Top 5 Stocks Recently Bought by Mutual Funds in India

The past few months have been challenging for investors as the markets have declined after topping out in September 2024. The Nifty 50 after seeing a high of 26,216 has slid down to the level of 23,000.

The S&P BSE Smallcap index has fallen by more than 10% in the past month to the level of 48,000.

This is a good time to look at what smart money is buying. So here is a list of the top five stocks that have seen an increase in mutual fund holdings in the December 2024 quarter.

These stocks are filtered using Equitymaster's stock screener.

Take a look...

#1 AWFIS Space Solutions

First on the list is AWFIS Space Solutions, a flexible workspace solutions provider in India. The company has become a market leader in the flexible workspace segment with a presence across 17 cities in India.

AWFIS provides a variety of workspace solutions, from individual desks to customised office spaces, and also offers services such as design and build, and facility management.

The company operates under two business models:

Straight Lease Model: AWFIS leases space from developers or space owners on traditional market terms, including a fixed monthly rental, with AWFIS bearing all capital expenditures for fitting out the property.

Managed Aggregation (MA) Model: AWFIS collaborates with developers and space owners who co-invest in fit-out infrastructure, often forgoing fixed rent for a share of the revenue or profit. This model allows for a more asset-light, risk-mitigated approach.

The latest shareholding pattern for AWFIS reveals an increase in mutual fund holding stake, from 10.1% in the September 2024 quarter to 19.2% in December 2024. Mutual funds seem to have utilised the recent fall in share price to accumulate this stock.

This buying by mutual funds seems to be justified by looking at the future growth prospects of the company.

AWFIS anticipates growth in the Indian flexible workspace market, projecting a rise in penetration to 20% by FY28, from the current 10%. The company is well-positioned to capitalise on the growth, given its leadership position and expansion plans.

The Indian office stock is expected to grow at a compound annual growth rate (CAGR) of approximately 6.5%, with the flex space segment growing at a much faster pace.

The company intends to expand into key micro-markets in tier 1 cities and upcoming tier 2 cities, investing in high-demand markets with strong long-term returns.

It already operates in 18 cities, covering 58 micro-markets and has a growing presence in eight tier 2 cities.

The company will increase its focus on AWFIS Transform (design and build), AWFIS Care (facility management), and other allied services, catering to a wider range of clients and tailoring solutions to their specific needs.

For more details, check out AWFIS Space Solutions' financial factsheet.

#2 Sundaram Clayton

Coming second on the list is Sundaram Clayton, a leading manufacturer of aluminium die castings.

The company's products are primarily used in the automotive industry, specifically for medium and heavy commercial vehicles (MHCV), passenger vehicles, and 2-wheelers.

It supplies cast, machined, and sub-assembled aluminium die castings to automotive OEMs (original equipment manufacturers) and Tier 1 manufacturers in India and abroad.

According to the latest shareholding pattern for Sundaram Clayton there is a notable increase in mutual fund holding stake, rising from 11% in the September 2024 quarter to 17.5% in December 2024.

The stock price also rose in tandem with mutual fund shareholding up until mid-January, thereafter, facing a selloff along with the whole small-cap pack.

The buying in stock is due to the anticipated positive trends for the business.

The Indian automotive industry is expected to see growth in the coming years. Specifically, sales of passenger vehicles are expected to grow by around 6% and MHCV sales are expected to grow by around 11% in FY25.

Two-wheeler sales are also expected to grow by around 10%. This increase in demand for vehicles is likely to drive demand for the company's aluminium castings.

The Indian government's increased outlay for capital expenditure (capex) on infrastructure is expected to drive demand in the commercial vehicle segment.

The automotive industry is increasingly focusing on light-weighting and fuel efficiency. This trend is expected to increase the demand for aluminium castings in all types of vehicles, which will benefit the company.

There is a customer preference for near-shore sourcing, which could benefit the company. The company's manufacturing facility in the USA will allow it to capitalise on this trend and reduce its carbon footprint.

Its USA subsidiary has almost 100% of its current capacity booked for the next 3 years.

For more details, check out Sundaram Clayton's financial factsheet.

#3 Mahanagar Gas

On number three comes Mahanagar Gas - a city gas distribution company that provides Compressed Natural Gas (CNG) for vehicles and Piped Natural Gas (PNG) to residential, commercial, and industrial customers.

