Month: August 2021

5 Mutual Funds That Doubled Investors Money In One year

Personal Finance

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ICICI Prudential Commodities Fund

ICICI Prudential Commodities Fund Direct-Growth is an ICICI Prudential Mutual Fund Thematic mutual fund scheme. It has assets under management (AUM) of 679 crores, making it a medium-sized fund in its category. The fund’s expense ratio is 0.94 percent, which is comparable to the expense ratios charged by most other Thematic funds.

ICICI Prudential Commodities Fund Direct has a 1-year growth rate of 132.68 percent. It has had an average yearly return of 68.27 percent since its inception.

A SIP of Rs 10,000 initiated a year ago would have made Rs 84,804 in profit. The majority of the money in the fund is invested in the Metals, Construction, Energy, Chemicals, and FMCG industries. The NAV of ICICI Prudential Commodities Fund for Aug 13, 2021, is 25.92.

Quant Small Cap Fund - Direct Plan

Quant Small Cap Fund – Direct Plan

Quant Small Cap Fund Direct Plan-Growth is a Small Cap mutual fund scheme. It is a tiny fund in its category, with assets under management (AUM) of 1,053 crores as of 30 June 2021. The fund charges a 0.5 percent expense ratio, which is lower than most other Small Cap funds.

The last one-year growth returns on the Quant Small Cap Fund Direct Plan are 127.10 percent. It has had an average yearly return of 16.48 percent since its inception.

Indiabulls Real Estate Ltd., Caplin Point Laboratories Ltd., India Cements Ltd., EID-Parry (India) Ltd., and Stylam Industries Ltd. are the fund’s top five holdings. Quant Small Cap Fund’s NAV for August 13, 2021, is 126.71. A SIP of Rs 10,000 initiated a year ago would have made Rs 76, 317 in profit.

Kotak Small Cap Fund - Direct Plan

Kotak Small Cap Fund – Direct Plan

Kotak Small Cap Fund Direct-Growth is a Kotak Mahindra Mutual Fund Small Cap mutual fund scheme. This fund has Rs 5,349 crores in assets under management (AUM), making it a medium-sized fund in its category. The fund’s expense ratio is 0.52 percent, which is lower than the expense ratios charged by most other Small Cap funds.

The 1-year returns for Kotak Small Cap Fund Direct-Growth are 105.99 percent. It has returned an average of 21.71 percent per year since its inception.

The fund’s top 5 holdings are in Century Plyboards (India) Ltd., Carborundum Universal Ltd., Sheela Foam Ltd., Lux Industries Ltd., Persistent Systems Ltd.

ICICI Prudential Technology Fund

ICICI Prudential Technology Fund

ICICI Prudential Technology Direct Plan-Growth is an ICICI Prudential Mutual Fund Sectoral-Technology mutual fund plan. This fund manages a total of 4,084 crores in assets (AUM). The fund’s expense ratio is 1.01 percent, which is lower than the expense ratios charged by most other Sectoral-Technology funds.

The 1-year growth returns on the ICICI Prudential Technology Direct Plan are 108.98 percent. It has returned an average of 27.42 percent per year since its inception.

The technology, services, communication, engineering, and financial sectors account for the majority of the fund’s holdings. When compared to other funds in the category, it has taken less risk in the Technology and Services sectors.

Infosys Ltd., Tech Mahindra Ltd., HCL Technologies Ltd., Tata Consultancy Services Ltd., and Persistent Systems Ltd. are among the top five holdings of the fund.

5 Mutual Funds That Doubled Investors Money In One year

5 Mutual Funds That Doubled Investors Money In One year

Fund Name NAV(Rs) 52-week high NAV 52-week low NAV One year returns
ICICI Prudential Commodities Fund 25.72 26.51 10.39 132.68%
Quant Small Cap Fund 127.834 133.662 55.323 127.10%
Quant Infrastructure Fund 18.431 18.802 8.841 108.24%
Kotak Small Cap Fund 165.321 169.042 79.898 105.99%
ICICI Prudential Technology Fund 155.85 155.85 74.85 108.98%

Disclaimer

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



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Card issuing banks may be hit if Mastercard ban continues for long, BFSI News, ET BFSI

Banking & Finance

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A month after predicting a hit to five private sector banks due to the ban on Mastercard by the Reserve Bank of India, the global brokerage has said that there would be no material impact on the card issuers.

