Foreign institutional investors are hoarding these 5 stocks—should you?

Foreign Institutional Investors (FIIs) have carved out a niche in India’s equity markets, often identifying opportunities that local investors might miss. These global heavyweights, armed with experience navigating both emerging and developed markets, offer a unique perspective—melding international business acumen with an in-depth understanding of India’s growth potential.

While domestic investors tend to focus on local factors, FIIs apply a broader, comparative lens. They measure Indian companies against global benchmarks, seeking businesses with scalable models, strong export potential, and governance standards on par with international peers. Their increasing stakes in select Indian firms reflect a strategic preference for those aligned with global ambitions.

Here is a look at the FII transactions in Indian equities over the last few years (till September 2024):

Beyond financial metrics, FII investments symbolize confidence in India's evolving role in the global economy—a belief that the country is capable of producing world-class enterprises. Examining these investments offers more than stock-picking insights; it provides a glimpse into how global investors are betting on India’s future.

Read this | DIIs have placed big bets on these three stocks. Should you, too?

Below, we spotlight five companies where FIIs now hold over 55% of the available shares—clear indicators of where international investors see the next global success stories emerging from India.

360 ONE WAM Ltd

Formerly IIFL Wealth & Asset Management, 360 ONE WAM stands as one of India’s largest private wealth management firms. It offers a wide array of services, including wealth management, financial product distribution, advisory, and portfolio management. The firm mobilizes funds across multiple asset classes, catering primarily to high net-worth individuals (HNIs).

With a market capitalization of ₹40,344 crore and FII holdings surpassing 65%, 360 ONE tops our list of companies favoured by global investors.

FII holdings in the firm surged from 20.06% in FY20 to 63.22% in FY24, further climbing to 65.58% by the end of September 2024—a testament to growing global investor confidence.

This spike in interest can be traced back to the 2019 demerger of IIFL Holdings, which split the business into three distinct entities:

IIFL Finance – focused on loans and mortgages

IIFL Wealth – handling wealth and asset management, now rebranded as 360 ONE

IIFL Securities – managing capital markets

Since listing in September 2019, 360 ONE WAM has expanded aggressively, operating with 10 domestic and eight international subsidiaries, and managing assets worth ₹4.66 trillion.

Among its key investors, BC Asia Investments X Ltd (a Bain Capital subsidiary) holds 24.3%, Small Cap World Fund Inc. owns 7.32%, and Capital Income Builder holds 4.35%.

The company’s financials highlight its robust growth. Sales grew at a 13% compound annual growth rate (CAGR) over the last five years, rising from ₹1,578 crore in FY19 to ₹2,921 crore FY24. Net profit more than doubled during the period, from ₹375 crore to ₹804 crore in FY24, reflecting a 17% CAGR.

The stock has delivered an impressive 241% return, jumping from ₹300 five years ago to the current price of ₹1,025. Despite this rally, the stock trades at a high P/E of 38x, compared to its median P/E of 30x since listing.

360 ONE WAM’s growth story, however, faces an inflection point. Co-CEO Anirudha Taparia—instrumental in scaling the firm into a wealth management leader—has announced his departure to potentially launch a new venture.

With Knight Frank projecting a 50% increase in individuals with over $30 million in assets between 2023 and 2028, India’s wealth management sector is set for rapid expansion. How FIIs navigate their investments in 360 ONE WAM amid these shifts will be crucial to watch.

#2 Samhi Hotels Ltd

Samhi Hotels Ltd, a leading branded hotel ownership and asset management platform, has carved a niche in India’s hospitality sector with long-term management arrangements involving industry giants like Marriott, IHG, and Hyatt.

With a market capitalization of ₹4,179 crore and FII holdings of 58.38% as of September quarter, Samhi Hotels comfortably secures the second spot in our list of companies heavily backed by foreign investors.

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Ranked third in India by inventory of operational keys (owned and leased) as of 31 March 2023, Samhi Hotels made its public debut in September 2023, raising ₹1,370 crore through an initial public offering (IPO). Its partnerships with prominent hotel brands—Courtyard by Marriott, Sheraton, Hyatt Regency, and Holiday Inn Express—serve as a magnet for foreign institutional investors.

While FII holdings declined from 63.40% at listing to 58.38% in the September quarter, the stake remains significant, signalling continued investor confidence in the company’s growth prospects.

