Top 5 Indian Stocks Attracting Massive FII Investments

Foreign institutional investors (FIIs) have rekindled their appetite for Indian equities, with net purchases surging to a four-month high in July 2024.

This renewed bullishness comes on the heels of a strong post-election performance in June, where FIIs injected a substantial Rs 265.6 billion (bn) into the Indian market.

IT and healthcare sectors have emerged as primary beneficiaries of this FII influx, as investors seek to capitalise on growth opportunities in these domains.

Let's explore the five stocks that witnessed significant FII buying during June 2024 quarter.

#1 Indus Towers

First on the list is Indus Towers.

Indus Towers is one of the largest digital communications infrastructure providers in the world that enables communication for millions of people every day.

With customers like Bharti Airtel, Vodafone Idea, and Reliance Jio, the company is one of India's leading wireless telecommunication firms by revenue.

The latest shareholding figures for Indus Towers indicate a notable uptick in FII ownership, climbing from 16.4% in the March 2024 quarter to 23.2% in the June 2024 quarter, reflecting a substantial increase of 6.8%.

Indus Towers, the largest tower infrastructure provider in India, is poised for significant growth amid a positive outlook in the telecom sector and expected tariff hikes.

Bharti Airtel, confident in the growth potential of Indus Towers, is implementing a strategic plan to enhance its telecom tower infrastructure business.

Airtel's strategy involves consolidating the tower business by acquiring Vodafone Plc's stake, which aims to secure dues payable to Indus Towers.

Additionally, Airtel plans to merge the high-growth data centre business, Nxtra, with Indus Towers. This move is designed to unlock value, provide an exit to Carlyle, and make Airtel more asset-light.

Indus Towers is set to benefit greatly from the anticipated tariff hikes, which will improve the financial health of telecom service providers.

The integration of Nxtra's data centre business is expected to add another high-growth area, enhancing Indus Towers' prospects in the future infrastructure sector.

Going forward, Indus Towers' leadership sees strong tower additions and business growth prospects in FY25, largely propelled by its top two telco customers' big expansion ambitions, Bharti Airtel's rural mobile broadband push and Vodafone Idea's upcoming 4G and 5G blitz across priority markets.

The Indus management believes these serious expansion plans of its two biggest telco clients present a lucrative revenue growth opportunity for the company.

For more details, see the Indus Towers company fact sheet and quarterly results.

#2 Aurionpro Solutions

Next on the list is Aurionpro Solutions.

Aurionpro Solutions is a global technology solutions leader that helps clients accelerate digital innovation securely and efficiently.

The company is engaged in providing solutions in corporate banking, treasury fraud prevention, and risk management solutions in internet banking, governance, and compliance.

The most recent shareholding data for Aurionpro Solutions shows a significant rise in FII stake, increasing from 6.3% in the March 2024 quarter to 12.9% in the June 2024 quarter, marking a growth of 6.6%.

This increase can be attributed to the company receiving approval from the Reserve Bank of India (RBI) to operate as an online payment aggregator (OPA) through their AuroPay payment gateway.

This authorisation unlocks significant growth potential by allowing the company to offer digital payment processing services to merchants nationwide, expanding beyond its previous capabilities of facilitating payments within its ecosystem.

With the RBI's nod, Aurionpro can now directly compete with established players in the booming Indian online payments market.

In FY24, the company's revenues increased by 35% to Rs 8.9 bn, compared to Rs 6.6 bn. This rise in revenue, combined with cost optimization efforts, boosted its bottom line. The net profit for the year stood at Rs 1.4 bn, up 40% from Rs 1 bn reported in FY23.

Additionally, Aurionpro delivered a positive performance driven by strategic wins across various segments.

In banking and FinTech, it secured a significant order from the State Bank of India for its next-generation cash management platform, Cashpro+, along with a multi-million-dollar partnership with a prominent US FinTech giant, positioning it for significant growth both domestically and internationally.

Looking ahead, Aurionpro Solutions aims to achieve an ambitious revenue growth target of 30-35% for the current financial year, backed by a strong order book.

The company closed the last financial year with a robust order book exceeding Rs 10 bn.

Aurionpro is targeting an EBITDA margin of 20-22% and a profit after-tax margin of 15-16%.

