DSP Tiger rides banking stocks

DSP BlackRock’s infrastructure play DSPBR T.I.G.E.R has clocked a one-year return of 5.4 per cent, well above the 38 per cent fall in its benchmark BSE 100. Over a three-year period too, the fund has notched up an annual return of 1.7 per cent.

The fund focuses on infrastructure stocks besides those sectors that could be affected by any structural change in economic policies, such as telecom or petroleum.

Pick-up in banks

Infrastructure as a sector has been floundering helplessly ever since the bear run in 2008-09. Lack of funding, high input costs and slow awarding of projects have hurt construction and power companies’ financials, with the result that these stocks failed to pick up even during the market rallies since. The share of construction and power stocks, which also falls under the ‘infrastructure’ umbrella, dropped from 23 per cent at end-2009 to 16 per cent by October 2011.

Meanwhile, the fund added banking stocks, with the sector’s portfolio share inching up 19 per cent by end-2011 from the 14 per cent in 2009. Exposure to the oil and gas sector too gradually dipped. With the poor run in capital goods stocks, exposure to this sector has also been pared to about 6 per cent from the double-digit share earlier.

However, infrastructure stocks have been looking up since early this year on hopes that interest rates may fall, helping the funding scenario. Competitive, high-priced bidding has also given way to more reasonable bids. Segments such as urban infrastructure and water and sanitation are showing promise with good awarding activity.

Since then, therefore, the fund has returned to the sector, gradually increasing stake over the months to end at 20 per cent now, against the 6 per cent in October last year. The fund, however, retained concentration on banks, which still accounts for the maximum sector share of 24 per cent. The BSE Bankex has shot up 43 per cent year to date.

This, together with picking up select stocks that rallied sharply, helped the fund’s strong 26 per cent return since January this year. That’s better than most other infrastructure funds such as Canara Robeco Infrastructure and Tata Infrastructure.

Stock moves

The fund picked up stocks such as JK Lakshmi Cements, Madras Cements and JK Cements. These have either near-doubled or more than doubled in the year to date. Other bets that paid off include SpiceJet and Sobha Developers. The top holdings, however, remain in banks. Stake in ICICI Bank has significantly shot up over the past year, as did stake in HDFC Bank and IndusInd Bank.

These stocks have returned between 13 and 27 per cent in the past year. A significant rise in holding of outperformer Larsen & Toubro helped. Other stocks added in the last one year include Union Bank of India, Reliance Infrastructure, Max India, Lanco Infratech and Tecpro Systems. Holding in Bharti Airtel, Siemens, Cairn India, Gail India, dropped sharply. Exits over the past year include Adani Port & SEZ, GVK Power & Infrastructure, Thermax and BHEL.

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