Stock Market Analysis, Mutual Fund, Economy

IPO Analysis : FSN E-Commerce Ventures Ltd. ( Nykaa)

2021-10-28T15:39:00.001+05:30

IPO Analysis : FSN E-Commerce Ventures Ltd.( Nykaa)

Incorporated in 2012, Nykaa is a digitally native consumer technology platform, delivering a content-led, life style retail experience to consumers. It has a diverse portfolio of beauty, personal care and fashion products, including own-brand products manufactured by the company.

Its business verticals include,

(a) Nykaa: Beauty and Personal Care and
(b) Nykaa Fashion: Apparel and Accessories.

As of 31st August 2021, Nykaa had ~3.1m SKU offerings from 4,078 national and international brands across business verticals. Its total GMV for FY21 grew at 50.7% YoY and stood at INR40.5b/USD550m, while its revenue grew at 38.1% YoY to INR24.4b/USD334m.

Its online channels include mobile applications, websites, and mobile sites. According to the RedSeer, Nykaa had one of the highest share of mobile application-led transactions, among the leading online retail platforms in India during FY21 and 5MFY22. As of August 31, 2021, cumulative downloads stood at of 55.8 million across all mobile applications and during 5MFY22, 88.2% of online GMV came through mobile applications. The offline channel comprised 80 physical stores across 40 cities in India over three different store formats as of 31st August 2021. Physical stores offer a select offering of products as well as a seamless experience across the physical and digital worlds.

Nykaa has a portfolio of 13 owned brands, which play a key role in increasing the assortment of products for consumers. The owned brand portfolio is executed by identifying the gaps in the market – across both the requirements of diverse consumers and multiple price points – and building brands to suit these needs, with a focus on high-quality products.

Some of these owned brands include,

(a) Nykaa Cosmetics: a comprehensive make-up and beauty accessories brand, (b) Nykaa Naturals: a naturally derived ingredients focused brand for skincare products,

(d) Twenty Dresses: This Apparel product line includes western wear as well as footwear, bags, and accessories categories,

(e) Nykd by Nykaa: offers lingerie and

(f) Pipa Bella: offers on-trend aesthetic jewellery.

Competitive Strengths:

One of India's leading specialty beauty and personal care companies.
Major brands offering their products on Nykaa's platform for sale
Capital efficient business with strong growth and profitability
Company's advanced technology platform
Founder-led company with an experienced management team

Financial and Valuation:

Peer Comparison with Listed Digital platforms:

Business Model:

Risk & Concerns:

The competitive advantage for Nykaa’s strategies to venture into fashion and other adjacent businesses is unclear, particularly amid the intense competition from other players and horizontal marketplaces. The move is especially puzzling given the massive opportunity in the BPC space and Nykaa’s dominant position.
As Nykaa’s BPC business grows, its strategy of working with an inventory model could possibly become a hindrance given the large investment in inventory that will be needed.
Given Nykaa’s success, new entrants could pursue the opportunity and enter the market using a similar inventory-led business model, thus eating into the company’s market share.
With a multi-faceted reliance on its technological ability to offer better product discovery and a unique customer journey, Nykaa will be challenged by competition to continually build upon and improve its technology stack to maintain its lead.
Nykaa’s store expansion strategy will play a crucial role in strengthening its pole position in a rapidly growing market. It will have to deal with various aspects including identifying optimal locations, negotiating with landlords, ramping up inventory, and identifying the right partners, among others – any of which could act as hurdle to its ambitious scale up plans.

Important Dates to Remember:

Conclusion:

It is recommended to apply in this IPO for listing gains only. Because this company has reported profit after tax during last FY only, before that it was incurring losses. But margins are improving, due to which we may see increase in profitability.

Sources: Various publications

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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Stocks to Buy Before Diwali 2021

2021-10-28T15:00:00.000+05:30

Stocks to Buy Before Diwali 2021

State Bank of India (SBIN)

CMP: 512 (As on 01:00 PM 28-10-2021)

Buying Range : 503-490

SL: 450

Target : 600

Upside: 19%

Rollover has been intact at 93% from the last 2 months which indicates longs are upright in the stock with more than 10% price increase in the October series. Good PSU bank to buy and hold for long term also.

Conclusion:

SBI is trading above triangle breakout zone. taking support at 100 DMA.
It is sustaining above the breakout zone and started the next leg on the upside indicating strength
RSI oscillator is placed in the bullish zone which will support the up move.
Short term and long term chats looks strong.
Considering the current chart structure, we expect the stock to inch higher towards 600 levels
Hence we advise to buy the stock in the range of 503-490 with a stop loss of 450

Larson & Tubro (LT)

CMP: 1831 (As on 01:00 PM 28-10-2021)

Buying Range : 1800-1760

SL: 1600

Target : 2200

Upside: 23%

Maximum Call OI is seen at 1900 and highest Call writers unwinding in this strike

is making it a comfortable upside. Short covering seen in the October series so

far will drive the stock to higher zones.

Conclusion:

L&T has given a breakout of the Inverse Head and Shoulder pattern on the weekly scale which has bullish implication
It is continuously forming higher-highs and higher-lows on the weekly charts indicating positive structure
RSI oscillator is positively placed indicating strength in the counter for higher level
Considering the current chart structure, we expect the stock to inch higher towards 2200 levels
Hence we advise to buy the stock in the range of 1792-1760 with a stop loss of 1600

BATA India (BATAINDIA)

CMP: 1959 (As on 01:00 PM 28-10-2021)

Buying Range : 2022-1980

SL: 1800

Target : 2450

Upside: 21%

Short covering is seen with increase in price by almost 18% in the October series

and increase in implied volatility indicating bulls to be in action.

Conclusion:

Bata India has given a strong breakout on the weekly charts
The stock is tagging the upper Bollinger band which indicates strength in the counter
RSI oscillator on the daily, weekly and monthly charts are positively placed which will take prices higher
Considering the current chart structure, we expect the stock to continue to its up move towards 2450 levels
Hence we advise to buy the stock in the range of 2022-1980 with a stop loss of 1800

Tech Mahindra (TECHM)

CMP: 1530(As on 01:00 PM 28-10-2021)

Buying Range : 1517-1480

SL: 1350

Target : 1850

Upside: 22%

OI shedding by almost 9% with increase in price which suggests shorts are covering their position and rollover of 97% in the previous series indicating positive sentiment and strong hands in the counter.

Conclusion:

TechM has formed a strong base near 50 EMA after a long consolidation on the daily scale which is a positive sign
It has given a fresh breakout on the daily charts indicating buying interest in the counter
RSI oscillator on all the time frames are well placed in the bullish territory which indicates strong momentum to continue
Considering the current chart structure, we expect the stock to inch higher towards 1850 levels
Hence we advise to buy the stock in the range of 1517-1480 with a stop loss of 1350

Disclaimer : Above stocks are suggested based on internal study. One can look to buy these stocks after analyzing risk and by taking advice form their financial advisor.

Happy Profitable Diwali

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Monetary Policy Review : October 2021

2021-10-18T16:04:00.000+05:30

Monetary Policy Review : October 2021

The Monetary Policy Committee (MPC) today unanimously voted to keep the policy Repo Rate unchanged at 4.0% respectively. It also voted in favor to continue with accommodative stance (with 5 to 1 majority, same as last meeting) as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.

In addition to above, Reserve Bank of India (RBI) announced following liquidity and regulatory measures:

Announced calibrated increase in quantum of VRRR auctions to INR 6 lakh crore (from INR 4 lakh crore) in four tranches of INR 50,000 crore each over next 2 months. Governor also mentioned that RBI may consider complementing this with 28-day VRRR auctions in a similar calibrated manner.
Extended the On Tap Special Long-Term Repo Operations for Small Finance Banks of INR 10,000 crore till 31 December 2021.
Extended the enhanced aggregate Ways and Means Advances limit for States / Union Territories of INR 51,560 crores by another 6 months till 31 March 2022.

On Economic Growth: The economic recovery is progressing well supported by receding cases, easing restrictions and improvement in pace of vaccination. The revival has been broad based with improvement in PMIs, steady growth in industrial production, forecast of strong food grain production, robust non-oil non-gold exports.

Further, high frequency indicators like cement production, railway freight traffic, e-way bills, power generation, etc. also points at fast pace normalization. However, select segments like contact intensive services, aviation etc. continue to remain under pressure. While Q1FY22 GDP growth came in slightly lower than estimated, RBI has retained the full year growth forecast and has revised up its growth estimate for Q2FY22 and Q3FY22. However, RBI continues to emphasis the need to nurture the recovery given the relatively low capacity utilization, uncertain external sector, high commodity prices and impact of monetary policy normalization in advanced economies.

On Inflation: The average inflation for July and August 2021 has been considerably lower than RBI’s forecast. This was mainly driven by soft momentum in vegetable prices and favourable base effect. However, fuel prices inched up further on back of rise in international crude prices and core inflation (CPI ex food & fuel) continues to remain sticky and at elevated level.

In view of lower food inflation, expectation of record food grain production, supply side measures by government on edible oil and pulses, lower pass through of high input prices, etc. RBI has revised down its CPI forecast by 80 bps for Q2FY22 and Q2FY23. Consequently, the full year target has been revised down by 40 bps.

Conclusion and Outlook

The status quo of monetary policy and increase in VRRR quantum was largely in line with consensus expectations and there was no major surprise in the policy. However, no new G-SAP announcement for

Q3FY22 was perceived a little negative by the market and yields at the longer end inched up slightly. However, Governor in his statement stressed that RBI retains the flexibility of conducting G-SAP and using other liquidity tools including operation TWIST and OMOs as and when deemed necessary.

Governor reemphasized that increase in quantum of VRRR should not be perceived as reversal from accommodative stance. RBI expects that the inter bank liquidity (excluding the VRRR) is likely to remain in the range of INR 2 to 3 lakh crore by early December 2021 i.e. ~2% of NDTL from ~4.5% currently.

Going forward, the fixed income market can face some headwinds as factors like elevated crude prices, resilient retail inflation, increase in inflation expectations, high SLR holding of banks, good recovery

momentum, etc. may adversely impact the yields. Further, hawkish commentary by US FOMC, rise in international commodity prices, etc. can put upward pressure on Gsec yield too.

However, despite the fixed income environment being not so favourable over the past few months, the rise in yields has been rather modest till now, primarily driven by continued RBI intervention through

deployment of conventional and unconventional tools. Over the past one and half year, RBI has extensively used policy tools like LTROs, TLTROs, operation TWIST, G-SAP, etc. to achieve “orderly

evolution” of yield curve. Further, the buoyant revenue collections have reduced the risk of fiscal slippage. Also, borrowing for compensation cess has been subsumed within the Government borrowing program and there is likely to be no increase from budgeted borrowing program.

In view of the above, we expect yields to trade within a range with an upward bias. However, given the increase in VRRR quantum and possibility of reverse repo rate hike in coming months, we expect the yields at shorter end to rise faster. In view of the aforesaid and relatively steep yield curve, we continue to recommend investments into short to medium duration debt funds, possibly, in a staggered manner

in line with individual risk appetite.

Sources: Various publications

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What is meant by DVR shares?

2021-10-18T15:45:00.002+05:30

What is meant by DVR shares?

A DVR is an abbreviation of Differential Voting Rights. It is like an ordinary equity share which provides fewer voting rights to the shareholders. As compared to the ordinary equity shares, DVR shares can have a higher or a lower voting right. But as per Indian regulation, companies are not allowed to issue equity shares with higher voting rights, resulting lower voting rights in DVR shares in India when compared to ordinary shares.

The basic difference between DVR shares and Ordinary shares is with respect to voting rights. Also, DVR shares receive higher dividend.

These shares are listed on stock exchange and are traded the same way as ordinary shares are traded, but DVR are mostly traded at a discount.

Tata Motors, Pantaloon retail, Gujarat NRE Coke are some of the Indian companies that have issued differential voting rights shares.

Benefits to the investors on buying DVR Equity Shares:

Apart from voting rights, a shareholder will get all other rights intact such as bonus shares, right share issue, etc.
DVR shares are usually offered at a discount when compared to ordinary shares, therefore less investment amount is required.
Generally higher dividend is paid in DVR shares than in regular equity shares.

Why companies issue DVR shares?

