Mutual Funds News    
TREND | 15 Sep 2022
Where is the smart money moving in August 2022?
By Ketan Sonalkar

The month of August saw the Nifty 50 index rise by 3.5% to 17,760 levels, continuing an upward trajectory from the previous month. Many sectors bounced back after their recent fall in May, but became volatile this week after US inflation numbers have made another large interest rate hike from the US Federal Reserve increasingly likely. 

With the recent upward movement, mutual fund managers bought into sectors and stocks that are likely to be outperformers. Let’s look at some of the stocks which were bought by managers of mutual funds in August. These include a new-age tech stock, a bank, a cement company, and interestingly two small caps in the forging industry.

 

Zomato – Prospect of turning profitable drives fund manager interest

Zomato is among the new-age tech companies that listed on the stock exchange last year after certain norms were eased for tech companies. It made its stock market debut in July 2021 and saw its stock price fall to nearly a third of its listing price a year later in July 2022. However, over the last two months, the stock has seen an uptick and increasing buying interest from mutual fund managers.

This was largely driven by the fact that according to the Q1FY23 results, Zomato’s food delivery segment has hit break even with an adjusted EBITDA of 0. It registered an adjusted EBITDA loss of Rs 80 crore in Q4FY22. However, at the company level, it registered an adjusted EBITDA loss of Rs 150 crore in Q1FY23. Zomato continues to be a loss-making company and fund managers are bullish on the stock with hopes of the company becoming profitable sooner than anticipated.

Fund managers who bought shares of Zomato

The highest quantity of shares was bought by Mirae Asset AMC with additions to schemes by Neelesh Surana and Ankit Jain to Mirae Asset Emerging Bluechip Fund Growth, Gaurav Misra and Gaurav Khandelwal to Mirae Asset Large Cap Fund Regular Growth, Neelesh Surana to Mirae Asset Tax Saver Fund - Regular Plan-Growth, the next highest buying came from Nippon India AMC with largest allocation by Samir Rachh and Kinjal Desai to Nippon India Small Cap Fund - Growth scheme.

Punjab National Bank - Joins the list of PSU banks reducing their NPAs

Punjab National Bank (PNB) is a leading Indian public sector bank with a vast network of branches and ATMs across the country. The bank has historically been plagued with growing NPAs, but the last few quarters saw the bank making an effort to reduce these.

In Q1FY23, the gross NPA level of the bank came down to 11.27% from 14.33% in Q1FY22. In fact, the Q1FY23 ratio is the lowest in the last ten quarters. The total advances grew 10.2% YoY to Rs 800,177 crore in Q1FY23, and retail credit rose 10.8% YoY to Rs 146,321 crore. Though the NPA levels are still high, the management expects to make a substantial recovery in the coming quarters.

Fund managers who bought shares of Punjab National Bank

Shares of PNB were added by Bhavesh Jain and Dhaval Dalal to Edelweiss Arbitrage Fund Regular Growth, Sailesh Jain to Tata Arbitrage Fund Regular Growth, Milind Bafna to Aditya Birla Sun Life Pure Value Fund Growth, Devender Singhal and Satish Dondapati to Kotak Nifty PSU Bank ETF schemes respectively.

Max Healthcare - Regular operations pick up with the waning of pandemic

Max Healthcare is a hospital chain based in New Delhi. It operates hospitals in and around the national capital region, Punjab, Uttarakhand, and Maharashtra. 

With the waning of the pandemic over the past few quarters, the hospital chain saw its revenue rise from regular functions (non-Covid). In Q1FY23, regular revenues rose YoY by 17.8% to Rs 1,473 crore, while Covid-related revenues fell to Rs 2 crore in Q1FY23 from Rs 136 crore in Q1FY22. The company is also planning to add 2,800 beds on existing land bank over the next five years.

