Tracking the monthly mutual fund shareholding data gives investors an insight into how fund managers view the economy, and  prospects of the companies in question. The change in shareholding can indicate sectors that are gaining traction, or  policy changes have triggered interest in specific industries.

The March 2021 data released by mutual funds shows that fund managers have placed their faith in recent performers, increased stakes in companies that are in the process of a turnaround, and in a smallcap company.

Dixon Technologies continues to be a favourite of MFs

Dixon Technologies has been in the news for the right reasons. This stock has been among the top performing stocks of FY21, returning 4X returns over that period. The company is into contract manufacturing of electronic items and has a portfolio spanning consumer electronics, lighting solutions, mobile phones and security surveillance systems. 

With MNC electronic companies focusing on shifting manufacturing to India, this is one firm that looks poised to take on that challenge. The company is also looking to take advantage of the Govt policies under the “PLI” scheme. The last quarter Q3FY21 has shown stellar growth in revenues with QoQ change at 33.2% and YoY change at 119.25%

PGIM India Midcap Opportunities Fund, PGIM India Flexi Cap Fund, Motilal Oswal Midcap 100 ETF and Motilal Oswal Nifty Midcap 150 Index Fund are some of the mutual funds that have bought shares in the month of March 2021.

Granules India is undertaking major capacity expansion

Granules India is engaged in the manufacture of active pharmaceutical ingredients (APIs), pharmaceutical formulation intermediates ( PFIs) and finished dosages (FDs).The company has 50% of its revenue from the US market, While  the Indian market contributes around 15%. In Q3FY21,  FD grew at 11%, PFI at 48% and APIs at 20% in YoY terms, showing a healthy growth across product categories. The company has received 2 ANDA (generic drugs) approvals from USFDA this quarter. A major expansion is being undertaken for a PFI and FD facility at Genome Valley, Hyderabad where land was acquired in Q4. For this project, the expected capex is around Rs 400 crore and the unit is expected to be operational in early FY24.

Kotak Equity Arbitrage Fund, UTI Arbitrage Fund, L&T Arbitrage Opportunities Fund, Edelweiss Arbitrage Fund are some of the mutual funds that have bought shares in the month of March 2021.

Deepak Fertilisers is best among peers

Deepak Fertilisers & Petrochemicals Corporation has seen consistent growth in its revenues over the past 3 quarters of FY21 despite a very challenging environment due to Covid-19. Revenues from Q3FY21 were at Rs 1,456.2 crore, the highest in the last eight quarters. Another standout feature in the numbers for this quarter has been the yearly revenue and net profit growth. The company has invested in increasing capacity across its plants over the past three years. These could not be fully utilised due to the pandemic situation last year, but going forward, the company is ready to ramp up production based on the demand for particular products.

Quant Active Fund was  the major buyer of Deepak Fertilisers’ shares during March 2021.

One MF buys Stylam Industries across various schemes

Stylam Industries is a small cap company that has seen the highest buying by mutual funds. It is also interesting to note that only one asset management company has bought its shares through its various schemes. Stylam company has a consistently  higher percentage of exports to domestic sales. 

What helped maintain the topline during the first three quarters of FY21 was exports being double of domestic sales. In Q3FY21, the domestic sales were Rs 40 crore and exports stood at Rs 84 crore. Stylam Industries is a pioneer in India for acrylic solid surfaces, having set up a manufacturing plant for the same.his is also expected to contribute significantly to the bottomline.

Quant ESG Equity Fund, Quant Tax Plan, Quant Consumption Fund and Quant Mid Cap Fund are the schemes from Quant AMC that have added the most number of shares to their portfolio. This is now the top holding in two of the above mentioned funds.

MFs buying Jindal Steel and Power as it outperforms peers

The past year has been good for most of the steel companies and Jindal Steel and power is no exception in the list. During FY21, the stock price surged 4X and has outperformed its peers. 

During FY21, JSPL achieved its highest ever production in plates, TMTs, wire rods and billets. The revenue and net profit for Q3FY21 was the highest in the last 10 quarters. The company also has reduced its debt to Rs 25,000 crore compared to Rs 36,000 crore at the start of the year, a reduction of Rs 11,000 crore. With no major capex planned and a strategy for debt reduction in place, this company is potentially emerging as one of the outperformers in its industry.

Nippon India Arbitrage Fund, DSP Equity Opportunities Fund, Tata Mid Cap Growth Fund and Mirae Asset Mid Cap Fund are some of the mutual funds schemes that have bought the JSPL’s shares in March 2021.

SBI Cards and Payments rides high on rising digital payments

A subsidiary of State Bank of India (SBI), is the second largest credit card issuer in India. After the Covid-19 pandemic struck India last year, use of credit cards for online payments has been rising. In the case of SBI Cards, 50% of existing and new users added during Q4 are from tier 2 and tier 3 cities, which are under-penetrated markets for credit cards. 

The growth  for 9MFY21 in online spend came from categories like department stores, consumer durables, and even apparel and jewellery. Currently, spending has reduced across categories like hotels, airlines, entertainment due to the second wave of Covid-19 as most states have curfews and travel restrictions. Malls and cinema halls are also shut. As and when these are open to business, these categories would be big contributors to the company bottom line.

Nippon India Focused Fund, SBI Flexi Cap Fund, Aditya BSL Frontline Equity Fund, and DSP Tax Saver Fund are some of the mutual funds schemes that have bought shares in the month of March 2021.

Varroc Engineering: This automotive lighting firm is on funds’ radar

This company makes automotive components and has a strong global footprint, and is a dominant player in the domestic space as well. It is one of the world leaders in automotive exterior lighting systems. A notable aspect is that it has doubled in share value in the past one year despite belonging to a sector that was severely impacted due to the lockdown. 

The Q3FY21 results point to an increase in revenue which is among the best in the last 10 quarters, a positive sign in a challenging environment.  The company during the last quarterly result indicated that capex done over the past few years would help generate free cash flows going forward. Any incremental capex would be towards upgrading or for capacity addition at existing plants only. The focus would be on reducing debt as well. The net effect of these is expected to lead to greater profitability in the forthcoming quarters.

HDFC Flexi Cap Fund, Nippon India Multi Cap Fund, Nippon India Large Cap Fund and Nippon India Focused Equity Fund are some of the mutual funds that have bought shares in the month of March 2021.

Astral Poly Technik is the turnaround king MFs love

Astral Poly Technik has shown resilience in times of the pandemic and delivered a stellar set of numbers in Q3FY21. From its lowest revenue in Q1FY21 to its highest ever revenue for a quarter in Q3FY21, it has been a quick turnaround. The company got its act together, responding to the pandemic situation such that the growth in revenues were also accompanied by the highest operating margin and net profit during Q3. 

The company has been focusing on expansion and new products. The expansion of the plant in Bhubaneswar, Orissa will come on stream in Q2FY22, and should contribute to revenues by Q3FY22. Another expansion is the valve manufacturing facility at the Dhokla plant. Similar expansion plans for other locations are underway. Another significant event is the acquisition of a plastic tank company from Shree Prabhu Petrochemicals Pvt Ltd (SPPL) which is expected to contribute a healthy margin to the company.

Axis Growth Opportunities Fund, PGIM India Large Cap Fund, Principal Balanced Advantage Fund, and Nippon India Nifty Midcap 150 Index Fund are some of the mutual fund schemes that have bought shares in the month of March 2021.