Category: Personal Finance

Explainer: A brief explanation about Systematic Investment Plans (SIP)

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Systematic Investment Plans (SIP) are those investment plans that will allow a person to invest a fixed amount in to a mutual fund on a regular basis.

Individuals who want to start investing, yet are unable to do a bulk investment, would often opt for SIP plans.

These plans will allow user to invest a small amount on regular basis.

Usually, an individual would spend a fixed amount to buy a number of shares in a fund on a regular basis.

As the amount is stable, the number of shares bought out can vary based on the share value and market condition.

But one big merit of this policy is that it can impart financial discipline in a user by prompting him to set aside a particular amount regularly.

It’s also a good plan for those people who wants to set aside a particular amount to fulfil plans such as tours, new vehicle etc. in a given time.

However, one demerit that the plan is that it’s inherent rigidity.

As only a fixed amount is invested, it will be hard to capitalise on market fluctuations, particularly gains.

Also SIPs often require long time commitment as the time period of these schemes can be around 15 years.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What should be your fixed income investment strategy?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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People invest in debt instruments to get stable returns. But all debt instruments do not offer stable returns. Some debt instruments like Debt funds are volatile due to interest rate cycle and other reasons. But, debt funds cannot be avoided as they have their advantages. We need to pick and choose the fund subcategories that would work well now.

Interest rate movement affects debt instruments. However, predicting interest rate movement, especially over the long term is difficult. The current scenario signals an upward trajectory. A hike in the interest rate will have an impact on one’s current Debt Mutual Portfolio in the Short to Medium term.

The following are some of the factors that may impact debt products –

• Crude oil prices spiking further – Given that India is the world’s third-largest oil importer, such a hike will inflate the import bill and disrupt the fiscal position. Inflation is expected to go up which in turn will spike up the interest rates.
• Foreign outflows – Outflows from domestic capital markets will also have an impact on the debt market. Foreign portfolio investors (FPIs) net sold shares worth Rs. 166.15 crore while domestic institutional investors (DIIs) bought equities worth Rs. 149.58 crore in April 2018, provisional data showed.
• Strengthening US Dollar – The rupee is near the 69-mark against the dollar, amid high demand for dollars from banks and importers. In fact, the Indian currency has fallen by 8 percent against the greenback in 2018 so far and is one of the worst performing currencies this year across the world. Some experts do not rule out the rupee to weaken further to a new low to the psychologically key Rs 70 per dollar.
• Trade deficit – Trade deficit widened to $ 14.62 billion in May ‘18 from $13.72 billion in April ‘18, which is a negative for inflation/ interest rates.
• Interest rate hike on US Treasuries – The Federal Reserve is slowly increasing the interest rates on it’s treasuries which will cause a flight of capital from across the world including India. This will strengthen the dollar and weaken the rupee. This may cause the interest rates in India to move up so that Indian GSecs will be competitive.
• GOI borrowing program – The government of India’s borrowing in this year is expected to be high considering that we are about 12 months away from national elections and populist measures absorbing a lot of money can be expected. This will again cause the interest rates to harden.Debt funds have an inverse correlation to interest rates and hence interest rate hikes are not great from the point of view of debt funds. However, we may have to stay invested in debt funds for liquidity and short term goals.

For this, one may choose funds with shorter tenure portfolios, good asset quality with accrual strategy of investment in the fund. Such funds would be affected the least in an interest rate upcycle. Also, one may avoid Govt securities as much as possible as they are extremely sensitive to interest rate movements, especially the ones with a longer duration.

The other option available in Debt MF space is Fixed Maturity Plans ( FMPs ).

A good alternative to Open Ended Debt Mutual Fund Schemes –

Fixed income investors with low to moderate risk profile may, therefore, take some exposure in Fixed Maturity Plans (FMPs). FMPs are close-ended debt mutual funds with a maturity period which could range from one month to five years. These funds usually invest their corpus in highly-rated securities, AAA corporate bonds, certificates of deposits (CDs), commercial papers (CPs), and the like. There are those which may invest in lower quality papers too and may give higher returns. But as a general rule, one may consider high quality portfolios to ensure safety of investments and interest payments.

