Canara Bank announced on Saturday that it has a limited period offer wherein home loans interest rates will start from 6.65% per annum. “This offer is applicable to all customers irrespective of the loan amount. Along with the attractive rate of interest and quick & hassle free sanction, the Bank has waived processing and documentation charges. This is a great opportunity to get home loan from Canara Bank to derive the benefits of this limited period offer,” stated a press release from the bank.
Adding to the customer convenience, the Bank is providing facility wherein the request for home loan can be made online by scanning the QR code and instant approval can be obtained. ‘Scan & apply’, ‘get instant approval’ is available for car loan, education loan, gold loan and personal loan also.
Till the end of November many banks were offering low home loan rates as part of their festive season offers. Already at really low levels, it was a good time for prospective borrowers to avail of a home loan. Although, the festive season offers are over, interest rates on home loans are still are low levels. Many banks had also waived off processing and documentation charges just like Canara Bank as for its latest home loan offer.
55% of Jan Dhan account holders are women, and 67% are in rural and semi-urban areas. (File image)
by Manoranjan ‘Mao’ Mohpatra
Recently, we celebrated the 7th anniversary of Pradhan Mantri Jan Dhan Yojana (PMJDY). Ever since its launch in 2014, Jan Dhan has been the biggest driver of financial inclusion and one of the largest financial inclusion schemes globally.
Well, that’s true. It’s because more than 430 million bank accounts have been opened under this scheme since inception, amounting to INR 1.46 trillion. Out of which, 370 million that is 86%, are currently operative. In the last seven years, Jan Dhan has financially included the segments like women and the rural population into the formal banking system, thereby empowering them financially to hold a bank account. In fact, today, 55% of Jan Dhan account holders are women, and 67% are in rural and semi-urban areas. Moreover, a total of 312.3 million RuPay cards have been issued to PMJDY account holders.
Hence, the figures mentioned above clearly attest that a significant shift towards financial inclusion is in progress in India.
However, before delving deep into the initiatives leading to financial inclusion in the country, it’s essential to understand what it means.
Financial inclusion is about delivering banking services to all sections of society. Primarily, it’s enabling to reduce the economic gap between the rich and the poor with an aim to lead economic progression in the country.
Initiatives towards financial inclusion
Among several initiatives driving financial inclusion, JAM trinity (linking Jan Dhan accounts with Aadhaar and mobile numbers) is one of them as it’s creating a holistic financial inclusion ecosystem. JAM trinity is serving as an important medium in strengthening financial delivery mechanisms and social welfare schemes and also enhancing the efficacy of several Direct Benefit Transfer (DBT) Programmes.
For instance, to avail schemes like PM-KISAN or life and death insurance, the first step requires people to have a bank account – and that’s what PMJDY provides.
In addition, Aadhaar helps identify and register beneficiaries, and mobile numbers allow communication with them via SMS.
At the same time, during the pandemic-induced lockdown, JAM played a game-changing role as it helped reach out to the citizens staying in the farthest corners of the country. It is because of JAM a total of INR 309.45 billion were credited to women PMJDY account holders during Covid-19 lockdown.
Clearly, Jan Dhan, as the first step towards financial inclusion, followed by banking services like debit cards, insurance, pension scheme, etc., is bringing the financially excluded segment into the formal banking system. Today, the number of individuals visiting banks and ATMs has considerably increased in rural and urban areas.
In addition, Aadhaar Enabled Payment System (AePS) is another service to facilitate financial inclusion in India. It helps in withdrawing money (financial aid received) at micro-ATMs using Aadhaar number and fingerprint. Providing authentication of customers, availability of services, accessibility through AePS channel, and affordability as it’s free of cost, AePS is undoubtedly playing a crucial role in the journey of financial inclusion. In fact, the National Payments Corporation of India (NPCI) highlights that the value of transactions through AePS has nearly doubled to approx. INR 219.78 billion in January 2021 from INR 112.87 billion in January last year.
Role of digital payments in financial inclusion
For several SMEs, digital payment services like Paytm, PhonePe, and Google Pay are becoming the first formal banking service. Even a small roadside kiosk now accepts payment digitally using a QR Code. According to a recent survey done by a merchant payment solutions company, India is estimated to experience the fastest growth in the transactions of mobile payments in terms of value, with a CAGR of over 20% between 2019 and 2023.