Nomura Global Markets Research says it does not foresee any material impact on card issuers in the near term, especially credit card issuers, but there could be a medium-term impact if this situation persists, according to a report.

What Nomura said

As many as five private sector banks, including Axis Bank, Yes Bank, and IndusInd Bank, are to be impacted by the Reserve Bank of India’s decision to ban Mastercard from issuing new cards for not complying with local data storage guidelines, Nomura had said last month.

HDFC Bank would also have been affected by this decision but the lender is already facing restrictions by the RBI on issuance of new cards (debit, credit or prepaid).

Besides these five banks, Bajaj Finserve and SBI Card may face problems as they were also issuing cards of this payment gateway.

So, in all, as per the report of global brokerage firm Nomura, seven financial institutions would not be able to issue new card as they sourced significant number from Marstercard.

The issuance of new cards through another payment gateway would take 2-3 months because it involves technology integration and other modalities, it had said.

“Among credit card issuers including co-brand partners, RBL Bank, Yes Bank and Bajaj Finserv lending are most impacted, in our view, as their entire card schemes are allied with Mastercard,” the report said.

As per the report, RBL Bank, Yes Bank and Bajaj Finserv were fully dependent on Mastercard for card issuance while dependence of IndusInd Bank, ICICI Bank and Axis Bank varied from 35 per cent to 40 per cent.

Card-issuing arm of State Bank of India, SBI Card, has only 10 per cent of their card tied up to the banned Mastercard. On the other hand, Kotak Mahindra Bank”s card portfolio is entirely allied to Visa and hence won”t face any issues.

After the development, RBL Bank had entered into an agreement with Visa Worldwide to start issuance of credit cards on the Visa platform. The bank will be able to issue the new cards after technology integration which is expected to take 8-10 weeks.

The RBI action

The RBI barred Mastercard Asia/Pacific Pte Ltd from on-boarding new customers across all its card products (debit, credit and prepaid) from July 22, 2021, as it failed to comply with data storage norms.

Taking action against Mastercard, the RBI said, “Notwithstanding lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data.”

However, the RBI’s directions will not impact existing customers of Mastercard.

Mastercard became the third major Payment System Operator on which restrictions have been imposed for non-compliance with RBI”s direction on Storage of Payment System Data.

Earlier, the RBI had restricted American Express Banking Corp and Diners Club International Ltd from onboarding new domestic customers on to their card networks from May 1 for violating data storage norms.

Mastercard is a payment system operator authorised to operate a card network in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).

In terms of the RBI’s circular on Storage of Payment System Data on April 6, 2018, all system providers were directed to ensure that within a period of six months the entire data relating to payment systems is stored only in India.

They were also required to report compliance to the RBI and submit a board-approved system audit report conducted by a CERT-In-empanelled auditor within specified timelines.



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CMS Info Systems files draft papers with Sebi to garner Rs 2,000-cr via IPO, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Cash management company CMS Info Systems has filed preliminary papers with markets regulator Sebi to mop up Rs 2,000 crore through its initial share sale offering. The company’s initial public offer (IPO) is a pure offer for sale by promoter Sion Investment Holdings Pte Limited, an affiliate of Baring Private Equity Asia, as per the draft red herring prospectus (DRHP).

Sion Investment, which acquired CMS in 2015, holds 100 per cent stake in the company at present.

CMS provides cash management services, which include ATM services, and cash delivery and pick-up.

The company’s integrated business platform is supported by customised technology and process controls, which enables it to offer customers a wide range of tailored cash management and managed services solutions.

It caters to broad set of outsourcing requirements for banks, financial institutions, organized retail and e-commerce companies in India. It operates business in three segments — cash management services, managed services and others.

This will be the company’s second attempt to go public. Earlier in 2017, it had filed draft papers with Sebi and had obtained the regulator’s clearance to launch the IPO. However, the company did not launch the public issue.

Axis Capital, DAM Capital Advisors, Jefferies India, and JM Financial are appointed as the book running lead managers to the issue.



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RBI gives Ind Bank Housing time till December to complete revival process, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank has asked Ind Bank Housing Ltd to complete its revival process by the end of December and submit a board-approved plan.

