According to a Moneycontrol report, FII ownership of Indian shares has dipped below 16% to a 12-year low. Foreign investors’ equity assets under custody totalled ₹71.08 trillion in October, down 8.8% from ₹77.96 trillion the previous month — the sharpest fall since March 2020.
Amid this selling spree, which warrants the term ‘exodus’, a few lesser-known mid cap stocks have seen fresh investments from FIIs, prompting us to wonder what foreign investors saw in them during their biggest selloff in the past decade. Let’s find out.
#1 ASK Automotive Ltd
Ask Automotive is the largest manufacturer of brake-shoe and advanced braking (AB) systems for two-wheelers in India. It had a market share of50% in FY23in terms of production volume for original equipment manufacturers (OEMs) and the branded independent aftermarket. The company was listed in November 2023 and has a market cap of ₹8,348 crore.
Here’s the FII holding in the company since it was listed:
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While the holding changed slightly between December 2023 and June 2024, it shot up 85% between the March and September quarters.
Goldman Sachs India Equity Portfolio’s holding went up from 1.73% to 1.82%, and there were three fresh investments in the company – by Allspring Emerging Markets Equity Fund (1.30%), Abu Dhabi Investment Authority – Monsoon (1.23%) and Florida Retirement System Allspring Global Investments LLC EMSC (1.06%).
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With more than 15 manufacturing units across five states, the company boasts of a solid clientele that includes Suzuki, TVS, Yamaha, Bajaj, Denso and Royal Enfield.
Sales grew at a compound annual rate of 11% over the past five years, ₹1,785 crore to ₹2,955 crore. Profit after tax (PAT) grew from ₹114 crore in FY19 to ₹174 crore in FY24, at a compound annual rate of 10%. Ebitda grew at a compound annual rate of 6% from ₹226 in FY19 to ₹301 in FY24.
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The current share price is ₹423, which is 36.5% higher than its listing price of ₹310.
The stock trades at a huge price-to-earnings (PE) ratio of 37.6, while the industry average is 31.8. Its median PE ratio since listing in November 2023 is 45.4.
In April the company entered into a joint-venture pact with Japanese auto components supplier AISIN Group Companies in the passenger-vehicles space. The two companies will market and sell auto components in “independent aftermarkets for passenger car production”.
#2 Genus Power Infrastructures Ltd
Genus Power Infrastructures Limited, a part of the Kailash Group, manufactures metering solutions and takes on engineering, procurement and construction (EPC) contracts on a turnkey basis. It also makes strategic investments.
With a market share of about 27% in the meter industry and about 70% in smart meters, the company has a market cap of ₹12,494 crore.
Genus’s key customers are state electricity boards, private utilities such as NDPL, and power distribution companies such as Reliance Energy. It also caters to overseas markets such as South Africa and Singapore.
Here’s how much of the company FIIs have held in the past few years.
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As you can see, the FII holding has grown over the past few years but skyrocketed after March 2023. It rose 4.6% between the March and September quarters of 2024.
Chiswick Investment Pte Ltd holds 15.13% of the company while Nomura India Investment Fund Mother Fund recently bought a 2.18% stake, according to data for the September quarter.
Managing director Jitendra Agarwal told Business Standard in August that the company has won three major orders with a total value of ₹11,003 crore (net of taxes). This includes orders worth ₹2,926 crore (net of taxes) and ₹3,609 crore (net of taxes) won in the third week of August and an additional ₹4,469 crore (net of taxes) since then.
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The orders are for designing advanced metering infrastructure (AMI) systems including the supply, installation and commissioning of about 5.59 million smart prepaid meters and system meters.
The company’s sales grew at a compound annual rate of 3% in the past five years, from ₹1,055 crore to ₹1,201 crore. Net profit grew at a compound annual rate of 12% over the same period, from ₹48 crore to ₹87 crore. Ebitda increased from ₹113 crore in FY19 to ₹135 crore in FY24, at a compound annual rate of 3.6%.
The company’s stock trades at ₹411, up 1,687% from ₹23 five years ago.
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The shares trade at a PE ratio of 85.7, the same as the industry average. Its 10-year median PE ratio is 21.
By harnessing the power of artificial intelligence, data analytics and digital transformation, the company aims to unlock new opportunities for efficiency, productivity and competitiveness. It also plans to offer software solutions and products to utilities across the globe.
Including the orders mentioned above, the company’s order book stood at more than ₹30,000 crore in September.
#3 Mrs Bectors Food Specialities Ltd
Last on the list is a company started by Rajni Bector in 1978. It manufactures biscuits and bakery products under the Mrs. Bector’s Cremica and Mrs. Bector’s English Oven brands, respectively.
The company was listed in December 2020 and has a market cap of ₹9,898 crore.
Mrs Bectors is a leader in the premium category in Delhi, NCR, Bengaluru and Mumbai. It also leads the B2B space with more than 3,00,000 packs sold every day.
Here’s how the FII holdings have changed since its listing.
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The FII holding shot up 56% between the March and September quarters of 2024. Abu Dhabi Investment Authority — Monsoon bought a 1.17% stake in the company and the Government of Singapore bought a 1.05% stake.
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The company’s sales grew at a compound annual rate of 16% from ₹784 crore in FY19 to ₹1,624 crore in FY24. Profit after tax was ₹33 crore in FY19, and compounded 33% annually to ₹140 crore in FY24. Ebitda saw compound annual growth of 20% from ₹97 crore in FY19 to ₹243 crore in FY24.
The stock price is ₹1,612, up 171% from its listing price of ₹594 in December 2020.
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The stock trades at a PE ratio of 69.4, far higher than the industry average of 32.36. The stock’s median PE since it was listed is 46.6.
The company plans to introduce new categories of products including frozen buns, dessert jars and brownies in the Indian retail segment. It incurred capital expenditure of around ₹200 crore in FY24 and has plans for around ₹350 crore of capex in FY25.
Follow the FII lead?
Equity markets have been volatile for some time now, and with experts predicting a crash or a huge correction, investors are now treading with caution.
Even as many FIIs have decided to move part of their money out of India, the stocks above have managed to garner some interest from them, and so may be worth adding to your watch list.
That’s because unlike domestic investors, who focus primarily on local factors, FIIs analyse Indian companies through a global lens, comparing them with international peers and identifying those poised for performance in line with global giants.
For more such analysis, read Profit Pulse.
Note: We have relied on data from Screener.in and Trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. He was an integral part of a leading equity research organisation based in Mumbai as its head of sales & marketing. Presently, he spends most of his time dissecting the investments and strategies of India’s super investors.
Disclosure: The writer and his dependants do not hold the stocks discussed in this article.
