Given the multi-bagger potential of smallcap stocks, any serious investor is often looking at potential candidates in this space. However, given the high potential of manipulation in prices , and lack of adequately certain audits of financials, it is important that one look at companies which have qualified the lenses of sophisticated investors especially mutual funds, FIIs etc. Though this itself also at times may not be a guarantee of prospects, at least the universe is restricted to a few stocks which one may then subject to further scrutiny or research.
Our Mutual Fund analysts regularly survey the universe of mutual fund investment behavior (Please do send us a mail at firstname.lastname@example.org for a copy of our August 2018 issue) to discern preferences of fund investors. The stocks below feature in our latest report as the ones in the smallcap space that mutual funds loaded up on with gusto during August 2018.
CMP : 847/ MCAP Rs 8370 Crs
Led by L&T Mutual Fund and Mirae Asset, this fund saw almost a 50% rise in mutual fund holdings relative to the previous month. A large quantity was also bought by Invesco Contra Fund. Reuters shows the consensus estimates for this stock at 1089/- which is a 28% upside and 15 out of the 20 institutional analysts covering this stock have a buy rating. The lowest target on this stock is Rs 870.
CREDIT ACCESS GRAMEEN
CMP : 367/-
This stock saw buying across the board with all big MF names participating in the IPO (Rs 422 Issue Price) and accumulating almost 42 lakh shares during August. There doesn’t seem to be adequate coverage on the stock and during the IPO , the recommendations were mixed.
CMP: 303/- / MCAP 5896 Crs
Despite the sharp runup in prices of almost 150%, fund managers bought almost 41 lakh shares in this counter during the month at an average price of close to Rs 300/. Reuters shows a split in the analyst community with half giving a buy reco and the other half maintaining a sell recommendation on the stock.
TATA MOTORS DVR
Mutual Funds seem to have been buying the DVR aggressively at an average price of around current prices. In past three months, Tata Motors (down 25%) and Tata Motors DVR (down 30%) have underperformed the market by falling more than 20% as compared to 5.9% rise in the S&P BSE Sensex. While the funds have been (very) moderately paring exposure to Tata Motors, there has been consistent buying in the DVR for the past few months with almost 83 lakh shares bought in August alone.
CMP : 606/ MCAP 9289 Crs
Funds bought almost 18 lakh shares in this scrip during the month led by the Reliance family of schemes. There are 11 analysts covering this stock in the institutional space with all of them having a buy recommendation and an average price target of Rs 747 implying a 26% upside.
Please note that the above list of stocks is compiled by our mutual fund desk based on its study of mutual fund behavior and is not a recommendation to buy/sell. Please do send us a mail at email@example.com for a copy of our August 2018 MF Trading Behavior issue.