State-owned Indian Bank is the promoter of Ind Bank Housing with 51 per cent stake in the company.

“On our request, RBI has given us time up to December 31, 2021 for completing the revival process of the company and to submit board approved plan for revival,” Ind Bank Housing said in a regulatory filing on Friday.

The company had reported a net loss of Rs 6.36 lakh in the quarter ended June 2021, which widened from Rs 4.38 lakh loss in the same period a year ago.

The company’s total revenues were Rs 6.39 lakh during the period, down from Rs 8.33 lakh.

In its annual report 2019-20, Ind Bank Housing said it has put in place an aggressive recovery mechanism for realisation of existing home loans.

As of March 31, 2020, it had only one employee on direct rolls, while others were engaged on contractual basis or deputed from the parent organisation, it said in the report.

In 2020-21, the company had a net loss of Rs 18.87 lakh. During FY20, the company had a profit of Rs 2.74 crore. After appropriating the profit, the accumulated losses of the company stood at Rs 134.83 crore as at March 31, 2020 as against Rs 137.58 crore a year ago, it said in its annual report.

Ind Bank Housing said it is making efforts for revival of its operations and has prepared a road map for restructuring of capital and restarting of lending operations. However, the efforts have been delayed due to the COVID-19 situation, it said.



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After reverse merger, promoter holding in Equitas, Ujjivan SFBs to fall to zero, BFSI News, ET BFSI

Banking & Finance

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Taking a cue from IDBFC First Bank, Equitas Small Finance Bank and Ujjivan SFB plan to reverse merge the holding companies into the SFB, thereby bringing down the promoter shareholding to zero.

In case of Ujjivan SFB, promoter shareholding, or the shareholding by the non-operating holding comapbny was 83.32 per cent as in June 2021 while in the case of Equitas, the NOFHC held 81.98 per cent of the bank in March this year.

RBI rules stipulate that the SFB promoters must bring down their shareholding to 40 per cent in five years.
The reverse merger, in this case, brings down the promoter shareholding to zero as post merger, the holding companies would cease to exist.

Equitas SFB

As per the SFB licensing guidelines of RBI, a promoter of SFB can exit or to cease to be a promoter after the mandatory initial lock-in period of five years (initial promoter lock-in) depending on RBI’s regulatory and supervisory comfort and SEBI regulations at that time.

In case of Equitas Small Finance Bank (the bank), the initial promoter lock-in for the company expires on September 4, 2021.

Hence, the bank had requested RBI if a scheme of amalgamation of the company with the bank, resulting in exit of the promoter, can be submitted to RBI for approval, prior to the expiry of the said five years, to take effect after the initial promoter lock-in expires.

RBI vide its communication dated July 9, 2021, to the bank has permitted the bank to apply to RBI seeking approval for scheme of amalgamation.

RBI has also conveyed that any ‘no objection’, if and when given on the scheme of amalgamation, would be without prejudice to the powers of RBI to initiate action, if any, for violation of any licensing guidelines or any terms and conditions of license, or any other applicable instruction, it added.

The share exchange ratio would result into each shareholder of the transferor company, Equitas Holdings, getting 226 equity shares of the transferee company, Equitas SFB, for every 100 shares held by them in the holding company.

Holding company

The RBI had mandated a holding company structure to ring-fence the bank from other financial services businesses of the group. A reverse merger is beneficial to the shareholders of IDFC as it would remove the holding company discount. While the 2013 RBI rules mandated it, in the 2016 guidelines for “on-tap” bank licensing, the RBI had not sought requirement of holding company for promoter if there are no other group entities.



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US banks walk tightrope of encouraging, but not mandating vaccines

Banking & Finance

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Big Wall Street banks have started enforcing stricter mask and vaccine requirements for staff, sometimes communicating them behind the scenes, in an effort to combat Covid-19 infections in their offices while avoiding a fierce national debate about individual rights, sources at the banks and consultants who work with them told Reuters.

Specifics differ, but many big banks have tightened up policies or pushed back return-to-office dates from just a month ago.

Now, Citigroup Inc and Morgan Stanley have the toughest rules at their New York headquarters, where staff entering must be vaccinated.

