MFs raise holdings in Indian Hotels, Triveni Turbine & CUB, among others

Mid- and small-cap shares have been caught in a bear grip since January 2018 but that has not stopped domestic fund managers from increasing their holdings in select investment bets. There are several stocks where mutual fund managers have raised stakes in the last six quarters despite the slump in stock prices. Some of the stocks that have been popular with mutual funds are Indian Hotels, Triveni Turbine, City Union BankN, VRL Logistics and Aditya Birla Fashion, among others. 

For instance, mutual funds have increased stakes in Indian Hotels consistently for the last six quarters from 13.05 per cent to 25.42 per cent as analysts expect the stock price to go up by up to 36 per cent in the next one year. Indian Hotels’ earnings per share (EPS) has risen 165 per cent in one year. “With the expected tailwind in the sector, IHCL being the leader, should be a key beneficiary of the turnaround,” said Rashesh Shah, analyst at ICICI Securities. “Additionally, focus on cost rationalisation and an asset light focus are strong positive for the company.” 

In Triveni Turbine, domestic funds have increased their stake from 6.23 per cent to 15.82 per cent in the last six quarters. The stock has outperformed the BSE Smallcap index by 12 per cent so far this year. Though the stock is richly valued now, analysts justify the premium valuation considering its growth. “Healthy earnings growth, margin profile, return ratios and a lean working capital cycle will support Triveni Turbine’s valuations,” said ChiragMuchhala, analyst, Nirmal Bang.

Similarly, mutual funds have raised their stake in VRL Logistics, Supreme Industries and Crompton Greaves Consumer consistently in the last six quarters.

Fund managers like City Union Bank due to its granular loan book, sustainable performance and healthy return metric; while strong margin performance across segments makes Aditya Birla Fashion more attractive to them. 

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