Thursday, February 29, 2024

MFs take to RBL after M&M investment

MUMBAI : Top mutual fund houses were active on the RBL stock counter last month, coinciding with auto major M&M’s 417 crore investment for a 3.53% stake in the Mumbai-based lender, which was greeted with surprise by the market.

Axis MF made a new entry into RBL stock counter while Aditya Birla Sun Life MF, which held 1.32% of its equity as of June quarter, added more, shows data from brokerage Nuvama.

Interestingly, Nippon India MF, which held the highest stake among peers of 3.09%, cut its stake in RBL.

These purchases helped the stock gain 25% in July, up from 181.95 a share to 227.85 at month end. Against this, Nifty Smallcap 100 index rose 8%.

The days on which the stock had hefty deliveries were 27 July worth 361 crore, 26 July ( 247 crore) and 17 July ( 265 crore).

M&M informed exchanges of its investment in RBL on 26 July. M&M added that it would consider a further investment up to 9.9% in RBL subject to regulatory approvals.

The M&M and MF activity could have happened on the three aforesaid sessions .

MFs held a combined 11.64% of equity in the bank as of June 2023 quarter. They had cut that from 13.72% in Jan-Mar.

The day after M&M annou-nced its investment the stock jumped to a 52-week high of 251.40. It has recovered from a 52-week low of 95.75 in August last year after NPAs and slippages moderated.

“NPA hiccups are behind; showing strong sign of recoveries: The bank’s reported slippages were down at 5.6bn v/s 6.8bn the previous quarter. Management expects slippages to moderate going forward. The up-gradation & rec-overies stood at 2.7bn against 3.8bn in 4QFY23. Additionally, write-offs were at 3bn v/s 3.4bn in the previous quarter. Lower slippages and moderate upgrades and write-offs resulted in decline in GNPA ratio (3.22%) decreased 15bps sequentially,” LKP Securities said in a 24 July report.

Small cap funds of MFs attracted net inflows of 4171.44 crore in July , down from 5472 crore in June , as per AMFI data . Against this large cap funds saw outflows of 1880 crore, up from 1362 crore in June.

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Updated: 13 Aug 2023, 09:45 PM IST

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