Promoter Buying Frenzy Fuels Speculation in these 5 Stocks. Are You a Shareholder?

Tracking promoter activities can help you better analyse a company's prospects.

While some activities like an increase in stake are positive indicators, others like pledging of shares, are a big negative.

Let's take a look at stocks that have seen promoter buying from the open market in the month of June 2023.

These companies have been sorted in descending order of their transaction value, from highest to lowest.

If you have a strong process for stock picking, this information could help you buy a quality stock at a price lower than what the owners and promoters have paid recently.

#1 IG Petrochemicals

First on the list is IG Petrochemicals, the largest producer of Phthalic Anhydride (PAN) in India with a market size of more than 50%.

PAN is used in the organic chemical industry for production of plasticizers, unsaturated polyester resins, alkyd resins, paints and CPC pigments, among other things.

The company has been able to maintain its dominance as it is the lowest cost producer among its peers.

According to the promoter holding data publicly available on the BSE, promoters of the company bought 470,903 shares from the open market towards the end of June 2023. The transaction value was close to Rs 230 million (m).

The promoter - Shekhavati Investment Corp, prior to this acquisition held 10.07% stake of the total equity. This increased to 11.6% after the acquisition.

Another promoter - Savita Investment Company also added around 100,000 shares of IG Petro worth Rs 49 m during June 2023. Their stake went up from 6.28% to 6.6%.

In FY23, the company reported its highest-ever annual revenue. The total revenue for FY23 grew by 26% to Rs 23.8 billion (bn), supported by a healthy product mix. Net profit was below estimates and came in at Rs 2 bn.

In the latest investor presentation, the company said that they are finding opportunities in the biofuels space. In the coming quarters, IG Petrochemicals is looking to enter the ecosystem and explore more on Compressed Biogas (CBG), Ethanol, and its derivatives.

IG Petrochemicals is undertaking a brownfield expansion of one of the units which should be done by the end of FY24.

Apart from promoters, foreign investors (FIIs) have remained quite bullish on the company and have raised their stakes consecutively for the past seven quarters.

In June 2023, shares of the company gained around 10%, moving up from Rs 450 levels to Rs 515 levels. In 2023 so far, IG Petrochemical shares are down 2%.

To know more, check out the latest shareholding pattern of IG Petrochemicals.

#2 Mindspace Business Parks REIT

Second on the list is Mindspace Business Parks REIT.

The company is one of the real estate developers in India with presence across the entire real estate value chain.

K Raheja Corp Group is the sponsor of Mindspace REIT.

According to the promoter holding data available on the BSE, promoters of the company Ravi Raheja and Neel Raheja bought 725,000 shares each from the open market on 6 June 2023. The transaction value was close to Rs 128 m for each of them.

Their holding now stands at 0.58% and 2%, respectively.

Two other promoters - Raghukool Estate Development LLP acquired 67,477 shares on 23 June 2023 while Cape Trading LLC acquired 34,005 shares on 26 June 2023.

Shares of the company have remained in a downtrend in the past one year owing to mixed office demand.

REIT stocks have been in focus these past two weeks after it was reported that these firms are planning to form an association to represent the industry and promote the emerging product.

In FY23, Mindspace Business Parks reported a 13.2% growth in net operating income on the back of a 17% rise in revenue.

The company also added over 30 new tenants during the year, taking the total tenants in its portfolio to over 200.

To know more, check out Mindspace Business Parks REIT annual report analysis 2023.

#3 Zydus Wellness

Third on this list is Zydus Wellness.

It's an Indian consumer goods company which produces nutrition and skincare products. It is a subsidiary of India's fourth largest pharmaceutical company, Zydus Lifesciences, formerly known as Cadila Healthcare.

Headquartered in Ahmedabad and Mumbai, Zydus has 5 manufacturing facilities across 4 locations - Aligarh, Sitarganj, Ahmedabad, and Sikkim. It has eight co-packing facilities in India, Oman, and New Zealand.

In the month of June 2023, promoters of Zydus Wellness - Zydus Family Trust - bought shares in three tranches. The first transaction happened on 6 June 2023 when they added 61,000 shares. The very next day, they bought additional 99,035 shares.

On 26 June 2023, promoters once again added shares and this time, they added 259,348 shares.

In total, their stake went up from 8.84% to 9.5%. All these transactions totaled make up for Rs 690 million.

