Midcaps MFs bought when markets tanked
As FIIs dumped blue-chips in the December 2015 quarter, fund managers of domestic mutual funds were accumulating select stocks in the mid- and small-cap space.
By Rajesh Mascarenhas, ET Bureau |
As foreign institutional investors (FIIs) dumped blue-chips in the December 2015 quarter, fund managers of domestic mutual funds were accumulating select stocks in the mid- and small-cap space.
ET has identifi ed a handful of midcap stocks in which mutual funds have increased their stake by 2-6% in the October-December 2015 period. The underlying theme of these companies is growth. Analysts said these companies are in a position to withstand the impact of a global slowdown.
FAG Bearings
An auto parts supplier, it was the darling of domestic funds in the December 2015 quarter. Funds increased their stake in the company to 25.65% from 19.34%. Analysts are bullish on Fag Bearings as they anticipate huge pent-up demand going forward. “We expect FAG to be a strong beneficiary of the cyclical and structural uptick in auto and industrial sectors,” said Shradha Sheth, analyst at Edelweiss.
PNC infratech
The company is a solid bet on the infra boom, according to analysts. “We assign Rs 554 per share to standalone EPC business at 15 times FY2018 EPS and BOT business at Rs 152 per share on a free cash flow basis at a 15% cost of equity,” said Adhidev Chattopadhyay, analyst, Elara Capital.
Ramco Cement
The mutual fund holding in Chennaibased Ramco Cement went up by nearly 6% in the December 2015 quarter. The stock has risen 6% in the last three months despite weak markets and is currently trading at 15.8 times its FY2017 estimated earnings.
VIP industries
VIP is one of the stocks that held their ground in the turmoil in midcaps. It gained 4% in three months against the 7% fall in Sensex. “VIP is expected to log 17% CAGR in sales and 25% EBITDA CAGR over FY2015-17,” said Shradha Sheth, analyst, Edelweiss.
Jubilant Foodworks
The stock is down 17% in a month and trades at 39 times FY2017 estimated EPS. Analysts see this stock as an urban cycle story driven by revival in discretionary spend due to boost from the 7th Pay Commission and lower interest rates and boost in household savings. “We value it at 43 times, a 50% premium to consumer companies, considering growth opportunity,” said Ruchita Maheshwari of IIFL.
ET has identifi ed a handful of midcap stocks in which mutual funds have increased their stake by 2-6% in the October-December 2015 period. The underlying theme of these companies is growth. Analysts said these companies are in a position to withstand the impact of a global slowdown.
FAG Bearings
An auto parts supplier, it was the darling of domestic funds in the December 2015 quarter. Funds increased their stake in the company to 25.65% from 19.34%. Analysts are bullish on Fag Bearings as they anticipate huge pent-up demand going forward. “We expect FAG to be a strong beneficiary of the cyclical and structural uptick in auto and industrial sectors,” said Shradha Sheth, analyst at Edelweiss.
PNC infratech
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The company is a solid bet on the infra boom, according to analysts. “We assign Rs 554 per share to standalone EPC business at 15 times FY2018 EPS and BOT business at Rs 152 per share on a free cash flow basis at a 15% cost of equity,” said Adhidev Chattopadhyay, analyst, Elara Capital.
Ramco Cement
The mutual fund holding in Chennaibased Ramco Cement went up by nearly 6% in the December 2015 quarter. The stock has risen 6% in the last three months despite weak markets and is currently trading at 15.8 times its FY2017 estimated earnings.
VIP industries
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VIP is one of the stocks that held their ground in the turmoil in midcaps. It gained 4% in three months against the 7% fall in Sensex. “VIP is expected to log 17% CAGR in sales and 25% EBITDA CAGR over FY2015-17,” said Shradha Sheth, analyst, Edelweiss.
Jubilant Foodworks
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The stock is down 17% in a month and trades at 39 times FY2017 estimated EPS. Analysts see this stock as an urban cycle story driven by revival in discretionary spend due to boost from the 7th Pay Commission and lower interest rates and boost in household savings. “We value it at 43 times, a 50% premium to consumer companies, considering growth opportunity,” said Ruchita Maheshwari of IIFL.
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