Advantages of investing in an FMP –

• Indexation benefit on capital gains, if investment tenure is more than 3 years. Most FMPs are over 3 years tenure.
•  Lower expense ratio.
•  Many FMPs invest in highly rated bonds/ papers and hence credit risk is likely to be low.
• Closed Ended Fund – The intervening interest rate volatility may not affect returns profile of the scheme. Scheme is cumulative and returns come at the end.
• Units will be listed on Stock exchanges and provides an exit option. But then, liquidity is low & hence one should invest here with the idea of holding it to maturity.

FMPs are available at the moment and the returns offered by the papers that they would be putting money into indicates that they may be able to offer 8.1-8.4% or thereabouts pretax, and is likely to offer about 7.4-7.5% after LTCG tax ( depends on the inflation position in the next three years ) . FMPs are best suited for those who do not want regular cashflows & liquidity in between.

B. Other options before you –

• Tax free bonds from secondary markets – offering about 6.3% tax free
• Perpetual bonds from secondary markets – offering pretax returns of about 8.8%-9% now ( for higher quality bonds )
• Corporate FDs ( High Credit quality ) – offering pretax returns of 8.3-8.5% now.

The above three options may be considered if regular income is needed. These are the other options available, apart from bank FDs. The first two will offer only annual income and the third would offer monthly/ quarterly payments.One needs to choose the right product to invest into based on the liquidity needs, risk they are willing to take, taxation, income needs etc. A good portfolio would have the right mix of these funds so that it is most suited to one’s needs.

Suresh Sadagopan is a Certified Financial Planner and runs Ladder7 Financial Advisories, a fee-only financial planning firm.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Explainer: A brief note about provident fund

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Countries across the world have various social security programs to ensure the security of their citizens.

Provident fund scheme is one such system that has been adopted in India. It’s a compulsory retirement savings scheme directly under the government of India control.

As part of the scheme, all workers have to mandatorily contribute a portion of their salary to the scheme.

Along with this, employers too have to contribute to the provident fund of their employees.

While some withdrawals are allowed to be made prior to the retirement, the government usually puts a limit to these withdrawals made prior the defined retirement age.

Also, workers are allowed to make certain withdrawals prior to the defined age and in certain other circumstances like medical crisis.

In India, the organisation tasked with assisting various companies to set up provident fund is the Employees’ Provident Fund Organisation (EPFO).

While other investment and saving options are available across the world, provident fund is still a prized savings for many due to the security it provides during old age.

With rapid urbanisation and scattering of families, provident fund provides economic stability to millions of old and vulnerable.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Five stocks that could offer 8-13% by August-end

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Trade war and political uncertainty in Europe’s biggest economy – Germany – kept equity markets under pressure for most part of Monday’s session. Recovery in the last hour of trade in front-line stocks saw the Nifty erasing partial losses to close at 10,657 levels, down 0.53%, for the day.

After Friday’s bounce back, the index has failed to show follow-through action on the upside. The index faced a hurdle at the rising support trend line, connecting lows of 9,952 and 10,418, which is now acting as resistance for the market. As long as the Nifty trades below 10,640 levels, we expect the market to retest 10,550 levels which is an important support level for the market.

On the upside, if Nifty trades above 10,705 levels, it can rally towards 10,810 levels where the falling resistance connects the highs of 11,172 and 10,929.

In Nifty options, 10,600 put is seeing the highest open interest suggesting the market has support between 10,550-10,600 levels.

Here is a list of top 5 stocks that could return 8-13% in the next 1-2 months:

Asian Paints Limited: Buy| CMP: Rs 1,293| Stop loss: Rs 1,250| Target: Rs 1,400| Return 8%

The stock has seen a base formation between the levels of Rs 1,260 and Rs 1,100 over a period of nine months and witnessed a breakout from the same to hit an all-time high of Rs 1,332 in the month of May.

The price then corrected down to the previous high of Rs 1,260 which has acted as a strong support for the stock and then bounced back. The stock has taken a support at its 50-days moving average and crossed 20-DMA.

In Monday’s session, the stock has shown price momentum with a long bullish candle and good volumes which suggests resumption of the uptrend.

The Relative Strength Index or the RSI on the daily chart has given a positive crossover with its average. The daily MACD has given a positive crossover with its average and moved above the neutral level of zero indicating corrective phase is over.

