Fund managers have sought shelter in defensive stocks in April that are likely to be less impacted by the effects of the Covid-19-led lockdown.
Pharma, healthcare,
insurance and gold loan
companies were their top picks. Funds opted for companies with cheaper valuations, cost efficiency and resilience in these times. Here are few companies that caught fund managers’ attention during the month.
METROPOLIS HEALTHCARE
CMP: Rs 1,215
Buyer: SBI MF / ICICI Prudential MF
Mcap: Rs 6,156 crore
THE PATHOLOGY specialist got approval to conduct Covid-19-related tests. In April, the stock fell close to 3% due to the broader rout and stake sale by Carlyle Group. Fund managers utilised the opportunity to enhance exposure as its fundamentals remain intact.
LAURUS LABS
CMP: Rs 443
Buyer: UTI MF
Mcap: Rs 4,736 crore
BETTER-THAN-ESTIMATED financial performance in the March quarter, presence in anti-malarial drugs and increasing capacity FDF (ingredients used in products) has attracted fund managers. Analysts estimate that for the next six months, tie-up with US-based Rising Pharma will provide steady business for Laurus which will boost its revenues.
HDFC LIFE INSURANCE
CMP: Rs 526
Buyer: Aditya Birla SL MF
Mcap: Rs 1,06,270 crore
STRONG ONLINE presence, franchise and diverse product offerings, makes this a good insurance bet. ICICI Securities estimates in FY21 and FY22, HDFC Life is expected to get new business worth Rs 4,000 crore due to high demand for protection on account of Covid-19 threat, attracting many investors.
MUTHOOT FINANCE
CMP: Rs 816
Buyer: DSP MF
Mcap: Rs 32,733 crore
FUND MANAGERS looking for an allocation to NBFCs are eyeing gold loan companies. With the price of gold moving up 45% in the last one year, Muthoot Finance could lend more to customers making them eligible for larger loans.
DR REDDY’S
CMP: Rs 3,772
Buyer: SBI MF
Mcap: Rs 62,676 crore
THE FACTOR attracting fund managers to the company is that all its manufacturing plants are making drugs meant for the US markets. Analysts believe the clearance from the USFDA also raises the probability of successful launch of high value products. With tight cost controls, operating costs will be lower than revenue growth.