Month: July 2021

Kotak Banking & PSU Debt Fund Direct-Growth

This fund was launched in January 2013 by the fund house Kotak Mahindra Mutual Fund. The 1-year returns for Kotak Banking and PSU Debt Fund Direct-Growth are 5.53 per cent. Since its inception, it has generated an average annual return of 8.90 per cent according to Value Research, which is unquestionably greater than the current interest rates of fixed deposits offered by leading banks. This fund has been rated 4-star by Value Research, which indicates the stability of the fund in terms of generating returns.

Union Bank of India, Reserve Bank of India, Rural Electrification Corpn. Ltd., Bank Of Baroda, and National Bank For Agriculture & Rural Development are among the fund’s top 5 holdings. As of 6 July 2021, the latest NAV of the fund is Rs 52.38 and the current asset under management (AUM) of the fund is Rs 9,714 Cr. One can start investing in this fund with a minimum SIP of Rs 1000 with no exit load.

IDFC Banking & PSU Debt Fund Direct-Growth

This banking and PSU mutual fund of IDFC Mutual Fund which was launched in February 2013 has also performed well in the last 3-5 years. The 1-year returns of the IDFC Banking & PSU Debt Fund Direct-Growth are 5.07 per cent. According to Value Research data, it has generated an average yearly return of 8.53 per cent since its inception. Axis Bank Ltd., Hindustan Petroleum Corpn. Ltd., GOI, Small Industries Devp. Bank of India Ltd. and National Highways Authority of India Ltd. are among the fund’s top 5 holdings.

This fund has been rated 5-star by Value Research and has an expense ratio of 0.30%. As of July 6, 2021 the latest NAV of the fund is Rs 19.78 and the current asset under management (AUM) of the fund is Rs 18,547 Cr. By making a minimum contribution of Rs 1000, one can start SIP in this fund with no exit load.

Nippon India Banking & PSU Fund

Nippon India Mutual Fund introduced this banking and PSU direct growth fund in May 2015. Nippon India Banking & PSU Debt Fund Direct-Growth returns are 5.26 per cent over the last 1-year. Since its inception, it has had an average yearly return of 8.65% and has been rated 5-star by Value Research.

National Bank For Agriculture & Rural Development, GOI, Small Industries Development Bank of India Ltd., Rural Electrification Corpn. Ltd., and National Thermal Power Corp. Ltd. are among the fund’s top 5 holdings. As of July 6, 2021 the latest NAV of the fund is Rs 16.65 and the current asset under management (AUM) of the fund is Rs 6,364 Cr. SIP in this fund with no exit load can be started with a minimum contribution of Rs 100.

Axis Banking & PSU Fund Direct-Growth

Axis Banking & PSU Debt Direct Plan has a 1-year growth rate of 4.83 per cent. According to Value Research data, it has provided an average yearly return of 8.59 per cent since its inception. This fund was launched in January 2013 by Axis Mutual Fund. National Bank For Agriculture & Rural Development, Food Corporation of India, Small Industries Devp. Bank of India Ltd., Hindustan Petroleum Corpn. Ltd., and Indian Oil Corpn. Ltd. are among the fund’s top 5 holdings.

Value Research has given the fund a four-star rating, and it has an expense ratio of 0.31 per cent. The fund has its debt allocation across sovereign, energy, financial, and FMCG sectors. As of July 6, 2021 the fund has a NAV of Rs 2123.43 and the current asset under management (AUM) of the fund is Rs 17,077 Cr. This fund has no exit load and one can start SIP in this fund with a minimum monthly contribution of Rs 1000.

Best Performing Banking & PSU Funds In 2021

Here are the 4 best banking and PSU funds in 2021 based on past returns and ratings.

