Sunil Singhania-owned Abakkus Fund has made fresh buying into four stocks and increased stake in 11 companies in the March 2021 quarter, compared to the December quarter, the shareholding pattern published by corporates on the exchanges showed.
Abakkus’ portfolio, which consists of 26 stocks, as of March 2021, indicated that these stocks are either from the midcap or smallcap category, and not from the largecap segment. Abakkus Asset Manager LLP is an alpha-focussed asset manager investing in India.
“According to the most recent corporate shareholdings filing by Abakkus, Sunil Singhania owns 26 stocks worth Rs 1,550.6 crore. When it comes to investment style, they aren't the typical fund manager who prefers to select largecap stocks and invest for the long term; instead, they make bets based on in-house analysis on where there is potential for big growth," Gaurav Garg, Head of Research, CapitalVia Global Research, told Moneycontrol.What makes the four stocks attractive
The four stocks in which Singhania's fund house made fresh buying are Easy Trip Planners, Nureca, Rajshree Polypack and Sarda Energy & Minerals. The stake acquisition in online travel agency Easy Trip Planners, and healthcare & wellness products distributor Nureca was through their IPOs.
Abakkus acquired a 1.06 per cent stake in Easy Trip, 2.38 per cent in Nureca, 8.79 per cent in Rajshree Polypack, and 1.01 per cent in Sarda.
On Rajshree Polypack, Garg said: "The country's logistics needs have grown, and so has the demand for logistics. Rajshree is a logistics firm with a low debt load. The company's cash flow has increased over the last few years. Its book value per share has also increased. This is a positive indication for investors to put their money into the business.”
Since there is no big domestic travel service company listed on the exchange, Easy Trip has an advantage, and with a market capitalisation of close to Rs 2,000 crore, it is the most valuable among peers, Garg says.
Nureca is a company that makes medical equipment. The business might have a lot of upside potential in the near term, according to Garg.
Sarda Energy & Minerals has reported strong QoQ EPS growth, growing revenue every quarter for the past two quarters. FIIs/ FPIs or institutions have increased their shareholding, and the company has been improving its book value per share for the last two years, he said.
Which are the 11 companies?
The 11 companies in which Abakkus raised stakes are HG Infra Engineering, HIL, IIFL Securities, Ion Exchange (India), Jindal Stainless (Hisar), Polyplex Corporation, Saregama India, Siyaram Silk Mills, Somany Home Innovation, Technocraft Industries (India) and Anup Engineering.
Abakkus made the stake acquisition, in the range of 0.1 per cent to 0.4 per cent, through its two funds -- Abakkus Growth Fund-1 and Abakkus Emerging Opportunities Fund-1.
“The stock selection was not based on the traditional method, but rather on identifying the market leader from untapped and high-demand sectors in the near future. Apart from that, they're rotating funds from one market to the next, based on supply and demand," said Garg.
He feels IIFL Securities may be a good value pick since the broking market is growing significantly.
“Other companies, such as Ion Exchange (India), have strong fundamentals as a provider of water and environmental management solutions, and as demand for climate change solutions rises, these companies may see an upside tick in the long run," Garg said.Stakes reduced in certain other firms
On the other side, Abakkus cut down its stake only in three stocks - HSIL, Mastek and Route Mobile -- in the March quarter, compared to the previous quarter.
The Abakkus Asset Management company bought a 3.49 per cent stake in cloud communication platform provider Route Mobile via an IPO in September 2020, but since then, Abakkus has been selling minor stakes in the company every quarter. The stake was reduced to 3.45 per cent in the quarter ending December 2020, and then it sold another 0.02 per cent in the quarter ending March 2021, leaving them with 3.43 per cent. “Route Mobile's return on capital employed (RoCE) has been declining over the last two years, apart from promoters reducing their shareholding,” Garg said.‘Mastek biggest bet by Abakkus’
One of the biggest bets of Abakkus Asset Management since March 2019 is IT services company Mastek, Garg feels. Abakkus had continuously raised its stake in Mastek until December 2020, when it reduced its stake to 5.8 per cent from 5.9 per cent in September 2020. For the March quarter, it reduced another 0.10 per cent. It holds 5.71 per cent in the company now.
Abakkus reduced its stake in sanitaryware company HSIL by 0.3 per cent to 2.7 per cent from 3 per cent. "When we look at the shareholding pattern of HSIL, we can see that the promoters and FIIs have recently increased their stakes, while DIIs and MFs have decreased theirs. Return on capital and return on assets have been declining over the past two years," Garg said.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.