Sun Pharma and HCL Tech find place in MFs' top ten picks

Fund managers allocate 2.5% of equity assets; oust Bharti Airtel and BPCL

The top 10 stock picks of local equity fund managers has undergone a change, with Dilip Shanghvi-owned Sun Pharmaceutical Industries and IT major HCL Technologies making it to the list. Telecom giant Bharti Airtel and state-owned oil marketing company Bharat Petroleum Corporation (BPCL) are no longer on the list.

 

It was only recently that these two companies were among fund managers’ top 10 preferred stocks. The replacement came during a month when key stock indices remained weak marked with steep volatility. Sun Pharmaceuticals, in particular, deserves special mention as in late April minority shareholder Daiichi Sankyo had offloaded its entire 8.93 per cent stake. The stock had fallen over eight per cent as there was an increased supply of nearly 214 million shares.  Fund managers had purchased about 27 million new shares of the company at a cost price of Rs 2,534 crore. With this, they more than doubled the number of shares in their holdings to 47.18 million shares against 20.18 million shares. As on 31 May, fund mangers allocated 1.25 per cent of total equity assets or Rs 3,727 crore.

 

“The stock had dipped about 25 per cent in a short time and that was a good opportunity to pick up the cheap stocks. Though the counter has further corrected from that level, I believe it is still a compelling case to buy,” said equity head of a large fund house.

 

It is probably the first time after a long phase that a pharma company has emerged among the most sought after stocks by fund managers. HCL Technologies, on the other hand, is the second IT stock to be in the top most allocated company in fund managers' radar along with Infosys. Fund managers believe IT could be a good contrary bet as stocks have already been beaten a lot. Put together, fund managers have allocated Rs 3,714 crore as on May 31.

Research analyst with Angel Broking has maintained a buy on HCL Technologies with a target of Rs 683. In its report, the brokerage said, “The (HCL) management remains confident of reverting back to the original profitability by FY18. We expect a CAGR of 20 per cent in dollar revenue over 2015 to 2017.”

As on 31 May, the overall equity asset under management stood at Rs 3.65 lakh crore.