Over 50% discount on Madhusudan Kela’s favourite smallcap stocks – Stock Insights News

Madhusudan Kela needs no introduction in the investor circles and otherwise as well. A regular on finance shows on television, he is one of the most followed Warren Buffetts of India. He currently holds 14 stocks in his portfolio worth over Rs 2,723 cr. But he is known his knack of smallcaps, that go on to become multibaggers.

Two of his favourite smallcap holdings, one into managing e-commerce operations and the other a systemically important non-deposit taking NBFC, are currently trading at a discount of over 50% form their all-time high price, starting a debate if they are undervalued gems or some risky traps.

Whatever it might be, Madhusudan Kela is still holding them despite the fall, which means he still sees potential in them. This calls for a deep dive into the stocks to try and find out what he sees in these 2 stocks that average investors are missing.

Unicommerce eSolutions Ltd

Incorporated in 2012, Unicommerce eSolutions Ltd manages e-commerce operations for brands, sellers, and logistics providers through its SaaS platform.

With a market cap of Rs 1,299 cr, the company is India’s largest eCommerce enablement SaaS platform in transaction processing by revenue. It streamlines eCommerce by automating brand and retailer operations and enables multi-warehouse management, automated inventory decisions, and omnichannel retail integration.

Madhusudan Kela has been holding a stake in Unicommerce eSolutions Ltd since August 2024 as per Trendlyne.com. Currently, he holds 1.8% stake in the company worth Rs 23 cr.

The company’s sales have grown from Rs 32 cr in FY20 to Rs 114 cr in FY25, which is a compound growth rate of 29% in the last 5 years. These are however stand-alone number, as consolidation ones are not available on screener.in.

The EBITDA (earnings before interest, taxes, depreciation, and amortization) for Unicommerce shows a turnaround as it went form losses of Rs 4 cr in FY20 to a profit of Rs 27 cr in FY25.

The company saw losses of Rs 4 cr in FY20 and has recorded a turnaround since then, as it closed FY25 at net profits of Rs 22 cr.

The share price of Unicommerce eSolutions Ltd however could not ride on the profit and EBITDA turnaround and saw a drop from Rs 210 when it was listed in August 2024 to Rs 126 as of closing on 11^th August 2025.

At the current price, the stock is trading at a discount of a little over 52% from its all-time high of Rs 264.

The company’s share is trading at a current PE of 60x, while industry median is 41x. The 10-year median PE for Unicommerce is 66x, and the industry median for the same period is a 25x.

One reason why Madhusudan Kela may have held the stock is the company’s ability to make the most on the capital invested in the business. The current ROCE (Return on Capital Employed) is 35% while the industry median is 11%. Which means for every Rs 100 the company invests as capital, it makes a profit of Rs 35 on it while the rest of the contemporaries make about Rs 11.

In the latest investor presentation of the company inn August 2025, the MD & CEO Kapil Makhija says “Our focused execution allowed us to enhance operational performance while continuing to invest in long-term platform development. As we look ahead in FY26, we remain committed to disciplined execution, deepening client relationships, and strengthening platform capabilities.”

Indostar Capital Finance Ltd

Incorporated in July 2009, Indostar Capital Finance Ltd is registered with the Reserve Bank of India (RBI) as a systemically important non-deposit taking NBFC.

With a market cap of Rs 3,755 cr, Indostar’s largest shareholder is Brookfield with a 56% holding in the company. Brookfield is listed on the NYSE and the Toronto Stock Exchange and is a leading global alternative asset manager offering investment strategies. Indostar Capital represents Brookfield’s foray into private equity investments in India.

Kela has held a stake in the company since June 2023 as per data on Trendlyne.com. Currently he holds 2.5% stake in the company worth Rs 93 cr.

The company’s revenues have seen a roller coaster ride in the last 5 years:

EBITDA for Indostar Capital has jumped from Rs 456 cr in FY20 to Rs 819 cr in FY25, which is a compound growth of 17%.

As for the net profits, the company has recorded an enviable turnaround, which could be the reason of Kela’s continued interest in the company.

The share price of Indostar Capital Finance Ltd has gone form Rs 253 in August 2020 to its current price of Rs 275 as of closing on 12^th August 2025.

At the current price of Rs 275, the company’s share is trading at a discount of almost 55% from its all-time high of Rs 608.

The share is trading at a PE of 72x, while the industry median is 23x. The 10-year median PE of Indostar is 16x while industry median for the same period is 21x.

There is a change in management as Jayesh Jain joined as CFO in March 2025. He has more than two decades of experience with stints at PNB Housing Finance, Hero FinCorp, and fintechs. The company expects his expertise in cost efficiency, risk management, and capital allocation to “accelerate the evolution of IndoStar.”

Opportunity or Trap?

The two companies we saw today, might not have the best of financials, and have seen their fair share of ups and downs. But they are showing signs of a turnaround which is what has held the attention and investment of Madhusudan Kela.

Kela is not someone known to make decisions on the fly and he definitely has his own reasons to not move away form these two stocks, despite the stock prices for them falling by over 50%. What is it that Kela sees that average investors cannot see or are not able to see.

Will these stocks get back to their all-time high glory and turn out to be a milestone in its investors journey, or will they fall further causing distress to its investors. Only time will tell. But you must add these stocks to a watchlist and keep a close eye on them.

Disclaimer

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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