Fin institutions meeting company managements raises interest in these midcap stocks

Mumbai: Institutional investors are showing maximum interest in mid-cap companies if the trends in the line-up of their meetings with Indian listed firms are to go by. Federal Bank, Persistent Systems, Star Health, Biocon, Greaves Cotton, VIP Industries, Aarti Industries, and Dixon Technologies are among the top midcaps companies that have seen the highest number of management meetings with fund managers in the past three months.

Investor meets are considered a soft indicator of their interest in the stocks, and in many cases in the past, institutional holding rose in those stocks post the meetings.
"Institutional investors usually meet with managements after doing a thorough research of fundamentals. Developments like demand trends, capacity expansions on the drawing board, etc. can be ascertained only after meeting the managements," said VK Vijayakumar, chief investment strategist, Geojit Financial Services. "Normally, meetings with managements are a prelude to accumulating the stock."

Federal Bank is at the top of the list with 159 investors, including almost all the domestic mutual funds and insurers that met the management in the last three months. Though the stock price remained flat in the last three months, Bloomberg consensus estimates show it could gain 30% in a year.

Around 130 institutional investors, including Warburg Pincus, BNP Paribas, Citi, Goldman Sachs, and UBS, have met the management of Star Heath in the last three months.

The stock has risen 16% in the last three months. Institutional investors held nearly 37% stake in the insurance firm as on March 31.

A meeting need not translate into investments, and there is no straight correlation between the number of investors who have visited the company and its share prices.

“We certainly believe that a higher number of institutional investor meetings with companies indicate increased market interest,” said Manish Chowdhury, head of research, Stoxbox. “With indices across all market capitalisations trading in a tight range since mid-2021, numerous mid and small-cap companies have caught investor fancy due to the large headroom for growth, compelling valuations, sustainable and scalable business model, and confidence in the management’s execution capabilities.”