Reserve Bank of India – Press Releases
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Month: September 2021
2 Stocks To Buy From ICICI Direct For Gains Up To 25 Percent
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Minda Corporation: Buy with a price target of Rs 168
Minda Corporation (MCL) principally works with domestic automakers in two areas: mechatronics and aftermarket, and information and connected systems.
Valuation
“MCL’s share price has grown at ~3% CAGR from Rs 110 as of mid- 2016, recording meager outperformance over the Nifty Auto Index. We retain BUY rating amid healthy growth prospects over FY21-23E. Target Price and Valuation: We value the company at a revised target price of Rs 160 i.e. 20x P/E on FY23E EPS, the brokerage has said.
While making the recommendation, the company traded at a price of Rs. 128 and the target suggested by the brokerage is Rs. 168, with an upside of 25%.
Minda Corporation: Key triggers for future price performance
- With considerable new orders won (Rs 2,490 crore lifetime orders in FY21), OEM recovery will boost volume recovery across MCH and ICS in the medium term.
- Ensuring a robust income outlook beyond FY23E
- Product profile is mainly unaffected by EV danger; aggressively developing EV-specific products such as DC-DC converters, BMS, and motor controllers, among other things.
- It has received orders from both established and emerging EV manufacturers, like Ola Electric.
- Expect a 15.1 percent net sales CAGR from FY21 to FY23E, with margins of 11% in FY23E.
Alternative Stock Suggestion
In addition to MCL, ICICI Direct favors Apollo Tyres in their auxiliary coverage. India is a country in South Asia. Benefits of CV resurrection include debt reduction and greater return ratios. Suggested to BUY with target price of Rs 275.
Buy Mahindra Lifespace Developers with target price of Rs 325
Mahindra Lifespace Developers (MLD) is the Mahindra Group’s real estate and infrastructure development arm. The company was trading at Rs. 281 when the recommendation was made, and the brokerage’s target price is Rs. 325, with a 16 percent upside.
According to the brokerage, the corporation has laid up five-year objectives, with the goal of reaching a sales value of Rs 2500 crore by FY25. It aims to complete four land transactions every year, totaling Rs. 2,000 crore in sales potential.
Valuation
“MLD’s share price has grown at ~16% CAGR over the past five years. We like MLD given its strong parentage, the management’s focus on expanding its overall scale of operation and a comfortable balance sheet. The new land purchases are expected to enable it to scale up its residential business. The change in management and execution has started to show initial signs of transformation. We maintain our BUY rating on the company. Target Price and Valuation: We value MLD at Rs 325/share,” the brokerage has said.
Mahindra Lifespace Developers: Key triggers for future price performance
- Unsold inventory and a strong launch pipeline with a potential cash flow of Rs 2,593 crore
- Huge captive land bank and expansion plans to invest Rs 500 crore per year on land with the potential to create Rs 2,000 crore in yearly sales
- Recent management changes have provided a varied range of experience and scale.
- Integrated cities and industrial clusters (IC & IC) businesses will gain from the PLI/manufacturing drive. Borrowing costs will be the lowest among peers, giving them a significant competitive edge.
Outlook
” We like MLD given its strong parentage, the management’s focus on expanding its overall scale of operation and a comfortable balance sheet. The new land purchases are expected to enable it to scale up its residential business. The change in management and execution has started to show initial signs of transformation. Hence, we maintain the BUY recommendation with a target price of Rs 325/share. The increase in target price is owing to higher premium of 35% (vs. 30% earlier) to our NAV estimates for growth potential, the brokerage has said.
Disclaimer
Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Please consult a professional advisor.
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AIBEA wants director posts filled in all public sector banks
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The All India Bank Employees’ Association (AIBEA) has urged the finance ministry to expedite steps to fill the vacant posts of directors in nationalised banks. It claimed that the bank boards were functioning with skeletal strength.
CH Venkatachalam, General Secretary, AIBEA, said in a letter to Finance Minister Nirmala Sitharaman, that 52 per cent of the director posts in the 11 nationalised banks were vacant.
The vacancies would defeat the purpose of these important posts — namely, taking care of the varied interests of banking operations, he said.
