The monthly portfolio disclosures by mutual funds give investors an idea of what the smart money is doing in the market and the sectors and companies that are in vogue or have fallen off the radar for fund managers. This screener shows stocks where mutual funds increased holdings in August 2021. There is growing interest from fund managers in banks, life insurance, auto ancillary manufacturers, and a recently listed specialty chemicals company.

SBI Life Insurance - Revised product mix and strong distribution channels

SBI Life Insurance has the highest market share amongst the privately owned life insurance companies. The company’s Q1FY22 results show that the sales of ULIP (unit-linked insurance plans) picked up, and its share in the overall product mix is showing improving trends. The company is focusing on selling more individual protection and annuity products, with the latter being more profitable. This is expected to add to its VNB (value of new business) margins.

SBI Life possesses the largest bancassurance network among life private life insurers which is critical for this business. It also has tie-ups with UCO Bank, South Indian Bank, and Yes Bank that have strengthened its distribution capabilities. 

Fund managers who increased their holdings in SBI Life

Rajat Chandak and Priyanka Khandelwal bought shares for ICICI Prudential Flexicap Fund Regular Growth scheme, Roshi Jain and Anand Radhakrishnan added shares to Franklin India Focused Equity Fund Growth scheme, Saurabh Pant bought for SBI Large & Midcap Fund Regular Payout Inc Dist cum Cap Wdrl scheme and  Milind Bafna added to  Aditya Birla Sun Life Pure Value Fund Growth scheme.

RBL Bank - Ambitious growth plans for credit cards and housing loans

RBL Bank is a fast-growing private sector bank offering services like corporate and institutional banking, commercial banking, retail banking, etc. The bank swiftly mitigated a major roadblock hit in July this year in its credit card business by signing up Visa for their credit card business. The bank has now resumed issuing credit cards to its new customers.

Earlier, Mastercard was the sole partner for the credit card business. The Reserve Bank of India had banned Mastercard from issuing any new cards on July 14 this year for not complying with data localisation requirements and this completely paused the issue of new cards by the bank. With the matter resolved, and Visa onboard for credit card services, the bank plans to issue 12-14 lakh cards in FY22. Credit cards contribute 37.5% of the retail book for the lender, which has a 5% market share in the segment.

The bank has 4% share of housing loans of its overall retail lending portfolio with a housing loan book of Rs 1,643.0 in FY21. The bank announced plans to add 120 housing finance branches to the existing 66 branches over the next three years with a target of Rs 10,000 crore loan book.

Fund managers who increased their holdings in RBL Bank

The fund managers who increased their holdings in the bank in August 2021 were Yogik Pitti, Harshal Joshi, and Arpit Kapoor through IDFC Arbitrage Fund - Regular Plan - Growth scheme, Sailesh Raj Bhan and Kinjal Desai through Nippon India Multi Cap Fund - Growth scheme, Bhavesh Jain and Dhaval Dalal through Edelweiss Arbitrage Fund Regular Growth scheme and  Shailesh Jain added more share to the Tata Arbitrage Fund Regular Growth scheme.

Lupin - New product launch and expected recovery in US markets

The last couple of quarters were lacklustre for Lupin on account of pricing pressure in the US generics market, where it is the third-largest generic drugs player for prescription drugs. The US markets were also impacted due to supply chain issues in FY21 against the backdrop of the pandemic.

In Q1FY22, formulations sales in the Indian market grew by 27% YoY. The company expects the ramp-up of its drugs Albuterol and Brovana to drive growth in India. The management is also hopeful of launching 10-12 products on an incremental basis in the Indian market.

Luping hopes to overcome hurdles in the US market over the next few quarters. In an interaction with analysts over a conference call after announcing Q1FY22 results, the management guided for EBITDA margins of 17%-18% in H2FY22.

Fund managers who increased their holdings in Lupin

In August 2021, fund managers who bought  Lupin’s shares were Rajat Chandak, Priyanka Khandelwal and Anish Tawakley for the ICICI Prudential Bluechip Fund Growth scheme, Anish Tawakley and Lalit Kumar added shares to ICICI Prudential Business Cycle Fund Regular Growth scheme, Dinesh Balachandran added to SBI Magnum Long Term Equity Scheme Regular Payout of Income Distribution cum capital wdrl scheme, and Hiten Shah through Kotak Equity Arbitrage Fund Growth scheme.         