Alongside, PM SVANidhi scheme is providing an incentive or cashback facility to street vendors for adopting digital transactions. The network of lending institutions and the digital payment aggregators such as Paytm, NPCI (for BHIM), Google Pay, Amazon Pay etc., will help to onboard the vendors for digital transactions. The onboarded vendors will receive incentives in the form of a monthly cashback in the range of Rs.50 to Rs.100.
Conclusion
Even banks are driving the initiative of financial inclusion by shifting towards digital banking. Those living in remote areas and women are now better equipped with banking facilities via an online system. The traditional financial institutions are leaving no stone unturned in moving their operations online, thereby thus allowing financial inclusion to widen its scope.
All in all, the vision is to bring more and more people – especially those who are underserved customers – into the formal financial ecosystem.
(The author is chief executive officer at Comviva. Views expressed are personal and not necessarily that of Financial Express Online.)
Reserve Bank of India, Shimla, invites tender in sealed cover under Two- Bid system (Technical & Financial Bid) for commercial premises for accommodating Office Premises of Reserve Bank of India, Shimla on Lease Rental Basis. The tender document comprising the terms and conditions can be downloaded from the RBI website https://www.rbi.org.in/ →Tenders) or may be collected from Reserve Bank of India, Estate Department, 40 SDA Complex, Kasumpti, Shimla, 171009 on all working days (Monday to Friday) from 10:00 AM to 05:30 PM.
Sr. No.
Particulars
Details
1.
Name of Department
Estate Department, Reserve Bank of India, Shimla
2.
Name of Tender
Requirement of Space for Accommodating Office Premises of Reserve Bank of India, Shimla Office on Lease Rental Basis.
3.
Mode of Tender
Offline Part I – Technical Bid and Part II – Financial Bid through
4.
Date of Notice Inviting Tender (NIT) available for parties
December 04, 2021 from 10:00 Hrs onwards available in the Bank’s website link – https://www.rbi.org.in/Scripts/BS_ViewTenders.aspx or may collect from Reserve Bank of India, Estate Department, 40 SDA Complex, Kasumpti, Shimla, 171009 on all working days (Monday to Friday) from 10:00 AM to 05:30 PM.
5.
Pre- Bid meeting Date
December 13, 2021 at 11:00 Hrs onwards (Offline)
Venue: – Reserve Bank of India Conference Hall 40 SDA Complex Kasumpti, Shimla
6.
Last date of submission of Earnest Money Deposit (EMD)
December 24, 2021 before 17:00 Hrs
7.
Date of Closing of tender for submission of Technical Bid (Part-I) and Financial Bid (Part-II).
December 24, 2021 at 17:00 Hrs
8.
Date and Time of Opening of Technical Bid (Part-I)
December 27, 2021 from 11:00 Hrs onwards
9.
Date and Time of Opening of Part-II (Financial Bid)
Part-II (Financial Bid) of those tenderers will be opened who qualify in the technical bid evaluation. Such bidder(s) will be communicated through e-mail separately.
10.
Earnest Money Deposit (EMD)
EMD of Rs. 2,00,000/- by following mode by specified mode. (Rupees Two Lakh only)
11.
Tender fees
NIL
General Manager-in-Charge Reserve Bank of India Shimla
ICICI Bank is now giving 2.50 percent and 3.00 percent interest rates to the general public on fixed deposits of less than Rs 2 crore maturing in 7 days to 29 days and 30 days to 90 days, respectively. Regular customers will get interest rates of 3.50 percent and 4.40 percent on term deposits maturing in 91 days to 184 days and 185 days to less than one year. On term deposits maturing in 1 year to less than 18 months and 18 months to 2 years, the general public will now receive interest rates of 4.90 percent and 5.00 percent, respectively.
Regular customers will get 5.20 percent and 5.40 percent returns on their deposits maturing in 2 years 1 day to 3 years and 3 years 1 day to 5 years, respectively, from ICICI Bank. The general public will now get interest rates of 5.60 percent and 5.40 percent on single deposits maturing in 5 years 1 day to 10 years and tax-saving fixed deposits of less than Rs 1.5 lakh maturing in 5 years, respectively.
