Foreign Institutional Investors (FIIs) remained net sellers in the Indian equity market for the second quarter in a row. Though the momentum has dropped significantly in the October-December quarter, it was still negative.
During the July-September quarter, FIIs sold (net) equities worth ₹76,609 crore, while in this October-December quarter, they sold equities worth ₹11,760 crore. (Source: NSDL)
While the overall sentiment of the FIIs was negative during the quarter, they deepened their exposure in select stocks as well.
In this article, we explore the top three stocks that FIIs bought the most during Q3FY26. However, we will exclude Indiabulls Ltd., in which FIIs increased their stake by 16.63% points (the highest), due to unavailability of concrete business information and financials. Perhaps we will revisit the stock in time to come.
With that said, here are the three stocks FIIs have been buying aggressively.
#1 IDFC First Bank: The ‘Unicorn’ Bet & 12% FII Surge
IDFC First Bank Ltd. was formed in December 2018 by the merger of IDFC Bank and Erstwhile Capital First to engage in new-age banking services. This private sector bank has been one of the fastest growing in the industry with a wide range of financial services such as loans, deposits, wealth management services, credit cards, corporate lending, small and medium enterprise (SME) lending solutions, NRI Banking, Trade Finance, and issues FASTags and other services.
FIIs increased their stake by 12.12% points during Q3FY26, taking the total FII holding in the company to 36.8% at the end of the quarter. The FIIs that bought a significant stake during the quarter are –
- Warburg Pincus via a preferential allotment, bought 9.45% stake
- Abu Dhabi Investment Authority (ADAI) bought 5.09% stake via preferential allotment as well
Deposit Velocity & Asset Quality
The total customer deposits of the private sector bank grew by 23.4% year-on-year (YoY) during Q2FY26 to ₹2,69,094 crore from ₹2,18,026 crore during Q2FY25.
On the other hand, total gross loans and advances surged by 19.7% YoY from ₹2,22,613 crore to ₹2,66,579 crore.
During Q2FY26, the gross non-performing assets (NPAs) declined to 1.86% from 1.97% during Q1FY26, a significant 11 basis points decline.
However, the Net NPA declined slightly by just 3 basis points to 0.52% from the earlier 0.55% during the same period.
NRI Portfolio: 13% Customer Growth
IDFC First’s NRI business is on a roll and touched a milestone during the first half of FY26 with 1,11,000 customers, up from 98,000 at the end of FY25.
During Q2FY26, the private bank enhanced its NRI product portfolio, which is probably one of the reasons for the hike in the number of customers. Digital onboarding process made the onboarding of the customers easy and hassle-free, UPI on certain international numbers for cardless and OTP-less payments, and other facilities.
Financials
The revenues of the bank went up from ₹8,957 crore in Q2FY25 to ₹9,937 crore in Q2FY26, offering a 10.9% YoY growth.
Net profit surged from ₹212 crore to ₹348 crore, a 64% YoY growth during the same period.
** Financial Results for Q3FY26 are Not Yet Announced
Valuation
The stock is currently trading at a Price/Earnings (PE) of 49.1x, which is higher than the industry median of 15.6x, indicating a premium valuation. However, the price-to-book value (PB) ratio is at par with the industry median of 1.3.
1-Year Share Price Chart of IDFC First Bank Ltd.
#2 Artemis Medicare: Brownfield Expansion & Tier-2 Push
Artemis Medicare Services Ltd. is a multi-speciality hospital in the Delhi-Gurgaon region with around 700 beds, catering to patients around the world. It has over 500 doctors covering over 40 medical specialities.
FIIs increased their stakes by 12.1% points during Q3FY26, taking the total holding to 12.47% at the end of the quarter. The FII that bought a significant stake during the quarter is –
- International Finance Corporation bought a 11.98% stake
The 1,000-Bed Roadmap
One of the primary reasons for FIIs piling into this stock is its exponential expansion plans.
The hospital has added 100-plus beds already by increasing the floor area ratio (FAR) via “Green Building Certification”. Furthermore, management has been planning to add between 850 and 1,000 beds in the coming 1.5 years, following the same FAR rules by the government.
