Top 3 Small-Cap Stocks That Attracted Mutual Fund Buying in July 2024

July 2024 was a stellar month for small-cap stocks in India, with the Nifty Smallcap 250 Index surging by nearly 5% and touching an all-time high of 18,038.10. This marked the second consecutive month of gains for the index, significantly outperforming the frontline indices. The remarkable performance of small-cap stocks caught the attention of mutual fund managers, leading to substantial buying activity. Here are the top three small-cap stocks that saw significant buying interest from mutual funds in July 2024.

1. KSB Ltd: Capital Goods Powerhouse

KSB Ltd., a 40.5% subsidiary of the German company KSB SE & Co. KGaA, stands as a leader in the Indian industrial pumps and valves sector. The company produces a diverse range of pumps used in various industries, including agriculture, wastewater treatment, energy (both nuclear and conventional), and oil and gas. With seven manufacturing plants across India, KSB is well-positioned to cater to a broad spectrum of industries.

Why Mutual Funds Are Interested:

KSB’s collaborations with Siemens and ABB for locomotive projects are yielding positive results, positioning the company as a key supplier in the railway segment. The company’s strong order book, coupled with its focus on expanding product offerings and enhancing operational efficiencies, makes it a compelling choice for mutual fund managers. Despite some project-related challenges, the management remains optimistic about KSB’s growth prospects, which likely attracted the inflow of nearly ₹3,000 crore in July alone.

2. PG Electroplast Ltd: A Leader in Electronics Manufacturing

PG Electroplast Ltd. (PGEL) is a leading provider of Electronics Manufacturing Services in India, specializing in Original Design Manufacturing (ODM), Original Equipment Manufacturing (OEM), and Plastic Injection Moulding. As a pioneer in its field, PGEL serves top Indian and global brands, making it a one-stop solution for electronics manufacturing.

Why Mutual Funds Are Interested:

PG Electroplast reported all-time high quarterly profits and sales in Q1 FY ’25, with revised operating revenue guidance of at least Rs 3,650 crore for PGEL and an additional Rs 600 crore for its joint venture, Goodworth Electronics. This brings the group’s operating revenue to an impressive Rs 4,250 crore. The company also revised its net profit guidance to at least Rs 216 crore for FY ’25. With a strong focus on improving capital efficiency and delivering industry-leading growth, PGEL’s promising future has drawn mutual fund inflows of about Rs 1,870 crore in July.

3. PNB Housing Finance Ltd: Steady Growth in the Financial Sector

PNB Housing Finance, promoted by Punjab National Bank, offers a range of housing and non-housing loans, including home loans, loans against property, and non-resident property loans. The company has shown strong performance in recent quarters, making it an attractive investment for mutual funds.

Why Mutual Funds Are Interested:

PNB Housing Finance achieved a double-digit growth of 14.4% YoY in retail loan assets and reduced its gross NPA by 241 basis points YoY to 1.35%. The company is working towards achieving a 1% NPA by the end of the year. Additionally, considerable recoveries from written-off accounts have contributed to a reversal in credit costs, with around Rs 80 crore recovered from the total written-off pool in Q1. These positive developments have resulted in mutual fund inflows of Rs 1,329.14 crore in July, reflecting strong confidence in the company’s future prospects.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.