The trend of smallcaps and midcaps outsmarting largecaps, which started in 2023 is showing no signs of a reversal so far in the new year. We ran a screener to find out which smallcap stocks have seen consistent buying from both mutual funds as well as FIIs in all the last four quarters of calendar year 2023 and found 9 names in the list. Two of these stocks have turned multibaggers.

1) Electronics Mart India

Electronics Mart runs retail stores of home appliances and consumer durables in South Indian states and Delhi NCR region. In the last four quarters, MF ownership has increased significantly from 7.65% to 15.85%. FII holding too went up from 3.11% in December 2022 to 4.99% in December 2023 with consistent buying seen in all the last four quarters. The stock, which was included in MSCI India Smallcap Index from December 1, is up 174% in the last one year.

2) Ion Exchange (India)

Shareholding data shows that FII ownership has gone up multi-fold in water treatment firm Ion Exchange in the last 4 quarters from 0.77% to 5.2%. MF holding has also gone up to 9.78%. The smallcap has more than doubled in the last one year.

3) Bharat Bijlee

Electrical engineering firm Bharat Bijlee has also seen huge institutional investor interest in the last 4 quarters. Mutual funds ownership has gone up from 0.45% to 4.43% while FII holding has also doubled to more than 2%. The stock is up over 80%.

4) Prism Johnson

Both mutual funds and FIIs have gradually increased stake in building materials company Prism Johnson to 5.10% and 3.91%, respectively.

5) Procter & Gamble Health

At the end of the December quarter, MFs raised their holding in Procter & Gamble Health to 8.98% while FII ownership went up to 7.6%.

6) Five-Star Business Finance

MF stake in Five-Star Business Finance has gone up from 1% to 4.17% while FII ownership has also gone up multi-fold to 54.28%.

7) Carborundum Universal

MF holding in the company rose to 28.35% in Q3 while FII ownership also rose to 10.63%. Carborundum Universal reported a muted Q2 mainly due to weak sales in the Ceramics and Electrominerals segment.

“We expect growth momentum to sustain, driven by sustainable demand across segments in the long term. It stands to benefit from multiple factors such as an uptick in capex in its end-user industries, China +1 strategy, strong government initiatives to support domestic manufacturing, and increasing demand prospects for specialty products driven by clean energy initiatives,” Sharekhan said.

8) BASF India

Despite the not-so-encouraging return (14% in one year) seen in BASF India, MF holding has gone up further to 3.33% while FII stake is now at 3.81%.

9) Hindware Home Innovation

MFs have gradually increased stake in Hindware Home Innovation from 1.17% to 4.26% in Q3. On the other hand, FIIs too have turned bullish and raised stake from 4.36% to 7.59%.

Analysts expect Hindware to report strong demand in the next two years owing to healthy industry tailwinds & company’s leadership position in sanitaryware & faucets biz coupled with growing market share in the plastic pipe segment.

“We believe revenue/EBITDA/PAT should grow by 11%/30%/70% respectively over FY23-FY25E. We continue to value the company at P/E(x) of 30x on FY25E EPS of Rs 27 and maintain our target price of Rs803 with a buy rating,” YES Securities said.

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