New age businesses: ‘Buy first, then test’ model should change, says Axis AMC

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

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“People buy first and then find reasons to justify their decisions, that has to change,” said Chandresh Kumar Nigam, MD and CEO, Axis AMC in an interview with CNBC-TV18.

This is a very different market as compared to when COVID-19 started about 20 months back, Nigam noted. He believes, one thing every investor should try to learn is how to evaluate the new-age businesses.

“As an AMC and as an investor, we have to have exposure to these stocks but have a more portfolio-based approach, have a number of these stocks in our portfolio, have more conviction on the five-seven year validity of the business model and then hopefully some of these will come well. So the approach for some of these companies is different from what we have used in the past but there is no way we can stay away from these businesses,” he said.

Also Read: BOTTOMLINE: SEBI lens on new age IPOs overlooks issue of irrational valuations

There is significant momentum in the market.

“That breadth is something that has led to a major shift and people looking at exploiting and taking advantage of a large number of companies that are likely to do better. The reality is that there is tailwind beneath a large number of companies at this point of time,” said Nigam.

According to him, the pendulum has moved onto the other side, valuations are discounting a significant part of the future and hence any sign of any bad news will make people refocus on valuations.

The Nifty is three percent in the red in the last five trading sessions. Over the past month, the benchmark has seen 3.3 percent correction. However, the bulls are staging a small fight back today (Nov 23) and the index is 0.5 percent in the green, at the time of publishing.

In the next two-six months, there will be ups and downs as people figure out whether inflation is going to have a big role to play.

“What happens to liquidity etc and then more on a nine-twelve months basis, it will be a very bottom-up kind of a market where people will be able to take a call for three years and beyond,” said the Axis AMC chief.

“The rising tide which has lifted everything will in some sense fade, it will not get higher certainly and so it will be the return of the bottom-up stock-picking,” he shared.

Also Read: Inflation, weaker rupee biggest concerns; positive on Bharti Airtel: Geosphere Capital

For the full interview, watch the accompanying video.

Catch all market updates here.

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

What Are The Characteristics Of A Good Cryptocurrency?

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

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There are currently over 6000 different types of cryptocurrencies in circulation. For someone who’s just getting into cryptocurrency, it can be an overwhelming task to identify the best coins to invest in. But just like human beings, cryptocurrencies also have certain qualities that differentiate the good from the bad.

Remember the (in)famous Squid Game coin? It soared from 1 cent to $2856 per coin in the space of just a week before the scam revealed itself when the developers made off with an apparent $3.38 million, according to a popular tech website.

Here are the top seven characteristics you need to look at when you evaluate cryptocurrencies.

1 – Security

Your cryptocurrency needs to be chosen with your financial security in mind. The ideal cryptocurrency will have security build into its native design. This means apart from 2-factor authentication and complex passwords, it will also include safety features built into it to prevent itself from getting hacked.

While you don’t need to do a full deep dive into the technical aspects of your cryptocurrency, you do need to do basic research to ensure that it has some amount of in-built security features to avoid itself from being hacked by sophisticated means.

2 – Stability

Chasing stability in the world of cryptocurrencies can sometimes sound like an oxymoron. After all, A cryptocurrency will only be truly stable if people, organizations, and countries decide to use it and that seems some way off into the future.

That doesn’t mean cryptocurrencies like Ether and Bitcoin aren’t stable. The ideal cryptocurrency finds its stability over time, as the number of transactions performed in that currency grows, which is exactly what has happened with both these cryptos. Choosing cryptocurrencies that follow this model is a good way to invest in them.

3 – Scalability

The scalability of cryptocurrency refers to the number of transactions that can be processed or confirmed per second. Today, we prefer paying online versus depositing a cheque because of the time difference in transaction times.

Blockchains use different methods to settle transactions although the best ones are also the fastest. Look at forums that address this issue and pick cryptocurrencies whose transactions get processed in the shortest timeframe.

