With volatile markets, most investors are looking for opportunities and levels at which they can buy certain stocks to add to their portfolio, essentially timing the market. The shareholding data of mutual funds allows us to analyse what fund managers see as the most promising investments.

Although investors should not follow these moves blindly, it makes for interesting reading to analyse why mutual funds increased their holding in certain stocks. If there is a consistent increase in holdings over a few months, it can be assumed that at least  one major section of the market is viewing the developments in those stocks positively.  Investors can also identify any developments in individual stocks which are likely to increase buying from market participants.

We have run a filter through this screener to check which mutual funds are consistently increasing their holding.

IRCTC:

Last month, Indian Railways allowed IRCTC to resume its e-catering services which were shut down since the onset of the Covid19 pandemic. This is significant as until now, the railways have been serving only ready-to-eat meals on trains. IRCTC had started this service in the year 2014 whereby passengers could order an array of food of their choice from reputed brands, as well as popular regional and local delicacies on phone or online while travelling on trains. These were delivered to their seats at the railway station.

During the pre-COVID period, IRCTC started clocking 20,000 e-catering orders per day. The return of one of the primary revenue generating streams for IRCTC has seen mutual funds increase their stake in the company.

Motilal Oswal Midcap 30, Tata Equity P/E Fund, HDFC Growth Opportunities and Canara Robeco Emerging Equities are some of the mutual fund schemes that added most number of shares of IRCTC from December 2020 to February 2021.

Godrej Industries:

The holding company of the Godrej Group has seen some of its subsidiaries show positive growth in the December 2020 quarter versus the last year. The Godrej Group consists of Godrej Industries and its subsidiaries—Godrej Agrovet, Godrej Chemicals, Godrej Consumer Products, Godrej Housing Finance and Godrej Properties.

Godrej Properties saw a growth of 25% in the booking value and booking volume growth of 51%. The chemicals business also saw a rise in revenues by 16% on a YoY basis. While the animal feed business, housed under Godrej Agrovet, contributed the most to Godrej Industries’ consolidated revenues, the highest contribution to its profitability was by Godrej Properties.

Nippon India Nifty Midcap 150 Index Fund, Motilal Oswal Nifty Midcap 150 Index Fund and Motilal Oswal Midcap 100 ETF were the three mutual fund schemes that added the highest number of Godrej Industries shares during from December 2020 to February 2021.

Jindal Steel & Power:

This company’s December 2020 results delivered the highest revenue and net profits in the last 8 quarters. A decision taken at the start of lockdown in 2020 has paid off, and then some. The company did not reduce production and instead kept its plants running at 80% capacity. And instead of looking for domestic opportunities, it focused on exports. The quantity of steel exported jumped exponentially, contributing to the growth in its top line. The company reported a consolidated net profit of Rs 2,432.20 crores for the quarter ending December 2020, mainly on account of increased revenues. During the same quarter a year ago, it had recorded a net loss of Rs 257.36 crore.

Aditya Birla Pure Value Fund, Nippon India Tax Saver and HDFC Mid-Cap Opportunities Fund are the mutual fund schemes that added the most number of shares of Jindal Steel & Power from December 2020 to February 2021. 

Torrent Power:

Torrent Power has shown significant improvement across a number of metrics in  Q3FY21. Profit before tax rose nearly 27% on a YoY basis to Rs 399 crore. There was a tax write back in the previous year during the same period, hence that gave a boost to the profit after tax, or net profit.

Economic revival in the post lockdown period has resulted in an increase in demand for electricity in Torrent’s distribution areas. Demand in Q3FY21 has reached close to levels comparable to the quarter ended December 2019 in all the distribution areas. The other major reasons for improvement in profitability can be attributed to improvement in efficiency of collections in the distribution business, and increase in the contribution from renewable energy due to addition of capacity in the preceding months. Torrent Power has also emerged as the highest bidder in the privatisation of the power distribution company in the Union Territory of Dadra and Nagar Haveli and Daman and Diu for 51 per cent privatisation of the power distribution company (discom), strengthening its distribution network.

Axis Focussed 25 Fund, Axis Long Term Equity Fund, SBI Focussed Equity Fund were some of the mutual fund schemes that added the most number of shares of Torrent Power from December 2020 to February 2021.