Fund managers who bought shares of Max Healthcare

Fund managers with growing interest in Max Healthcare include Abhiroop Mukherjee and Siddharth Bothra for Motilal Oswal Flexicap Fund Regular Plan Growth, Manish Gunwani and Kinjal Desai for Nippon India Growth Fund - Growth, Priya Ranjan and Roshi Jain for HDFC Flexi Cap Fund Growth and Chirag Setalvad and Priya Ranjan for HDFC Mid-Cap Opportunities Fund Growth schemes respectively.

Ambuja Cement - Sustained demand and capacity expansion make a strong foundation

Ambuja Cements is engaged in the manufacture and sale of clinkers and cement. It has a cement production capacity of around 31.5 million tonnes. It recently changed ownership with the Adani Group acquiring it from multinational cement giant Holcim.

The company’s expansion projects are on track. It is adding cement grinding capacity of 1.5mtpa at Ropar (Punjab), a brownfield clinker capacity of 3.2 mtpa at Bhatapara, and a cement grinding unit of 7mtpa at existing Sankrail and Farakka. The growing demand for cement in real estate and infrastructure projects is one of the key factors that fund managers are placing their bets on cement stocks.

Fund managers who bought shares of Ambuja Cement

Shares of Ambuja Cement were bought for their respective schemes by Hiten Shah for Kotak Equity Arbitrage Fund Growth, Abhiroop Mukherjee and Siddharth Bothra for Motilal Oswal Flexicap Fund Regular Plan Growth, Sanjeev Sharma and Vasav Sahgal for Quant Active Fund Growth and Vasav Sahgal and Ankit Pande for Quant Tax Plan Growth.

Sona BLW Precision Forging - Riding out the EV adoption in high gear

Sona BLW Precision Forgings is an Indian company, engaged in the manufacturing of precision forged bevel gears and differential case assemblies for automotive and other applications.

The company is establishing a significant presence in the EV (electric vehicle) space and in Q1FY23 won orders worth Rs 912.8 crore from a leading Indian EV and ICE two-wheeler manufacturer. It also won orders worth Rs 1,600 crore from an European PV and EV manufacturer. Its revenues from the EV segment have grown from 2% in FY20 to 29% in Q1FY23.

Fund managers who bought shares of Sona BLW Precision Forging

Fund managers who added shares of Sona BLW Precision Forging include Rama Iyer Srinivasan and Mohit Jain to SBI Multicap Fund Regular Growth, Dinesh Ahuja and Dinesh Balachandran to SBI Balanced Advantage Fund Regular Growth, Sohini Andani and Mohit Jain to SBI Bluechip Fund Regular Growth and Kinjal Desai and Ashutosh Bhargava to Nippon India Multi Cap Fund - Growth schemes respectively.

LIC Housing Finance - Retail loans witness a massive growth

LIC Housing Finance is one of the largest Housing Finance companies in India and is a subsidiary company of LIC. 

In Q1FY23, 98% of disbursals were attributable to individuals and retail now contributes 82% to loans, as against 78% in Q1FY22. Disbursals were better as housing demand was robust. The company witnessed strong demand in southeastern, western, and southern regions. Management guided for 12-15% YoY growth in disbursals for FY23 while individual disbursals might also see similar growth. The outlook on construction finance is improving, and the current share of 5% may improve to 7-8% by year-end. 

Fund managers who bought shares of LIC Housing Finance

LIC Housing Finance saw buying by fund managers for respective schemes from Hiten Shah for Kotak Equity Arbitrage Fund Growth, Sailesh Jain for Tata Arbitrage Fund Regular Growth, Priyanka Khandelwal and Ihab Dalwai for ICICI Prudential Large & Mid Cap Fund Growth, and Anant Laddha and Priya Ranjan for HDFC Banking & Financial Services Fund Regular Growth

Tata Consumer Products - Starbucks bounces back post-pandemic

Tata Consumer Products is one of the leading companies of the Tata Group, with a presence in the food and beverages business in India and internationally. It is the second largest tea company globally and has leadership in many markets.

In Q1FY23, Tata Starbucks recorded revenue growth of 238% YoY for Q1FY23, led by normalised store operations. It opened 7 new stores and entered four new cities, taking the total store count to 275. It also introduced new products such as plant-based protein products under Tata Simply Better, multiple variants of Tata Soulfull, and spices for South India under Tata Sampann, as well as honey and spreads under its Himalayan brand in Q1FY23.