4 – Supply

The main problem of regular or fiat currency is that one can print as much of it as is required. Some people have already sounded the alarm about an upcoming debt crisis because of easy money that was printed to support economies during the Covid-19 lockdowns.

Cryptocurrencies, however, can escape this problem of supply. Most, in fact, have a fixed amount of coins that will ever exist. Bitcoin, for example, can have a maximum 21 million coins in existence and no more.

Other, mostly newer, coins also “burn” cryptocurrency tokens by sending them to inaccessible wallets. This limits the total number of the cryptocurrency available and makes it more valuable over time. WazirX recently held its sixth coin burn event where it burned 5,933,333 WRX equivalent to INR 74.8 crore, taking its total tally of burnt coins to 21,786,665 worth over USD $47 million.

Having a cryptocurrency that regularly undertakes such measures to keep a fixed number of coins in circulation is a good indicator of a strong cryptocurrency.

5 – Decentralisation

The whole idea about cryptocurrency is to give power to people instead of a holding organisation. One of the defining features of Bitcoin is that no one knows who created it, inspite of attempts to uncover the identity of Satoshi Nakamoto.

Some cryptocurrencies, on the other hand, try to take away from this decentralised nature of the blockchain to try and manipulate their currency. If you ever come to know the identity of any people or organisation behind a particular cryptocurrency, sell it all off right away. Even though it’s not directly related, always remember how the Squid Game scam played out.

6 – Demand

This one is pretty simple. Pick a cryptocurrency that actually has demand. By demand, we mean that the cryptocurrency is in the news and has the potential to grow over time through word-of-mouth and other means such as media coverage, availability on exchanges such as WazirX etc. The idea is the earlier you invest in a cryptocurrency, the more valuable it gets as others begin discovering it.

7 – Use Case

One important aspect of cryptocurrencies is how to use them the way you might use currency to buy and trade for goods and services. This is one aspect that not many people give a thought to when buying cryptos but if you think about it, having the ability to pick up something worthwhile with your crypto is actually a pretty interesting prospect.

For example, you can pick up NFTs with Ether and open up a whole new world of possibilities for yourself. This is better than simply picking up a crypto and HODLing it under its valuable enough to sell at a good price. Basically, look at cryptos as a means for what it can do for you rather than just as a way of buying and selling at the right price.

Now that you know what qualities to look for whilst picking up a good cryptocurrency, which ones would you add to your portfolio. If you haven’t already, open your crypto account with a trusted exchange like WazirX and get started on your crypto journey today.

This is a partnered post. 

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Market correction: Long way to go before we get seriously worried, says Shankar Sharma

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

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Market Veteran Shankar Sharma told CNBC-TV18 that the market has to take a breather and there is still a long way to go before one should start to get seriously worried. According to the market veteran, this is nothing more than a small correction.

The Nifty is three percent in the red in the last five trading sessions. Over the past month, the benchmark has seen 3.3 percent correction. However, the bulls are staging a small fight back today (Nov 23) and the index is 0.5 percent in the green, at the time of publishing.

“We have had a vertical rally in the last 18 odd months and where do we go from here? The short answer to that is that we still have a long way to go before we should start getting seriously worried,” said Sharma.

Many market participants have been waiting and praying for a correction.

“When you get it, it will happen in a manner that you don’t like. The market has to take a breather and it is taking one right now,” he said, adding, “This is nothing but a correction and nothing more than that.”

Also Read: Inflation, weaker rupee biggest concerns; positive on Bharti Airtel: Geosphere Capital

The benchmark indexes may not reflect a major fall but it’s noteworthy that the midcap and smallcap segments have seen a correction.

Sharma on IPOs

According to Shankar Sharma, one is never going to make serious money on a broad basis in the IPO market.

“Odd stocks here or there, you will make a lot of money but usually a well-marketed IPO is already priced to perfection. In fact beyond that and you are setting yourself up for a disappointment,” he said.

