SBI back on funds' radar

Fund houses have lapped nearly 60 million shares

The shares of the country’s top lender State Bank of India (SBI) are once again back on the radar of equity fund managers. The counter has been ignored by money managers for several quarters in a row. The latest buying in the stock has coincided with the merger announcement SBI and its associates banks.

SBI is among the most-bought by fund managers in June and July. Put together, they have lapped up nearly 60 million shares of SBI, investing a massive Rs 1,350 crore in the banking behemoth.

On Tuesday, shares of SBI closed at Rs 254.6 compared to its 52-week high of Rs 268.70.

Fund houses that have shown the most renewed interest in SBI are Reliance Nippon Mutual Fund, Franklin Templeton MF, DSP BlackRock MF, ICICI Prudential AMC MF and Birla Sun Life Mutual Fund. HDFC Mutual Fund, a dominant and a persistent investor in shares of SBI, too, cornered stocks worth Rs 133 crore recently.

Interestingly, they went on a shopping spree when the SBI counter was trading in the range of Rs 215-230 on the stock exchanges. The stock is up around 10 per cent since then.

As on July 31, a total of Rs 9,718 crore or 2.43 per cent of the equity assets under management (AuM) is parked in SBI, making the counter the fifth most owned by fund managers.

“SBI was on our radar for long. But, since we lacked clarity on how the PSU (public sector unit) pack is going to tread the NPA (non-performing asset) mess, we preferred to stay away and did not add it in our portfolio. With an improvement in earnings and the merger with associate banks, we took a directional call on the bank and invested heavily,” said the chief investment officer of a large fund house.

A Nirmal Bang report said: “Once the merger goes through, there will be a significant increase in the balance sheet strength as well as profitability of SBI.”

“It’s an investment in the country’s economic growth. SBI is a strong proxy of revival in India’s economic health and from here on we believe the stock will decisively help the performance of our schemes,” said an equity head.

SBI had slipped from an all-time high of Rs 340 to a low of Rs 148 earlier this year. The fall was so sharp and quick that it deterred fund managers. Instead, they concentrated on private players such as HDFC Bank, Axis Bank, ICICI Bank, YES Bank and IndusInd Bank.

Currently, there are 380 equity schemes that have investment in stocks of SBI. The schemes which are heavily invested, in absolute terms, in the largest lender include HDFC Equity Fund (Rs 1,368 crore), Reliance Equity Opportunities Fund (Rs 803 crore), HDFC Top 200 (Rs 778 crore), HDFC Prudence Fund (Rs 710 crore), Franklin India High Growth Companies Fund (Rs 447 crore), HDFC Tax Saver Fund (Rs 375 crore), Reliance Tax Saver Fund (Rs 310 crore), and ICICI Prudential Focused Bluechip Fund (Rs 290 crore).