FM unveils EASE 4.0 for PSB’s tech transformation
“It also runs counter to the much-professed principles of good governance,” he said.
According to the association, the posts of Workman Director and Officer Director, representing the employees and officers of the banks, respectively, were incorporated in 1970 and had remained filled for 44 years without interruption.
Since 2014, however, when the NDA government came to power, these posts have stayed vacant, the letter added.
PSBs to make additional provision of over ₹21,300 cr for higher family pension, NPS
Venkatachalam emphasised that the association had submitted a panel of names to the banks concerned and the government, as prescribed, but none had been appointed all these years.
The association has learnt that the names it proposed “have been duly recommended by the concerned Banks to the Department of Financial Services in the Ministry of Finance, Government of India, and all these proposals and recommendations are pending consideration by the Government”, he wrote.
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MSMEs, retail loans to take bank NPAs to Rs 10 lakh crore by March 2022, BFSI News, ET BFSI
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Banks’ bad loans might cross Rs 10 lakh crore by the end of this fiscal, mainly on account of slippages in retail and MSME sectors, a study said.
“NPAs are expected to rise to 8.5-9 per cent by March 2022, driven by slippages in retail, Micro, Small and Medium Enterprise (MSME) accounts, besides some restructured assets,” the study by industry body Assocham and ratings firm Crisil said.
Reserve Bank of India (RBI) Governor Shaktikanta Das this month had said the current levels of non-performing assets (NPA) looks manageable.
At the end of June, the gross NPA level of the banking system was 7.5 per cent and the capital adequacy level was around 16 per cent, which gives an adequate cushion, Das said at an event.
MSME, retail hit
The current asset quality stress cycle will be different than that witnessed a few years back. NPAs then came primarily from bigger, chunkier accounts.
According to the study, this time, smaller accounts, especially the MSME and retail segments, are expected to be more vulnerable than large corporates, as the latter have consolidated and deleveraged their balance sheets considerably in the past few years.
Even though the restructuring scheme announced for MSMEs and small borrowers should prevent the NPAs from rising too much, there is an opportunity for stressed asset investors with expertise and interest in these asset classes, it added.
”The effectiveness of the Insolvency and Bankruptcy Code (IBC) will be tested by the potential spike in NPAs as the standstill on initiation of fresh insolvency cases for year ended in March 2021 and as most of the pandemic-induced policies or measures are unlikely to be continued”the study said.
IBC to rescue
The expected increase in GNPAs of both banks and non-banks this fiscal, because of the pandemic, will provide an opportunity for players in the stressed assets market through resolution via various routes, with IBC likely to be the most preferred.
However, the GNPAs of banks have declined from the peak seen in March 2018 and were lower as of March 2021 as against March 2020. Supportive measures, including the six-month debt moratorium, Emergency Credit Line Guarantee Scheme (ECLGS) loans and restructuring measures were among the main reasons.
According to the study, the risk management practices of Indian banks, especially public sector banks, have scope for improvement.
In the past, laws were not in favour of lenders and allowed erring promoters to exploit the tedious recovery procedure. This is borne out by the high number of wilful defaulters of banks, it noted.
”However, RBI has tightened norms for such defaulters and made stressed asset resolution norms more stringent. That, coupled with increased resolution of large-ticket NPAs under the IBC framework, have contributed to better recovery of NPAs,” the study said.
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2 Stocks To Buy From Sharekhan For A Decent Upside
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Buy Persistent Systems, says Sharekhan
Sharekhan has set a price target of Rs 4,160 on the stock of Persistent Systems as against the current market price of Rs 3599.
“Our interaction with the management of Persistent Systems Limited indicate that the company would sustain its sequential revenue growth momentum (5.6% CQGR over the past six quarters) in the coming quarters because of broad-based demand, robust deal TCVs, healthy deal pipeline and new logo additions. With around 60% revenue contribution from digital engineering and lower legacy drags, we believe Persistent Systems is well poised to capture opportunities from the accelerated spend in the digital engineering area,” the brokerage has said.