“The whole debate around the Paytm fiasco is not warranted because it is buyer beware. So Paytm is only just a symptom, it is not the real problem. The problem is investors get blinded by their own greed and they have only themselves to blame,” he added.

Also Read: Paytm IPO pricing ‘absolutely off’; fall ‘category killing’: BharatPe MD

When asked if the trend of pricing valuations high even for loss-making companies is ebbing, he replied, “When you look at the financials of the companies (new-age companies), the reality is this – they are tiny companies. It is just a hype around them, which is inflating a Rs 2,000 crore topline or a Rs 1,000 crore topline to a one lakh crore valuation, which is absolutely nuts because they have an app. Once you have an app then a Rs 1,000 crore topline suddenly magically gets changed into a one lakh crore valuation merely because you have something called an app.”

Also Read: BOTTOMLINE: SEBI lens on new age IPOs overlooks issue of irrational valuations

“All these companies, except Nykaa, have very low promoter holdings. The pricing of IPOs is dictated by the venture capitalist or the private equity funds. For them the incentive is to price high, pump it up and sell it out in the IPO. These are not strong promoter-driven companies,” Sharma added.

The best themes in Sharma’s view still remains the midcaps and smallcaps.

“You have to play the theme of consumption – building material plays, they have done tremendous for us, we continue to like them. Innerwear companies like Dollar Industries, Lux – have done phenomenally well. Liquor stocks – Radico Khaitan, Globus. There are so many stocks out there which have benefited from the ebbing of the COVID times. There are many out there which will give you multiples of what HDFC Bank is going to give you,” he shared.

For the full interview, watch the accompanying video.

Catch all market updates here.

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

India to release 5 million barrels of crude oil from strategic reserves

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

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India plans to release about 5 million barrels of crude oil from its emergency stockpile in tandem with the US, Japan and other major economies to cool prices, a top government official said on Tuesday. India stores about 38 million barrels of crude oil in underground caverns at three locations on the east and west coast.

Of this, about 5 million barrels will be released, starting as early as 7-10 days, the official, who wished not to be named said. The stocks will be sold to Mangalore Refinery and Petrochemicals Ltd (MRPL) and Hindustan Petroleum Corp Ltd (HPCL) which are connected by pipeline to the strategic reserves.

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“We may look at releasing more reserves later,” the official said adding a formal announcement was expected later in the day.

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Copper prices bounce back, here’s why

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

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Metals are finally doing well. Some buying opportunity is seen coming on the lower side, especially for copper prices.

In the last couple of sessions, copper was trading at nearly one-month low but a smart recovery has been seen in the New York session on Monday and Asia seems to be doing some follow-through buying there.

There has been a decline in LME inventories and now in the past three months, inventories have declined by 40 percent.

Also Read: Vedanta a risky bet if commodity cycle turns jittery, Hindalco better placed: Go India Advisors

The spread between spot and three-month contract is at a three-month high of $120 per tonne, which indicates that there is a near-term tightness into the market and that is the reason this premium has been on the higher side.

Cancelled warrants are at 28 percent, which means the on-ground demand picking up.

Markets are also looking at the elections in Chile this weekend. Chile is the second-largest producer of copper in the world. So, there is a bit of uncertainty coming in from there as well.

Market analysts believe that copper prices will continue to be choppy because demand from China property market is still weak, the strength in US dollar will also weigh on.

Also Read: Inflation, weaker rupee biggest concerns; positive on Bharti Airtel: Geosphere Capital

In the next six months, there could be some kind of a balance coming in because many of the mines are ramping up, so there would be a breakeven.

In the next three-six months, the expectation is that copper will be in the range of $8400 per tonne on the lower side and $10,000 per tonne on the higher side.

Watch the accompanying video of CNBC-TV18’s Manisha Gupta for more details.

