Best Mutual Funds with Substantial Exposure

In a research identifying the top Indian brands that have withstood global unrest, Brand Finance, one of the world’s leading brand valuation consultancy, stated in its report that, “Mahindra Group, which is currently among India’s top 10 most valuable brands, is growing rapidly. Mahindra Group has become India’s 7th most valuable brand (up 15% to a brand value of USD 7 billion). The Group performed exceptionally well in last fiscal year with record profits crossing Rs 10,000 crore for the first time.”

In 2022-23, the Group’s consolidated revenue reached Rs 1,83,964 crore (USD 23.8 billion), with consolidated profit before tax (PBT) at Rs 18,868 crore (USD 2.4 billion). This robust financial performance underpins the group’s position among India’s top companies.

From humble beginnings as a steel trading company in 1945, the Mahindra Group has transformed into a global force, touching lives across continents and industries. Today, it stands as a testament to Indian ingenuity and entrepreneurial spirit, a true ‘Mahindra Rise.’

History of Mahindra Group

The Mahindra Group has a significant global presence, operating in over 100 countries across six continents. This global reach allows the Group to tap into international markets, expand its customer base, and diversify its revenue streams.

In 1945, on October 02 in Ludhiana, two brothers, Jagdish Chandra Mahindra and Kailash Chandra Mahindra, along with Ghulam Mohammed, set up ‘Mahindra & Mohammed’. They started as steel traders, capitalising on India’s post-independence industrial boom.

Further, in 1947, the year of Indian Independence, the company was rechristened as Mahindra & Mahindra (M&M) after Ghulam Mohammed migrated to Pakistan.

The company secured a license to assemble Willys Jeeps, marking their foray into the automotive sector. M&M launched its iconic indigenous jeep, the Mahindra CJ-3, forever etching its name in the Indian automotive landscape.

Later, M&M entered the tractor market with the launch of the Mahindra Bolero, recognising the crucial role of agriculture in India’s development. In 1994, M&M acquired Ford’s tractor business in India, solidifying its position as a leading player in the farm equipment market.

Mahindra & Mahindra had established Mahindra Ugine Steel Company (MUSCO) in collaboration with France’s Ugine Kuhlmann, diversifying into the steel manufacturing sector.

Going forward, it entered the financial services domain with Mahindra Finance, offering rural financing solutions and empowering millions. Recognising the burgeoning IT revolution, M&M established Tech Mahindra, venturing into the IT services and consulting sector.

The iconic Mahindra Scorpio, a stylish and powerful SUV, marked M&M’s entry into the premium automobile segment. M&M expanded its global footprint with acquisitions like Satyam Mahindra and Reva Electric Car Company, diversifying into electric vehicles and renewable energy.

Presently, Mahindra & Mahindra Ltd. continues its innovation journey, focusing on electric mobility, connected cars, and artificial intelligence, with a commitment to sustainability.

The Mahindra Group began with the steel trading business seven decades ago and now has become a brand that traverses nations and sectors. Imagine a sprawling tree, its roots firmly planted in Indian soil, its branches reaching out to diverse sectors like automobiles, farm equipment, finance, IT, infrastructure, and more that’s the Mahindra Group.

Here’s a List of Stocks under the Mahindra Group Companies:

[Read: The Ultimate Investment Framework to Beat Market Volatility]

Should One Consider Investing in Mahindra Group Stocks?

The Mahindra group enjoys a strong brand image in India and a growing international presence. The company powers ahead as the fastest-growing brand amongst the top 10 businesses in India; Mahindra Auto is among the fastest-growing auto brands globally; Tech Mahindra has the biggest jump in global rankings.

The Indian Government under the ‘Atmanirbhar Bharat’ is actively promoting domestic manufacturing and infrastructure development, sectors where Mahindra Group has a strong foothold. This could be beneficial for further expansion of the business.

The Mahindra Group is committed to sustainable practices and has incorporated sustainability principles into its business operations. The Group has set ambitious sustainability goals, including reducing carbon emissions, increasing renewable energy usage, and promoting resource conservation.

In a recent report released by the company, in the utility vehicles segment, Mahindra sold 39,981 vehicles in the domestic market, a growth of 32%, and 40,764 vehicles overall, including exports. The domestic sales for commercial vehicles stood at 22,211. In the last one year, Mahindra sold 331,446 tractors in India despite a challenging agricultural environment.

On October 02, 2023, Mahindra Finance announced a strategic co-lending partnership with the State Bank of India (SBI), India’s largest public sector bank. Mahindra Lifespace Developers Limited (MLDL), the real estate and infrastructure development arm, announced its partnership with Axis Bank.

Overall, the Mahindra Group delivered a remarkable performance in 2023, demonstrating its resilience and adaptability in a dynamic market. This has brought the Mahindra group stocks into the limelight and gained decent investor traction.

Nevertheless, it’s crucial to note that individual companies within the Group may have varying performance. Always conduct thorough research before making any investment decisions.

Investors may benefit from Mahindra Group’s significant development and manage market swings by incorporating shares of Mahindra Group companies in their portfolio. However, an investor may consider some factors, like a high debt-to-equity ratio, which could increase financial vulnerability amidst economic downturns.

Mahindra Group faces stiff competition from established players and new entrants in each of its sectors. Staying ahead of the curve will be a daunting task for the business. The Indian economy and global markets are susceptible to external factors that could impact Mahindra’s performance.

