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39 companies see consistent increase in public shareholding in 2020; worth a look?

Investors should stay with companies that have dynamic management, visible growth, viable business model, low debt and innovative strategy, while firms with uncertainty surrounding them should be sold, say experts.

March 12, 2021 / 10:00 AM IST

Retail investors raised stakes in 39 companies and reduced in 20 in every quarter of 2020, data from AceEquity shows. Of the 39 companies, 13 more than doubled investors’ wealth during the period.

We considered only those companies that have a market capitalisation of more than Rs 1,000 crore.

Stocks that more than doubled investors' wealth include names like Tata Steel, Suzlon, NIIT, Firstsource Solutions, Vaibhav Global, and Dixon Technologies.

In some of the companies, the increase in public shareholding was also due to the invocation of pledged shares, stake sale, etc, experts said.

“Public shareholding can be sub-divided into institutional and non-institutional holdings. Upon further scrutiny, we find that DishTV India (46.1 percent), Eveready Industries (18.07 percent) and Mindtree (13.08 percent) were the three companies with significant holding changes,” Gopal Kavalireddi, head of research at FYERS told Moneycontrol.

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In May 2020, Yes Bank acquired over 24 percent stake in Dish TV following invocation of pledged shares due to debt default by the company and other group firms. In July, 3.85 crore pledged shares were sold by lenders, increasing public holding, he said.

MindTree promoters sold their stake as the company was acquired by Larsen & Toubro, making L&T the new promoter with a 61.03 percent holding, Kavalireddi said.

Public Holding_001

Note: The table is for reference and not buy or sell ideas

Retail investors should stay with companies that have dynamic management, visible growth, viable business model, low debt and innovative business strategy, experts said. The stock of companies with uncertainty surrounding them should be sold, they added.

What should investors do?

Investors should stay with companies connected to the economy, consumption, autos as well as IT, experts said.

“Consumer durables, FMCG and autos are expected to do well due to the pick-up in rural consumption, which is driving the overall consumer demand. So the companies like Dixon Tech, Polycab India, V-Mart Retail, Britannia Inds and M&M are expected to do well despite their higher valuations,” said Vinit Bolinjkar, Head of Research, Ventura Securities Ltd.

A rise in spending on high-value discretionary purchases such as cars, two-wheelers and consumer durables could lead to better retail loan growth. "We would recommend holding positions in HDFC Bank, Kotak Mahindra Bank, Axis Bank, AU Small Finance Bank, JM Financials, CreditAccess Gramin,” he said.

The recent rise in capex on IT infrastructure by organisations and governments to ensure seamless functioning from remote locations (work from home) has been good for companies' order books. "We are expecting IT companies from the list could report better numbers in the coming years and offset the impact of a strong rupee."

The year 2020 saw the economy drift into a recession, a fall in demand for automobiles as well as consumer durable and travels and hospitality industry, including hotels and airlines, took a big hit but business is now picking up.

After a series of lockdowns that choked consumption, the economy has now started to open up and green shoots are visible. Pharma companies will be in focus on vaccine news and technology revolution in many companies will keep IT stocks attractive.

“Given the fact that it was a pandemic, it was a no brainer to invest in pharma stocks and ride the rally. Work from home led to buying in the telecom and technology stocks. Lower interest rates led to buying in real estate and auto stocks,” Nilesh Shah, CMD, Atlas Integrated Finance Ltd told Moneycontrol.

A keen interest was being seen in energy stocks the economy opening up. The Union budget 2021 and the governments' intention to speed up divestment led to buying in even the fundamentally weakest PSU stocks, Shah said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.

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