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

Samsung to pick Taylor, Texas, for its $17 billion chip plant

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

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South Korean tech giant Samsung Electronics Co Ltd said on Tuesday it had not made a final decision on the location of a new USD 17 billion chip plant in the United States, after the Wall Street Journal reported it would be Taylor, Texas.

The WSJ said Texas Governor Greg Abbott was scheduled to make an “economic announcement” on Tuesday at 5 pm (2300 GMT).

A site in Texas’s Williamson County, near the city of Taylor, offered the best incentives package of the sites Samsung was considering, sources previously told Reuters. The world’s biggest memory chipmaker has said it is also considering sites in Arizona and New York.

The new plant is set to make advanced logic chips used to power mobile devices and autonomous vehicles, as the global auto industry faces a significant semiconductor shortage.

The factory would mark Samsung’s second chip factory in Texas, where it already manufactures chips at a plant in Austin.

Samsung is joining rivals TSMC and Intel in the race to expand chip contract manufacturing in the United States, where the sector is seen as an area of strategic competition with China.

US President Joe Biden’s administration has promised billions of dollars in federal funding to boost chip manufacturing and research to ensure it has an edge over China in advanced technologies and to address shortages for critical industries like autos.

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

As Latent View makes bumper debut, a look at how shares of recent IPOs have fared

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

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Latent View Analytics made a bumper debut on Dalal Street, with shares listing at a premium of 169 percent compared with its issue price. That brought the data analytics in the league of the best debutants of recent times, easing concerns about whether IPOs are losing their appeal after Paytm’s shares listed at a huge discount.

Latent View’s listing day premium is the third-highest among some IPOs of 2021 so far. Two more companies – Go Fashion (India) and Tarsons Products –  will be listing their shares on stock exchanges BSE and NSE this month.

Robust demand for the new kid on the block comes days after Paytm parent One97 Communications joined the club of the worst listings so far. At the current price, Paytm shares are at a discount of about 32.6 percent compared to its issue price. Paytm’s public issue was the largest of all time in India, surpassing the likes of Reliance Power, Coal India and GIC.

About one-fifth of the new Dalal Street entrants have already slid to discount compared to their issue prices. Most of these stocks made weak debuts.

Here’s how shares of this year’s market debutants have fared so far:

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

BEL gets biggest-ever export order from Airbus; eyeing Rs 15-20K crore orders this fiscal, says CMD

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

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Bharat Electronics Ltd (BEL) has received its biggest-ever export order from Airbus. Airbus Defence and Space has signed a deal with BEL under the C-295 aircraft programme of the Indian government for the manufacturing and supply of radar warning receivers and missile approach warning systems.

Anandi Ramalingam, CMD of Bharat Electronics, said this is the first export order from Airbus valued at nearly $90 million (Rs 670 crore). The main subsystems, which comprise this order, are radar warning receiver (RWR) and missile approach warning system (MAWS).

“Another noteworthy feature apart from being the biggest ever order of BEL is that it is in the true spirit of Atmanirbhar Bharat, the whole system is designed, developed and manufactured indigenously. It is designed by DRDO and manufactured by BEL. It will also get integrated with a countermeasure dispensing system, which will be supplied by Bharat Dynamics Limited (BDL),” she added.

According to her, the whole defence systems will be designed and manufactured within the country. Throwing light on their current orderbook position, Ramalingam said it currently stands at nearly Rs 56,000 crore. The company has won good export orders in the current year. “This year order accretion has been very good and we are anticipating that we will be able to acquire orders worth about Rs 15,000 to 20,000 crore in the current financial year,” she said in an interview with CNBC-TV18. When asked about margins from the current Airbus orders, she said she could not give the exact margin number but said the margins would not be strained.

On order visibility she said, “As far as export orders are concerned in this particular year itself, we hope to acquire another 25 million euro of orders from part of the consortium supplying the Rafale aircraft to the Indian air force.”The major component of the radar, which is transmit-receive modules (TRMS) are being manufactured by BEL.