Invest in Mahindra Group Stocks via Mutual Funds to Mitigate the Risk

Mutual funds have become increasingly popular among Indian investors, providing a convenient and diversified way to invest in Indian stocks. This will free investors from worrying about the significant risk of investing in direct equities.

[Read: Relying on Star Ratings to Pick Best Mutual Funds? Read This]

Additionally, rather than investing in each ‘Mahindra group stock’ separately, one can collectively allocate their assets to multiple ‘Mahindra group stocks’ by investing in mutual funds.

#1 – UTI Transportation & Logistics Fund (Sectoral Fund)

UTI Transportation & Logistics Fund invests predominantly in equity and equity-related securities of companies engaged in the transportation and logistics sector. The scheme invests across the market cap, and as of October 2023, it holds 69.46% allocation in large caps, 16.98% allocation in mid-caps and 6.56% in small caps.

Currently, the scheme holds an AUM of Rs 2,348.39 crore and is benchmarked against the Nifty 50 index.

UTI Transportation & Logistics Fund holds maximum exposure in stocks of Mahindra & Mahindra Ltd., which is a multinational automotive manufacturing corporation. It holds a market capitalisation of Rs 2.02 trillion as of October 2023. Currently, the overall exposure to Mahindra group stocks accounts for 15.75% of the scheme’s assets.

#2 – HDFC Transportation and Logistics Fund (Thematic Fund)

HDFC Transportation and Logistics Fund invests predominantly in equity and equity-related securities under the Transportation and Logistics theme. Launched in August 2023, it currently has an AUM of Rs 555.07 crore and is benchmarked against Nifty 50- TRI.

However, since the scheme is newly launched a few months ago, it does not have a long performance track record. Thus, investors may consider their suitability and invest only after analysing a proven performance track record.

The scheme invests across the market cap, and as of October 2023, it holds 48.41% allocation in large caps, 15.73% allocation in mid-caps and 26.59% in small caps. Do note it has a higher allocation to small-cap stocks, which are highly risky and sensitive to market fluctuations.

HDFC Transportation and Logistics Fund holds fair exposure in M&M Ltd. stocks at 6.60% and CIE Automotive India Ltd. at 4.77%, both of which are amongst the top 10 holdings. Currently, the overall exposure to Mahindra group stocks accounts for 11.36% of the scheme’s assets.

#3 – Baroda BNP Paribas Focused Fund (Focused Fund)

Launched in 2017, Baroda BNP Paribas Focused Fund invests in a concentrated portfolio of equity & equity-related instruments of up to 25 companies across market capitalisation. As of October 2023, the fund has 50.57% in large caps, 31.54% in mid-cap stocks, and 4.72% in small-cap stocks.

Baroda BNP Paribas Focused Fund has an overall allocation of 10.85% to Mahindra group stocks. The highest exposure is in Tech Mahindra Ltd., a global IT powerhouse offering services like digital transformation, cloud solutions, and cyber security.

Being a focused fund, the other major allocations are to giants like 3.36% to M&M Financial Services Ltd., providing financing solutions for individuals and businesses, including rural credit through Mahindra Finance and 2.78% to M&M Ltd.

#4 ICICI Pru Transportation and Logistics Fund (Thematic Fund)

The scheme endeavours to create a substantially diversified portfolio by investing predominantly in equity and equity-related securities of companies engaged in the transportation and logistics sectors.

Launched in October 2022, the scheme currently holds an AUM of Rs 2,434.84 crore and is benchmarked against the Nifty 50 Index. However, since the scheme was launched a year ago, it has no long performance track record.

In terms of Mahindra Group Stocks, this scheme holds a major allocation of around 8.05% in M&M Ltd. The fund also has exposure to CIE Automotive India Ltd. The scheme invests across market segments such as – 61.91% allocation into large-cap stocks, 16.51% and 17.05% in mid and small-cap stocks, respectively.

Do note it has a higher allocation to mid and small-cap stocks, which are highly risky and sensitive to market fluctuations. Investors may consider their suitability before investing.

#5 Taurus Flexicap Fund (Market Cap Fund)

Taurus Flexicap Fund aims to provide long-term capital appreciation by investing in large, mid and small-cap stocks across market capitalisation. The scheme holds 60.63% in large caps, 13.53% in mid-caps and 13.55% in small caps as of October 2023.

The overall allocation to Mahindra Group Stocks is around 9.19%, and there is significant exposure in market leaders from the Mahindra group, such as 4.66% in Tech Mahindra Ltd. and 4.53% in M&M Ltd.

Although sectoral/thematic mutual funds could be a good diversifier to your portfolio, it takes at least a few years to reach their potential. Investors may consider taking a plunge into these mutual funds only after thorough market research and assessing their suitability based on risk tolerance, investment horizon and goals.

To conclude…

Mahindra Group offers an attractive investment opportunity with its diversified portfolio, strong financials, and commitment to innovation. Remember, diversification is key to mitigating risk. Don’t put all your eggs in one basket, even within the Mahindra Group. Consider your overall investment strategy, consult a SEBI-registered financial advisor, and make informed investment decisions.

[Read:  How to Choose Mutual Funds For Your Investment Portfolio]

We are on Telegram! Join thousands of like-minded investors and our editors right now.

MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.

She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.

 

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.