MFs accelerate Maruti Suzuki share sale in Dec

Profit-booking and not a directional call, say fund managers

Mutual fund managers since April last year have sold around 3.6 million shares, worth nearly ~30 billion, of India’s largest car manufacturer Maruti Suzuki. They plan to continue to prune its holdings as valuations appear stretched after the last year’s stellar rally.

In 2017, shares of Maruti Suzuki jumped 83 per cent, even as the benchmark Sensex gained 28 per cent.

“There is nothing wrong with the company. The recent selling (of Maruti Suzuki's shares) should not be seen in this light. It's a market leader in automobiles and is even today among the top holdings in portfolios. But, the problem is stretched valuations. I doubt it will sustain in case liquidity dries out,” said a top chief investment officer (CIO).

According to fund managers in a bull market flushed with liquidity, it's hard to pinpoint a fair valuation for Maruti Suzuki shares. “When it first crossed the ~6,000-mark during 2017, I partially sold (its shares) and so, did many other peers. But, it scaled up further and kept galloping. I think, if Maruti comes back to about ~8,500, it will be buy call. Till then we won't mind booking profits,” said a senior manager, who is currently tilting more towards Tata Motors.

The rising discomfort among fund managers with Maruti could also be figured out from the outright sale witnessed during December. First time in several years, fund managers liquidated over a million shares of the car-maker in a single month as stock price inched towards the Rs 10,000-mark.

When Business Standard asked, if is it becoming a directional call, fund managers denied. “One can't do away with Maruti Suzuki. It's merely profittaking and nothing more. We will come back if the counter gives us opportunities, which I think it will,” said the fund manager.

The selling is not restricted to just one or two fund houses, but it is largely across the board. At December end, the exposure which equity segment of mutual funds had in Maruti Suzuki stood at ~125 billion against ~79 billion a year ago.