On Fast Track

Between June 2004 to June 2005, the FMCG (fast moving consumer goods) sector has been one of the best performing sectors. The BSE FMCG Index has moved up by a handsome 55 per cent during this period. Consequently, it has also been one of the favourite sectors among funds, which is clearly visible in the numbers. In June 2004, diversified equity funds had an average exposure of 6.46 per cent to the FMCG sector, which has risen to 8.66 per cent in June 2005. Let's take a closer look at investments by open-ended funds in four interesting FMCG stocks.

Hindustan Lever
When you talk of FMCG stocks, HLL is the first company that comes to your mind. Though the stock price has appreciated by nearly 29 per cent between June 2004 and June 2005, the price movement has shown many swings. The open-ended funds sold the maximum number of shares of this stock during the last year.

UTI Mutual Fund turned out to be the biggest seller, selling more than 92 lakh shares during the last year. As many as 16 funds of UTI Mutual were invested in the stock as on June 30, 2004 but as the price appreciated it went on a profit-booking spree. In June 2005 only five funds from UTI Mutual have HLL. During June 2005, two of its funds UTI CRTS 81 and ULIP sold nearly 9 lakh shares and completely exited the stock.

HDFC Mutual bought maximum number of shares (29.52 lakh) during the last year. As on June 30, 2005, seven of its funds own more than 30 lakh shares. Four funds added the maximum number of shares during this period: Magnum Equity, DSPML Equity, Tata Pure Equity and ING Vysya Equity. Birla Dividend Yield Plus, Magnum FMCG and Tata Young Citizens sold the most. Kotak Mutual and Deutsche entered the stock in June 2005, buying 2.29 and 2 lakh shares respectively. As many as eight funds bought the stock during April and exited the very next month. This pushed up the investments by funds significantly during April 2005. Interestingly, of the three FMCG funds, only Franklin FMCG has held the stock all through.

Britannia Industries
This stock has lost favour among funds. There were 27 funds invested in the stock in June 2004, but after a year, only 16 funds have this stock in their portfolios.

The stock price continued to move at a very slow pace between June 2004 and October 2004. But suddenly there was a spurt of 13 per cent in November and then subsequently a jump of another 22 per cent in December 2004. Probably this triggered profit booking from funds and the number of funds invested in the stock dropped from a high of 31 to just 21 and further down to 18 funds by the end of January 2005. Canbank, ING Vysya, LIC and Principal exited the stock during December 2004. In the subsequent month, HDFC Mutual divested 66 per cent of its investments. HDFC Core & Satellite reduced its investments in the stock, while HDFC Prudence exited the stock altogether. ICICI Dynamic Fund also shed its holdings.

Thereafter, the stock price continued to depreciate, and gave a negative month-on-month return during January, March and April 2005. Gradually, the number of funds having Britannia Industries in their portfolios dropped down to just 12 in May 2005. But this number again rose to 16 the next month. In June 2005, there are 16 funds from eight fund houses holding 6.09 lakh shares. UTI Mutual Fund accounts for more than a third of the total investments by funds. Only one of the three FMCG funds-Franklin FMCG-is invested in the stock. It has held positions in the stock all through the year.

Tata Tea
This is a widely held stock. As many as 52 funds from 18 fund houses hold 41 lakh shares as on June 30, 2005. The stock price has appreciated by almost 69 per cent in the last 12 months. In June 2004, there were just 34 funds invested in the stock.

Of the three FMCG funds, two of them have significant exposure to the stock. In June 2005, Magnum FMCG and Franklin FMCG have 10.24 per cent and 6.97 per cent of their assets invested in the stock. There are two other diversified equity funds which own more than 5 per cent of their assets in this stock: Sundaram Select Focus (5.76%) and Templeton India Growth (5.25%).

Franklin Templeton Mutual Fund is the largest investor accounting for nearly 51 percent of the total investments by funds. Eight funds from this fund house hold 21.3 lakh shares of the stock. The AMC has added more than two-third of its investments during the past year. The recently launched Franklin India Flexi Cap holds a majority chunk: 9.64 lakh shares. Franklin India Bluechip has the second largest holding in the Franklin family, though it is relatively a new entrant, having bought the stock in April 2005 and doubled its exposure the next month to 6.5 lakh shares. Templeton India Growth (3 lakh) and Franklin India Prima Plus (1.59 lakh), also have substantial holdings in the stock.

Other fund houses, which have significant investments in the stock, include Tata Mutual (3.91 lakh shares), Reliance Mutual (3.69 lakh shares) and Prudential ICICI Mutual (3.48 lakh shares). JM Balanced bought the stock during November 2004, held on to it for seven months and then sold it completely in June 2005.

An appreciation of almost 12 per cent in the stock price during May 2005, attracted two more fund houses. Cholamandalam Mutual and DSPML bought the stock during the month of June 2005 with two funds from each family buying 77,000 and 62,000 shares respectively.

Nestle India
Nestle India seems to be out of favour with equity funds. The stock price has underperformed the BSE FMCG Index in eight months out of last 12. Though the price has been steadily moving upwards, it is just up 29 per cent in the past year against a 55 per cent rise in the BSE FMCG Index. As a result, the number of funds invested in the stock has slipped from 27 in June 2004 to 16 in June 2005.

Again, UTI Mutual Fund is the fund house with maximum number of shares-17.90 lakh shares. This accounts for nearly 69 per cent of the total investment by funds. It has added close to 8.5 lakh shares in the last year. The other fund houses, which have a reasonable investment in the stock are: Franklin Templeton (5.04 lakh shares), Birla Sunlife (2.02 lakh shares) and Prudential ICICI (1.06 lakh shares). Alliance Capital and Sundaram hold a meagre 5,125 and 4,790 shares, respectively.

Though UTI Mutual Fund has increased its investments in the stock, the stock is a part of six funds as compared to eight funds in June 2004. UTI MIS sold its holding in October 2004, while UTI Equity Tax Savings Plan exited in January 2005. ULIP is the only UTI fund to have hiked its exposure. Even at Franklin Templeton, the number of funds that have invested in Nestle has come down from six to four. Both the monthly income plans of the fund house sold the stock in November 2004. Templeton India Pension Plan also exited in January 2005. But soon, the stock appeared in the portfolio of the newly launched Franklin India Flexi Cap in March 2005. Birla Sunlife has added the stock to one more fund portfolio. Birla MNC was the only fund to be invested in the stock, though it exited in November 2004. Subsequently, the fund house added the stock in Birla Dividend Plus during March 2005 and in its tax saving fund, Birla Equity Plan during April 2005. Prudential ICICI has been relatively a new entrant. Prudential ICICI Power added the stock to its portfolio in January 2005, followed by Prudential ICICI MIP the next month.

Three funds from Kotak Mahindra Mutual held the stock till July 2004: Kotak 30, Kotak Balance and Kotak Income Plus. All three funds exited the stock one after another: Kotak Balance exited the stock in August 2004, Kotak 30 in November 2004 and Kotak Balance in December 2004. But the fund house again invested in the stock through Kotak Mid Cap in March 2005, which it sold the next month, and through Kotak 30 in April 2005, which was sold after holding for two months.