As the first week of 2023 has ended, many investors might be looking for stocks that could generate a decent return over the remainder of the year. While it may be difficult to hand-pick potential outperformers on your own, it might help to see which stocks are on the buying list of institutional investors such as Mutual funds.

In that vein, here are the top 3 frontline stocks from the prominent index, that have been bought by mutual funds in the last two quarters, ended September 2022.

Apollo Hospitals Enterprises Limited

Apollo Hospitals Enterprises Ltd. (NS:) is a large-cap hospital chain with a market capitalization of INR 63,682 crores. After the Covid-19 pandemic, the stock delivered multi-bagger returns of around INR 390%, from the INR 1,050 odd levels to INR a high of INR 5,141, in less than two years. 

However, the price rally is also backed by strong fundamentals, with the hospital increasing its net income at a difficult-to-match rate of 36.7% over the last 5 years. The FY22 profit margin also surged to 7.02%, the highest since FY14. It remained the favorite stock of mutual funds as they increased their stake by 2.88% in two quarters to 8.82%, by September 2022.

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Maruti Suzuki India Limited

Maruti Suzuki India Ltd. (NS:) is the largest passenger vehicle manufacturer in India with a market capitalization of INR 2,55,592 crores. In the first two quarters of FY23, it has already reached 56% of the total FY22 revenue of INR 90,236.40 crores, which was an all-time high, increasing the likelihood of yet another stellar fiscal year. The EBITDA margins have also gone up, from 8.28% to 11.22% in the last 4 quarters.

No doubt that if someone wants to bet on the auto sector in India, Maruti Suzuki India cannot be ignored. Mutual funds have ramped up their stake by 2.37% in two quarters to 10.59%, by September 2022.

Hero MotoCorp Limited

Hero MotoCorp Ltd (NS:) is the company behind popular commuter bikes – Splendor and Glamour and has a market capitalization of INR 55,296 crores. The company is struggling to increase its revenues for many years as 5-year revenue growth is a negligible 0.44%, which came as a surprise to me. 

However, the stock seems to be decently valued looking at its FY22 earnings, with a P/E ratio of 23.87. Its arch rival TVS Motor Company (NS:) is much more expensive, at a P/E of 64.67. Mutual funds are showing confidence in the stock, bumping up their stake by 2.28% to 10.98%, by September 2022. In fact, mutual funds have consistently increased their stake for 6 consecutive quarters.

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