Top 4 Stocks With Rising Promoter and Institutional Holdings to Add to Your Watchlist

Ever wondered why savvy investors monitor companies with rising promoter, foreign institutional investors (FIIs), and domestic institutional investors (DIIs) holdings?

Tracking these stakeholders can be a game-changer for your investment strategy. When promoters and institutional investors increase their stake, it demonstrates confidence in the company's future growth and long-term prospects.

Rising stakes from both FIIs and DIIs reflect their belief in the company's potential to outperform the market, as these institutions conduct extensive research before making investment decisions.

A few Indian companies exemplifying this trend are Deepak Nitrate, Saregama India, Epigral, and Inox Green, which have witnessed significant increases in promoter, FII, and DII stakes.

This change was driven by strategic expansions, positive financial performance, and growing confidence in their long-term vision.

Let's delve into each of these companies in more detail.

#1 Deepak Nitrate

First in the list is Deepak Nitrate.

Deepak Nitrite has witnessed an increase in stake from major shareholders including promoters, foreign institutional investors (FIIs) and domestic institutional investors (DIIs).

In Q1 FY25, the promoters' stake increased to 49.24% from 49.13% in Q4 FY24, reflecting their confidence in the business. The FIIs and DIIs also saw increases to 6.9% and 21.2% from 6.7% and 19.3%, respectively.

Deepak Nitrite manufactures basic intermediates, fine & speciality chemicals, performance products, and phenolics.

It is known as one of the fastest growing and trusted chemical intermediates companies in India, with over 30 products, 56 applications, and 1,000+ clients. It has been the largest producer of phenol & acetone in India since 2019.

Deepak Nitrite Financial Snapshot (2020-24)

	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	57%	3%	56%	17%	-4%
Gross Profit Margin (%)	45%	49%	40%	33%	32%
Operating Profit Margin (%)	24%	29%	24%	16%	15%
Net Profit Margin (%)	14%	18%	16%	11%	11%
Return on Capital Employed (%)	38%	40%	44%	30%	22%
Return on Equity (%)	39%	33%	32%	21%	17%

Data Source: Ace Equity

In terms of financials, Deepak Nitrite reported a YoY revenue growth of 21%, reaching Rs 21.6 bn compared to Rs 17.6 bn in Q1 FY24. While the net income has increased by 35.3% to Rs 2 bn.

The company has committed Rs 14 bn in capex, with Rs 2 bn expected to be commissioned this financial year.

Deepak Nitrite is focused on new product development, sustainability initiatives, and margin improvements, despite challenges in export markets.

The management is optimistic about demand recovery by year-end, supported by government initiatives and infrastructure spending.

For more information about Deepak Nitrate, you can have a look at the factsheet and the quarterly results of the company.

#2 Saregama India

In Q1 FY25, Saregama India's promoter holding increased to 59.2% from 59% in Q4 FY24.

Meanwhile, FIIs and DIIs also raised their stakes to 17.2% from 15% and 3.2% from 2.6%, respectively.

In terms of its operations, Saregama India is one of the oldest music labels in the country, with business interests across music, films, web series, television serials, and retail.

It holds the position of being the largest recording and publishing company in India. It has a vast library of intellectual property including over 150,000 songs, 69 films and web series, and 6,000+ hours of television content.

Saregama India Financial Snapshot (2020-24)

	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	-4%	-15%	30%	28%	9%
Gross Profit Margin (%)	99%	94%	75%	69%	71%
Operating Profit Margin (%)	12%	29%	35%	30%	31%
Net Profit Margin (%)	8%	26%	27%	25%	25%
Return on Capital Employed (%)	15%	34%	23%	19%	20%
`Return on Equity (%)	11%	22%	11%	14%	13%

Data Source: Ace Equity

Saregama India reported Q1 FY25 operating revenue of Rs 2 bn, representing a 26% YoY increase. While the net income for the quarter saw a decline of 14% YoY to Rs 370 m.

Management remains optimistic, maintaining a 32% to 33% adjusted operating margin guidance, with music revenue expected to grow by at least 26% FY25.

Furthermore, management anticipates doubling Profit Before Tax (PBT) over the next 3 to 4 years.

For more information about Saregama India, you can have a look at the factsheet and the quarterly results of the company.

