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TREND | 17 Aug 2022
Where’s the smart money moving in July 2022?
By Ketan Sonalkar

The Nifty 50 rose 8.7% in July, the highest monthly rise since January 2022. Many sectors have reversed their downtrend and have shown positive signs over the last two months. The Nifty Auto index reached its all-time high of 12,500 in July and the Nifty FMCG index also crossed its all-time high of 42,000.

As the Nifty moved higher, mutual funds bought into sectors like automotive and pharma buying stocks that are likely to be outperformers over the next few quarters. Mutual fund managers bought shares of a leading steel maker, a life insurer, a pharmaceuticals maker, and a car and truck maker.

Tata Steel - Steady domestic demand and falling fuel costs bode well

Tata Steel is among the top global steel companies with an annual steel production capacity of nearly 34 MTPA (million tonnes per annum). It is also one of the oldest companies of the Tata Group.

Steel companies' stock prices dropped sharply in May after the government imposed an export tax on steel products. However, over the last few weeks, coking coal prices halved to $208/tonne in August 2022 from $415/tonne in June 2022. This will work in favour of the steel industry as it will result in lower production costs. Post the export tax imposition, domestic prices fell by 15% in the month of June to Rs 59,000/tonne. Another factor that is helping the steel industry is the price of domestic steel remaining steady in the Rs 57,000-59,000 range over the last one and a half months. Steel companies are also hopeful of a dialogue with the government regarding the relaxation of the export taxes.

Fund Managers who bought shares of Tata Steel

Fund managers who bought Tata Steel include Mehul Dama for Nippon India ETF Nifty 50 BeES, Mahesh Patil for Aditya Birla Sun Life Pure Value Fund Growth, Kinjal Desai and Ashutosh Bhargava for Nippon India Tax Saver (ELSS) Fund - Growth and R. Srinivasan and Mohit Jain for SBI Flexicap Fund Regular Growth schemes.

Tata Motors - Leadership in the EV segment could drive its fortunes

Tata Motors is a leading Indian car and truck maker, which also owns the iconic Jaguar and Land Rover brands since 2008. Tata Motors has taken the lead in passenger electric vehicles (EVs)  in India. Its Nexon EV is the highest selling EV in India

In Q1FY23, JLR’s performance was impacted by chip shortages, rising inflation, and weak product mix. JLR’s management guided dispatches to dealers of 90,000 units in Q2FY23 and production is expected to improve every quarter. Demand continues to be strong with an order book of 2 lakh units in Q1FY23 as against 1.68 lakh units in Q4FY22. 

Tata Motors is planning to launch a number of new EV models over the next few years and recently unveiled its EV concept Avinya, expected to begin production in three years.

Fund Managers who bought Tata Motors

Shares of Tata Motors were added by Hiten Shah to Kotak Equity Arbitrage Fund Growth, Rohit Singhania and Charanjit Singh to DSP Tax Saver Fund Regular Plan Growth, Mehul Dama to Nippon India ETF Nifty 50 BeES and Atul Penkar and Dhaval Gala to Aditya Birla Sun Life Tax Relief 96 Pyt of Inc Dis cum Cap Wdrl schemes.

HDFC Life Insurance - Consistent performance continues in Q1FY23

HDFC Life Insurance (HDFC Life) is among the top three private life insurance companies in India. Part of the HDFC Group, it has an extensive distribution network, and a broad-based product mix with a focus on non-participating, protection & annuity business.

Over the past three quarters, HDFC Life showed consistent improvement in industry-specific metrics and the same continued in Q1FY23. Its gross premium written grew 23% YoY to Rs 9,396 crore, while VNB (value of new business) margins were at 26.8% led by a balanced product mix. Persistency ratios improved for the 13th and 61st month to 88% and 54%, respectively. Its net profit in Q1Fy23 was up 20.8% YoY at Rs 365.3 crore, aided by growth in premium written.

Fund Managers who bought shares of HDFC Life Insurance

Buying interest from fund managers came from Anand Radhakrishnan and Ajay Argal for Franklin India Focused Equity Fund Growth, Hiten Shah for Kotak Equity Arbitrage Fund Growth, Sailesh Jain for Tata Arbitrage Fund Regular Growth, and Mehul Dama for Nippon India ETF Nifty 50 BeES.

