MFs cut allocation to Maruti Suzuki by 25 bps

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Equity fund managers have cut their allocation to shares of Maruti Suzuki by a quarter of a percentage point ahead of the company's e-voting on the Gujarat unit. With this, the automobile major has slipped one notch to seventh position in the list of top 10 most invested companies.

In November, the allocation of total equity assets to Maruti Suzuki stood at 2.26 per cent, against 2.51 per cent in October. In absolute amounts, there was a decline of Rs 900 crore in investment value. The value dipped to Rs 7,109 crore against Rs 8,007 crore in October.

E-voting ended on Tuesday. The voting through postal ballot took place from November 16 to December 15 and the results will be announced on December 17.

Several of the fund houses Business Standard spoke to have either abstained from voting or voted in favour. Though they add that there was no loss to the company; in fact, they say, the company will only benefit in terms of profitability. "There was a debate on what should be done in this case. There was no consensus but, the majority did not have any problem if the deal had gone through," said a fund manager on condition of anonymity.

Meanwhile, there was a mixed trend in the change in schemes' holding of Maruti Suzuki's shares in November. Among the top 25 equity schemes having investment in excess of Rs 75 crore to Maruti Suzuki in their portfolios, about half kept their holdings intact and did not sell even a single share of Maruti Suzuki in November. Around eight equity schemes sold shares while the rest bought fresh shares. This clearly suggests a lack of consensus call from fund managers.

For instance, schemes like HDFC Equity Fund, HDFC Top 200 Fund, Axis Long Term Equity Fund, Birla Sun Life MNC Fund, UTI Opportunities Fund and ICICI Prudential Focused Bluechip Equity Fund, among others, kept the number of Maruti Suzuki's shares in their portfolio intact.

On the other hand, schemes like HDFC Prudence, Birla Sun Life Frontline Equity Fund, UTI Mastershare Fund, Reliance Equity Opportunities Fund, Reliance Growth Fund and Reliance Vision Fund, among others, sold Maruti's shares from their holdings during the same period.

"Fund managers took separate calls. If there has been selling in some schemes, I think it has more to do with profit booking, rather than taking a directional call. Though, ethically it may be depressing to see that a company's core activities are being outsourced to the parent. There have been several favourable tweaks in the clauses we suggested last year. So, prima facie we did not have issue with the current arrangement," explains an equity fund manager.

At the end of September quarter, holdings of mutual funds in Maruti Suzuki were 7.99 per cent while those of foreign institutional investors (FIIs) stood at 22.08 per cent. Fund managers add that the resolution will pass through easily as FIIs are supportive of the move.

On Tuesday, shares of Maruti Suzuki traded strong to close at 1.1 per cent high at Rs 4,620 on the BSE.


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