3 SME Stocks with High Institutional Holding

When institutional investors or mutual funds invest in a specific stock, it often reflects their belief in the company's long-term potential.

These big names in the industry have access to vast pool of resources, they conduct detailed research and are very selective with their choices.

Moreover, the interest of these investors can boost a stock's visibility, increasing the underlying liquidity and ultimately drawing more attention.

Institutional investors become more compliant when the stocks under consideration are penny stocks or small and medium-sized enterprises (SMEs).

In today's article, we'll look at some SME stocks with high institutional holding (mutual funds and domestic + foreign institutions).

#1 Sona Machinery

First on this list is Sona Machinery.

As of June 2024, institutional holding in this SME stock stands at 6.2%. 3.4% is held by alternate investment funds while foreign portfolio investors hold 2.7% stake.

Sona Machinery is a leading manufacturer of agro-processing equipment, catering to rice milling, flour milling, and seed processing industries.

The company offers a range of products, including grain cleaning, grading, dehusking, and packaging machines. With a presence in 50+ countries, Sona Machinery serves markets in Asia, Africa, and South America, focusing on both domestic and international clients in the agricultural sector.

For FY24, Sona Machinery achieved a revenue of Rs 950 million (m) and an operating profit of Rs 150 m, reflecting a YoY growth of 15% and 20%.

The company is a big beneficiary of PMKSY scheme. The government of India has allocated Rs 4,600 crore under the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) until FY26.

This scheme promotes mega food parks, expansion of food processing and creation of infrastructure for agro processing clusters.

That is why, promoters of the company have also planned for a capex to make the most of this opportunity.

With the government's increasing emphasis on agro-processing and mechanisation, Sona Machinery aims to expand its footprint in both established and emerging markets, targeting double-digit growth in the coming years.

#2 Pratham EPC Projects Ltd.

Next on the list is Pratham EPC Projects.

As of June 2024, institutional holding in the company stands at 8.3%.

Promoters hold 73% while the rest is held by retail public.

Out of the 8.3%, 0.1% is held by insurance companies while foreign portfolio investors (FPIs) hold 8.11% as of June 2024.

Pratham EPC Projects operates in the infrastructure sector, focusing on engineering, procurement, and construction (EPC) projects across power, oil & gas, and urban development sectors.

The company has a wide geographical reach with projects in India, Southeast Asia, and the Middle East.

For FY24, Pratham EPC recorded its highest-ever consolidated revenue of Rs 690 m, with its operating profit margin coming in at 21%.

The company's net profit improved to Rs 100 million in FY24 due to better project execution and cost management strategies.

Pratham EPC Projects is well-positioned for future growth, especially with a robust pipeline of power and urban development projects expected over the next two years.

The company has also incorporated a wholly owned subsidiary, Pratham International Contracting - LLC, in the Emirate of Abu Dhabi. The subsidiary will operate in the hydrocarbon infrastructure industry, focusing on pipeline installation, maintenance, and electromechanical equipment contracting within oil and gas fields.

The company has guided for double digit margins for the financial year FY25.

#3 Basilic Fly Studio

Next on this list is Basilic Fly.

As of June 2024, institutional holding in Basilic Fly Studio stands at 1.3% with most of the shares owned by FPIs.

Promoters of the company have 59.9% stake while the rest is held by individual investors.

Basilic Fly Studio is an animation and visual effects (VFX) company, offering services to film production houses, gaming companies, and digital content creators.

With a client base spread across the US, Europe, and Asia, Basilic Fly Studio has gained a reputation for delivering high-quality VFX and animation services.

For FY24, the company's sales grew by 42.8% while net profit came in at Rs 360 m, up 27.7% YoY.

The company has completed 10,000 projects, including movies, 2,000 series, and 8,000 commercials, with 300 plus clients.

Basilic Fly Studio recently marked a significant milestone with the launch of Lightrunner Studio in the UK, extending its capabilities to deliver top-notch visual effects for feature films, television, and advertising.

With increasing demand for VFX and animation in entertainment, Basilic Fly Studio aims to maintain above industry average growth rate and expand its presence in global markets.

Which Other SME Stocks Have High Institutional Holding?

In addition to the above stocks which we discussed in detail, several other companies are noteworthy for their significant institutional holdings.

Esconet Technologiesv is making strides in the IT services sector, focusing on innovative software solutions that cater to various industries.

Beta Drugs specialises in pharmaceutical manufacturing and has seen growing demand for its high-quality generic drugs, reflecting a strong growth trajectory.

Meanwhile, Hi-Green Carbon operates in the green energy sector, concentrating on sustainable solutions that meet the rising demand for environmentally friendly products.

Oriana Power is involved in renewable energy projects, capitalising on the global shift towards sustainable power sources and contributing to India's energy security.

Lastly, Kotyark Industries Ltd. is a player in the manufacturing sector, focusing on quality production and expanding its market reach, which has garnered investor interest.

All these companies highlight the diverse opportunities within the SME sector and showcase the potential for growth driven by both innovation and sustainability.

When institutional investors invest heavily in small and medium enterprises (SMEs), it often reflects their belief in the potential for substantial growth and stability within these companies. These institutional investors typically conduct rigorous analyses, highlighting the sound fundamentals and strategic advantages that can position SMEs for success.

However, it's essential for investors to consider the underlying factors, including financial performance, industry trends, and competitive positioning. While significant institutional ownership can enhance a stock's visibility and credibility, it can also introduce volatility if large fund managers decide to divest their positions.

It is crucial for investors to remain vigilant and conduct thorough research before making investment decisions.

Happy Investing!

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...