Category: Personal Finance

1 Large-Cap, 1 Mid-Cap & 1 Small-Cap Share To Buy From ICICI Direct For Upside Of Up To 19%

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1. SBI Cards and Payments Services:

The large cap stock, from the boutique of the country’s leading state-run lender SBI, SBI Cards has been recommended a ‘Buy’ for a target price of Rs. 1200 in the short term of 12 months. The target set out by the brokerage firm ICICI Direct for the scrip implies gains of over 16 percent considering the stock’s LTP of Rs. 1029.9.

SBI Cards is the country’s second largest credit card issuing company i.e. into a high margin business with impressive return ratios. RoE stands at over 25%, while RoA is over 5%.

Q1Fy22 results show gradual recovery in operations

As per the brokerage, even despite the raging second Covid wave, the credit card issuing company posted gradual pick in operational performance. Notably some of the key performance measures such as NII, NIM that are indicative of revenues have been positive. Also the asset quality at the finance term lending institute improved.

Resilience in spends, digitization, improved asset quality to trigger SBI Cards’ future price performance:

The brokerage firm believes that increasing spending together with the opening up of the economy will fuel the firm’s business growth. Improved asset quality with lower non-performing assets (NPAs) and increase in revolver, EMI book to improve margins. Further, digitization will be a big positive for the credit card category. ICICI Direct sees return ratios to improve with RoE, RoA at 6.5%, 28.5%, respectively, by FY23E.

ICICI Direct values the scrip of SBI Cards at approximately 12x FY23E ABV to arrive at a revised target price of Rs. 1200 from Rs. 1100 earlier, said the brokerage report.

SBI Cards current market price Rs. 1029.9
Target price Rs. 1200
Potential upside 16.52% in 12 months
Gains since listing in March 2020 Close to 50%

2. Indian Hotels:

2. Indian Hotels:

For this hospitality scrip i.e. a mid cap stock, ICICI Direct has set out a target price of Rs. 170 to be realized in a short span of 12 months. This means a straight forward gain of 19.5% from the last traded price of Rs. 142.25.

Indian Hotels with a number of reputed brands in its portfolio including Taj, Vivanta, Ginger and SeleQtions enjoys a diversified position in the hospitality industry. Plus it also caters to the luxury segment in global locations such as the US, Maldives etc.

Cost optimization, ability to raise low-cost debt- Big positive for Indian Hotels

The company amid the disruption caused by the pandemic took the path of cost optimization in FY21 which will prove beneficial in the long run. The brokerage firm expects hospitality company’s EBITDA margins to grow by more than 24% by FY23E. Also the company has a strong potential to raise loan involving low cost. Also, the company’s balance sheet position will serve as a cushion to face the challenges ahead.

Operational loss narrowed in q1FY22 on a YoY basis; Covid second wave impact felt

Similar to the entire hospitality industry, Indian Hotels also bore the brunt of the second wave. Nonetheless the 2 positives noted by the brokerage include a sharp jump in average room rate by 45% YoY to Rs. 7024 per room. Operational loss also declined on a YoY basis to Rs. 149 crore.

ICICI Direct maintains its ‘Buy’ on Indian Hotels and value it at Rs. 170 i.e. 23x FY23E EV/EBITDA.

Indian Hotels current market price Rs. 142.25
Target price Rs. 170
Potential upside 19.51%

3. Siyaram Silk Mills:

3. Siyaram Silk Mills:

ICICI Direct has maintained its ‘Buy’ call on the small cap scrip of Siyaram Silk i.e. into manufacturing of fabric and apparel. The company is selling its product line under various brands including Siyaram (flagship brand), Oxemberg, MSD and J Hampstead

Resilient Q1FY22 performance

Siyaram Silk Mills has logged QoQ de-growth of 54% to Rs. 233 crore. Nevertheless, gross margin improved. Lower other income led to decline in profitability with PAT down 78% QoQ.

ICICI Direct values the stock of Siyaram Silk Mills at Rs. 455 i.e. 14x FY23E EPS.

Demand recovery, low-leverage and cost rationalization to boost stock’s performance

Post lifting or lessening of the coronavirus led restrictions as and when trade activities pick up pace, the company would benefit from recovery in demand.