Fund managers who bought shares of Tata Consumer Products

Shares of Tata Consumer Products were bought for respective schemes by Priya Ranjan and Rahul Baijal for HDFC Top 100 Fund Growth, Nippon India Tax Saver (ELSS) Fund - Growth, Kinjal Desai and Ashutosh Bhargava for Nippon India Large Cap Fund - Growth and Mahesh Patil and Kunal Sangoi for Aditya Birla Sun Life Focused Equity Fund Growth.

Kirloskar Pneumatic - Entry into new segment aids growth

Kirloskar Pneumatic manufactures air, refrigeration and gas compressors and systems that account for 95% of sales. It serves diverse industries such as oil, gas, steel, cement, food processing, air separation and automobiles. Its manufacturing facilities are located in Pune and Nashik.

KPCL’s entry into screw air compressors significantly improved the addressable market over the past two years. Management has indicated improving market share of air compressors. In a meeting with analysts, the management guided for a Rs 4,000–5,000 crore market for air compressors, up from their earlier target of Rs 3,300 crore.

Fund managers who bought shares of Kirloskar Pneumatic

Fund managers who added shares of Kirloskar Pneumatic include Venugopal Manghat and Vihang Naik to L&T Emerging Businesses Fund Regular Growth, R. Janakiraman and Sandeep Manam to Franklin India Smaller Companies Fund Growth, Vishal Gajwani and Nitesh Jain to Aditya Birla Sun Life Small Cap Fund Growth and Sonam Udasi and Abhinav Sharma to Tata Flexi Cap Fund Regular Growth schemes respectively.

 

Rolex Rings - Strong and sustained exports with rising orders

Rolex Rings is among the leading manufacturers of forged and machined components in India. Over the past four decades, it has garnered expertise in manufacturing transmission components, engine components, chassis components, exhaust system components, and bearing rings.

The management said that they continue to receive enquiries from existing as well as new customers as they try and de-risk their supply chains in both bearing rings as well as auto components. They say that they have still not witnessed any perceptible impact of the slowdown in the Americas or Europe, and have increased engagement with their customers to maintain revenue visibility.

Fund managers who bought shares of Rolex Rings

This small cap company saw buying interest from Vinit Sambre and Jay Kothari for DSP Small Cap Fund Regular Plan Growth, Satyabrata Mohanty for Aditya Birla Sun Life Equity Advantage Fund Growth, Dhaval Shah and Satyabrata Mohanty for Aditya Birla Sun Life Equity Hybrid '95 Fund Growth and Aniruddha Naha and Vivek Sharma for PGIM India Midcap Opportunities Fund Regular Growth schemes respectively

HDFC AMC - Revamped fund management  takes charge post CIO’s exit

HDFC AMC, part of the HDFC Group, is among the largest and most profitable asset management companies in India. It had 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 strengths. The company, however, has been losing its market share in the past few years. Over the last two months the AMC also had a change in the leadership. One of its longest serving fund managers and CIO Prashant Jain resigned and Chirag Setalvad has taken over. 

HDFC AMC was impacted by the ban on new NFOs (new fund offerings) by AMCs for a few months, which was lifted on Jul 1, 2022. With the ban lifted, it has applied for a slew of NFOs, including ETFs which have become popular with investors in recent times.

Fund managers who bought shares of HDFC AMC

Shares of HDFC AMC were added to their respective schemes by Priyanka Khandelwal and Anish Tawakley to ICICI Prudential Bluechip Fund Growth, Manish Gunwani and Kinjal Desai to Nippon India Flexi Cap Fund Regular Growth, Trideep Bhattacharya and Sahil Shah to Edelweiss Mid Cap Fund Growth and Priyanka Khandelwal and Anish Tawakley to ICICI Prudential Business Cycle Fund Regular Growth

Prabhudas Lilladhar released a Sector Update report for Mutual Funds News on 16 Sep, 2022.
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