Steel Authority of India (SAIL):

While the metal sector is showing an uptrend across the board, the Q3FY21 numbers have been a surprise for SAIL investors. For years the company was looked upon as a beleaguered PSU due to government apathy. Now, it seems to be on the verge of a turnaround.

The revenue for Q3FY21 is the highest recorded in the past eight quarters. When seen from a trailing twelve month (TTM) perspective, it recorded the highest revenue, operating profit and profit before tax compared to the previous five years. What seems to have aided the last few quarters’ performance is that during the lockdown, export almost doubled. And in the subsequent unlock period, the demand recovery was faster than anticipated.

Nippon India Growth Fund, Aditya Birla Sun Life Small Cap Fund and L&T Arbitrage Opportunities Fund are some of the mutual fund schemes that added the most number of shares of SAIL from December 2020 to February 2021.

Fortis Healthcare:

The development which seems to draw interest from market participants in Fortis Healthcare is the expected closure of legal and quasi legal matters related to the company. The recent quarter numbers are nothing to write home about with the net profit still in the red. The Malaysian firm IHH had acquired a controlling stake of 31% in the company in Feb 2018. This triggered a mandatory open offer for another 26% from the open market. This offer has not proceeded further due to legal issues. Once the legal matters are resolved, (expected soon) it could pave the way for controlling ownership, restructuring and expansion going forward.

Nippon India Pharma Fund, Nippon India Tax Saver Fund, Aditya Birla Small Cap Fund and Tata India Pharma & Healthcare Fund added the highest number of shares of Fortis Healthcare among mutual funds.

Mphasis:

Mphasis is one of the IT services companies still seeing interest from stakeholders despite having a stellar run, with its share price rising by almost 100% in the last one year. There are a couple of factors at play here. One being very consistent growth in revenues and profits, with the last quarter being the highest in the last eight years. When seen on a TTM basis, there has been healthy growth in revenues, operating profits and profit after tax in the last 5 years. The last few months have also seen the company win many million dollar deals. The size of these deals has been almost double on a YOY basis. Additionally, the tenure of these deals is also higher than the regular deals that company bagged in the past, which gives investors visibility in long-term revenue growth.

Mirae Asset Emerging Bluechip, ICICi Prudential Large & Mid Cap Fund, Mirae Asset Midcap Fund and PGIM India Midcap Opportunities Fund saw the highest addition of Mphasis’ shares by mutual funds from December 2020 to February 2021.

Polycab India:

Polycab India has the distinction of being the third largest company in terms of market capitalisation in the cables and wires as well as the fast moving electrical goods (FMEG) space, despite getting listed only in April 2019. Another key highlight is that for the previous FY it had the highest net profit growth in YoY terms in FMEG sector. This makes it stand out against its peers like Havells India and V-Guard Industries.

The company has evolved from being a pure cable maker to a behemoth straddling the cables and wires space. The company saw revenue growth across different verticals in the last quarter. The wire and cables business grew on account of exports and demand for optic fibre. The FMEG vertical is one of the major drivers of revenue. This segment saw good growth from products like fans and luminaires, and is expected to give further traction to the company’s growth.

Nippon India Multi Cap, Kotak Taxsaver, Kotak ESG Opportunities Fund and Tata Flexicap were some of the mutual fund schemes that added the highest quantity of shares of Polycab India during February 2021.

Titan Company:

The recent quarter results were very strong for this company. The December 2020 quarter revenue was highest in the last 10 quarters. So was the operating profit as well as the profit after tax. This is seen as a huge recovery for the company which was severely affected in the first two quarters of FY21 on account of the Covid-19 lockdown and subsequent unlock phases. Other factors seen to be working positively in its favour include the reduction of custom duty on gold imports from 12.5% to 10.75%. E-commerce has also been a big driver in the recovery with an absolute growth of 30% during the last quarter.

Nippon India Arbitrage Fund, ICICI Prudential Balanced Advantage Fund and ICICI Prudential Equity Arbitrage Fund saw the highest addition of Titan’s shares by mutual funds from December 2020 to February 2021.