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    MFs bet big on value, recovery themes

    Synopsis

    Here are some stocks bought by leading asset managers.

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    With benchmark indices trading at all-time highs with lofty valuations, fund managers believe there are a couple of ways to pick good stocks.
    With benchmark indices trading at all-time highs with lofty valuations, fund managers believe there are a couple of ways to pick good stocks. One is to follow the value investing principle. The other one is to buy shares of companies where there are signs of an operational recovery. These factors have played an important role in fund managers’ stock picking in November, when lump sum flows into the industry slowed while SIPs remained robust. Here are some stocks bought by leading asset managers:

    Shree Cement

    CMP: Rs 20,373
    Market-Cap: Rs 73,507 crore
    Bought by: Aditya Birla SL MF

    Among the top five players by capacity, Shree Cement has consistently shown its distinctness in its operations through timely expansion and cost control. A combined impact of these two factors has helped the company record highest Earnings before Interest Depreciation Tax and Amortisation (EBITDA) on selling a tonne of cement even in the second quarter— which is seasonally not so favourable in terms of business. It recorded EBITDA per tonne of Rs 1,452. Besides, the company also recorded growth of over 10% in volumes in the September quarter when volumes of most large players fell. Also, its realisations improved by 9% on year-on-year comparison in the September quarter. Most importantly, the company announced its plans to raise Rs 2,000 crore through the Qualified Institutional Placement (QIP) route. The proceeds will be invested in expanding its capacity which presently stands at 38 MT.

    Maruti Suzuki

    CMP: Rs 7,221
    Market-Cap: Rs 218,413 crore
    Bought by: HDFC MF

    A key investment argument which has attracted the street’s interest in the stock of India’s largest car manufacturer is: the company’s worst phase of business cycle is over. Besides this, there are signs of recovery as the company recorded a 1% growth in its sales between October and November. The company also pruned its inventory levels which again helped in saving costs. In addition to this, the company raised its production by 4% in November after a gap of nine months which has been received favourably by analysts and managers. Also, Maruti has reduced aggression in giving out discounts as seen in October this year. This augurs well for the company’s thirdquarter sales of the present fiscal. Expectations of a IT rate cut may also trigger further interest in the stock. New launches, rural exposure, steady market share, strong franchise and a shift towards petrol are a few factors why managers have enhanced exposure in the stock.


    Hindustan Unilever (HUL)

    CMP: Rs 2,005
    Market-Cap: Rs 434,109 crore
    Bought by: ICICI Prudential MF

    Two aspects of HUL’s operations give confidence to analysts and money managers. One, the company has a diverse portfolio of close to fifteen categories. And in these categories, the company has dominant market shares. Second, focusing on premium products in these categories, the company has been able to expand its margins even in times of a slowdown. This has been promptly recognised by savvy fund managers. Besides this, the company’s wide distribution presence of eight million outlets and high return on equity of over 80% serve as solid arguments justifying the attractiveness of the company’s stock. Analysts have raised their earnings’ estimates for the company. Between FY19 and FY22, they foresee the company’s earnings per share (EPS) grow in the compounded annual growth rate (CAGR) range of 18-21%.

    Bajaj Finance

    CMP: Rs 4,070
    Market-Cap: Rs 244, 927 crore
    Bought by: IDFC MF

    A favourite of many fund managers, the company has been one of the biggest gainers in the NBFC crisis as it continues to gain market share and weaker NBFCs continue to disappear. This 31-year old company has 944 urban, 951 rural and over 97,000+ distribution outlets, an unmatched network. With more than 50 product lines spread across consumer financing, SME financing, commercial, rural and mortgage lending. Analysts expect the company to maintain its growth trajectory, with deepening geographical penetration and increasing repeat business.

    Sun Pharma

    CMP: Rs 439
    Market-Cap: Rs 105,244 crore
    Bought by: HDFC Mutual Fund

    A value pick on the list of many fund managers who believe the worst is over for the company, that ranks No. 1 in India and has a 9.2% market share. The company reported a consolidated profit of Rs 1,064.09 crore for the September quarter, in line with analysts’ estimates. With product development across geographies is more or less uniform, the management continues to focus on cost saving exercise for the generic business in response to the changing industry dynamics that is likely to improve margins. It may also look at developing specific products for China and Japan in the near future. The big challenge is its investment of $1.5 billion in US specialty, for which the breakeven would take long as the company has already lined up more investments.




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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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