This is not the first time, promoters have infused money out of their pockets. In fact, they have been increasing their stake for the past couple of quarters. FIIs have also started to show interest, increasing their stake from 2.38% to 3.87%.

For the past one year, shares of Zydus Wellness have failed to enthuse investors as rising input costs continue to bite the company's margin.

The company posted a flat growth in profit this year. Going forward, the company is hoping for better margins as overall demand has started to pick up, especially in rural areas.

Zydus Wellness continues to expand and increase the market share of its brands with necessary investments in each brand through product innovations, various media campaigns, sales promotions, and digital initiatives.

To know more, check out the latest shareholding pattern of Zydus Wellness.

#4 L G Balakrishnan & Bros

Fourth on the list is L G Balakrishnan & Bros, a company engaged in auto-ancillary space.

It has two main segments - transmission and metal forming. Under transmission, products include chains, sprockets, tensioners, belts and brake-shoe. While under metal forming space, the offerings include fine blanking for precision sheet metal parts, machined components and wire drawing products.

In the month of June 2023, 4 different promoters bought stakes in the company from the open market.

The transaction details are as below -

Promoter Name	No of shares bought	Total holding (shares)	Total stake (%)	Date of acquisition
LGB AUTO PRODUCTS PRIVATE LIMITED	64,000	1,856,000	5.9	15-Jun-23
LG SPORTS PRIVATE LIMITED	21,000	450,000	1.4	15-Jun-23
B VIJAYAKUMAR - TRUSTEE JESHTA FAMILY PRIVATE TRUST	9,675	1,569,675	5.0	19-Jun-23
LG FARM PRODUCTS PRIVATE LIMITED	6,845	806,845	2.6	15-Jun-23

Source: BSE, Equitymaster

All these four transactions amounted to around Rs 85 m.

Apart from promoters, FIIs have shown decent interest in the auto ancillary player, taking their stake up from 3.32% to 9.17% in the past one year.

With pandemic fears recessing and commodity prices easing, shares of the company have been on an uptrend.

In FY23, the company posted muted numbers with profit coming in at Rs 2.5 bn, almost same as last year.

The company has a strong market share of over 60% in automotive chains in the domestic 2-wheeler segment. It enjoys a strong client base including the likes of Hero Motocorp, Bajaj Auto, Yamaha, Honda Motorcycles and Scooter India, TVS Motor, Yamaha, Royal Enfield and so on.

While investing in auto industry space comes with the risk of cyclicality, L G Balakrishnan offers some support as it's also a dominant player in the replacement market.

In the past one year, shares of the company have rallied over 70%.

To know more, check out the latest shareholding pattern of LG Balakrishnan.

#5 Cosmo First

Last on the list is Cosmo First.

The company is engaged in specialty films for packaging, lamination and labeling applications. Its films offering also include biaxially oriented polypropylene (BOPP) films and cast polypropylene (CPP) films.

After launching many new products in 2022, the company has faced input cost pressures biting into margins.

Two promoters together accounted for five insider buying transactions for Cosmo First in the month of June 2023.

Ashok Jaipuria first added 55,000 shares for an amount not exceeding Rs 35 m. In the next few days, he again added 45,000 shares for Rs 29.5 m.

Within the next 10 days, Gayatri & Annapurna through Ashok Jaipuria, undertook three buy transactions of 63,000, 20,800, and 16,200 shares. These three transactions combined amounted to Rs 68 m.

The company recently conducted a buyback through the tender offer route at a price of Rs 1,070 per share, for a maximum amount of Rs 1.1 bn. The promoters too participated in this buyback

It is also looking at a capex worth Rs 5-Rs 5.5 bn in a phased manner by March 2025.

Currently, the company has entered into a renewable power agreement to source 40% of power requirement for its largest plant through renewable sources. This is a big development from the aspect of renewable energy space.

In the past 1 year, shares of the company have eroded 1/3rd in value.

Which other promoters are buying shares from the open market?

Apart from the above, here are other companies that have seen promoter buying in recent months.

If you are on the lookout for companies that have seen big shareholding changes and want to apply your own filters and parameters, look no further than Equitymaster's Powerful Stock Screener.

This screener allows you to screen stocks based on both pre-set queries and your own criteria.

Here are some of the popular screens:

• Stocks with High Promoter Pledge
• Promoters Increasing Stake for 4 Consecutive Quarters
• Promoters Decreasing Stake

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