In December, the Nifty 50 closed at an all-time high of 21,731 and delivered an impressive 7.9% return. This surge was fueled by increased rural spending on account of the harvest and wedding seasons, which boosted consumption-driven spending overall. 

Despite higher interest rates, the banking sector saw 16.5% credit growth YoY. The government’s election-driven spending has also driven infra, cement and steel stocks higher. 

Indian equity mutual funds’ SIPs recorded a net inflow of Rs 17,000 crore in December, with sectoral funds registering the highest inflow of Rs 6,005 crore, followed by small-cap stocks at Rs 3,857 crore. As a result, Nifty Midcap 100 and Nifty Smallcap 100 rallied by 7.6% and 6.9%, respectively. The month also saw the launch of 14 new open-ended schemes, which together received funding of Rs 7,812 crore.

Bharat Heavy Electricals’ MF holdings increase to 2,146 lakh shares in December

BHEL: Order wins are key to growth  

Bharat Heavy Electricals (BHEL), a general industrial firm, is into power plant equipment manufacturing for the engineering, industrial, and construction sector. It also produces complex electrical equipment for the power, oil & gas, defence, and aerospace sectors.

Recently, BHEL won orders worth Rs 15,000 crore from NLC India for the construction of three 800 MW thermal power plants. BHEL is also diversifying into defence and railways. BHEL has won a Rs 13,000 crore order for Vande Bharat trains. BHEL and Titagarh Rail Systems are set to supply 80 Vande Bharat train sets, along with a service contract of 35 years. The company is also expecting a naval gun order worth around Rs 3,000 crore from the defence ministry. 

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 coming years. The company’s total order book stood at Rs 1,15,000 crore in Q2FY24. 

Fund managers who bought shares of BHEL

Fund managers who added shares of BHEL to their portfolios include Vasav Sahgal and Ankit A. Pande for Quant Tax Plan Fund, and Nimesh Chandan and Siddharth Chaudhary for Bajaj Finserv Flexi Cap Fund. Fresh buys were done by Sharwan Kumar Goyal and Ayush Jain for UTI Nifty200 Momentum 30 Index Fund, Shriram Ramanathan and Gautam Bhupal for HSBC Aggressive Hybrid Fund, and Abhishek Bisen for Kotak Balanced Advantage Fund.

Bandhan Bank: Shifting towards secured loans 

Bandhan Bank (BANDHAN) started its journey as a microfinance institution based in  West Bengal, but has since grown into a major banking and finance player with a pan-India presence. The bank currently has a loan book of Rs 1,07,630 crore, mainly serving MSMEs, micro-entrepreneurs, and retail borrowers.

Bandhan Bank aims to increase its secured loan books from the current 44% to 50% by FY26. It is expected to see a 20-25 bps increase in the cost of funds in FY24. Net interest margins are projected to moderate around 7-7.5%. However, the bank’s ongoing digital transformation and a reduction in network expansion to around 100 branches per year are expected to lower expenses. Its asset quality has seen higher slippages in the past two quarters. These slippages have been partly offset by better collection efficiency.

Fund managers who bought shares of Bandhan Bank

Fund managers who added shares of Bandhan Bank to their portfolios include Sanjeev Sharma and Vasav Sahgal for Quant Active Fund, and Kedar Karnik and Jay Kothari for DSP Equity Savings Fund. Fresh buys were done by Samir Rachh and Kinjal Desai for Nippon India Small Cap Fund, Raj Mehta and Rajeev Thakkar for Parag Parikh Flexi Cap Fund and Mahesh Chhabria and Neelotpal Sahai for HSBC Equity Savings Fund.

RBL Bank: Unsecured loans sustain margins 

RBL Bank (RBLBANK), headquartered in Mumbai, is a banking and finance firm specializing in retail loans and credit cards. It is one of the largest credit card issuers in India with over 5% market share. The bank caters to 14.3 million customers through 528 branches. Around 58% of these branches are located in metro areas. The bank has a strong footprint in Maharashtra, Karnataka and Tamil Nadu, with a loan book size of Rs 76,324 crore. 

Credit cards are the key revenue driver for RBL Bank, making up nearly 40% of its loan book. The bank has a credit-to-deposit ratio of 85% and aims to increase it further. However, the majority of RBL Bank’s deposits would be repriced in Q2FY24, leading to rising costs of funds and moderate yields. While the pressure on margins has affected the bank's profitability, stable NPAs have led to lower provisioning requirements. The management has guided for a credit growth of 20% CAGR and net interest income growth of 23% in FY24-25 (currently at 4.8%).

Fund managers who bought shares of RBL Bank

Fund managers who added shares of RBL Bank to their portfolios include Sanjeev Sharma and Vasav Sahgal for Quant Small Cap Fund, Laukik Bagwe and Rohit Singhania for DSP Dynamic Asset Allocation Fund, Manish Lodha and Abhinav Khandelwal for Mahindra Manulife Large & Mid Cap Fund and Harsha Upadhyaya and Abhishek Bisen for Kotak Balanced Advantage Fund. Fresh buys were done by Sanjay Chawla and Miten Vora for Baroda BNP Paribas Flexi Cap Fund.

