Himadri BuchMoneycontrol
Domestic mutual fund (MF) managers do not seem to be perturbed by the storm brewing at Bombay House. On Monday evening after market hours, in a shocking development, Tata Sons' chairman Cyrus Mistry was replaced by his predecessor Ratan Tata. Forty-four mutual fund houses have an exposure of Rs 24,000 crore in Tata Group stocks. This is a significant share of equity MFs' total assets under management (AUM) of Rs 5.05 lakh crore.MF managers believe that it is unlikely to affect group company stocks in the medium-to-long term. In fact, they are cashing in on the fall in shares of Tata Group scrips to further build their portfolio.
“Whatever is happening [should be seen] from the perspective of an improvement for the company. So we are quite positive on the (Tata) Group companies and believe the pain is provisional,” said Sadanand Shetty, Vice President and Fund Manager at Taurus Mutual Fund in an interview to Moneycontrol.
Many Tata Group companies figure prominently in the portfolios of several mutual funds. Fund managers have been stocking up on Tata Group stocks such as Tata Motors, TCS, Tata Steel, Tata Chemicals, Voltas, Indian Hotels and Titan. These blue chips are the top holdings of many equity mutual fund schemes. Investors' Patience to Pay offIn an interview to CNBC-TV18 Harish Krishnan, Senior Vice-president and Equity Fund Manager at Kotak Mahindra Mutual Fund agreed. “Almost all of the (companies) are professionally well run; they have a very strong leadership team and are hoping for value creation over medium- to long-term perspective (in the portfolio).”
In the interim, however, a few Tata Group companies which are being bailed out, could get hit as a result of Cyrus Mistry's abrupt and unprecedented ouster. In medium-to-long term shareholders patience will pay off, Krishnan added.
Gopal Agrawal, CIO at Mirae Asset, too, believes that Tata as a parent company is quite solid and the fund house is not reshuffling its portfolio.
Shares of all Tata Group's listed companies declined on Tuesday as Cyrus Mistry's removal as the conglomerate's chairman stoked uncertainty about the prospects of restructuring with the group. Tata Group, under Mistry ,was trying to cut down debt by looking to sell unviable assets.
NAVs are Intact“We are using the weakness in shares to build our portfolio. In fact, yesterday and today we have bought more shares of Tata,” said a fund manager from a private fund house on condition of anonymity.
Since Mistry took over as chairman in December 2012, most Tata Group stocks have given strong returns. Tata Metaliks have soared over 570 percent. Tata Elxsi surged over 470 percent and Tata Communications jumped 175 percent.
Among other group firms, Indian Hotels, Tata Consultancy Services and Tata Motors on BSE have rallied by 60 to 146 percent. Tata Steel and Tata Global Beverages have each gained by over 2 percent each -- the least during his tenure.
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