JPMorgan Chase & Co and Goldman Sachs Group Inc have not mandated vaccines the same way, but both require unvaccinated workers to wear masks and get tested at least weekly.

Bank of America Corp will only allow vaccinated staff to return to its offices in early September, while encouraging other employees to get inoculated.

Drop in infections

The widespread availability of Covid-19 vaccines in the United States caused infections to drop dramatically from January to June, but driven largely by the Delta variant, the current seven-day moving average of daily new cases is up 35 percent, according to Reuters tracking data.

Wells Fargo & Co pushed back its return-to-office start date to October because of an increased risk from the Delta variant.

Behind the scenes, executive committees have been debating policies and how to express them for weeks. Although sources inside the banks say the majority of Wall Street’s workforce has been vaccinated, there remains a vocal group of employees who do not want to get shots for health or religious reasons, as well as some who feel that any mandate infringes on their personal rights.

“It’s, like, on a wing and a prayer that people are saying they are going to require this,” said a senior executive at one of the large banks who requested anonymity to discuss high-level internal discussions.

Sending mandates through company-wide memos can stir outrage not only from employees who oppose them, but from politicians and right-wing groups that sometimes use big banks as political targets, the executive said. When new requirements have been reported in the press, some of the banks have experienced backlash, leading them to communicate changes more quietly, sources said.

Vaccination policies

Citigroup announced its vaccination mandate through a LinkedIn post. Morgan Stanley has stopped sending Covid-19 policy updates through e-mail and instead has managers communicate directives to staff in small groups or individually.

Morgan Stanley’s policies vary by region.

There is also some risk of employees suing banks, either because they got sick at the office due to a Covid-19 outbreak, or because they oppose mask and vaccination requirements, sources said.

Outside the financial sector, there have been some attempts to sue, but judges have been siding with employers, said Jacqueline Voronov, a labor and employment attorney at HallBooth Smith.

“The courtroom doors are always open,” she said. “Can you bring a claim? Yes. Will it be successful? Most likely, no.”

The banks are walking a fine line as they try to encourage staff to get vaccinated and return to offices, while avoiding backlash from them, as well as legal, political and headline risk, said Adam Galinsky, a Columbia Business School professor who specialises in leadership, decision-making and ethics.

Companies generally need employees to be engaged with their responsibilities, rather than worried about getting sick or caught up in fierce social debates.

As a result, it makes sense that the banks are quietly urging staff to get vaccinated and enforcing tougher mask and testing policies for now, but, eventually, Galinsky expects them to move toward hard line mandates for all staff.

“They are trying to find that right pathway,” he said.

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2 Energy Stocks To Buy For Potential Upside Of Up To 29% From HDFC Securities

Personal Finance

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Oil India: Buy For Over 20% Upside

HDFC Securities gives a ‘Buy’ rating on the stock of oil drilling and exploration major, Oil India for a price target of Rs. 200, implying an upside of over 20% from the last traded price of Rs. 166.35 per share.

Oil India last traded price Rs. 166.35
Target price Rs. 200
Potential gains > 20%

The rationale as specified for the ‘Buy’ on the scrip is suggested to be the following by the brokerage firm:

(1) increase in crude price realisation and

(2) improvement in domestic gas price realisation (at USD 2.5/mmbtu). We expect oil price realisation to increase to ~USD 59/bbl in FY22E and USD 61/bbl in FY23E vs. USD 44/bbl in FY21, given the expected global economic rebound, post COVID.

Revenue and RPAT below estimates for Q1FY22; EBITDA Higher

Revenue was not in line with estimates and came in lower while EBITDA was a tad higher due to lower than expected crude realization but lower operating expenses. PAT at the firm also came in lower due to lower other income and higher depreciation and interest cost.

Brokerage further lists out key call highlights:

• The standalone Capex budget for FY22 is Rs. 41bn and consolidated Capex is Rs. 55bn.

• The company aims to reach 5mmscmd gas production from Baghjan field by FY24.

• The NRL refinery expansion to 9mmt will be complete by FY25. Capex for the expansion has been revised higher to Rs. 280bn from Rs. 220bn.

• Debt outstanding as on Jun’21-end is Rs. 140bn, cash and cash equivalents plus investments are Rs. 18bn.