Sonata Software: International venture to drive revenue growth

Sonata Software is an IT consulting and software company providing software products, development services, IT consulting, and business solutions, with a focus on digital transformation. Through alliances with global tech leaders such as Microsoft, Oracle and IBM, the company stays updated on new technologies, enabling it to offer innovative solutions for varied clients.

Sonata Software recently integrated with Quant Systems, which has unlocked partnership opportunities worth $150 million in the healthcare, life sciences, and BFSI verticals. The firm has also expanded its major deal pipeline by 38%. It expects a 25% revenue contribution from AI through Harmony. The management plans to expand its International IT Services division, with a revenue target of $1,500 million by FY26E, an increase of 118% from FY23. It is also focused on maintaining EBITDA margins of around 20%, a notable increase from the 11.5% in Q2FY24.

Fund managers who bought shares of Sonata Software

Fund managers who added shares of Sonata Software to their portfolios include Meeta Shetty for Tata Digital India Fund, Shreyash Devalkar and Karthik Kumar for Axis Nifty Smallcap 50 Index Fund, Himanshu Mange for Nippon India Nifty Smallcap 250 Index Fund, Swapnil Mayekar for Motilal Oswal Nifty Smallcap 250 Index Fund. Fresh buys were done by Piyush Baranwal and Ramesh Mantri for Whiteoak Capital Large & Mid Cap Fund.

Minda Corporation: EV parts and new product launches help growth

Minda Corporation, a manufacturer of automobile components like mechatronics, security systems, die casting, telematics, and instrument cluster sensors serves both the passenger and commercial vehicle sectors. While its manufacturing base is in India, the company caters to clients across Germany, China, Japan, Poland and Mexico.

Minda Corporation has won orders worth Rs 3,500 crore, with nearly 30% related to electric vehicles (EV), including Rs 700 crore for battery chargers. Its new product launches like smart key lock sets are gaining traction and helping revenue growth. Its smart key vertical received orders worth Rs 450 crore in Q2FY24. Minda is also expanding margins through product premiumization, streamlining fixed costs, and localization of component procurements.

Acquiring new customers and adding new products are expected to help Minda Corporation’s export revenue. The management expects the firm’s revenue to grow by 23% in FY24-25,  with a 150 basis points expansion in EBITDA margins.

Fund managers who bought shares of Minda Corporation

Fund managers who added shares of Minda Corporation to their portfolios include Sanjeev Sharma and Vasav Sahgal for Quant Small Cap Fund, and Himanshu Mange for Nippon India Nifty Smallcap 250 Index Fund. Fresh buys were done by Dhaval Gala and Dhaval Joshi for Aditya Birla Sun Life Transportation and Logistics Fund, Sachin Relekar and Nishita Shah for Bandhan Infrastructure Fund and R Sivakumar and Nitin Arora for Axis Retirement Savings Fund.

Mankind Pharma's MF holdings stand at 299 lakh shares in December

Mankind Pharma: India-specific business eliminates competition

Mankind Pharma (MANKIND) is a leading Indian pharmaceutical manufacturer, with 91% of its revenue derived from branded formulations. The firm has a presence in the anti-infectives, cardiac, gastro, and respiratory segments. It is also into consumer healthcare, offering products like condoms, emergency contraceptives and pregnancy tests. 

Mankind Pharma launched its IPO in April 2023, which was subscribed 15.3 times its issue size. As the fourth-largest pharmaceutical firm in India, Mankind Pharma's focus on the domestic market provides a barrier against intense competition in highly regulated international markets. It also shields the company from challenges like policy changes, currency risks and economic slowdowns. The firm is also looking to increase the revenue share of chronic drugs (diabetes and respiratory segments) by enhancing prescription volumes.   

Fund managers who bought shares of Mankind Pharma 

Fund managers who added shares of Mankind Pharma to their portfolios include Sohini Andani and Mohit Jain for SBI Bluechip Fund. Fresh buys were done by Sankaran Naren and Dharmesh Kakkad for ICICI Prudential Value Discovery Fund, Arjun Khanna and Harish Bihanifor Kotak Small Cap Fund, Pranav Gokhale and Shridatta Bhandwaldar for Canara Robeco Flexi Cap Fund and Taher Badshah and Hiten Jain Invesco India Focused 20 Equity Fund.

Sobha: Geo expansion and increased demand for premium segment to aid top line

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

Sobha has undertaken projects in Kerala, Delhi NCR, and Hyderabad. As a result, Bengaluru's sales share has dropped to 54% (from 65% a year ago) in H1FY24. Even though Bengaluru is a key region for the company, it aims to expand into other metros and Tier 1 cities. Sobha currently has a project pipeline of 8 million square feet outside of Bangalore. The escalating real estate values in metro cities also contribute to higher price realization. This diversification aligns well with the rising demand in the premium luxury segment.