Improved capital efficiency and profitability will enable the company to realize optimal RoCE of appx. 17% by FY23E.

25% cost savings through cost rationalization implemented in FY21 would help in improvement in EBIDTA margin going ahead.

Sales of Siyaram Silk for July 2021 month is trending close to 70% of the pre-Covid level and will further pick up pace during the festivities.

The company’s debt/equity is now reduced to 0.2x in FY21 from 1.0x in FY12.

Buy Siyaram Silk For a target of Rs. 455, Says ICICI Direct

Siyaram Silk Mills current market price Rs. 393.05
Target price Rs. 455
Potential upside 15.76%

Disclaimer:

Disclaimer:

Stock market investment poses a risk of financial loss being high on risk. Also, note above stock picks are taken from the brokerage report of ICICI Direct and need not be construed as investment advice.

GoodReturns.in



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What Is Amended Under The General Insurance Business (Nationalisation) Amendment Bill, 2021

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Insurance

oi-Kuntala Sarkar

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Finance Minister Nirmala Sitharaman introduced The General Insurance Business (Nationalisation) Amendment Bill, 2021 in the Lok Sabha on 30th July, 2021. The bill has been recently passed by the Rajya Sabha and was already passed in the Lok Sabha on 3rd August. The opposition parties were certainly not pleased with the amendment in the bill and demanded that it should be referred to the committee of the House.

What Is Amended Under The General Insurance Business (Nationalisation) Amendment

What does the amendment say?

The amendment in the bill provides a greater scope of private participation in the public sector general insurance companies. This amendment will change the General Insurance Business (Nationalisation) Act, 1972 – which was introduced to nationalise all the private companies undertaking general insurance business in the country.

The bill will be introduced to 3 new major changes. The amendment will exclude the proviso to Section 10B of the Act. Hence it will omit the clause that says that the union government must hold at least 51% of the shareholding. This is the key point to encourage more private investment in the sector. The amendment will also introduce a new section 24B. It will provide for “cessation of application of the Act to such specified insurer on and from the date on which the Central Government ceases to have control over it.” The last change is going to have another new section 31A. This will provide for “liability of a director of the specified insurer, who is not a whole-time director, liable for any acts of omission or commission committed with his knowledge and consent.”

The union government was already on the track for more private investment in the sector

Finance Minister (FM) in the union budget, 2021 already increased the FDI limit in the insurance sector from 49% to 74%. That was one of the most significant steps towards the privatisation of the insurance sector in the country. The FM also said in the budget speech, “We propose to take up privatisation of two Public Sector Banks and one General Insurance company in the year 2021-22. This would require legislative amendments.”

FM at that time announced that the Initial Public Offering (IPO) of LIC will be implemented in FY22. It is going to be a part of the consolidation in the banking and the insurance sector. No formal market valuation has been undertaken till now, but the company is expected to have the potential to raise Rs. 1 lakh crore, according to industry insiders. An IPO is a stock launch by the government in which “shares of a company are sold to institutional investors and usually also retail investors”.

Now, in India total of 4 general insurance companies are performing in the public sector, namely the National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited, and the United India Insurance Company Limited. The decision about which one will be privatised after the amendment is yet to be taken.

India has a considerably large insurance market

Data published by the Insurance Regulatory and Development Authority of India (IRDAI) states, “25 general insurance companies recorded a 10.8% increase in their collective premium in January 2021 to Rs. 16,247.24 crore (US$ 2.24 billion) compared with Rs. 14,663.40 crore (US$ 2.02 billion) in January 2020.”

According to IBEF data, “India’s insurance penetration was pegged at 3.76% in FY20. In terms of insurance density, India’s overall density stood at US$ 78 in FY20.” Commenting on the private participation it added, “The market share of private sector companies in the general and health insurance market increased from 47.97% in FY19 to 48.03% in FY20.”

This indicated a continuous private sector growth in the overall insurance sector in India. With the newly introduced amendments, private participation in the general insurance sector will increase further, and they will slip in the presently public-owned companies steadily.

