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Top 10 Penny Shares Held By Mutual Funds In India


One reason for this may be because DCB Bank reported a 22% decline in its net profit for the quarter ended December 2021.

For the entire nine months ended December 2021 as well, the bank showed weaker asset quality, excess liquidity and slower book growth.

Another possible factor is that FII sells interests as clearly indicated.

#3 Ashoka Buildcon

Ashoka Buildcon is involved in the construction and infrastructure facilities business. It is also involved in the sale of RMC (ready mix concrete).

The company has significant experience in implementing road projects across India and has built more than 10,000 km of lanes to date. This is reflected in his portfolio of 25 projects.

Coming to Ashoka Buildcon’s shareholding, the mutual fund holds about 61.1 million shares of the company or 21.75% of the total equity. But the important thing to note here is that mutual fund exposure has been declining over the past two years. As of March 2020, the mutual fund held a 30.76% stake.

This is despite road and highway developers having a solid track record in executing contracts, a strong order book and a good financial profile.

But there’s a big red flag here: Debt. It remains a major focus for the company. Ashoka Buildcon had a debt -to -equity ratio in excess of 10x as of March 2021.

Over the years, its debt has increased while the company has increased its profits.

#4 Gujarat Port of Pipavav

Next on our list is Gujarat marine port services company Pipavav Port.

Gujarat Port Pipavav is India’s first private sector port located on the south west coast of Gujarat near Bhavnagar. The port is strategically located on the International Maritime Trade route that connects India with the US, Europe, Africa, the Middle East on one side and far to the east on the other.

These stocks have high exposure to mutual funds as well as FII. While the mutual fund collectively holds a 20% stake (96.9 million shares), FII has an exposure of 22.3% (107.8 million shares).

FII’s exposure has increased for the past four quarters while mutual fund holdings have been on a downward trend over the past eight quarters.

Gujarat Pipavav has a debt -free status so far and has been offering healthy dividend payments (with dividend yields in excess of 5%) over the years.

While this is interesting, one should note that large dividend payments in excess of the profits generated, can reduce its cash position. Since it has a debt -funded capex plan, lower dividends could be announced in the future.

#5 Karur Vyasa Bank

What’s so weird? Another bank stock is part of this list.

Karur Vyasa Bank has medium-sized franchises in the South Indian states.

The bank’s portfolio was diversified across segments such as retail (23.2%) agriculture (22.3%), small and medium enterprises (32.3%) and corporate (22.1%) as at December 2021.

With a share of 24.6%, gold loans continued to account for the bulk of the agriculture portfolio.

As of December 2021, it has a network of 781 branches, of which about 54% are located in semi-urban and rural areas.

The mutual fund held an 18.6% stake in Karur Vyasa Bank in December 2021. This is 1.68% higher than the September 2021 quarter.

#6 Lemon Tree Hotel

Lemon Tree is the owner of the largest mid -price hotel chain in India. It operates 87 hotels in 52 cities.

With the help of its long -term strategic investor APG, the largest pension fund in the Netherlands, Lemon Tree has grown organically and inorganically, nearly doubling its capacity, in recent years.

Lemon Tree operates hotels nationwide with a total room inventory of 8,309 in fiscal 2021.

Mutual funds appear to like the hotel’s shares as they held a 13.3% stake in the company in December 2021. While shareholdings have been down recently, consecutively for the past eight quarters are accurate.

Along with MF, FII also had a good exposure of 22.8% or 180.7 m of shares in December 2021.

Lemon Tree, along with other hotel stocks remained resilient and rose higher despite some concerns.

This follows the fact that the Indian tourism and hospitality industry has reopened amid a decline in covid cases, leading to a resurgence of hotel bookings.

Choices for accommodation and dining are likely to move towards well -known and trusted brands that implement hygiene and safety in their products and services.

Lemon Tree, as a solid player, with a large room inventory, has bright prospects.

