Category: Personal Finance

Tamil Nadu Power Finance and Infrastructure Development Corporation Limited (TNPFC)

This is a wholly-owned company by the government of Tamil Nadu and licensed with the RBI as a Non-Banking Finance Company. Regular and elderly people can choose between a non-cumulative fixed deposit and a cumulative fixed deposit. The interest on a non-cumulative fixed deposit is paid on a monthly, quarterly, or annually basis.

These FDs have a two-year, three-year, four-year, and five-year term. Depending on the tenure chosen, current interest rates vary from 7.25 percent to 8.00 percent with an additional rate of 0.50% to senior citizens. Whereas under the cumulative fixed deposit option, the interest is compounded on a quarterly basis and paid on maturity. The cumulative fixed deposit has a tenure of one year, two-year, three-year, four-year, and five-year and based on your specified term the interest rate will range from 7.25 percent to 8.50 percent for the general public and senior folks are also entitled to an additional rate of 0.50%.

Applicable interest rate for Non-cumulative fixed deposit scheme

Applicable interest rate for a cumulative fixed deposit

Tamil Nadu Transport Development Finance Corporation Ltd (TDFC)

The reasons to invest in the fixed deposit scheme of TDFC are best interest rates up to 8.00% to the general public and 8.50% senior citizens. These rates are much higher than the rates of SBI, private sector banks and even small finance banks. TDFC offers two types of deposit schemes to the investors i.e. Money Multiplier Scheme (MMS) and Period Interest Payment Scheme (PIPS). Under the MMS scheme, the minimum deposit amount is Rs 50,000 and the applicable interest rates are compounded quarterly and paid on maturity.

Under the PIPS scheme, the minimum deposit amount is Rs 50,000 and interest is paid either monthly or quarterly or annually. TDFC is offering the following interest rates on fixed deposits to both regular and senior citizens which are in force from 18.01.2021.

Applicable interest rates under Period Interest Payment Scheme (PIPS)

Applicable interest rates under Money Multiplier Scheme (MMS)

Kerala Transport Development Finance Corporation Ltd (KTDFC)

KTDFC also offers two types of deposit schemes to debt investors. The company offers a Periodic Interest Payment Scheme (PIPS) and Money Multiplier Scheme (MMS). The applicable interest rate will be paid monthly or quarterly under the Periodic Interest Payment Scheme (PIPS). The applicable interest rate will be compounded monthly and paid at maturity under the Money Multiplier Scheme (MMS) of KTDFC. With effect from January 1, 2021, the following interest rate on KTDFC fixed deposits is applicable to both regular and senior citizens.

For regular customers

For senior citizens

Buy Neogen Chemicals for gains of 19%

From the current price level of Rs. 1273.7 per share, brokerage firm sees an upside of close to 19 percent and has set a target price of Rs. 1515 to be realized in a short term of 12 months.

Neogen Chemicals is a specialty chemicals company into manufacturing of specialty organic bromine-based chemical compounds as well as specialty inorganic lithium-based chemicals compounds. The company’s products find usage in pharmaceutical intermediates, agrochemical intermediates, engineering fluids, polymers additives and water treatment chemicals among others.

Revenue visibility of Rs. 350 crore after commissioning of Dahej plant

The capital expenditure at the Dahej plant, both of the phases, catering to different businesses, is expected to provide for asset turn of 2.7x, which provides incremental revenue visibility of Rs. 350 crore. Since both these business verticals are margin accretive thus, incremental revenue share from both segments is expected to aid gross margins and thereby OPM. This should inch up return ratios and thereby valuations in medium term, adds the brokerage firm.

Target Price and Valuation: The brokerage values Neogen Chemicals at 40x P/E FY24E EPS to arrive at a revised target price of Rs. 1515/share (earlier Rs. 1095/share).

Key triggers for gains in the stock

• Phase 1 and Phase 2 capital expenditure at Dahej seems to be lucrative for both advance intermediates and custom synthesis revenue growth.

• Higher component of the value added portfolio to expand company’s margin.

• Increased allocation of free cash flow towards organic/inorganic growth likely to expand return ratios further.

2. Reliance Industries: Hold Rating

The brokerage firm has recommended a ‘Hold’ rating on the scrip of the oil to telecom giant RIL having operations across varied segments including retail, digital services etc. The firm has set out the target price of Rs. 2480, i.e. an upside of 2.5 percent from the current price levels of Rs. 2420, with the target period of 12 months.

