With markets volatile, some sectors or the other can come on investors’ radar in case they can find value in it. The smart money tries to do that in turbulent markets. Before this turbulence in the markets, the markets seemed to have some legs. During this period in January 2022, Indian mutual fund managers made a few bets. Even though FIIs (foreign institutional investors) sold their holdings in January 2022, domestic mutual funds continued to buy stocks in sectors that have growth potential. 

This screener shows stocks where mutual funds increased holdings in January 2022. Fund managers had their eyes on a state-owned infrastructure player, a pharmaceutical firm, a ceramic tiles company as well as a chemical company. An underlying theme for investment is two companies that are likely to benefit from the growing market for electric vehicles.

IDFC - Restructuring to strengthen the balance sheet of bank

IDFC is the holding company of IDFC First Bank and IDFC AMC (asset management company). The company recently announced a restructuring plan which involves the merger of the holding company and the bank, and the sale of the AMC business. 

After selling the AMC business, IDFC will be merged into IDFC Bank with proceeds from the sale to be ploughed back into the bank. This is expected to strengthen the bank's balance sheet as well as reduce the complexity and create a single entity. 

Fund managers who increased their holdings in IDFC

Fund managers who increased stake in IDFC are Chirag Setalvad and Sankalp Baid who bought for two schemes, HDFC Small Cap Fund Growth scheme and HDFC Childrens Gift Fund scheme, Neeraj Kumar and Arun. R for SBI Arbitrage Opportunities Fund Regular Growth scheme and Hiten Shah for Kotak Equity Arbitrage Fund Growth scheme.

Ipca Labs - Acquisition aids entry into new segments and markets

Ipca Labs is a pharmaceuticals maker with over 350 formulations and 80 APIs (active pharmaceutical ingredients). In November 2021, it acquired a 26.5% stake in Lyka Labs for Rs 98 crore to strengthen its portfolio. Lyka makes and markets injectables, lyophilized injectables, and topical formulations. A significant part of its business is from the rest of the world (ROW) markets. This acquisition is expected to mark its entry into the lyophilized injectables market.

On February 3, 2022, one of the two greenfield manufacturing plants for APIs set up at Dewas with a capex of about Rs 250 crores commenced trial production.

Fund managers who increased their holdings in Ipca Labs

Shares of Ipca Labs were added by Vinit Sambre, Resham Jain, and Jay Kothari to DSP Midcap Fund Growth scheme, Pankaj Tibrewal to Kotak Emerging Equity Scheme Growth scheme, Harsha Upadhyaya to Kotak Equity Opportunities Fund Growth scheme and Chirag Setalvad and Sankalp Baid to HDFC Mid-Cap Opportunities Fund Growth scheme.

NBCC - Infrastructure push by government and entry into airport segment

NBCC’s business verticals include PMC (project management consultancy), EPC (engineering procurement and construction) and real estate. It is a government-owned entity and a beneficiary of a number of infrastructure projects undertaken by the Centre.

Since the last two quarters, the company received many orders including its largest international contract of Rs 1,000 crore for social housing from the Maldives, a Rs 400 crore project from a sports university at Imphal, and the construction of a medical college at Sonipat for Rs 285 crore. The company also entered the segment of airport engineering services, with a contract from Jaipur International airport. The management sees future potential in this segment with the government keen on adding and modernising airports across the country.

Fund managers who increased their holdings in NBCC

Shares of NBCC were added by Hitesh Shah to Kotak Equity Arbitrage Fund Growth scheme, Venugopal Manghat and Praveen Ayathan to L&T Arbitrage Opportunities Fund Regular Growth scheme, Harsha Joshi and Arpit Kapoor to IDFC Arbitrage Fund - Regular Plan - Growth scheme and Rajeev Bhardwaj to Invesco India Arbitrage Fund Growth scheme.

Kajaria Ceramics - Real estate sector driving growth and expansion plans on track

Kajaria Ceramics manufactures glazed as well as unglazed ceramic tiles and sanitaryware. The company sells its products domestically and also exports them to other countries.