Samhi Hotels excels in identifying and transforming underperforming business hotels. Its business model revolves around acquiring distressed assets, upgrading them, and partnering with marquee operators to reposition these properties in the market, unlocking their full potential.

Among the top foreign backers of Samhi Hotels Ltd, ACIC Mauritius 1, an affiliate of Equity International, holds a 15.06% stake, followed by the Government of Singapore at 8.10%, and Blue Chandra Pte. Ltd with 3.96%. 

On the financial front, the company’s revenue has grown at a 15% compound annual growth rate (CAGR) over the past five years, rising from ₹471 crore to ₹957 crore in FY24. While Samhi reported a loss of ₹235 crore for the year ended March 2024, this reflects a marked improvement from previous years, with a five-year compounded profit growth rate of 6%, signalling progress toward profitability.

The stock is currently trading at ₹189—a 35% increase from its listing price of ₹140. While the P/E ratio is yet to be available on Screener.in, the industry median among peers stands at approximately 45x, highlighting the sector's growth potential.

Samhi Hotels has ambitious expansion plans through FY27, focusing on adding new rooms, acquiring properties, and rebranding existing assets. It has also made significant progress in deleveraging, reducing debt from ₹2,833 crore in FY23 to ₹1,824 crore in FY24.

According to the India Brand Equity Foundation (IBEF), the Indian hospitality sector is poised for exponential growth, with expected revenue growth of 7-9% in FY2025. Furthermore, Zion Market Research projects the industry to grow at a CAGR of 10.10% from 2024 to 2032.

Given the industry’s allowance for 100% foreign direct investment (FDI), Samhi Hotels Ltd remains a stock to watch closely as it capitalizes on India’s booming hospitality sector.

#3 Le Travenues Technology Ltd

Securing the third spot, Le Travenues Technology Ltd, better known as Ixigo, stands out as one of India’s leading online travel agencies (OTA), boasting the highest monthly active users among its peers. As of FY23, Ixigo ranked as the second-largest OTA in India by consolidated revenue.

With a market capitalization of ₹5,707 crore and an FII holding of 59.83%, Ixigo has firmly positioned itself among the top companies backed by foreign investors. Before its IPO in June 2024, the company raised ₹333 crore from anchor investors, followed by ₹740.10 crore through the public issue. This comprised a fresh issue of 1.29 crore equity shares worth ₹120 crore, alongside an offer for sale (OFS) of 6.67 crore shares, aggregating ₹620.10 crore.

Although trailing FII investment data is limited, the company’s FII stake increased in the two quarters since listing, from 58.18% in the June quarter to 59.83% in the three months through Septermber, reflecting growing investor confidence.

Ixigo continues to dominate in terms of app engagement, with over 80 million monthly active users as of September 2023, according to data.ai. By 31 March 2023, the company reported 429.4 million annual active users and 49.1 million transactions in FY23.

The top FII backers include Saif Partners India IV Ltd, holding 15.01%, Peak XV Partners Investments V at 10.11%, and Gamnat Pte. Ltd with 9.43%.

On the financial front, Ixigo’s sales surged from ₹40 crore in FY19 to ₹656 crore in FY24, reflecting an impressive 75% CAGR over the past five years. Profitability has also improved steadily—after reporting a loss of ₹57 crore in FY19, the company turned the corner with a PAT of ₹73 crore in FY24.

For more such analyses, read Profit Pulse.

The stock, currently priced at ₹147, has risen 9% from its listing price of ₹135. However, it trades at a lofty P/E of 142x compared to the industry average of around 85x, suggesting high growth expectations from investors.

With ambitious expansion plans, Ixigo aims to become a "One-Stop Travel Solution Provider" by increasing monetization through cross-selling and upselling while also exploring B2B and corporate growth opportunities.

#4 Redington Ltd

Ranked fourth, Redington Ltd is a leading distributor of IT and mobility products and a provider of supply chain management solutions across India, the Middle East, Turkey, and Africa. With a market capitalization of ₹13,243 crore and FII holdings at 58.07% as of September 2024, Redington Ltd earns its place on this list of heavily FII-backed companies.

The company operates through 55 international subsidiaries, comprising wholly owned and partially owned entities, with a presence in 31 countries, covering 40 markets where it holds No.1 or No.2 positions across key segments.