In Raipur, Artemis is coming up with its 300-bedded facility, which will be mainly for tertiary or quaternary care. The building construction is almost ready, and by the end of FY26, it is anticipated to start functioning as well.
Another super speciality hospital with 650+ beds to come up in the South Delhi region and in other select Tier -II cities.
Artemis is also expanding its overseas operations and management with a plan to add two more hospitals with around 200 beds to its international locations, which is now an 80-bedded facility.
Financials
Sales increased from ₹235 crore in Q2FY25 to ₹270 crore in Q2FY26, growing at 15% YoY. The net profit for the period grew from ₹23 crore to ₹30 crore, at 32.8% YoY.
** Financial Results for Q3FY26 are Not Yet Announced
Valuation
The stock is trading at a PE of 37.7x, lower than the industry median of 46.5x, indicating a relatively cheaper valuation.
1-Year Share Price Chart of Artemis Medicare Services Ltd.
#3 KMEWL: The Green Tug Monopoly & 15-Year Visibility
Knowledge Marine & Engineering Works Ltd. (KMEWL) offers a wide range of marine and shipbuilding services, ranging from dredging, manning, owning, hiring, chartering, maintaining marine crafts, and also repairing and maintenance services of marine infrastructure, both in India and Myanmar.
FIIs increased stakes by 10.26% points in this shipbuilder, taking the total holding to 11% at the end of the October-December quarter. The FIIs that bought a significant stake during the quarter are –
- Infinity Direct Capital bought 4.47% stake
- Infinity Direct Holdings bought 3.8% stake
- Infinity Partners II- Direct bought 2.07% stake
These allotments were done on a preferential basis.
The ₹650 Crore Order Book
During the first half of FY26, the company received one of its highest value orders with a tenure of 15 years. The order is from the VOC Port and the Entered Cruise & Tourism Services, which is in collaboration with the Madhya Pradesh Tourism Board. This is a Green Tug contract, which offers revenue visibility for the coming 15 years. The contract value is ₹652.6 crore.
As India aims to convert half of all the tugs to Green Tugs by the end of 2030 and has a vision of 100% Green Maritime operations by 2047, winning this Green Tug order is also strategically significant for the company. There are only a handful of companies that are qualified to bid and deploy in this Green Tug space.
Apart from this long-term contract, the company also won two major contracts from the Inland Waterway Authority of India (IWAI) worth ₹195 crore. These are for building 24 crafts, including both boats and a dredger.
The Narmada Cruise Catalyst
KMEWL has also entered into a contract with the Madhya Pradesh Tourism Sector to build and operate the luxury cruise ship project on the River Narmada. This project offers a revenue visibility of up to ₹800 crore over the next 20 years.
This cruise will cover a journey of 135 kms from Dhar to the Sardar Sarovar Dam and the Statue of Unity. The cruise will feature 36 deluxe cabins with panoramic views, an infinity pool, a wellness centre, fine dining, a lounge, cultural entertainment zones, and more such facilities.
Financials
Sales of KMEWL have dipped marginally from ₹52 crore in Q2FY25 to ₹50 crore in this Q2FY26, as did the net profit, dipping from ₹13 crore to ₹12 crore.
Despite the sluggish business during the previous quarter, FIIs increased their stake in the company, which is probably a sign of them looking forward to the upcoming long-term projects and the big order book.
** Financial Results for Q3FY26 are Not Yet Announced
Valuation
The company is trading at a PE of 81.7x, which is at par with the industry median. There are hardly any companies operating in this space.
However, the company has a high PBV ratio of 14.9 against the industry median of 8.6, suggesting investors’ expectations around future growth prospects.
1-Year Share Price Chart of Knowledge Marine & Engineering Works Ltd.
The Verdict: Follow the Flows or Wait?
Though FIIs remained net sellers in the Indian equity market, they bought significant stakes in select stocks during the October-December quarter.
Strong order book, revenue visibility for the long term, and future growth prospects seem to be some of the areas FIIs are looking at, beyond the regular business numbers. However, whether they hold on to these stocks for long or reshuffle their portfolio will be something worth keeping track of.
Disclaimer:
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.
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 her dependents do not hold the stocks discussed in this article.
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