Thus, the stock can be bought at current levels and on dips towards Rs 1,280 with a stop loss below Rs 1,250 and a target of Rs 1,400 levels.

Infosys Limited: Buy| CMP: Rs 1,335| Stop loss: Rs 1,290| Target: Rs 1,450| Return 8.6%

The stock has seen a base formation between the levels of Rs 1,280 and Rs 900 over a period of two years. Last week, the price saw a breakout from this consolidation and hit a new high of Rs 1,340 in Monday’s session.

Typically, the stock breaking out at all-time highs continue to see new highs in the near future as well. The stock is taking support at its 21-days moving average and then started trending higher.

The price has also given a breakout from Bollinger band with the expansion of band and closed above the upper band. Thus, the stock can be bought at current levels and on dips towards Rs 1,320 with a stop loss below Rs 1,290 and a target of Rs 1,450 levels.

Godrej Industries Limited: Buy| CMP: Rs 618| Stop loss: Rs 585| Target: Rs 700| Return 13%

The stock has been in an uptrend on the long-term charts forming higher tops and higher bottoms on the long-term chart. For the last eleven months, the stock has been in a corrective phase and was trading sideways to negative in a narrow range of Rs 699 to Rs 512 levels.

The stock has seen a bounce back from Rs 550-512 zone on multiple occasions indicating a strong support zone for the stock. The daily MACD line has given positive crossover with its average suggesting stock is likely to see the start of a fresh uptrend.

The stock has moved above the falling resistance trend line connecting highs of Rs 699 and Rs 646 on the weekly chart and was consolidating above it for the last few weeks.

Thus, the stock can be bought at current levels and on dips to Rs 607 with a stop loss below Rs 585 for a target of Rs 700 levels.

Sundram Fasteners Limited: Buy| CMP: Rs 643| Stop loss: Rs 615| Target: Rs 720| Return 12%

The stock is in a long-term uptrend forming higher tops and higher bottoms on the daily chart and weekly chart. The stock has seen in a consolidation zone between the levels of Rs 645 and 545 odd levels over the last four months with a positive bias.

The price has been taking support at its 100-day moving average. The Relative Strength Index on the daily chart has given a positive crossover with its average suggesting that the stock is likely to see a breakout on the upside.

Thus, the stock can be bought at current levels and on dips towards Rs 635 with a stop loss below Rs 615 and a target of Rs 720 levels.

Indiabulls Housing Finance Limited: Sell| CMP: Rs 1,115| Stop loss: Rs 1,160| Target: Rs 1,020| Return 8.5%

The stock has formed a bearish head and shoulders pattern on the weekly chart. It witnessed a breakdown from the pattern in the month of May and then saw a bounce back towards Rs1,270 odd levels.

Here it faced some resistance at its 200-day moving average and then saw a resumption of the downtrend. Also, on the daily chart, the price has given a breakout from the Bollinger band with the expansion of band and closed outside lower band suggesting the start of a fresh trend in the direction of the breakout.

The price has been trading below its long-term as well as short-term moving averages. MACD line has given negative crossover with its average below neutral level of zero on the daily chart.

Thus, the stock can be sold at current levels and on the rise towards Rs 1,125 with a stop loss above Rs 1,160 and a target of Rs 1,020 levels.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

One year of GST: Consumer the ultimate beneficiary of the landmark reform

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The real estate industry has significant forward and backward linkages with other industries that are predominantly in the informal sector. With the unified Goods & Services Tax (GST) regime, the stakeholders are now witnessing the benefits of integration in the supply chain and the consumer will be the ultimate beneficiary of this landmark reform.

Business has benefited with a multitude of indirect taxes on construction inputs being streamlined into one while house buyers have benefited due to the uniformity brought about by GST being levied at a standard rate and on a consistent basis of calculation across the country. In the past, across cities, the variability in the rate of Value Added Tax and the basis of calculation created an additional level of variability factor in property price in different states. The same is uniform across markets now and the prospective consumer has one lesser complexity to deal with.

On ground, the impact of cost-benefit varies across markets and product categories. Considering that real estate as a product involves large number of inputs and is delivered over a four to six-year period to the consumer, the verdict on the exact impact of GST will take some time.

Impact on ready-to-move and under construction properties

In case of a ready possession property, there is no incidence of GST and has the required clarity from consumer point of view.

