In July, the benchmark indices Nifty 50 and Nifty 500 surged by 2.9% and 3.8% respectively. The Nifty 50 hit an all-time high of 19,991 briefly, supported by an upbeat earnings season. However, the broad index retreated from its peak as weak IT earnings,  India’s inflation imprint for July and China’s slowing economy weakened investor sentiments. India’s retail inflation in July reached a 15-month high of 7.4%. 

Domestic institutional investors sold equities worth Rs 1,184 crore in July 2023. The volatility in large-cap stocks has brought back the focus on small-cap growth stocks. The Nifty Smallcap 100, which shot up by 8% in July, saw the highest interest from fund managers.

Bharat Heavy Electricals’ MF holdings increase to 1,934.8 lakh shares in July

BHEL: Order wins are key to growth  

Bharat Heavy Electricals Ltd (BHEL) is a power plant equipment manufacturer engaged in the engineering, manufacturing, and construction of complex electrical equipment for the power, oil & gas, defence, and aerospace sectors.

BHEL won orders worth Rs 14,000 crore, including a Rs 13,000 crore order for Vande Bharat trains. BHEL and Titagarh Rail Systems, bagged an order to supply 80 Vande Bharat trainsets, along with a service contract of 35 years. BHEL is also expecting a naval gun order from the defence ministry, valued at around Rs 3,000 crore. With the expansion of thermal power plants, BHEL is expected to secure 15-20 GW thermal power plant contracts worth around Rs 1.5 trillion in the next couple of years. The company’s total order book stood at Rs 91,336 crore in Q1FY24. 

Fund managers who bought shares of BHEL

Fund managers who added shares of BHEL to their portfolios include Pankaj Tibrewal and Arjun Khanna for Nippon India Vision Fund, and Harish Krishnan and Abhishek Bisen for Kotak Balanced Advantage Fund. Fresh buys were done by Sanjeev Sharma and Vasav Sahgal for Quant Mid Cap Fund, Dhaval Gala and Dhaval Joshi for Aditya BSL PSU Equity Fund, and Richard D'souza for SBI PSU Fund.

Engineers India: Order book hinges on execution quality

Engineers India (ENGINERSIN) is a public sector undertaking with interests in consultancy and engineering of turnkey projects, particularly oil, gas and petrochemical industries in India and abroad.

Engineers India is trying to diversify into new growth verticals like coal gasification, defence and transportation. Its network in the oil & gas industry has been key to winning new projects. The firm has an order book of Rs 8,100 crore and another Rs 1,590 crore in the pipeline. Its consultancy margins are at 25% and turnkey margins at 2%. The company is expanding into the Middle East to take advantage of the oil & gas project hub. Also, India's planned increase in refining capacity from 250 metric tonnes per annum (mtpa) to 400 mtpa by 2030 will help Engineers India bag new orders.

Fund managers who bought shares of Engineers India

Fund managers who added shares of Engineers India to their portfolios include Mehul Dama for Nippon India Nifty Smallcap 250 Fund, Swapnil Mayekar for Motilal Oswal Nifty 500 Fund, and Arun Agarwal and Nirman Morakhia for HDFC S&P BSE 500 Index Fund. Fresh buys were done by Sanjeev Sharma and Vasav Sahgal for Quant Small Cap Fund, and Manish Lodha and Fatema Pacha for Mahindra Manulife Multi Cap Fund.

Orient Electric:  New products and advertising to drive revenue growth

Orient Electric (ORIENTELEC) specialises in the manufacturing of electric consumer durables like fans, home appliances, lighting, and switchgears. The firm holds a major presence in fans and lighting and is India’s largest fan exporter with a market share of 60%.

Orient Electric saw a setback in the second half of FY23 due to regulatory changes, distribution restructuring, and inflationary pressures. In Q1FY24, the firm almost emptied its non-rated fans inventory and saw an uptick in sales of rated fans. The softening of raw material prices has helped in margin expansion. Orient Electric’s expansion into South India, exploration of new overseas export destinations, new product launches and higher spending on advertisement and branding will aid revenue growth.

Fund managers who bought shares of Orient Electric

Fund managers who added shares of Orient Electric to their portfolios include Pankaj Tibrewal and Arjun Khanna for Kotak Small Cap Fund, Dhaval Shah and Bhupesh Bameta for Aditya BSL Multi Asset Allc, Yogesh Patil and Dikshit Mittal for LIC MF Small Cap Fund, and Arun Agarwal and Abhishek Mor for HDFC Nifty Smallcap 250 ETF. Fresh buys were done by Ihab Dalwai and Sharmila D’mello for ICICI Pru Large & Mid Cap Fund.