FIIs have steadily increased their stake in Redington, growing from 34.44% in FY19 to 58.07% by September 2024—a significant rise that reflects growing global investor confidence. The top foreign investors include Synnex Technology International Corp., holding 24.12%, and Fidelity Puritan Trust, with a 3.16% stake.

Redington's revenue doubled over the last five years, rising from ₹46,536 crore in FY19 to ₹89,346 crore in FY24, reflecting a 14% CAGR. Net profit also climbed from ₹484 crore to ₹1,239 crore during the same period, achieving an 18% CAGR.

The company’s stock is currently priced at ₹169—a remarkable 200% increase from ₹56 five years ago. Despite this surge, it trades at a modest P/E ratio of 11.2x, closely aligned with its 10-year median P/E of 10x.

Redington recently experienced leadership changes, with Rajiv Srivasrava stepping down as managing director and V.S. Hariharan taking over as group CEO in September 2023. Additionally, the company announced a strategic partnership with Zoho Corporation, aiming to bring Zoho's industry-leading cloud solutions for productivity, collaboration, and customer engagement to a broader customer base across India.

With its strong financials, steady FII interest, and strategic initiatives, Redington Ltd is well-positioned to capitalize on growth opportunities across global markets.

#5 Five-Star Business Finance Ltd

Rounding off the list is Five-Star Business Finance Ltd, one of the fastest-growing, non-deposit-taking systemically important NBFCs. The company specializes in providing secured business loans to micro-entrepreneurs and self-employed individuals, carving out a niche in India’s financial sector.

With a market capitalization of ₹24,928 crore and FII holdings at 56.7% as of September 2024, Five-Star Business Finance earns its spot among the most FII-backed companies.

The company raised ₹1,960 crore through its IPO, debuting on stock exchanges in November 2022. While historical comparison is limited, FII holdings surged from 6.54% in December 2022 to 56.7% by September 2024—a substantial jump, highlighting growing investor confidence.

Headquartered in Chennai, the company operates a robust network of over 480 branches, spanning nine states, one union territory, and 150 districts. Key markets include Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka, supported by a workforce of 8,700 employees.

Among its top foreign investors, Sirius II Pte. Ltd holds 6.02%, while Norwest Venture Partners X - Mauritius holds 2.41%.

The company has demonstrated impressive financial growth, with sales increasing from ₹402 crore in FY19 to ₹2,183 crore in FY24, reflecting a CAGR of 40%. Net profit has soared from ₹156 crore to ₹836 crore during the same period, mirroring the 40% CAGR. The current share price of ₹852 is a 67% jump over its listing price of around ₹510.

The stock trades at a P/E ratio of 27x, aligning closely with the industry median of 24x. As of 9MFY24, the company’s assets under management (AUM) stood at ₹8,931 crore, reporting a 43% year-over-year growth.

Five-Star Business Finance plans to shift from bank borrowings to market borrowings in the coming quarters, aiming to reduce borrowing costs by 35 basis points.

With its rapid growth, expanding footprint, and strategic shift in borrowing strategies, Five-Star Business Finance is well-positioned to capitalize on the rising demand for micro and small business financing in India.

Is following foreign money the right move?

The five companies we reviewed today boast strong fundamentals and unique selling points that have attracted significant foreign investment. With FIIs holding substantial stakes, these stocks certainly deserve a place on your watchlist.

However, caution is warranted. There isn’t a clear pattern to FII investments across these companies—while some have enjoyed long-term FII backing, others are newly listed, leaving limited data for meaningful comparisons.

Also read | Is this the end of the bull market?

That said, tracking these stocks—and others with heavy FII involvement—could offer valuable insights into how global investors select their bets. Observing their patterns might even help identify the next big FII favourite.

Note: This article relies on data from www.screener.in and www.trendlyne.com. In cases where this data was unavailable, we referred to other widely accepted and credible sources.

The purpose of this article is to present interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you are considering any investments, we strongly advise consulting with your financial advisor. This content is strictly for educational purposes only.

About the author: Suhel Khan has been an avid market follower for over a decade. He previously held a key position as Head of Sales & Marketing at a leading equity research organization in Mumbai. Today, he focuses on analysing the investments and strategies of India’s top investors.

Disclosure: The writer and his dependents do not hold any positions in the stocks discussed in this article.