Insiders are aggressively buying these 5 stocks. More details here…

The other day, I was shopping for shoes with my mother. We ignored well-known brands like Bata India or Relaxo Footwears and went to a local vendor who makes shoes.

There was a particular pair of shoes that I really liked. However, after much discussion with the manufacturer about the price and quality, my mother said that we should look for better alternatives.

Once we were out of the unit, I asked him why he had rejected those shoes. here is his answer,

“Did you see the hesitation on his face when I asked if these shoes were sturdy? Why should we trust him when he himself doesn’t believe in his product?

We bought the shoes from another vendor.

An owner’s belief in his product is very important. Because it is the belief of an owner that attracts the belief of other people in the product.

You must have watched some episodes of Shark Tank India and realized in some cases that the sharks are betting on the person and not the product.

That is why Promoter’s stake in the company Shows their confidence in the company. Many investors often track the buying and selling activity of promoters to get a gist of what the promoters of the company are doing and whether they are confident of the company’s growth.

Today, let’s look at five Indian companies that have seen insider buying for consecutive quarters.

The promoters of these companies have increased their stake for at least four quarters.

#1 Maharashtra Seamless

First on the list is Maharashtra Seamless.

Maharashtra Seamless is the flagship company of the well diversified DP Jindal Group.

It is engaged in manufacturing of Seamless and ERW Steel Pipes and Tubes. The company has also diversified its business portfolio into renewable energy generation.

The shareholding pattern of Maharashtra Seamless shows that insiders or promoters have increased their stake in the company for six consecutive quarters.

In June 2021, he held 63.73% stake which has increased to 67.63% for the quarter ending December 31, 2022.

Maharashtra seamless shareholding pattern

There could be several reasons for the promoters’ growing confidence in the company.

Maharashtra Seamless has a 55% market share in the seamless pipe segment with manufacturing facilities at Nagothane and Mangaon in Maharashtra and Narketpally in Telangana. The company derives a major portion of its revenue and profit from this segment.

Operating and Finance Performance

Data Source: Investor Presentation

The outlook for the seamless segment is bright. The global seamless pipe market is expected to witness a strong growth in demand for OCTG pipes, driven by resurgence in exploration and production activity in the oil and gas sector and greater emphasis on horizontal and directional drilling operations.

Another major driver for the growth of the seamless pipe market is the growing demand from the sugar and chemical industries where boilers and other chemical processes are frequently used.

Various initiatives taken by the Government of India to promote the Oil & Gas sector are a blessing in disguise for the company.

Demand from the oil and gas industry is a major driver for Maharashtra Seamless

#2 GNA Axel

Incorporated in the year 1993, GNA Axles is a Punjab-based manufacturer of Rear Axle Shaft, Other Shafts and Spindles used in On-Highway and Off-Highway vehicles segments in India.

The company is primarily engaged in manufacturing and selling of auto components for the four wheeler industry.

The shareholding pattern of GNA Axles shows that insiders or promoters have increased their stake in this auto ancillary company for four consecutive quarters.

In December 2021, he held 67.52% stake which has increased to 68.08% for the quarter ending 31st December 2022.

GNA Excels Shareholding Pattern

So why are insiders taking a stake in GNA Excels? Could be due to various reasons…

The first reason is the buoyant demand for auto components despite weak exports.

Here’s what we wrote in a recent article:

The company may see a spurt in sales of Class 8 trucks. In September 2022, these truck variants received heavy orders in North America. But the next two months were weak.

In its 2021-22 annual report, GNA Axles said it was expecting the North American truck market to post double-digit growth within the next 18 months.

The company enjoys a leading market share of over 50% in the supply of rear axle shafts, spindles and drive shafts in the domestic tractor and CV segments. More than 50% of its revenue comes from exports.

The company also enjoys group synergy. GNA Group which also includes GNA Gears was established in 1946 and has a long track record of operations.

Plus, it’s not just the promoters who are excited about the company… even Mutual funds have steadily increased stake in the company,

#3 Sasken Technologies

Sasken Technologies is an Indian multinational technology company, based in Bangalore, India, that provides product engineering and digital transformation services to global clients in industries such as semiconductors, automotive, consumer electronics, enterprise-grade devices, smart devices and wearables, industry provides. Telecom.

The shareholding pattern of Sasken Technologies shows that insiders or promoters have increased their stake in this IT company for six consecutive quarters.

In June 2021, he held 40.48% stake which has increased to 43.38% for the quarter ending December 31, 2022.

2022 was a nightmare even for India’s best IT stocks. Poor financial performance and high attrition rate along with other factors played havoc for investors in IT stocks. However, the winds are slowly changing.