However, in case of under-construction property, there are primarily two customer segments; one who bought an under-construction property before the implementation of GST and the second are buyers who have bought an under-construction property post the implementation of GST. For the first set of consumers, the incidence of GST will be very particular to the specific case dependent on the stage of construction and the value of land in the house price. For the second set of consumers, the rate of GST is clear at 12% (after abatement for land).

Impact on house prices

In terms of the GST impact on house prices, house buyers particularly in the low to mid-income housing segment have witnessed a cost reduction on account of either or both factors – the benefits of input tax credit and lower GST rate of 8%. However, in case of premium housing, we have witnessed a moderate upward pressure due to unabsorbed input tax credit as the land value in such cases is much higher than the provided standard abatement for land value to the tune of one-third of the value of the house. However, considering the subdued residential market scenario in the country, in almost all cases, developers have absorbed any upward cost pressure because of GST, which augurs well for the consumers.

Impact on warehousing

Another prominent segment of real estate that has been significantly influenced by GST is the logistics and warehousing segment. Warehousing activities carried out for the sole purpose of avoiding tax have become redundant with the introduction of GST. Travel time for inter-state transportation has also come down significantly owing to the elimination of state entry barriers. Trucks are now able to cover longer distances every day, with an improved turnaround time, implying that transporters can carry out their business with smaller fleets.

GST has also reduced the costs incurred on taxes and state permits. Both these savings (time and cost) are nullifying the need for multiple warehouses in different geographies. Faster movement of goods will enable reduced inventory holding levels. Reduced inventory levels directly impact the requirement for warehousing space and facilitate the growth of fewer, larger warehouses that allow companies to leverage enhanced economies of scale. Accordingly, companies have begun warehouse consolidation and benefit from reduced inventory carrying costs. Not ignoring the fact that the level of consolidation in warehousing will vary across industries.

Considering that we have spent just a year in this new regime and the teething problems are being addressed on a regular basis, we are optimistic about the potential of this reform, which will eventually have a transformatory impact on the country’s property market.

Disclaimer: The views and investment tips expressed by investment experts are their own and not that of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

Source: Moneycontrol.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Planning to go short? Two stocks that are looking weak on the charts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Last week, the Nifty retested its crucial hurdle placed around 10,850 but failed to hold above that level, extending its prevailing consolidation phase. Global cues – lingering tensions over trade war like situation and a vertical surge in crude oil prices – dictated the market trend the world over.

Last Thursday, the rupee touched a new record low against the dollar, weighing on sentiment. Pressure continued on the broader front and a sharp decline was witnessed across the board. Finally, the Nifty settled at 10,714.30, down nearly a percent for the week-ended June 29.

Though the Nifty is still showing resilience despite the global turmoil, continuous under-performance has turned sentiment bearish in the broader market.

The index has crucial support at 10,550 levels and a decisive breakdown may result in a further decline. Private banks, FMCG and IT are our preferred picks on the sectoral front, while state-run banks, media, and select infra counters would continue to reel under pressure. We advise keeping stock-specific trading approach.

Here is a list of top 3 stocks that could return up to 6% in the short term:

Exide Industries Limited: Buy| Target: Rs 272| Stop-loss: Rs 247 | Return 6.25%

After seeing a marginal correction from its record high, Exide was seen consolidating around the support zone of short-term moving averages (20, 50 EMA) on the daily charts. It formed a fresh buying pivot.

The chart patterns are showing tremendous resilience while most stocks are reeling under pressure. The chart pattern is favorable too. Traders are advised to initiate fresh long positions in the range of Rs 254-256.

Dish TV India Limited: Sell | Target: Rs 68| Stop-loss: Rs 74| Return 4.89%

Dish TV has been under pressure for more than a year as it witnessed a gradual decline. After its multiple failed attempts to cross its resistance barrier of long-term average i.e. 200-EMA on the daily chart, it has formed a fresh shorting pivot.

Indications are in the favour of a breakdown in near future. We advocate creating fresh shorts in the given range of Rs 71.50-72.50. It closed at Rs 72.10 on July 2, 2018.

Coal India Limited: Sell |Target: Rs 250| Stop-loss: Rs 272|Return 5.30%

Coal India after the breakdown from its consolidation range, is currently hovering in a narrow range, offering shorting opportunities to traders.

