Retail investors often pay close attention to the preferences of mutual funds and foreign portfolio investors, as they are considered the ‘smart money’ that can influence and move financial markets. In this edition of Chart of The Week, we look into the Q1FY24 shareholding data for companies with the highest increases in foreign institutional investment (FII) holdings QoQ. We also identify companies with an increase in their domestic institutional investment (DII) holding% with the help of a screener.
According to Trendlyne's FII/DII activity data, FIIs have been net buyers in Indian equities since March 2023 and MFs have followed suit since June. In the above screener, we have companies from the banking & finance, diversified, general industrials, retailing and hotels, restaurant & tourism sectors. Notable companies in the list include HDFC Asset Management Company, Devyani International, Timken India, Craftsman Automation, Vedant Fashion and Aditya Birla Capital.
We begin with the banking & finance sector, where we find two companies: Shriram Finance and HDFC Asset Management Company. Shriram Finance has the highest FII holding increase of 5.6 percentage points in Q1FY24. Mutual funds have also increased their stake in the company by 2.8%. Shriram’s stock price rose by 28.8% in the past quarter. Shriram Finance is currently the largest retail NBFC in the country after the merger of Shriram Transport Finance Co and Shriram City Union Finance. According to Motilal Oswal, the merger brings benefits like increased product sales and financial strength.
Notable FII investors in Shriram Finance are T.Rowe Emerging Markets (1% stake), Vanguard (1% stake), and Government of Singapore (3.3% stake). The MF holding jump is mainly due to the investments made by Kotak Mahindra (1.4% stake).
HDFC Asset Management, on the other hand, has seen an increase of 5.5 percentage points in FII holdings and 4.3 percentage points in MF holding in Q1FY24. Its stock price rose by 26.9% in the past quarter. The key FII investor in this case is SmallCap World Fund (0.4% stake), while the major DIIs are SBI Mutual Fund (7% stake), and Nippon Life India Trustee (1.8% stake).
Moving on to the hotels, restaurant & tourism sector, we have two major companies, namely Devyani International and Sapphire Foods. Devyani International’s FII holdings surged by 2.3% in Q1FY24.
Sapphire Foods stands out with the highest FII holding increase of 3.2 percentage points in its sector and an MF holding rise of 1.7 percentage points in Q1. The FII holding rise is mainly due to investments by Fidelity Funds (0.4% stake) and Kotak Funds (0.2% stake). Similarly, the MF holding increase is led by Nippon India (1.4% stake) and Franklin India (0.4% stake). According to ICICI Securities, despite challenges in Q1FY24, the company’s revenue is expected to grow by 16.5% QoQ. Both KFC and Pizza Hut (PH) India faced sluggish demand during Q4FY23, with PH India declining by 2% in SSSG (Same Store Sales Growth), while KFC saw a 2% increase.
In the auto & auto components sector, Craftsman Automation has the highest FII holding increase of 3.3 percentage points in Q1FY24. The investment by Goldman Sachs (1.2% stake) contributed to this surge. The stock has surged 49% in the past quarter. According to Motilal Oswal, the company has diversified its business and reduced its dependence on specific segments. The recent acquisition of DR Axion boosted its presence in passenger vehicles (PVs) and decreased reliance on commercial vehicles (CVs). It has also entered the electric Vehicle (EV) segment.
As for Timken India, a general industrials major, it has the highest MF holding increase of 5.2% in the past quarter, the highest in its sector. The MFs that invested in the company are SBI Tax Advantage Fund (4.7% stake), Nippon India (0.8% stake), and Aditya Birla Sun Life (1.2% stake). Analysts predict that significant capital investments over the next three years will serve as the main catalyst for the stock’s growth. These investments will focus on various projects, including the development of Vande Bharat trains, freight wagons, electric locomotives, and other initiatives.
In the retail sector, Aditya Birla Capital’s FII and MF holdings have increased by 3.2% and 0.37% respectively. Vedant Fashions’ FII and MF holdings also rose by 2.9% and 3.9% respectively in the past quarter. Similarly, the consumer electronics major, Dixon Technologies, surged by 3% and 1.8% in FII and MF holdings respectively. The software & services major, KPIT Technologies, saw an increase of 2.5% in FII holdings in the same period.
Check out the full screener here.