HDFC Securities values Oil India’s standalone business at Rs. 115 (6.0x Mar-23E EPS) and its investments at Rs. 85. The stock is currently trading at 2.8x FY23E EPS

Indraprastha Gas: Buy For Over 29% Gains

Indraprastha Gas: Buy For Over 29% Gains

HDFC Securities has maintained its previous ‘Buy’ rating on the scrip pf Indraprastha Gas for a target price of Rs. 691, meaning a potential upside of 29.12% from the last traded price as on the closing of August 13, 2021 of Rs. 535.15.

Indraprastha Gas last traded price Rs. 535.15
Target price Rs. 691
Upside 29.12%

Rationale given for a ‘buy’ on Indraprastha Gas

As per the brokerage firm the company is witnessing robust volume growth on the back of its quasi-monopolistic position in Delhi/NCR with regulatory support being extended as prioritised gas allocation. Also, the ‘Buy’ is premised on the portfolio of mature, semi-mature and new geographical areas (GA).

Q1FY22 not so impressive

Being weighed down by weak sales volume, higher than expected gas cost as well as operating expenses but a better than expected other income, both EBITDA and profitability at the company suffered. Volume came in lower QoQ as CNG and industrial/commercial demand saw an impact due to the Covid 19 second wave.

On the volume estimates, HDFC Securities in its report said “We estimate CNG volume to increase by 24% YoY in FY22E and 18% YoY in FY23E. Total volume is estimated to increase by 21% YoY in FY22E and 17% YoY in FY23E”. “Per-unit EBITDA is expected to correct by 6% YoY to Rs. 7.2/scm in FY22E on account of higher gas cost. Subsequently, per-unit EBITDA should improve to RS. 7.7/scm in FY23E (+8% YoY). Consolidated EBITDA should grow by 13% YoY in FY22E to RS. 17bn and 26% YoY in FY23E to RS. 21bn, driven by improvement in volumes, positive outlook, and healthy per-unit margin”, added the brokerage report.

Based on the discounting cash flow (DCF) mode, the brokerage suggest a target price of Rs. 691 (WACC 9%, terminal growth rate 3.0%). The stock is trading at 22.3x FY23E PE.

Disclaimer:

Disclaimer:

The stocks listed in the report are taken from brokerage report of HDFC Securities and should not be construed as investment advice. Equities are at record high and extreme cautiousness is needed before taking any call.

GoodReturns.in



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Jayant Sinha, BFSI News, ET BFSI

Banking & Finance

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As the Indian Bankruptcy Code (IBC), one of the crucial reforms that gives India Inc the ‘right to exit’ and start afresh, completed five years, ETCFO spoke with Jayant Sinha, former union minister and Chairman of the parliamentary standing committee on finance, to know if liquidation is a scam under IBC? And more.

“Liquidation should not be a benchmark. And that is why we have to think carefully about what should be the benchmarks and a resolution process particularly for secured financial creditors,” said Jayant Sinha.

Almost half of the closed cases by lenders under IBC in FY21 ended in liquidation, as per the Insolvency and Bankruptcy Board of India (IBBI), while only 13 per cent were resolved. In most of the cases under IBC, by the time they are resolved, their asset value depreciates leading to 90% haircuts, according to IBBI

Specifically from the secured creditors perspective, when they lend against collateral they expect 100 per cent value back instead of “salvage or the liquidation value”.

“If that was to be the case, the kind of loans a company would be able to get would be very modest, because everybody’s just lending against liquidation value. We can’t have that,” Sinha said, underscoring the importance of having benchmarks.

Liquidation can’t be a benchmark under Insolvency and Bankruptcy Code: Jayant SinhaThese benchmarks are for secured financial creditors as there should be a very high level of confidence that they’re going to get the vast part of their loan back, he said.

But the question is how to decide the benchmark?

Sinha points to global benchmarks, the major economies that we compete with like Germany, Japan, China, the US, the UK. What secured financial creditors typically get through the resolution process should be the benchmark, he said.

Benchmark the quantum of haircut

In one of the recommendations, the parliamentary standing committee in its report titled, ‘Implementation of Insolvency and Bankruptcy Code: Pitfalls and Solutions’ was to benchmark the quantum of haircuts to avoid a 90 per cent haircut situation.