Sustainable growth momentum
According to Sharekhan Persistent Systems, is well positioned to capture opportunities in the market place, given its strong capabilities in the product engineering space, strong executions, hiring of senior-level talents, and an effective sales incentive programme.
“At the current market price, the stock is trading at a valuation of 31x/28x its FY2023E/FY2024E earnings, justified given its strong earnings growth potential, healthy cash conversion, and M&A opportunity for strengthening its capability. We expect USD revenue/earnings to report a CAGR of 20%/30% over FY2021-FY2024E. Hence, we retain our Buy rating on the stock with a revised price target of Rs. 4,160,” the brokerage has said.
Buy Polycab, says Sharekhan
Sharekhan believes that the stock of Polycab is a good buy at the current levels and the stock can hit a price target of Rs 2850 from the current levels of Rs 2468.
“Our interaction with the management of Polycab India Limited (Polycab) indicate both B2B and B2C business gaining traction m-o-m with pick up in infrastructure construction and residential demand. Consolidation of copper prices from mid-June is expected to lead to dealer restocking, pick-up in primary sales, and decline in inventory levels. The upcoming festive season bodes well for its B2C products such as lights, switches, and wires. Management reiterates H2FY2022 to be better than H1. The Project leap to touch Rs. 20,000 crore revenue by FY2026 remains intact,” the brokerage has said.
Valuations of Polycab India
According to Sharekhan, the company is one of the quasi plays on both infrastructure and consumption growth story of India. “We have revised our estimates upwards for FY2022-FY2024, factoring higher growth in both its B2B and B2C verticals. We believe Polycab is a quasi play on both infrastructure and consumption story of India. Consistent market share gains in the core business and expected scaling up of the FMEG business provide positive outlook in the medium to long term. The stock is currently trading at a P/E of 29x/25x its FY2023E/FY2024E earnings. We retain Buy on the stock with a revised price target of Rs. 2,850,” Sharekhan has said.
Disclaimer
Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Please consult a professional advisor.
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Should you invest in Hawkins Cooker FD opening for booking on September 15?
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With interest rates bottoming out, fixed income investors have been scouting for options with higher returns. But higher returns invariably mean higher risk. Consider the case of the FD scheme of Hawkins Cookers. The company is offering 7.5 per cent per annum for deposits with a tenure of 12 months. For deposits of 24 and 36 months, the rates offered are 7.75 per cent and 8 per cent per annum, respectively. These rates are higher than many others in the market today.
But the flipside is that FDs of Hawkins are rated ‘MAA’/Stable rating by ICRA. While this rating implies high credit quality and low credit risk, it is a couple of notches below the highest rating of ‘MAAA’ — indicating that the Hawkins deposit has higher risk than the safest deposits in the market today.
Investors who can take such higher risk for higher returns can consider the FD scheme of Hawkins that opens on Wednesday, September 15, 2021. Interested investors should note that they should pre-register for the FDs on the company’s website (https://www.hawkinscookers.com/fd2021.aspx), beginning 9:30 am. Once you register, you will get a pre-acceptance number and the payment has to be made within 10 days, with a filled in FD application form. If the pre-accepted numbers cross the threshold amount (₹28.17 crore) which the company intends to raise through FDs, you will be put on a wait-list. Wait-listed applications will be considered if pre-approved applicants fail to pay within the stipulated time.
At the current juncture, locking into deposits with longer tenures could mean missing out on higher returns when the rate cycle begins to move up. A one- to two-year time-frame hence, seems better, as this could perhaps give the opportunity to reinvest at higher rates later on.
Why FD investors get the short end of the stick under waterfall mechanism
The company accepts a minimum of ₹25,000 as deposit and in multiples of ₹1,000 thereafter — up to a maximum of ₹20 lakh. Investors can choose from the cumulative and non-cumulative options. Under the former, interest will be compounded at monthly rests and paid on maturity, along with the principal. A deposit of ₹25,000 will fetch ₹26,941/ 29,177/31,756, at maturity, for tenures of 12/24/36 months, respectively. For non-cumulative deposits, interest will be paid out on half-yearly basis.
