D-Mart shopping rakes in huge gain for mutual funds

A third of shares in the IPO cornered by funds; stock has surged 162% over issue price

Investment in shares of Avenue Supermarts, which runs the D-Mart value retail chain, has proved a blockbuster for the country's equity fund managers.

Interestingly, mutual funds managed to corner 30 per cent of the shares on offer in the retailer's Initial Public Offer (IPO) last month.

Of the 62.5 million shares on sale, fund managers grabbed a little over 19 mn at an offer price of Rs 299. Most of the investments were made in the anchor book of the IPO. The stock is currently trading at Rs 784, a jump of a whopping 162 per cent within a month of listing.

Nearly 81 equity schemes have allocated their assets to Avenue Supermarts. Schemes which could lap up more number of these shares include HDFC Prudence, HDFC Equity, HDFC Top 200, HDFC Balanced Fund, ICICI Prudential Focused Bluechip Fund, Axis Equity Fund, ICICI Prudential Midcap Fund and Reliance Growth Fund.

No other listed retail stock has MF exposure as high as Avenue Supermarts. Other retail sector MF investments include Future Retail, where 32 schemes have invested Rs 427 crore; Trent, where 15 schemes have invested Rs 793 crore; and Shoppers Stop, where 12 schemes have investments worth Rs 408 crore.

"D-Mart's operating model has always been looked at. We were certainly one of those investors who had long been waiting for the retail chain to hit the market. But, the rally in the counter was beyond our expectations. Internally, we had the view that post listing, it might find resistance at Rs 550-575 but the euphoria beat us altogether. It's good for the portfolio," said a fund manager.

 

The average allocation of the schemes to Avenue Supermarts, however, is only one percentage point. Some, though, have allocated between two and five per cent of their assets to the retail giant. Such as Tata India Tax Savings Fund, ICICI Prudential Business Cycle Fund, Birla Sun Life Emerging Leaders Fund, SBI FMCG Fund, Sundaram Equity Multiplier Fund, UTI India Lifestyle Fund, IDFC Imperial Equity Fund, IDFC Equity Fund and Tata India Consumer Fund.