Parag Parikh Flexi Cap doubles down on IGL, MGL; adds more ITC and bank stocks

Parag Parikh Fund did not add any new stock to its portfolio in May. Instead, India’s largest active equity fund chose to deepen some of its existing bets.

The ₹1.42 lakh crore scheme more than doubled its holdings in city gas distributors Indraprastha Gas (IGL) and Mahanagar Gas (MGL) during the month, while also increasing exposure to stocks such as ITC, HDFC Bank, ICICI Bank and HCL Technologies.

Rather than introducing new ideas, the fund used the month to increase exposure to a select group of existing holdings.

City gas stocks saw the sharpest increase

The most notable activity during May was concentrated in the fund’s city gas distribution holdings.

Parag Parikh Flexi Cap Fund more than doubled its holdings in both Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL), making them the biggest additions to the portfolio by percentage increase.

Biggest additions in May

The increase was large enough to materially alter the weights of both stocks within the portfolio. IGL’s allocation rose from 0.45% of assets in April to 1% in May, while MGL’s weight increased from 0.03% to 0.07%.

ITC, banks and technology stocks also saw fresh allocations

While city gas companies recorded the biggest percentage increase, a substantial portion of the buying activity was spread across some of the fund’s larger and more established holdings.

ITC emerged as one of the biggest additions. The fund increased its holding from 24.3 crore shares to 28.8 crore shares during the month, an increase of more than 4.4 crore shares.

The fund also added to three of its largest banking positions — ICICI Bank, HDFC Bank and Kotak Mahindra Bank.

Other notable additions

Against a long list of additions, only Cipla saw a reduction in shareholding. The reduction was relatively small and appears more like than a decisive change in investment view.

More importantly, the fund did not completely exit any stock during the month. Several holdings, including Axis Bank, Maruti Suzuki, Bharti Airtel, Tata Consultancy Services, Dr. Reddy’s Laboratories, Zydus Wellness, Narayana Hrudayalaya and Central Depository Services (India), remained unchanged.

Cash and debt holdings declined

One of the more meaningful portfolio-level changes came outside equities.

The fund’s combined allocation to cash, debt and arbitrage positions declined during the month.

Liquidity allocation

The decline was driven largely by lower exposure to debt and money market instruments, which fell by nearly one percentage point.

Despite the reduction, the scheme continues to maintain a sizeable liquidity buffer. At the end of May, nearly 15% of assets remained invested in cash, debt and positions.

REIT and overseas holdings remained largely unchanged

Outside domestic equities, portfolio activity was limited.

Among REIT holdings, Brookfield India Real Estate Trust was the only position where the fund increased exposure. Holdings in Embassy Office Parks REIT and Mindspace Business Parks REIT remained unchanged.

REIT holdings

The overseas portfolio saw no activity. Holdings in Alphabet, Amazon, Meta Platforms and Microsoft remained unchanged during the month, indicating that all the portfolio adjustments were concentrated within domestic holdings.

Despite the additions, the fund’s core portfolio remained remarkably stable.

HDFC Bank continued to be the largest holding at 7.88% of assets. It was followed by Power Grid Corporation of India (6.41%), ITC (5.84%), Coal India (5.66%) and ICICI Bank (5.11%).

However, the portfolio saw selective increases in existing positions which remains consistent with the fund’s low-turnover investment approach.