Tenors
Interest rates p.a.
7 days to 14 days
2.50%
15 days to 29 days
2.50%
30 days to 45 days
3.00%
46 days to 60 days
3.00%
61 days to 90 days
3.00%
91 days to 120 days
3.50%
121 days to 150 days
3.50%
151 days to 184 days
3.50%
185 days to 210 days
4.40%
211 days to 270 days
4.40%
271 days to 289 days
4.40%
290 days to less than 1 year
4.40%
1 year to 389 days
4.90%
390 days to
4.90%
15 months to
4.90%
18 months to 2 years
5.00%
2 years 1 day to 3 years
5.20%
3 years 1 day to 5 years
5.40%
5 years 1 day to 10 years
5.60%
5 Years (80C FD)
5.40%
W.e.f. December 04, 2021. Source: Bank’s website
ICICI Bank Fixed Deposit Interest Rates For Senior Citizens
On their deposits of less than Rs. 2 Cr, senior citizens will continue to get an additional rate of 0.50% over and above the card rate applicable to regular customers on tenors of 7 days to 5 years. The main attraction for senior citizens is that ICICI Bank offers a special fixed deposit named ICICI Bank Golden Years FD where they can get an additional interest rate of 0.20% for a limited time over and above the existing additional rate of 0.50% per annum on their fresh deposits opened as well as renewed deposits of less than Rs. 2 Cr maturing in 5 years 1 day up to 10 years. According to the bank’s website, the deal is only valid till 08th April 2022.
Tenors
Interest rates p.a.
7 days to 14 days
3.00%
15 days to 29 days
3.00%
30 days to 45 days
3.50%
46 days to 60 days
3.50%
61 days to 90 days
3.50%
91 days to 120 days
4.00%
121 days to 150 days
4.00%
151 days to 184 days
4.00%
185 days to 210 days
4.90%
211 days to 270 days
4.90%
271 days to 289 days
4.90%
290 days to less than 1 year
4.90%
1 year to 389 days
5.40%
390 days to
5.40%
15 months to
5.40%
18 months to 2 years
5.50%
2 years 1 day to 3 years
5.70%
3 years 1 day to 5 years
5.90%
5 years 1 day to 10 years
6.30%
5 Years (80C FD)
5.90%
W.e.f. December 04, 2021. Source: Bank’s website
ICICI Bank Fixed Deposit Interest Rates (Single deposits of Rs. 2 Cr to less than Rs. 5 Cr)
The bank has also revised its interest rates on single deposits of Rs. 2 Cr to less than Rs. 5 Cr. According to the bank’s website, these rates are in force from 3rd December 2021 and are as follows.
The Reserve Bank of India (RBI) may deflate the hype around reverse repo hike in the monetary policy by explaining the virtues of using reverse repo change as a pure liquidity tool and not a rate tool, according to State Bank of India’s economic research report “Ecowrap”.
It emphasised that delaying normalisation measures is prudent in the current situation which would also give time for economic recovery to strengthen further.
“We believe the talks of a reverse repo rate hike in the Monetary Policy Committee (MPC) meeting may be premature as the RBI has been largely able to narrow the corridor without the noise of rate hikes and ensuing market cacophony,” said Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI.
Reverse repo rate is the interest rate that banks earn for parking short-term surplus liquidity with RBI.
Section 45Z (3) of the amended RBI Act of 2016 clearly states that, “The Monetary Policy Committee shall determine the policy rate required to achieve the inflation target”.
Ghosh emphasised that nowhere in the MPC’s mandate is there any reference to its role in liquidity management, which remains internal to the functioning of the Bank consistent with its policy stance. Thus, the RBI is not obliged to act on reverse repo rate only in MPC.
Unconventional tool
Also, change in reverse repo rate is an unconventional policy tool that the RBI has effectively deployed during crisis when it moved to a floor instead of the corridor.
In this regard, the report made a reference to Goodhart’s (2010) observations that the width of the policy corridor acts as an independent instrument for the central bank in a crisis and an asymmetric corridor is a logical outcome.
According to SBI’s economic research department, the central bank can (for whatsoever reason) supply any amount of additional liquidity without pushing short-term money market rates below the key policy rate.
