Six of 8 small investors' favourites of March quarter have let them down

NEW DELHI: Equity bets did not reward retail investors much in the March quarter of 2021, even though the benchmark indices hit record highs.

Data showed four of eight stocks, where retail investors hiked stakes by over 100 basis points during the March quarter, delivered negative returns between 18 per cent and 44 per cent. Two of the remaining four have lagged Sensex's 9.1 per cent return year to date.

Small investors, individual who hold up to Rs 2 lakh worth of shares in a counter, hiked stake in Bliss GVS Pharma by 304 basis points to 13.85 per cent in March quarter from 10.81 per cent in December quarter. The stock has plunged 44 per cent year to date.

Bandhan Bank saw small investors hike stake to 4.83 per cent by the end of March quarter from 3.52 per cent at the end of the December quarter, up 131 basis points. This scrip is down 22 per cent year to date.

In the case of Amara Raja Batteries, retail bets jumped by 137 basis points to 8.31 per cent from 6.94 per cent sequentially, but the stock is down 18 per cent so far in 2021.

Astrazeneca Pharma India is another stock, which saw retail investors raise their stake by 116 basis points to 12.92 per cent from 11.76 per cent in March quarter but is now down 17.83 year to date.

In the case of Bliss GVS Pharma, the drugmaker reported a 28.69 per cent YoY drop in March quarter net profit at Rs 6.24 crore against Rs 8.75 crore reported for the same quarter last year. Sales rose 10 per cent to Rs 132.05 crore.

Analysts are not impressed with Bandhan Bank, as 17 per cent of its March 2020 loan book turned sour in FY21. Besides, March quarter gross NPA ratio at 6.8 per cent looked artificially suppressed as 25 per cent of NPA was written off. The YoY growth in the loan portfolio stood at 21 per cent.

"High loan growth driven by top-up loans/increased ticket sizes seems to be an attempt by the bank to outgrow its asset quality issue by bringing the denominator effect into play. However, with the second wave of Covid negatively impacting collection efficiency, this strategy is going to backfire in FY22E," Ambit Capital said in a note.

In the case of Amara Raj Batteries, valuations were a big worry. Even after factoring in strong volume growth led by a recovery in automotive OEM and industrial
segments from second half of FY22, the company’s valuations look expensive at 16.4 times FY2023 EPS estimates, Kotak Institutional Equities said.

“With low investments on R&D and limited expertise in the lithium-ion technology, we believe multiple re-rating is unlikely," it said.

AstraZeneca is not tracked by too many analysts.

Bombay Dyeing gained 2.7 per cent year to date, but fell short of the 9 per cent rise in the Sensex so far this year. Care Ratings' returns of 8.8 per cent also fell marginally short of Sensex's. Retail holding had jumped by 550 basis points in Care Ratings and by 110 basis points in Bombay Dyeing during the March quarter.

Two stocks that rewarded small investors were Central Bank of India (up 53.79) and Amber Enterprises (up 17.67). Some reports suggest Central Bank is among the top contenders of privatisation, and this is what has driven up the stock in recent months.

“We continue to like Amber for its focus on new business opportunities either through the government’s Atmanirbhar scheme or a shift in focus on the China + one strategy by adding key clients amid the pandemic. We believe its strong balance sheet will help the company sail through the near-term challenges," ICICI Securities said.