Still a year away from redemption, MasterPlus may well be your goldmine
Vipul Mehrotra
MasterPlus '91, the seven year growth scheme from UTI, is approaching redemption in March, 1999. The stock is available at Rs 17.00 on the NSE at a discount of 24.21 per cent to its net asset value of Rs 22.43. If the NAV remains constant, this would mean a 31.94 per cent return over the next fifteen months with long term capital gains tax benefit.Master Plus '91 aims to provide long term appreciation primarily through investment in equities. Possibility of a dividend payout, splits and rights was indicated at launch. The fund has not paid any dividend till date though UTI made an abortive attempt to raise money through rights in November, 1996. The timing of the launch of MasterPlus was extremely favourable as before the scam bust in the overheated market, the few funds listed were trading at a hefty premium. For these factors, the fund was able to raise close to Rs 1000 crore in a brief period. Master Plus '91 has appreciated by an annual rate of 14.2 per cent since its launch and has outperformed
its peers most of the times. Since its launch, the BSE National Index has appreciated by an annual rate of 7.30 per cent. The fund has managed to stay ahead of major market averages since launch. Although the fund lost ground during the 1995-97 bear phase, in 1997 there are signs of a turnaround with the NAV appreciating by 12.07 per cent. During 1997, the NAV of the fund touched a high of Rs 27.42 (August 6) and a low of Rs 20.43 (January 01, 1997). The launch of MasterPlus coincided with the government's first round of disinvestment in public sector units. This proved to be a blessing for the fund or else, the deployment of its huge corpus of Rs 1000 crore would have taken a toll on its performance. MasterPlus cornered a large chunk of PSU shares at attractive prices. MasterPlus '91 success can be largely attributed to its aggressive positions in PSUs. As on October 30, 1997, PSU stocks account for around 37 per cent of the net assets. Five of the top six holdings are in PSUs with HLL being the onlyexception. In all the top 27 holdings account for almost 74 per cent of the net assets of over Rs 2100 crore. The top five holdings account for 34 per cent of net assets or Rs 723 crore while the top ten account for Rs 1088 or 52 per cent of the net assets. As compared to June 1996, 18 stocks remain among the top 25 stocks as on October 31, 1997. The major entrants include Reliance, State Bank and Punjab Tractors. Reliance today figures in the top ten holdings while it was not among the top 25 in 1996. MasterPlus has a Rs 48 crore exposure in Reliance, Rs 40 crore exposure in SBI and Rs 33 crore in Punjab Tractors. Raymond is the major dropout in its latest holdings. Going by the present trend of closed-end funds of being converted, MasterPlus in all likelihood will be converted into an open-end fund before or at the time of redemption. With its two year long dry run in the close end equity segment, UTI would try to hang on to the Rs 2000 crore plus corpus. Either way, redemption or repurchase will be
offered to the unitholders. At prevailing discount and the increasing attractiveness of the underlying assets in the portfolio, the downside risk with Master Plus is very low, till redemption. Value Research
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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