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These 3 small caps saw substantial stake increase by mutual funds

These 3 small-caps saw substantial stake increase by mutual funds

These 3 small-caps saw substantial stake increase by mutual funds
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By Mousumi Paul  Aug 28, 2019 2:03:04 PM IST (Updated)

The stock market has been volatile and continuously under-pressure since last two months but after the government’s announcement on the FPI rollback, investors’ sentiment has turned positive. Interestingly, in last one year, mutual funds have heavily in small-cap companies despite the Nifty Smallcap 100 index falling about 28 percent.

The stock market has been volatile and continuously under pressure since last two months. but after the government’s announcement on the FPI rollback, investor sentiment has turned positive. Interestingly, in the last one year, mutual funds have invested heavily in small-cap companies despite the Nifty Smallcap 100 index falling about 28 percent.

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As per the data compiled by Value Research, there are three small-cap stocks wherein the mutual funds have raised their stake more than 5 percent in the last one year.
ISGEC Heavy Engineering is into manufacturing and sale of sugar. In the last one year, the company saw mutual funds’ investment rising to 10.32 percent from 5.87 percent.
The company’s engineering segment forms 80 percent of the total revenue. With 10 subsidiaries and joint ventures, the company is heavily diversified into heavy engineering, manufacturing and sale of sugar.
On the earnings front, the company’s consolidated net sales during the June quarter rose 29.39 percent year-on-year (YoY). However, consolidated net profit dropped 40 percent YoY on the back of increased total expenses. The company, in the last one year, has corrected 47 percent and currently trades at a P/E of 19x.
The second stock is Sheela Foam, which in the last one year saw mutual funds increasing their stake to 18.20 percent from 8.54 percent in June last year. Since last year, Sheela Foam has corrected 27 percent, with high P/E valuation of 42x.
Sheela Foam is a leading  mattress and foam manufacturer in the country. The company is spread across Australia (5 facilities) and India (9 facilities) with 2,750 retail outlets. In terms of financials, it has posted a consolidated net revenue increase of 2.43 percent YoY in the June quarter, 2019 . Net profit during the quarter jumped 19 percent YoY.
The third stock that saw the most amount of investment from mutual funds is Indian Energy Exchange. The funds increased stake to 9.48 percent from 4.36 percent last year. The stock in the last one year has corrected 21 percent with P/E valuation of 25x.
Indian Energy Exchange is a power trading platform that involves physical delivery of electricity. The company has 98 percent market share. On the financials front, the company delivered poor results during the first quarter of the current fiscal year. Net sales fell 9.58 YoY while net profit fell 5.50 percent YoY.
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