Currently there are very few companies who have issued DVR shares. Now, let us see the advantages to the companies who issue DVR shares:

By issuing DVR shares, company can decide on how much of its powers to dilute, also the company can retain control and raise money.
The company can choose on how much voting rights to be given to each shareholder and what kind of shares to issue.
It provides safeguard against hostile takeover as when equity shares are issued with voting rights, there can be a chance that investor can hold majority and takeover the control of company’s management.

Who should invest in these shares?

DVR shares offer a variation to both the investors i.e. retail investor and the institutional investor, particularly those who may not be certain about voting rights but may see the economic values in the form of high discount offer which is being made and DVR shareholders get incremental dividend.

Why retail investors should make investment?

Ideally DVR shares are good instrument for long term investors, particularly those investors who are not necessarily interested in taking a voting position but who seek higher dividend. Though, like ordinary shares DVR shares are also listed in the same way. But, DVR shares are traded at a discount as these provide few voting powers to the shareholders. Due to price differentiation of DVR shares and normal shares investors can take advantage.

Why in India DVR shares not very much popular ?

DVR share is an extremely great investing tool. For retail investor who do not attend and vote in AGMs, it is a good way to earn higher dividends as one can get DVRs at a steep discount. But, till today in India DVR shares have not yet gone in a big way as:

In DVR shares the liquidity is an issue as institutions are not keen to participate.
As per SEBI, DVR shareholders are not permitted to receive higher dividend than ordinary shareholders. If we see in case of DVR share issue, the dividend differential is hardly attractive which does not lead the investor to get excited about it. This is also one of the major reasons why DVRs have not really taken off in a big way in India.
Also, without voting rights, the institutional investors are by default not willing to invest in equity.

TATA Motor DVR:

Now lets talk about TATA motor DVR.

Reason 1 to buy TATA Motor DVR:

Current market Price (CMP ) of TATA Motor is Rs 509.60 (As on 18-10-2021, Closing)

CMP of TATA Motor DVR is Rs 269.75 (As on 18-10-2021, Closing)

In TATA Motor Case actual Price of DVR should be around Rs 339.733, hence right now TATA Motor DVR is trading at discount. This may act as first reason to buy this stock.

Reason 2 to buy TATA Motor DVR:

Trend of this is bullish i.e trading above all moving averages, with RSI above 80, though RSI above 80 is not sustainable hence investment in this stock can be done in staggered manner. While applying other indicators also it seems strength and bullish pattern, however we may see little profit booking but its ok as it will act as buying opportunity.

Reason 3 to buy TATA Motor DVR:

TATA Motors has laid future plan and coming up with new ( 10 Nos) Electric vehicles which will again push this stock to touch new highs.

Conclusion:

TATA motor DVR is a good stock for accumulation in any dip, for long term.

Sources: Various publications

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Is Legal heir and Nominee the same?

2021-05-27T14:56:00.002+05:30

Is Legal heir and Nominee the same?

Many of us are doing financial planning and investing in various asset class. But we don't know the basic difference of Nominee and legal Heir, or most of the time we don't even fill this area while investing.

Well through this Blog/ Article I will try to highlight the importance of Nominee in various Assets (investment areas) and will try to differentiate between Legal heir.

Nominee: A nominee is somebody who will receive the asset upon the death of the owner/holder.

Legal Heir : means any person, male or female, who is entitled to succeed to the property of a deceased person under a will or as per the succession laws.

Will your Nominee get the money on your death ?

Did you think that your nominee is the person, who will get all the money legally from your Life Insurance Policy and Mutual funds investments ?
Ha! That is exactly what you think if you are not aware of the legal aspects.

We assume a lot of things which sounds like they are obvious, but are not true from the legal point of view.

Today, we all concentrate on nominations in financial products.

For whom are we earning ?
For whom are we investing ?

Who, do we want to leave all our wealth to, in case something happens to us ?

It might be your children, your spouse, parents, siblings etc., or just a subset of these.

You also might want to exclude some people from your list of beneficiaries!.
So you think you will nominate person X in your Insurance policy, and when you are dead and gone, all the money goes to person X and he/she becomes the sole owner ? You are wrong, dude !
It does not work that way.

Let us see how it actually does!

What is a Nominee ?

According to law, a nominee is a trustee, not the owner of the assets. In other words, he is only a caretaker of your assets.

The nominee will only hold your money/asset as a trustee and will be legally bound to transfer it to the legal heirs.

For most investments, a legal heir is entitled to the deceased’s assets.

For instance, Section 39 of the Insurance Act says the appointed nominee will be paid, though he may not be the legal heir.
The nominee, in turn, is supposed to hold the proceeds in trust and the legal heir can claim the money.

A legal heir will be the one who is mentioned in the will. However, if a will is not made, then the legal heirs of the assets are decided according to the succession laws, where the structure is predefined on who gets how much.

For example, if a man during his lifetime executes a will. In the will, he mentions his wife and children as legal heirs, then after his death, his wife and children are the legal owners of his assets.

It is essential that one needs to execute a will.
It is the ultimate source of truth and replaces the succession law.

Nominee can also be one of the legal heirs.

Important :
Mention the Full Name, Address, age, relationship to yourself of the nominee. Do not write the nomination in favour of wife and children as a class. Give their specific names and particulars existing at that moment. If the nominee is a minor, appoint a person who is a major as an appointee giving his full name, age, address and relationship to the nominee.

Why is the concept of Nominee ?

So you might be wondering, if the nominee does not become the sole owner, why does such a concept of a nominee exist at all ?

It is pretty simple. When you die, you want to make sure that the Insurance company, Mutual fund or your Shares should at least get out of the companies and go to someone you trust, and who can further help, in process of passing it to your legal heirs.

Otherwise, if a person dies and has not nominated anyone, your legal heirs will have to go through the process of producing all kind of certificates like death certificates, proof of relation etc., not to mention that the whole process is really cumbersome! (For each legal entity! The insurance company, the mutual funds, for the shares, for the real estate..).

So, to simplify, if a nominee exists, these hassles do not happen, since the company is bound to transfer all your money or assets to the nominee.
The company then goes out of scene & then, it is between nominee and legal heirs.

Example of Nomination :

Ajay was 58 years old who died recently in an accident. As his children were settled, he wanted to make sure that his wife is the sole owner of all the monetary assets. This includes his insurance policy and mutual funds. So during his lifetime, he nominated his wife as a nominee in his term insurance policy and mutual funds investments. However, after Ajay’s death things did not turn up the way he wanted. The reason being Ajay did not leave a will. Though his wife was the nominee in all his movable assets, as per the law, his wife, along with children, were the legal heirs and all of them had equal right to Ajay’s assets.

One simple step which could have saved the situation was that Ajay should have made a will which clearly stated that only his wife was entitled to get all the money and not his children.

Nomination in Life Insurance :

A policyholder can appoint multiple nominees and can also specify their shares in the policy proceeds. Nomination in life insurance has one limitation, as insurance policies are bought to secure your financial dependents, your first choice of nominee has to be your family members. In case you want to nominate a non-family member like a friend or third party, you will have to show/PROVE the insurance company that there is some insurable interest for the person. This happens because of a Clause called PRINCIPAL OF INSURABLE INTEREST in insurance. Note that provision of nomination in life insurance is related to Section 39 of the Insurance Act.

Note that as per LIC website –

Nomination is a right conferred on the holder of a Policy of Life Assurance on his own life to appoint a person/s to receive policy moneys in the event of the policy becoming a claim by the assured’s death. The Nominee does not get any other benefit except to receive the policy moneys on the death of the Life Assured.
A nomination may be changed or cancelled by the life assured whenever he likes without the consent of the Nominee.

Make sure, you have a nominee for your policy for easy settlement of the claim, if you do not have any nominee mentioned in the policy, it can turn out to be a disaster for your dependents to get a claim.

Nomination in Mutual Funds :

In case of mutual funds, you can nominate up to three people, who can be registered at the time of purchasing the units. While filling in the application form, there is a provision to fill in the nomination details.

Even a minor can be a nominee, provided the guardian is specified in the nomination form. You can also change nomination later by filling up a form which is available on the mutual fund company website.

Nomination in mutual funds is at folio level and all units in the folio will be transferred to the nominee(s). If an investor makes a further investment in the same folio, the nomination is applicable to the new units also.

A non-resident Indian can be a nominee, subject to the exchange control regulations in force from time to time.

Nomination in Shares :

Now you know what a Nominee means and who actually gets the money. So if there is a husband H, with wife W and nephew N, and he has nominated his nephew N to be the nominee of his shares in demat account, who will have the legal right to own the shares after husband’s death ? If you answer is wife, you are wrong in this case!

In case of stocks, it does not work the usual way, if a will does not exist.

In the verdict, Justice Roshan Dalvi struck down a petition filed by Harsha Nitin Kokate, who was seeking permission to sell some shares held by her late husband.
The Court noted that as she was not the nominee, she had no ownership rights over the shares. Ms Kokate’s lawyer had argued that as she was the heir of her husband who had died intestate (without a will), she should have ownership rights of the shares, and be able to do anything with them as she wished.

In this case, Ms Kokate’s husband had nominated his nephew in favor of the shares. Justice Dalvi however noted that under the provisions of the Companies Act and the Depositories Act, Acts which govern the transfer of shares, the role of a nominee was different.

A reading of Section 109(A) of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares which includes the ownership rights there under in the nominee upon nomination validly made as per the procedure prescribed, as has been done in this case.

It means that if you have not written a will, anyone who has been nominated by you for your shares will be the ultimate owner of those stocks. The succession laws on inheritance will not be applicable but, in case, you have made a will, that will be the source of truth.

Nomination in PPF :

If you have Rs 10 lakh in your public provident fund (PPF) account and you have not nominated anyone for your PPF account, your legal heirs will get maximum of Rs1 lakh only!
Yes, it is so important to have a nominee.

You can nominate one or more persons as nominee in PPF. Form F can be used to change or cancel a nomination for PPF. Also note that you cannot nominate anyone if you open an account for a minor.

Nomination in Saving/Current/FD/RD Account in Banks :

FD’s also come with nomination facility. While opening a new account, there is a column for nomination in the same form and you should fill it. You can nominate two persons with first and second option. Note that in case you have not done any nomination till now, you should request Form No DA-1 from your Bank which is used to assign a nominee in future.

In the same way to change/cancel the nomination, you need to fill up Form no DA-2.

Read about Corporate Fixed Deposits :

As per a famous case, A Bench of Justices Aftab Alam and R M Lodha in an order said that the money lying deposited in the account of the original depositor should be distributed among the claimants in accordance with the Succession Act of the respective community and the nominee cannot claim any absolute right over it.
Section 45ZA(2)(Banking Regulation Act) merely put the nominee in the shoes of the depositor after his death and clothes him with the exclusive right to receive the money lying in the account. It gives him all the rights of the depositors so far as the depositors account is concerned. But, it by no stretch of imagination make the nominee the owner of the money lying in the account, the Bench observed.

CONCLUSION :

Taking Personal finance for granted can be fatal!!!!!

Just investing knowledge, is not enough to have a great financial life. You also need to be well versed with basic legal aspects and make sure you carry out all due arrangement .

Nomination is one important aspect you should seriously consider, when checking for the financial products you have bought or plan to buy in future.

Mistakes in Personal Finance :

It’s important to make sure that your loved ones do not face legal issues and only say and think lovely thoughts about you when you are not around, rather than crib & grumble.

Sources: Various publications

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IPO Analysis: Nazara Technologies Ltd.

2021-03-13T11:58:00.002+05:30

IPO Analysis: Nazara Technologies Ltd.

Nazara Technologies Limited is the leading India based diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America. They provide offerings across the gamified early learning, eSports and interactive gaming ecosystems including Kiddopia in gamified early learning, Nodwin and Sportskeeda in eSports and eSports media, World Cricket Championship (WCC) and CarromClash in mobile games, and Halaplay and Qunami in skill-based, fantasy and trivia games.

Competitive Strengths

One of the leading eSports companies in India.
Diversified business based on the geographical presence and gaming products.
Strong leadership backed by marquee investors.
Asset light business model.

