Fund managers go shopping for power, infra, NBFC midcaps & smallcaps

With retail investors preferring fi nancial savings to physical savings, money continued to pour into equity mutual funds in March. As a result, fund managers continued to hunt for mid- and small-cap stocks. Post improvement in earnings of metals and oil and gas sectors, fund managers of large asset management companies have focused on key infrastructure themes, auto and NBFC.

Here is a list of top-five companies in which fund managers have taken reasonably good exposure in March.

PNC Infratech | Rs 138
Robust order book, relatively lighter balance sheet and superior and timely execution capabilities have ensured sustained interest in the stock of roads and construction company PNC Infratech. In the coming quarters, the company’s execution of roads projects is expected to pick up. The company’s construction business is expected to make larger contribution to its road projects. It has an order book of about Rs 5,500 crore, which gives good revenue visibility.

Pokarna | Rs 1,352
Pokarna is one of the leading manufacturers of granite blocks and slabs. It also manufactures quartz (engineered stone slabs). Close to 85% of its total sales come from exports. It exports to more than 50 countries with the US contributing about 53% of overall sales. The company is expected to benefit from two key factors: one is recovery in the US construction industry, and increasing preference for Quartz in the construction industry across the US and Europe.



Power Finance | Rs 163
Several triggers have helped the strong momentum in the stock of PFC, the key lender to power companies. The repayments from state electricity boards to the company have almost halved thanks to the issuance of Ujwal Discom Assurance Yojna (Uday) bonds. The street expects better repayments from state power utilities, which accepted bill payment in older notes. This factor is expected to sustain interest in the company’s stock.

Edelweiss Fin | Rs 176
Edelweiss Financial has successfully transformed itself into an NBFC, with a healthy growth rate. In the credit space, it lends primarily to Tier-2 and Tier-3 companies, which helps it earn higher yields, with calculated risk. It is fancied by fund managers, due to its stake in the ARC business, where strong underwriting and effi cient management can lead to disproportionate returns, which is likely to boost profi tability in medium-to-long term.

Minda Inds | Rs 434.2
Minda Industries has expertise in automotive switches, lighting and horns. It has outperformed the industry average in all major divisions it operates in. Analysts were impressed with the performance for the last quarter despite the adverse effect of demonetisation on the industry especially in the two-wheeler segment. The government’s focus on agri and rural spending will give MIL an added advantage in the years to come as it primarily caters to the two-wheeler segment.