Mutual Funds Bought Stakes at these IPOs During the March Quarter

Experts say that fund managers buy company stocks in a small area with small business models and basic betting.

Co-operative fund managers participated in 12 of the 17 companies listed in the March quarter with a combined market value of more than Rs 3,200 million as of March 31, data from Morningstar India showed.

The IPO market continued to grow in the first quarter of the 2021 calendar year as 17 companies received Rs 18,800. This is the highest since January-March 2018, when 14 companies received Rs 19,275 crore.

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“MFs invest in IPOs in two ways. First, strategy (ly) – spending money on IPO values that result in profit listing. Secondly, (the opportunity) to invest in new companies with good businesses with good long-term prospects,” said Srinivas Rao Ravuri, CIO – Equities, PGIM India Mutual Fund.

Many major ticket companies appeared on buses during the March quarter, such as India Railway Finance (IRFC), a wholly-owned company Indian Railways, Indigo Paints, Home First Finance, and Kalyan Jewelers.

Experts say that fund managers buy company stocks in a small area with small business models and basic betting.

Many large ticket companies began appearing in the banks of the March and FII fund managers looking for new ideas in the IPO space on solid foundations and selling at lower prices compared to their peer list, “said Vinit Bolinjkar, Head. For research, Ventura Securities Ltd.

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The IPO investors are MTAR Technologies, making Indian rocket engines Home First Finance Company, Stove Kraft. This is actually a bet, and the growth of their business is better than the performance of the right sector. So we would recommend that investors hold their positions in these stocks,” he said.

That is to say, and experts also warn that being held hostage by domestic or foreign fund managers should not be the only situation for investors trading to choose these shares. Robust business model, current business growth rate, book volume, business channel, and equity are also important factors.

In particular, fund managers are exploring the potential for price recovery and future wage growth and the resilience of this growth given the market size and channel of the company in the market. In an interview with Moneycontrol’s Kshitij Anand, Ravuri said investors Jaipuria, Founder & Managing Director at Valentis Advisors Pvt. Ltd.

This holds actual events for stocks like Home First Finance and Stove Kraft, which have emerged as favorites of both domestic and foreign fund managers. At the end of March 31, 2021, domestic and foreign institutions kept both at least 5 percent of the cells in both cells – the only 17 recorded quarterly in March.

Firstly, we believe the company has the right foundations. Still, if we look at the second wave of the virus, we should wait for further clarification as the limitations could affect the company’s financial performance,” he said.

“At Stove Kraft, it’s promising prospects for long-term growth, but we will suggest that investors wait until there are tangible signs of recovery within the company’s financial performance,” he added.