“On a consolidated basis, O2C and oil & gas contributed 62% to revenue, while retail, digital and others contributed 28%, 3% and 7%, respectively However, at the EBITDA level, O2C and oil & gas contributed 43% while retail, digital and others contributed 11%, 38% and 8%, respectively, says the brokerage report.

Triggers boosting the future price:

Reliance Jio valuations catch up:

Over the years of operation, Jio is fast collaborating with start-ups or niche companies with presence into digital technologies. The company has invested over US$1.9 billion over the last five years. We believe these investments provide an option value in the overall opportunity and complete the digital ecosystem creation objectives, as per the brokerage firm.

Aggressive Reliance retail footprint expansion:

The company has continued to maintain same store sales growth (SSSG) and also registered improvement in operating profitability, which has enabled it to demonstrate revenue and EBITDA CAGR of 50% and 58%, respectively, over FY16-21. Also, the steady free cash flow will enable the company to be low on debt as well as invest in future inorganic endeavour.

O2C hive off to unlock value:

The hive off of the company’s O2C business into a subsidiary is likely and the regulatory approval process is underway. Furthermore, the stake sale to global player will unlock value for the conglomerate company.

New energy initiatives:

The company plans to invest Rs. 60000 crore on new energy and materials over the next three years. Additionally, RIL is expected to invest Rs. 15000 crore in the value chain, partnerships and future technologies, including upstream and downstream industries leading to total investment of Rs. 75000 crore in the new energy business.

So, given the company’s leadership hold in each of its product and service portfolio together considering the long term prospects, ICICI Direct recommends a Hold on the scrip and values it at on an SOTP basis at Rs. 2480 per share.

Disclaimer:

The stocks listed in the report are taken from the brokerage report of ICICI Direct and is not a recommendation to buy into these stocks. Stock market investment pose financial risk. Please consult a financial advisor before betting on such risky investment avenues.

GoodReturns.in

Britannia: Sustainable growth likely, says Sharekhan

Sharekhan has set a price target of Rs 4740 on the stock of Britannia Industries, as against the current market price of Rs 4068.

Britannia has its medium to long term growth strategies in place with growing the core biscuit portfolio by gaining market share through sustained innovation and distribution expansion (especially in the Hindi speaking belt) while growing the adjacencies such as dairy/bakery by investing across the value chain (setting up facilities, innovations and higher marketing spends), Sharekhan has said.

“This along with improved supply chain management and operating efficiencies would help to post better margins in the coming years (barring FY22 which is affected by higher input prices),” the brokerage has said.

Britannia, price target of Rs 4,740 on the stock

“With sustained market share gain, new product launches and higher traction on new channels (including e-commerce), we expect Britannia’s core biscuit category to grow ahead of industry growth in the medium term. This along with scale-up in revenues of adjacent categories and efficiencies would help Britannia to achieve double digit earning growth over FY2021-24E (barring FY2022),” Sharekhan has said.

The stock is trading at 43.5x/37.6x its FY2023/24E EPS, which is at discount to its large peers. “Strong growth prospects across key categories, higher cash generation ability, discounted valuations and receding risk of inter-corporate deposits makes it a good investment pick in the FMCG space. We maintain our Buy recommendation on the stock with a revised price target of Rs. 4,740,” the brokerage has noted.

Buy, Sundram Fasteners, says Sharekhan

Sharekhan has set a price target of Rs 1100 on the stock of Sundram Fasteners as against the current market price of Rs 942.

“The company’s order book remains at healthy levels with sectors such as farm implements, printed circuit boards, and industrial power generation growing rapidly. Domestic original equipment orders have improved more than 90% of pre-COVID levels across segments with commercial vehicle segments showing strong signs of recovery,” it has said.

Major capex over, price target of Rs 1100 on the stock

According to Sharekhan the company has completed major three-year capex plan in FY2020. The company had invested Rs. 1,000 crore during FY2017-FY2020 and had expanded capacity across segments. Currently, the company is operating at 80% capacity utilisation. The recent capex programme has enabled the company to increase revenue by 25-30% without any major investments and will improve its turnover at minimal cost.

