Category: Personal Finance

Buy Solar Industries with upside of 16.24%

Solar Industries (SIL) is a dominant participant in the Indian industrial explosives market, with a global manufacturing base in six nations.

The brokerage expects a gain of up to 16.64 percent in the shares of the chemicals company, with a target price of Rs. 2290 per share, up from the last trading price of Rs. 1963.25 per share for the next two quarters.

According to HDFC Securities, the company’s exports and foreign division has been a key growth driver, with a 19 percent CAGR from FY12 to FY21. Apart from that, in 2010, SIL entered the defence market and began producing highly synergic consumable items such as multi-mode hand grenades, HMX (High Melting Explosives) & HMX compounds, composite propellants, pyros, igniters, fuses, and rocket integration, among others.

Valuation & Recommendation:

“We believe, within the Industrial explosives space, SIL is a unique company which has strong pricing power and has been exhibiting consistent better than industry performance for more than 2 decades. Going forward, we expect SIL’s revenue, EBITDA & PAT to report a growth of CAGR 23/24.5 and 31% respectively over FY21-23E.

Segment-wise we expect Defense revenues to reach Rs. 500Cr by FY23 up 4x over FY21 while exports and overseas are expected to grow by 20.7% CAGR for next 2 years. Apart from these, domestic business like CIL/ institutional and trade channel are expected to grow at a CAGR of 12.5/13.9 and 13.5% respectively over FY21-23E, ” the brokerage has said.

The stock, according to HDFC Securities, is currently valued at 37 times FY23E earnings. It believes the stock’s fair value is Rs. 2130 (40x FY23E) in the base scenario and Rs. 2290 in the bull case (43.5x FY23E).

Buy Indian Bank with upside of 22.49%

Indian Bank is one of the better-managed PSU banks, requiring only modest government assistance to generate cash. It has a long track record of outperforming the rest of the PSU banking group.

The brokerage expects a gain of up to 22.49 percent in the shares of the chemicals company, with a target price of Rs. 170.50 per share, up from the last trading price of Rs. 139.20 per share for the next two quarters.

According to the brokerage, due to the high corporate book, we remain cautious on the asset quality front. It has a high BB & below rated book with a lot of exposure to infrastructure, NBFCs, and other sectors. For the next few quarters, even management is cautious about the retail and MSME segments. However, the low cost of capital, in combination with the low valuation, gives us confidence in the long run.

Valuation & Recommendation:

“We expect Indian Bank to grow its loan book at 9% CAGR while NII and Net profit are expected to grow at 7.5% and 39.5% (due to lower base) CAGR respectively over FY21-23E. ROAA is estimated to improve to 0.8% in FY23E from the current 0.6% in FY21 and RoE could rise to 12.4% from 9.9% in FY21.

We expect healthy recoveries and upgrades in next two years. Asset quality trend of corporate and MSME would be the crucial monitorables. Most of the concerns arising out of pending writeoffs out of restructured/SMA accounts are already in the price. We have assumed higher recoveries and lower slippages going forward. NIMs may also start stabilizing around 3% level,” the brokerage has said.

According to HDFC Securities, over the next two quarters, investors can buy Indian bank at Rs.139 (0.46xFY23E ABV) and add more at Rs.121 for a base case fair value of Rs.158 and a bull case fair value of Rs.170.5.

Disclaimer

The above stocks are picked from the brokerage reports 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 houses are not liable for any losses caused as a result of decisions based on the article. Please consult a professional advisor.

ET reported earlier on Thursday that the firm had appointed Wall Street bankers Goldman Sachs and Morgan Stanley to steer its US listing and was in talks with investors to raise $100 million. Sources said the firm is eyeing a valuation of $6 billion for its IPO. The Noida-based firm is backed by Sequoia Capital, Temasek Holdings, Actis, PayPal and Mastercard, amongst others.

“Over the last 18 months we have scaled our prepaid issuing stack, online payments, and also the buy now pay later (BNPL) offering. We continue to make progress in the larger Asian markets with our BNPL platform. [We’re] very excited to have a marquee investor like Invesco join us in the journey,” B. Amrish Rau, chief executive officer of Pine Labs, said in a statement.

Pine Labs predominantly specialises in developing software and deployment solutions for point of sale (PoS) devices for storefronts. It has been diversifying its offerings on its newly developed software platform with enterprise solutions such as BNPL integration, invoice management, payment gateway and issuing prepaid cards. The third-highest-valued fintech firm in India behind Paytm and PhonePe, the startup posted a net revenue of Rs 800 crore in FY21, according to company estimates shared with ET in July.

Digital payments continue to see steady growth in India, fuelled by the Covid-19 pandemic. Consumer-focused fintech startups such as Paytm and Mobikwik have also filed their draft prospectuses to go public on domestic exchanges later this year.