UNO Minda - A standout player in the auto ancillary industry

Uno Minda, formerly known as Minda Industries, is India’s largest maker of automotive switches, horns, seats, and alloy wheels. It is also one of the largest automotive lighting players.

The company reported a stellar set of Q1FY23 results, with an all-time high quarterly revenue of Rs 2,564.9 crore. Its net profit was lower than Q4FY22 due to the change to the new tax regime, which has a different taxation structure with higher taxes for certain items.

The company is consistently growing its share in EV components, with the current order book comprising 50% of EV components. The company is likely to benefit from the government's decision to have six airbags in all passenger vehicles.

Fund Managers who bought shares of UNO Minda

Shares for their respective schemes were bought by R. Srinivasan and Mohit Jain for SBI Flexicap Fund Regular Growth, Satyabrata Mohanty for Aditya Birla Sun Life Equity Advantage Fund Growth, Shreyash Devalkar and Hitesh Das for Axis Midcap Fund Growth, and Hardick Bora and Vinay Paharia for Union Small Cap Fund Regular Growth.

UPL - Stellar Q1FY23 performance aided by tie-ups across the world.

UPL is engaged in the agrochemicals and industrial chemicals business with manufacturing facilities across the world. In Q1FY23, its revenues from the agrochemicals vertical were the highest in the last 10  quarters at Rs 4,548 crore. The company has an impressive track record with a five-year revenue CAGR of 18.6%, and a five-year net profit CAGR of 36.9%.

During Q1FY23, UPL and Bunge formed a joint venture ‘Orígeo’ to target large farms in Brazil to increase Brazilian farmers’ sustainability, productivity, and profitability. It also entered into a new supply agreement with Bayer for ‘Spirotetramat’, an insecticide to develop differentiated pest management solutions. UPL launched Zoatin, a bionutritional, to increase crop health and yield in partnership with Christian Hansen. As a part of its collaboration with MMAG (a subsidiary of Mitsui Chemicals Agro Inc.), UPL launched a new insecticides range in India containing the patented molecule ‘Flupyrimin’ to target the most damaging rice pests.

Fund Managers who bought shares of UPL

Fund managers who added UPL to their schemes in July include Hiten Shan of Kotak Equity Arbitrage Fund Growth, Sanjeev Sharma and Vasav Sahgal of Quant Active Fund Growth, Vasav Sahga and Ankit Pande of Quant Tax Plan Growth, and Mehul Dama of Nippon India ETF Nifty 50 BeES.

Laurus Labs delivers healthy Q1FY23 results with a positive growth outlook

Laurus Labs is a pharmaceutical company that specializes in generic APIs (active pharmaceutical ingredients) and FDFs (fixed dose formulations) in therapies of anti-retroviral (or ARV) RV and oncology.

The company posted its best quarterly revenue in the last 10 quarters in Q1FY23 at Rs 1,540.7 crore. It has multiple planned capacity expansions in its portfolio based on an increased focus on Non-ARV APIs and Formulations and high-growth CRAMS (contract research and manufacturing services) segments.

Fund Managers who bought shares of Laurus Labs

Buyers of shares in Laurus Labs include S. Bharath and Ratish Varier for Sundaram Mid Cap Growth, Aniruddha Naha and Vivek Sharma for PGIM India Midcap Opportunities Fund Regular Growth, Ankit Jain for Mirae Asset Midcap Fund Regular Growth and Aniruddha Naha and Ravi Adukia for PGIM India Small Cap Fund Regular Growth schemes respectively.

Torrent Pharmaceuticals - Strong Q1FY23 performance and expected entry into the diagnostics space pique fund managers interest

Torrent Pharmaceuticals is a maker of branded generic medicines that are sold in India as well as exported to Brazil, the US, and Germany. It has entered into an agreement with Dr. Reddy's Laboratories to acquire four of its brands Styptovit-E, Finast, Finast-T, and Dynapress. Styptovit-E, a gynaecology product with an estimated market size of about Rs 500 crores will further strengthen Torrent’s presence in the therapy. The acquisition of Finast; Finast-T, and Dynapress, which are used in the treatment of Benign Prostatic Hyperplasia (BPH), will aid in Urology therapy.