2023 could be a year of reset and revival for Indian IT stocks. The tech sector is set to undergo significant changes in 2023 as a result of new technologies, hiring strategies and government reforms, and the sector’s potential will be tested.

Globally, a deep understanding and acceptance of India being a preferred destination for IT services due to its access to talent, strong work ethic and recently thought of as an innovation home among the world’s most successful crop of start-ups Is.

Therefore, as per the report, the Indian engineering R&D market is likely to witness a compound annual growth rate of 12-14% for the next 2-3 years.

After three decades and several cycles of disruption and change, Sasken Technologies has evolved into a strong contender in the engineering R&D and digital services sector, with the ability to deepen existing competencies and build new ones in response to emerging market needs. have built.

#4 Mon Distilleries and Breweries

SOM Distilleries & Breweries manufactures and sells spirits, beer and alcopop in India and internationally. The company offers beer, whiskey, rum, vodka, brandy, etc.

It also offers ready-to-drink products under the Cosmo Cranberry, Knotty Orange, Passion Fruit and Tangy Lemon brand names.

The shareholding pattern of Som Distilleries & Breweries shows that insiders or promoters have increased their stake in the beverage company for four consecutive quarters.

In December 2021, he held 24.48% stake which has increased to 32.72% for the quarter ending December 31, 2022.

In a board meeting held on 9 December 2022, Mon Distilleries and Breweries approved a proposal to set up a new canning facility in Bhopal with an investment of one billion rupees and expand its existing utilities.

The company’s expansion plan also includes expanding the brewing facility at the Hassan plant of Woodpecker Distilleries and Breweries. The company hopes to complete the expansion plan in time to be ready for the summer season.

The board also approved a rights issue to finance the expansion plan. The company will issue fully paid equity shares of Rs 5 each, aggregating to Rs 490 million.

So capacity expansion could be one of the reasons for the promoters rally. Other reasons could be the company’s strong market share and strong third quarter numbers.

The company reported a net profit of Rs 105.2 million for the quarter ended December 31, 2022, as against a net loss of Rs 11.2 million during the year-ago period. The net profit for the quarter is up 28% sequentially.

The company’s total sales grew by 101% to Rs 30.8 billion in the quarter ended December 2022, as against Rs 15.3 billion during the previous quarter ending December 2021. December 2022 sales are up 19% sequentially.

#5 NCL Industries

NCL Industries is one of the leading cement and construction material manufacturers and suppliers in India. The company started manufacturing cement under the brand name Nagarjuna and established a premium brand image, especially in the coastal districts of Andhra Pradesh.

The shareholding pattern of NCL Industries reveals that insiders have increased their holding in NCL Industries for six consecutive quarters.

In June 2021, he held 43.73% stake which has increased to 46.48% for the quarter ending December 31, 2022.

A news headline went viral in September 2022:

India overtakes Britain to become world’s fifth largest economy

This title filled every Indian with pride, even those who contributed zero to the economy. Jokes apart, it is clear from the title that India’s economy is growing at a rapid pace.

When an economy is growing, people invest more in infrastructure as the standard of living increases. Therefore, a growing economy suggests a boom in the infrastructure sector. And the fast growing infrastructure sector suggests an increasing demand for cement.

Cement demand is strong and prices are likely to remain stable with an uptrend in the near future.

The increasing demand for cement will be a big boost for NCL Industries as it sells a reputed brand of cement. Being one of the most popular brands in the southern region, it is expected to witness a sharp growth in sales which will eventually lead to higher profits and better earnings per share.

Track promoter buying activity on Equitymaster’s stock screener

You can track which stocks promoters are buying using Equitymaster’s India stock screener.

The tool also tracks what foreign investors are buying and selling and domestic mutual funds buying and selling.

Warning

When insiders are buying stake in their company through the open market, it can mean two things… Promoters may be of the view that Shares are undervalued Or they think something big is going to happen in the company. They may know something that the retail person does not.

However, it must be noted that promoter buyout cannot be the only reason to invest in a stock. Sometimes insiders may continue to buy stakes to prop up their share price even when there is no reason for the company to be bullish.

Veteran investor Peter Lynch effectively summed up the dilemma of such stocks in a quote,

“When insiders are buying, it’s a good sign, unless they’re New England bankers.”

New England’s remarks reflect the folly of the promoters of the Texas and New England banks. They had high stakes in their own banks, even when they had no strategy to change the share price. Ultimately the bank had to be closed.

Therefore, high promoter holding should be an additional point in your list of finding a fundamentally strong company.

Disclaimer: This article is for informationfor purposes only. This is not a stock recommendation and should not be consideredLike this.

This article is syndicated equitymaster.com