Mumbai: Leading mobile operator Bharti Airtel replaced Reliance Industries as the most preferred stock of domestic fund managers in July, becoming the only company to topple the dominance of the country’s most valuable firm since at least December 2006.
“Bharti, as a consumption play, appears to be far more attractive to funds than a commodity play,” said Sanjay Sinha, chief executive of DBS Cholamandalam Asset Management.
Bharti has a market value of about $33 billion, making it India’s fourth-most valuable firm. Reliance is worth $66 billion and is the largest firm by market cap.
As many as 273 funds collectively held 116 million shares of the cellular operator at July-end and 15 funds introduced the stock in their portfolios during the month, according to data from fund tracker ICRA Online.
By comparison, 270 funds held stakes in Reliance Industries, controlled by billionaire Mukesh Ambani, with at least seven dumping the firm — which posted a larger-than-expected drop in June quarter net profit and is locked in a legal battle with Reliance Natural Resources, run by estranged younger brother Anil Ambani, over a gas-sales pact.
Bharti unseated Reliance Industries even though its shares have fallen 3.8% since it announced in May that it had renewed merger talks with South African peer MTN, nearly a year after the companies’ prior talks fell through.
Bharti — more than 30% owned by southeast Asia’s top phone firm Singapore Telecommunications — has consistently added about 2.8 million subscribers a month, leading growth in an increasingly competitive space where rivals such as Vodafone have expanded networks rapidly.
Firms such as ICICI Prudential Asset Management, IDFC Mutual Fund, ING Investment Management and Principal Pnb Asset Management added Bharti stock to their portfolios, while Canara Robeco and DSP BlackRock dumped Reliance Industries from at least one of their fund’s portfolios.
Bharti shares rose 2.4% in July, compared with an 8% rise in the broader market, while Reliance shares lost 3.3%