“The stock is trading at a P/E multiple of 28 times and EV/EBITDA multiple of 17.2x its FY2023E estimates, which is trading at the higher end of its average multiples. The stock’s premium valuation is justified given strong pedigree of its promoter, revenue visibility and ability to pass on costs to its customers. We retain our Buy rating on the stock with a revised price of Rs. 1,100,” the brokerage has said.

Disclaimer

The above stocks are picked from the brokerage report of Sharekhan. 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.

1. Buy Nuvoco Vistas for a target price of Rs. 827, upside of 54%

The brokerage firm is bullish on the Nirma Group company i.e. the largest cement company in East India in terms of capacity and sees it to have a potential upside of 54 percent, having set a target price of Rs. 827 per share.

Buy call has been initiated given the company’s strengthening of its leadership:

The company has consolidated its position in the East and grown inorganically to become the sixth leading cement company in the country. “A large retail presence in the high-growth east region buoyed its operating margin during FY20-21. It should further expand to Rs. 1,177/MT in FY23E, riding on cost initiatives and synergy benefits from the integration of the recently acquired NU Vista (erstwhile Emami Cements)”, adds the brokerage. The other acquisition way back in 2016 of Lafarge Cement also helped.

Triggers abound to help the company in scaling up its operating margin:

The company is working to strengthen its low cost power consumption share to result in cost savings. Also, the acquisition of NU Vista into the company and focus on boosting its blended cement manufacturing is seen to unlock another Rs. 200/mt of of unitary EBITDA by FY23E. These moves along with healthy pricing should drive up consolidated unitary EBITDA by NR 235/MT by FY23E, despite factoring in fuel cost inflation and the impact of accelerated capacity additions by competitors.

Post IPO, balance sheet is healthy:

The huge inflow of Rs. 1500 crore from the proceeds of the just concluded IPO helped the company to de-stretch its balance its balance sheet. The brokerage adds that additionally from “strong operating cash flow outlook, and lower Capex outgo, we estimate its net debt/EBITDA to cool off to below 1x FY23E onwards vs ~4x during FY17-21. We estimate its debt reduction to continue despite its ongoing 8/15% clinker/cement expansion by FY23E and despite factoring in Capex acceleration towards the Karnataka greenfield plant by late FY25E.”

Strong performance to drive multiple valuation re-rating

“We like Nuvoco for its balance sheet turnaround after two mega acquisitions and robust operating performance, led by structural revenue and cost triggers. We initiate coverage on the stock with a BUY rating and target price of INR 827/sh (11x its Sep’23E consolidated EBITDA). In our view, Nuvoco’s continued strong performance should drive valuation multiple rerating”, adds the brokerage.

2. Gujarat Narmada Valley Fertilizers- Buy for 21% gains

It is a technical positional pick by the brokerage firm for a short term, wherein the brokerage suggests a buy in the stock for a target of Rs. 465, from the current levels of Rs. 383, implying upside of Rs. 21.41 percent. Stop loss for the trade is suggested at Rs. 332 per share.

Observations:

Downward sloping channel breakout is seen on the daily charts. Price breakout is accompanied by jump in volumes. Stock has been holding levels above its medium to long term moving averages. Inverted head and shoulder breakout is seen on the daily charts Indicators and oscillators have turned bullish on daily and weekly charts Short term moving averages are trading above medium to long term moving averages. These are some of the observations considering which the stock has been given a ‘Buy’ for 21 percent gains.

Gujarat Narmada Valley Fertilizers & Chemicals Limited.(GNFC), is a joint sector enterprise promoted by the Government of Gujarat and the Gujarat State Fertilizers & Chemicals Ltd.(GSFC). Set up in Bharuch, GNFC draws on the resources of the natural wealth of the land as well as the industrially rich reserves of the area. The company at first set up its largest single-stream ammonia-urea fertilizer complexes.

Disclaimer:

The above stocks are picked from the brokerage report of HDFC Securities. 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 Mundra, it is very important for banks to have a ‘very hard look’ at the traditional models which banks have been pursuing.

While the process of re-imagination of business models for banks has already started, the banks should not ‘try to imitate’ fintech companies in totality as it is not the right approach, former RBI deputy governor S S Mundra said on Tuesday.

Growingly, it is looking like banks are evolving as the fintech companies, which also do the business of accepting deposits and do lending, Mundra said while speaking at the 14th edition of the Banking Colloquium, organised by CII.