It is the authorised distributor of CNG and PNG in Mumbai, Thane, and Raigad, and has operated for over 25 years.

The latest shareholding pattern for Mahanagar Gas shows an increase of 5.2% in mutual fund holding, from 5.1% in the September 2024 quarter to 10.3% in December 2024.

The mutual funds have seemed to have promptly utilised the recent fall to load up on this stock.

There are many possible reasons why mutual funds may be buying Mahanagar Gas.

First and foremost is its strong market position. Mahanagar Gas is one of the largest CGD companies in India, with a dominant presence in the Mumbai metropolitan region and surrounding areas.

This provides a stable customer base and a strong foundation for growth.

The company is in a sector with significant growth potential, given the government's push for cleaner fuels. It is expanding its network and customer base, including plans to add over 180 kms of steel pipeline and 250 CNG filling stations in the next five years.

The company demonstrated strong financial performance year on year (YoY). Its earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 56% YoY. The EBITDA margin increased to 30% in FY24 from 19% the year before.

For more details, check out Mahanagar Gas's financial factsheet.

#4 PG Electroplast

Fourth on the list is PG Electroplast - a leading Indian electronic manufacturing services (EMS) provider, specialising in original design manufacturing (ODM), original equipment manufacturing (OEM), and plastic injection moulding.

The company manufactures and assembles a wide range of consumer electronic components and finished products. It serves domestic and international brands across various industries, including consumer electronics, automotive, and home appliances.

According to the December 2024 shareholding pattern, mutual funds increased their stake in the company to 8.9%, from 3.8% in the preceding September 2024 quarter.

The company has shown strong financial performance to justify this buying. It has delivered a sales CAGR of 57% over the last 3 years period and a net profit CAGR of 125% for the same period.

The 3-year average return on equity (ROE) is 19%.

The company expects that its existing product lines will help achieve at least 20% to 25% growth in revenue in the next two to three years.

For more details, check out PG Electroplast's financial factsheet.

#5 Wonderla Holidays

Fifth on the list is Wonderla Holidays an amusement park operator in India that aims to provide a welcome escape from daily life and create lasting memories for its customers.

The company builds and operates resource-efficient amusement spaces to provide a fun, thrilling, and hygienic experience.

It operates four amusement parks located in Kochi, Bengaluru, Hyderabad, and Bhubaneswar, and also has a resort in Bengaluru.

The company has in-house ride design and manufacturing capabilities, which allows for cost optimisation and customisation of rides to meet visitor preferences.

According to the December 2024 shareholding pattern, mutual funds increased their stake in the company to 11.1%, up from 6.1% in the preceding September 2024 quarter.

The stock price in the last quarter was sideways. Mutual funds had used this time to smartly accumulate the stock.

This buying of stock is on the back of good revenue visibility.

Wonderla is expanding its presence in India, with a new park in Bhubaneswar that recently commenced operations and another under construction in Chennai, expected to be operational in FY26.

The company has demonstrated consistent revenue growth, profitability, and a low-debt profile, making it an attractive investment.

It has delivered a sales CAGR of 133% over the last 3 years period and a net profit CAGR of 70% for the same period. The 3-year average return on equity (ROE) is 10%.

For more information, check out Wonderla Holidays' financial factsheet.

Snapshot of Stocks that Mutual Funds are Buying

Here's a table showing the above stocks on important parameters.

Conclusion

Tracking the stocks that mutual funds are buying can provide valuable insights into institutional investment trends and market sentiment.

However, while these stocks may have strong fundamentals and growth potential, investors should conduct their own research before making any investment decisions.

Different mutual funds have different objectives, typically longer investment horizons, and access to larger capital.

Also, by the time mutual fund holdings are disclosed, stock prices may have already adjusted, reducing the potential upside.

There's also the risk of herd mentality, where blindly following institutional moves can lead to investing in overvalued stocks.

To maximise returns, investors should combine mutual fund activity with their own research, focusing on fundamentals, corporate governance, valuations, as well as personal risk tolerance.

Happy investing.

Disclaimer: This article is for education purposes only. It is not a recommendation and should not be treated as such. Learn more about our recommendation services here...