The Hindu Business Line : Birla Infrastructure Fund: Capital goods pruned

Infrastructure funds have been strong performers over the past year. However, even among such funds, the divergence in returns has been as high as 10 percentage points. A closer look reveals that concentrated allocation to a few sectors at the right time made the difference to the returns generated by such out-performers.

This week we scanned the portfolio of Birla Infrastructure Fund over a period of one year to see how the fund shuffled its stocks and sectors. While its net assets remained largely unchanged over this period, the NAV grew by 68 per cent. Redemption pressure may have led to the asset size not moving in line with returns. The fund’s top three sectors, on an average, cornered 50 per cent of the assets. In relation to peers, Birla’s exposure to the power sector had remained low until October, when it enhanced its weight to 9 per cent of assets. In the capital goods space the fund preferred to book profits occasionally.

In the past six months, as the capital goods stocks rally was dominant, the fund booked profits in BHEL, Crompton Greaves, Jyoti Structure, Thermax and Engineers India. Punj Lloyd and Suzlon Energy were added to the portfolio.

The fund reduced allocation to the construction sector and pruned exposure to Larsen and Toubro, even as the stock surged by 45 per cent in October. Exposure to IVRCL Infrastructures increased four-fold in the past six months. In the same period it pruned holdings in Nagarjuna Construction by a similar proportion.

While Action Construction and GMR Infrastructure were the new additions in the last quarter, holdings in GVK Power & Infrastructure almost doubled. Lanco Infratech and Jai Corp were additions to the October portfolio.

While exposure to Jindal Steel and Power reduced, Jindal Saw was halved in the past six months. Welspun Gujarat Stahl Rohren was another stock that was pruned heavily.

The cement portfolio underwent a minor rejig. Birla Corporation, Grasim and Shree Cements were retained without much change during the past quarter. The holding in India Cements was cut during the quarter, while JK Cements and Mangalam Cement were bought in October. With increased asset allocation to the power sector, CESC, Tata Power and NTPC entered the portfolio.

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