Funds	1-year returns	3-year returns	5-year returns	Rating by Value Research	Expense Ratio
Kotak Banking & PSU Debt Fund Direct-Growth	5.53%	9.40%	8.57%	4 star	0.36%
IDFC Banking & PSU Debt Fund Direct Growth	5.07%	9.79%	8.22%	5 star	0.30%
Nippon India Banking & PSU Fund	5.26%	9.52%	8.50%	5 star	0.33%
Axis Banking & PSU Fund Direct-Growth	4.83%	9.12%	8.31%	4 star	0.31%

Should you invest?

According to the data of Value Research, banking and PSU funds have generated an average SIP-return of 7.80% in the last 5 years. If we look at the last 3 to 5 years returns of banking and PSU funds, most of the funds have generated more than 8% returns. These returns are much higher than the prevailing interest rates of fixed deposits of leading commercial and private sector banks. On the other side, corporate fixed deposits may give you higher returns than banking and PSU funds. But corporate fixed deposits are not suggested to invest for risk-averse investors as they are not insured by DICGC.

Investing in debt and PSU funds are not recommended for senior citizens as the returns are market-based. As a result, they can invest in special fixed deposit schemes or fixed deposits of small finance banks as they are insured by DICGC. As a final conclusion and not a suggestion to invest, investors who have a mid-term goal and low-risk profiles can invest in debt and PSU funds for higher market-based average returns than fixed deposits, but investors who do not want to welcome market-based returns in their portfolio can invest in fixed deposits of small finance banks for higher returns than fixed deposits of commercial and private sector banks.

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in GoodReturns.in

1. IDFC Sterling Value Fund – Regular Plan – Growth:

Introduced in the year 2013, this fund has the benchmark as Nifty 50. The fund’s expense ratio for the direct plan is 0.93 percent. Majorly the fund is invested into small cap stocks. Exit load for the scheme has been decided at 1 percent in case of early redemption.

Investors can start their value fund journey by starting a SIP for as less as Rs. 100 and for lump sum investment they will need to put out Rs. 5000.

Top holdings of the fund include Deepak Nitrite,JK Cement, JK Cement, Gujarat Gas, KEC International etc.

2. UTI Value Opportunities fund-Direct Plan-Growth:

This is another an old scheme wherein investors can think to add up their wealth. The fund over the 1-year tenure has offered a return of 58.6% better than the benchmark. Nonetheless, the expense ratio of the fund even for the direct plan is on the higher side at over 1 percent.

With most of the exposure diverted to the large caps, mutual fund risk-o-meter has classified the fund to be moderately risky. Further within the large cap space, the fund is more inclined towards the financial space and some of the fund’s top holdings comprise ICICI Bank, HDFC Bank, Infosys, Axis Bank, Bharti Airtel etc.

SIP in the fund can be started for as less as Rs. 500 while for lump sum investment, sum of Rs. 5000 shall be put into the scheme.

3. ICICI Prudential Value Discovery Fund:

This value fund invests in a mix of equities and government securities being more titled towards the large cap. Over a 1-year tenure, the scheme has underperformed the benchmark with return of 55%. SIP here again can be started for as less as Rs. 100. The value equity fund charges 1.29% as expense ratio i.e. near to what value funds charge.

Investment in the fund have been doubled in every 2 years. Another plus point of the fund is that it has been able to trim losses by a significant amount in case of falling markets.

The fund is majorly invested across energy, technology, financial, healthcare and auto sectors and likewise its 5-top holdings are Sun Pharmaceutical, Mahindra & Mahindra Ltd., Infosys, Bharti Airtel., National Thermal Power Corp. Ltd..

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Disclaimer:

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in

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ICICI Bank

Motilal Oswal has a “buy” call on the stock of ICICI Bank. The firm believes that the bank continues to see strong growth in retail deposits and has succeeded in building a robust liability franchise over the past few years.

“It has one of the lowest funding costs (with cost of deposits declining to 4%) among the private banks; this has enabled the company to underwrite a profitable business without taking undue balance sheet risks, thus supporting the margin further,” Motilal Oswal Institutional Equities has said.