The overall downtrend and chart formation are clearly indicating a fresh decline ahead. Traders shouldn’t miss this opportunity and create fresh shorts in the given the range of Rs 264-266. It closed at Rs 261.60 on July 2, 2018.

Disclaimer: The views and investment tips expressed by investment experts are their own and not that of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

Source: Moneycontrol.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Portfolio check: These top 10 stocks could return 21-115% in one year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After hitting record highs in late January, followed by sharp sell-off, the market has been consolidating and trying very hard to move towards that all-time high.

The Sensex rallied 4% in the first half of 2018, but the broader market corrected sharply with the Nifty Midcap index falling 14%, especially after the strong 48% out-performance in 2017.

Experts said some mid, small and large caps are trading at attractive valuations. “We expect stock-specific movement in large caps to continue to support the market. But mid and small caps are likely to take more time to settle.”

Considering the current rangebound trade, they feel the market may be waiting for earnings to pick up from the second half of financial year 2019

Big reform decisions taken by the government, normal monsoon resulting in a likely increase in consumption and an earnings recovery continue to support the market, but global trade concerns, volatility in crude oil prices, weakening rupee versus the dollar and an increase in the cost of capital are headwinds to the rally.

“In the backdrop of higher fuel prices, increase in interest rates and a weakening rupee-dollar scenario, we are of the view that market may trade in a range and is unlikely to witness any strong appreciation in the next 6-8 months,” Rajeev Srivastava, Business Head-Securities & Commodities, Reliance Securities, said.

He advises investors to invest in quality stocks, which are less vulnerable to macro concerns and have healthy cash flow visibility. Considering the likely pick-up in rural consumption, higher utilisation and recent reforms, he is hopeful that corporate earnings will witness double-digit growth in coming quarters.

Here is the list of top 10 stocks that could return 21-115% in a one-year period:

Brokerage: Motilal Oswal

Larsen & Toubro: Buy | Target – Rs 1,540 | Return – 23%

L&T enjoys several levers across its business/geographical segments. It has emerged as the E&C partner of choice in India, which provides a robust foundation to capitalise on the next leg of investment cycle.

Under its new five-year strategic plan to financial year 2021, L&T aims to: (a) grow sales at 12-15% CAGR to reach Rs 2 lakh crore by 2021, (b) expand margins to 11.2%, up 120bp over financial year 2016, driven by higher profitability in key manufacturing verticals (power, process, forgings and Katupalli yard) and hydrocarbons, (c) unlock value via asset sales to drive RoE to 18% from 12% in financial year 2016 and (d) reduce working capital to 18% of sales from 20% currently.

Manufacturing businesses (like Shipyard, Power BTG, and Forgings) also offer interesting possibilities over the longer term. Many of these businesses are difficult to replicate, and L&T is strongly positioned as a dominant player.

We maintain Buy with an SOTP-based target price of Rs 1,540 (E&C business at 22x financial year 2020E EPS, to which we add Rs 520 for subsidiaries). The stock trades at 19x/15x its standalone business (ex. subsidiaries) on financial year 2019/financial year 2020 EPS versus its historical average of 22x. Key risks to the rating include (a) a sharp slowdown in government spending and (b) a sharp fall in oil prices in the Middle East.

Brokerage: ICICI Securities

Tata Steel: Buy | Target – Rs 700 | Return – 25%

Tata Steel and ThyssenKrupp AG have signed a definitive agreement to combine their European steel businesses in a 50:50 joint venture to be named ThyssenKrupp Tata Steel BV headquartered at Amsterdam, Netherlands.

The formation of the joint venture paves the way to offload significant debt from Tata Steel’s consolidated balance sheet to the new joint venture. The deleveraging of balance sheet would aid the management to focus more on the profitable domestic business and pursue organic and inorganic growth prospects.

We continue to remain positive on the domestic steel consumption story driven by increased government expenditure/policies and supportive macros. We like Tata Steel given the integrated nature of domestic operations, which enables it to report higher EBITDA/tonne vis-à-vis its domestic peers.

Going forward, for Indian operations, we maintain our sales volume estimate of 12.5 MT for financial year 2019E and 12.8 MT for financial year 2020E with EBITDA/tonne estimate of Rs 13,250 per tonne for financial year 2019E and Rs 14,000/tonne for financial year 2020E.

