The month of May 2022 saw a high degree of volatility in the markets. The indices lost around 8% in the first two weeks, followed by a partial recovery by the end of the month, closing 3% lower than April 2022. The decline has continued into June, and many stocks across the board have lost more than 15% of their stock value.

During the last month, as valuations improved, domestic institutions bought into sectors and stocks that may be outperformers over the medium to long term. Some of the stocks mutual fund managers bought in May 2022 include tech companies (including some of the leading IT services players), a highly beaten-down asset management company, and a newly minted stock that debuted on the bourses last month.

Infosys - Strong order wins and upbeat guidance by management

Infosys is the second-largest Indian IT services company in terms of market capitalisation. It is also among the fastest-growing IT services firms in the world, and a leader in the offshore services space.

Interacting with analysts during its analyst day, the company said that it is exploring newer growth areas beyond cloud migration i.e., cybersecurity, data analytics, building cloud-based platforms, etc.

The management re-iterated delivering on its guidance for revenue growth of 13–15% on a constant currency basis for FY23. It also confirmed EBIT margin guidance to be in the range of 21–23% for FY23. It has bagged strong deals, added 6 new $100 million clients and 5 new $200 million clients during FY22.

Fund Managers who bought shares of Infosys

Shares were added by Manish Banthia, Sankaran Naren and Priyanka Khandelwal to ICICI Prudential Equity & Debt Fund Growth, Prashant Jain and Sankalp Baid to HDFC Flexi Cap Fund Growth, Kotak Equity Arbitrage Fund Growth and Manish Banthia, Rajat Chandak and Priyanka Khandelwal to ICICI Prudential Balanced Advantage Fund Growth.

Tata Motors - Resumption of economic activity boosts passenger and commercial vehicle sales

Tata Motors is a leading automobile manufacturer in India that designs, manufactures, and sells commercial vehicles and passenger vehicles. Its subsidiary JLR’s order book grew to a record high of 168,000 units in Q4FY22. 

In Q4FY22, its retail sales for cars and buses recovered. Tata Motors sold 43,341 cars in May 2022 as compared to 41,587 in April 2022. Tata Motors is the largest electric car player in India, and its wholesales are growing at a rapid pace every month. In May, Tata Motors replaced Hyundai as the second-largest seller of passenger vehicles in India based on wholesale dispatches to dealers.

The management intends to maintain its target of near-zero net debt by FY24, with improvement in operating performance, FCF (free cash flow) in all the businesses, possible asset monetization, and raising equity, if required.

Fund Managers who bought shares of Tata Motors

Shares were purchased by Hiten Shah for Kotak Equity Arbitrage Fund Growth, Sailesh Jain for Tata Arbitrage Fund Regular Growth, Kayzad Eghlim, Priyanka Khandelwal and Nikhil Kabra for ICICI Prudential Equity Arbitrage Fund Regular Growth and Kinjal Desai and Anand Gupta for Nippon India Arbitrage Fund Growth schemes respectively.

Tech Mahindra - Leveraging telecom domain expertise with 5G services

Tech Mahindra is among the top five IT services companies in India. It provides IT and full-form services for telecommunication equipment manufacturers, telecom service providers, software vendors, and systems integrators.

In Q4FY22, it won new deal wins of $1 billion, constituting $366 million worth of deals from the enterprise segment, and the remaining $645 million from CME (communications, media and entertainment) segment.

Bharti Airtel and Tech Mahindra announced a strategic partnership to set up a joint 5G innovation lab to co-develop and market 5G use cases in India. With the government’s plan for auction of 5G spectrum in place, Tech Mahindra will be a direct beneficiary.

Fund Managers who bought shares of Tech Mahindra

Shares of Tata Motors were added to respective schemes by Manish Gunwani and Kinjal Desai for Nippon India Growth Fund - Growth, Manish Banthia, Sankaran Naren and Priyanka Khandelwal for ICICI Prudential Equity & Debt Fund Growth, Vaibhav Dusad and Priyanka Khandelwal for ICICI Prudential Technology Fund Growth and Venkat Samala and Meeta Shetty for Tata Digital India Fund Regular Growth respectively.

Jubilant Foodworks - Change of leadership  and expansion plans for FY23

Jubilant Foodworks is a quick-service restaurant company (QSR). It owns the franchise for Domino’s in India, Nepal, Sri Lanka, and Bangladesh, and also for Dunkin’ Donuts and Popeyes in India.