LIC Housing Finance - Affordable housing presents new opportunities

LIC Housing Finance (LICHFL) is one of the largest housing finance companies in India. It is noteworthy that despite the pandemic, LICHFL continued its streak of recording higher YoY annual revenues for the tenth consecutive year and recorded its highest-ever revenues in FY21 at Rs 19,880 crore.

Triggers that will drive growth include the government’s increased focus on housing, in particular affordable and mid-segment (Units Price -affordable below Rs 40 lakh and mid-segment - Rs 40 lakh to Rs 80 lakh).  Interest rates on home loans too are at an all-time low,  in the range of 6.9%, encouraging home buyers to go for purchase. LICHFL disbursed a total of Rs 55,223 crore in FY21 and 77.9% of this was contributed by the retail home buyers book. 

Another is the tie-up with IPPB (India Posts Payment Bank) for selling housing finance products to its customer base of 4.5 crore, via a network of 650 branches and 1.36 lakh banking access points across India.

Fund managers who increased their holdings LIC Housing Finance

Yogik Pitti, Harshal Joshi and Arpit Kapoor bought shares for IDFC Arbitrage Fund - Regular Plan - Growth scheme, Bhavesh Jain and Dhaval Dalal bought for Edelweiss Arbitrage Fund Regular Growth scheme, Vinay Sharma and Kinjal Desai added shares to Nippon India Banking & Financial Services Fund Growth scheme, and  Rohit Singhania and Charanjit Singh bought for DSP Tax Saver Fund Regular Plan Growth scheme.

Jamna Auto - Recovery in commercial vehicle demand holds the key

Jamna Auto is an auto ancillary company that makes suspensions for commercial vehicles. It is the largest manufacturer of suspension springs in India and the third-largest in the world. The company’s sales are directly dependent on sales of commercial vehicles. In an environment of declining sales of commercial vehicles by almost half over the past two years, the company improved its net profits by 50% in FY21.

The scrappage policy of commercial vehicles announced by the government recently is slated to be a growth driver for the company.  This company is a bet on a recovery in commercial vehicle volumes.

Fund managers who increased their holdings in Jamna Auto

Jamna Auto found buyers in Sankaran Naren, Priyanka Khandelwal and  Harish Bihani for ICICI Prudential Smallcap Fund Growth scheme, Priyanka Khandelwal and Prakash Goel for ICICI Prudential Multicap Fund Growth scheme, Anupam Tiwari and Hitesh Das added to Axis Small Cap Fund Regular Growth scheme, and Pranav Gokhale and Amit Nigam increased their holding in Invesco India Multicap Fund Growth scheme.

Minda Industries - Charging up for electric vehicle market expansion

Minda Industries is an auto ancillary company that makes automotive switches, horns, parking sensors, seats, etc. The product portfolio is equally divided between two-wheelers and four-wheelers. The company posted its highest-ever annual revenues in FY21 at Rs 6,421.8 crore, a YoY increase of 16.6%. 

In Q1FY22, the company has won a number of orders from auto manufacturers. These include a Rs 75 crore order from American and European auto manufacturers for seating systems, alloy wheels from a Japanese and a Korean company, LED lamps for Indian and Korean auto companies. The management expects the alloy wheels segment to contribute revenue of Rs 250 crore in FY22 from Rs 80 crore in FY21.

As the next growth phase, Minda is betting big on the growth of electric vehicles and 90% of their products find application in electric vehicles in addition to fossil fuel vehicles. The company is also developing products that would find applications exclusively in electric vehicles.

Fund managers who increased their holdings in Minda Industries

The company found buyers in Sohini Andani via SBI Magnum Midcap Fund Regular Growth scheme, Shriram Ramanathan and Venugopal Manghat via L&T Hybrid Equity Fund Growth, Vihang Naik for L&T Tax Advantage Fund Growth scheme, and Priyanka Khandelwal and Prakash Goel added shares to ICICI Prudential MidCap Fund Growth scheme.

Bank of India - Restructuring, and growing its digital footprint

Bank of India is one of India’s largest public sector banks with a pan India network of over 5,000 branches. In FY21, the bank posted annual net profits of Rs 2,082.8 crore, after consecutive five loss-making years. Its asset quality has shown continuous improvement with the gross NPA ratio at 13.5% in Q1FY22 as against 13.9% in Q1FY21 and 16.5% in Q1FY20. 

The bank is also raising Rs 3,000 crore via a QIP (qualified institutional placement). The purpose of the issue is not only for regular business growth, but also to deploy capital for improving the technology platform of the bank, co-lending digital operations, and tie-ups with fintech companies.

