Foreign investors stocked up on these three mid caps in Q1. Should you?

Mint

5 days ago

The April-June quarter brought interesting news for the Indian stock market as foreign institutional investors (FIIs) increased their stakes in several Indian companies.
Foreign flows into the Indian market often signal confidence in the country's long-term growth. What's particularly noteworthy is that FIIs invested in diverse sectors including renewable energy, defence, shipbuilding and financial services in Q1.
In this piece, we'll dive into three mid cap stocks that saw notable FII buying during the quarter.
#1 Premier Energies Ltd
Premier Energies is a solar manufacturing powerhouse that's been quietly building its empire since 1995. What makes it stand out is its scale and focus on technology. With a massive 2 GW of capacity for solar cells and 5.1 GW for solar modules, it is equipped to handle high volume. The company's automated production lines achieve an impressive 23.2% cell efficiency. It is also future-ready, planning to introduce advanced TOPCon cell technology.
Most of the company's revenue comes from India's booming domestic solar market, which fits perfectly with the government's ambitious renewable energy targets.
FIIs' shareholding jumped from about 3% in March to 4.38% in June – a 46% increase in just one quarter. This isn't just a random buying; it shows the company's strong financial performance and expansion plans caught investors' attention.
Another important aspect of Premier Energy is its backwards integration strategy. It's setting up a 2-GW solar wafer plant through a joint venture, essentially controlling more of its supply chain.
The company's revenue increased 109.76% in FY25 and net profit surged 305%. The Ebidta margin expanded to 28.78% from 15.93% in FY24. This performance was due to India's booming solar demand and the company's growing manufacturing capacity.
The company also has a massive order book worth ₹84,456 crore (5.303 MW of capacity), mainly comprising domestic orders, which provides strong revenue visibility.
#2 Indian Renewable Energy Development Agency Ltd
IREDA is a financial institution focussed on India's clean-energy transition. Established in 1987 as a non-banking financial Institution under the ministry of new and renewable energy, IREDA has spent more than three decades funding renewable energy projects across India.
What makes IREDA attractive is its position as the government's primary vehicle for financing India's ambitious renewable energy goals. The company recently achieved a significant milestone in operational autonomy, giving it more freedom to take strategic decisions and expand operations.
Foreign investors clearly see IREDA's long-term potential. Their shareholding jumped from 1.75% in March to 2.04% in June – a 38.80% increase – despite weak financials. This suggests FIIs are looking beyond quarterly fluctuations and focusing on IREDA's strategic importance.
A key factor that boosted investors' confidence was the recent policy support for IREDA's bonds. The government granted tax-saving status to IREDA bonds under Section 54EC, making them attractive for investors looking to save on capital gains tax.
This regulatory backing not only broadens IREDA's investor base but also ensures more consistent and lower-cost capital inflows, strengthening its ability to fund renewable energy projects efficiently.
IREDA reported mixed financial results in Q1FY26, with revenue from operations growing 29% year-on-year but net profit declining 36% year-on-year, reflecting operational challenges. IREDA's outstanding loan book grew 26%, while new sanctions jumped 36%.
Other key developments, such as ₹2,010-crore fundraise through a qualified institutional placement (QIP), the launch of perpetual bonds worth ₹1,270 crore, and maintaining a healthy margin with a 9.95% yield on loan assets and a 3.60% net interest margin, underscored its role as India's premier renewable-energy financier.
#3 Garden Reach Shipbuilders & Engineers Ltd
Garden Reach has over six decades of experience in building naval and commercial vessels. Based in Kolkata, It's a government-owned company that has been the backbone of India's maritime defence capabilities since it was nationalised in 1960. It holds the distinction of being the first Indian shipyard to build 100 warships. In 2006 GRSE received Miniratna status, which enhanced its financial and operational autonomy.
The company's portfolio spans guided-missile frigates, corvettes, fleet tankers, fast patrol vessels, amphibious warfare vessels for naval applications, and commercial vessels such as research ships, dredgers and tugboats. Beyond shipbuilding, the company also operates engineering and engine divisions, positioning itself as a comprehensive maritime solutions provider in India's expanding defence sectors.
Foreign investors seem bullish about GRSE's long-term prospects, with their shareholding increasing 46% from 3.84% in March to 5.33% in June.
GRSE's strategic diversification into commercial shipbuilding adds another layer of attraction. The company has secured an order from German clients and signed an MoU for India's first polar research vessel. This diversification reduces dependence on government contracts while positioning GRSE in high-margin, specialised segments with significant export potential.
The company delivered strong results in FY25, with revenue from operations increasing 41% year–on-year. Net profit surged 46% while the operating margin remained around 13%.
In Q4 FY25, revenue jumped 62% quarter-on-quarter and net profit increased 118%. A significant business development was the ₹430-crore provision write-back from the P-17 Alpha project, reflecting the company's improved cost visibility as the first ship nears delivery.
GRSE's order book stands at ₹22,860 crore, providing strong revenue visibility. The company aims to expand capacity from 24 to 28 ships this year, positioning itself for major upcoming defence contracts worth ₹40,000 crore.
Conclusion
Buying patterns show FIIs are investing in India's structural transformation and not just looking at companies' financials.
Despite the mixed quarterly results of the above companies, FII continued to increase their stakes, demonstrating their confidence in the long-term growth of sectors such as renewable energy, defence indigenisation, and financial inclusion. While short-term volatility may continue because of project execution cycles and operational adjustments, the underlying fundamentals of these companies remain robust.
For retail investors, FII activity can serve as a valuable signal about India's growth trajectory. However, success will depend on the efficient execution of expansion plans, continuing policy support, and an ability to translate strategic positioning into sustained financial performance.
Happy investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com