For European operations, we model sales volume estimate of 10 MT and EBITDA/tonne estimate of $75/tonne for both financial year 2019E and financial year 2020E, respectively. We value the stock on an SOTP basis and maintain target price of Rs 700. We maintain Buy recommendation on the stock.

Brokerage: KR Choksey

Suzlon Energy: Buy | Target – Rs 15.8 | Return – 115%

We believe WTG business could grow at around 15-20%  CAGR over the next 4-5 years largely led by healthy order flows from SECI and windy states. Further, increase in the tendering for hybrid wind and offshore wind energy to aid WTG financial performance in the years to come.

In terms of operation and maintenance (O&M), we believe increase in the revenue share for domestic O&M would enhance operational performance for group O&M segment, which has been improving by 300-400bps YoY.

We expect operating profit margin for group O&M business to reach at 27% by financial year 2020E from 19% in financial year 2018. This could result into company to demand better valuations at the time of divestment of stake.

We have valued WTG business at 9x EV/EBITDA, while O&M at 12x due to healthy FCF than WTG. We have arrived a target price of Rs 15.8, an upside potential of 115%. We recommend a Buy rating on the stock.

Brokerage: Bonanza

Tata Chemicals: Buy | Target – Rs 876 | Return – 27%

Tata Chemicals’ specialty chemical (S&C) businesses includes salt, agri inputs, pulses, spices and nutritional solutions. Tata Chemicals has adopted a strategy for the next 3-5 years to focus on its S&C business and consumer business. Post exiting from fertilizer business, Tata Chemicals is planning to increase the contribution from S&C business to around 35% by financial year 2020E, considering the current product portfolio.

It is exploring new avenue in FMCG sector, which is a high margin business with low working capital.

Tata Chemicals has reduced its debt through sale of investment in Tata Global Beverage, divestment of the fertilizer business and also through cash generated from its operations. Currently, it has a net cash position of Rs 1,02 crore while net consolidated debt is around around Rs 4,130 crore.

With global leader in soda ash and sodium bicarbonate, exiting from low margin fertiliser business, focus on specialty chemical and consumer business, exploring new avenue in FMCG sector with Tata Sampann and reduction of debt through sale of investment, we value Tata Chemicals at 7.00x financial year 2020E EPS of Rs 125.20 to arrive at target price of Rs 876.

Brokerage: SMC

Exide Industries: Buy | Target – Rs 320 | Return – 25%

As the company is one of the largest leaders in the battery space, it is likely to get benefit, if the demand scenario improves. Moreover, it is also expected that cost reduction initiative and focus on profitable segment would drive the margins going forward.

Thus it is expected that the stock will see a price target of Rs 320 in 8 to 10 months time frame on a current P/E of 31.56x and financial year 2019 (E) earnings of Rs 10.14.

Persistent Systems: Buy | Target – Rs 971 | Return – 21%

According to the management, the company expects an accelerated demand from enterprises to leverage digital ecosystems for innovation and growth. Its emerging technologies, transformational experience and continued progress with collaborations and acquisitions would give optimism for its growth going forward.

Moreover, a gradual improvement in utilization rate and better revenue growth in the non-linear business would support EBITDA margin. Thus, it is expected that the stock will see a price target of Rs 971 in 8 to 10 months time frame on an expected P/E of 21x and financial year 2019 (E) earnings of Rs 46.23.

Brokerage: Anand Rathi Shares & Stock Brokers

Mahindra & Mahindra Financial Services: Buy | Target – Rs 609 | Return – 34%

Mahindra & Mahindra Financial Services (MMFS) is one of India’s non-banking finance companies focused in the rural and semi-urban sector and is one of the largest Indian tractor financier.

The company is primarily in the business of financing purchase of new and pre-owned auto and utility vehicles, tractors, cars, commercial vehicles, construction equipment and SME Financing.

The company’s strength in vehicle financing which is showing good traction across products & geography. Its housing-finance loan growth is expected to expand 18-20% CAGR.

The main driver for improvement in RoA would be gradual increased share of SME business going ahead. Normal Monsoon, Higher farm income and Govt. spending will give boost to company’s business.

