Stealthy disposal of shares in four lesser-known companies by Foreign Institutional Investors (FIIs) revealed
Foreign institutional investors (FIIs) have been offloading their shares in small-cap stocks, including Aditya Birla Fashion and Retail, Samhi Hotels, Hi-Tech Pipes, and ITD Cementation, during the July 2025 quarter. This trend is primarily due to a broader FII selling trend, despite some inflows into Indian equities overall.
The selling spree by FIIs can be attributed to several key factors. Risk aversion and portfolio rebalancing have played a significant role, with FIIs reducing holdings in smaller and mid-sized names to focus on larger or higher quality stocks amidst market uncertainties.
Market volatility and uncertainty, including global macroeconomic concerns and trade deal uncertainties, have also impacted investor sentiment negatively. The upcoming US-India trade deal deadline has added to the uncertainty, causing a dip in investor confidence.
However, it's important to note that this selling movement was selective. While FIIs exited some smallcaps like Aditya Birla Fashion and Retail, they simultaneously increased stakes in certain multibagger smallcaps with strong momentum and quality metrics, signaling a preference shift toward stocks with strong performance and governance.
Despite the FII selling, several small-cap companies have shown resilience. Hi-Tech Pipes, for instance, has an installed capacity of 7.5 lakh MTPA as of Q4 FY25. In FY25, the company's revenue increased 14% to Rs 30.7 billion, driven by a 24% increase in sales volume. Hi-Tech Pipes' product portfolio includes ERW pipes, color-coated coils, GI and GP pipes, CR coils, among others. The company is also expanding its operations, with plans to build a new greenfield plant in Secunderabad, aiming to achieve 1 m tonnes of annual production capacity by FY26, and 2 m tonnes of installed capacity by FY29.
Hi-Tech Pipes' financial performance has been impressive, with its EBITDA per metric ton improving 12% to Rs 3,297 in FY25, and its PAT rising 66% to 729 million in the same period. The company aims to increase its value-added products (VAP) share to 42-43% by FY26.
Samhi Hotels, an institutional multi-branded hotel ownership company, has also shown robust growth. The company has a strong asset pipeline, with several hotels expected to contribute to existing revenue in the short term. Samhi Hotels has a diverse presence in 14 cities, with 32 hotels totaling 4,948 rooms across 10 brands. In Q1 FY26, FIIs reduced their stake in Samhi Hotels to 47.5%, while the stake of DIIs and public shareholders increased to 15.1% and 37.5%, respectively. The company's total revenue grew 17% YoY to Rs 11.5 billion, and the company swung to a profit of Rs 860 million from a loss of Rs 2.3 billion. Samhi Hotels expects overall revenue to grow in the early double digits in the long term, and aims to generate free cash flow of Rs 3.6 billion in FY26.
Aditya Birla Fashion and Retail, a fashion retail company, has also seen a decline in FII holdings. The company's revenue rose 14% year-on-year (YoY) to Rs 73.6 billion, but its loss after tax (PAT) reduced by 31% to Rs 6.2 billion. The company operates brands such as Pantaloons, StyleUp, The Collective, TMRW, Sabyasachi, Shantanu Nikhil, Masaba, Tarun Tahiliani, Tasva, and Jaypore.
In summary, the selling of small-cap stocks by FIIs in Q2-Q3 2025 is a strategic response to market volatility and geopolitical uncertainties, favoring instead stocks with more stable growth and better market momentum. Despite this, several small-cap companies like Hi-Tech Pipes and Samhi Hotels have shown resilience and continued growth.
- In the July 2025 quarter, foreign institutional investors (FIIs) have been selling their shares in small-cap stocks, shifting their investment focus towards larger and higher quality stocks amidst market uncertainties.
- Despite the selling trend, small-cap companies like Hi-Tech Pipes and Samhi Hotels have demonstrated resilience, with Hi-Tech Pipes expanding its operations and showing impressive financial performance.
- Market volatility and uncertainty, including global macroeconomic concerns and trade deal uncertainties, have impacted investor sentiment, causing a dip in investor confidence and the selling of small-cap stocks.
- FIIs have displayed a preference for stocks with strong performance and governance, as they exited some small-cap names while increasing their stakes in certain multibagger small-caps.
- Businesses like Samhi Hotels have shown robust growth, with a strong asset pipeline, diverse presence, and positive financial indicators, despite a decrease in FII holdings.
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