4 Multibagger Stocks that are Mutual Fund Darlings. What's so Special About Them?

Many times, we become too lazy to follow the process of picking stocks and end up replicating what others are buying instead.

It's not for no reason that investors track the portfolios of top investing gurus of India such as Vijay Kedia, Ashish Kacholia, Dolly Khanna, and the like...

Deciding what to invest in is a big task. There are thousands of stocks to choose from.

That is why many investors follow the approach of looking at what the top mutual funds are buying and selling and then act upon it.

The stock selection of certain fund houses is as per their investment processes and systems. And we all know the importance of having a process and a system in place when it comes to investing.

Mind you, fund managers can also make mistakes. So mimicking their portfolios does not provide a clear solution.

Keeping that in mind, here's a list of multibagger stocks in India where mutual funds have consistently increased their holdings in the past four or more than four quarters.

Mutual fund mangers picked these best multibagger stocks in 2022 and made a killing. By the way, none of these are multibagger stocks below Rs 100.

#1 JK Paper

Most states are lifting lockdowns and announcing the re-opening of schools and offices.

As kids move back from the PDF to paper for reading and writing, the prospects of paper stocks look good.

I understand changing with the time is important but traditional forms of learning are more important for kids in the era of laptops, tablets, and mobiles.

Even as an adult, aren't you buying physical books even if they are available on kindle?

This is what we wrote to you in March 2022, at a time when the entirety of stock market was going through a tough phase.

And how apt were we!

The paper sector has had its fair share of prolonged rough patches, but it invariably found its mojo back.

And this time around, it found its mojo with a rapid pace, with all stocks rising to their all-time high levels.

Even the technical indicators were suggesting a possible 'buy' on these stocks.

Technically, the Bollinger Band expansion or widening indicates the resumption of fresh bullish momentum. This is supported by a bullish crossover on the Moving Average Convergence Divergence (MACD).

It's not the first time the stock has seen such a technical setup. History repeats itself in the market. In October 2020, the Bollinger band expansion with bullish crossover on MACD added wings to the rally.

The sector was ripe for multibagger gains. The street was expecting the sector to report strong earnings for the quarter ended June 2022 following the blockbuster performance of JK Paper.

JK Paper reported more 100% increase in its consolidated revenues to Rs 15.1 bn aided by strong demand and pricing environment for paper makers. The company's consolidated operating profit jumped 104% while net profit nearly tripled to Rs 2.6 bn.

If this wasn't enough, optimism got a boost by reports of a possible price hike by companies this month.

Market is also looking at the ban on single-use plastic kicking in July, which is expected to fuel domestic paper demand in the coming quarters.

From touching a low of Rs 192 in December last year, shares of JK Paper currently trade at Rs 445. Today, JK Paper rallied another 5% to its new all-time high.

Mutual funds have made a killing on this stock as they kept adding shares of JK Paper to their kitty.

The shareholding pattern of JK Paper shows that mutual funds have taken their stake to 4.09% from 0.20% in June 2021.

In the most recent quarter, they added over 2% stake. This is the fourth consecutive stake hike by them.

To know more, check out JK Paper's financial factsheet and its latest quarterly results.

#2 West Coast Paper Mills

Next on our list is another stock from the paper sector, West Coast Paper Mills.

West Coast Paper Mills is rising due to the same reasons why the entire paper sector is booming.

West Coast Paper Mills is the flagship entity of the SK Bangur Group, based out of Kolkata. It manufactures writing and printing papers, among other products. It has a 3.2-lakh metric tonne per annum (MTPA) plant at Dandeli, Karnataka.

The paper and paperboard division accounts for over 95% of the total revenues.

The stock has delivered multibagger gains within a year, having rallied from Rs 247 to Rs 535 at present.

A week ago, the company reported strong financials owing to acquisition of Andhra Paper.

Mutual funds are slowly and steadily increasing their stake in the company. As of June 2022, they hold 7.96% stake in the company. This is up from 7.71% in June 2021.

The latest shareholding pattern of West Coast also shows that FIIs are bullish on the company.

For more details, check out West Coast company fact sheet and quarterly results.

#3 Chalet Hotels

If you're wondering how a hotel stock has delivered multibagger gains, at a time when the entire tourism and travel industry is suffering, you're not alone.

Much before the pandemic, India's hotel industry witnessed a prolonged period of supply-demand mismatch, with a massive supply overhang.

However, slower new supply with a revival in demand growth in the past few years changed all that. Then the Covid-19 pandemic arrived.

Every business was affected adversely, with hotels at the forefront. Travel and tourism was negligible and weddings were curtailed. This resulted in a massive loss for hotel companies.

But now, demand has picked up already, largely from domestic travel. The industry is expected to flourish. This gives players like Chalet Hotels a leg up and a chance to recover losses fast.

The company reported revenues of Rs 5.1 bn in 2022 as compared to Rs 2.9 bn in financial year 2021. Losses narrowed to Rs 0.7 bn from Rs 1.4 bn a year ago.

After seven consecutive quarters of losses, Chalet Hotels turned profitable in June 2022 quarter.

No wonder mutual funds are sitting on hefty gains, as they hold 19.98% stake in the company as of June 2022. The same figure was 16.5% in June 2021. Mutual funds have consistently bought stake in the hotel company for the past four quarters.

The company was recently awarded a contract by Delhi International Airport (DIAL) to develop a hotel at the Terminal 3 of Indira Gandhi International Airport (IGIA).

To know more, check out Chalet Hotels' financial factsheet and its latest quarterly results.

#4 Rolex Rings

When the entire automobile sector was down in the dumps, proxy plays like auto ancillary companies turned out to be the biggest gainers.

Auto stocks too have recovered now. The reasons why auto stocks are rising are not hard to guess. Weak metal prices, falling oil prices, a new electric vehicle policy by the government, and seasonal demand of products, are a few among others.

Amid this sharp rally, one stock which has gained significantly is newly listed Rolex Rings.

This smallcap stock has delivered multibagger gains in less than a year. The stock has advanced from its IPO price of Rs 900 to currently trade around Rs 1,792 per share (52-week high of Rs 1,969.).

Rolex Rings is among the leading manufacturers of forged and machined components in India.

The company's IPO received overwhelming subscription to the tune of 130 times. Since then, there has been no stopping Rolex Rings.

The company's management has guided for the growth momentum to continue. They are witnessing strong demand in the domestic as well as export markets.

To reduce the power cost, the company has invested in renewable energies projects. It already built windmills. It's now investing in solar plant which will be fully operational by end of this year.

The company is also involved in the electric vehicle (EV) space which makes it one of the top electric vehicle stocks in India.

As of June 2022, mutual funds hold 21.8% stake in the company. This was 6.96% in June 2021.

Mutual funds have now increased stake in the auto ancillary company for five consecutive quarters, the shareholding data shows.

To know more, check out Rolex Rings financial factsheet and its latest quarterly results.

Track what mutual funds are buying and selling...

A smart way to filter stocks is to figure out who else is buying them. By watching this activity, it's easier to get a sense of a stock's prospects.

Ever wondered if there was a stock screener that lets you find all this at one click? Equitymaster has got you covered.

Check out our Stock Screener which filters stocks that mutual funds and institutional investors are buying and selling.

To track what mutual funds are buying, check out our screener on stocks recently bought by mutual funds.

You can also screen stocks recently sold by mutual funds.

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...