FII stake in consumer companies at all-time high: Analysis

The Foreign Institutional Investors (FII) ownership in consumer companies has risen steadily in the past three years and now it is at an all-time high. CNBC-TV18’s Pragya Bharadwaj reports.

The larger concentration of the FII money seems to be in the midcap consumer stocks. Therefore, these midcaps could become vulnerable in case of any sort of pullout by these funds from the emerging markets.

Also Read: FIIs pull out $7.5 bn from Indian capital mkts in June

Just using this data and quoting figures as of March 31 2013, FII stake in Jubilant FoodWorks is at almost 42 percent and as a percentage of the freefloat in the company, it stands at almost 91 percent.

In Marico, the FII stake is also above 30 percent and as a percentage of freefloat almost at 78 percent. For Godrej Consumer as well; FII float as a percentage of freefloat at 77 percent.

FII stake has gone up in Dabur, TTK Prestige and even Asian Paints among others.

The top five FII holdings constitute more than 50 percent of what they hold in these companies. There again Jubilant FoodWorks tops the list followed by Colgate, Marico and Godrej Consumer.

Aberdeen, Oppenheimer, First State and Vanguard have high exposure to the Indian FMCG and other consumer names.

Also, it is interesting to note that there are some companies like United Spirits or Dabur for that matter, where the MSCI weight is substantially lower. However, FII stake in these companies is quite higher than their MSCI weightage. Dabur FIIs actually holds 27 percent more than their MSCI weightage and similarly for United Spirits, etc. These stocks have seen a very good run up, in fact Godrej Consumers had been giving consistently lifetime highs, it would possibly be because of the very high interest of FII ownership in these companies.

On the flip side, however, there is United Breweries, Hindustan Unilever (HUL) or an Asian Paints, some of these larger companies where the FII ownership compared to the MSCI weight is substantially lower. So, in HUL, it is 10 percent lower, and almost 8 percent lower on these companies.

On the back of this entire thing, StanC recommends that they remain almost neutral on the sector because of the high valuations. They expect that in case of any sort of pullout, the investor should remain concentrated on large caps like an ITC or an HUL because of the much less FII ownership in these companies.