“Thus, the interest rate can be set to achieve monetary goals, while the amount of liquidity in the banking system can play the role of financial market stabilisation. Since the pandemic, the RBI has done exactly this balancing act, and the pandemic is not yet over!” Ghosh said.
Referring to the US Fed indicating accelerating the bond tapering program, thereby ending it earlier than anticipated, the report observed that the rate hikes are also in offing sooner than expected as inflation is no longer considered as transitory.
“Unless Omicron proves more fatal than Delta variant, this in turn would imply strengthening of the dollar and depreciation pressures for the rupee. Thus RBI would have to look for multiple objectives,” the report said.
Ecowrap noted that the forthcoming monetary policy comes against the backdrop of the global scare of Omicron, that we are still trying to unravel.
However, the good thing is India has now vaccinated 125 crore people and this might have given the country better preparation for the future as the gap between the first and second wave was only 2 months.
“…The pandemic has also worked its way through the population resulting in larger herd immunity…” the report said.
Calibrated progress
Ghosh noted that the RBI has made a calibrated progress towards liquidity normalisation since the October policy with amount parked in overnight fixed reverse repo declining to ₹2.6 lakh crore from ₹3.4 lakh crore in pre-October policy
The lower increase in currency in circulation as more people are now using digital modes of payments has also contributed to the build-up of the surplus liquidity.
The report said the RBI has also largely achieved its objective of pushing up short term rates with 3 month T-Bill rate which was below reverse repo for major part of August now at 3.52 per cent, factoring in the impact of variable reverse repo rate. Similarly, 6 month and 1-year T-Bill rates have shifted upwards by 20-30 basis points since last MPC.
According to the research report of the brokerage “GFL is in a sweet spot with its presence in fluoropolymers, demand for which is increasingly driven by the new-age verticals of battery, solar panel and green hydrogen. GFL is in the process of expanding its capacity in fluoropolymers, which provides visibility on growth during our forecast period (FY21-FY24E). GFL is also expanding into other fluorine derivatives used in the new-age verticals, which expands the company’s addressable market and provides a vista of sustained growth. GFL has laid out a bold CAPEX plan of Rs25bn over the next three years. It is likely to see its earnings grow at 45.9% CAGR over FY21-FY24E (on a low base though), and RoCE (post-tax) improve from 6.7% to 18% over the same period. Despite the strong earnings outlook, GFL is trading at a reasonable P/E multiple of 20x FY24 vs 42.1x for Navin Fluorine and 27.5x for SRF.”
ICICI Securities has claimed that “Fluoropolymer revenues to grow at 32.9% CAGR over FY21-FY24E (58% of GFL revenues). GFL achieved full capacity utilisation in PTFE in Q2FY22 and is planning to expand capacity by 25% in FY23 with a planned CAPEX of Rs2.5bn. It already has enough capacity for R-22 and TFE; hence we expect a higher asset turnover of 1.5-1.6x. The new fluoropolymers segment has achieved only 65% capacity utilisation, and GFL expects it to hit full utilisation soon. The company is in the process of adding 57% capacity in new fluoropolymers including critical PVDF, FKM and micropowders. It is also introducing I-SAN, which finds application in flame retardants. This gives visibility on fluoropolymers’ revenue growth, while the higher contribution from this portfolio should also aid margin expansion. GFL is also backward-integrating into R-142B, which should help scale PVDF in future.”
Investment rationale
The brokerage in its research report has claimed that “Gujarat Fluorochemicals (GFL), through its large portfolio of fluoropolymers, has a presence in materials which are used by new-age verticals like lithium-ion-battery, solar panels and hydrogen fuel cells. Fluoropolymers such as PVDF, PTFE and FEP would find good use in these verticals. Further, GFL is planning CAPEX targeting certain new fluorine derivatives, which could expand its addressable market in new age segments, in our view.”
The brokerage has further stated that “We believe the entry into new-age verticals puts GFL ahead of its Indian peers in high-performance materials and could prove key for the longevity of the company’s growth. Further, backward integration for most of these materials by GFL would prove to be a high entry barrier for others. Revenue contribution from the new-age verticals in our forecast period is very small, but successful execution and long-term contracts at least with India OEMs could prove to be an ice breaker, and would be key to watch.”
