Friday, June 22, 2012

Mahindra Finance Sold by JPMorgan, Again

Ramesh Iyer, Managing Director,
M&M Financial Services Ltd.
By Staff Reporter:
11:59 PM IST, Friday, 22nd June 2012

Mahindra & Mahindra Financial Services Ltd (BSE: 532720, NSE: M&MFIN) on Friday again witnessed a significant sell by the JPMorgan Chase subsidiary, Copthall Mauritius Investment, in National Stock Exchange.

As per disclosures made available at NSE after trading hours on Friday, Copthall offloaded 8.63 lakh M&MFIN shares at Rs. 630.08 a share.

StockExplain had on Thursday reported another sell by this JPMorgan arm at NSE, in which 12.80 lakh shares were sold off with no identified takers.

Friday’s sell fetched Copthall Mauritius Rs. 54.39 crore, at a per share price of Rs. 630.08.

Despite Copthall being the largest non-promoter shareholder in Mahindra Finance, the expected mandatory disclosures for Thursday’s sell didn’t appear on NSE or BSE, by either the seller or the company.

Though the sells by JPMorgan Chase on both days were massive, and despite the fact that there were no buyers buying above 0.50% stake on both days, the NBFC stock could close flat in NSE on Friday, thereby signalling that there was reasonable buying support.

The scrip slipped by 2.26%, up to Rs. 620, intraday, but recovered to close flat. It remains to be seen whether the unidentified buyers on both days are of long-only nature, like institutional investors or promoters.

Instead, if the buyers are of lower quality like brokerages providing counterparty support for the time being, the stock might slip later on as the distribution begins.

The stock might also have benefited from retail buying in recent days, as a couple of international and domestic brokerages had given positive outlook on Mahindra Finance. 

HSBC had recently initiated coverage on the stock with an Overweight rating and 26% upside, while KR Choksey Securities had given a Buy Call with 30-40% upside.

However, the market is likely to take its directional cue from the fact that the stock’s largest investor is selling, and selling for the second day in a row.

Though Copthall, as well as JPMorgan directly, have a long history of investing and profit-booking in Mahindra Finance, dating back more than four years when the scrip was at one-third of current market price, their last identified large deal in the scrip was one-and-a-half years back when Copthall bought 23.67 lakh shares at Rs. 754 a share.

Such high buys earlier and lower sells as on last two days hint that there is a kind of urgency to exit significantly from the scrip. However, the urgency might also be due to current internal circumstances at Copthall or JPMorgan.

Friday’s sell by Copthall amounted to a 0.83% stake cut in the company, and if this FII hasn’t transacted in the counter since Q4 end, except for the last two days, its stake now stands at 2.41%, down from 4.47%.

Apart from Copthall, the largest investors in the counter are PCA India Equity Open, Fidelity Investment Trust - Fidelity Diversified International Fund, Cartica Capital, Valiant Mauritius Partners, Tree Line Asia Master Fund (Singapore), Dragaon Peacock Investments, Flagship Indian Investment Company (Mauritius), Wasatch Emerging Markets Small Cap Fund, and Bank Muscat SAOG A/c Bankmuscat India Fund.

Mahindra Finance closed trade in NSE on Friday at Rs. 634.70, up by just 0.06%.