Month: July 2021

1. SBI Contra Fund-Regular Plan Growth:

The fund introduced in the year 1999 invests its corpus in a staggered way and are more into large and small cap stocks. NAV of the fund as on July 7 is Rs. 176.88 and in comparison to its benchmark S&P BSE 500 TRI over a 1-year period, the fund has delivered good returns of 85.42%. For reaping the maximum gains, investors need to have an investment horizon of at least over 3 years.

Top holdings of the fund comprise ICICI Bank, Infosys, Axis Bank, Sun Pharma, GAIL, Lupin and Carborundum etc.

SIP investment into the fund can be started with Rs. 500, while for lump sum investment one needs to put in a minimum of Rs. 5000.

In case the investor makes redemption before a period of 1 year then there is charged an exit load of 1 percent.

2. Kotak India EQ Contra Fund (KCONF):

For the fund, the investment is mostly into large and mid cap and hence in terms of rolling return it underperformed the other Invesco India contra fund. The stock selection of the fund integrates the manager’s conviction as well as the quantitative model. “We choose stocks which are fundamentally sound, but are undervalued. When we are looking at intrinsic value, we are not just looking at the price to earnings or the price to book value or an EBITDA multiple, but we are also looking at different fundamental factors such as operating profitability, cash flow, balance sheet leverage and return ratios”, said Shibani Kurian, Head of Research and Equity Fund Manager at Kotak Mutual Fund.

Over a 1-year period the fund has outperformed its benchmark Nifty 100 TRI with return of 54.9%, nonetheless this has been lower than the category average return of 64%.

Some of the top scrip holdings wherein it holds a diversified portfolio are Infosys, RIL, ICICI Bank, HDFC Bank, SBI, UltraTech Cement, Axis Bank, Larsen and Toubro etc. Furthermore, the fund is more into financial, technology and construction space.

SIP in the fund can be started for an amount of Rs. 1000.

3. Invesco India Contra Fund-Growth:

The fund has been into existence since the year 2007 and as of July 7 commands an NAV of 70.79. Expense ratio of the fund is less than the category average at 1.83 percent. Furthermore, most of the corpus is put into the large cap category.

SIP in the fund can be started for as less as Rs. 100. In a 3-year period, the investment of Rs. 10000 monthly SIP is now valued at Rs. 5.15 lakh, offering an absolute return of 44.71 percent.

Top holdings of the fund include ICICI Bank, HDFC Bank, Axis Bank, Infosys, RIL, Sun Pharma etc.

Conclusion:

These funds have the potential to generate good enough returns and this has been seen in the past. In some of the conditions, investors tend to avoid some of the stocks which results in their mispricing and investment into such funds can be beneficial on the hope that in the near to medium term, stock price shall stabilize and return to its original or real value, providing gains to its investors.

Disclaimer

Investing in mutual funds is risky and investors should understand the risk. Greynium Information Technologies and the author do not take any responsibility for losses incurred based on the decisions in the article. The article is meant for informational purposes only.

Invesco India Mid Cap Fund

This fund has been rated as “5-star” by Crisil, which could make it a good mutual fund to buy. The fund invests the money in stocks of midcap companies, which means returns can be very volatile.

We would like to tell investors that they also need to be a little cautious and invest small amounts, preferably by way of Systematic Investment Plans in the fund.

The net asset value under the growth plan is Rs 79.76, while under the dividend option it is Rs 30.16. If you do not have lumpsum to invest, you can look at staggered investment whereby a small sum of Rs 1,000 can be considered for the purposes of SIP investments.

This fund is a very old fund and was launched way back in 2007. The 1-year returns from Invesco India Mid Cap Fund has been a stupendous 65%, while the 5-year returns on an annualized basis is lower at 17.38%.

Axis Midcap Fund

Axis Midcap Fund has not only been rated “5-star” by CRISIL, but a similar ratings had been accorded to it, by noted rating agency Value Research. This fund has always been among the top performing funds, which is one of the reasons why the assets under management is Rs 11,000 crores plus.