“Banks have to be conscious that fintech companies are compact entities, they are nimble. So, banks trying to imitate a fintech company in its totality, to my mind is not a right approach and it is not a right business model,” he pointed out.

According to him, it would be beneficial for both the banks and the fintech companies to have a meaningful cooperation, and in this way, both can leverage their respective strengths. “So it is that situation where there is a competition, but there is a cooperation.”

Mundra said fintech companies have the strength of being nimble and innovative, while banks have the advantage of having good resource bases, reach and trust of the customers. “So, these things can be complementary and to the advantage of both,” he emphasized.

The former RBI deputy governor said both banks and fintech companies ‘should avoid the temptation’ of introducing too many products and too many processes, whether it is by way of collaboration or in-house, in short intervals.
“My personal observation and experiences are it leaves both their important constituencies confused. And, the important constituencies are their own staffs and their own customers,” he said.

According to Mundra, it is very important for banks to have a ‘very hard look’ at the traditional models which banks have been pursuing.

“I am not suggesting that branches should go away but there is a need to reimagine the business model. One has to see which are the branches that are loss making and which are the branches that are contributing positively, which are the branches which can be downsized and which branches can be completely done away with and where you can rely completely on technology and where you can rely on agency arrangement,” he said, adding for every bank it was important to do a complete holistic assessment of their branch networks and how to derive maximum value from this.

On corporate lending, he said banks should not sell only products to a corporate as most corporates are now expecting ‘solutions’ from the banking system. “So if you only focus on products you will only end up making some topline, but it will not add to your bottomline. So you need to adopt a solution-based approach if you want to do corporate banking,” he added.

ELSS Funds

You can’t sell, redeem, or switch these plans during the three-year lock-in term. When compared to the Public Provident Fund (PPF), which has a 15-year lock-in time, and the National Savings Certificate (NSC), which has a 5-year lock-in period, the ELSS has a relatively short lock-in duration.

In comparison to other traditional tax-saving paths, LSS has the shortest lock-in time of three years and the potential to create greater profits. The stock market accounts for at least 65 percent of the ELSS fund’s assets. Unlike other fund options such as sector funds, financial services, and infrastructure, investments in equity-linked savings schemes are diversified and invested across sectors and industries.

Expense Ratio of the ELSS Fund

The expense ratio refers to the fees that mutual funds charge for managing their investors money.

Investors should evaluate the expense ratio of tax-saving funds while making investments. The fund’s high expense ratio indicates that the fund incurs a lot of costs.

In this area, the expense ratio ranges from 1.46 to 2.99 percent. A fund with a low or moderate expense ratio and a greater rate of return should be chosen by the investor.

Risk and Diversification

In terms of stock exposure and diversification, different ELSS funds use different strategies to maintain a balanced portfolio. Some funds spend a bigger percentage of their whole portfolio in fewer stocks, while others stick to a diversified strategy. Investment risk and return are inextricably connected. High-return mutual funds carry larger risks, while low-return mutual funds carry smaller risks.

To determine the best Tax Saving Fund, you must first determine your risk profile, or how much risk you are willing to face when investing in mutual funds.

Fund Manager and Fund House

If a fund has a good and consistent fund manager who has produced positive results in the past, it may be fairly believed that the fund will continue to produce positive results in the future. Always look into the fund manager’s background and track record, not just for this fund but for any other funds he or she runs. When a fund house is created, it has the necessary experience to handle huge sums of money.

Because decision-making processes are pre-determined, a change in the fund management has no impact on the fund’s performance.

Return consistency

After reviewing the consistency of their performance in different periods of market cycles and evaluating calendar year returns, carefully select funds. A fund should be able to outperform its benchmark in rising markets while falling less in falling markets. Seek funds that have consistently performed in the highest quartile among funds with similar portfolios and have a consistent portfolio management strategy.

Market cap composition

SEBI has granted fund managers complete discretion in determining the percent allocation in stocks The manager decides on the allocation based on market conditions, the fund’s aim, and his own risk-taking capability to attain that goal. Examine the fund’s past market cap allocation trends as well as the consistency of its investment patterns. It is preferable to choose funds with a consistent investment pattern rather than funds with a regularly changing investment pattern because the latter carries a larger risk.