Buy Gujarat Fluorochemicals Limited (GFL) with a target price of Rs. 3,086 (upside 50% from CMP)
According to the brokerage’s call “We are initiating coverage on Gujarat Fluorochemicals with a BUY rating and target price of Rs3,086 valuing the stock at 30x FY24E EPS (P/E multiple). The 30x PE multiple is based on the market capitalisation weighted average PE multiple for other Indian fluorine companies. Our target prices imply an EV/EBITDA multiple of 18.7x FY24E.”
Disclaimer
The stock has been picked from the brokerage report of ICICI Securities Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
How Crisil rates small cap and other mutual funds?
Unlike most other ranking models, which are based purely on returns or net asset value (NAV), Crisil Mutual Funds Ratings uses a combination of NAV and portfolio-based attributes for evaluation. This provides a single point analysis of mutual funds, taking into consideration key parameters such as risk-adjusted returns, asset concentration, liquidity and asset quality.
While most houses that rank mutual funds can do so on sound guidelines, there is no guarantee of returns and markets being extremely volatile there is no saying where returns could be headed. In any case let’s highlight some of the things that are worth taking a look at for Kotak Small Cap Fund.
Kotak Small Cap Fund: Great performance
3-year returns (annualized)
5-per returns (annualized)
Kotak Small Cap Fund
34.64%
22.97%
The Kotak Small Cap Fund has assets under management to the tune of nearly Rs 6,180 crores. This fund is backed by a solid performance and has generated returns of almost 71% in the last 1-year. Having said that there is no guarantee that similar returns would be churned out in the future as well. Markets are extremely volatile and one has to be careful before investing.
The fund has holdings in stocks like Century Plyboard, Sheela Foam, Persistent Systems, Galaxy Surfactants etc. All of these stocks have rallied sharply in the last 1-year, which has boosted returns. The minimum SIP investment required is Rs 1,000.
Should you invest in the Kotak Small Cap Fund through SIP?
It it were a lumpsum investment into a small cap fund, we would have definitely told investors to be cautious. This is because the stock markets have rallied a great deal since the covid 19 sparked a nationwide closure. In fact, indices have more than doubled in value since then. We believe that the markets are over priced and hence investors should not invest any amounts that are lumpsum. It is now more sensible to invest through the SIP route, which would be a smart strategy to adopt under the current situation. It’s also important to remember that small cap mutual funds are risky, given that the invest only in companies with a small market capitalization. Having said that we are not advising any investment in mutual funds at this stage. All we are doing is informing readers of a well-rated fund.
We are unsure of where the markets will head from here on, given the way the Omicron variant is spreading. With increasingly new variants spreading every few months, I guess the markets would have to live with covid variants for a long-time. So expect volatility and invest only if you have an appetite for risk.
Disclaimer
Investing in equity mutual funds is risky and investors are advised caution. Invest only if you have an appetite to take risk. Please be informed neither Greynium Information Technologies Pvt Ltd nor the author are liable for any losses caused as a result of decisions based on the article.
ICICI Bank has amended its fixed deposit interest rates with effect from December 4, 2021, and following the most recent modification, the bank currently offers an interest rate of up to 5.60 percent to the general public and 6.30 percent to senior people. The bank’s adjusted interest rates on domestic, NRO, and NRE deposits of less than Rs. 2 crore are listed below.