The other reason to be buying the stock of ICICI Bank according to the firm is the retail mix which remains healthy, with the CASA ratio at 46.3%, retail contribution-to-fees at 78%, and the loan mix increasing to 67%.

“ICICI Bank appears firmly placed to deliver healthy sustainable growth, led by focus on the core operating performance. We estimate RoA/RoE of 1.8%/15.2% for FY23E. Adjusted for subsidiaries, the standalone bank trades at 1.9x FY23E ABV,” Motilal Oswal Institutional Equities has said.

HDFC Bank

Another largecap stock where Motilal Oswal Institutional Equities has a “buy” is the stock of HDFC Bank.

“HDFC Bank has shown robust traction in its corporate portfolio, which compensated for the softness in retail lending. Loan growth over FY21 was, thus, largely led by the Corporate segment (53% of total loans). The management of HDFC Bank has shown robust traction in its corporate portfolio, which compensated for the softness in retail lending. Loan growth over FY21 was, thus, largely led by the Corporate segment (53% of total loans),” the broking firm has said.

According to Motilal Oswal Institutional Equities a strong liability franchise would support margins.

“Therefore, the bank is well placed to gain incremental market share on both the asset and liability fronts. We expect RoA/RoE of 2.1%/17.8% for FY23E. The bank trades at 3.1x FY23E ABV,” the broking firm has said.

State Bank of India

SBI is another large bluechip banking stock, where Motilal Oswal Institutional Equities has a “buy” call. According to the firm, the bank is well placed to gain incremental market share on both the asset and liability fronts.

“State Bank of India has one of the best liability franchises (Current Accounts Savings Account mix: 46%). As a result, it is poised to manage yield pressure, while a reduction in the interest rate on deposits would continue to support margins (to a large extent). Subsidiaries – SBI Mutual Fund, SBI Life, and SBI CARD – have exhibited robust performances over the last few years, which could result in value unlocking. We estimate FY23E RoA/RoE of 0.8%/14.9%. Subsidiaries account for ~35% of the total valuation. Adjusted for subsidiaries, the standalone bank trades at 0.8x FY23E ABV,” Motilal Oswal Institutional Equities has said.

Federal Bank

Motilal Oswal Institutional Equities has also recommended to buy the shares of Federal Bank.

“The has been taking a cautious approach in lending to high-rated corporates. The mix of retail loans improved to ~33% in FY21 from 28.4% in FY19. Although business growth remains subdued, we expect a gradual pickup in loan growth, resulting in improved overall operating performance. We expect RoA/RoE of 1.1%/14% by FY23E. The stock currently trades at 1.0x FY23E ABV,” the brokerage has noted.

Disclaimer

All of the above 4 stocks are picked from the research report of Motilal Oswal. Investing in stocks is risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.

1. Vodafone Idea:

The beleaguered telecom service provider has been downgraded by both ICICI Securities and Motilal Oswal. ICICI Securities has given a ‘Sell’ call on the scrip and sees the stock to hit a target price of Rs. 5.

Cash problem persist with the telecom service provider said ICICI Securities in its report:

“Vodafone Idea’s (VIL) Q4FY21 reported revenues were down 11.8% QoQ to | 9,607.6 crore, out of which 9.6% decline was due to removal of IUC. On a reported basis, ARPU fell ~11.6% QoQ to | 107. Reported EBITDA margins were up 660 bps QoQ to 45.9%, aided by one-off related to IT and network costs to the tune of | 450 crore. Adjusted for the same, margins were at 41.2%”, added the report.

On the valuation front, the company’s research report said VIL remains the weakest private telco. Further the report added the company’s survival is only possible on quick quick capital infusion and tariff hike/floor tariff implementation. This is indeed required become of the upcoming payment deadlines etc. We maintain SELL rating with a DCF based target price of Rs. 5/share (vs. Rs. 6/share, earlier). We will monitor triggers like fund raise and tariff hike, before changing stance.