Aurobindo Pharma: US market aids top-line growth

Aurobindo Pharma (AUROPHARMA) is a key player in the manufacturing of active pharmaceutical ingredients (API), branded drugs and generic pharmaceuticals. US and European markets account for nearly 75% of its revenue. The firm has cumulatively received 613 drug approvals from the US Food and Drug Administration (USFDA) so far.

Aurobindo Pharma's Q1FY24 sales have been driven by the drug shortage in the US. Price erosion has also stabilised, leading to an improvement in the firm’s margins. Its newly launched injectables are gaining traction. In Q1FY24, Aurobindo Pharma launched five injectables and received approvals for 19 products, including 7 injectables. The firm is expected to grow at a 11% CAGR from FY24 to FY25, supported by healthy growth in the injectable business and biosimilars sector in the US and new product launches in the US and Europe. 

Fund managers who bought shares of Aurobindo Pharma

Fund managers who added shares of Aurobindo Pharma to their portfolios include Chirag Setalvad and Priya Ranjan for HDFC Mid-Cap Opportunities, and Neelesh Surana for Mirae Asset Tax Saver. Fresh buys were done by Dwijendra Srivastava and Ravi Gopalakrishnan for Sundaram Flexi Cap Fund, Sanjeev Sharma and Vasav Sahgal for Quant Business Cycle Fund, and Daylynn Pinto for Bandhan Sterling Value Fund.

Kansai Nerolac Paints: Revival in automotive sector and lower raw material costs to aid bottom line 

Kansai Nerolac Paints (KANSAINER) is into the manufacturing of paints for household and industrial applications. With nearly 45% of its revenue coming from Industrial clients, Kansai has a significant presence in this segment, particularly in the automotive sector. It has eight manufacturing plants and a 31,000-dealer network spread across India.

Under the leadership of the new MD, Anuj Jain, Kansai has made investments towards increasing its distribution network and customer outreach. The firm is also broadening its product portfolio in decorative paints. . In a bid to enhance brand visibility, Kansai is leveraging influencers and social media platforms. Revival in the automotive sector and lower raw material costs is expected to aid its growth. 

Fund managers who bought shares of Kansai Nerolac Paints

Fund managers who added shares of Kansai Nerolac Paints to their portfolios include Kinjal Desai and Amar Kalkundrikar for Nippon India Vision Fund, Ekta Gala for Mirae Asset Nifty Midcap 150 ETF, Swapnil Mayekar for Motilal Oswal Nifty Midcap 150 Idx, and Arun Agarwal and Nirman Morakhia for HDFC NIFTY Midcap 150 Index. Fresh buys were done by Sankaran Naren and Priyanka Khandelwal for ICICI Pru Bharat Consumption.
 

CSB Bank's MF holdings stand at 215.1 lakh shares in July

CSB Bank: Diversification into retail segment key 

CSB Bank (CSBBANK), owned by Fairfax, is one of the oldest private sector banks in India. Rooted in Kerala, the bank specializes in gold and small and medium enterprise (SME) lending. CSB Bank caters to 2.2 million customers through 654 branches. Around 58% of its branches have presence in semi-urban and rural areas. The bank has a major presence in South India and a loan book size of Rs 22,000 crore. 

CSB Bank is trying to diversify itself from gold loans and SME lending into retail banking. Gold-based lending has seen intense competition from nationalised banks, eroding profit margins. SME lending has also slowed down due to higher interest rates. CSB Bank is seeing healthy growth in retail segments on the back of strategic capex for new branches. The bank plans to open 100 new branches in FY24.

Fund managers who bought shares of CSB Bank

Fund managers who added shares of CSB Bank to their portfolios include Mehul Dama for Nippon India Nifty Smallcap 250, Jaiprakash Toshniwal for LIC MF Banking & Fin Serv Fund, Kayzad Eghlim and Nishit Patel for ICICI Pru Nifty SmCp 250 Idx and Arun Agarwal and Abhishek Mor for HDFC Nifty Smallcap 250 ETF. Fresh buys were done by R Srinivasan and Mohit Jain for SBI Magnum Global.

CreditAccess Grameen Bank: Driving growth through branch expansion and new loan products 

CreditAccess Grameen Ltd (CREDITACC) is a microfinance institution with a focus on women. It has its presence in 14 states and a branch network of 1,826. The NBFC has a gross AUM of Rs 21,814 crore, catering to 45.9 lakh customers. The firm has a strong rural presence and is expanding into non-microfinance businesses.

Higher customer additions and increasing ticket size are aiding its loan portfolio growth. CreditAccess reported AUM growth of 40% in Q1FY24. The firm's net interest margins are expected to moderate going forward. Its competitive lending rates (200-400 bps lower than its peers) play a key role in customer retention. Branch expansions have contributed to a wider outreach and customer additions. It plans to increase its AUM to Rs 50,000 crore in the next five years and expand its non-microfinance loan book to 25% from the current 10%. It also plans to add new categories like loan against property (LAP), vehicle loans and gold loans to non-microfinance loans. 

