MUMBAI: Foreign institutional investor (FII) interest in Reliance Communications (RCOM) is waning. While Idea Cellular saw an increase in FII investment in the last one year and Bharti managed to maintain the levels despite choppy market conditions, RCOM failed to remain lucrative to FIIs amid falling market share and lower revenue growth.
According to the information provided by RCOM to the BSE, the FII holding in the company declined from 13% in March ‘07 to 10% in March ‘08. That’s nearly 25% fall in 12 months. The decline has been gradual, with FIIs shedding almost over 50 bps every quarter.
FIIs are considered to be the most astute long term investors on the Dalal Street and constitute single largest group of non-promoter investors in some of India’s most well known companies including HDFC, ICICI Bank, ACC, Grasim and Indian Hotels among others. "FII interest in a company is a reflection of its performance and growth potential," says an analyst.
As FIIs has always been one of the most deep-pocketed investors on the D-street, a sell-off by them triggers erosion in the stock price. And that has what happened to the share price of Reliance Communications.
The company has lost nearly 35% from its peak reached on January 10 this year. In comparison, the Sensex declined by around 25% during the period.
The company has also under performed its two others peers — Bharti Airtel and Idea Cellular during the period. Since the beginning of the year, Bharti Airtel and Idea have fallen 17% and 25% respectively.
In case of Idea Cellular, the FII holding was 6.6% in the December ‘07 quarter and moved up to 7.7% by March ‘08. During this period, the company posted 45% rise in net profit, bolstered by increased ARPUs and zooming subscriber base.
Idea’s national market share improved from 8.6% to 9.4% between March ‘07 and March ‘08.
According to the information provided by RCOM to the BSE, the FII holding in the company declined from 13% in March ‘07 to 10% in March ‘08. That’s nearly 25% fall in 12 months. The decline has been gradual, with FIIs shedding almost over 50 bps every quarter.
FIIs are considered to be the most astute long term investors on the Dalal Street and constitute single largest group of non-promoter investors in some of India’s most well known companies including HDFC, ICICI Bank, ACC, Grasim and Indian Hotels among others. "FII interest in a company is a reflection of its performance and growth potential," says an analyst.
As FIIs has always been one of the most deep-pocketed investors on the D-street, a sell-off by them triggers erosion in the stock price. And that has what happened to the share price of Reliance Communications.
The company has lost nearly 35% from its peak reached on January 10 this year. In comparison, the Sensex declined by around 25% during the period.
The company has also under performed its two others peers — Bharti Airtel and Idea Cellular during the period. Since the beginning of the year, Bharti Airtel and Idea have fallen 17% and 25% respectively.
In case of Idea Cellular, the FII holding was 6.6% in the December ‘07 quarter and moved up to 7.7% by March ‘08. During this period, the company posted 45% rise in net profit, bolstered by increased ARPUs and zooming subscriber base.
Idea’s national market share improved from 8.6% to 9.4% between March ‘07 and March ‘08.
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