Brief Of Financials (In Rs. Cr)

Objective of the Issue:

It aims to raise money for the below objectives:

To achieve the benefits of listing Equity Shares on the Stock Exchanges.
To carry out the sale of up to 5,294,392 Equity Shares by the Selling Shareholders

Important Dates to Remember:

Verdict:

Expected, high listing gains, one can apply in this IPO solely for listing gains.

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IPO Analysis: Kalyan Jewellers India Ltd

2021-03-13T11:41:00.001+05:30

IPO Analysis: Kalyan Jewellers India Ltd.

Kalyan Jewellers India Limited is one of the largest jewelry companies in India based on revenue as of March 31, 2020, according to the Technopak Report. They were established by their founder and one of the Promoters, Mr. T.S. Kalyanaraman, who has over 45 years of retail experience, of which over 25 years is in the jewelry industry.

They have expanded to become a pan-India jewelry company, with 107 showrooms located across 21 states and union territories in India, and also have an international presence with 30 showrooms located in the Middle East as of June 30, 2020. All showrooms are operated and managed by them. In Fiscal 2020, their revenue from operations was ₹10,100.92 crore, of which 78.19% was from India and 21.81% was from the Middle East. Their total showrooms have increased from 77 as of March 31, 2015 to 137 showrooms as of June 30, 2020, and they intend to continue to open additional showrooms as they expect significant opportunity for further penetration in their existing markets as well as in new markets, primarily in India. They also sell jewelry through their online platform.

Company Strength:

Established brand built on the core values of trust and transparency;
One of India’s largest jewellery companies with a pan India presence;
Hyper local strategy enabling them to cater to a wide range of geographies and customer segments;
Extensive grassroots “My Kalyan” network with strong distribution capabilities enabling deep customer outreach;
Visionary Promoters with strong leadership and a demonstrated track record supported by a highly experienced and accomplished senior management team and board of directors;
Wide range of product offerings targeted at a diverse set of customers; and
Robust and effective internal control processes to support a growing organisation and showroom network with a pan India presence.

Objectives of the Issue:

The IPO proceed will be utilized towards the following business purposes;

To finance business working capital requirements.
To meet general corporate purposes.

Brief of the Financials (in Rs. Cr):

Important Dates to Remember:

Verdict:

Valuation are quite costly, one can apply only for listing gains otherwise this IPO can be avoided. For long term investment one can wait and enter after listing only.

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IPO Analysis : Suryoday Small Finance Bank Ltd

2021-03-13T11:15:00.000+05:30

IPO Analysis : Suryoday Small Finance Bank Ltd.

Suryoday Small Finance Bank Limited is among the leading SFBs in India in terms of net interest margins, return on assets, yields and deposit growth and had the lowest cost-to-income ratio among SFBs in India in Fiscal 2020.

They have for over a decade been serving customers in the un-banked and under banked segments in India and promoting financial inclusion. Pursuant to receipt of the RBI Final Approval, they started operations as an SFB on January 23, 2017. Prior to commencement of operations as an SFB, they operated as an NBFC – MFI carrying out microfinance operations and operated the joint liability group-lending model for providing collateral-free, small ticket-size loans to economically active women belonging to weaker sections. Their average “priority sector” loans, as a percentage of average ANBC for Fiscal 2018, 2019 and 2020 was 99.08%, 112.10% and 103.67%, respectively. Over the years, they have diversified its loan portfolio to include non-micro banking loans thereby reducing their dependence on micro banking business.

The Bank commenced its microfinance operations in 2009 and has since expanded their operations across 12 states and union territories, as of July 31, 2020. As of July 31, 2020, their customer base was 1.43 million and their employee base comprised 3,949 employees and they operated 482 Banking Outlets including 137 Un-banked Rural Centers.

What this Company Offers?

Offer credit products like MFI loans, Vikas Loans, Shopkeeper Loans, etc.
Offer digital banking, NPCI payment systems, and mobile technologies along with banking through traditional channels.
Focus on the un served and the under served through innovative banking practices.
Offers diversified asset portfolio with a focus on retail operations.

Brief Financial Details (in Rs Cr):

Objective of the issue:

The Bank proposes to utilize the Net Proceeds from the Fresh Issue towards augmenting the Bank's Tier-1 capital base to meet the Bank's future capital requirements.

Important Dates to Remember:

Verdict:

In my view, valuations are costly. Some quantity of this company is pledged. In my view one can avoid this IPO. We can get good entry levels after listing.

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IPO Analysis: Anupam Rasayan India Limited

2021-03-10T17:26:00.009+05:30

IPO Analysis: Anupam Rasayan India Limited

Anupam Rasayan India Limited is one of the leading companies engaged in the custom synthesis and manufacturing of specialty chemicals in India. The company evolved into custom synthesis and manufacturing of life science related specialty chemicals and other specialty chemicals, which involve multi-step synthesis and complex technologies, for a diverse base of Indian and global customers. Their key focus in its custom synthesis and manufacturing operations is developing in-house innovative processes for manufacturing products requiring complex chemistries and achieving cost optimization.

The company has 2 distinct business verticals

(i) life science related specialty chemicals comprising products related to

agro-chemicals, personal care and pharmaceuticals, and

(ii) other specialty chemicals, comprising specialty pigment and dyes, and polymer additives.

In Fiscal 2020 and in the 6 months ended September 30, 2020, revenues from their life science related specialty chemicals vertical accounted for 95.37% and 92.48%, respectively, while revenue from other specialty chemicals accounted for 4.63% and 7.52%, respectively, of its revenue from operations, in such periods.

The company has developed strong and long-term relationships with various multinational corporations, including, Syngenta Asia Pacific Pte. Ltd., Sumitomo Chemical Co. Ltd. and UPL Ltd. that has helped them expand their product offerings and geographic reach across Europe, Japan, United States and India.

The Government of India has also recognized the company as a 3-Star export house.

Company Strength:

Strong and long-term relationships with diversified customers across geographies with significant entry barriers;
Core focus on process innovation through consistent R&D, value engineering and complex chemistries;
Diversified and customized product portfolio with a strong supply chain;
Automated manufacturing facilities with strong focus on environment, sustainability, health and safety measures;
Consistent track record of financial performance;
Experienced promoters and strong management team.

Objective of the Issue:

The net proceeds from the IPO will be utilized towards the following purposes:

To make prepayment/repayment of company's indebtedness including accrued interest.
To meet general corporate purposes.

Brief Financials of The Company: (in Rs Cr)

Important Dates to Remember:

Verdict:

One can apply for listing gains. GMP as on 10-03-2021 is Rs 305-310.

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IPO Analysis: Craftsman Automation Limited

2021-03-10T17:11:00.005+05:30

IPO Analysis: Craftsman Automation Limited

Craftsman Automation Limited is a diversified engineering company with vertically integrated manufacturing capabilities, engaged in three business segments, namely power train and other products for the automotive segment (“Automotive - Power train and Others”), aluminium products for the automotive segment (“Automotive – Aluminium Products”), and industrial and engineering products segment (“Industrial and Engineering”). They are the largest player involved in the machining of cylinder blocks and cylinder heads in the intermediate, medium and heavy commercial vehicles segment as well as in the construction equipment industry in India. They are among the top 3-4 component players with respect to machining of cylinder block for the tractor segment in India. They are present across the entire value chain in the Automotive-Aluminium Products segment, providing diverse products and solutions. Company’s strong in-house engineering and design capabilities help them offer comprehensive solutions and products to their long standing domestic and international customers in each of the segments in which they operate.

Their comprehensive solutions include design, process engineering and manufacturing including foundry, heat treatment, fabrication, machining and assembly facilities. The core competence in machining and assembly of industrial and engineering products has helped them to establish themselves as a significant player in the Automotive - Power train and Others segment.

The key products in this segment are highly engineered and include engine parts such as cylinder blocks and cylinder heads, camshafts, transmission parts, gear box housings, turbo chargers and bearing caps. The end users for their products include OEMs producing commercial vehicles, special utility vehicle, tractors and off-highway vehicles. Additionally, they also provide machining services within its Automotive – Power train and Others segment.

Company Strength :

Diversified engineering company with a focus on providing comprehensive solutions and manufacturing high quality, intricate and critical products, components and parts;
Strong in-house process and product design capabilities with the ability to interchange capacity and product mix;
Long term and well established relationships with marquee domestic and global OEMs;
Extensive manufacturing footprint, with strategically located manufacturing facilities;
Experienced management team supported by motivated and skilled work force;
Robust financial performance in challenging business environment.

Objective of The Issue:

The company purposes to utilize funds towards the following objectives;

To make re-payment/pre-payment of company's borrowing fully or partially.
To meet general corporate purposes.

Brief of Financials of the Company (in Rs Cr)

Important Dates to Remember:

Verdict:

Valuation is quite high, good company for investment. One can also purchase this IPO after listing. GMP is not yet available. Since their is action seen in primary market hence listing gains can be expected from this IPO.

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IPO Analysis: Laxmi Organic Industries Limited

2021-03-10T16:48:00.009+05:30

IPO Analysis: Laxmi Organic Industries Limited

Laxmi Organic Industries Limited is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost 3 decades of experience in large scale manufacturing of chemicals. They are currently among the largest manufacturers of ethyl acetate in India with a market share of approximately 30% of the Indian ethyl acetate market. Further, post completion of the YCPL Acquisition, their market share in the ethyl acetate market will be further enhanced. In 2010, they commenced manufacturing the Specialty Intermediates by acquiring Clariant’s diketene business. They are the only manufacturer of diketene derivatives in India with a market share of approximately 55 % of the Indian diketene derivatives market in terms of revenue in Fiscal 2020 and one of the largest portfolios of diketene products.

Their products are currently divided into 2 broad categories, namely the Acetyl Intermediates and the Specialty Intermediates. The Acetyl Intermediates include ethyl acetate, acetaldehyde, fuel-grade ethanol and other proprietary solvents, while the Specialty Intermediates comprises of ketene, diketene derivatives namely esters, acetic anhydride, amides, arylides and other chemicals. Their products find application in various high-growth industries, including pharmaceuticals, agrochemicals, dyes & pigments, inks & coatings, paints, printing & packaging, flavours & fragrances, adhesives and other industrial applications.

Competitive Strengths

Leading manufacturer of ethyl acetate with significant market share;
Only Indian manufacturer of diketene derivatives with a significant market share and one of the largest portfolios of diketene products;
Diversified customer base across high growth industries and long-standing relationships with marquee customers;
Strategically located manufacturing facilities, vertical integration and supply chain efficiencies;
In-house research and development capabilities and consistent track record of technology absorption;
Global presence and low geographical concentration;
Differentiated business model, asset base, product mix and experience in handling complex chemistry create high entry barriers; and
Experienced promoter, board of directors and key managerial personnel.

Brief Financial of Company (Rs in Crs)

Objective of the Issue:

Investment in subsidiary firm, Yellowstone Fine Chemicals Private Limited (YFCPL) to partly finance the capex to establish a new manufacturing facility.
To invest in YFCPL for financing working capital requirements.
To finance the capex for expansion of SI manufacturing facility.
To finance business working capital requirements.
To purchase plant and machinery for infrastructure development at SI facility.
To make prepayment or repayment of borrowings availed by the company and subsidiary, Viva Life sciences Pvt Ltd (VLPL).
To meet general corporate purposes.

Some Dates to Remember:

Verdict:

One can apply for this IPO for listing gains, GMP is 85-90 (as on 10-03-2021)

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IPO Analysis : Easy Trip Planners Ltd

2021-03-08T17:34:00.000+05:30

IPO Analysis : Easy Trip Planners Ltd

It got incorporated in 2008, Easy Trip Planners Ltd is the second largest online travel agency in India in terms of gross revenue. The online travel agency offers a range of travel products and services and end-to-end travel solutions including airline tickets, rail tickets, bus tickets, taxis, holiday packages, hotels, and other value-added services i.e. travel insurance, visa processing, etc.

It offers a range of online traveling services through its website, android and iOS mobile application. The company follows B 2 B 2 C (business to business to customer), B 2 C (business to customer), and B 2 E (business to enterprise) distribution channels to offers its services.

They were ranked third among the Key Online Travel Agencies in India in terms of gross booking revenues and air tickets gross booking revenues in FY19.

They have been consistently profitable since incorporation and according to the CRISIL Report they were the only profitable online travel agency among the Key Online Travel Agencies in India in FY19. Their market share in the Indian online travel agency industry in terms of gross booking revenues and gross booking revenues for air ticketing segment was 3.8%, and 4.5% to 5%, respectively, in FY19.