About 10 stocks in the portfolio form 34% of the holdings at Axis Midcap Fund. Among the stocks that that the fund holds in its portfolio includes names like Cholamandalam Finance and Investment, Voltas, Astral, PI Industries, Coforge, ICICI Bank etc.

This is among the better rated mutual funds to invest with a long term perspective in mind. The portfolio also is very strong with companies that have had a stellar track record.

Edelweiss Large & Mid Cap Fund

This fund has also been rated “5-star” by Crisil, but, it is not strictly a midcap fund. Edelweiss Large & Mid Cap Fund invests in both large cap and midcap funds, which is a good combination for equity mutual fund investors to invest in.

The one good thing about the Edelweiss Large & Mid Cap Fund is that it gives the fund manager the flexibility to look at both categories of investment, which is midcap and largecaps.

This fund’s portfolio also looks sound to capture gains from rising markets as the portfolio includes names like ICICI Bank, HDFC Bank, Infosys, State Bank of India and Axis Bank.

Under the growth plan the fund has an NAV of Rs 48, which is a level investors will have to buy into.

Disclaimer

Investing in mutual funds is risky and investors should understand the risk. Greynium Information Technologies and the author do not take any responsibility for losses incurred based on the decisions in the article. The article is meant for informational purposes only.

Tata Motors

The firm is bullish on the stock of Tata Motors and sees good traction going ahead. It has suggested to buy the stock of Tata motors for long term. Motilal Securities recommends BUY at Rs.317 with target price of Rs.400.

The stock gained 17.08 percent over three years, compared to 45.46 percent for the Nifty 100. This year, the stock has fared well, with a total return of 67.27 percent to date.

According to it, JLR’s retails grew 68% YoY to ~124.5k in 1QFY22, with LR/Jaguar growing 72.5%/55%.

‘Wholesales stood at 84,442 units (excluding China JV), up 72.6% YoY. However, this was ~30,000 units lower (~27%) than what otherwise would have been planned as a result of semiconductor supply constraints and the impact of COVID-19, although this reduction had been broadly anticipated. It expects the situation to start to improve in 2HFY22. Hence, it expects a negative FCF of ~GBP1b, with a negative EBIT margin in 2QFY22,”the brokerage firm has said.

TTMT’s three businesses are all recovering. While the India CV business is recovering cyclically, the India PV business is recovering structurally. JLR is experiencing a cyclical comeback as well, thanks to a good product mix.

Godrej Agrovet

The firm examined current patterns in palm oil prices, the factors that drive these prices, and the resulting impact on GOAGRO’s Palm Oil division, which contributed 12 percent of revenue and 17 percent of EBITDA in FY21. The stock has performed with a total return of 23.10 percent to date.

Its stock is currently trading at Rs 663.55. It currently has a market capitalization of Rs 12808.94 crore. The company reported gross sales of Rs. 52501.3 crores and total income of Rs. 51596.9 crores in the most recent quarter.

“Global palm oil prices have seen a sharp rally, primarily due to higher demand from the Bio-Diesel segment (primarily the US market) and increased demand from China. However, with expansion in plantations, coupled with the easing of logistic issues, the outlook for palm oil production remains strong. As a result, Jun’21 palm oil prices fell 12% MoM. Palm oil prices were flat on a YTD basis and up 55% YoY to USD1,017/mt,” firm said it its report.

China is buying huge quantities of palm oil, pumping up prices of the hard oil that India imports from Indonesia and Malaysia, to meet its domestic demand. In CY21, China’s palm oil imports increased 6% YoY to 7.2mmt (v/s 6.8mmt in FY20), it added.

Laurus Labs

The Annual Report Analysis of Laurus Labs (LAURUS) shows a significant increase in ROE, owing to a solid head start in finished dosage forms (FDF), improved operational profit, and a lower borrowing rate, the broking firm said.

