Tuesday, March 20, 2012

Mahindra Lifespace Developers Sees Continued Selling by HSBC for Rs. 30.43 Crore

Anita Arjundas,
Mahindra Lifespace Developers Ltd.
By Special Correspondent:

Mahindra Lifespace Developers Ltd (BSE: 532313, NSE: MAHLIFE) counter on Monday saw massive follow-up selling of 9.51 lakh shares by HSBC Global Investment Funds Mauritius Ltd, amounting to 2.33% of the total shares in the company.

The significant sell was executed both at NSE and BSE, at the same rate of Rs. 320 a share. While National Stock Exchange saw a sell of 5.80 lakh shares, Bombay Stock Exchange witnessed an offload of 3.71 lakh shares. HSBC raised a total of Rs. 30.43 crore from both the sells.

Notably, there were no identifiable institutional buyers or promoters, as counterparties to the sells by HSBC Global Investment Funds, which signals that the large offloading was picked up by the wider market.

The promoter company, Mahindra & Mahindra Ltd (BSE: 500520, NSE: M&M) already holds a healthy 51.05% stake in Mahindra Lifespace Developers.

Around four weeks earlier, HSBC had disclosed to Indian stock exchanges that two of its arms, had sold 0.65% stake in Mahindra Lifespace Developers through open market transactions on February 23rd. 

Interestingly, HSBC Global Investment seems to be on a selling spree in this counter during this quarter, even apart from these two identified sells. 

As of Q3 end, HSBC Global Investment held 18.13 lakh shares or 4.44% stake in Mahindra Lifespace. But its disclosure on February 24th makes it clear that HSBC had sold off 3.02 lakh shares or 0.74% stake before the disclosed sell on February 23rd. 

Altogether the three sells amount to 3.72%, and the effective current holding of HSBC Global Investment stands corrected from 4.44% in Q3 end to just 0.72% now, which hints at a total exit strategy by this noted FII.

On the fundamental side, Mahindra Lifespace Developers has been a reasonable performer during the last 3 fiscals with revenue increasing by 137% and net profit increasing by nearly 65%, both on a consolidated basis. 

In the current fiscal year-to-date, performance has been sluggish with consolidated revenue increasing by only 10% and consolidated net profit growing by only 7%, compared with the corresponding nine-monthly period of the last fiscal. Standalone performance has been especially hit in Q1 & Q2, and only a modest rebound is seen in Q3.

Reflecting this sluggish performance, and in sync with the general market correction, Mahindra Lifespace stock had corrected steeply in the first nine-months of FY‘12, falling from a 52-Week High of Rs. 425 on 8th April in BSE to a 52-Week Low of Rs. 235 on 30th December, registering a loss of nearly 45%.

But when the market recovered, Mahindra Lifespace was quick to rebound, soaring by over 50% from its yearly lows, and HSBC Global Investment has effectively utilized this recovery in Q4 to sell off significant quantities.

The fact that Monday’s sell was the most significant in size reveals that HSBC had waited for the Indian Budget to be announced. The budget was noted for its lack of sops for the realty sector, even while input costs and taxes are set to appreciate, thereby deepening the lull in demand.

It will be interesting to watch the calls other major investors in Mahindra Lifespace will take post HSBC Global Investments’s almost full exit. They include Small Cap World Fund, Amansa Investments, ICICI Prudential Life Insurance, FID Funds Mauritius, Amundi Funds India, Royal Bank Of Scotland, and ICICI Prudential Tax Plan. 

As of Q3 end, Small Cap World Fund, a part of the global asset management major, American Funds, was the largest non-promoter investor in Mahindra Lifespace with a 5.28% stake.

Despite the massive sell by HSBC, Mahindra Lifespace Developers closed Monday’s trade down by only 0.48% in a down market, which shows there were eager buyers as well. On Tuesday, Mahindra Lifespace opened trade up by 0.85%, went as high as 3.04% up, but is now trading just 0.28% up at Rs. 320.20 in NSE. 

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