The company has a strong Rural & Semi-Urban area presence – with 1284 offices covering 27 States & 4 Union Territories. The company has a healthy mix of Both – ( A) Vertical lending across products & (B) Geographic mix which reduces volatility & risk. We have a Buy coverage on M&M Financial with a target price of Rs 609 per share.

Brokerage: JM Financial

Indostar Capital Finance: Buy | Target – Rs 650 | Return – 29%

Indostar Capital Finance (Indostar) is an NBFC promoted by Mauritius-based Indostar Capital (a holding company with a 57.7% stake in Indostar and owned by various institutions, including the Everstone Group, which has a 51.2% stake in Indostar Capital).

It commenced operations in 2011. In Apr’17, Sridhar (ex-CEO of Shriram Transport) was appointed Indostar’s CEO to lead its foray into vehicle and housing finance. The company has demonstrated strong execution capabilities (loan book posted a 25% CAGR over financial year 2014-18) by initially building the corporate book (74% of loans as of financial year 2018) and subsequently entering SME financing and effectively executing its strategy in the segment (23% of loans as of financial year 2018).

Over the past year, the company has tried to balance its loan book by diversifying its exposure into retail segments such as vehicle and housing finance.We forecast a net profit CAGR of 25% over financial year 2018-20E, led by strong loan growth (50% CAGR over financial year 2018-20E) and steady asset quality.

We forecasts RoA/RoE of 3.1/11.2% by financial year 2020E (versus 3.7/11.7% in financial year 2017). Indostar trades at 1.3x BV FY20E, which is the cheapest among NBFCs in coverage. We initiate coverage with a Buy rating and a Mar’19 target price of Rs 650, valuing the stock at 1.7x Mar’20 PB (implied financial year 2020 P/E of 16x).

Brokerage: CD Equisearch

J Kumar Infraprojects: Buy | Target – Rs 321 | Return – 42%

Buttressed by stable order inflows so far this fiscal, JKIL is eying projects over Rs 4,500 crore for the next couple of years, including metro rail orders of Pune, Mumbai Delhi and Bangalore. It recently bagged order for construction of underground shafts and R&R facilities for Pune Metro Rail worth some Rs 222 crore.

Yet large orders of the size of Mumbai Metro Line 3 have not been assayed last fiscal. It missed out on not so thinly discussed projects like Mumbai Trans Harbor Link (MTHL) and Mumbai Nagpur Expressway (where it failed to emerge among 18 successful bidders). It also lost out on Mumbai Metro Line 4 corridor order where consortiums of Reliance Infrastructure and Tata Project emerged as successful bidders.

Earnings fortification over the next few years rest on timely execution of sizeable projects – Mumbai metro line2, line 3, and JNPT road projects.

Execution of newly bagged projects like Pune Metro Rail, improvement of Chheda Nagar Junction, Ghatkopar and construction of South Delhi Municipal Corporation Head Quarter would not gather pace before the start of next fiscal.

On balance, we advise buying the stock with revised target of Rs 321 (previous target: Rs 273) based on 13x FY20e earnings (forward peg: 0.7) over a period of 9-12 months.

Brokerage: Edelweiss Securities

Capacit’e Infraprojects: Buy | Target – Rs 397 | Return – 48%

Notwithstanding the recent turmoil in EPC stocks, business fundamentals of Capacit’e Infraprojects continue to strengthen—not only has the company entered the public sector space that widens its catchment area, it continues to bag repeat orders from multiple clients in the private sector.

With its book-to-bill crossing 5x, the company is set for robust growth (Building a reputation for quality; initiating coverage). We believe investors looking for quality companies with a proven track record, strong earnings potential (31% EPS CAGR over financial year 2018–20), a lean balance sheet (negative net debt) and attractive valuations (13.3x FY20E EPS) should consider Capacit’e.

We expect steady topline growth, a stable margin trajectory and declining debt to drive 23% revenue CAGR and 31% EPS CAGR over financial year 2018–20E (excluding BDD Chawls).

Additionally, rising scale and better cash flow will lend impetus to return ratios. We maintain Buy with a target price of Rs 397 assigning P/E of 20x to FY20E earnings.

Disclaimer: The views and investment tips expressed by investment experts are their own and not that of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

Source: Moneycontrol.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow