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Oct 30, 2017 02:46 PM IST | Source:

Mutual funds lap up ITC as the stock turns cheapest among FMCG peers

Mutual funds houses have been lapping up shares of ITC due to its cheap valuations compared with the available stocks in the FMCG sector.

Himadri Buch @himadribuch
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Mutual funds houses have been lapping up shares of ITC due to its cheap valuations compared with the available stocks in the FMCG sector.

India’s 4th largest company by market cap which rose a little over 11 percent so far in the year 2017 saw some bulk-buying interest from mutual fund managers in September ahead of its results.

Fund managers bought Rs 1,433 crore worth of ITC shares in September, according to data compiled by Morningstar India which led to over 10 percent month-on-month increase in their holding. The market value of total mutual fund holding in ITC is nearly Rs 15000 crore.

As per the data on Moneycontrol, the top 10 mutual funds, by assets under management, purchased 4.15 crore shares of ITC in September.

In the last 3 months, shares of ITC have fallen over 8 percent on fear that sales volumes of India's largest cigarette maker would be hit due to a rise in product prices after the revision in total tax incidence on cigarettes.

ITC reported Q2 sales of Rs 4,554.21 crore from its flagship cigarette business. The numbers in the quarter under question aren't comparable with the year-ago figures due to introduction of GST.

Consequent to the introduction of GST with effect from July central excise, VAT etc. have been replaced by GST. In accordance with Indian Accounting Standard - 18 on revenues and Schedule III of the companies Act, 2013, GST, GST compensation cess, VAT etc. are not included in gross revenue from sale of products and services for applicable periods.

ITC valuation has become more attractive as it became stock cheaper than its peers, say analysts.


Among the fund houses that added ITC in the recent share price correction is Aditya Birla Sun Life Mutual Fund.

September saw the highest rise in equity flows for mutual fund schemes although the total asset under management (AUM) slipped slightly.

The total category wise AUM of the mutual fund industry decreased by 0.9 percent to Rs 20.40 lakh crore in September 2017. On a QoQ basis total AUM of mutual fund increased by 2.2 percent and on a YoY basis, it increased by 29 percent.

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