The bank recently entered into a co-lending arrangement with MAS Financial Services for MSME loans. This would aid the bank to build a robust MSME portfolio. The bank is also reported to be one of the four banks shortlisted for privatisation by the central government. Any developments on this front would be a positive for the bank.

Fund managers who increased their holdings Bank of India

Sanjeev Sharma, Vasav Sahgal, and Ankit Pande bought shares through two schemes, Quant Small Cap Fund Growth and Quant Active Fund Growth. Prashant Jain and Sankalp Baid bought shares for HDFC Top 100 Fund Growth scheme, and Milind Bafna added shares to Aditya Birla Sun Life Pure Value Fund Growth scheme. 

Marico - New digital brand strategy to drive new products

Marico is an FMCG (fast-moving consumer goods) company with leadership in hair oils (Parachute) and other products including edible oils, cosmetic products, etc.

Marico is strengthening its digital strategy after having tasted success with one such brand. Last year it acquired men's grooming brand Beardo, which is exclusively sold via online channels. The company expects sales of Rs 100 crore from this brand in FY22. Buoyed by the success of an online brand, it plans to develop a few more online brands over the next few years.

In Q1FY22, the revenues increased YoY from Rs 1,925 crore to Rs 2,525 crore, but net profits declined YoY Rs 388 crore to Rs 365 crore. This was on account of increased raw material prices. The management expects the raw material prices to moderate in Q2FY22 and decline in the second half of FY22 aiding margins for the company.

Fund managers who increased their holdings in Marico

Marico found buyers in Hiten Shah for Kotak Equity Arbitrage Fund Growth scheme,  Shailesh Jain for Tata Arbitrage Fund Regular Growth scheme, Milind Bafna for Aditya Birla Sun Life Pure Value Fund Growth scheme, and Sudhanshu Asthana and Kamal Gada for UTI Focused Equity Fund Regular Growth scheme.   

Coforge - Continued deal wins to propel growth

Coforge is among the top ten Indian IT companies by market capitalization. A solid performer, it has delivered increasing revenues for the past eight quarters. Besides, it has also delivered a strong YoY revenue growth consistently for the last eight years.

Q1FY22 was a record quarter in terms of the size and significance of the deals. It signed three large deals during this quarter. These include a $20 million contract over three years in the insurance space and a $100 million contract over four years in the BFS (banking and financial services) space.

Fund managers who increased their holdings in Coforge

Ajay Tyagi bought shares through UTI Flexi Cap Fund Regular Plan Growth scheme, Shriram Ramanathan and Venugopal Manghat through L&T Hybrid Equity Fund Growth scheme, Jinesh Gopani for Axis Long Term Equity Fund Growth scheme, and Manish Gunwani and Kinjal Desai added to Nippon India Flexi Cap Fund Regular Growth scheme.

Tatva Chintan Pharma Chem - Green chemistry focus and expansion plans

Tatva Chintan Pharma Chem (TCPC) is a specialty chemicals manufacturer engaged in the manufacture of chemicals used in pharmaceutical and agrochemical industries. TCPC listed on the exchanges on July 29.

The company has started capacity expansion at the Dahej facility on its existing available land. Approximately Rs 147 crore from IPO proceeds will be used for this purpose. According to the management, this new facility will be available by Q4FY23. Another Rs 23 crore from IPO proceeds is being used for funding capital expenditure requirements for upgradation at the R&D facility in Vadodara.

Their focus on ‘green’ chemistry processes is a factor to consider since worldwide trends in the chemical industry are moving towards green chemistry eliminating or minimising the use of hazardous chemicals in the manufacturing process.

The specialty chemicals space is one of the fastest-growing sectors in India and fund managers look keen to invest even in the new entrants. The stock of TCPC on its listing debut delivered 95% listing gains for investors over the issue price of Rs 930 per share. It is currently trading at Rs 2105 per share in the second week of September.

Fund managers who bought Tatva Chintan

This newly listed company found buyers in Sohini Andani through SBI Magnum Midcap Fund Regular Growth scheme, Manish Gunwani and Kinjal Desai for Nippon India Flexi Cap Fund Regular Growth scheme, Mahendra Kumar Jajoo, Harshad Borawke, and Vrijesh Kasera bought for Mirae Asset Hybrid Equity Fund -Regular Plan-Growth scheme and Vrijesh Kasera added to Mirae Asset Healthcare Fund Regular Growth scheme.