Friday, January 27, 2012

Karuturi Global's SHP Reveals Significant FII Selling in Q3

By Special Correspondent

Karuturi Global Ltd (BSE: 531687, NSE: KGL) has filed its Share Holding Pattern (SHP) for Q3 of FY‘12, in BSE today, and there are several changes worth noting in this latest SHP, compared with the SHP for Q2 of this fiscal.

The first change to be noticed is that the equity base has increased by 3.47 million shares, but which amounts to only a 0.43% dilution from the previous quarter, and as such, is a minor change.

The most significant change in Karuturi Global's SHP is that Foreign Institutional Investors’ (FII) holdings have shrunk from 35.01% in Q2 to 28.04% in Q3, amounting to a net sell of 7%. 

The bulk of this selling seems to have been done by BNP Paribas Arbitrage which was holding 5.22% in Q2, but which in Q3 is not among investors holding more than 1% shares, which implies that BNP Paribas has sold at least 4.22% shares of Karuturi during this past quarter.

Another notable seller during this quarter seems to be the hedge fund, Mansoon India Inflection Fund 2 Ltd which held 1.59% in Q2, but which is not there among the +1% holders now, implying a sell of at least 0.59% during this quarter.

Another seller of Karuturi Global, but to a lesser degree, has been Emerging India Focus Fund, but whose action is significant due to another reason. Emerging India Focus, along with two other FIIs, India Focus Cardinal Fund and Elara India Opportunities Fund are under a lock-in, which started from February 14th 2011, that prevents them from selling their stake now. All three had been allotted shares through warrant conversion at Rs. 12. The Karuturi scrip closed today’s trade at Rs. 5.65 in NSE, up by 3.67% from yesterday's close.

The market is keenly watching whether these three FIIs will sell as soon as the lock-in expires on one-year completion, as the Karuturi scrip had suffered a huge fall in price, and had failed to bounce back with the market, which is mainly attributed to the serious headwinds and controversies facing this floriculture major in its new foray into agriculture in the African nation of Ethiopia.

Karuturi Global has been world’s leading producer of cut roses for a few years now.

The SHP filed today provides a hint to how these FIIs may act, as Emerging India Focus Fund has already started selling its shares not under this lock-in. During Q3, this FII has sold 580,000 shares, which amounts to all of their shares without lock-in.

Another hint comes from the action of India Focus Cardinal Fund, which at 8.18% stake is Karuturi's largest non-promoter shareholder. India Focus Cardinal, which is facing serious regulatory action and ban from Indian market, by SEBI, due to their alleged involvement in the GDR manipulation scam, had recently appealed at SAT to allow them exemptions to sell select scrips from their holdings including Karuturi Global. SAT has allowed this appeal, which means India Focus Cardinal is free to sell Karuturi shares as and when the lock-in expires.

Karuturi’s Q3 SHP is however not all gloom and doom. At least two FIIs have bought significant quantities during the quarter. Deutsche Securities Mauritius Ltd has bought 2.26 million shares during the quarter, and their stake in Karuturi Global stands enhanced from 1.10% in Q2 to 1.37% now. However, their strategy seems to be one of averaging at lower prices, which often signals a strategy of faster exits as and when the opportunity arises.

Another FII which has bought during the quarter is a Citibank arm, which has bought at least 0.42% stake, as they have re-surfaced among +1% holders, after selling and disappearing from this list in Q2.

It is notable that despite these buys, the overall FII holding is down by around 7%. As can be expected, the FII selling was absorbed mainly by non-institutional shareholders including retail investors, whose collective holding has jumped from 44.85% to 51.93%, which is an identical rise of over 7%.

Karuturi Global doesn’t have significant stake-holding by India’s Domestic Institutional Investors (DIIs), and their stake stands steady at 0.54%, lower slightly only due to the small dilution in the quarter.

Karuturi’s promoter stake also remained steady at 18.07%, slightly down only due to dilution. However, promoters pledged nearly 24% their total  stake during this quarter, compared to no pledge in the previous quarter.

1 comment:

  1. Stockask - very informative as usual .Amar