In Q1FY23, revenues grew 10% YoY to Rs 2,3777 crore and net profit by 7% YoY to Rs 354 crore. This is the highest quarterly revenue and profit in the last eight quarters. It has expanded its sales force of medical representatives by 300 in this quarter. The company is also considering an entry in the diagnostics space and details on this are expected in Q3FY23.

Fund Managers who bought shares of Torrent Pharmaceuticals

Torrent Pharmaceuticals saw buying interest from fund managers Hitesh Das and Ashish Naik for Axis Quant Fund Regular Growth, Anil Ghelani and Diipesh Shah for DSP Quant Fund Regular Growth, Anoop Bhaskar for IDFC Core Equity Fund - Growth and Kinjal Desai and Ashutosh Bhargava for Nippon India Multi Cap Fund - Growth schemes respectively.

PB Fintech - Partnership with LIC likely to make a significant difference

PB Fintech, also known as Policybazaar, is a recently listed fintech company that acts as an insurance and loans marketplace (through Paisabazaar.). The company continues to make losses every quarter and posted losses for a fifth consecutive quarter in Q1FY23. 

In July, the company announced a partnership with India’s largest life insurer Life Insurance Corporation of India,. This is expected to drive sales for PB Fintech as well as help LIC expand its online presence. The company is also expanding its reach with plans to establish 200 stores by FY24.

Fund Managers who bought shares of PB Fintech

Shares of PB Fintech were added to their respective schemes by Neelesh Surana and Ankit Jain to Mirae Asset Emerging Bluechip Fund Growth, Neelesh Surana to Mirae Asset Tax Saver Fund -Regular Plan-Growth, Ankit Jain and Siddhant Chhabria to Mirae Asset Great Consumer Regular Growth and Pranav Gokhale to Invesco India Mid Cap Fund Growth.

Berger Paints - Falling crude oil prices and the upcoming festive season paint a bright picture

Berger Paints is India’s second largest paint company with a strong presence in the decorative, industrial and automotive sectors. All paint companies were severely affected by rising crude prices (which form a major raw material for paints) through FY22 and into Q1FY23. A big relief came in at the end of Q1FY23 into Q2FY23 as crude oil prices started cooling to below $90 per barrel in August from peaks of $120 per barrel in early June.

In Q1FY23, revenue rose 52.7% YoY to Rs 2,772.4 crore. This was on a low base. The company raised prices by 3% in Q1FY23, thereby absorbing the raw material cost inflation. The next quarter, Q2FY23 will witness a rise in repainting of homes with the festive season kicking in and this will drive the demand for decorative paints in this quarter.

Fund Managers who bought shares of Berger Paints

Buying interest for respective schemes came from Hiten Shah for Kotak Equity Arbitrage Fund Growth, Ajay Tyagi for UTI Flexi Cap Fund Regular Plan Growth, Sailesh Jain for Tata Arbitrage Fund Regular Growth and Bhavesh Jain and Dhaval Dalal for Edelweiss Arbitrage Fund Regular Growth schemes respectively.

Granules India - Rising quarterly revenues and approval for PLI scheme

Granules India is an active pharmaceutical ingredients or API, intermediates, and finished dosages pharmaceuticals firm. It has seven manufacturing facilities for marketing and distribution to B2B and B2C segments. It exports to a host of countries in Europe, Africa, the US, and Canada.

In Q1FY23, its revenue rose 19.5% YoY to Rs Rs 1,024.crore. Granules has also got approval from the Department of Pharmaceuticals (DOP) under the Centre’s production-linked incentive scheme to manufacture dicyandiamide (DCDA). It will incur a capex of Rs 100 towards the  DCDA plant and the project is likely to be operational in two years.

Fund Managers who bought shares of Granules India

Fund managers who bought Granules India’s shares in July include Deepak Gupta for Invesco India Arbitrage Fund Growth, Milind Bafna for Aditya Birla Sun Life Pure Value Fund Growth, Sanjeev Sharma and Vasav Sahgal for Quant Small Cap Fund Growth, and Sailesh Jain for Tata Arbitrage Fund Regular Growth.

1 Comment
mayank609 Great information . It would be better if stock split and bonus information is also provided with it like

PDSL has split on 26August 2022
18 Aug 2022
Prabhudas Lilladhar released a Sector Update report for Mutual Funds News on 16 Sep, 2022.
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