MCX, IHCL, Federal Bank, PVR Inox: Midcap, smallcap stocks that life insurers are gung-ho on

Indian Hotels Ltd, Federal Bank Ltd and Bharat Forge Ltd were among top midcap investments of five prominent life insurers at the end of September. Smallcap stocks such as Krishna Institute of Medical Sciences Ltd (KIMS), Affle India, Redington India and MCX led their smallcap favourite list at the end of September, data compiled by Nuvama Institutional Equities suggest.

Five insurers namely ICICI Prudential Life, SBI Life, HDFC Life, Tata AIA Life and Kotak Life owned Rs 1,991 crore worth of IHCL shares, which is seen as key beneficiary of rising demand and pick up in average room rentals. Analysts likes IHCL due to its operational efficiency and debt-free balance sheet.

IHCL was followed by midcap lender Federal Bank, where the five insurance companies owned Rs 1,782 crore worth shares. The private bank has reported a 20 per cent rise in YoY advances and 23 per cent jump in YoY deposits for the September quarter.

Bharat Forge was insurers' third most favourite midcap bet with Rs 1,641 crore ownership. In the case of Bharat Forge, Prabhudas Lilladher expects a revenue growth of 30.1 per cent YoY for the September, led by strong growth across segments. It expect Ebitda margins at 17 per cent benefiting from lower commodity and input cost and operating leverage. Profit is seen rising 13.4 per cent for the quarter

Midcaps Ashok Leyland (Rs 1,548 crore), Nykaa (Rs 1,545 crore), Voltas (Rs 1,417 crore), Persistent Systems (Rs 1,348 crore), Ramco Systems (Rs 1,318 crore), AU SFB (Rs 1,311 crore) and Astral Pipes (Rs 1,187 crore) were other insurer favourites. Balkrishna Industries, Cummins and M&M Financial were other insurer midcap favourites.

In the case of smallcap stocks, KIMS was their most favourite smallcap stock with Rs 677 cro exposure. It was followed by Affle India (Rs 471 crore), Redington India (Rs 446 crore), IDFC (Rs 414 crore), MCX (Rs 407 crore) and Narayana Hrudayalaya (Rs 406 crore).

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