Fund managers who bought shares of Sobha

Fund managers who added shares of Sobha to their portfolios include Pranav Gokhale and Shridatta Bhandwaldar for Canara Robeco Small Cap Fund,  Aditya Khemani and Amit Ganatra for Invesco India Mid Cap Fund, and Manish Gunwani and Kirthi Jain for Bandhan Small Cap Fund. Fresh buys were done by Mahesh Patil and Chanchal Khandelwal for Aditya Birla Sun Life Equity Hybrid '95 Fund, and Dhimant Shah and Rohan Korde for ITI Multi Cap Fund.

Kaynes Technology: New semiconductor plant to open better avenues

Kaynes Technology (KAYNES) is an IoT solution provider and integrated electronics manufacturer, offering a range of services in electronics system design and manufacturing (ESDM) services. The firm operates eight manufacturing facilities across India (in Karnataka, Haryana, Himachal Pradesh, Tamil Nadu, and Uttarakhand). The automotive sector is a major segment that provides nearly 34% of its revenue.

As the company mostly caters to other industrial businesses, its primary market is business-to-business (B2B). This segment has lower competition and higher margins. The firm also has an order book of Rs 3,462 crore, providing revenue visibility for two years.  Kaynes Technology has also launched a QIP for Rs 1,400 crore and has been acquiring smaller foreign firms to increase its international presence. According to Trendlyne Technicals, the stock has increased by 55.5% in the past six months.

Kaynes Technology plans to set up a Semiconductor Assembly and Testing (SAT) facility and a Printed Circuit Board (PCB) manufacturing plant at Rs 3,750 crore. The firm currently meets nearly 65% of its semiconductor requirements through imports.

Fund managers who bought shares of Kaynes

Fund managers who added shares of Kaynes Technology to their portfolios include Pranav Gokhale and Shridatta Bhandwaldar for Canara Robeco Small Cap Fund, and Sanjay Doshi and Kinjal Desai for Nippon India Power & Infra Fund. Fresh buys were done by Rajat Chandak and Sharmila D’mello for ICICI Prudential Flexicap Fund, Shreyash Devalkar and Hitesh Das for Axis Flexi Cap Fund, and Aditya Khemani and Amit Ganatra for Invesco India Mid Cap Fund.

Safari Industries: New manufacturing unit to boost margins

Safari Industries (SAFARI) is a textile and apparel manufacturing firm specialising in luggage and luggage accessories. The company operates production facilities in Mumbai and Halol, Gujarat, where it manufactures injection-molded and vacuum-formed plastic articles. However, the majority of its fabric products are imported.

Safari Industries recently expanded its distribution channels and has also improved inventory management by adding new stock-keeping units. The firm has also launched new products and implemented price hikes, while reducing discounts, resulting in increased price realizations. Also, the recent capacity addition of 1,25,000 units per month will help gross margins. This additional capacity will reduce the need for outsourcing and expand margins. The firm is expected to grow at a CAGR of 24% from FY24 to FY26.  

Fund managers who bought shares of Safari Industries

Fund managers who added shares of Safari Industries to their portfolios include Himanshu Mange for Nippon India Nifty Smallcap 250 Index Fund, Swapnil Mayekar for Motilal Oswal Nifty Smallcap 250 Index Fund, Harsh Sethi for SBI Nifty Smallcap 250 Index Fund, and Kayzad Eghlim and Nishit Patel for ICICI Prudential Nifty Smallcap 250 Index Fund. Fresh buy was done by Nemish Sheth for Bandhan Nifty Smallcap 250 Index Fund.

Mahanagar Gas: Lower CNG prices to enhance margin 

Mahanagar Gas (MGL) is a city gas distribution utilities firm operating in Mumbai, its adjoining areas, and the Raigad district of Maharashtra. Nearly 70% of the company’s revenue is from CNG sales. The firm has 319 CNG stations under its banner.

The acquisition of Unison Enviro (UEPL) for Rs 531 crore has helped the firm expand its geographical footprint. UEPL holds gas distribution rights across Ratnagiri, Chitradurga & Devangere, and Latur & Osmanabad. In a move aimed at benefitting consumers, MGL reduced CNG prices by Rs 3 per kg in October. Although this price reduction will impact the company's top line, the expected increase in CNG volumes is likely to offset the impact. Lower input costs for CNG are expected to improve its margins. 

Mahanagar Gas has also launched card-based schemes for CNG users to expand its market share. The government plans to raise the share of natural gas in India’s energy mix to 15% by 2030, up from the current 6%. This is expected to boost MGL’s prospects. 

Fund managers who bought shares of Mahanagar Gas

Fund managers who added shares of Mahanagar Gas to their portfolios include Kedar Karnik and Jay Kothari for DSP Equity Savings Fund, Shreyash Devalkar and Karthik Kumar for Axis Nifty Smallcap 50 Index Fund and Himanshu Mange for Nippon India Nifty Smallcap 250 Index Fund. Fresh buys were done by Amit Premchandani for UTI Value Fund and Nemish Sheth for Bandhan Nifty Smallcap 250 Index Fund