Suzlon, Vedanta, HDFC Bank: Mutual funds bought over 1 crore shares of these 18 firms in January; own any?

Domestic institutional investors substantially raised their stakes in a couple of firms from across the segments in January. According to Prime Mutual Funds database, mutual funds lapped up an additional 10 million shares of at least 18 companies last month. Brokerages are also bullish on a couple of firms.

With an addition of 88.3 million shares, HDFC Bank topped the list. They held 1.36 billion shares of the private sector lender as of January 31, 2024, against 1.27 billion shares in December 2023. Shares of HDFC Bank declined more than 14% to Rs 1462.25 on January 31, 2024 against Rs 1709.65 on December 29, 2023. HDFC Bank witnessed heavy selling pressure after the lender’s Q3 results failed to impress D-Street investors. According to Jefferies, the bank’s sharp correction post results bring valuations to an interesting level of 2.1x FY25 adjusted PB and 14x PE. The global financial services firm has a ‘Buy’ rating on HDFC Bank with a target price of Rs 2,000.

“After disappointment in Q3 results, we had trimmed earnings estimates for loan growth and NIMs for the bank for FY25-26. Still, we factor a decent 16% YoY growth in loans for FY25 (implying 3.8% quarterly rise), 17% rise in deposits and 10bps YoY expansion in NIMs (starting Q1FY25),” Jefferies said. Shares of HDFC Bank traded at Rs 1,414 in the afternoon trade on February 15.

Overall, domestic institutional investors bought shares worth Rs 26,743 crore in January when the broader indices BSE Midcap and BSE Smallcap indices rallied 5% and 7%, respectively. On the other hand, the benchmark BSE Sensex inched lower by 0.67% during the same period.

Renewable energy major Suzlon is next on the list. Mutual funds bought 3.89 crore shares of the company last month. Suzlon Energy last month reported a consolidated net profit of Rs 203.04 crore, up 160% against the net profit of Rs 78.28 crore in the same quarter last year. According to Axis Capital, Suzlon expects India to commission 5-6GW of wind capacity in FY25, after considering transmission evacuation and land acquisition challenges faced by the industry. Acquiring land can take up to 6-9 months, but the availability of windy sites or cranes is not an issue. A massive ramp-up in transmission spending planned over 2022-27 will ease evacuation challenges. Suzlon expects that by FY27-28, 8-10GW per annum of wind capacity can be commissioned in India, but that kind of level cannot be achieved earlier.

Mutual Funds also added over 3 crore shares each of Bank of India, Samvardhana Motherson International, GMR Airports Infrastructure and Vedanta.

Data further highlighted that mutual funds raised their stake in ITC by adding over 2.3 crore shares of the FMCG major. They also bought over 2.32 crore shares of the country’s largest lender by assets State Bank of India (SBI). ICICI direct is positive on SBI with a target price of Rs 800. The lender's shares scaled their fresh all-time high of Rs 763.90 on February 15. “SBI reported healthy performance in Q3FY24, while optically earnings were marred by one-time provisions during the quarter. Business growth remained healthy both on advances (over 14.4% YoY) and deposits (over 13.02% YoY) with continued focus on retail loans and term deposits,” the brokerage said.

With an addition of over 1 crore shares, HFCL, Bank of Baroda, Hindalco, Kotak Mahindra Bank, Coal India, One 97 Communications, Jubilant Foodworks, Reliance Industries, FSN E-Commerce Ventures (Nykaa) and AU Small Finance Bank also stood among major buys of mutual funds last month. Nomura is bullish on Bank of Baroda with a target price of Rs 290. “Bank of Baroda’s Q3 PAT was 14% ahead of our estimate, with RoA delivery strong at 1.2%. Core PPOP was 5% ahead of the estimate, led by strong NII and softer opex, which offset softer core fee delivery in the quarter,” Nomura said.

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