Suzlon Energy, Indus Towers: Here’s what mutual funds bought and sold in September 
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Suzlon Energy, Indus Towers: Here’s what mutual funds bought and sold in September Telecommunications, consumer discretionary, financial services, information technology (IT) and commodities were the favourite sectors of domestic mutual funds in September when the benchmark equity index BSE Sensex gained 1.54 per cent during the month. On the other hand, the BSE MidCap and BSE SmallCap indices advanced 3.65 per cent and 1.13 per cent, respectively.
With a net buy of nearly Rs 129 crore, Indus Towers emerged as the top pick of mutual funds last month. They bought 6.95 million shares of the mid-cap firm during the month. It was followed by automobile major Tata Motors (Rs 26.75 crore), Cholamandalam Investment & Finance (Rs 23.16 crore) and Infosys (Rs 21.57 crore), according to primemfdatabase.com.
JM Financial in a report said, “We expect net tenancy additions for Indus Towers to remain healthy as Bharti continues its aggressive 5G rollout and rural expansion programme. Hence, EBITDA is likely to rise 3.2 per cent QoQ in Q2FY24.”
Of late, brokerages also retained the bullish on Infosys after it posted in-line performance for the quarter ended September 2023. The country’s second-largest IT firm Infosys reported 3 per cent year-on-year (YoY) growth in net profit after (minority interest) at Rs 6,212 crore in Q2FY24 compared with Rs 6,026 crore in the corresponding quarter last year. Meanwhile, the firm’s board also approved an interim dividend of Rs 18 per equity share.
According to YES Securities, the near-term demand environment remains challenging as clients remain cautious regarding the evolving macroeconomic situation in the US and Europe and there has been a slowdown in discretionary tech spending in sectors such as Hitech, retail and telecom and it continues to impact near term revenue performance.
“Management has lowered FY24 revenue growth guidance to 1 to 2.5 per cent in cc terms from earlier guidance of 1 to 3.5 per cent on account of near-term demand concerns. Employee attrition continues to decline and should support operating margin going ahead. We estimate a revenue CAGR of 10.3 per cent over FY23‐25 with average EBIT margin of 21.9 per cent. We maintain our ‘Buy’ rating on the stock with revised target price of Rs 1,838 per share,” YES Securities said in a report.
ICICI Bank (Rs 21.84 crore), HDFC Bank (Rs 18.23 crore), HDFC Life Insurance (Rs 17.51 crore), Aavas Financiers (Rs 17.20 crore), Sumito Chemical India (Rs 16.98 crore) and Motherson Sumi Wiring India (Rs 16.69 crore) stood among other major net buys of mutual funds in September.
Mutual funds lapped up an additional 175,000 shares in Bharti Airtel in September, indicating a net buy of Rs 15.77 crore.
“Bharti remains our top pick (unchanged 1-year target price of Rs 1,125) as we expect a structural uptrend in industry ARPU (9 per cent CAGR over FY24-28) driven by future investment needs industry requires an ARPU of Rs 270-300 in the next 3-5 years for a pre-tax RoCE of 12-15 per cent to justify capex. We maintain ‘Hold’ on Indus Towers with an unchanged target price of Rs 160 due to duopoly risks,” JM Financial said.
Axis Bank, NTPC, Astra Microwave Products, State Bank of India, Suzlon Energy, Aditya Birla Capital, CMS Infosystems, Crompton Greaves Consumer Electricals and Larsen & Toubro stood among other major buys of the domestic institutional investors in September. They bought shares worth somewhere between Rs 5 crore and Rs 14 crore last month.
Commenting on Suzlon Energy, Purnartha Investment Advisers said India’s announcement that it aims to reach net zero emissions by 2070 and to meet 50 per cent of its electricity requirements from renewable energy sources by 2030 is a hugely significant moment for the global fight against climate change. Most of the growth in demand this decade would have to be met with low-carbon energy sources in the renewables space.
“Renewables growth is expected to be driven by Wind and Solar. In its plan to achieve the goal of 500GW of renewable energy by 2030, GOI is targeting 100GW from wind energy (currently at 43GW). The two decades crown of debt-laden business and saga’s around Suzlon energy have now come to an end,” Purnartha said.
The business has witnessed change due to various debt restructuring activities along with sectoral tailwinds and a government push towards renewable energy. The company with 33 per cent market share in the wind segment, wind and solar being the lowest cost-optimal solution for a decarbonised grid as per the Ministry of Power. Suzlon Energy became the natural beneficiary of the tailwinds, reduced interest costs, enhanced efficiencies, consistent OMC business cashflows, up-to-date technology and constant deployment in R&D. Suzlon is well equipped to leverage the market opportunity arising from the energy transition, according to Purnartha Investment Advisers.
On the other hand, they sold shares worth Rs 122.83 crore of FMCG major Hindustan Unilever last month. They also offloaded some shares of Data Pattern (Rs 70 crore) and CCL Products (Rs 29.56 crore).
Sharing its view on the domestic equity markets, Tata Mutual Fund in a report said that the Nifty 50 is trading at 70 per cent premium to the MSCI EM index, above its historical average of around 50 per cent in P/E terms.
“Stable macros, broad-based earnings growth and robust banking or corporate sector health are driving the premium. However, crude price and domestic elections are key risks to the valuation premium,” Tata Mutual Fund said in a report.
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