The company recently had a change in the top management. The board of directors appointed Sameer Khetarpal as the Chief Executive Officer and Managing Director. He has over 25 years of experience with companies like Amazon, McKinsey, GE, and Hindustan Unilever in various leadership roles.

The company opened 80 new Domino's stores in Q4FY22 India, the highest ever in a quarter, taking the store count to 1,567 and entering 17 new cities. In FY23, it plans to open another 250 new stores. It is also expanding its brand portfolio beyond Domino’s and added seven new stores to its emerging brand portfolio during Q4FY22 with four Popeyes stores and one store each of Dunkin Donuts, Hong's, and Ekdum. The latter is a brand developed specifically for the Indian market with biryani as the mainstay product.

Fund Managers who bought shares of Jubilant Foodworks

Addition of shares to schemes was done by Gaurav Misra and Gaurav Khandelwal for Mirae Asset Large Cap Fund Regular Growth, Hiten Shah for Kotak Equity Arbitrage Fund Growth, Anand Radhakrishnan and R.Janakiraman for Franklin India Flexi Cap Fund Growth and R.Janakiraman and Sandeep Manam for  Franklin India Opportunities Fund Growth respectively.

Orient Electric - Switchgear and new product launches deliver a stellar FY22

Orient Electric is one of the leading consumer electrical brands in India with a diverse portfolio of fans, lighting, home appliances, and switchgears. Orient Electric today is the largest manufacturer and exporter of fans from India, with more than 60% export share, and a dominant presence in 35 international markets

Orient Electric recorded its highest ever annual revenues in FY22 at Rs 2,452.2 crore and also its highest ever net profit of Rs 126.6 crore. The switchgear segment delivered revenue growth of over 50% during FY22. The company introduced a new range of switches, catering to the mass-premium segment, which is, according to management, well received by channels and consumers alike.

Fund Managers who bought shares of Orient Electric

Fund managers buying Orient Electric shares include Gaurav Misra for Mirae Asset Focused Fund Regular Growth, Priyanka Khandelwal and Harish Bihani for ICICI Prudential Smallcap Fund Growth, Sanakaran Naren and Anand Sharma for the new launch ICICI Prudential Housing Opportunities Fund Regular Growth and Aniruddha Naha and Anandha Padmanabhan for PGIM India Flexi Cap Fund Regular Growth schemes respectively.

Cyient - Large deal wins and acquisitions add to future revenue streams 

Cyient offers engineering and development services to aerospace & defence, transportation, energy and utilities, communication, and others. In Q4FY22, it won seven large deals with a total contract potential of $134.9 million, six from services and one from composite B2S(business to specification). It won 23 large deals in FY22, with a total contract potential of $308.6 million.

Cyient last month completed the acquisition of Celfinet, a Portugal-based international wireless engineering services company focused on providing end-to-end network planning and performance optimisation services for euro 41 million.

Celfinet is Cyient’s third acquisition since January 2022, the previous two being Citec, a plant and product engineering company, and Grit Consulting with expertise in metal mining and energy. The three acquired companies will together contribute 21% to Cyient’s revenues from FY23.

Fund Managers who bought shares of Cyient

Shares of Cyient were added by Vinit Sambre, Jay Kothari, and Resham Jain to DSP Small Cap Fund Regular Plan Growth, Vaibhav Dusad and Priyanka Khandelwal to ICICI Prudential Technology Fund Growth, Sachin Padwal-Desai and Umesh Sharma to Franklin India Equity Hybrid Fund Growth and Pankaj Tibrewal to Kotak Small Cap Growth scheme respectively.

Campus Activewear - IPO received well by mutual fund AMCs

Campus Activewear is among India’s fastest-growing sports and athleisure footwear brands. The company made its debut on the stock exchanges on May 9. The IPO saw an oversubscription of 51X. The stock delivered 30% ingain on listing but has lost most of this in the recent market fall, and is trading 6% higher than its issue price on June 16.

The company’s Q4FY22 revenues were up 28.1% YoY at Rs 3,523.4 crore and FY22 revenues were up 67.9% YoY at Rs 11,941.8 crore. 

The average selling price per pair of Campus shoes has been rising from Rs 485 in FY19 to Rs 620 in FY22. The company expanded its installed annual assembling capacity to 28.8 million pairs in FY22 from 25.6 million pairs in FY21. Campus Activewear has invested Rs 74.5 crore in FY22 towards various initiatives aimed at improving brand perception and recall.