Risk investors, both global and domestic, have flocked to the sector in India amid regulatory constraints in investing in China. Late last month, Prosus acquired digital payments processor BillDesk in a $4.7-billion all-cash deal.

RattanIndia Enterprises:

Rajiv Rattan headed is a business conglomerate based out of Delhi. The company’s work areas span power generation, consumer finance, renewable energy and electric mobility. The group’s combined assets are equivalent to $2.7 billion.

The company’s TTM P/E is at a negative -7264.3 while the sector P/E is at 21.37.

As of last the company commanded a market cap of Rs. 6503 crore.

Poonawalla Fincorp:

This is an NBFC company commanding a market capitalization of Rs.13,142 crore . A host of brokerages are bullish on the scrip as there is a recent management change which is seen to be positive for the scrip.

There was indeed seen a downside in today’s trade as the SEBI banned the company’s managing director for insider trading.

The lending company is into offering a bouquet of loans from personal to professional loans and even insurance services.

HFCL:

The company is a leading telecom company and specializes in manufacturing of telecom equipment, optical fiber cables and intelligent power.

The focus on to 5 G technology has also improved the prospects of the company going ahead.

TTM P/E- 32.49

Sector P/E- 88.18

Tata Steel BSL:

The company in the year 2018 has been acquired by Tata Steel which was previously known as Bhushan Steel. The company is now the third largest secondary steel producing company with an existing steel production capacity of 5.6 million ton per annum. The company’s products included Hot Rolled Coil ,CRCA ,CRFH ,Galvanized Coil and Sheet ,Galume Coil and Sheet ,Color Coated Coils,Color Coated Tiles,High Tensile Steel Strips,Hardened & Tempered Steel Strips,Precision Tubes,HFW/ERW Pipe (API Grade),3LP Coated Pipes,Billets and Sponge Iron.

TTM P/E- 1.8

Sector P/E- 4.43

Shree Renuka Sugars

Headquartered in Mumbai and with head office in Belgaum, the company is the largest sugar producers globally. The company is a global agribusiness and bio-energy corporation. Additionally, the company is also into refining of sugar.

The recent push for ethanol blending for fuel will augur well for the company going ahead.

P/E TTM- -20

Sectoral p/E- 13.27

Conclusion:

These penny stocks have relatively infrequent trading which indicates less buyers and hence low liquidity. With low or limited trading, these stocks are subject to high volatility. Though considered affordable, every other investor should not take a buy decision on them given the huge volatility.

Disclaimer:

The information or the scrips collated above need not be construed for investment advice.

GoodReturns.in

Hawkins Cookers FD Interest Rates

According to Hawkins Cookers Ltd “Proposed time schedule mentioning the date of opening of the Scheme and the time period for which the circular or advertisement is valid from September 15, 2021, to September 30, 2022, or the date of the Company’s 62nd Annual General Meeting, whichever is earlier.” The following interest rates will be applicable on minimum deposits of Rs.25,000 and in multiples of Rs.1,000 subject to a maximum of Rs.20,00,000.

Scheme (A) Cumulative (Interest compounded monthly)

Scheme (B) Non-Cumulative (Interest payment Half-Yearly)

Hawkins Cookers FD Ratings & Mode of Interest Payout

ECS/Direct Credit/RTGS/NEFT/Warrant mode will be used for interest payment and repayment. Deposits can be repaid through ECS/Direct Credit/RTGS/NEFT/Cheque, subject to SEBI and RBI restrictions. Hawkins Cookers Ltd has obtained [ICRA] MAA (Stable) rating by the Credit Rating Agency ICRA Limited. The rating was issued on July 21, 2021, and it simply means that the company has excellent credit quality with minimal credit risk. The credit rating of Hawkins Cookers Limited is a quantifiable evaluation of the company’s credibility that educates investors about the risk of the company failing on its financial commitments.

It is mandatory for interested investors to pre-register their interest online at www.hawkinscookers.com/fd2021.aspx from 9:30 am onwards on September 15, 2021, according to the circular of the company. The Fixed Deposit form along with the detailed Terms and Conditions can be downloaded from www.hawkinscookers.com/fdform2021.pdf.

Should you invest?

Amid the current low interest rates on fixed deposits of leading private and public sector banks, small finance banks offer higher interest rates with DICGC insurance benefit on fixed deposits up to Rs 5 lakhs which makes investment in small finance banks risk-free up to the amount covered. However, when it comes to corporate deposits, such as Hawkins Cookers Fixed Deposit Scheme, the only condition on which investors should rely is the credit rating.

