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B. Krishna Kumar

THE community of `public shareholders' can be savvier when it comes to stock picking — buying on the `lows' to participating in the subsequent boom in valuation — than perhaps even institutional investors. Or so it would seem, if their investment behaviour in the shares of TVS Motors Company in the last year, were anything to go by.

Between March 2001 and March 2002, they bought 4.07 lakh shares thus pushing their holdings from 15.28 per cent of the total equity capital to 17.04 per cent during this period. The stock spurted from Rs136.95 by close of March 2001 to Rs 388.7 by March 2002.

In contrast, FIIs reduced their holding from 7.28 per cent in March 2001 to 2.58 per cent in December 2001 when the price rally in the scrip had gathered momentum. (It is another matter that they shored up their holdings in the subsequent three months, but at considerably higher prices.)

Mutual funds including UTI fared no better with their stake coming down from 7.13 per cent in March 2001 to 4.78 per cent by March 2002. UTI at least has the excuse of redemption pressures to justify its reduced holdings. But there is no such defence in the case of others — just plain bad timing. Collectively their shareholding has come down from 16.47 lakh shares to 11.04 lakh shares.

Banks and financial institutions fared no better. They too have shed their holdings marginally during this period.

Two aspects stand out. The increase in public shareholding has come at a time when there is a question mark over the continued association of Suzuki in the venture.

Additionally, the investment support has come at a time when the business fundamentals have looked none too good. The company had, by the close of fiscal 2000-01,clearly lost some ground in the motorcycle segment. In the year that followed it had regained lost ground through the successful launch of two motorcycle models `Fiero' and `Victor'. In other words, even as professional institutional investors were writing off the stock, the general public have been mopping up available stock.

The share price had spurted from a low of Rs 72.8 (in September 2001) not seen for many years to a high of Rs 471.75 in April 2002. Professional investors represented by mutual funds and FIIs have clearly misread the turn of events and have in the process lost out on an opportunity to make significant returns.

Of course, not all institutional investors had misread the market signals. The private corporate bodies as a class of shareholders had increased their holdings from 5.93 per cent in March 2001 to 7.53 per cent in March 2002.

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