Its share price today is 682.15. It currently has a market capitalization of Rs 36574.82 crore. The company reported gross sales of Rs. 47687.2 crore and total income of Rs. 47960.4 crore in the most recent quarter. This year, the stock has fared well, with a total return of 92.69 percent to date.

“LAURUS is investing INR15-17b in building R&D centers and greenfield/brownfield expansions for a meaningful commercial benefit from FY23. We raise our EPS by 3%/6% for FY22/FY23, factoring in improved business scope in the ARV – Synthesis segment. We raise the PE multiple to 24x (from 18x earlier) as LAURUS fortifies its skillsets across the clinical phase towards (a) commercial manufacturing in the CDMO segment (Synthesis), (b) gaining traction in the Biotech space, and (c) total integration as well as pipeline buildup in the ARV/Non-ARV space.” the firm said.

Accordingly, we arrive at TP of INR800 on a 12M forward earnings basis and reiterate BUY on the stock, it added.

Indian Hotels

IH had an investor meeting at which it outlined its strategy to capitalise on business recovery, focus on new brands and companies, seek asset-light expansion, maintain expenditure optimization, strengthen the Balance Sheet, and focus on RoCE. At Rs.152, Motilal Securities recommends BUY with a target price of Rs.180.

The current share price is 151.8. It currently has a market capitalization of Rs 18070.78 crore. The company reported gross sales of Rs. 11331.5 crores and total income of Rs. 12436.7 crores in the most recent quarter.

“As per ‘Aspiration CY22′ announced in CY18, it looked to sign 15 Hotels under management contract annually. However, it added 22/29/17 Hotels in FY19/FY20/FY21,” the firm said in the report.

Total operating cost fell 45% to INR19.2b and fixed cost per month declined by 28% to INR1.2b in FY21 on the back of manpower optimization and reduction in corporate overheads. Staff/room ratio has reduced substantially for IH across brands, it added.

4 Stock Recommendations From Motilal Oswal For Solid Returns

Disclaimer

The above mentioned stocks have been picked from brokerage reports. The author, the brokerage or Greynium Information Technologies do not take any responsibility for losses that maybe incurred. The above article is for informational purposes only.

Launch of NACH mandate for NPS subscribers

Regarding the launch of NACH mandate for the benefit of Nodal Officers/PoP/Corporate, PFRDA on its recent circular dated June 04, 2021, has stated that “At present, the nodal offices of Government Sector deposit NPS contributions of associated Subscribers by preparing Subscriber Contribution File (SCF) and uploading the same in “NPSCAN system” after validating it. Thereafter, the Nodal Office visits its Bank (accredited bank) in order to transfer the funds (equivalent to the amount uploaded in the SCF) to the Trustee Bank (TB) appointed by PFRDA.” PFRDA has observed instances where in the transferred contributions are returned due to certain errors as mentioned below:

• Non-mentioning of Transaction id in the inward message while transferring the funds
• which is a mandatory field.
• Invalid 7-digit A/c no.
• Remittance made by Offices for expired Tran id.
• Amount mismatch between the file and actual amount remitted.
• FRC completed previously.
• Non-existence of Tran id provided in CRA system.
• Duplicate fund received on same day.
• Different PAO id in beneficiary a/c.

To counter the above-said errors, PFRDA has clarified in its circular that “In order to overcome the above challenges and to ease the process of contribution upload by Nodal officers, PFRDA is pleased to introduce a NACH mandate jointly hosted by Trustee Bank (TB) and Central Record Keeping (CRA) through National Automated Clearing House (NACH) operated by National Payments Corporation of India (NPCI).” The circular further added that “The NACH mandate is technology enabled which offers end to end solution and is a secured mode of contribution fund transfer. Under NACH Mandate, all the nodal offices have to provide the ‘one-time mandate registration’ for auto debiting their bank accounts with the amount based on the SCF uploaded in NPSCAN. The facility can also be availed by POPs/Corporate which prepares SCF and transfer contributions on a regular basis. There is no additional cost to avail the facility from CRA and TB.”

