The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

February - 2005 - issue > Personal Finance

Mutual'ly Beneficial

Priya Pradeep
Wednesday, February 16, 2005
Priya Pradeep
Geodesic Information Systems’ evolution as a leading product company and a software solutions provider did not pass without notice. Geodesic’s stock quote (GEIS.BO) on December 7 2004 was Rs. 677 on the Indian bourses. One month later it increased an enviable 36% to Rs.920. Geodesic is a literal dark horse when it comes to receiving attention from the ordinary investing public but has not escaped the notice of seasoned senior fund managers like Anil Sarin of Prudential ICICI Asset Management Company Limited. “It may be a revelation, but a smaller company like Geodesic which is not in our portfolio is doing better percentage wise than Infosys” reveals Sarin. He reasons that it is not in their portfolio because the company, which is run by a twelve-strong team would be more of a novelty than people can tolerate especially when it comes to their valuable savings. Further to be a part of a mutual fund, a company has to be of a certain size so that a mutual fund does not look like wearing a venture fund hat. This non-inclusion is also due to the extreme skepticism in people’s minds associated with product IT companies.

The top three companies in Prudential ICICI’s Technology Fund are Infosys, TCS and Satyam, cornering 29 percent of the allocation. The entry has been made with Infosys, NDTV and software product companies like I-flex and Subex Systems. PruICICI owns 5 percent of Subex, which operates in the field of mobile and wireline telephony, and Subex’s major strength was that it had total market share of all India operating networks. Animation majors are also included in the tech fund, with 80–85 percent of the CNX IT Sector Index or BSE IT Index being dominated by heavyweights like Infosys, Wipro and TCS by market capitalization. These superstars determine the tech fund’s returns.

NDTV is now a major money-spinner for the Technology Fund where the average price earlier was between Rs.85-94 but now it stands at Rs.139 a jump of nearly 64 percent, which was based on the talk that foreign investors would be allowed in that medium and the fact that its Hindi channel has pipped its arch rival in the Hindi news segment. A further trigger for the market is NDTV launching its new business channel ‘Profit’. The incremental cost for starting a TV channel is very low compared to the good return it gets which is a very good attraction for investors. That NDTV could be a major player is reflected in the major switch over of the discerning TV audience from other news channels to NDTV in 2004. 2005 could portend even better. Media business, especially TV channel business is a high upfront investment business for 2005, according to Sarin. Actually, the cost line remains moderate and the revenue line shoots up with the extra revenue falling to the bottom line. This means high operating leverage for the company in question.

After the peak of 2000 and the ebb of 2001-2002, technology funds have evolved and now the Technology Fund portfolio in Prudential ICICI is not limited solely to IT companies but now includes the media, pharmaceutical companies and telecom. Even though it’s defined as a Technology Fund, presently 13 percent is invested in non-technology stocks. The NAV performance for the Technology Fund last year was 40.75 percent.

Prudential ICICI’s investment philosophy:

Share on Twitter
Share on LinkedIn
Share on facebook