Date:16/02/2006 URL: http://www.thehindubusinessline.com/2006/02/16/stories/2006021602401500.htm

Back HLL performance helps boost FCMG funds

Nilanjan Dey

Kolkata , Feb. 15

THE Hindustan Lever stock, which is powering ahead on the exchanges on the back of its quarterly performance, has energised the equity funds that have it in their portfolios.

The stock, which ended nearly 12 per cent higher at about Rs 236 on the NSE on Wednesday, has boosted the NAVs of these funds, including those that are dedicated to the fast moving consumer goods sector.

SBI Magnum FMCG Fund, which had HLL as its No. 2 holding at the end of last month, scaled up to Rs 21.14 on Tuesday, up from Rs 20.83 on the previous day. HLL accounted for 19.36 per cent of its net assets as on January 31.

Investors, fund circles say, have been attracted by the FMCG major's latest results — a 22 per cent-plus increase in profit after tax on a 14 per cent-plus increase in net sales. The company has come back to double-digit growth after six years.

"The market has discounted HLL for long. This may change thanks to higher realisations across several product categories and cost initiatives," said Mr Mahesh Patil, Fund Manager with Birla Sun Life MF.

On Wednesday, the HLL stock was trading actively, leading to a turnover of Rs 290 crore on the NSE.

It peaked at Rs 236.70, which was also the 52-week high for the counter. On the BSE, it went to a high of Rs 236.50 after opening the session at Rs 226.

While a number of other FMCG stocks have gained ground in recent times, investors note that the market has not favoured the HLL scrip.

Therefore, the spurt in the latter cannot be compared to moves recorded by ITC on the exchanges, fund houses suggest, adding that the market's experience with FMCG plays such as ITC, Dabur and Marico has been vastly different.

FMCG funds have recorded serious gains in the past one year; the returns have ranged from 55 per cent in SBI Magnum FMCG to 103 per cent in Prudential ICICI FMCG.

Franklin FMCG with 73 per cent is in the middle ground.