2. Shoppers Stop:

For the retail company headquartered at Mumbai, HDFC Securities has given a ‘Sell’ recommendation and sees the stock to weaken in price by a sharp 27% from the last traded price to hit a target price of Rs. 180.

Mall Bound Shoppers Stop saw the most impact

HDFC Securities in its report said with the company’s major presence in malls, the retail stores of Shoppers Stop were the worst affected amid the lockdown due to the second wave. However, 4Q recovery (95% of baseline sales) has been better than expected (HSIE: -87.5%). “Gross margin improved sequentially (GAAP: 40.9% vs HSIE: 37.9%). Absolute operating cost structure was in line. We continue to remain circumspect on the longevity of the business as cost arbitrage between pure-play department stores and online platforms continues to shrink with each passing year, said the company.”

” We meaningfully cut our FY22 EBITDA estimates to account for the second wave impact. FY23 EBITDA estimates remain largely unchanged. Maintain SELL recommendation with a DCF-based TP of INR 180/sh (implying 9x FY23 EV/EBITDA).”

3. Spicejet:

The airline company was seen trading firm in the previous day’s trade as the civil aviation allowed airlines to operate at increased capacity. Nonetheless the no frill air carrier today traded again lower by a margin.

Rising fuel and liquidity crisis a major problem with the airline

BOB Capital Markets sees a liquidity crisis for Spicejet. Also another dampener is the rising fuel cost.

The brokerage company said the company’s Q4FY21 revenue and it logged a net loss of Rs. 2.4 billion, translating to negative EPS of Rs 3.9. We remain cautious due to the weak balance sheet (negative net worth); as well as growing competition amid rising fuel cost. Maintain SELL with a revised TP of Rs 60 (vs. Rs 70) as we cut estimates owing to the pandemic-linked crisis and higher fuel costs.

Disclaimer:

All of the above 3 stocks are picked from brokerage reports. Investing in stocks is risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article. I

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7 Stocks Enter Largecap Category After AMFI Reclassification

Large cap funds are ones that invest a larger percentage of their assets in firms with a high market capitalization. Three characteristics that are frequently used to define a large-cap corporation are trustworthy, reputable, and strong.

NMDC, Apollo Hospitals, Cholamandalam Investment and Finance, SAIL, Bank of Baroda, Honeywell Automation and Adani Total Gas t all went from midcap to largecap territory.

PI Industries, HPCL, Indraprastha Gas, Petronet LNG, and Hindustan Aeronautics were replaced by these stocks.

Stocks that entered Midcap Category After AMFI Reclassification

Mid-cap funds are equity mutual funds that invest in the stock of mid-sized businesses. Companies that are rated from 101 to 250 depending on their market capitalisation are classified as mid cap companies, according to the rules.

Midcap stocks now have an average market capitalisation of Rs 11,819 crore, up from Rs 8,389 crore during the December-January reclassification.

Indian Railway Finance, Macrotech Developers, Sona BLW Precision Forgings and Indigo Paints are the new entries of the mid-cap segment.

Tata Elxsi, APL Apollo Tubes, Kajaria Ceramics, Bank of Maharashtra, and Apollo Tyres are among the firms that have been reclassified from small-cap to mid-cap.

Stocks that enter smallcap category After AMFI Reclassification

Small cap funds are equity funds that invest at least 65 percent of their assets in small size businesses’ stock and stock-related investments. According to SEBI regulations, small cap businesses are those with a market value of less than 250 companies market cap.

Some of the stocks that have been reclassified as small-caps from midcaps include Metropolis Healthcare, Prestige Estate Projects, ITI, Mahanagar Gas, Procter & Gamble Health, Credit Access Grameen, Central Bank of India, SJVN, Akzo Nobel, IIFL Wealth Management, and Motilal Oswal Financial Services.