During the fourth quarter of the financial year 2025, Indian markets witnessed one of the highest sales in the equity segment by the Foreign Institutional Investors (FIIs). They offloaded equities worth ₹1,16,559 crore in just three months. While this has been out in the open, there are certain stocks which FIIs bought in Q4FY25 without many noticing. These stocks mostly belong to the small-cap segment or the Small and Medium Enterprises (SME) segment.

Here in this article, we will focus on three such stocks that FIIs added to their portfolio during Q4FY25. While they had very small stakes in these stocks earlier, during the fourth quarter of FY25, they invested heavily in these stocks, taking the overall holding above 3% in each of these companies.

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#1 Southern Petrochemicals Industries Corporation Ltd. (SPIC)

SPIC, a petrochemical manufacturer, saw 4.03% points rise in FII holding during Q3FY25. At the end of the quarter FII holding stood at a respectable 4.87%.

SPIC is known for its Urea, and nitrogenous chemical fertilizers.

While reasons for FIIs to invest in this stock can be many, but a 62% year-on-year (YoY) growth in sales during Q3FY25 might have attracted the FIIs to some extent. The sales jumped from ₹506 crore in Q3FY24 to ₹818 crore in Q3FY25. The sales also grew significantly compared to the previous quarter (Q2FY25) when it was at ₹760 crore.

The growth in the net profit might also have caught the attention of the FIIs. Net profit grew 15.7% YoY, from ₹33 crore in Q3FY24 to ₹38 crore in Q3FY25.

Similarly, earnings per share (EPS) also went up during the Q3FY25 to ₹1.89 from ₹1.63 per share a year back in the corresponding quarter.

The valuation of this petrochemical manufacturer might also have caught the attention of the FIIs. The stock price to earnings (P/E) is at 10.1, close to the 10-year median of 10.4. However, the industry P/E is at 18.9, indicating the stock is selling cheaper than its peers.

Apart from these, FIIs might also have looked into Return on Capital Employed (ROCE), which is at 17.8% while the industry average is 13.0%.

Ares Diversified bought a significant stake of 3.47% in this company during Q4FY25, which raised the overall FII holding.

#2 Zota Health Care Ltd. (ZOTA)

Zota Health Care is another smallcap company where FIIs invested heavily during Q4FY25. This pharmaceutical company is known for its wide variety of pharma, ayurvedic, and nutraceutical products. Zota has a wide network for exporting its products especially to the different parts of Asia, Africa, Russia, and Latin America.

During Q4FY25, FIIs increased the stake in this firm by 3.36% points which took the overall holding to 3.60%. Valiant Mauritius Partners Offshore Limited is the foreign institutional investor which purchased 1.92% stake in this firm during the quarter.

While it is difficult to say what attracted the FIIs to invest in this stock, here are certain factors that they might have considered.

The sales of the firm have been growing consistently for five quarters starting from the quarter ended on 31st December 2023. During Q2FY25 and Q3FY25, the firm witnessed a 49% YoY rise and 54% YoY rise in the sales respectively.

While the sales have been growing consistently, the company has not been able to make a profit yet. Rather, it won’t be wrong to say that during the five quarters when sales improved, the profit went down massively.  

The declining profit may be questionable as FII raised its stake in the company. However, it might be due to the expansion business model that Zota is following.

During December 2024, the firm announced expanding its Davaindia network. The total number of stores (operational) increased from 1,165 during October 2024 to 1,294 in December.

This growth has primarily come from their company-owned-company operated stores model. During October 2024, these stores where 501 in number, while during December, it increased to 601.

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#3 Vasa Denticity Ltd. (DENTALKART)

Vasa Denticity, engaged in selling dental products of varied kinds witnessed 3.32% points rise in its FII holding during Q4FY24. This took the overall holding by FIIs to 3.60% in the firm.

Since the June 2024 quarter until December 2024, the firm has seen its net profit surging YoY consistently. This might be one of the reasons why FIIs bought a stake in this firm during the Jan-Mar quarter.

During Q1FY25, net profit grew by 34%, while during Q2FY25, it further went up to 44%, and finally in the December 2024 quarter it grew 63%. During the December quarter sales also grew by 71% YoY.

Another factor that might have drawn the attention of the FIIs to this stock is ROCE being more than double the industry median. While the industry median is 20.19%, Vasa has an ROCE of 44.98%.

The 3-year Return on equity (ROE) is 49% which can also be a reason for the FIIs raising stake in the firm.

The stock, having a P/E of 52.8, is trading cheaper to its 10-year median of 65.2. However, compared to the industry P/E of 41.8, Vasa is trading at a premium.

During the Jan-Mar quarter, two FIIs bought stakes in the firm –

  • Ashoka India Equity Investment Trust Plc purchased a 1.77% stake
  • Malabar India Fund Limited purchased a 1.56% stake

Other companies with rising FII stakes

Apart from the three companies mentioned above, here are two more that witnessed around a 1.5% increase in the FII stakes during the March’25 quarter.

Wrapping up

Amidst the massive selling spree during Q4FY25, these FII picks suggest there may be some potential in these stocks. Even in a falling market, they showed interest in these stocks mostly due to sales growth, expansion by the business, even if profits tanked. While it is difficult to figure out the exact reasons behind these picks, keeping an eye on these stocks might be beneficial in the coming days.

We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. 

Disclaimer:

The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only. 

Maumita Mitra is a seasoned writer specializing in demystifying the world of investment for a broad audience. She has a keen eye for detail and a knack for explaining complex financial concepts in the simplest manner possible. 

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

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