Archive · 10 Aug 2026
Why Mukul Agarwal Still Backs Two Beaten-Down Smallcap Stocks
Mukul Agarwal is a famous investor in India who picks stocks carefully.
This article looks at two companies he owns.
The first company, Capacite Infraprojects, builds tall buildings and other structures for customers.
It has a huge list of future jobs — more than five years of work — but its stock price is below the value of the company's own assets.
Customers are slow to pay, and some company shares are promised to lenders.
The second company, West Coast Paper Mills, makes paper.
Its profits were very high a few years ago but have fallen a lot since then.
Even so, its stock price keeps going up because the government may add taxes on cheap paper coming from Indonesia.
That tax has only been suggested, not approved yet.
So one stock is a bet on doing good work, and the other is a bet on a government decision.
Ace investor Mukul Agarwal holds about Rs 176 crore combined in Capacite Infraprojects (6.6% stake worth Rs 119 crore) and West Coast Paper Mills (1.4% stake worth Rs 57 crore), part of his Rs 7,720 crore portfolio.
Both smallcaps show triple-digit five-year compounded net profit growth, but the article warns those figures are skewed by near-zero or loss-making FY21 bases.
Capacite Infraprojects trades at about 0.95 times book value with a Rs 13,535 crore order book — roughly 5.2 times FY26 sales — though its June-quarter profit fell to Rs 40 crore from Rs 47 crore.
West Coast Paper Mills trades near its 52-week high (closing at Rs 599 on 7 August 2026) even as net profit fell 86% from the FY23 peak of Rs 1,087 crore to Rs 156 crore in FY26.
West Coast Paper's rally is driven by a June 2026 recommendation of anti-dumping duties of up to US$376 per tonne on Indonesian paperboard, which the finance ministry has not yet notified.
West Coast Paper reports its June-quarter results on 12 August 2026 and its board has recommended a final dividend of Rs 3 per share.
- Who
- Ace investor Mukul Agarwal, whose Rs 7,720 crore portfolio includes the two smallcaps; the analysis was written by Suhel Khan.
- What
- An analysis of why Agarwal still holds Capacite Infraprojects and West Coast Paper Mills, two beaten-down smallcaps with triple-digit five-year profit growth but very different outlooks.
- When
- Article based on data as of the market close on 7 August 2026; West Coast Paper reports its June quarter on 12 August 2026.
- Where
- India — both are Indian listed companies; West Coast Paper runs a mill at Dandeli, Karnataka and consolidates the Andhra Paper business.
- Why
- Capacite offers execution visibility from a large order book at a discount to book value, while West Coast Paper's case rests on a pending anti-dumping duty that could curb cheap Indonesian imports.
Bull Case
Bear Case
Capacite Infraprojects' investment case
Bull Case
Trades below book value (~0.95x) with a Rs 13,535 crore order book equal to roughly 5.2 times FY26 sales, giving rare multi-year earnings visibility at a PE of about 10x.
Bear Case
Customers take about 151 days to pay, nearly a third of promoter shares are pledged, returns on capital are thin, and the June quarter missed with profit down to Rs 40 crore.
West Coast Paper's profit growth
Bull Case
The 115% five-year compounded profit growth and climb to a 52-week high reflect a recovering, undervalued paper business.
Bear Case
The CAGR is not meaningful because FY21 was a loss year; profits have fallen 86% from the FY23 peak and core paper earnings are far below the headline profit.
Anti-dumping duties as a catalyst
Bull Case
Recommended duties of up to US$376 per tonne on Indonesian paperboard could finally stop cheap imports and support domestic paper prices.
Bear Case
The duty is only a recommendation and still must be notified by the finance ministry, making the stock a bet on a government decision rather than on earnings.
- Investor
- Mukul Agarwal (portfolio worth Rs 7,720 crore)
- Combined holding
- ~Rs 176 crore in the two stocks
- Capacite stake
- 6.6% worth Rs 119 crore
- West Coast Paper stake
- 1.4% worth Rs 57 crore
- Capacite order book
- Rs 13,535 crore (~5.2x FY26 sales)
- Capacite valuation
- ~0.95x book value; PE ~10x vs industry median ~17x
- West Coast Paper FY26 net profit
- Rs 156 crore, down 86% from Rs 1,087 crore in FY23
- Anti-dumping recommendation
- Up to US$376 per tonne on Indonesian virgin multi-layer paperboard for five years; pending notification