Top 5 Stocks Bought by FIIs Recently: Foreign Investors Increasing Their Shareholding
Introduction:
Foreign Institutional Investors (FIIs) have shown an increased interest in Indian equities, with certain stocks witnessing significant buyouts. This article delves into the top 5 companies where FIIs have amplified their shareholding during the June 2022 quarter. By exploring these companies, we can gain insights into potential long-term investment opportunities. It is important to note that the trading prices mentioned in this article reflect the market close as of September 14, 2022.
1. Eris Lifesciences Limited:
Unveiling the Operations and Strengths:
Eris Lifesciences Limited specializes in the manufacturing and marketing of pharmaceutical products, offering a diverse range of over 280 formulations. This purely domestic branded formulation company witnessed a 2.04% increase in FII shareholding during Q1FY23. The company's revenue is primarily derived from its top 15 mother brands, contributing over 75% of its total revenue. Notably, 9 out of these top 15 brands rank among the top 5 brands in their respective segments. Eris Lifesciences operates through 22 sales depots, and 2069 stockists, and serves over 500,000 retail chemists. However, the company has experienced a decline in its net profit due to decreased profit margins.
Analyzing Financials and Technical Parameters:
To gain a comprehensive view of Eris Lifesciences, it is crucial to assess its financial and technical indicators. Two key indicators, the 200 DMA (Day Moving Average) and RSI (Relative Strength Index) provide valuable insights into the stock's performance. A stock trading above the 200 DMA is considered bullish while trading below it indicates a bearish trend. Additionally, an RSI value below 30 suggests oversold conditions, which can lead to a potential uptrend, while an RSI above 70 indicates overbought conditions and a possible trend reversal.
2. Praj Industries Limited:
Unveiling the Core Competencies:
Praj Industries Limited stands as a leading biofuel technology company in India, specializing in process design, engineering, manufacturing, and commissioning of ethanol plants. The company is also a prominent solution provider in Hypurity Systems, Wastewater Treatment, Brewery & Beverages, and Critical Process Equipment & Skids. During Q1FY23, FIIs increased their stake in Praj Industries by 2.09%. The company's strong order book, supported by favorable government policies, has been a significant driver of its stock's performance. Notably, Praj Industries' stock has surged by 5 times in the last 1.5 years, primarily due to the government's accelerated target of achieving 20% ethanol blending by 2025. Furthermore, the company boasts healthy revenue diversification and a strong geographic presence. However, being part of the cyclical capital goods industry exposes Praj Industries to potential risks.
Examining the Impact of End-User Industry Growth:
Operating in a cyclical space, Praj Industries is susceptible to the growth rates of end-user industries. During FY17 and FY20, the company witnessed a decline in revenue due to a weak industrial CAPEX momentum and an extended working capital cycle caused by economic slowdowns. This highlights the potential impact of end-user industry growth on Praj Industries' topline and profitability.
3. IIFL Finance Limited:
Diving into a Diversified NBFC:
IIFL Finance Limited is a diversified Non-Banking
Financial Company with business segments encompassing Housing Finance, Gold Finance, microfinance, and business loans. In Q1FY23, FIIs increased their stake in IIFL Finance by 2.39%. Housing Finance constitutes the largest share of the company's loan book, accounting for 35%. Notably, the share of Gold Loan has grown significantly, from 13% in 2017 to 32% in Q1FY23. IIFL Finance has maintained a steady net interest margin (NIM) of 7.8% in Q1FY23 and has consistently shown improvement in its Return on Assets (ROA) and Return on Equity (ROE). However, the company faced challenges with asset quality in FY22, witnessing an increase in Gross NPA (Non-Performing Assets) and Net NPA. Sustaining asset quality will be crucial for the company's future business and profitability.
4. Polyplex Corporation Limited:
Exploring Polyester Film Manufacturing:
Polyplex Corporation Limited operates in the manufacturing of Polyester Films, specializing in BOPP (biaxially oriented polypropylene), blown PP/PE (polypropylene and polyethylene), and CPP (cast polypropylene) films used in flexible packaging and industrial applications. During Q1FY23, FIIs increased their stake in the company by 2.55%. The company's manufacturing facility operates at over 95% capacity utilization, outperforming industry averages of 71%-82%. Polyplex Corporation has consistently delivered profitable growth to investors, with a 23.6% CAGR (Compound Annual Growth Rate) in profit and a 16% CAGR in sales over the past 5 years. However, the company faces potential challenges due to fluctuations in the prices of its major raw materials, terephthalic acid (PTA), and mono-ethylene glycol (MEG), derived from crude oil. Additionally, currency rate fluctuations and changes in government policies regarding flexible packaging could impact the company's profitability.
5. Varun Beverages Limited:
A Strong Presence in the Beverage Industry:
Varun Beverages Limited primarily caters to PepsiCo's operations, manufacturing and distributing carbonated soft drinks, juice-based drinks, and packaged drinking water. As PepsiCo's largest franchisee in India, the company operates 31 manufacturing units within the country and has franchise operations in Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe. During Q1FY23, FIIs increased their stake in Varun Beverages by 2.90%. The company's operational efficiency stands out as a major strength, achieved through backward integration in its manufacturing processes. Varun Beverages maintains in-house manufacturing facilities for various components, including Crown Corks, PET Pre-Forms, Corrugated Boxes, Shrink Sheets, Plastic Cap Closures, and Plastic Shells. However, the domestic beverage industry faces challenges related to regulatory changes in soft drink content and environmental concerns regarding groundwater depletion and effluent discharge.
Frequently Asked Questions
FIIs have recently increased their stake in various stocks, including Eris Lifesciences Limited, Praj Industries Limited, IIFL Finance Limited, Polyplex Corporation Limited, and Varun Beverages Limited.
The specific stocks bought by FIIs today may vary as it depends on the latest market activity. It is recommended to check the real-time market data or consult with a financial advisor to get the most up-to-date information.
The stock with the most FII holdings can change over time due to market dynamics. However, some stocks that have historically attracted significant FII investments include Reliance Industries Limited, HDFC Bank Limited, Infosys Limited, Tata Consultancy Services Limited, and ICICI Bank Limited.
The stocks being sold by FIIs can vary depending on their investment strategies and market conditions. It is advisable to monitor the latest market trends and FII activity or seek professional advice to stay updated on the stocks that FIIs are currently selling.
Disclaimer: The information in this blog post is for educational purposes only. Invest responsibly at your own risk. No liability for gains or losses. Seek professional advice before making investment decisions.
