FPI stock bets: FPIs bet on Varun Beverages, SBI Life, HDFC Life despite macro concerns

ET Intelligence Group: The economy can wait, but great stocks at great valuations don’t: That’s the investment philosophy at several overseas funds these days. They are buying into the classic bottoms-up theme, seemingly unconcerned about commentaries on the broader economic environment – or volatility in the benchmark indices.

Foreign portfolio investors (FPI) have raised holdings in the ‘bottoms-up’ stocks in the range of 2-6 per cent in the September quarter, and these investments are worth Rs 11,000 crore.

Among the beneficiaries are Varun Beverages, Mahanagar Gas, SBI Life Insurance, HDFC Life Insurance, Amara Raja Batteries, Lemon Tree Hotels, SIS, and Bharat Electronics.

To be sure, in this period, FPIs sold Rs 22,413 crore of Indian equities, according to NSDL data.

Many of these stocks tell specific tales of economy-agnostic growth.

At Varun Beverages, for instance, organic volumes grew 18 per cent in the September quarter in the domestic market, while volume growth after including the sales from a recent acquisition was 60 per cent. It is one of the largest bottlers of Pepsi. Similarly, in the essential consumption space, the city gas distribution companies, such as Mahanagar Gas, have continued to show volume growth.

A security solutions company is also able to demonstrate growth despite clients pruning both operating and capital expenditure. Securities and Intelligence Services (India), a provider of security solutions to corporates, has reported 5.9 per cent revenue growth annually in the past 10 quarters, thanks to the slowdownresistant revenue model of security providers. Globally, security budgets at corporates have actually risen during periods of lower output and layoffs, past data showed.