As of November 30, 2019, they provided their customers with access to more than 400 international and domestic airlines, more than 1,096,400 hotels in India and in international jurisdictions, almost all railway stations in India as well as bus tickets to and cab rentals for major cities in India. They provide customers with the option of no-convenience fee, such that customers are not required to pay any service fee in instances where there is no alternate discount or promotion coupon being availed.

Competitive strengths:

One of the leading online travel agencies in India.
Strong brand name and distribution network.
In-house advanced technology infrastructure.
Consistent financial track record and operational performance

Financial Detail of The Compnay (In Rs. Cr)

Important Dates and Facts to Remember:

Verdict:

One can apply for this IPO solely for listing gain only.

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Stock market News as on 08-03-2021

2021-03-08T14:40:00.003+05:30

Stock market News as on 08-03-2021

Nifty tops 15,000 mark mirroring firm global cues; Sensex up 350 points

Tracking the global mood, the Indian benchmark indices traded around 1% higher in Monday's early deals. Investors reacted to US President Joe Biden's $1.9 trillion corona virus relief package passed in the Democratic-controlled Senate on March 6 while keeping a close watch on the US bond yields. The yields on US 10-year Treasuries hit a one-year high of 1.625% last Friday in the wake of positive US jobs data and rising inflation, and stood at 1.60% on Monday.

At 9:38 AM, the frontline S&P BSE Sensex was trading at 50,772, up 369 points or 0.72%. Market breadth is positive and out of a total of 2,287 shares traded on the Bombay Stock Exchange, 1,662 advanced while 497 declined and 128 remained unchanged. The broader Nifty 50 was at 15,043, levels, up 104 points or 0.70%. The Nifty sectoral indices were painted green, led by Nifty PSU Bank index, up 2%.

The Week that was – March 1 to March 5, 2021

Key indices logged modest gains amid volatile swings during the week. The Nifty index dropped below the psychological 15,000 mark. Value buying emerged after India's GDP returned to positive territory after contracting for two straight quarters. Stabilizing US Treasury yields, hopes surrounding global COVID-19 vaccination programme and the passing of $1.9 trillion US stimulus package also boosted gains. However, global stocks weakened towards end of the week amid rising bond yields. Rising crude oil prices also weighed on the sentiment as higher crude oil prices could increase fiscal deficit, current account deficit and stoke fuel price inflation. Auto stocks were in demand during the week.

In the week ended on Friday, March 5, 2021, the Sensex surged 1,305.33 points or 2.66% to settle at 50,405.32. The Nifty50 index soared 408.95 points or 2.81% to settle at 14,938.10. The BSE Mid-cap index rose 609.15 or 3.05% to settle at 20,587.80. The BSE Small cap index jumped 780.67 points or 3.87% to settle at 20,936.02.

Global Markets

Asian shares rallied on Monday while the dollar held near three-month peaks after the U.S. Senate passage of a $1.9 trillion stimulus bill and a surprisingly strong payrolls report augured well for a global economic rebound. There was also upbeat news in Asia, as China’s exports surged 155% in February compared with a year earlier when much of the economy shut down to fight the corona virus. The prospect of yet faster growth helped MSCI’s broadest index of Asia-Pacific shares outside Japan firm 0.4%. Japan’s Nikkei gained 1.2%, while S&P 500 futures rose 0.3%, after a sharp turnaround on Friday.

OIL, RUPEE & FIIs

Crude Oil: The oil prices were at the highest levels in more than a year after Yemen's Houthi forces fired drones and missiles at the heart of Saudi Arabia's oil industry on Sunday, raising concerns about production. Brent climbed $1.09 a barrel to $70.45, while US crude rose $1.08 to $67.17 per barrel.

Indian Rupee: The rupee slumped by 19 paise to close below the 73 mark against the US currency on Friday due to a stronger dollar and risk aversion in the global markets. At the inter bank forex market, the local unit opened at 72.98 against the greenback and traded in the range of 72.73 - 73.09 during the day. The rupee finally ended at 73.02 against the American currency, registering a fall of 19 paise over its previous closing.

FPIs: As the rising bond yields in the US cause panic in the global markets, foreign portfolio investors (FPI) have turned to sell their holdings. FPIs have pulled out a net Rs 881 crore from the Indian equity market in the first week of March. They have pulled out a net investment of Rs 5,595 crore from the debt segment, as shown in NSDL Website.

Week Ahead

Trend in global markets, macro data, movement of rupee against the dollar, Brent crude oil price movement and investments by foreign portfolio investors (FPI) and domestic institutional investors (DII) will be watched. Global cues will continue to be in focus as resurgence in virus cases around the world, leads to more restrictions and more pressure on economic recovery. Updates related to COVID-19 will be closely watched. Also, on the radar will be news on Covid vaccine development. From here on the pace of the improvement of economic indicators along with outcomes of a possible vaccine or cure for COVID-19 would determine the movement of the market.

On the macro front, the Industrial Production and Manufacturing Production data for January will be released on March 12, 2021.

Overseas, China will announce inflation rate for February on March 10, 2021. US will also announce inflation rate for February on March 10, 2021. In Europe, the European Central Bank (ECB) will announce its interest rate decision on March 11, 2021.

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Stock Market Analysis : Nifty below 15000 mark with Amid Volatility

2021-02-22T17:13:00.001+05:30

Stock Market Analysis : Nifty below 15000 mark with Amid Volatility

The Indian markets slid in the early deals of Monday's volatile session, with public sector banks being the top drags. Markets had registered sharp gains post the Union Budget, but last week profit-taking was witnessed. Markets might witness volatile trade this week amid monthly derivatives expiry.

At 10:10 AM, the front line S&P BSE Sensex was trading at 50,582, down 316 points or 0.62%. Market breadth is flat and out of a total of 2,456 shares traded on the Bombay Stock Exchange,1,181 advanced while 1,144 declined and 131 remained unchanged. The broader Nifty 50 was at 14,902, levels, down 79 points or 0.50%.

The Nifty sectoral indices, barring the Nifty Metal index, were painted red. In the broader markets, the S&P BSE Midcap and Small cap indices were up 0.13% and 0.3%, respectively.

The Week That Was–Feb 15 To Feb 19, 2021

Key indices ended with modest losses as investors booked profits after recent rally. Rising global and local bond yields impacted sentiment. The up move was triggered by a range of positive developments, including a high-spending union budget, strong corporate earnings, robust foreign fund flows and progress on COVID-19 vaccinations.

The Sensex settled below the key 51,000 level while the Nifty ended below the psychological 15,000 mark. Both these indices retreated after scaling record highs. However, the broader markets that are BSE Midcap index and the BSE Small cap Index, both, ended in the green last week.

In the week ended Friday, February 19, 2021, the Sensex dropped 654.54 points or 1.27% to settle at 50,889.76. The Nifty 50 index shed 181.55 points or 1.20% to settle at 14,981.75. The BSE Midcap index rose 124.49 or 0.63% to settle at 20,035.52. The BSE Small cap index added 241.36 points or 1.23% to settle at 19,863.41.

Global Markets

Asian share markets inched higher to day as expectations for faster economic growth and inflation globally batter bonds and boost commodities, though rising real yields also make equity valuations look more stretched in comparison.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.1%, after easing from a record top late last week as the jump in US bond yields unsettled investors.

Japan’s Nikkei recouped 1.0% and South Korea 0.4%, while E-Mini futures for the S&P 500 were a fraction firmer.

Oil, Rupee & FIIs

Crude Oil: Oil prices have gone along for the ride, aided by tightening supplies and freezing weather, giving Brent gains of 21% for the year so far. Early Monday, Brent crude futures were up 43 cents at $63.34 a barrel, while US crude added 11 cents to $59.35.

Indian Rupee: Buoyed by foreign fund inflow and weaker US dollar, the Indian rupee is trading at its highest level in almost a year. On Friday the rupee closed flat at 72.65 against the greenback, as foreign funds continued to pump monies into Indian markets.

FPIs: On Friday, foreign institutional investors (FIIs) net bought shares worth Rs 118.75 crore, while domestic institutional investors (DIIs) net sold shares worth Rs 1,174.98 crore in the Indian equity market.

Foreign portfolio investors (FPIs) invested Rs 24,965 crore in Indian markets in February so far. According to depositories’ data, FPIs pumped in Rs 24,204 crore into equities and Rs 761 crore in the debt segment, taking the total net investment to Rs 24,965 crore during February 1-19.

Week Ahead

Trading could be volatile this week as traders roll over positions in the F&O segment from the near month January series to February series. The February 2021 F&O contracts will expire on Thursday.

On the macro front, India's gross domestic product (GDP) for the fourth quarter will be released on February 26, 2021. India's infrastructure output data for January will be unveiled on February 26, 2021.

Global cues will continue to be in focus as resurgence in virus cases around the world, leads to more restrictions and more pressure on economic recovery. Updates related to COVID-19 will be closely watched. Also, on the radar will be news on Covid vaccine development. From here on the pace of the improvement of economic indicators along with outcomes of a possible vaccine or cure for COVID-19 would determine the movement of the market.

China will announce Loan Prime Rate for 1 year and 5 years today. The United States Durable Goods Orders for January will be declared on February 25, 2021.

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IPO Analysis : Nureca Limited IPO

2021-02-10T16:42:00.000+05:30

IPO Analysis : Nureca Limited IPO

Nureca Limited is a healthcare and wellness products distributor which got incorporated in 2016. The company aims to offer the best quality, durable, and innovative tools to customers to monitor chronic diseases to improve their lifestyle.

The firm has a well-diversified product portfolio including Chronic Device Products, Orthopedic products, Mother and Child products, Nutrition Supplements, and Lifestyle products to meet the Indian healthcare market requirements. It is the first digital company to sell such products through its website and other online partners i.e. e-commerce players, retailers, and distributors.

Let's discuss the products portfolio of Nureca in a bit detail:

Chronic Device Products – including products such as blood pressure monitors, pulse oximeters, thermometers, nebulizers, self-monitoring glucose devices, humidifiers, and steamers.

Orthopedic Products – including rehabilitation products such as wheelchairs, walkers, lumbar and tailbone supports, and physiotherapy electric massagers.

Mother and Child Products – which includes products such as breast pumps, bottle sterilizers, bottle warmers, car seats, and baby carrycots.

Nutrition Supplements – including products such as fish oil, multivitamins, probiotics, biotin, apple cider, and vinegar.

Lifestyle Products – including products such as smart scales, aroma diffusers, and fitness trackers.

A few products sold by the Company:

Dr. Trust Wheelchair.

Dr. Trust Walker.

Dr. Trust Walker with wheels.

Dr. Physio Full Body Massager.

Dr. Trust Fish oil.

Dr. Trust Multivitamins.

Dr. Trust Balance Scale.

Dr. Trust Fitness Tracker Smart band.

Company’s Distribution Network:

Nureca is a digital first company where in company sells the products through online channels partners such as e-commerce players, distributors and retailer.Further, company also sell its products through company’s own website drtrust.in

Currently, 95% of revenues for the Company comes through digital channels (e-Commerce).

Tie up with Croma:

To expand the business footprint, Nureca, in October 2019, joined hands with Croma, India’s first omni-channel electronics retailer from the Tata Group, to emerge as the very first company to sell healthcare and wellness products through Croma stores.

As part of this tie-up, Nureca will sell products from its Dr Trust and Dr Physio brands at 30 Croma stores across the country.

Competition in the Business:

Nureca competes with local and global companies operating in India. The market is extremely fragmented with over fifty players, most of them Indian, with mostly generic products, showcasing no significant competitive advantage in terms of innovation or differentiation.

There are numerous other players in the market, like Dr Morepen, Health Sense, Agaro, Lifelong, Omron, Philips, Johnson and Johnson, Roche, Bayer

Positives for the Company:

Growth in Home Health Segment. : The Home Health Market in India and neighbouring countries is pegged at Rs.20,757.0 crore in 2019 and is expected to grow to Rs.38,920.7 crore by 2025 at a CAGR 11.0%. The growth is driven by rising awareness of Health and wellness, increasing spending power, growing burden of chronic diseases, and the need for Healthcare stakeholders to reduce healthcare costs.

