Retail Investors Reap Multi-Bagger Gains Betting on These 29 Stocks for 4 Quarters

Retail investors have become an increasingly influential force in the market in recent years, no longer seen as mere spectators. This development also coincides with a period of fluctuations in the investment choices of foreign investors.

ET Markets analysed the shareholding pattern of retail investors (individuals holding up to Rs 2 lakh) and found that they have increased their stake in 29 companies consistently over the last four quarters.

The data shows that these investments have been very profitable, as stocks have generated exceptional returns over the past year.

Interestingly, several public sector companies like Gail (India), Bharat Electronics, Hindustan Aeronautics, National Fertilisers, ITDC and Shipping Corp, have seen retail investors increase their stake for four consecutive quarters. In the case of National Fertilizers, retail investors increased their stake from 9.48% at the end of the June 2023 quarter to 13.19% at the end of June 2024. This growing confidence in the stock has proven rewarding as the stock price has surged 103% during this period. Similarly, Bharat Electronics has seen its retail stake increase from 5.34% in June 2023 to 9.18% in June 2024. The stock has offered a return of 136% to investors during the same period. ITDC, with a gain of nearly 112% in the last one-year period, has also seen a sustained increase in its retail stake over the last four quarters.

Besides public sector units, retail investors also bet on themes such as renewable energy, construction and engineering, technology and consumer.

Inox Wind, in the renewable energy sector, has caught the attention of retail investors as its stake has increased from 4.19% in June 2023 to 5.97% at the end of June 2024. This has been one of the most rewarding bets as shares have surged over 300% during this period.

Meanwhile, Heritage Foods, backed by the family of Andhra Chief Minister Chandrababu Naidu, is also among the retail favourites with a 28% stake by end-June 2024.

Among the stocks favoured by retail investors over the past one year, Hindustan Construction holds the highest stake of nearly 43%. The stock has not disappointed as it has gained 111% during this period.

What should investors do?

Most of the stocks above belong to the mid and small cap categories, which have seen a strong rally in recent times, pushing valuations even higher.

“Current valuations reveal that midcaps (PE: 43.6, PB: 5.1) and small caps (PE: 29.6, PB: 4.4) are relatively expensive, especially smallcaps, whose market capitalisation ratio has surpassed the levels seen during the 2008 crisis. Given these high valuations, midcaps currently offer a relatively better investment opportunity,” said Kirang Gandhi, Personal Financial Mentor.

Inox Wind recorded its best performance individually in the first quarter and has a strong order book of 2.6 GW. The company expects higher order execution from FY2025, with guidance of 800 MW and 1,200 MW for FY2025 and FY2026E, respectively, and a target of 2 GW of annual execution in the medium term.

Axis Securities is bullish on the stock and has raised the target price to Rs 205, post the first quarter results.

Stocks like HAL and BEL are also favored by analysts, which can be considered as allocation stocks in investors’ portfolio.

“As allocation stocks, if you really want to take a longer term view, maybe BEL, which is still growing at 30-35%, which is not bad, and HAL, which is growing at a very high rate again. These are the two names we are comfortable with,” said Hemang Jani, an independent market expert.

(With data from Ritesh Presswala)

(Disclaimer:The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of Economic Times)