“We have supplied nearly 1,700 of them in the last financial year and together 8,000 numbers are in the pipeline, of which about 4,000 we are likely to conclude shortly for about 25 million euros,” she said.She said the domestic order pipeline was also very good.

“We have electronic warfare systems of Airforce amounting to about Rs 4,000 crore, we have electronic warfare systems for Army amounting to about Rs 3,500 crore, then there are naval systems which we are targeting about Rs 3,000 crore.”

“We also have Akash Prime, which is actually Akash Army for which BDL will be the lead integrator but a lot of other radars and other ground systems come from us and that will be around Rs 4,000 crore,” said Ramalingam.These are the orders that the public sector company is tracking in the next maybe six to eight months’ time. Further to that, many other orders of big missile programmes are in the pipeline, added Ramalingam.”So I’m sure that in the next few years, we will be able to acquire nothing less than Rs 15,000 to 20,000 crore per year comfortably,” she further said.

For the full interview, watch the accompanying video

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

7-10% correction in Indian market a possibility; eye on real estate pockets, energy space: InCred AMC

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

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Punita Kumar Sinha, Chairperson of InCred AMC, mentioned that she wouldn’t be surprised if Indian markets corrected 7-10 percent. In an interview with CNBC-TV18, Sinha said that between India and China, a lot of FIIs are currently leaning toward China. She also mentioned that if the markets do correct then the right strategy would be to remain selective and focus on fundamentals. She believes sectors like materials, energy could be the ones to watch out for amid the rising inflation backdrop. She also sees promise in consumer discretionary space and pockets of real estate among others.

Sinha said, “The thing that really pushed the Indian market much higher starting June, July, was what has happened in China. The Chinese regulatory regime had tightened, there was a lot of concern on what happens there in terms of the tech sector and we saw a lot of money flowing out of China. I think some of that came to benefit India.”

She further said, “India also had a lot of IPOs. So I think a lot of FIIs invested in those IPOs as well and money did come into India. Now, what has happened is that in terms of China-India trade, that trade is now moving more in favour back to China, because India is trading at a far higher premium to China, than it has ever in the past.”

“So while there is still concern on China, and it is not at all like a slam dunk that China is going to outperform India, but there is definitely enough people who are now looking at the valuations in China and saying, the India-China trade doesn’t look that attractive in favour of India anymore, and perhaps we should look back at China. So maybe some of the FII selling has come from that,” Sinha explained.

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On her picks in the current market scenario, Sinha said, “The economy is picking up, so on the economic side, India is doing quite well and growth is showing strong momentum. Other than inflation, which seems to be kind of a concern globally, there doesn’t seem to be a lot of concern on the growth side. Of course, interest rates might move back up next year. So I think if you look at what might be a good place to start, looking at when the economy does well, when interest rates kind of go up, I think financials is a sector that has lagged the markets, that is a sector to look at.”

Sinha added, “Globally, there is still the view that if inflation rises, which it is in the US in particular, we are seeing rising inflation numbers, then materials, energy, those are the sectors that one should still be looking at. I think consumer discretionary, pockets of real estate are the other sectors. I think if the supply chain bottlenecks start easing then auto may be a sector that one should also look at. So there is opportunity across different sectors, but we will have to be very careful and very selective while picking entry points.”

Read Here: Indian consumers optimistic, ready to spend despite inflation blues: Survey

On IPO market, she said, “Globally, you are also seeing the IPO market has been full of a lot of IPOs, a lot of supply. Even if you look today in the US markets, most of the IPOs that got listed this week and last week were all down double digits. So there has been quite a bit of supply, a lot of concern on valuations. I think valuations everywhere in the world are stretched but liquidity continues unabated and so I think that’s the push and pull that you keep seeing in the market.”