Marketing & Distribution of Products: Company markets and sells the products across India through company’s own website i.e. Dr trust.in and third party e-commerce platforms, distributors and retailers and manage the sales and marketing activities through our Corporate Office. Company believes that this distribution network ensures that the products are easily available in almost any part of India. In addition to leveraging and engaging the distribution network for marketing initiatives, company also undertake direct promotional initiatives like advertising the products through digital marketing.

Reputed Brand with Constant Innovation: Company’s brands i.e Dr. Trust, Dr. Physio and Trumom have built a reputation of introducing innovative products that appeal to Indian customers. Company combines the technical expertise with an understanding of the Indian home healthcare market developed through market feedback and extensive interaction with the vendors. Through these efforts, company seeks to be the first to introduce innovative products in the market with unique functionalities that create new demand.

For example, Nureca has launched BP monitors which can be connected to a mobile phone through bluetooth or our own application i.e. Dr. Trust BP Connect App for remote monitoring of the patient.

Other Important Dates and Facts:

Verdict: Seeing the company structure and future prospects, I think one should apply in this IPO. Since company's main focus is on e Commerce and digital marketing, hence their will not be any question on sustainability of the company.

Seeing high action in secondary market, one can expect listing gains also.

Sources: Various publications

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What are Economic Indicators and their Importance

2021-01-15T17:22:00.001+05:30

What are Economic Indicators and their Importance

Economic indicators are key stats about the economy that can help you better understand where the economy is headed. These indicators can help investors decide when to buy or sell investments. For example, if the stock market is at its peak, you may want to sell. If the market is low and on the rise, you may want to buy. Economic indicators can help you understand the flow of market, as well as other important financial factors.

Types of Economic Indicators

Leading indicators:

Leading indicators signal future changes. That means, they usually change before the economy itself changes. This makes them extremely useful for short term predictions of economic developments. An example of a leading indicator is the stock market. Stock market returns usually start to decline, before the economy as a whole falls into a recession and vice versa.

Lagging Indicators:

Lagging indicators usually change after the economy as a whole changes. For that reason, they cannot directly be used to predict economic changes. They are more useful to confirm specific patterns (e.g. economic cycles) and make further predictions from there. Arguably the most popular example of a lagging indicator is unemployment. Unemployment usually starts to increase a few quarters after the economy has started to recover from a recession.

Coincident Indicators:

Coincident indicators occur at about the same time as the changes they signal. Therefore, they can provide valuable information about the current state of the economy. An example of a coincident indicator is personal income. If the economy is strong and business is going well, personal income rates will increase at about the same time.

Attributes of Economic Indicators:

It may possess one of the three following attributes:

Pro cyclical:

It is an indicator that moves in a direction similar to the economy. For example, GDP is pro cyclical because it increases if the economy is performing well. If the economy is not doing well (i.e., recession), GDP decreases.

Counter cyclical:

It is an indicator that moves in the opposite direction of the economy. For example, the unemployment rate declines if the economy is thriving.

A cyclical:

It is an indicator that bears no relationship to the economy at all.

Few Important Economic Indicators:

Gross Domestic Product (GDP)

GDP is a lagging indicator. It is one of the first indicators used to gauge the health of an economy. It represents economic production and growth, or the size of the economy.

An increase in GDP indicates that businesses are making more money. It also suggests an increase in the standard of living for people in that country. If GDP decreases, then it suggests the reverse.

Balance of Trade

Balance of trade is a lagging indicator. It’s the net difference between a country’s value of imports and exports, and shows whether there is a trade surplus or a trade deficit. A trade surplus is generally desirable, and shows that there is more money coming into the country than leaving. A trade deficit shows that there is more money leaving the country than coming in. Trade deficits can lead to significant domestic debt. In the long term, a trade deficit can result in a devaluation of the local currency, since it leads to significant debt. The increase in debt will reduce the credibility of the local currency. It could also lead to a major financial burden for future generations, since they will be forced to pay off that debt.

Inflation

Inflation measures the cost of goods and services. Inflation has a key effect on economies and markets. For economies, high inflation discourages savings and investment, leads to higher interest rates, and ultimately limits growth. In markets, higher inflation may initially lead to asset price increases, but ultimately investors will pay lower multiples and real wealth will decline. The key reports to focus on are the Producer Price Index (PPI) and Consumer Price Index (CPI). Use a moving average of the year-over-year change and watch for results that are negative (signaling deflation) or over four percent.

Housing

In a land of increasing house prices, banks lend and the economy booms. However, the housing game has changed. We have lived through the housing collapse, we expect banks to become more prudent for many years. Weakness in housing will lead to a drop in lending and economic contraction. Many reports track housing. New home sales and existing home sales are the most popular. However, I prefer to look at housing starts and building permits. Permits are a leading indicator and offer an assessment of housing demand. When permits are rising, house prices should appreciate as well.

Spending

We live in a consumption-based society. As consumers increase their expenditures, the economy grows. While many surveys attempt to capture people’s feelings about the state of the economy, behavior is what counts. Look to the monthly retail sales report for an indication of actual consumer activity.

Consumer Price Index (CPI)

CPI is a lagging indicator, and the U.S. relies on it heavily as one of the best indicators of inflation. This is because changes in inflation can spur the Federal Reserve to make changes to its monetary policy.

CPI measures changes in prices paid for goods and services by urban consumers for a specified month. It’s essentially a measure of the cost of living changes. It offers a gauge of inflation as it relates to purchasing those goods and services.

CPI takes a sampling of several hundred goods and services across 200 categories. CPI does not include Social Security taxes, income, or investments in stocks, bonds or life insurance. However, it does include all sales taxes associated with the purchase of those goods.

Producer Price Index (PPI)

PPI is a coincident indicator that tracks price changes in almost all goods-producing sectors, including mining, manufacturing, agriculture, forestry and fishing. PPI also tracks price changes for an increasing portion of the non-goods-producing sectors of the economy. The report measures prices for finished goods, intermediate goods and crude goods. Prices from thousands of establishments are tracked each month and are recorded on the U.S. Bureau of Labor Statistics website.

PPI is important because it’s the first inflation measure available in the month. It captures price movements on a wholesale level, before price changes show up on the retail level.

Interest Rates

Interest rates are a lagging indicator of economic growth. They are based around the federal funds rate, which is determined by the Federal Open Market Committee (FOMC). When the federal funds rate increases, interest rates increase. The federal funds rate increases or decreases as a result of economic and market events.

When interest rates increase, borrowers are more reluctant to take out loans. This discourages consumers from taking on debt and businesses from expanding, and as a result, GDP growth may become stagnant.

If interest rates are too low, that can lead to an increased demand for money and raise the likelihood of inflation. Raising inflation can distort the economy and the value of its currency. Current interest rates are indicative of the economy’s current condition, and can also suggest where the economy might be headed.

Currency Strength

Currency strength is a lagging indicator. When a country has a strong currency, its purchasing and selling power with other nations is increased. A country with a strong currency can import products at a cheaper rate and sell its products overseas at higher foreign prices. However, when a country has a weaker currency, it can draw in more tourists and encourage other countries to buy its goods since they are cheaper.

Manufacturing Activity

Manufacturing is a leading economic indicator. Durable goods orders are an indicator of manufacturing activity. The term “durable goods” refers to consumer products that usually aren’t replaced for at least a few years, such as refrigerators and cars. Near the end of each month, the Department of Commerce Census Bureau publishes its report on durable goods.

Durable goods orders are a measure of new orders manufacturers receive for those types of goods. An increase in durable goods orders is generally taken as a sign of economic health, while a decline might indicate trouble in the economy. Increases and decreases in durable goods orders may also be associated with increases and decreases in stock indices, respectively.

Income and Wages

Income and wages are a lagging indicator. When the economy is operating properly, earnings should increase to keep up with the average cost of living. However, when incomes decline relative to the average cost of living, it is a sign that employers are either laying off workers, cutting pay rates or reducing employee hours. Declining incomes can also indicate an environment where investments are not performing as well.

Incomes are broken down by different demographics, like age, gender, level of education and ethnicity. These demographics can give insight into how wages change for certain groups. A trend that may affect what seems to be only one smaller group may actually suggest an income problem for the entire country, rather than just the group it initially affects.

There’s no golden rule in investing, but considering these economic indicators one can help themself to make informed investment decisions. The Federal Reserve releases a report known as "the Beige Book" eight times per year. The Beige Book outlines the nation’s economic conditions and it can be a useful resource for investors, economists and analysts. Economic indicators are important to take into account before making any investment decisions. With a little research, you’ll be able to maximize

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IPO Analysis: Indigo Paints Limited

2021-01-13T16:14:00.004+05:30

IPO Analysis: Indigo Paints Limited

It is one of the fastest-growing paint companies in India and in terms of revenue, it is the 5th largest company in the decorative paint industry. The company is engaged in manufacturing different types of decorative paints like enamels, emulsions, wood coatings, primers, distemper, putties, and cement paints.

It is the first company that started manufacturing certain differentiated products like Metallic Emulsions, Bright Ceiling Coat Emulsions, Tile Coat Emulsions, Dirt proof & Waterproof Exterior Laminate, Floor Coat Emulsions, Exterior and Interior Acrylic Laminate, and PU Super Gloss Enamel. The sales from these differentiated products are continuously growing as it was 26.68% in 2018 increased to 28.62% in fiscal 2020.

Indigo Paints has a strong market network with dealers in Tier 1, Tier 2, and Metros as well. It has 3 manufacturing facilities situated in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu). It is further looking to expand its manufacturing capacities at Pudukkottai to manufacture water-based paints.

Indigo Paints is a decorative paint manufacturer. Its peers are companies such as Asian Paints, Berger, Kansai Nerolac, and Akzo Nobel. The size of the decorative paints industry in 2019 was Rs 40,300 crores and as per research by Frost & Sullivan, Indigo Paints had about 2% market share.

To create demand for Company’s differentiated products, Indigo paints initially tapped into Tier 3, Tier 4 Cities, and Rural Areas, where brand penetration is easier and dealers have greater ability to influence customer purchase decisions.

Objective of the Issue:

The net proceed from the Indigo Paints IPO will be used against following objectives.

To meet the capital expenditure requirements for manufacturing facility expansion at Pudukkottai, Tamil Nadu
To purchase tinting machines and gyroshakers.
To repay all or certain borrowings.
To meet general corporate purposes.

Risk Factors of investing in this IPO

These risk factors can impact company revenue and margins which would affect its share price. Investors should go through these points and understand them before investing.

1) An inability to protect, strengthen and enhance its existing company brand could adversely affect its business prospects and financial performance.

2) The continuing impact of the COVID-19 pandemic on its business and operations is uncertain and it may be significant and continue to have an adverse effect on its business, operations and its future financial performance.

3) The company engages in a highly competitive business and any failure to effectively compete could have a material adverse effect.

4) They may not be able to identify or effectively respond to evolving preferences, expectations or trends in a timely manner, and a failure to derive the desired benefits from its product development efforts may impact its competitiveness and profitability.

5) Company’s ability to grow its business depends on its relationships with the dealers and the community of painters, and any adverse changes in these relationships, or company inability to enter into new relationships, could negatively affect business and results of operations.

6) Company does not enter into long-term arrangements with its dealers and any failure to continue existing arrangements could negatively affect its business and results of operations

7) Their proposed capacity expansion plans relating to its manufacturing facilities are subject to the risk of unanticipated delays in implementation and cost overruns.

8) A significant portion of company sales is derived from the state of Kerala and any adverse developments in this market could adversely affect its business.

Verdict: Valuations are highly priced, since their is entry barriers in this sector, hence looks good for long term. Government is also focusing on House for all, this could be the beneficiary. In my view one should invest in this company for listing gains as well as for portfolio.

Sources: Various publications

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IPO Analysis : Indian Railway Finance Corporation Limited

2021-01-13T15:24:00.006+05:30

IPO Analysis : Indian Railway Finance Corporation Limited

The Indian Railway Finance Corporation (IRFC) incorporated in 1986 is a public-sector enterprise that is wholly-owned by the Government of India. IRFC is primarily engaged in financing the acquisition of rolling stock assets, leasing of railway infrastructure assets, and lending to entities under the Ministry of Railways (MoR). Being the borrowing arm of Indian Railways, IRFC is responsible to raise funds for MoR that is required to procure rolling stock assets (wagons, trucks, electric multiple units, locomotives, coaches), its improvement, expansion, and assets management.

