Wipro, Zomato, RIL, LIC, SBI among large-cap buys of mutual funds in December

At a time when large-cap looks reasonably valued compared with the broader universe, the country’s mutual funds upped their stake in select blue chips in December. Data collated by primemfdatabase.com showed the mutual funds bought over 10 million shares of at least 13 large-cap companies last month.

Food delivery firm Zomato emerged as the top buy in terms of number of shares added. Mutual funds bought 71.1 million additional shares of Zomato in December, taking their total value of holdings to Rs 13,276.84 crore against Rs 11,881.23 crore as of November 2023. Global financial services firm Goldman Sachs is also positive on Zomato with a target price of Rs 160. Shares of the company closed at Rs 139.60 on January 12.

With an additional buy of 32.9 million shares, Tata Steel was next on the list. It was followed by Tata Power (24.8 million shares), GAIL (India) (20.8 million shares), Axis Bank (19.6 million shares) and ITC (18 million shares). Antique Stock Broking is positive on Tata Power with a target price of Rs 450, indicating a potential upside of over 25 per cent against the current market price.

“Tata Power is up 65 per cent in the last one year against the sector’s median performance of 94 per cent. Going ahead, we believe Tata Power will outperform the sector for three crucial reasons. Firstly, CGPL continues to break even because its share in coal profits is adjusted against tariffs. Investors fail to appreciate the possibility of the optimal mix of short-term trades given higher dark spreads to sustain, secondly, consolidated RE can deliver Rs 10,000 crore EBITDA by FY27 as against Rs 3,400 crore in FY24E. Lastly, the lowest capital outlay/MW for pumped hydro entails higher platform valuation,” Antique Stock Broking said in a report on January 10.

Mutual funds further added over 1 crore shares in other companies namely Samvardhana Motherson International, ICICI Bank, State Bank of India (SBI), Mankind Pharma, Reliance Industries, Dabur and Wipro.

IDBI Capital maintained 'Buy' on Wipro post Q3 results. "Wipro’s Q3FY24 results were in line with the consensus estimate. Going forward, the company has guided -1.5 per cent-0.5 per cent indicating improvement in demand. The company is seeing early signs of a return to growth in consulting, as demonstrated by the double-digit growth in order bookings in Capco business. Wipro is also seeing some green shoots in discretionary spend," IDBI Capital Markets said in a report.

Recently, Jefferies gave a ‘Buy’ rating on Reliance Industries with a target price of Rs 3,125. Shares of the energy-to-telecom settled at Rs 2,740 on January 12. “RIL underperformed Nifty by 9 per cent in CY23 and trades cheap relative to Nifty. We forecast 13 per cent EBITDA growth in FY25 with Jio contributing around 2/3rd share on the back of a tariff hike. We expect capex to decline in Jio and Retail in FY25 helping improve free cash flow abating concerns on rise in net debt,” the overseas firm said in a report.

Domestic money managers also bought somewhere between 4 million and 10 million shares of Coal India, Power Grid, Life Insurance Corporation of India (LIC), Indian Railway Catering & Tourism Corporation (IRCTC), Tata Motors, Adani Power, Jindal Steel & Power (JSPL), BPCL, Vedanta, SBI Life Insurance and Bharti Airtel.

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According to KRChoksey Shares & Securities, LIC will capitalise on the industry's growth opportunities, aided by its significant AUM and geographical expansion. It further added that market shares of SBI Life Insurance stood at 10.4 per cent as of December 31, 2023, up from 10.1 per cent in November 2023, but a YoY improvement from 8 per cent. “SBI Life aligns with the regulator’s vision and will continue to focus on various reforms to enable deeper penetration of the life insurance industry. The company has a healthy product pipeline, which is expected to improve the share of the non-ULIP segment gradually. It will strive to deliberately maintain the ULIP share of at least 55 per cent,” KRChoksey said in a report.

In the mid-cap space, mutual funds bought an additional 274.6 million shares of Vodafone, 147.6 million shares of Bank of India and 86.2 million shares of Steel Authority of India (SAIL). On the other hand, Hudco (29.3 million shares), Piramal Pharma (19.2 million shares) and Karur Vysya Bank (17.9 million shares) were among the major buys in the small-cap space in terms of the number of shares.

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