Tenure
Interest rates p.a. for regular customers
Interest rates p.a. for senior citizens
7 days to 14 days
2.50%
3.00%
15 days to 29 days
2.50%
3.00%
30 days to 45 days
3.00%
3.50%
46 days to 60 days
3.00%
3.50%
61 days to 90 days
3.00%
3.50%
91 days to 120 days
3.50%
4.00%
121 days to 150 days
3.50%
4.00%
151 days to 184 days
3.50%
4.00%
185 days to 210 days
4.40%
4.90%
211 days to 270 days
4.40%
4.90%
271 days to 289 days
4.40%
4.90%
290 days to less than 1 year
4.40%
4.90%
1 year to 389 days
4.90%
5.40%
390 days to
4.90%
5.40%
15 months to
4.90%
5.40%
18 months to 2 years
5.00%
5.50%
2 years 1 day to 3 years
5.20%
5.70%
3 years 1 day to 5 years
5.40%
5.90%
5 years 1 day to 10 years
5.60%
6.30%
5 Years (80C FD)
5.40%
5.90%
W.e.f. December 04, 2021. Source: Bank Website
HDFC Bank Fixed Deposit Interest Rates
On December 1, 2021, HDFC Bank changed its interest rates on domestic / NRO / NRE fixed deposits of less than Rs. 2 crore. Following the most recent modification, the general public will now get a maximum interest rate of 5.50 percent on their deposits, while senior citizens will enjoy a maximum interest rate of 6.25 percent. The latest interest rates on domestic, NRO, and NRE deposits of less than Rs. 2 crore of HDFC Bank are mentioned below.
Tenor
Interest Rate (per annum)
Senior Citizen Rates (per annum)
7 – 14 days
2.50%
3.00%
15 – 29 days
2.50%
3.00%
30 – 45 days
3.00%
3.50%
46 – 60 days
3.00%
3.50%
61 – 90 days
3.00%
3.50%
91 days – 6 months
3.50%
4.00%
6 mnths 1 days – 9 mnths
4.40%
4.90%
9 mnths 1 day
4.40%
4.90%
1 Year
4.90%
5.40%
1 year 1 day – 2 years
5.00%
5.50%
2 years 1 day – 3 years
5.15%
5.65%
3 year 1 day- 5 years
5.35%
5.85%
5 years 1 day – 10 years
5.50%
6.25%
W.e.f. 1st December 2021. Source: Bank Website
Yes Bank Fixed Deposit Interest Rates
On November 3rd, 2021, Yes Bank, one of India’s largest private-sector lenders, updated its fixed deposit interest rates. Yes Bank is now giving an interest rate of up to 6.25 percent to the general public and 7.00 percent to senior citizens on resident fixed deposits of less than Rs. 2 crore. The bank’s most recent fixed deposit interest rates are mentioned below.
Tenor
Interest Rate (p.a.)
Senior Citizen Rates (p.a.)
7 to 14 days
3.25%
3.75%
15 to 45 days
3.50%
4.00%
46 to 90 days
4.00%
4.50%
3 months to
4.50%
5.00%
6 months to
5.00%
5.50%
9 months to
5.25%
5.75%
1 Year to
6.00%
6.50%
3 Years to
6.25%
7.00%
W.e.f. 3rd November 2021. Source: Bank Website
State Bank of India (SBI) Fixed Deposit Interest Rates
The country’s largest lender, State Bank of India (SBI), changed its fixed deposit interest rates at the commencement of this year, and the new rates are in force from January 8, 2021. The following are the most recent interest rates on retail domestic term deposits (below Rs. 2 crore) of SBI.
Emkay Global is optimistic on the stock of Aditya Birla Fashion and Retail and says the company’s performance stood out in terms of per-store recovery for Lifestyle EBOs at 110% in Q2 vs. peers at 70-80%. According to the broking firm, the faster recovery in the relatively more impacted Pantaloons segment and the strong pick-up in the wholesale channel (MBO+LFS) on festive stocking, can surprise ahead.
“Faster recovery trends, aggressive portfolio/store expansion and improving efficiencies drive our positive stance on Aditya Birla Fashion and Retail. Valuations at 27x/22x FY23/FY24E EBITDA (pre-IndAS) are at a discount to peers. We have a Buy rating on Aditya Birla Fashion and Retail with a Dec’22E target price of Rs 340, based on 30x Dec’23E pre-IndAS EBITDA. Delay in full unlocking remains a key downside risk to estimates,” the brokerage has said.
Emkay Global is also bullish on the stock of forgings maker, Bharat Forge, and has a buy call on this midcap stock. “Our positive view is underpinned by Bharat Forge’s leadership position in automotive forgings, focus on diversification and expected recovery in the core segments,” the brokerage has said.
According to Emkay Global, the company’s revenue growth is expected to be robust at a 19% CAGR over FY22-24E, driven by strong recovery in domestic MHCV industry production, growth in export CV segments due to a revival in North America Class-8 trucks industry; consistent growth in the PV segment and recovery in other industrial segments.