Given the relatively higher risk, it is recommended that investors restrict their investments to the minimum amount. Also, it will suit those with a bigger investible surplus on hand as they can park only a portion of their surplus here.
Better rates than others
The interest rates offered by Hawkins are relatively higher across tenures. For a 12-month deposit, while public sector banks offer 4.25-5.15 per cent, private banks offer up to 6 per cent, and small finance banks (SFBs) offer up to 6.5 per cent — Hawkins offers 7.5 per cent. For tenures of 24/36 months, banks currently offer up to 7 per cent, while Hawkins offers 7.75 and 8 per cent, respectively.
But the relatively lower rates offered by banks on their deposits are commensurate with their relatively higher safety. FDs with banks (including those with SFBs) are covered under the deposit insurance offered by DICGC, for up to ₹5 lakh per bank. This cover is not available for corporate FDs such as those of Hawkins.
The rates offered by Hawkins are 150 to 220 basis points higher than those offered by NBFCs, such as Bajaj Finance and Sundaram Finance. But these deposits have a higher credit rating (AAA), indicating better safety.
Even among its peers with about similar rating, the rates offered by Hawkins score better. For instance, Shriram Transport Finance’s deposits, rated MAA+ by ICRA (also rated FAAA by CRISIL), offer 6.5/6.75/7.5 per cent per annum and tenures of 12/24/36 months, respectively. JK Paper has a similar rating (‘FAA’/Stable by CRISIL), but the interest rates offered by it are 50-75 basis points lower than those offered by Hawkins, across tenures.
About the company
Hawkins is one of the leading manufacturers of pressure cookers in India with a wide distribution network (the brand has second highest market share of 34.9 per cent). The company has also diversified its product portfolio into other cookware products that constitute about 20 per cent of its turnover.
However, Hawkins is a small company, both in terms of turnover and market capitalisation (₹3,281 crore).
While the company’s revenue grew by 10.3 per cent compounded annual growth rate (CAGR) over FY16 to FY19, the growth was muted in FY20 — 3.2 per cent (y-o-y) to ₹674 crore, owing to the Covid-19 lockdown restrictions in March quarter. In FY21, however, with the company upping its online presence, sales saw a re-bound and grew by 14 per cent (y-o-y) to ₹768 crore.
Net profit grew by 14.5 per cent CAGR over FY16 to FY21 to ₹80.6 crore.
Hawkins plans to meet its working capital requirements from this FD scheme, apart from using the money as a buffer for any unforeseen exigencies. The company has unencumbered cash and liquid investments of ₹167 crore in FY21 compared to ₹48.5 crore as of March 31, 2020, owing to shorter debtor turnover days during the year (revised policy in FY21). Besides, as per ICRA’s rating rationale, the company also has largely unutilised working capital limits, which provide a liquidity cushion.
The company is net-debt free, and its debt to equity ratio is healthy at 0.13 times as of March 2021.
All you wanted to know about NRI bank fixed deposits
While the lockdowns initially impacted the sale of its products, the WFH scenario has helped boost their demand, thereafter. In the recent June quarter, the company’s top line soared by 50 per cent over the year ago period to ₹151.45 crore. Besides, while continuing fixed costs despite abysmal sale volumes and rising input prices dented its profits last year, the company raised prices by 5-10 per cent this year. Following the price rise and sales getting back to normal, its net profits inched up to ₹17.13 crore during June 2021 quarter, compared to ₹6.45 crore in the corresponding quarter last year.
Conservative investors who prefer full safety of capital over returns may avoid this offer, given its lower credit rating and the unsecured nature of the deposits.
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2 Stocks To Buy For Up To 19% Gains By ICICI Direct And Axis Direct
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ICICI Securities:
Axis Securities has initiated coverage on ICICI Securities and given a ‘Buy’, giving a target price of Rs. 870 per share. This is an almost 18.6% from the last traded price of Rs. 733.5. The company is at the 4th position in terms of active clients in FY21 despite massive competition from discount brokers.
Nonetheless as similar to other sectors, the broking industry is consolidating too in favour of digital and large players.
