Several Small and Mid-cap companies shares have been stuck in a bear grip since January 2018. However, that has never restricted domestic fund managers from raising their holdings in select investment bets.
While various stocks’ fund managers have raised the stakes in the last six quarters, inspite of the decline in stock prices, some of the stocks that have been especially preferred with mutual funds. These are Indian Hotels, Triveni TurbineNSE -0.25 %, City Union Bank, VRL Logistics and Aditya Birla Fashion and many more.
To cite an example, mutual funds have consistently increased stakes in Indian Hotels for the last six quarters from 13.05% to 25.42%. This is because analysts have expected the stock price to rise by up to 36% in the upcoming year. The earning per share (EPS) of Indian Hotels has increased by a whopping 165% in one year.
Reportedly, Rashesh Shah, Analyst at ICICI Securities stated that ‘With the expected tailwind in the sector, IHCL being the leader, should be a key beneficiary of the turnaround. He also said, “Additionally, focus on cost rationalisation and an asset light focus are strong for the company’.
In other news, Triveni Turbine’s domestic funds have moved their stake up from 6.23% to 15.82% in the last six quarters. So far this year, this stock has outperformed the BSE Smallcap index by 12%. Although the stock is highly valued now, several analysts have justified the valuation of the premium taking its growth into consideration. Mr. Chirag Muchhala, analyst, Nirmal Bang stated, “Healthy earnings growth, margin profile, return ratios and a lean working capital cycle will support Triveni Turbine’s valuations”.
On similar lines, in the last six quarters, mutual funds have continuously increased stake in other companies namely VRL Logistics, Crompton Greaves Consumer and Supreme Industries.
Many fund managers prefer City Union Bank because of its sustainable performance, healthy return metric and granular loan book. Similarly, strong margin performance across segments has made Aditya Birla Fashion an attractive option for them.