#7 ITD Cementing

ITD Cementation, with 13% of its equity owned by mutual funds, is another engineering company that forms part of this list.

Established in June 1978, ITD is engaged in providing design, engineering, procurement and construction (EPC) services for infrastructure projects in India.

It has done various works including piling, foundations, soil improvement, geotechnical & specialist engineering, marine structures and ports, transportation projects including highways and bridges, hydroelectric projects, industrial works and urban infrastructure projects.

The mutual fund currently holds 22.4 m of company shares. Mutual fund ownership has declined over the past two years while the opposite is seen in the face of FII.

#8 Sadbhav Engineering

Next on our list, we have Sadbhav Engineering, which is engaged in the business of infrastructure facility development in canal areas, irrigation projects, roads, bridges etc.

Like most of the stocks we discussed above, the case is similar for Sadbhav Engineering. The mutual fund has reduced its stake in the company over the past eight quarters. As of December 2021, they hold a 13% stake or 22.3 million shares.

Even FII did the same. FII’s exposure to Sadbhav Engineering has decreased from 11% in March 2020 to just 4.2% at present.

Why do mutual funds and FII turn down on stocks?

Well, the company doesn’t have anything great to show in front of the results. It has a track record of reporting losses.

Currently, the company is trying to survive through asset monetization, raise funds through any means possible, and continue to survive so that it can drive a resurgence.

In January 2018, the company’s shares traded above Rs 400. Jump forward to the present and the shares traded at a price of less than Rs 40. Talk about wealth erosion!

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#9 Thomas Cook (India)

Next on our list, we have another travel -related services company – Thomas Cook.

Thomas Cook offers a wide spectrum of services including foreign exchange, corporate travel, leisure travel, visa & passport services, and e-business. The company set up its first office in India in 1881.

Thomas Cook leads both the wholesale and retail forex segments. The company’s wholesale business benefits from its forged relationships with major banks in India. The retail segment is supported by an extensive distribution network and synergies with the tourism segment.

As of December 2021, the mutual fund holds 45.8 million shares (12.1% stake) of Thomas Cook. The organizers of the company hold a majority stake of 65.6%.

#10 Navneet Education

The last stock on our list is Navneet Education.

Navneet Education is a leading manufacturer of Maharashtra and Gujarat state board publications as well as stationery products.

As of December 2021, the mutual fund has an 11.8% stake in the company while FII’s holding is seen at 3.7%.

The mutual fund has reduced its stake in Navneet Education over the past three quarters. In March last year, they had a 15.3% stake.

The reason behind this may be the company’s performance in fiscal 2021. The company’s publishing segment is getting a big hit as schools are still closed. The stationery segment also got a hit but it was helped by exports.

If you look at the 1 month, 3 month, 1 year, 3 year or 5 year Navneet Education stock price chart, you will see that it has given a negative return.

But given its strong market position in educational books, Navneet Education could see an improvement in its performance once the school reopens. Only time will tell.

In which other penny stocks does the mutual fund have exposure?

Apart from the above, here are other penny stocks in which mutual funds hold a substantial stake.

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Keep track of which penny stocks are being bought and sold by mutual funds …

The smart way to filter stocks is to find out who else is buying them. By watching this activity, it is easier to know the prospects of a stock.

Fund managers carefully select stocks based on a variety of factors and zero in on the most suitable stocks to accept.

Mind you, fund managers can also make mistakes so mimicking their portfolio doesn’t provide a clear solution.

Ongoing research cannot be compromised.

Don’t forget to check out the Joint Head of Research at Equitymaster, Rahul Shah video where he focuses on the right penny stocks to watch in 2022.

Happy Investing!

Disclaimer: This article is for informational purposes only. It is not a stock proposal and should not be treated as such.

Notes: Equitymaster.com currently inaccessible for technical reasons. We regret the inconvenience. In the meantime, please access our content at NDTV.com. You can also keep track of us Youtube and Telegram.

(This article is syndicated from Equitymaster.com)

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