Institutions tend to have significant sums of money, and therefore, they are welcomed with open arms by the companies and stock market. Such entities include (but not limited to) mutual funds, pension funds, hedge funds, and PE firms. Interests of large and global institutional investors are in line with those of smaller shareholders. However, institutional involvement is not always a good thing—mainly when institutions are selling their stakes. This can impact the market sentiments and can bring a downturn in stock market. There are certain global institutional investors holding some of the top Indian stocks and these stocks have strong track record.
Institutional investors are those organizations which control a lot of money and purchase significant volumes of securities. Such financial institutions own shares of the stock on behalf of their clients and they tend to be a major force behind supply and demand in stock market. There are several global institutional investors who are holding top Indian stocks in their portfolios such as Goldman Sachs, JP Morgan, Morgan Stanley, etc. One of the critical benefits of global institutional investors investing in top Indian stocks is their involvement being seen as smart money. Retail investors replicate investment methodologies of global institutional investors and they tend to track portfolio of such investors closely.
Goldman Sachs has invested its money in some of the top Indian stocks and this article will be beneficial for readers who plan to replicate the portfolio of such global institutional investors.
1. Gokaldas Exports
The company has been categorised as a global leader and one-stop destination for leading apparel brands. Gokaldas Exports Limited is premier apparel manufacturer, and offers a broad range of apparel products, which includes outerwear, activewear and fashion wear for all seasons.
Gokaldas Exports Limited, through its wholly owned subsidiaries, has entered into an agreement for the acquisition of Atraco Group. Product range of the company includes shorts, pants, shirts, t-shirts, blouses and dresses. Equity value of the transaction is to the tune of US$55 million and this will be funded by a mix of debt and internal accruals.
Transaction should comprise of acquisition of shares and assets and will be subject to regulatory approvals. It should be closed by 3Q24 (October -December 2023).
Even in volatile operating environment, the company stood strong with year-on-year revenue growth of 25% and net profit growth of 48%. It saw muted volume in 2H23 as a result of prevailing market conditions. However, its execution excellence resulted in consistent growth in operating margins and improvement in quarterly profits. Strong performance during the year stemmed from its healthy order book and effective capacity utilisation.
Retail apparel sales in the US should see good momentum starting from 2H24. However, demand faced challenges because of high inflation. Hikes in interest rates by central banks throughout economies might impact consumers’ disposable income, which can impact consumer demand. That being said, long-term industry structure is still positive, with focus of brands on China plus one sourcing strategy and suppliers’ consolidation.
2. SJS Enterprises
The company is a leading players in Indian decorative aesthetics industry. It has been categorised as a “design-to-delivery” aesthetics solutions provider and has ability to design, develop and manufacture diverse product portfolio for customers principally in automotive and consumer appliance industries.
The company has released its audited financial results for quarter ended June 30, 2023. It saw strong performance, surpassing industry production volumes. EBITDA of the company came in at INR313.8 million on margin of 26.1%, impacted by ~30 basis points on account of one-off expense under other expenses of INR8 million. Net Profit (PAT) for 1Q24 came in at INR180.0 million on margin of 15.4%.
Domestic sales of the company saw 8.4% year-over-year growth as a result of 14.2% year-over-year growth in automotive segment. Recovery was seen in exports, delivering year-over-year growth of 90.8% due to 120.7% increase in automotive segment and 72.2% rise in consumer appliances segment.
Exports initiatives continue to support performance of the company because of new business wins and improved exports market outlook. Appointment of sales agents in South America continues to help the company in strengthening presence in that region. The company sees gradual pickup in demand in Europe too. It saw cash flows of INR77.1 million during 1Q24, taking total cash & cash equivalents balance to INR2,849.7 million. Strong cash-generating ability and internal accruals position supported the company in funding WPI acquisition.
3. Newgen Software Technologies
The company has been categorised as a leading provider of unified digital transformation platform having native process automation, content services, and communication management capabilities. There are companies relying on its industry-recognized low code application platform to develop and use complex and content-driven business applications on cloud.
The company has released its results for full-year and quarter ended March 31, 2023. It crossed milestone of INR1,000 crores of total income for FY23, with revenue from operations (consolidated) coming at INR974.0 crores in comparison to INR779.0 crores in FY22, exhibiting a rise of 25% year-over-year.
Profit after tax was at INR176.3 crores, exhibiting a rise from INR164.2 crores in FY22. In 4Q23, the company saw strong growth in revenue from operations (consolidated) to reach INR305.1 crores in comparison to INR231.4 crores in 4Q22 (exhibiting a rise of 32% year-over-year).
Continuing its strong momentum, the company’s 1Q saw strong growth throughout all the geographies. It posted highest quarterly year-over-year revenue growth rate in 1Q24. Total income of the company came in at INR264 crores and PAT was at INR30 crores. During 1Q24, the company saw strong bookings from both, existing and new customers.
Revenue from operations (consolidated) was at INR251.7 crores in comparison to INR187.9 crores in 1Q23, exhibiting a rise of 34% year-over-year.
Conclusion
While above are some of the top Indian stocks held by Goldman Sachs, there are several other global institutional investors who have invested in Indian companies. Institutional investors, such as Goldman Sachs, provides the vital capital to publicly-traded companies. This capital helps the company in supporting growth and innovation.
Since these companies have specialised market knowledge and access to analytical resources, they can improve returns and reduce risk for clients, making the financial markets stable.
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