The company’s Q3FY22 results are also encouraging. It delivered the highest quarterly revenue in the last 10 quarters at Rs 1,075.7 crore. With the pick-up in demand for real estate and resumption of construction activity, the next few quarters hold potential for the company.

The company is undertaking capacity expansion at three sites in Rajasthan, Gujarat and Andhra Pradesh to add around 12.4 million square metres to its total capacity with an overall capex of Rs. 250 crore. All three expansion projects are expected to be completed in Q1FY23.

Fund managers who increased their holdings in Kajaria Ceramics

Fund managers with growing interest in Kajaria ceramics include Pankaj Tibrewal for Kotak Emerging Equity Scheme Growth scheme, Gopal Agrawal and Sankalp Baid for HDFC Large and Mid Cap Fund Growth scheme, Vineet Maloo and Vinod Bhat for Aditya Birla Sun Life Business Cycle Fund Regular Growth scheme and Pranav Gokhale and Amit Nigam for Invesco India Multicap Fund Growth scheme.

Havells  - Powering up segments, expanding FMEG product range

Havells India is a leading player in the electrical cables industry and also an FMEG (fast-moving electrical goods) manufacturing company. The Q3FY22 results saw it generate the highest consolidated revenues in the last ten quarters at Rs 3,713.1 crore. The revenue growth came from all of its operating segments including cables, switchgears, lighting and FMEG products.

The company is also expanding products offered under the Lloyd brand it acquired in 2017. A new washing machine factory at Ghiloth, with a capacity of 3 lakh units per annum commenced operations in December 2021. These machines manufactured would be marketed and sold under the Lloyd brand.

Fund managers who increased their holdings in Havells

Havells India saw buying from Hiten Shah for Kotak Equity Arbitrage Fund Growth scheme, Gaurav Misra and Gaurav Khandelwal for Mirae Asset Large Cap Fund Regular Growth scheme, Neelesh Surana for Mirae Asset Tax Saver Fund -Regular Plan-Growth scheme, and Neelesh Surana and Ankit Jain for Mirae Asset Emerging Bluechip Fund Growth scheme.

NIIT - Restructuring to result in two distinct identities

NIIT provides training services for global corporations. These training services are provided under the CLS (corporate learning segment) vertical and contribute around 88% to the overall revenues of NIIT. The other vertical is the SNC (skill and career group) which is focused on emerging markets, imparting training through a digital learning platform.

The company has proposed a restructuring through which CLS and SNC will become two separately listed companies. The management said that while both CLG and SNC businesses have strong growth ambitions, they have slightly different characteristics. The plan is to transfer the CLG business undertaking to NIIT Learning Systems Ltd (NLSL), a wholly-owned subsidiary of NIIT Ltd. Shareholders holding one share of NIIT will get one share of NLSL.

Fund managers who increased their holdings in NIIT

Shares were added by fund managers, Priyanka Khandelwal and Lakshminarayanan KG to ICICI Prudential ESG Fund Regular Growth scheme, Meeta Shetty and Venkat Samala to Tata Digital India Fund Regular Growth scheme, Samir Rachh, and Kinjal Deasai to Nippon India Small Cap Fund - Growth scheme and Hardick Bora and Vinay Paharia to Union Small Cap Fund Regular Growth scheme.

Minda Corporation - Getting ready to gain larger share of EV components

Minda Corporation is an auto component manufacturer that makes mechatronic components for two and four-wheelers. It is expanding its product offerings in the EV (electric vehicle) space and plans to increase its components per EV going forward. EV orders are for products such as battery chargers, telematics, wire harness and key systems, etc. 

The company is focused on two wheelers, three wheelers and CVs (commercial vehicles). It added Hero Electric and BMW as new customers for EV chargers in Q3FY22. The content per vehicle in ICE two-wheelers is just Rs 4,000-6,000 as compared to Rs 14,000-16,000 in the case of EVs. The company expects EVs to contribute 15-20% revenues in the next 4-5 years. 