Placing a fixed deposit with a positive score is a safe bet, which is why Hawkins Cookers FD Scheme can be a good option for debt investors as the company has obtained MAA (Stable) rating by the Credit Rating Agency ICRA Limited. As a result, investing in Hawkins Cooker FDs may be a better option than investing in a leading bank’s fixed deposit scheme like SBI, which offers a low-interest rate of 5,40 percent as of now. However, we advise our readers to briefly look at the applicable terms and conditions, inflation risk, and taxation as per your income tax slab which may lower your post-tax return if you are in the higher tax bracket.

If the interest income received on a corporate FD surpasses Rs. 5000, the TDS rate is 10% for all resident Indian citizens. TDS deduction on FD interest is charged at 20% if PAN details are not submitted, it is one of the main considerations apart from higher rates and credit rating which our readers should keep in mind. Last but not least, it is critical to select Corporate FD with caution and to reduce the risk of default, choose only those certified ‘AAA’ in terms of rating.

Investors these days are being more patient and staying put in the equity markets for the long-term, expecting better returns. However, some investors are yet not comfortable with the equity markets because of their volatility. They are interested in profit maximization beyond the stock market, in a short-term period. Bank Fixed Deposits (FD) or Life Insurance plans do not attract them because of their lengthy timeline and inflation dilemma. The below discussion is for those investors. The investment option is called invoice discounting – which is related to both MSMEs and big companies, in two different segments.

How is invoice discounting being operated?

Be it a big company or a medium scale company, when they are operating in a market they are most likely to sell products/goods to the buyers. Now, when a product is sold in the market, this includes multiple ingredients and items within it. For example, if Apple is selling mobile phones in the market, they will certainly need parts or materials like packaging items, metal parts, glass, etc. These will be manufactured by other suppliers to send to Apple, and they will assemble the parts, enable the software, do the packaging, and sell the final product. Here comes the importance of the suppliers or manufacturers.

When Apple will order its supplier to make mobile parts for them, they will not give the total payment for those parts. Rather, they will offer the suppliers an invoice that will commit the full payment for the manufactured parts, which will be paid after around 30-90 days. With this commitment, the manufacture will supply the parts to Apple. But what happens if the supplier needs the money immediately, cannot wait any longer? Then the supplier can sell the invoice to other investors in the market by online financial platforms. The investor will have to pay the amount payable by Apple to the supplier, but they will get a discount of 20%. Later the production company will pay the full amount directly to the investor, whereby the investor will have a profit margin.

This is why the investment option is called invoice discounting. For example, if the total amount payable by Apple is Rs. 1000, the investor will pay only Rs. 800 to the supplier. The 20% loss is neglected because it is assumed that the supplier has already counted profits within this amount. Thus, the supplier can fulfill its demand of immediate money, with a lesser profit. Later, after 30-90 days, at the time of payment, when Apple will remunerate for the parts, they will directly pay the full Rs. 1000 to the investor. So, in that way, within a very short period of 30-90 days, the investor will earn a good profit.

Profit share

However, the total profit of 20% is not attributed to the investor alone. A margin of this, at around 8%, is taken by the online financial platform, where the invoice was sold by the supplier. Hence, the rest 12% will be given to the investor. Now, this 8% and 12% can vary depending on the companies involved and the platforms.

In India mostly the MSME sector runs its operations through an invoice discounting system to earn their working capital. They manufacture for large-scale companies and earn the amount immediately from investors. Investors then after the short-term period earn their 12% profit.

Risk factors

The invoice discounting is a great investment opportunity, keeping in mind certain risk factors. The investor should always analyze the brand value of the company who will give the final payment. The credit history or credit risk should be checked, to understand how and when they have done their earlier payments. Along with this, the company’s insolvency factor or debt obligation should be another concern to look at.

On the other hand, the manufacturer company, who is dealing the invoice, should also be checked to understand if they are good companies or not. Otherwise, they might deal with invoices that are not going to be settled in the future. Also, the disputed invoice is another risk; if the sold products are disputed, then the big company can reject to pay the money, or can pay only a percentage of the total amount payable. In that case, the investor will face loss.

Invoice Discounting platforms

KredX, Receivables Exchange of India Ltd (RXIL), TradeCred, Finovate Capital, Invoice Mart, M1 Treds, and Priority Vendor are some of the popular online debt platforms, where the invoice discounting ecosystem is operated. In these platforms, the investors should find the risk mitigations, financial reports, credit history, shareholders details, internal rate of return (IRR), etc. to have a better outlook on the deal.

However, this investment option is most likely for big investors who can put a lump sum amount in this, a very small-scale investment will not be appropriate for the field. Also, not all of the companies – manufacturers or sellers will be reputed companies here. So, an in-depth study of the companies is required for invoice discounting.