It follows a financial leasing model to finance rolling stock assets procurement for a lease period of 30 years. In fiscal 2019, the actual capital expenditures by the Indian Railways were Rs. 1,334 billion, out of which, IRFC financed Rs. 525.35 bn accounting for 39.34% expenditures.

IRFC (Indian Railway Finance Corporation) is in the principal business of borrowing funds from the financial markets to finance the acquisition/creation of assets which are then leased out to the Indian Railways or any entity under the Ministry of Railways. As per the DRHP, IRFC is registered with the RBI as an NBFC-ND-IFC (i.e. a Non-Deposit accepting Infrastructure Finance Company). The public issue will be in the form of new shares issued by the company as well as an offer for sale by the Government (which is currently the sole shareholder in IRFC).

Key Strengths

Strategic role in Indian Railways growth.
Sound credit rating i.e. CRISIL AAA/A1+ and ICRA AAA/A1+.
Competitive cost of borrowing.
Strong financial performance.
Sound asset-liability management.
Experienced management team.

Objective of the Issue: The net IPO proceeds are proposed to be utilized for the following objects:

To augment company's equity capital base to meet business future growth requirements.
To meet general corporate purposes.

Important Dates to Remember:

13th Jan – Announcement of Price Band

15th Jan – Anchor Investors Allotment

18th Jan – Offer Opens

20th Jan – Offer Closes

25th Jan – Finalization of Basis of Allotment

27th Jan – Unblocking of ASBA Accounts

28th Jan – Credit of Equity Shares to Depository Accounts

29th Jan – Commencement of Trading

Verdict: Since it is a first PSU NBFC getting listed on exchange, and it is responsible for financing of 85% railway projects, future is good with good margins. Grey market price is Rs 2 (as on 13th January 2021). In my view one can apply for this IPO.

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Sources: Various publications

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Result Analysis : Reliance Industries – Q2FY21

2020-11-02T16:22:00.002+05:30

Result Analysis : Reliance Industries – Q2FY21

Total revenue from operations at 128,385 Cr

165,228 Cr (-22.95%) YoY | 100,929 Cr (27.32%) QoQ

Six month revenue 229,314 Cr Vs. 339,315 Cr (-32.48%)

Net Profit of 10,602 Cr

11,352 Cr (-6.63%) YoY 13,248 Cr (-19.94%) QoQ

Six month profit 23,850 Cr Vs. 21,493 Cr (10.91%)

Before exceptional Item:

EPS (in Rs) 14.68

18.47 YoY |12.89 QoQ

Before exceptional item:

Six month EPS 27.39 Vs. 35.03

View: Result is in line with the market expectation. YoY revenue declined and profit also declined due to impact of their petroleum & gas business in YoY and QoQ which is partially offset by strong performance by Reliance JIO and retail business. Quarter ending June 2020 profit was higher by INR 4.9K Crs towards exceptional gain so net profit was not comparable with Q2FY21. H1FY21 profit was also higher by said amount.

Business Updates & Highlights

EBITDA (Cons.) before exceptional items for the quarter was INR 23,299 crore Vs. 25,766 Cr Vs. 21,585 Cr in QoQ therefore declined by 9.5% in YoY and up by 7.9% in QoQ.

Finance cost was around INR 6,084 Cr Vs. 5,450 Cr in YoY Vs. 6,735 Cr in QoQ therefore up by 11.6% in YoY and declined by 9.65 in QoQ.

Exports (including deemed exports) from RIL’s India operations in Q2FY21 was INR 34,581 crore as against INR 53,161 crore in Q2FY20 Vs. 32,581 Cr in Q1FY21 therefore declined by 34.9% in YoY and up by 5.6% in QoQ.

Reliance Jio

Revenue including access revenues for the quarter was INR 21,708 crore VS. 14,562 Cr in YoY Vs. 20,277 Cr in QoQ therefore up by 49% in YoY and 7.1% in QoQ.

EBITDA for the quarter was INR 7,971 crore Vs. 5,166 Cr Vs. 7,332 Cr and increase of 55.4% YoY and 8.7% in QoQ. EBITDA Margin was around 43.1% Vs. 41.8% Vs. 42.5% in QoQ therefore up by 130 bps in YoY and 60 bps in QoQ.

H1FY21 EBITDA was around INR 15,303 Cr and EBITDA margin was around 42.8%.

Net profit in Q2FY21 was INR 3,020 Cr Vs 990 Cr in Q1FY20 Vs. 2,520 Cr in Q1FY21 therefore up by 205% in YoY and 19.8% in QoQ. H1FY21 Net profit was INR 5,540 Cr.

Total Customer base as on 30th June 2020 of 405.6 million. Largest customer base in country.

RELIANCE JIO Q1 ARPU RS 145 Vs. 120 in Q2FY20 Vs. 140.3 in Q1FY21. Its improved in YoY and QoQ.

Total wireless data traffic during the quarter of 1,442 crore GB Vs. 1,420 Cr (1.5% QoQ growth).

Wireless gross addition showed a strong sequential increase to 27.2 million as lockdown restrictions began to ease during the quarter.

JPL has completed the fund raising of INR 152,056 crores across thirteen global investors which includes Facebook, Google etc. All of these investments, excluding Google, have been completed post fulfilling applicable conditions and total amount of INR 118,319 crore has been received by the Company.

Reliance Retail

Revenue for the quarter was INR 41,100 crore Vs. 41,202 in YoY Vs. 31,620 Cr in QoQ therefore slightly down in YoY and up by 30% in QoQ due to lockdown ease in part of the country.

Revenue for the H1FY21 was around INR 72,720 Cr Vs. 79,398 Cr in H1FY20 therefore declined by 8.4% in YoY.

EBITDA for the quarter was INR 2,006 crore Vs. 2,322 Cr in YoY Vs. 1,079 Cr in QoQ therefore declined by 15.7% in YoY and up by 85.9% in QoQ. EBITDA margin was around 5.5% Vs. 5.8% in YoY Vs. 3.8% in QoQ.

H1FY21 EBITDA was around INR 3,092 Cr Vs. 4,390 Cr in H1FY20 therefore declined by 29.7% in YoY.

The current footprint of the business spans across 11,931 retail stores in over 7,000 towns with 29.7 million sq. ft. of retail space. Entered pharma category during the quarter.

JioMart Kirana partnerships were extended to 20 cities during the period with 4X increase in orders over 1Q FY21. With a strong value proposition and uninterrupted service despite operating constraints, JioMart continues to win the trust of Kirana partners

Petrochemicals business

Revenue of Q2FY21 was INR 29,665 Cr Vs. 38,538 Cr in YoY Vs. 25,192 Cr in QoQ therefore declined by 23% in YoY and up by 17.8% in QoQ.

Revenue for H1FY21 was around INR 54,857 Cr Vs. 76,149 Cr in H1FY20 therefore declined by 28% in YoY.

EBITDA of Q2FY21 was around INR 5,964 Cr Vs. 8,946 Cr in Q2FY20 Vs. 4,430 Cr in Q1FY21 therefore declined by 33.4% in YoY and up by 34.6% in QoQ.

EBITDA margin was around 20.1% Vs. 23.2% in YoY Vs. 20.1% in QoQ.

Cracking margins for Reliance improved Q-o-Q due to feedstock mix and favourable economics for ethane cracking. RIL crackers operated at near 100% utilisations during the quarter

PP margins reduced by 21% ($ 126/MT) due to higher feedstock prices despite robust demand from health & hygiene applications. PE margins remained stable ($ 478/MT) with firm demand from packaging sector. PVC margins improved by 14% ($546/MT) led by strong demand recovery in agri and construction sector.

PX-Naphtha delta declined 37% Q-o-Q ($ 136/MT) with sharp increase in naphtha price while PTA margins declined by 14% Q-o-Q ($107/MT) in well-supplied markets. PX and PTA markets were also impacted by start-up of new capacities in China.

Refining & Marketing business

Revenue of Q2FY21 was INR 62,154 Cr Vs. 97,229 Cr in Q2FY20 Vs. 46,642 Cr in Q1FY21 therefore declined by 36% in YoY and up by 34.7% in QoQ.

EBITDA in Q2FY21 was around INR 3,002 Cr Vs. 5,896 Cr in YoY Vs. 3,818 Cr in QoQ therefore declined by 49.1% in YoY and 21.4% in QoQ

EBITDA margin was 4.8% Vs. 8.2% in YoY therefore declined by 340 bps in QoQ . Production (MMT) 15.3 Vs. 16.7 in YoY Vs. 16.6 in QoQ.

GRM ($/bbl) was around 5.7 in Q2FY21 Vs. 9.4 in Q2FY20 Vs. 6.3 in Q1FY21. Therefore significantly declined in YoY and also corrected in QoQ.

Segment EBITDA for 2Q FY21 declined by 21.4% QoQ to INR 3,002 crore primarily on account of lower middle distillates cracks and narrower light-heavy crude differential leading to higher crude cost. The performance was also partially affected by planned turnaround during the quarter.

Reliance BP Mobility Limited (“RBML”), a joint venture (JV) of RIL and BP operated 1,406 fuel retail outlets. Against industry growth of 5.3% and 41.1% Q-o-Q in HSD and MS, RBML clocked 15.1% and 55.4% respectively.

Media Business

Revenue for Q2FY21 was around INR 1,061 Cr Vs. 1,174 Cr in Q2FY20 Vs. 807 Cr in Q1FY21 therefore declined by 9.6% in YoY and up by 31.5% in QoQ.

EBITDA in Q2FY21 was around INR 166 Cr Vs. 68 Cr in YoY Vs. 27 Cr in QoQ. Therefore significantly improved in QoQ. EBITDA margin in Q2FY21 was around 15.6% Vs. 3.3% in QoQ.

TV viewership has now settled at ~1.1x pre-COVID levels. Pay-TV has clawed back its share from free-to-air channels, as entertainment programming is back in full-swing.

An increased propensity to pay for content has been witnessed. Flagship properties MoneyControl and Voot have witnessed rapid growth in subscribers

Financial

ROE and ROCE is around 10.3% and 10.7% respectively and book value per share is around INR 970 per share and share is currently trading at 2.5x of its book value. Company is currently trading at annualized PE of 36 around which is average as per Industry benchmark. Promoter holding in the company is around 50.5% which is slightly increased by YoY and QoQ. Insurance cos, FIIs and mutual fund hold around 25.2%, 5.1% and 5.9% respectively. **Operating cash flow as of Sep 2020 was INR (12,305 Cr) Vs. 53,482 Cr in Sep 2019**

View Share price high 2,368 and now 2,055 . Reliance Industries Limited (RIL) is an Indian multinational conglomerate company. Reliance owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications.

Position: Strong support is INR 2000/1950. Long term investor should continue with the company with target price of INR 3000 any correction will give good opportunity to enter Reliance on SIP basis.

Opportunities Reliance Industries is currently no.1 company In India in terms of market capitalization and outperform for past 3 years. Reliance is diversified group now and its more focused now on Retail and digital services (JIO) and partially setoff the pressure and margin of Refining and Petrochemical business. The current growth of Retail and Digital services business is excellent and Reliance has overtaken to Airtel and Vodafone Idea as now No.1 Telecom Company in India on subscription base as well as revenue base also. As 5G is under process and more looking into digital media space the growth is evitable. Petroleum & refining company currently technology driven company with highly diversified their business model.

Reliance JIO Jio has become the only operator (outside China) to have reached the milestone of 400 million subscribers in a single country market. Wireless gross addition showed a strong sequential increase to 27.2 million as lockdown restrictions began to ease during the quarter. Jio Platforms expanded efforts to develop open and interoperable interface compliant architecture based 5G solution with a virtualized RAN. Very aggressive player to increase their customer base on MoM (Net customer addition of 7.3 Mn in this quarter), every quarter exceptionally well growth for topline as well as bottom line, Quarterly EBITDA run rate crossed $1 billion. Sequential improvement in ARPU at INR 145 vs. INR 140 in 1Q FY21. Qualcomm Technologies and Jio achieved over a 1 Gbps milestone on the Reliance Jio 5GNR solution with a Tier-I carrier in the US. JPL has completed the fund raising of INR 152K crores across thirteen global investors which includes Facebook, Google etc.