Fund Managers who bought shares of Campus Activewear

Shares of Campus Activewear were purchased by Abhiroop Mukherjee and Siddharth Bothra for Motilal Oswal Flexicap Fund Regular Plan Growth, Abhiroop Mukherjee and Niket Shah for Motilal Oswal Midcap 30 Regular Growth, Vishal Gajwani and Nitesh Jain for Aditya Birla Sun Life Small Cap Fund Growth and Prashant Jain for HDFC Balanced Advantage Fund Growth schemes respectively.

KIMS (Krishna Institute of Medical Sciences) - Massive expansion plans in the pipeline

KIMS is a hospital chain headquartered in Hyderabad. It is the largest corporate healthcare group in Andhra Pradesh and Telangana. It covers a whole array of specialities across its network of hospitals.

KIMS will incur a capex of Rs 500 crore over the next one-and-a-half years on new projects. For instance KIMS Manavata hospitals, a 51:49 joint venture between KIMS and Manavta Healthcare to set up a hospital in Nashik, is allocated a capex of Rs 200–250 crore, and Rs 160–180 crore will be spent in the first phase. KIMS will incur Rs 325–355 crore for its Bangalore project.

The company recently acquired 51.07% stake in Sunshine Hospitals (600-bed capacity) based in Telangana at an enterprise value of Rs 730 crore. The objective of KIMS is to scale up other specialties, which would improve occupancy. The acquisition was done in October 2021. Apart from these, the company is looking at expanding its presence in other states like Maharashtra and Karnataka.

Fund Managers who bought shares of KIMS

Shares of KIMS were added to respective schemes by Gaurav Misra and Gaurav Khandelwal for Mirae Asset Large Cap Fund Regular Growth, Anupam Tiwari and Hitesh Das for Axis Small Cap Fund Regular Growth, Anupam Tiwari and Sachin Jain for Axis Multicap Fund Regular Growth and Shreyash Devalkar and Hitesh Das for Axis Flexi Cap Fund Regular Growth.

Navin Fluorine - Key player in a niche chemical segment 

Navin Fluorine is a commodity chemicals company focused on fluorine-based chemicals - producing refrigeration gas, chemicals, inorganic bulk fluorides, and specialty organofluorines and offers contract research and manufacturing services at Surat in Gujarat and Dewas in Madhya Pradesh.

NFASL (Navin Fluorine Advanced Sciences), a wholly-owned subsidiary of Navin Fluorine, entered into a multi-year contract to manufacture and supply a key fluoro-specialty chemical. This project will require setting up of new capacity at Dahej, with an investment of Rs 540 crore to be financed through a mix of debt and internal accruals. The project is expected to be completed by the end of CY23.

Fund Managers who bought shares of Navin Fluorine

Shares were bought by Manish Gunwani and Kinjal Desai for Nippon India Growth Fund - Growth, Rama Iyer Srinivasan and Mohit Jain for SBI Multicap Fund Regular Growth, Aniruddha Naha and Vivek Sharma for PGIM India Midcap Opportunities Fund Regular Growth and Shridatta Bhandwaldar for Canara Robeco Flexi Cap Fund Growth schemes.

HDFC AMC - Trying to regain lost market share

HDFC AMC, part of the HDFC group, is among the largest and most profitable mutual fund companies in India, with an AUM (assets under management) of around Rs 4.3 lakh crore as of March 31, 2022. Being one of the early movers in the industry, its strong distribution network, with 228 branches and over 75,000 empanelled distribution partners, are its strength. The company, however, has been losing its market share in the past few years.

In an investor call, the management said that the launch of new schemes (New Fund Offers or NFOs) across various segments could aid AUM growth. It also plans to come out with more NFOs in the AIF (alternative investment funds) segment. The AMC recently got SEBI's approval to launch nine more ETF fund schemes. It has also filed for defence fund, MNC fund, and business cycle fund NFOs. In order to improve its market share, it plans to introduce portfolio management services or PMS in the next few quarters.

Despite a lackluster performance in FY22, the company’s revenues are growing consistently, with it posting its highest-ever annual revenues in FY22 at Rs 2,433.2 crore. It is also a very high return business with a net profit margin of above 50% in the last three years closing, with FY22 net margin of 65.8%.

Fund Managers who bought shares of HDFC AMC

Buying interest in shares of HDFC AMC came from Neeraj Kumar for SBI Arbitrage Opportunities Fund Regular Growth, Bhavesh Jain and Dhaval Dalal for Edelweiss Arbitrage Fund Regular Growth, Harshal Joshi and Nemish Sheth for IDFC Arbitrage Fund - Regular Plan - Growth and Hiten Shah for Kotak Equity Arbitrage Fund Growth schemes respectively.