#3 Epigral

In the last quarter, Epigral saw an increase in holdings by the promoters, FIIs, and DIIs. The promoters increased their stake to 71.58% from 71.49% in Q4 FY24.

Similarly, FIIs and DIIs also increased their stakes to 1.46% and 0.18% from 1.36% and 0.02% respectively.

Epigral Limited, formerly known as Meghmani Finechem Ltd, incorporated in 2007, is a leading integrated chemical manufacturer in India. Epigral's Dahej facility is a well-planned, backward and forward integrated, and automated complex.

Epigral was the first company in India to set up an Epichlorohydrin plant and the largest capacity plant of CPVC Resin.

Additionally, it is a leading manufacturer of caustic soda, caustic potash, chloromethanes, hydrogen peroxide, chlorine, and hydrogen.

Epigral Financial Snapshot (2020-24)

	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	-14%	36%	87%	41%	-12%
Gross Profit Margin (%)	55%	54%	51%	49%	45%
Operating Profit Margin (%)	32%	32%	33%	31%	25%
Net Profit Margin (%)	18%	12%	16%	16%	10%
Return on Capital Employed (%)	15%	16%	29%	32%	17%
Return on Equity (%)	30%	21%	35%	33%	16%

Data Source: Ace Equity

Coming to its financials, Q1 FY25 revenue increased by 43% to Rs 6.5 bn, compared to Rs 4.5 bn in Q1 FY24, with 53% of revenue coming from derivatives and the specialty business.

During the quarter, the company faced logistics challenges impacting shipments but aims to maintain a 25% margin despite market fluctuations.

Future plans of the company include strengthening the integrated complex and expanding the derivatives and specialty business, with a goal to achieve 70% revenue from these segments and 30% from Chlor-Alkali by FY28.

The caustic soda industry is expected to see demand improvement, with a focus on the Indian market over exports. Energy costs are optimised through backward integration and solar and wind hybrid power investments.

The management remains optimistic, focusing on diversification, expansion, and efficiency for long-term growth.

For more information about Epigral, you can have a look at the factsheet and the quarterly results of the company.

#4 Inox Green Energy

Inox Green Energy Services Limited is a major provider of wind power operation and maintenance ("O&M") services in India.

The company is a subsidiary of Inox Wind Limited ("IWL") and is part of the Inox GFL group of companies.

The company offers comprehensive O&M solutions for wind turbine generators (WTG) and common infrastructure O&M through long-term contracts ranging from 5 to 20 years.

Inox Green Energy Financial Snapshot (2020-24)

	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	1%	4%	0%	45%	-10%
Operating Profit Margin (%)	53%	37%	48%	23%	33%
Return on Capital Employed (%)	4%	2%	3%	1%	4%

Data Source: Ace Equity

Inox Green delivered stable earnings in Q1 FY25 with revenue of Rs 508.6 m compared to Rs 565.7 m in Q1 FY24. While PAT increased to Rs 41 m in Q1 FY25 from Rs 26.7 m in Q1 FY24.

The company is exploring a potential demerger of its power evacuation business, aiming for a cleaner, asset-light balance sheet within six to nine months, subject to board approval.

Financial guidance suggests an annual operating income of Rs 120 m, with management projecting a top line of Rs 10-15 bn upon becoming a 10 GW portfolio company.

Despite a YoY revenue decline due to exceptional gains in the previous year, Inox Green remains optimistic about future growth, supported by India's renewable energy potential and government initiatives.

The company is also in discussions with large customers for new O&M business opportunities, with no outstanding settlements from previous customer issues.

For more information about Inox Green Energy, you can have a look at the factsheet and the quarterly results of the company.

Conclusion

While rising stakes from promoters, FIIs, and DIIs often indicate positive sentiment and a promising future, it's important not to overlook potential downsides.

Increased institutional ownership can sometimes lead to short-term volatility, especially if large institutional players decide to exit their positions abruptly.

Additionally, promoter and institutional buying, though encouraging, does not guarantee future performance, as unforeseen market shifts or internal challenges could still derail growth.

Investors should remain cautious, avoiding over-reliance on these signals alone.

It's crucial to conduct thorough research and carefully evaluate any investment opportunity before making decisions.

Ensure your decision aligns with your risk tolerance and long-term goals.

Happy Investing!

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...