“We believe ICICI Securities is well-placed as the industry leader and we expect its growth to be driven by (1) Longterm industry tailwinds; (2) Limited revenue cyclicity owing to the diversified product basket as well as its efforts to further diversify revenue stream; (3) Improving customer sourcing and activation through proactive use of the digital platform; and (4) Improving profitability due to its cost rationalization efforts”, said the brokerage.
Traction in investment will be seen and this will be positive for the brokerage firm
Investments in the Indian economy will be driven on account of:
a) Digital initiatives increasing ease of transaction;
b) Superior returns offered by the equity markets vis-à-vis traditional investments;
c) Higher investor awareness coupled with increased retail participation aiding growth over the medium to long term.
Valuation:
ICICI Securities is eligible to trade at premium valuation vs its peers given its superior ROE profile, strong parentage, and competent management team. We initiate coverage with a ‘BUY rating and a target price of Rs 870/share (19x Sept’23E EPS), implying an upside of 22% from the recommended price.
PVR:
ICICI Direct has suggested to buy the scrip of multiplex company PVR for a target price of Rs. 1592, implying gains of 13.71% from the current price of Rs. 1410.15. Further the brokerage firm is recommending a buy on the scrip for a period of 3 months and stop loss of Rs. 1275
Observation for the scrip by ICICI Direct:
Media space showing underperformance has been a major laggard.
But beaten down stocks from the space are likely to show outperformance going ahead.
Technicals
The company recovered from its major support of Rs. 1280-1300 levels. “We expect fresh longs to follow the recent accumulation in the stock.The open interest in the stock has increased gradually in the last two weeks along with a price recovery. Current OI in the stock is at a six month high. This month we saw additions of 60% in open interest. Considering continuous additions and recovery of the stock, we expect further fresh accumulation to be seen, which should take it higher in the coming sessions. The stock has been witnessing accumulation near the support level of Rs. 1300. With continued Put writing in 1300 strikes, we expect downside risk to be limited. On the other hand, Call OI of 1400 strike is already witnessing closure of positions suggesting upsides in the stock. These positions are expected to aid it to break the option range on the higher side. The stock has seen noteworthy delivery based action around Rs. 1300-1340 in the last couple of months. Since then, it has remained in a narrow range. With early signs of the stock moving out of the prevailing range, we expect its upward momentum to endure. The delivery Z-Score has again started to move into the positive territory since May 2021 as the stock is witnessing fresh accumulation in the delivery segment”, added the brokerage report.
Disclaimer:
The stocks mentioned here are taken from brokerage report and should not be construed for investment advice.
GoodReturns.in
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RBL Bank credit cards go live on Visa
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Private sector lender RBL Bank on Wednesday started issuing credit cards to its new customers on Visa’s payment network.
“The launch follows the successful completion of technology integration with the new platform following the agreement between RBL Bank and Visa on July 14, 2021,” it said in a statement.
RBL Bank has a five per cent market share in credit cards in India. Its card issuance had got disrupted after the Reserve Bank of India imposed a bar on Mastercard from on-boarding new customers on its domestic network. RBL Bank earlier had an exclusive partnership with Mastercard.
Also read: Can you bank on neobanks?
The bank said it will leverage its partnership with Visa to offer a wide range of credit cards to a variety of customer segments, adding that the technology integration has been done in record time.
“With this launch, we are confident of meeting our annual plan of issuing 1.2-1.4 million credit cards in 2021-22,” said Harjeet Toor, Head – Retail, Inclusion and Rural Business, RBL Bank.
Sujai Raina, Head – Business Development, India, Visa said, “At a time when consumers are looking for more ways to pay without using cash, we are pleased to announce our partnership with RBL Bank to issue Visa-powered credit cards to their consumers.”
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Strategic Disinvestment: CBDT Makes Clarification Regarding Carry Forward of Losses
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Taxes
oi-Vipul Das
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The Central Board of Direct Taxes (CBDT) has released clarification on September 10, 2021 regarding the carry forward of losses in the event of a modification in shareholding due to strategic disinvestment. In the event of a merger of a public sector company (PSU) as part of strategic disinvestment with one or more company or companies, CBDT has clarified that “the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss, or as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected.”
