Life insurance, health top buys for FPIs in March quarter
FPI inflows into Indian equities during the March quarter were the highest in a quarter in two years.
Life insurers, banks and healthcare companies have been high on their list while auto ancillary, housing finance and hotel companies were high on their selling list. ET takes a look at stocks where FPIs raised and reduced stake during the quarter within the BSE500 space:
SBI LIFE INSURANCE COMPANYNSE 0.41 %
CMP (Rs ): 636.65
Last 1-Year change: -16.5 per cent
FPIs have raised stake in the life insurer by 9.2 per cent in the quarter ended March. According to the latest shareholding pattern, Carlyle Group’s CA Emerald Investments holds 9 per cent in SBI Life. It had purchased the stake from BNP ParibasNSE -3.00 % Cardif SA. Jefferies in a recent note said exclusive distribution access with SBI and strong brand recall from its pseudo-sovereign identity give SBI Life a unique competitive advantage. Jefferies has a buy rating and target price of Rs 745 on the stock.
CMP (Rs ): 1,155.70
Last 1-Year change: -9.5 per cent
Endurance has seen a 5.7 per cent increase in FPI holding in the March quarter. Smallcap World Fund has raised its stake to 3.68 per cent from 3 per cent. The company is likely to benefit from new customer wins, stricter safety norms in India and increasing demand for aluminium content in passenger vehicles, said LKP Securities in a recent note, initiating coverage with a buy rating and target price of Rs 1,399.
UJJIVAN FINANCIAL SERVICES
CMP (Rs ): 327.35
Last 1-Year change: -19 per cent
Ardisia Limited, an affiliate of Creador LLP has raised its stake in Ujjivan to 9.96 per cent from 4.99 per cent at the end of December quarter, leading to overall FPI holding increasing to 13.71 per cent in the March quarter. Media reports earlier this month that HDFC Bank’s Digital Banking Head is likely to be new CEO of Ujjivan. The new CEO could drive some course correcton on liability strategy but HSBC sees higher execution risks in the near-tomedium term.
CMP (Rs ): 386.85
Last 1-Year change: -23.7 per cent
Motilal Oswal believes Laurus Labs is at the cusp of strong earnings growth over FY19-FY21, led by increased traction in its formulation business and changed product mix in the API segment. The recently awarded formulation contracts provide enough scope to break-even in FY20 and improve profitability, said Motilal Oswal.
CMP (Rs ): 237.4
Last 1-Year change: -32.6 per cent
YES Bank, which reported its first ever quarterly loss is one of the stocks where FPIs raised stake the most in the three months ended March, by 4.2 per cent. “The price had come down sharply and it had got clean chit on divergence, which may have led to FPIs raising shake. But the stock could fall 10 per cent on result and FPIs who had bought then will now be on the backfoot. Growth will be hampered going forward,” said Abhimanyu Sofat, head of research at IIFL.
DEWAN HOUSINGNSE -6.14 % FINANCE CORPORATION
CMP (Rs ): 143
Last 1-Year change: -77 per cent
Dewan Housing has seen FPI holding come down by 4.6 per cent in the three months ended March. The stock has fallen sharply amid liquidity crunch in the non-banking financial sector after the defaults by IL&FS last year. Billionaire investor Rakesh Jhunjhunwala has increased stake in Dewan Housing by 0.73 after cutting his stake in the company in the previous quarter. Recently, CRISILNSE -0.56 % downgraded rating on commercial paper of Dewan Housing, citing low visibility in raising funds and CRISIL’s belief that liquidity levels will remain subdued vis-a-vis earlier expectations.
ASHOK LEYLANDNSE -1.81 %
CMP (Rs ): 88.50
Last 1-Year change: -45.6 per cent
The notable change in Ashok Leyland’s shareholding pattern after the March quarter was that Kuwait Investment Authority Fund reducing stake to 1.55 per cent from 1.72 per cent. Emkay Global in a recent note said it expects Ashok Leyland’s revenue over FY19-FY21 to be muted at 4 per cent CAGR due to a reversal in the medium and heavy commercial vehicle cycle. EBITDA margin is likely to contract from 10.5 per cent in FY19 to 7.6 per cent in FY21 on lower scale, adverse mix, higher discounts and partial absorption of BS-VI costs, said Emkay.
CMP (Rs ): 1,706.75
Last 1-Year change: -35.14 per cent
Shareholding of FPIs reduced by 2.25 per cent in the December quarter to 5.75 per cent in the March quarter. MF holding declined to 0.15 per cent from 1.21 per cent at the end of December quarter. Analysts believe that operating profit margins are likely to fall going forward owing to a steep rise in prices of key raw material needle coke and fall in price of graphite electrodes-both UHP grade and HP grade.
CMP (Rs ): 2604.15
Last 1-Year change: -30.7 per cent
Weak rural demand, sharp increase in cost and aggressive competitio are key headwinds for the company, said Nomura. The brokerage has a neutral rating and has lowered target price to Rs 2,725 from Rs 2,802. “We believe two-wheeler industry growth will remain slow going ahead. A further rise in regulatory costs is likely to impact demand and margins in FY21,” said Nomura.
JET AIRWAYS (INDIA)
CMP (Rs ): 167.3
Last 1-Year change: -73 per cent
Financial woes have eroded investor confidence in the airline over the recent months culminating into a temporary shutdown. FPI holding in the airline halved to 1.47 per cent from 3.2 per cent at the end of the December quarter.