not to forget the company is expanding into high-margin Wealth Management and AIFs.
And he is buying at a significant correction from the all-time high, which positions him for mean reversion, getting him a seat in a fundamentally strong financial service provider caught in a “bad news” valuation before the next cyclical upswing in capital market activity.
Associated Alcohols: Capitalizing on the premiumization pivot
Incorporated in 1989, Associated Alcohols & Breweries Ltd is in business of manufacturing and trading of ENA, Indian Made Indian Liquor (Country Liquor), Indian Made Foreign Liquor and Hand sanitizer.
With a market cap of Rs 1,578 cr, the company is a prominent player in the liquor industry, with a significant presence in Madhya Pradesh, holding a 20-25% market share in IMIL and IMFL products. Additionally, it ranks among the top 5 IMFL players in Kerala and is the world’s first producer of White Brandy.
Ace investor Porinju Veliyath bought a 1.05% stake in the company as per the exchange filings for the quarter ending December 2025, under his holding company Equity Intelligence India Private Limited.
Let’s dive into the financials of the company to try and find out the reason. We are looking at standalone numbers to get a long-term perspective.
The company’s sales grew from Rs 523 cr in FY20 to Rs 1,075 cr in FY25, which is a compounded growth of 16%. For H1FY26, the sales recorded are Rs 521 cr.
EBITDA grew from Rs 78 cr in FY20 to Rs 128 cr in FY25 logging in a compound growth of 10%, and for H1FY26, the EBITDA is Rs 61 cr.
The net profits grew at a compound rate of 10% from Rs 49 cr in FY20 to Rs 81 cr in FY25, and for H1FY26 the profits recorded are to Rs 38 cr.
The share price of Associated Alcohols & Breweries Ltd was around Rs 330 in January 2021 and as on 19th January 2026 it was Rs 833, which is a jump of over 150%.
Relative valuation vs. Industry peers
At the current price of Rs 833, the stock is trading at a discount of 44% from its all-time high of Rs 1,496.
The share is trading at a PE of 18x, while the industry median is 34x. The 10-year median PE for the company is 15x and the industry median for the same period is 22x.
Porinju Veliyath’s stake in Associated Alcohols is a strategic “Value-Growth” play centered on the company’s transition from a commodity-grade ENA producer to a high-margin branded IMFL (Indian Made Foreign Liquor) player.
By capitalizing on the premiumization trend in India’s alco-bev industry, the firm is de-risking its revenue stream from low-margin country liquor toward proprietary brands, supported by significant capacity expansion and a robust balance sheet.
Ride the small cap rally with the small cap champions?
The two small cap stocks we saw today have caught the attention of two highly followed super investors of India. When investors like Veliyath and Kela pick small cap stocks, which is considered by many as a risky sector, smart investors look at it under a microscope.
While Emkay has seen a drop in profits on a yearly QoQ basis, Associated Alcohol has logged a small growth on that front. Both the companies have promoter confidence and now backing by the super investors of India, which makes them worth a look.
The best way to find out if these small cap picks of the two Warren Buffetts of India are worth the money is to 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.
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