What fund managers are buying in the smallcap, midcap space


demonetisation, the mutual fund industry has had a good show as investors moved from physical savings to financial savings. Flow of money into mutual funds through SIPs has crossed the Rs 4,200-crore mark. Excellent performance from mid and small-cap funds has lead to increased flows into this fund category forcing fund managers to identify new stocks. They have deployed a large part of these increasing flow in mid and-small-sized companies which have potential to show reasonably good revenue growth in the coming quarters.

Increasing construction activities in the southern region, especially Andhra Pradesh and Telangana, and low per capita cement consumption in the eastern region should enhance revenue growth for Sagar Cements which has presence in these regions. Besides, the company will be expanding its capacity to 6MT from 4.3MT, which should help it cater to rising demand in aforementioned regions.

The increasing government regulations and focus on water treatment and water management, along with stricter enforcement of the environmental norms for polluted water discharge, reduced carbon footprint and requirement of zero liquid discharge plants from various industries will also drive the demand for water and wastewater treatment solutions, will benefit the company.

Post demonetisation, organised players in tiles industry are expected to gain more business. Kajaria Ceramics is one of the largest organised tile manufacturers which has a pan-India presence through wide distribution and dealer network. It will be one of the prime benefi -ciaries of the key initiative of ‘Housing for All’ vision and ‘Swachh Bharat Abhiyan’ initiatives of the government.
The company’s diversifi cation from pure cable manufacturer to manufacturing fans and other key cable-related products used widely in houses such as water heaters, miniature circuit breakers (MCBs) and distribution boxes is expected to enhance its revenue growth. It will be one of the key beneficiaries of any improvement in capital expenditure cycle of industrials and real estate.

Co is expected to see significant value unlocking. Post demerger of its non-finance investments, Sundaram Finance will have core focus on business related to finance and emerge as a holding company of non-finance related investments. Besides this, it has superior asset quality, return ratios and experienced management, the company would get full value to its financing business.