CBDT said in the statement that “Finance Act, 2021 has amended section 72A of the Income-tax Act, 1961 (the Act) to inter alia provide that in case of an amalgamation of a public sector company (PSU) which ceases to be a PSU (erstwhile public sector company), as part of strategic disinvestment, with one or more company or companies, then, subject to the conditions laid therein, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss, or as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected.”
The CBDT has also said that, in order to facilitate strategic disinvestment, it has been determined that Section 79 of the Income-tax Act, 1961, would not apply to a formerly public sector company that has become so as a consequence of strategic disinvestment.
“Accordingly, loss incurred in any previous year prior to, and including, the previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company,” added CBDT in the statement.
CBDT has further clarified that “The above relaxation shall cease to apply from the previous year in which the company, that was the ultimate holding company of such erstwhile public sector company immediately after completion of the strategic disinvestment, ceases to hold, directly or through its subsidiary or subsidiaries, fifty-one per cent of the voting power of the erstwhile public sector company.”
According to CBDT, the term “erstwhile public sector company” and “strategic disinvestment” shall have the meaning in Explanation to clause (d) of sub-section (1) of Section 72A of the Income-tax Act, 1961.
Story first published: Wednesday, September 15, 2021, 10:49 [IST]
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Best Interest On Govt Company FDs, These Are Better Than Bank Deposits
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How interest rates on FD compares for individuals (state government deposits vs bank deposits)
| 1 year | 3-years | 5-years | |
|---|---|---|---|
| TDFC (State Govt) | 7.00% | 7.75% | 8.00% |
| TN Power (State Govt) | 7.00% | 7.75% | 8.00% |
| KTDFC (State Govt) | 6.00% | 6.00% | 5.75% |
| SBI | 4.90% | 5.30% | 5.40% |
| HDFC Bank | 4.90% | 5.30% | 5.50% |
| ICICI Bank | 4.90% | 5.35% | 5.35% |
* The above is for individuals, for senior citizens interest rates are around 0.25% to 0.50% more
Good solid interest rates on fixed deposit from state government owned enterprises
The two Tamil Nadu government owned entities, Tamil Nadu Transport Development Finance Corporation (TDFC) and Tamil Nadu Power Finance and Infrastructure Corporation (Tamil Nadu Power Finance) are offering excellent interest rates of as much as 8% for individuals, which makes them the best fixed deposits to invest in terms of interest rates.
Interestingly, the interest rates are as high as 8.5% for senior citizens in both these Tamil Nadu based entities. At one point, KTDFC, which is a government of Kerala owned enterprise was also offering high interest rates of 8%. However, since the start of the year, they have dropped interest rates considerably. The interest rates from some of the government entities on their FDs is almost 2.6% more when compared to bank Fds over 5-year tenure.
How to apply for KTDFC, TN Power Finance and Tamil Nadu Transport Development FDs?
We had in the past personally invested in the deposits of the Kerala owned Kerala Transport Development Finance Corporation. There was no problem with either service or other issues and the redemption was done in time. However, we suggest to go with the fixed deposits of Tamil Nadu Power Finance and Infrastructure Corporation, because the website is excellent for the purpose of online application. In fact, you can even download the app and view you fixed deposits on the app. In fact, the company has 12,28,669 online applications thus far. Having said that you need to upload your KYC related documents, so please keep them ready.
High on safety for these fixed deposits
All of three that is KTDFC, TN Power Finance and Tamil Nadu Transport Development FDs are the best and safe, as they are state backed entities. In fact, the KTDFC fixed deposits are guaranteed by the government of Kerala to the extent of Rs 4,500 crores.
We see no problems with repayment of principal and interest amount for any of these companies. Service wise too we have had a good experience with the deposits of KTDFC. With interest rates on bank FDs around that 5 to 5.5% mark, investing with interest rates at 8% is not a bad idea at all. Having said that if you invest for the very long term and interest rates climb, you maybe trapped with your fixed deposits. We believe that at some stage the Reserve Bank of India maybe forced to increase the repo rates for banks, which should push overall interest rates in the economy higher, as inflation starts trending higher.
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