The company's top management believes that focusing on transit payments, B2B services, and supplier payments will be key drivers of future growth.

For more details, see the Aurionpro Solutions company fact sheet and quarterly results.

#3 Allcargo Gati

Next on the list is Allcargo Gati.

Allcargo Gati is one of India's premier express distribution and supply chain management companies. It provides seamless, end-to-end logistics solutions backed by future-ready digital tools and technology.

The most recent shareholding data for Allcargo Gati shows a significant rise in FII stake, increasing from 0.9% in the March 2024 quarter to 6.9% in the June 2024 quarter, marking a growth of 6%.

This can be attributed to the company's QIP launch.

Allcargo Gati launched a QIP to raise funds from institutional investors and has approved the floor price.

Allcargo Gati is looking to raise as much as Rs 2 bn from the qualified institutional placement of shares.

The base size of the issue is Rs 1 bn, with an option to raise it by another Rs 1 bn.

Allcargo Gati has set the floor price for the QIP issue at Rs 106.7 per share.

Further, for FY24 the company reported a 1% decline in revenue at Rs 16.9 bn. Meanwhile, the company made a net profit of Rs 60 million (m) during the year against a net loss of Rs 110 m in FY23.

Looking ahead, Allcargo Gati plans to optimise its operations and capitalsze on growth opportunities in the logistics sector.

For more details, see the Allcargo Gati company fact sheet and quarterly results.

#4 Timken India

Next on the list is Timken India.

Timken India was incorporated in 1987 as Tata Timken, a joint venture between Tata Iron and Steel Company (TISCO) and The Timken Company, a world leader in bearings. It commenced commercial production at its Jamshedpur plant in March 1992.

The latest shareholding pattern of Timken India reveals a notable increase in FII stake. It rose from 7.2% in the March 2024 quarter to 12.5% in the June 2024 quarter, a growth of 5.3%.

This increase is attributed to strong quarterly results and promising future plans.

For the March 2024 quarter, the company reported a 12.3% year-on-year rise in revenue to Rs 9.1 bn, compared to Rs 8.1 bn. Additionally, net profit surged 35.3% to Rs 1.4 bn, up from Rs 1 bn a year earlier.

Looking ahead, the market expects the company to report revenue growth driven by strong demand from the railway industry and a robust capex plan.

According to the management, the export segment, which had been declining in recent quarters (from 28% in FY23 to 20% in FY24) due to the global economic slowdown, is anticipated to gradually recover starting in Q1FY25, with peak recovery expected in Q2FY25.

The company aims to increase export contribution to 25-30% over the next 2-3 years.

For more details, see the Timken India company fact sheet and quarterly results.

#5 KFin Technologies

Last on the list is KFin Technologies.

KFin Technologies is a leading technology-driven financial services platform.

The company provides services and solutions to asset managers and corporate issuers across asset classes in India. It also provides several investor solutions including transaction origination and processing for mutual funds and private retirement schemes in Malaysia, the Philippines, and Hong Kong.

Recent shareholding data for KFin Technologies shows a rise in FII ownership, increasing from 16.7% in the March 2024 quarter to 22.8% in the June 2024 quarter.

This rise can be attributed to strong quarterly earnings.

For the March 2024 quarter, the company's revenue surged 25% to Rs 2.3 bn from Rs 1.8 bn a year back. Meanwhile, its net profit surged to Rs 745 m, up 30.6% in the March 2024 quarter, driven by growth across business verticals.

For FY24, the company's revenue jumped 16.3% to Rs 8.4 bn, while the net profit rose 26% to Rs 2.5 bn.

Going forward, the company is looking to diversify its product range.

For more details, see the KFin Technologies company fact sheet and quarterly results.

Conclusion

Buying stocks that Foreign Institutional Investors (FIIs) are purchasing can offer several advantages.

FIIs conduct extensive research and use sophisticated analytical tools, providing security as their investment decisions are backed by professional analysis.

Their significant market influence often drives stock prices up, creating positive momentum from which you can benefit.

Further, stocks with high FII interest also tend to have better liquidity, making them easier to buy and sell without significantly affecting the stock price and reducing transaction costs.

However, it is essential to conduct your research and consider your financial goals and risk tolerance.

While following FII trends can be beneficial, it should not be the sole basis for your investment decisions.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...