Foreign institutions bet on these three penny stocks amid their massive selloff

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Subscribe to enjoy similar stories. Foreign institutional investors (FIIs) have been pulling out crores of rupees from the Indian markets for a few months now. Between October and November, the FII outflow was more than ₹1.5 trillion – one of the biggest ever.

While the markets and investor circles were abuzz with the news of FIIs selling their holdings in market giants, these investors quietly picked up substantial stakes in lesser-known companies, including penny stocks, which they generally avoid. One of these companies saw its FII holding jump more than 15x, according to exchange filings for the September quarter. Let’s look at these underdogs that attracted interest from FIIs amid the massive selloff.

Gujarat Toolroom Ltd specialises in building multi-cavity moulds for medical disposables, pharmaceuticals, food and beverage packaging, caps and closures, writing instruments and more. With a market cap of ₹225 crore, this company has grabbed the interest of foreign investors such as Zeta Global Funds (OEIC) PCC Limited and Eminence Global Fund PCC. Both of these bought a 13.58% stake in the company, according to exchange filings for the September quarter.

The overall FII holding in the company is now 27.15%. It was 0% as of the June quarter. The FIIs’ investment in the company is interesting, because it did not have any significant business and did not report revenue for several years, barring FY23.

The reasons for this sudden interest could be that the company, which is almost debt-free, reported staggering numbers for FY24 as compared to FY23. Sales jumped from ₹2 crore in FY23 to ₹555 crore in FY24 – an almost 28,000% jump. Net profit increased 7,200% from ₹1 crore to ₹73 crore and Ebitda grew 3,700% from ₹2 crore