Fund managers who bought shares of CreditAccess Grameen Bank

Fund managers who added shares of CreditAccess Grameen to their portfolios include Shreyash Devalkar and Vinayak Jayanath for Axis Small Cap Fund, Sailesh Raj Bhan and Ashutosh Bhargava for Nippon India Multi Cap Fund, and Yogesh Patil and Preethi S for UTI Banking & Fin Svcs Fund. Fresh buys were done by Pranav Gokhale for Invesco India Mid Cap Fund and Manish Gunwani and Sumit Agrawal for Bandhan Financial Services Fund.

CDSL: Non-market linked revenue streams to cushion volatility

Central Depository Services (India) Ltd (CDSL) facilitates the holding of securities in dematerialised form and enables securities transactions. It is an intermediary for exchanges, clearing corporations, depository participants and investors. CDSL has more than eight crore investor accounts.

In Q1FY24, CDSL saw a 20% YoY increase in revenue, driven by higher annuity income and equity delivery volumes. Annuity income is non-market linked and helps maintain revenue streams in the down cycle. Although margins contracted by 183 bps to 53.9% in Q1FY24, revenue is anticipated to expand around 17% in FY24, with a projected EBITDA margin of 56.5%. The firm is also venturing into the insurance repository sector, subject to regulatory approvals. 

Fund managers who bought shares of Central Depository Services (India)

Fund managers who added shares of Central Depository Services (India) to their portfolios include Vishal Mishra and Shridatta Bhandwaldar for Canara Robeco Equity Taxsaver Fund, and Mehul Dama for Nippon India Nifty Smallcap 250 Fund. Fresh buys were done by Pranav Gokhale and Taher Badshah for Invesco India Smallcap Fund, Mohit Jain and Milind Agrawal for SBI Banking & Financial Svcs Fund, and Manish Gunwani and Sumit Agrawal for Bandhan Financial Services Fund.

Sobha - Higher price realisation, launch pipeline and geographical expansion help revenue growth

Sobha (SOBHA), which operates from Bangalore, is engaged in real estate construction, development, and sales. Sobha has developed townships, housing apartments and commercial real estate. It has also ventured into interior works, metal works and concrete products, providing backward integration.

Its 15 million square feet launch pipeline for the next two years provides revenue visibility. The escalating value of real estate in metro cities contributes to higher price realization. Sobha reported the highest-ever price realization of Rs 10,506 per square foot in Q1FY24. The firm's expansion into cities like Kochi and Gurugram has helped in diversification and margin expansion. Notably, heightened demand from the premium luxury segment has seen an uptick

Fund managers who bought shares of Sobha

Fund managers who added shares of Sobha to their portfolios include Anand Sharma and Sharmila D’mello for ICICI Prudential Housing Opps Fund, Mehul Dama for Nippon India Nifty Smallcap 250 Fund, and Arun Agarwal and Abhishek Mor for HDFC Nifty Smallcap 250 ETF. Fresh buys were done by Abhinav Sharma for Tata Infrastructure Fund, and Mohit Jain and Bhavin Vithlani for SBI Infrastructure Fund.

Amara Raja Batteries: Industrial and export segments propel near term growth

Amara Raja Batteries (AMARAJABAT), headquartered in Hyderabad, specialises in manufacturing lead-acid and lithium-ion storage batteries, and inverters. Its batteries find applications in the telecom sector, railways, automobiles, power control and home appliances. The firm is also into manufacturing lithium-ion batteries, contributing 4% of the total revenue.

Amara Raja's Q1FY24 revenue growth was aided by 15-16% YoY growth in the industrial and export segments. The firm reported QoQ margin contraction on account of increased insurance costs and higher trading content. It has managed to secure a stronger position in the automotive sector, and gain market share. However, muted demand in the segment is hampering revenue growth. The firm is seeing high traction in its industrial segments and has clocked 96% capacity utilisation in the quarter. Amara Raja is also investing Rs 3,000 crore for building a 500 MWh lithium-ion plant. 

Fund managers who bought shares of Amara Raja Batteries

Fund managers who added shares of Amara Raja Batteries to their portfolios include Pankaj Tibrewal and Arjun Khanna for Kotak Small Cap Fund, and Swapnil Mayekar for Motilal Oswal Nifty 500 Fund. Fresh buys were done by Sailesh Raj Bhan and Ashutosh Bhargava for Nippon India Multi Cap Fund, and Manish Gunwani and Kirthi Jain for Bandhan Emerging Businesses Fund.