Withdrawal of pension corpus of Rs 5 lakh without purchasing annuity

Recently PFRDA has also enabled subscribers to withdraw the whole accumulated pension amount without acquiring an annuity if the pension corpus is less than Rs 5 lakhs. The Pension Regulator has said in a gazette notification that “where the accumulated pension wealth in the Permanent Retirement Account of the subscriber is equal to or less than a sum of Rs 5 lakh, or a limit as specified by the Authority, the subscriber shall have the option to withdraw the entire accumulated pension wealth without purchasing an annuity and upon such exercise of this option, the right of such subscriber to receive any pension or other amount under the National Pension System or from the government or employer, shall extinguish.”

Extension of timelines for activities under National Pension System (NPS) and NPS Lite- Swavalamban scheme

PFRDA has also recently modified certain timeframes for activities in the context of the second wave of the pandemic under the National Pension System (NPS) and NPS Lite- Swavalamban. “Point of Presence (POPs) are advised to undertake NPS related activities within prescribed Turn Around Time (TAT) under the Pension Fund Regulatory and Development Authority (Point of Presence) Regulations, 2018, and guidelines issued there-under, in order to ensure timely and efficient service to subscribers, PFRDA said in a circular.

Partial withdrawal of NPS subscribers through self-declaration

Recently, PFRDA has allowed NPSsubscribers to partially withdraw the amount by self-declaration. In its recent circular dated January 14, 2021, PFRDA has stated that “on Ease of Partial withdrawal of NPS Subscribers through self – declaration, the Partial Withdrawal Requests will be processed on the basis of Self-declaration provided by Subscriber for reason of partial withdrawal.” The circular has also clarified that “No supporting documents (w.r.t. stated withdrawal reason) are required to be submitted by the Subscriber for availing Partial Withdrawal. The Subscriber is required to accept the ”Self-declaration” for Partial Withdrawal which is provided in Withdrawal Form as part of – Declaration by the Subscriber. In addition, the Subscriber is required to provide Bank Proof of the details of Bank Account registered in CRA system. If the Bank Account details given in the application are different from the Bank Account details registered in CRA system, then partial withdrawal request shall be rejected by POP. ” According to PFRDA, after three years of continuous subscription, NPS subscribers would be allowed to make up to 25% partial withdrawal of their own contribution.

Contributions under D-Remit via IMPS

NPS users are now allowed to deposit their contributions using a Direct Remittance System (D Remit) through IMPS (Immediate Payment System). The circular published on 10 March by the Pension Fund Regulatory and Development Authority (PFRDA) has clarified that “The functionality of accepting IMPS has been released from 1 March 2021. However, unlike the contributions received through NEFT/RTGS which are returned on the same day in case of a return, the IMPS contributions in case of a return shall be effected on T + 1 through the ‘credit adjustment process’ as per the guidelines of NPCI and based on D Remit process guidelines issued by the PFRDA.” Existing NPS subscribers under the government, non-government, or all citizens model can make their voluntary contributions through Direct Remittance using their savings bank account by generating a virtual ID linked to their Permanent Retirement Account Number (PRAN). In both tier I and tier II accounts, the minimum D-Remit transaction amount is limited to Rs 500. By generating a Virtual ID, one can use the D- Remit facility without any additional charges.

Premature exit rules for NPS Lite Swavalamban Subscribers

PFRDA has stated in Circular No. PFRDA/2021/21/SUP-NPST/1, published on July 2, 2021, that “as per the 6th Amendment of Exit Regulations, the Swavalamban Subscribers whose accumulated pension wealth do not exceed one lakh rupees and if they are not eligible to migrate to Atal Pension Yojana (APY), can opt to prematurely exit with lump sum payment.” The circular further added that “those eligible Subscribers as mentioned above are not required to continue in the Swavalamban scheme for minimum period of twenty-five years irrespective of the receipt of Govt of India (GoI) co-contribution under Swavalamban by them. However, if GoI’s co-contribution was availed by those eligible Subscribers and the same shall be deducted along with the returns generated from the corpus at the time of their exit.”