Five out of six BSE500 stocks, where retail investors increased stakes by at least 50 basis points in each of last four quarters, are down up to 60 per cent year-to-date, data compiled from corporate database AceEquity suggests. They included IT names such as Zensar Technologies and Birlasoft, graphite electrode manufacturer HEG, power trading platform IEX and sugar producer Balrampur Chini Mills.
Shares of Zensar Technologies have plunged 59.68 per cent year-to-date. Small individual investors, holding up to Rs 2 lakh worth shares, accounted for 19.76 per cent stake in this company as of September 30. This was 431 basis points higher than June quarter’s 15.45 per cent stake. Retail investors had 13.75 per cent stake in the company as of March quarter, 10.89 per cent in December and 9.18 per cent in the year-ago quarter, data showed.
Analysts noted that the company is facing short-term demand challenges due to macro headwinds in high-tech & manufacturing and consumer service segments . Even as the management has retained the guidance of achieving mid-teen margins by Q2FY24E, they recently cut earnings estimates for FY23-25.
Shares of HEG have fallen 43 per cent in 2022 so far. Retail stake in this company has risen consistently in each of last four quarters — by at least 90 basis points, to 21.41 per cent in September quarter from 14.04 per cent in the year-ago quarter.
ICICIdirect has upgraded this stock to ‘Buy’ from “Hold’. It said countries across the world are moving towards their carbon neutrality goals and that corporates are adopting environment friendly manufacturing processes.
“Steel manufacturers are gradually moving towards the EAF process, auguring well for graphite electrodes demand over the medium to long term horizon. This is likely to support an uptick in graphite electrode prices,” it said.
Birlasoft is down 50 per cent year-to-date. Retail stake in this IT firm has hit a high of 19.44 per cent in September quarter compared with 12.09 per cent in the year-ago quarter. Birlasoft’s September quarter results were a mixed bag. The quarterly performance was weaker than expectations due to delays in deal ramp-up, furloughs at certain clients, and postponement in expected work extension after the completion of a large project.
Emkay in a recent note said the company continues to grapple with weakness in life sciences and E&U and is witnessing a trend of elongated deal closure and execution cycle. But the company has not seen any project cancelations.
“Despite potential furloughs in Q3 and prevailing macro uncertainties, management remains confident of delivering double-digit revenue growth in FY23, considering improving supply-side situations, strength in BFSI and manufacturing, and healthy deal wins. We have cut our EPS estimates by 1.9-3.3 per cent for FY23E-25E, factoring in Q2 performance. Revenue growth acceleration remains key for stock price performance in our view,” it said.
IEX is down 45 per cent year-to-date. Retail holding in this stock stood as high as 39.61 per cent in September quarter against year-ago’s 19.21 per cent. Analysts cited the recent loss market share and said there are risks to near-term volume. One would wait for extensive time series data before writing off IEX’s monopoly status, they said.
Balrampur Chini Mills has fallen 5 per cent this year. Retail stake in this company stood at 18.10 per cent in September quarter against 14.56 per cent in the year-ago quarter.
Centrum Broking in a note today said: “Raw sugar prices rose to the highest prices in more than seven months recently and currently are marginally below the five year high rates . Notably, after factoring the rupee depreciation of 8-9 per cent during the year (28 per cent since 2017 high) the current rates surpassed that highs. In nutshell, current rates are very remunerative for Indian sugar mills and they should be easily able to export 6MMT quota much before the May 2023. As per Balrampur management more than 4 mmt have already been contracted.”
The brokerage has a buy rating on the stock with a target of Rs 486.
Meanwhile, Amara Raja has made a strong recovery from June low of Rs 438.15. The stock is flat year-to-date. For September quarter, the company reported one of its best quarterly performances in recent times, analysts said.