Reliance Retail Strong recovery in revenues with EBITDA almost doubling sequentially as compare with Q1 however still not pre Covid level. Store functioning continued to be impacted, but progressively eased during quarter, 85% stores operational (1Q: 50%), of which half could operate fully. 232 new stores launched in quarter as operating curbs are lifted, total stores currently are 11,932. Gross revenue is more than 41K Cr in this quarter and EBITDA was around 2K Cr. Digital commerce continues to grow customers and scale Led by JioMart, AJIO and RelianceDigital. Kirana partnerships extended to 20 cities; orders up 4X while providing uninterrupted supplies. Various acquisition eg. Future group (subject to regulatory approval), Netmeds, Grab, C-square etc. to largest player in the retail sector. Largest fund raise in India in consumer / retail sector from marquee global investors around 37.7K Cr

More Value will be more unlocked for shareholders once Reliance comes with IPO of Reliance Digital and Reliance Retail

Risk : Reliance two main businesses Petrochemicals and Refining continuously declined in YoY and QoQ despite they were covered still covered 56% dependent on topline in this quarter. GRM ($/bbl) corrected in QoQ and YoY. In bottom line this segment covers around 57% and declined by more than 40% in YoY. Deal with Aramco is also put on hold and currently no clarity on this matter.

Sources: Various publications

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Result Analysis : Laurus Lab – Q2FY21

2020-10-30T17:12:00.001+05:30

Result Analysis : Laurus Lab – Q2FY21

Total revenue from operations 1,139 Cr

712 Cr (59.97%) YoY | 974 Cr (16.92%) QoQ

Half yearly revenue: 2,113 Cr Vs. 1,263 Cr (65.84%)

Net Profit of 242.2 Cr

56.5 Cr (332.12%) YoY 171.8 Cr (40.89%) QoQ

Half yearly Net profit: 414 Cr Vs. 71.6 Cr (478.21%)

EPS (in Rs.) 4.50

1.06 YoY | 3.21 QoQ

Half year ending EPS: 7.71 Vs. 1.34

View: Result is above expectation and strong. YoY and QoQ revenue increased and profit multifold in YoY. Margin continue expanding in QoQ and YoY.

Business Updates & Highlights

Q2FY21 EBITDA was around INR 373.5 Cr Vs. 137.8 Cr in Q2FY20 Vs. 278.2 Crs in Q1FY21 therefore up by 172.2% in YoY and up by 34.1% in QoQ. EBITDA margin is around 32.7% Vs. 19.2% in YoY Vs. 28.5% in QoQ. Therefore EBITDA margin improved by 1350 bps in YoY and 420 bps in QoQ.

H1FY21 EBITDA was around INR 651.4 Crs Vs. 220.2 Crs in H1FY20 therefore up by 196% in YoY. EBITDA margin in H1FY21 was around 30.8% Vs. 17.4% in H1FY20.

R & D spent of INR 85 Cr and 4% of sales in H1 FY21.

Business vertical performance

Generic FDF

Revenue growth of 183% for the quarter (YoY) Vs. 9.3% in QoQ and 202% for H1 (YoY).

Generic FDF business maintains robust growth momentum for the quarter. The growth in the quarter was led by higher sales from tender business in LMIC; having a strong order book for coming quarters.

Launched TLE400 in LMIC markets . Launched TLE400 & TLE600 in US market.

2 product validations completed for formulation apart from filling of 26 ANDAs & NDAs. 8 products received Final Approvals, and 8 products have received Tentative Approvals

Synthesis & Ingredients

Revenue showcased the growth of 36% for the quarter (YoY) Vs. 16% in QoQ and 37% for H1 (YoY)

Total Number of Active Projects in the CDMO division stood at 49 as of H1 FY21

Generic API

Revenue from Generic API segment showcased the growth of 22% for the quarter (YoY) Vs. 28.4% in QoQ and 30% for H1 (YoY)

The Anti-Viral segment showed growth of 20% in YoY and 12.8% in QoQ and 19% for H1 (Y-o-Y) and is expected to have good growth for the full year

In the Other API segment - Contract manufacturing of Generic APIs showing robust growth 18% in the quarter (YoY) and 80% for H1 (YoY)

Filed 264 patent applications and 130 patents granted as on Sept 30, 2020.

The Board of Directors of the Company in their meeting held on October 29, 2020 have approved for the payment of interim dividend of Rs. 0.80/- ( 40%) per equity share of Rs.2/each

Financial

ROE and ROCE is around INR 41.8% and 37.5% respectively and book value per share is around INR 33 and share is currently trading at 10x of its book value. Company is currently trading at annualized PE (forward PE) of 24 which is good as per Industry benchmark. Promoter holding is around 32.1% in the company which is low but stable. FIIs and Mutual fund hold around 20.7% and 3.3% in the company which FIIs increased by more than 4% in this quarter also.. Company is very strong operating cash flow as of Sep 2020 it was around INR 336 Cr Vs. 142 Cr in Sep 2019 (Very Strong). Borrowing is also declined in this quarter and borrowing cost is also downward.

Share View Share price high 340 (52 week) and now 331. Laurus Labs is a leading research-driven Pharmaceutical Manufacturing Company in India. Ine of the leading manufacturers of API for Anti-Retroviral (ARV), Oncology, Cardiovascular, Anti-Diabetics, Anti-Asthma, and Gastroenterology. Formulation manufacturing to service all leading markets of North America, Europe, and Low Middle-Income Countries (LMIC).

Position: Share support price is INR 300/270. Long term investor should continue with the company and any correction will give good opportunity

Opportunities Laurus has a portfolio with more than 60 commercialized APIs with strong presence in ARV, Oncology, anti-diabetic and Hepatitis C therapeutic segments. Further the company has forayed into formulation on a large scale from Unit II in FY20 resulting in major revenue being contributed from that segment i.e. about 29% in FY20 as against about 2% during FY19. Partnership with Global Fund offers higher volume contracts with reasonable predictability in FDF Tender business. Have a healthy order book for FY 21 & beyond in FDF CMO business with a strategic partner in EU. Generic FDF segment contributed 38% in H1 FY 21 to total revenue as against just 2% in FY19. Increased focus and eventually dedicated R&D and Manufacturing for Synthesis Business and overall focusing on growth model for future years. Doubling capacity of FDF by 2022. Among top 5 in India in terms of Reactor capacities. Strong board of management and it was promoted by Dr. Satyanarayana Chava (Whole time Director & CEO) who has over 30 years of experience in the pharmaceutical industry and oversees the technical aspects of operation including R&D, process development, etc. The company has filed 257 patents application out of which 116 patents were granted as on March 31st, 2020.

Risk Laurus has moderate operating cycle period which has improved to 146 days during FY20 as against 161 days during FY19 still its on higher side as compare to other Pharma companies. Laurus is exposed to foreign exchange fluctuation risk in view of large volume and high value transactions of export and import, a phenomenon common to the players in the industry. The pharmaceutical industry is highly regulated in many countries and requires various approvals, licenses, registrations and permissions for business activities. The approval process for a new product registration is complex, lengthy and expensive.

Sources: Various publications

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Result Analysis : Astec Life – Q2FY21

2020-10-30T17:07:00.000+05:30

Result Analysis : Astec Life – Q2FY21

Total revenue from operations 155 Cr

140.2 Cr (10.71%) YoY | 111.9 Cr (38.52%) QoQ

Half yearly revenue: 266.9 Cr Vs. 217.2 Cr (22.54%)

Net Profit of 17.8 Cr

5.3 Cr (235.82%) YoY 16.1 Cr (10.61%) QoQ

Half yearly Net profit: 34.04 Cr Vs. 4.1 Cr (750.21%)

EPS (in Rs.) 9.11

2.70 YoY | 8.26 QoQ

Half year ending EPS: 17.3 Vs. 2.13

View: Result is overall good. Although revenue marginally increased in YoY but profit up by more than 200%.

Business Updates & Highlights

Q2FY21 EBITDA was around INR 29.3 Cr Vs. 15.2 Cr in Q2FY20 Vs. 28.2 Crs in Q1FY21 therefore up by 92.8% in YoY and up by 3.9% in QoQ. EBITDA margin is around 18.9% Vs. 10.9% in YoY Vs. 25.2% in QoQ. Therefore EBITDA margin improved by 800 bps in YoY and declined by 630 bps in QoQ.

H1FY21 EBITDA was around INR 57.6 Crs Vs. 21.6 Crs in H1FY20 therefore up by 166% in YoY. EBITDA margin in H1FY21 was around 21.5% Vs. 9.1% in H1FY20.

Financial

ROE and ROCE is around INR 22% and 21% respectively and book value per share is around INR 126 and share is currently trading at 9x of its book value. Company is currently trading at annualized PE (forward PE) of 32 which is good as per Industry benchmark. Promoter holding is around 70% in the company which very strong but decreased by more than 2% in QoQ. FIIs and Mutual fund hold around 0.6% and 0.3% in the company. Company is very strong operating cash flow as of Sep 2020 it was around INR 18.9 Cr Vs. (1.1) Cr in Sep 2019 Vs. 16.9 Cr in March 2020. (Very Strong). The good thing is company is continuously reducing their debt and interest cost significantly down in this quarter in Q2FY21 it was around 1.13 Cr Vs. 3.58 Cr in Q2FY20 Vs. 1.54 Cr in Q1FY21.

Share View: Share price high 1,365 (52 week) and now 1,090. Astec LifeSciences Limited is an India-based company and part of Godrej Group. The Company is engaged in agro chemicals, including fungicides and herbicides business. It manufactures a range of agrochemical active ingredients and pharmaceutical intermediates.

Position: Share support price is INR 1000. Share can delivered good return in short to mid term.

Opportunities : Astec has an extensive track record spanning more than two decades and it enjoys an established position in the manufacturing of technical grade fungicides. Supported by its technical competency, the company has established itself as one of the preferred suppliers of technical grade fungicides to a reputed clientele, comprising large MNCs, in the domestic and export markets. Furthermore, the company’s investments in the new R&D lab are expected to provide a significant boost to R&D capabilities, enabling it to develop new products and also benefit from the opportunities that the global demand shift from China may present for the Indian entities. Continuously reducing their debt on YoY and QoQ. Double digit growth in both topline and bottom line for past 5 years. Last 5 year CAGR growth is around 35%. Strong parentage and financial flexibility as a part of Godrej Group. Astec has benefitted in terms of managerial as well as financial support from GAVL. Astec continues to benefit from the strong financial flexibility arising on being a part of the Godrej Group.

Risk: Company’s revenues remain susceptible to the vagaries of monsoons and the regulatory risks associated with the ban of products by regulatory authorities upon review or change in regulations. Moreover, its profit margins remain exposed to the fluctuations in raw material prices, primarily those sourced from China. QoQ margin was declined in this quarter. Astec derives a large part of its revenues from a few products within the Triazole fungicide category.

Sources: Various publications

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Coffee Can Investing

2020-10-29T13:37:00.000+05:30

Coffee Can Investing

Coffee Can Investing !!!!! is it really something or some kind of joke, no today with this article I want to draw your kind attention towards a new concept of COFFEE CAN INVESTING.

So before going further lets first discuss about What is coffee can investing?

The strategy gets its name because in the old west people who invest in the stock market would receive physical certificates of proof which they would put away in coffee cans. They would hide these cans in their mattresses later forgetting about them.

These stocks would eventually grow enormously making its holder rich when he found it again. The success of Coffee Can Investing depends entirely on the wisdom and foresight used to select stocks in the portfolio.

" Hence it is a concept based on the research done by Rob Kirby. In simple words, one selects a list of stocks or mutual funds and invests in them, and then literally forgets about it. "

Why coffee can investing is not popular in India?

Only around 5% of the Indian population indulges in the Indian stock markets. Around 95% prefer to invest their savings in Land and Gold. This could be because we as people tend to put our trust in assets that we can see and touch. Due to this land came to be considered as one of the best investments due to the boom in the period between 2003 to 2013. Due to this India has currently become one of the priciest markets in the world. But the prices are not followed by an apt demand.