Fund managers who increased their holdings in Minda Corporation

Buyers for Minda Corporation include Anupam Tiwari and Sachin Jain for Axis Multicap Fund Regular Growth scheme, Fatema Pacha and Manish Lodha for two schemes, Mahindra Manulife Multi Cap Badhat Yojana Regular Plan Growth scheme and Mahindra Manulife Flexi Cap Yojana Regular Growth scheme, while Anupam Tiwari and Hitesh Das bought for Axis Small Cap Fund Regular Growth scheme

Larsen and Toubro Infotech (LTI) - Strong performance driven by consistent growth

LTI is an IT services company that offers application development, digital solution services to BFSI, retail, health, media & hi-tech verticals. The company’s revenues are consistently growing sequentially over the last six quarters with highest ever quarterly revenues in Q3FY22 at Rs 4.237.5 crore.

In Q3FY22, LTI signed a large deal of $31 million with one of the major pharma companies in the US to upgrade their legacy IT infrastructure. The management also indicated that this account has scope for expansion.

The company plans to add 5,000 new entry-level employees by the end of FY22. LTI had hired 1,000 employees in the first two quarters, who were being trained on new technology, and will be deployed in projects. 

Fund managers who increased their holdings in LTI

Growing interest in LTI saw buying from Anupam Tiwari and Sachin Jain for Axis Multicap Fund Regular Growth scheme, Hiten Shah for Kotak Equity Arbitrage Fund Growth scheme, Shreyash Devalkar and Hitesh Das for Axis Flexi Cap Fund Regular Growth scheme and Sailesh Raj Bhan and Kinjal Desai for Nippon India Large Cap Fund - Growth scheme.

Rain Industries - Riding out the metal demand growth cycle

Rain Industries is one of the world's leading producers of calcined petroleum coke, coal tar pitch and other high-quality basic and specialty chemicals. It operates in three key business verticals–carbon, chemicals and cement.

The company registered its highest consolidated quarterly revenues in Q2FY22 at Rs 3,907.7 crore. It is a beneficiary of the rising demand for metals globally. Its key product CPC (calcined petroleum coke) contributes 50% of its revenues and is a key product for metal production.

Fund managers who increased their holdings in Rain Industries

Rain Industries saw portfolio additions by Hiten Shah to Kotak Equity Arbitrage Fund Growth scheme, Venugopal Manghat and Praveen Ayathan to L&T Arbitrage Opportunities Fund Regular Growth scheme, Harsha Joshi and Arpit Kapoor to IDFC Arbitrage Fund - Regular Plan - Growth scheme and Bhavesh Jain and Dhaval Dalal to Edelweiss Arbitrage Fund Regular Growth scheme.

Neogen Chemicals - Expanding to capture EV battery market share

Neogen Chemicals manufactures specialty organic bromine-based chemical compounds as well as specialty inorganic lithium-based chemicals compounds. It listed on the stock exchanges in May 2019 and has since then delivered more than 4X returns to its investors.

In Q3FY22, the company posted its highest ever quarterly revenues at Rs 132.7 crore and highest ever net profits at Rs 10.5 crore. It is also increasing its capacity for electrolyte for lithium-Ion batteries and advanced chemistry cells at its Vadodara facility with a capex of Rs 35 crore. The management envisages a growing potential for the lithium-ion batteries as the adoption of EVs (electric vehicles) gains momentum.

Fund managers who increased their holdings in Neogen Chemicals

Buyers for Neogen include Saurabh Pant for SBI Large & Midcap Fund Regular Payout Inc Dist cum Cap Wdrl scheme, Ashish Naik and Hitesh Das for Axis Special Situations Fund Regular Growth scheme and Rama Iyer Srinivasan, Dinesh Ahuja and Mohit Jain for SBI Magnum Children's Benefit Fund- Investment Plan Regular Growth scheme.