As per IBBI, in the resolved cases, the haircut, or the loss to banks on their claims, rose to 60 per cent in FY 2021, from 55 per cent average in the previous years. While in the March 2021 quarter alone, haircuts rose to a whopping 74 per cent of the claims made by the lenders against the defaulters.

While it is a matter of concern, how will benchmarking haircuts work?

Benchmarking haircut is not a prescription. It’s not a number that you have to meet. But it is something that should guide the committee of creditors in terms of how and how quickly they should go through the resolution process..

He believes that the system needs to gear up to deliver better outcomes. He feels there are many reasons why 40% recovery is happening. He ascribed these low recoveries to companies close to liquidation coming to IBC, processes that dragged on for a long time eventually eroding the value of the assets, apart from other reasons.

“Going forward, 40% cannot be the benchmark. It is not good enough. Whereas 5% is not good enough either. We need to do better for secured financial creditors. And the changes that we are suggesting are in support of all of that,” he said.

Role of NCLT

As far as delays in the process are concerned, one aspect is counter litigation by promoters. This costs money and time to the whole system. How should IBC deal with such issues, especially when NCLT is facing the challenge of capacity?

Sinha suggested three steps to reduce litigation.

Firstly, fill the vacancies at NCLT as quickly as possible because then there is more time to adjudicate a case well and come up with a good resolution.

If judges don’t have enough time and rush through cases, they won’t give good judgments, and then things will end up in litigation. Therefore, adding capacity as soon as possible is one way in which we can deal with these endless litigation type issues.

Liquidation can’t be a benchmark under Insolvency and Bankruptcy Code: Jayant SinhaSecondly, improve the quality of NCLT members. The parliamentary committee has recommended that the NCLT should at least have high court judges so that we can benefit from their experience and their wisdom. That’s another way to prevent litigation.

The third way of preventing litigation is to ensure when people submit the resolution plan as per the deadline, they do not have an opportunity to come in with another resolution plan after that. Because not doing so, will again rest in litigation, and a lot of contentions back and forth.

“So these are three very concrete steps that we have suggested to reduce litigation as it is one of the reasons a lot of these timelines are being extended,” he said.

ALSO READ: RBI Governor and Jayant Sinha to discuss IBC



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3 Stocks To Buy For Gains Up To 38%, Says ICICI Securities

Personal Finance

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Buy eClerx Services stock for a potential upside of 22%

ICICI Securities sees an upside in the stock of eClerx Services to Rs 2650, from the current market price of Rs 2172.

According to the brokerage firm, margins are expected to expand 138 basis points to 25.9%, owing to higher revenue growth offset by Personiv acquisition-related costs. Due to the return of travel and an increase in facility costs, we project FY23E margins to fall off to 24.8 percent.

“eClerx’ share price has grown by ~1.4x over the past five years. We continue to remain positive and retain our BUY rating on the stock Target Price and Valuation: We value eClerx at Rs 2,650 i.e. 21x P/E on FY23E EPS.” the broking firm said.

Future price-performance triggers include:

  • To drive growth, get traction in customer service, RPA, analytics, content generation, and cross-sell and upsell to Personiv clients.
  • Revenues are likely to be driven by lower roll offs from one-time client-specific events, improved deal wins, and a resurgence in growth.
  • In FY21-23E, expect dollar revenues to expand at a 19.7% CAGR.

Buy Lemon Tree Hotels stock for a potential upside of 38%

Buy Lemon Tree Hotels stock for a potential upside of 38%

Lemon Tree (LTHL) is India’s largest hotel brand in the mid-priced market, promoted by Patanjali Keswani. ICICI Securities sees an upside in the stock of Lemon Tree Hotels to Rs 2650, from the current market price of Rs 2172.

According to ICICI Securities, LTHL is in capex mode, it has a lot of debt on its books. In FY21, it raised money from APG to deal with the Covid-induced issue. We believe the firm is now in a better position to manage liquidity without further dilution, thanks to improved demand visibility and a lower debt repayment schedule (Rs 115 crore for FY22 and Rs 140 crore for FY23E).

