Top 5 Penny Stocks FIIs are Buying

There are a lot of announcements and hype around stocks bought and sold by foreign institutional investors (FIIs).

Investors get excited when a major financial institution mentions some intention related to buying a certain stock.

It has become apparent over the years that FIIs can be the driving force in some way behind the rise or fall for a particular stock. FIIs are well-known drivers of specific stocks as well as the entire market.

Their dominance over the benchmark indices may have reduced over the last few years due to the rise of the Indian retail investor.

But they still hold sway over the stocks in which they have a big shareholding.

In this article, we'll look at the top penny stocks the FIIs bought in the September 2023 quarter.

Penny stocks are companies that usually have low share prices, typically less than Rs 100 and often less than Rs 50.

Please note, not all the companies have filed their latest shareholding so we've just listed stocks which have done that for the latest quarter.

With that explainer out of the way, let's dig in...

#1 Lancer Container Lines

First on this list is Lancer Container Lines.

The company provides shipping and logistics services in India and abroad. Its primary business is ocean transport services of intermodal containers by container ships.

The latest shareholding pattern of Lancer Container Lines shows that foreign investors (FIIs) added 4.92% stake in the company in September 2023 quarter.

FII holding went up from 17.49% to 22.41%. Prior to this, FIIs were on a selling spree, reducing exposure for the past three quarters.

Shares of the company have more than doubled in the past three months, ever since it posted strong Q1 earnings and also laid out big growth plans for the coming 2-3 years.

Going by its latest concall, the company plans to add more than double the number of containers in the next two years. It's spending around Rs 600 million (m) as part of capex for this. This capacity addition is expected to be done by the end of FY24.

Apart from this, the company is going to start vessel operations starting January 2024. This could possibly result in better operating margins.

Going forward, the company is also looking to expand in new markets including China, the Mediterranean, North Africa, East Africa, and CIS countries to its operations.

This, coupled with the capacity expansion and new product launches, keeps the company in a steady growth phase at least for the medium term.

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

#2 IDFC First Bank

Next on this list is IDFC First Bank.

The bank is one of the strongest banking players in India.

The latest shareholding pattern of IDFC First Bank shows that FIIs added 3.63% stake in the September 2023 quarter. FII holding went up from 20.85% to 24.48%.

For the past five quarters, FIIs have been buying the stock of IDFC First Bank. This could be due to the bank's relatively clean balance sheet and that it's gearing towards high-maintenance businesses.

It's confident of maintaining high margins in the future and seems well-positioned to benefit from the uptick in credit growth.

The bank has reported a loss in the past due to the mergers and acquisitions it has undergone. It has reported a loss twice in the past 5 years, once due to the merger with Capital First and in 2020 due to a one-time provision cover towards stressed accounts.

But now, the company's fortunes seem to be taking a turn. And the recent stock performance implies that the company's patchy performance may just be a thing of the past.

Earlier this week, the Competition Commission of India (CCI) approved IDFC's merger with IDFC First Bank. According to the management, this merger will help create a financial services powerhouse and augment operational efficiency for the merged entity and create synergies.

To know more, check out IDFC First Bank's financial factsheet and its latest quarterly results.

#3 Primo Chemicals

Third on this list is Primo Chemicals.

Erstwhile known as Punjab Alkalies & Chemicals, the company's main product is Caustic Soda Lye and it's the largest producer of Caustic Soda in the North India region.

The by-products of the company are Hydrochloric Acid, Liquid Chlorine, Sodium Hypochlorite, and Hydrogen gas.

The latest shareholding pattern of Primo Chemicals shows that FIIs added 2.1% stake in the company in the September 2023 quarter. Prior to this, FIIs didn't have any holding in the stock.

This purchase was done on 12 July 2023 via a bulk data when Europe-based financial services group Societe Generale bought around 5 million equity shares in the chemicals company.

In the past one year, shares of the company have underperformed falling over 25%. The stock currently trades at its 52-week low.

The dampened sentiment could be due to the cyclical nature of the industry. More so for Primo Chemicals because of the electro-chemical unit (ECU) realisations which increased in FY23.

However, the company has undertaken capacity expansion of caustic soda in FY23 and also set up some downstream product units. This could bode well for the company in the coming quarters.

It's also coming off a strong FY23 where margins improved mainly backed by increasing realisations and higher demand in the sector.

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

#4 Rana Sugars

Fourth on this list is Rana Sugars.

The company is engaged in the business of manufacturing sugar and undertaking the allied businesses of cogeneration and distillery.

The latest shareholding pattern of Rana Sugars shows that FIIs added 1.73% stake in the company in the September 2023 quarter. Prior to this in the June 2023 quarter, FIIs didn't have any holding in the stock. And before that, FII holding fluctuated between 0-3%.

After reporting string of losses between 2017 and 2019, the company started to post regular profits in the next four years. However, the growth rate has declined. Even in FY23, despite the company reporting higher revenues, profit and margins declined.

The company looks as a strong candidate for a turnaround as multiple tailwinds are working in favour at the moment. A Reuters report recently said India is considering banning sugar exports. If true, this will be the first time in seven years that India will ban sugar exports.

The company also has a long-term power purchase agreement (PPA). It has installed a 102 MW co-generation power unit and has 3 PPA for its 3 units in Moradabad, Rampur and Buttar with tenure of the agreement being 20 years from the date of commission (2027).

To know more, check out Rana Sugars' financial factsheet and its latest quarterly results.

#5 Arfin India

Last on this list is Arfin India.

The company is engaged in the business of manufacturing, trading and selling of various non-ferrous metal products in the domestic and international market.

The latest shareholding pattern of Arfin India shows that FIIs added around 1% stake in the company in the September 2023 quarter. Prior to this, for the past three quarters, FIIs didn't have any holding in the stock. Before that, FII holding fluctuated between 0-2%.

As the company has multiple product lines, it caters to different customers from the auto, steel, and power industry. This way, it doesn't have to worry about sector concentration risks. In FY23, the company posted marginal growth in revenue and profit backed by volume-driven growth.

Apart from pan-India presence supplying to marquee customers like Tata Steel, JSW, SAIL, among others, the company also supplies its product to Japan, Saudi Arabia, China, Vietnam, Oman, South America, and the Middle East.

Shares of the company have gained over 70% in the past one year.

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

Which Other Penny Stocks Saw FII Buying in September 2023?

Here are some other penny stocks which saw FII buying in the quarter gone by.

	FII Holding (%)
Company	23-Sep	23-Jun
Axita Cotton Ltd.	5.32	3.43
Orient Paper & Industries Ltd.	1.79	0.90
K.M. Sugar Mills Ltd.	0.85	0.00
Punjab National Bank	2.65	1.82
K.C.P. Sugar And Industries Corporation Ltd.	0.65	0.00
Kesoram Industries Ltd.	4.42	3.78
DCW Ltd.	8.43	7.99
Vascon Engineers Ltd.	0.90	0.51
IFCI Ltd.	1.87	1.51
Housing & Urban Development Corporation Ltd.	0.65	0.32
Paradeep Phosphates Ltd.	5.57	5.25

Data Source: Ace Equity

You can now track all this information using Equitymaster's Indian stock screener.

Here's the screener showing stocks where FIIs have added exposure.

Be it promoters, mutual funds, or FIIs, there's a lot of curiosity when these big names buy or sell stake.

So track this activity with ease using our popular stock screeners -

• Stocks recently bought by mutual funds
• Stocks recently bought by foreign investors
• Promoters increasing stake

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...