The list comprises M&M Financial, Affle India, Amara Raja, CEAT,
, Escorts and Can Fin Homes. Individuals, who own up to Rs 2 lakh worth of shares, raised their stakes in these companies by at least 200 basis points during the June quarter.
While FPIs cut their exposure in M&M Financial by 223 basis points and mutual funds by 1.24 per cent in the June quarter, retail stake in the NBFC jumped by 335 basis points sequentially to 7.51 per cent from 4.16 per cent at the end of the March quarter. The scrip is down 27 per cent since April 1. Analysts have a ‘hold’ rating on the stock.
Small investors lapped up shares of M&M Financial in what Edelweiss later in its June quarter earnings report called the worst quarter for the NBFC in a decade. The brokerage said growth has been pushed back further and that earnings would remain under pressure.
“With a sharp spike in gross NPAs and restructured book, the stressed book increased to 35 per cent from 22 per cent in Q4, which raises concerns over the underwriting standards of the company. While the company has made adequate provisions, the same has resulted in 10 per cent erosion in net-worth with net NPL/ net-worth ratio also rising sharply to 35 per cent from 17 per cent in Q4,” said Phillip Capital, which suggesting a price target of Rs 160 on the stock.
In the case of Affle India, the stock valuations were deemed expensive, but the scrip has fallen 26 per cent since April 1, making it look attractive again. Small investors hiked stake in this stock by 206 basis points to 8.85 per cent from 6.79 per cent QoQ. FPIs and mutual funds were sellers.
Axis Securities expects Affle to report robust sequential revenue growth of 6.6 per cent in rupee terms. “Operating margins are likely to improve by 120 basis points,” it said and advised investors to watch out for the management commentary on mobile ad spends from clients across geographies.
Sharekhan in a report earlier this month maintained a price target of Rs 6,580 on Affle India. It said the recent acquisition of Jampp by the company is expected to be margin-dilutive initially, but should provide high-growth opportunities in the coming year.
“We forecast Affle’s revenue to grow at 54 per cent and earnings at 23 per cent over FY21-23,””it said. Analyst updates suggest a strong upside for this stock. The stock today trades at Rs 4,204 apiece.
saw a 600 basis points jump in retail stake to 14.34 per cent from 8.31 per cent. Kotak has a ‘sell’ rating on the stock, while some other brokerages have ‘hold’ ratings. The battery maker has shown its intention to scout for a partnership into Li-On cell manufacturing domestically. Analysts said the step is in the right direction, but wish to see specific action and contours of funding before changing their positions on the stock.
Retail investors hiked stake in CEAT by 273 basis points to 12.6 per cent from 9.87 per cent. The company’s strong revenue beat in the June quarter was somewhat offset by weak margins amid a spike in commodity prices.
Nirmal Bang has a ‘sell’ rating on the stock, as it finds the risk-reward unfavourable at current valuations. “With the capex intensity waning, we expect CEAT to be FCF-positive from FY23, provided it demonstrates a fine balance between capex and profitability,” Edelweiss said, which has a ‘hold’ rating on the stock.
RBL Bank, Escorts and Can Fin Homes are the three other stocks that saw strong retail buying in the June quarter. These stocks are down 10-11 per cent since April 1.
Analysts are largely positive on Can Fin Homes. They said the NBFC’s balance sheet is strongly capitalised with tier-1 capital of 24.3 per cent. “With pricing being the key determinant in a highly competitive housing loan market, disbursements run-rate over the coming quarters would be a key monitorable,” Nirmal Bang said.
Dalal & Broacha Stock Broking said Can Fin Homes will continue to quote premium valuations as its loan book quality of 90 per cent retail housing with negligible exposure to developer finance remains best in class and its competitive cost of funds is on par with some banks and HFCs.
In the case of RBL Bank, Emkay Global is expecting the it to report a 39 per cent drop in June quarter profit at Rs 85.5 crore on an 11 per cent fall in NII at Rs 924.80 crore. The brokerage has maintained a ‘buy’ call on the stock even as it expects “profitability in June the quarter to remain subdued due to slower growth and elevated provisions.”
Meanwhile, analysts either have ‘hold’ or ‘buy’ ratings on Escorts. “We like the tractors segment, which we believe is completely outperforming the auto segment, which has been struggling because of lack of volume. The tractor segment is comparatively better off with the monsoon going in the right direction and a good year likely for the farm sector. We like both M&M and Escorts in this space,” Jigar Shah, CEO at Kim Eng Securities, told ET NOW last week.
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