“Medium-term performance will also be aided by high-potential segments such as Defence, Railways, Aerospace and Aluminium parts. We have a buy rating on the stock with a price target of Rs 950,” the brokerage has said.
Emkay Global also has a buy on small cap IT stock Birlasoft. The firm has set a Dec 2022 target price of Rs 550 based on 25x Dec’23E EPS.
“The management remains confident of sustaining revenue growth momentum and delivering mid-teen revenue growth in FY22 on broad-based demand, healthy deal intake (ACV remains robust although reported TCV not reflecting strength YoY), robust deal pipeline (up 50% YoY) and improving win rates, growing annuity revenue, and anticipated recovery in Enterprise Solutions. The company is well on track to achieve aspirational goal of USD1bn revenue by Mar’25 with an EBITDAM of 18%,” the brokerage has said.
The brokerage has also recommended buying the stock of small cap realty player Sunteck Realty with a Dec‘22E target price of Rs740 on the stock based on 1.2x NAV (Development NAV of Rs 618 + NAV premium of Rs 124). “Further upside is possible from faster monetization of non-core land,” the brokerage has said.
“On a trailing 3-yr moving average basis, sales may witness a 27% CAGR in FY21-FY24E. Further, we estimate core ROE improving to 11% by FY24E as both construction and sales cycle gains traction,” the brokerage has further added in its latest report.
According to Emkay the key risks include delay in JDA formation, slower than estimated execution, rapid reversal in interest rate cycle resulting in high interest rate environment.
Disclaimer
The above small and midcap stocks have been picked from the latest brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
According to the brokerage’s research report “Ipca has grown at almost 1.5x industry growth over the last five years. Its success is attributable to its R&D, where it has successfully demonstrated aceclofenac (Zerodol) superiority to other NSAIDs and low0dose chlorthalidone (CTD) efficacy that has enabled it to shift Rx to its own brands. Ipca is confident of not only sustaining its pain franchise- Zerodol peak sales >INR10bn – but also grow cardiac and other divisions. The company is getting aggressive to expand cardiac therapy to an aspirational 25% of revenue (from ~17-18%) and plans to add 350-400 salesforce.”
Edelweiss Securities Ltd in its research report has also said that “The UK business is ~60% down from its peak, but Ipca is confident of recovering a large part in the next 18 months as it will have a basket of ~25 products (up from 9) the next 18 months on its own label. The EU situation, which is currently facing excess inventory, should start easing over the next couple of quarters. Ipca’s acquisitions are either to fill gaps in existing businesses (Lyka for injectable) or part of long-term plans (Pisgah: low-volume/high-value CRAMS). Investments in subsidiaries/associates have been less than USD100mn over the last five years, keeping BS lean.”
Investment rationale
The brokerage in its research report has reported that “Ipca has had a strong execution track record in the past years along with maintaining healthy balance sheet (low net D/E) despite an investment phase. Even without the US, Ipca is likely to report double-digit growth as: a) main domestic therapies pain and CVS continue to post market-leading growth; b) API exports to remain strong as Ipca bolsters sartans over its existing portfolio; and c) recovery in generics led by EU. Ipca has a moat w.r.t. cost leadership in several APIs, enabling it to be the cheapest supplier in the world. With domestic and APIs contributing ~70% to revenue, Ipca deserves to trade at a premium.”
Buy Ipca Laboratories With A Target Price of Rs. 2,530
The brokerage has stated that “The unprecedented input cost escalation should start easing over the next six months. Ipca is confident of maintaining its volume in sartans as it has developed a new process and expects orders in the rest of the API business to also pick up. Near-term pressures should not obscure its market-beating growth in India, its vertically integrated business model, API potential beyond FY22 due to capacity addition and an enviable cost optimisation track record.”
According to the brokerage’s call “Ipca has been a beneficiary of several one-offs such as HCQs during covid and sartan opportunities in API. Hence, while FY22 growth looks challenging, FY23 should see normal growth resuming. We stay optimistic on Ipca’s long-term prospects. Retain ‘BUY/SO’ with a TP of INR2,530.”
Disclaimer
The stock has been picked from the brokerage report of Edelweiss Securities Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
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