Three large-cap companies wherein mutual funds have increased their stake the most over the last six months
09-Dec-2019 •Danish Khanna
Here are three large-cap stocks wherein fund managers have increased their stake in the last six months.
Part of Aditya Birla Group, it is the largest manufacturer of cement , ready-mix concrete and white cement in India. Buoyed by a number of organic and inorganic growth drives, including some major acquisitions like Jaypee cement in June 2017 (21.2 MMTPA) and Binani Cement in November 2018(6.25 MMTPA), the company has emerged as one of the leading cement producers across the world, with operations spanning across India, the UAE, Bahrain, Bangladesh and Sri Lanka. In another major move, the company has recently completed its acquisition of Century cement, resulting in its total consolidated capacity of 109.4 MMTPA. For this merger, the company took over a debt of Rs 3,000 crore. Post the Century merger, the company has 23 integrated plants, 27 grinding units and seven bulk terminals.
In terms of financials, UltraTech has reported an EPS growth of 63 per cent y-o-y for the quarter ended September 2019. Also in its recent conference call, the company has reported a planned capex of Rs 2,000 crore for FY20, which it expects to get covered from the cash flows. Its return on equity stood at 8.9 per cent in FY19. Currently, the stock trades at a PE of 38x which is above the five-year median PE of 32x.
Incorporated in 1994 by Srichand Hinduja, this fifth largest private bank of India had a loan book of Rs 1.9 lakh crore as of September 2019. Unlike other banks, its loan portfolio is evenly divided between corporate (45 per cent of total loans) and retail banking (55 per cent). Even in corporate lending, the bank follows a very diversified approach towards different sectors, with no sector accounting for more than 3.8 per cent of the total loans outstanding. The bank's CASA ratio stood at 41.5 per cent of the total deposits as of September 2019, signifying that the bank has access to funds at low cost because current accounts and savings accounts have low costs of borrowing as compared to other borrowings. Recently, it acquired Bharat Finance Inclusion, one of the largest microfinance lenders.
Operating 1,753 branches across India, the bank's gross and net NPA stood at 2.2 per cent and 1.1 per cent, respectively, as of September 2019. Net interest margins also improved to 4.1 per cent in September 2019 from its year-ago level of 3.8 per cent. The bank's stock has been a wealth creator for the investors, giving a return of 27 per cent compounded annually in the last ten years. However, in the last one year the stock has been down by more than 6 per cent and is trading at a price to book ratio of 3.1 times against the five year median of 3.4 times.
Motherson Sumi Systems
Founded by Vivek Chaand Sehgal in 1983, the company commenced its journey as an automotive-cable supplier to Maruti Suzuki (then Maruti Udyog). Over the years, it acquired 22 companies, thus accessing new customers, markets, new products and technologies.
Having a presence in over 40 countries, the company has diversified into other businesses, including car wiring, vision systems, modules and polymer products, technology and software, among others.
Its strategy, wherein no country, customer or component accounts for more than 15 per cent of its total revenue, has enabled it to navigate major pitfalls. For instance, Volkswagen, a leading customer, was found to be fudging the US emission norms in 2015. Even though Motherson's stock took a beating following the scandal, it was able to recover fast as Volkswagen accounted for just 12 per cent of revenue.
Due to the slowdown in automobile sector the stock price has taken a beating and is currently down by more than 15 per cent in the last one year. Its stock currently trades at a PE of 27x less than its five year median PE of 29.5x.
Disclosure: The intent of the article is not to recommend any specific stocks. If you wish to invest in any of the above-mentioned securities, please do thorough research.