“The company remains a key branded player in the high growing mid-scale segment. We retain BUY rating on the stock Target Price and Valuation: We value the stock at Rs 55 on a SOTP basis i.e. 23x FY23E EV/EBITDA,” the brokerage said.

Key triggers for future price-performance:

  • With the economy opening up, performance is expected to improve dramatically starting in H2FY22E.
  • Due to an anticipated, 15- 18 percent decline in room supply as a result of continued stress and increased desire for branded players, the company is well-positioned to acquire the unorganized market share.
  • If a new requirement occurs, the company’s broad asset base, strategic alliance, and financial flexibility will continue to sustain its liquidity profile.

Buy Tata Steel stock for a potential upside of 38%

Buy Tata Steel stock for a potential upside of 38%

Tata Steel (TSL) is one of the most geographically diverse steelmakers in the world, with operations and commercial presence all over the globe. ICICI Securities sees an upside in Tata Steel‘s stock to Rs 2650, from the current market price of Rs 2172.

ICICI Securities believes that working capital, which increased in Q1FY22, is likely to decrease in the coming quarters. Indian operations steel volumes are predicted to be 1 million tonnes (MT) higher in FY22E than in FY21 (Indian operations steel sales volume was 17.3 MT in FY21).

“Tata Steel share price has grown by ~3.5x over the last 12 months. We maintain our BUY rating on the stock Target Price and Valuation: We value TSL at | 1750, based on SoTP valuation”, the brokerage has said.

Key triggers for future price-performance:

  • Tata Steel plans to increase its steel production capacity in India to 40 million tonnes (MT) by 2030. Both organic and inorganic approaches would be used to double domestic manufacturing capacity.
  • India’s share of Tata Steel’s overall consolidated production capacity has climbed from 29 percent in 2010 to 57 percent in 2020 and is expected to reach 73 percent by 2030.
  • Tata Steel’s gross debt reduction objective for FY22E is over US$2 billion, with offshore debt payback taking priority.

Disclaimer

Disclaimer

Investors should certainly not take any trading and investment decision based only on information discussed in this article. We are not a qualified financial advisors and any information herein is not investment advice. It is informational in nature, which is taken from the brokerage report of Khambatta Securities. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates, author and the brokerage house do not accept culpability for losses and/or damages arising based on information in the article.



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What is Platform Banking?, BFSI News, ET BFSI

Banking & Finance

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What is Platform Banking?

Platform banking refers to lenders owning and operating a digital marketplace which allows for its customers to purchase physical goods and transact on non-banking services. Banks have the option of entering into the platform business through several entry levels, including a product, service or payments platform, thereby eventually creating an entire ecosystem of products and services for their customers. According to Infosys Finacle, a platform business is likely to receive a valuation two or three times higher than a linear business.

What are the types of Platform Banking on offer?

There are seven entry points to Platform Banking in India, according to a report by Infosys Finacle, which includes a Product Platform, Service Platform, Payments Platform, Investment Platform, Social Platform, Communication Platform, and a Social Gaming Platform. A Product Platform allows the lender to aggregate products and services sold on other e-commerce platforms, whereas a Service Platform allows one to aggregate service solutions for their customers. A Payment Platform offered generally by all lenders both in India and Globally, for their customers to transact, is a commonly taken avenue by banks to enter platform banking. An Investment platform allows lenders to, with a fee, connect their customers to lenders, whereas a Social Media platform like Facebook or Twitter, would represent a Social Platform. Communication Platforms, which have embedded payment features in them, including the recently launched Whatsapp Pay, serves as an excellent example of Platform Banking. Social Gaming Platforms have been tapped as the emerging field for bankers, to target gamers who trade in virtual currencies.

Are customers interested to use banking platforms for non-banking activities?

According to a Deloitte survey conducted in the United States, a third of retail banking customers were interested towards a platform services offered by their primary lender. 34% of customers surveyed said they were willing to use platform banking services, whilst 25% said they were neutral. 41% of respondents to the survey said they were unlikely to use platform banking services.

Notably, younger customers including both the Gen Z and Millennial customers were most responsive to the idea of a superstore, with a resounding 75% and 67% approval, respectively. 54% Gen X and 33% Boomers showed interest in a financial superstore app, whilst on a cumulative level, 55% of all respondents had shown interest in the India.



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