Sinha further said, “I have been talking about valuation being stretched for a while and what we are seeing in India is not isolated to India alone. The IPO market has been tightening up in terms of capital raising in the US, so markets are tightening up, IPOs in the US, some of them have gone up significantly on the first day of trade. But then, we started seeing them correct, something we are seeing in India as well. So similar patterns to some extent, of course, some of the global investors are invested in India and US and so they are driving similar flows across multiple markets. So yes, I think one has to be a little bit concerned about the valuation.”

She added, “So whenever the Indian market goes up very fast, in a very short period of time, we do see corrections following so I think now the growth is in good shape. So barring any other external shocks, one should think that if you get the right entry points and valuations do correct, which they might then maybe start re-looking at the fundamentals and getting back and being more selective.”

For full interview, watch accompanying video…

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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

Paytm tepid start: More listing dips likely to impact pricing, say experts

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

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Its been raining new listings in the past few months and a whole lot of new-age companies have arrived on the Street. A key talking point for these players has been the sky high valuations. The Paytm listing disaster has further intensified this conversation. How do you value these new businesses? What is the difference in the public and private market approach and what is likely to be the wider impact?

To discuss this, CNBC-TV18 spoke to Karthik Reddy, Co-founder and Managing Partner of Blume Ventures, Vice chairman of Indian Private Equity & Venture Capital Association, and Sudhir Variyar, MD at Multiples Alternate Asset Management.

On new-age IPO valuation, Reddy said, “Every company, not just Paytm, all the four companies, that is PB Fintech, Paytm, Zomato, and Nykaa are stellar examples of market leadership and redefining the market segments that they are playing in.”

“With respect to building new business models for the long-term, I think you Paytm is the least understood in terms of what its business potential could be. The others are relatively more straightforward in terms of the customer problem. It is more of an understanding in the short to medium term of what Paytm could become. That has set people on a nervous path, relative to the other companies, because ironically, the other companies were far less valued in the private domain as in the public domain,” Reddy said.

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On valuations, he said, “In all humility, I feel public markets are a place where people do lean on established benchmarks on how to value them. So if you don’t have benchmarks, it is going to be challenging. For the first time, I was delighted to see all these businesses take on the challenge and actually go to the markets because they don’t have benchmarks in the market. Even for Zomato, Nykaa and Policybazaar, it is not easy to say that there is a clear validation of what has been achieved before.”

“Conventional models don’t even justify the other three valuations. So I feel the quantum of institutional support and the quality of institutional support for these stocks, as they try to discover the price is going to be very, very critical. The understanding and formulating of what, how you should value such a business is, is being discovered in the public domain for the first time, which is a fascinatingly interesting time for Indian tech companies,” he shared.

On pricing, Variyar said, “I think if you look at the longer trend, there are a lot more investors coming in, very high quality investors are coming in and saying that it is not just profitability that we look at, but the kind of modes that you build, market leadership, path to profitability, and I guess to a certain extent, these are wise investors and they add depth to the capital market.”

He added, “My sense is that these investors are only going to increase so I don’t see this as a verdict that these companies should not have come to the capital market, unless lot more things gets proven. I think even proving the business model is a journey.”

Read Here: Paytm lacks pent-up demand from FIIs, see stronger standing for Nykaa: Dimensions Corp

Variyar said, “In a very active IPO market, where you are used to seeing IPO pops, you see a lot of speculative investors come in as well. The first sign of nervousness is obviously to swing to the other side. So these are events I guess one would kind of expect in any active IPO market. There would be some IPOs, which will underperform. But overall, I still don’t see a situation and if there are a couple of more situations where there is drop in IPOs, post-IPO prices, then you would see the speculative interest go away and there would be more fundamental oriented investors coming in, which will correct the pricing a little bit.”

He added, “However, I would still say that the kind of demand that is there in the market for good quality companies with good macros, good management with a unique business model is very strong. So I don’t see IPO activity come down. Yes, there is this segment of speculative investors who come in expecting an IPO pop, not really spending any time trying to understand the business model. The more fundamental investors will take a longer-term view for more stabilisation to see how management is delivering.”

For full interview, watch accompanying video…

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