The Hindu Business Line : M&M catches FIIs' fancy

An analysis of the shareholding pattern of the company reveals that foreign institutional investors (FIIs) and mutual funds have hiked their stake in the last 3 months ended March 2004. While FIIs have hiked their stake in the company by 2.87 percentage points, the latter have edged up their holding by 1.17 percentage points.

The company's robust earnings performance on the back of a sharp surge in the sale of vehicles, particularly its best selling sports utility vehicle Scorpio, appears to have attracted institutional investors to the stock. M&M sold 23,976 units of Scorpio's in 2003-04, a 100 per cent increase over the previous fiscal.

The revival in the tractor segment also appears to have interested institutional investors. After four continuous years of decline in growth, the recently concluded fiscal saw the tractor industry recording its first year of positive growth. M&M, a major player in the tractor segment, is likely to be benefited by this revival.

FIIs at the end of March 2004 held 21.99 per cent in M&M, up from 19.12 per cent held in December 2003. FIIs such as HSBC Global Investment, JP Morgan Fleming Asset Management, the Government of Singapore and the Monetary Authority of Singapore have increased their holdings in the stock. On the other hand, FIIs such as T Rowe Price, Merrill Lynch Capital Markets and American Century Investment have reduced their holdings in the stock.

A similar pattern is also reflected in the holdings of domestic mutual funds. HSBC Equity Fund and HDFC Trustee Company have increased their holdings, while UTI has reduced its holding in the stock.

The stock, since the beginning of January 2004 has gained 23 per cent. On Friday, the stock closed at Rs 482.15 on the BSE accompanying trading volumes of 3.13 lakh shares. On the NSE, the stock closed at Rs 482.4, with 8.27 lakh shares.

The company recently raised the holding limit for FIIs, from 24 per cent to 35 per cent of its paid-up capital.

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