Out of those 5% investing in stock markets, around 95% of them would be day traders only and rest would be medium term traders who watches portfolio daily and exit the stocks if it gives 10-15% returns. Only a handful of people investing in stocks which may be counted in numbers would be in coffee can investing which may be around 0.05% of those people investing in stock markets.

Benefits of Coffee Can Investing

1. Minimum Expenses

Coffee Can Investing can be said to have been built on this factor. Apart from the cost that occurs during the one-time investment, there will be no more transaction cost for the remaining holding period. Tracking an index involves multiple additions and eliminations to a fund portfolio. Due to this, the investments are affected regularly from brokerage and other expenses transaction costs.

A Coffee Can Portfolio created by the individual would not have an Expense Ratio. Also, investors rarely consider how taxes affect their investments. Regular purchases and sales would result in added taxes on any profit earned.

2. No need for tracking the portfolio.

This is also one of the necessities of Coffee Can Investing. Once we have filtered and achieved a portfolio of quality stock the only thing that is required is for them to be put aside and left alone for a decade.

When we invest we unfortunately always try and keep track of what is going on with the company. CEO changes, political and other economic changes would all stimulate us to act on our holdings. In fact, a Coffee Can Portfolio would even require us to not even look at our stocks during the pandemic.

3. Not Affected by volatility

The filters to create a suitable coffee can portfolio ensures that only the best stocks as per the present scenario make it to your portfolio. However, in the short term, these stocks will face very high volatility in reaction to the market, political, and other changes. In the long term, the stocks will only be judged by their intrinsic quality. In the long term, the portfolio will face reduced impact from market volatility.

4. Out performance by 8-10%

According to ‘Coffee Can Investing’ a portfolio that has followed all the steps will be performing better than the market and beating it by 8-10%

Why don’t funds just follow Coffee Can Investing?

If this investment strategy enables you to outperform the market by such a large margin then the question arises as to why shouldn’t mutual funds just follow this investing strategy.

One of the major reasons is the wait for a very long term it may be more then 10 years. In Coffee Can to judge how you have performed, you will have to wait for over a decade. Very few investors would be willing to commit to such a fund.

Imagine a scenario where a fund does start coffee can investing. It would have to set up a team that would prepare a portfolio for the fund. What next? Coffee can would require you to simply ignore the investment for the next decade. Setting up a fund only as Coffee Can will have a huge setup cost at the beginning with returns only after a decade. In regular investment firms, the employees are rewarded for the right decisions, investments, and performance. These benefits would only be available to the employees of such firms only after a decade. This would be highly unfair to them.

Coffee can investing doesn't suit to all kind of people as it requires not looking at the portfolio.

Now, question arises, who will apply such kind of concept in real life. And the answer is, we can (retail customers) apply such concept to their portfolio while doing any investment. If one is having a long term horizon, capital and patience then this concept will be wonderful. The stocks should be picked carefully which have good fundamental and strong growth and investment can be done.

Happy Investing!!!!

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Result Analysis: APL Apollo – Q2FY21

2020-10-29T12:54:00.001+05:30

Result Analysis: APL Apollo – Q2FY21

Total revenue from operations 2,202 Cr
1,647 Cr (33.70%) YoY | 1,110 Cr (98.32%) QoQ

Half yearly revenue: 3,311 Cr Vs. 3,719 Cr (-10.94%)

Net Profit of 102.6 Cr
59.6 Cr (72.82%) YoY 21.9 Cr (381.49%) QoQ

Half yearly Net profit: 124.5 Cr Vs. 111.9 Cr (11.71%)

EPS (in Rs.) 36.80
23.91 YoY |6.72 QoQ

Half year ending EPS: 43.52 Vs. 44.84

View: Result is above expectation and strong. YoY revenue and profit both have up. Strong recovery as compare to QoQ after business resume.

Business Updates & Highlights

Q2FY21 EBITDA was around INR 169.1 Cr Vs. 72 Cr in Q2FY20 Vs. 71.1 Cr in QoQ Q1FY21 therefore up by 134.7% in YoY and up by 135.1% in QoQ. EBITDA margin is around 7.6% Vs. 4.3% in YoY Vs. 6.4% in QoQ. Therefore EBITDA margin improved by 330 bps in YoY.

EBITDA per ton was INR 3,514 (+78% YoY).

Operating cash flow was 271% in H1FY21 Vs. 107% in FY20.

Split of Equity share

The sub-division of equity shares of the Company from the existing One (1) equity share of face value of Rs. 10/- each into Five (5) equity shares of face value of 2/- each. To facilitate larger shareholder base, to increase liquidity and to make the shares more affordable to investors. Record date yet to be notified and expected to completion in next 2-3 months subject to shareholders approval.

Financial

ROE and ROCE is around INR 17.9% and 21.3% respectively and book value per share is around INR 544 and share is currently trading at 5.7x of its book value. Company is currently trading at annualized PE of 36 which is average as per Industry benchmark. Promoter holding is around 39.5% in the company which is low but increased in QoQ.. Mutual fund hold around 13.5% in the company. Company is very strong operating cash flow as of Sep 2020 it was around INR 651.9 Cr Vs. 305 Cr in Sep 2019 (Very Strong). Debt equity ratio in Sep 2020 was 0.2 Vs. 0.6 in FY 2020 (Significantly improved)

Share View

Share price high 3,195 (52 week) and now 3,106. APL Apollo Tubes Limited (APL Apollo) APLAPOLLO is India’s leading branded structural steel tube manufacturer. Headquartered at Delhi NCR, the Company operates 10 manufacturing facilities with a total capacity of 2.5 Million MTPA. APL Apollo’s multi-product offerings include over 1,500 varieties of Structural Tubes to be used for Residential and Commercial Construction and Infrastructure development. The Company’s vast distribution network of over 800 distributors is spread all across India, with warehouses cum- branch offices in over 28 cities.

Position: Share support price is INR 2,750/2500. Long term investor should continue with the company.

Opportunities

APL Apollo Tubes Ltd has created its dominant leadership in structural steel tube industry. The Q2FY21 performance was significantly better than Q1FY21, which was partially impacted due to disruption from COVID-19. 40% Market Share in Structural Steel Tubes and Growth rate is 27% CAGR in last 10 years. Sales Volume in FY11 was 195 (K Ton) Vs. 1,633 in FY20 (K Ton) significant growth. company is also catering new opportunities with more structured way like warehousing (As per JLL report there will be 344 mn sq. ft of warehousing space in India by 2022), affordable housing (Trends for affordable housing with low cost & faster completion is picking in India), urban Infra (Govt plans to start 100 additional airports by 2024, To invest Rs19,000 crore in upgrading airport infrastructure in the country, especially in smaller cities over next three years) and urban real estate India’s vertical growth pushed high-rises buildings with G+20 floors or more to record highs in 2019) etc. Monopolistic business with highest market share around 40% as per nearest competition its around 12%.

Risk

Low operating margin business and its around 7-8%. Despite having the largest capacity in the ERW segment, market share is estimated at 14-16% at present, although, estimated to increase to 18-20% in over the next 3 years. ERW pipe manufacturers are 'steel convertors' and fluctuation in raw material prices are passed on to the consumer but with a lag of 1-2 months. Hence, margins are susceptible to fluctuations in prices of steel (Hot rolled coil).

Sources: Various publications

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Result Analysis : Larsen & Toubro Ltd Q2FY21

2020-10-29T12:43:00.000+05:30

Result Analysis : Larsen & Toubro Ltd Q2FY21

Larsen & Toubro Ltd.’s quarterly profit and revenue fell, and order inflows slowed, even as the nation eased the lock down curbs.

Net profit before exceptional item fell 41.8% year-on-year to Rs 1,462.84 crore in the quarter ended September, India’s largest engineering-to-construction company said in an exchange filing. That compares with the Rs 1,234.9-crore consensus estimate of analysts.

Including exceptional item, the loss stands at Rs 2,322.10 crore.

L&T, in the reported quarter, posted an exceptional cost of Rs 3,732.30 crore, comprising impairment of funded exposure in the heavy forgings facility joint venture and impairment of assets in the power development business.

L&T completed the sale of its electrical and automation unit to Schneider Electric during the July-September period. It also announced a *special dividend of Rs 18 apiece*

Revenue fell 12.2% over the year ago to Rs 31,034 crore

Operating profit fell 12% to Rs 5,318.77 crore Margin stood at 17.1%

The year-on-year numbers aren’t strictly comparable as last year’s figures don’t include Mindtree Ltd.’s results, which L&T acquired, and the switchgear business.

Order Book L&T’s order book inflow during the quarter stood at Rs 28,039 crore — a decline of 42% over the corresponding quarter a year ago.

International order during the quarter constituted 36% of the total order inflow. The consolidated order book of the group stood at Rs 2,98,856 crore as on Sept. 30, 2020.

L&T, which has stopped providing guidance for order inflow, said it's "seeing tremendous uncertainty in the current environment".

"We are still discovering what the new normal could be post Covid," said R Shanker Raman, chief financial officer at L&T during the press interaction.

"We are not a committing to a guidance this year." The company, however, received a letter of intent for high speed rail project or bullet train valued at Rs 25,000 crore. The project will be completed in four years, adding to order inflow in the third quarter.

Segment wise performance

Revenue YoY
Infrastructure 13,096 Cr (20%)
Hydrocarbon 4,050 Cr (6%)
IT & tech 6,200 Cr 5%
Financial 3,342 Cr (3%)

Outlook on Capital Spends

A strong emphasis by the government on infrastructure spending augurs well for the company, and the National Infrastructure Pipeline, which lays out a detailed capex road map till 2025, provides visibility on the domestic infrastructure outlook.

Sectors such as water, power transmission and distribution, metro/regional rapid transit system, railways, roads and expressways are witnessing increased traction as far as bidding / tendering activity is concerned.

View: It is a very good company for investment at current levels i.e in range of 890 to 950 with a long term target of 1300 .

Sources: Various publications

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Correlation of COVID 19, Economy and Market Return

2020-10-28T17:17:00.003+05:30

Correlation of COVID 19, Economy and Market Return

As we are all aware, it has been a difficult year for the Indian economy. The Covid-19 pandemic has severely impacted normal business functioning. However, after falling more than 37.5% between January 1, 2020, and the bottom on March 23, 2020, markets have since recovered, rallying by 49.6% between March 23, 2020, and August 31, 2020.

Therefore, the main concern among investors currently is the disconnect between markets and the economy.

As our economy now slowly works towards reaching the pre-Covid-19 normality, a look at the below historical NIFTY-50 returns may bring out certain interesting perspectives to our minds:

As can be observed from the above table, whenever the NIFTY 50 has delivered a compounded annual growth rate (CAGR) of 5% or less over the last 10 years, it has generally performed very well in the next 3, 5 and 10 year periods (please refer the highlighted cells). 10 year returns below 5% have generally occurred due to a strong reason related to economic/political or domestic/global events. And historically, markets tend to generate better returns in the next 3 or more years. After a gap of several years, the 10 year NIFTY 50 CAGR fell to 5% as on March 31, 2020, due to the impact of the Covid-19 pandemic.

Interestingly, there is also another important perspective to note. While the NIFTY 50 has given a CAGR of 5%, India’s nominal GDP has grown at a CAGR of 11.5% over the last 10 financial year. India’s nominalGDP has run ahead our equity markets in the last decade. There is, therefore, a material disconnect between the performance of the market and our economy in the last 10 financial years.

With this in mind, it must also be noted that theCovid-19 pandemic is a rare event or disruption. Our economy may suffer for a period, but it is expected to trudge back to normalcy at some point of time, aided by the concerted effort of the Government and the Reserve Bank of India (RBI). The markets, therefore, appear to be focusing on the likely recovery in future, instead of the current economic disruption. Foreign Portfolio Investors (FPIs) too appear to have echoed the sentiment, investing around INR 91,044 crore from May to August 2020, after withdrawing INR 68,857 in the months of March and April, 2020.

Additionally, the Indian economy has already begun to show initial signs of recovery in the past few months. In the long term, India’s excellent demographics, abundant natural resources and a young and competitive manpower may prove to be huge positives. India may also provide businesses a possible avenue to reduce their dependence on China.
Although rising Covid-19 infections continues to remain a significant risk for the economy, it will be interesting to observe how the markets perform in the next few years.

Sources: Various publications

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