Story first published: Friday, August 13, 2021, 19:52 [IST]



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For Up To 28% Gains “Buy These 2 Stocks,” Says Motilal Oswal

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Eicher Motors

Current market price Rs 2,546
Target price Rs 3,250
Gain 27.65%

Motilal Oswal has said to buy the stock of Eicher Motors, with a price target of Rs 3,250 on the stock, which is at least 26% higher than the current market price

The first quarter of FY22 saw the best ever exports (+28% QoQ, 83% growth over 1QFY20). According to the Motilal Oswal report, international network expansion continues with the addition of eight exclusive stores (to 140) and 19 new multi-brand outlets (to 650) in the first quarter of FY22. Eicher Motors targets to take the exclusive store count to 175 by FY22-end.

Eicher Motors performance beat was driven by VECV, while Royal Enfield was in line with Motilal Oswal’s estimates. Delayed product launches (first due to the second COVID wave and now due to the semiconductor shortage) have shifted the recovery timelines to 2HFY22.

“Near term uncertainties due to supply-chain issues notwithstanding, the recently launched Meteor and upcoming products would help expand the addressable markets and drive the next phase of growth for Royal Enfield. The stock trades at 33.5x/21.6x FY22E/FY23E consolidated EPS. We maintain our Buy rating,” the brokerage has said.

Coal India

Coal India

Current market price Rs 143
Target price Rs 185
Gain 29.37%

Motilal Oswal Institutional Research is also betting on the stock of Coal India and has a set target price that is almost 26% higher than the current market price. The dividend yield according to Motilal Oswal is a solid 12%, which is double of what banks are offering in terms of interest rates.

The management highlighted that while dispatches and production targets were set at 740 metric tonnes and 670 metric tonnes, respectively, for FY22, it is realistically looking at dispatches of 700mt and production of 630-640 metric tonnes for FY22.

Coal India’s 1QFY22 result highlights the benefit of a recovery in Power demand, leading to improved off-take and profits.

“Adjusted EBITDA (excluding OBR) jumped 64% YoY to Rs 46 billion We expect profitability to recover in FY22E (+24% YoY). Capital expenditure run-rate is likely to increase in the near term, but higher dispatches and some normalization in receivables should aid cash generation and maintain dividends (dividend yield:12%). We reiterate our Buy rating with a target price of Rs 185 per share, based on 4 times FY22E EV/EBITDA,” the brokerage has said.

Disclaimer

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. The above article is for informational purposes only and is picked from the brokerage report of Motilal Oswal. Be careful while investing as the Sensex has now crossed 55,000 points.



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RBI Makes The Highest Gold Purchases In The First Half Of 2021: Here’s Why?

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Investment

oi-Kuntala Sarkar

|

RBI, the central bank of India keeps a substantial amount of gold reserves as a hedge. Recently a report released confirms that the RBI bought the highest amount of gold on a half-yearly basis this year. The central bank’s gold reserves, in proportion to the Forex (foreign exchange) reserves, has crossed 700 tonnes for the very first time. Importantly, India’s present Forex reserves are also at an all-time high figure at $620 billion.

RBI Makes The Highest Gold Purchases In The First Half Of 2021: Here's Why

The RBI has purchased a record of nearly 29 tonnes of gold in proportion to the Forex reserves in the first half of 2021. Now the bank’s total gold reserves is standing at 705.6 tonnes till 30th June 2021. This data saw a 27% hike in the last 2 years. The gold reserve of the RBI was 558.1 tonnes at the start of 2018. However, the report also stated that the gold reserve since then has plunged to 6.55 in the June 2021 quarter than 7% at the end of March.

In June 2021, the bank’s gold reserve among all central banks globally was around 30% – according to the World Gold Council (WGC). The WGC data informs that all of the central banks cumulatively purchased 32 tonnes of gold. At the same time India’s share was around 9.4 tonnes. At the present time, the RBI is standing at the 10th position among all recognised central banks globally in terms of their gold reserves.

Reports have been coming since last year that the RBI is thinking of increasing the amount of gold reserve to itself. The RBI was reportedly looking to increase the gold reserves to 10% of its total reserves than the current reserve at 6.5%. So, the bank was quite focussed on the precious metal to have a substantial hold on the economy even when the overall economic situation was trembling in the last year.

Stressing on that matter, WGC added in a report, “Central banks are likely to continue buying gold on a net basis in 2021 at a similar or higher rate than in 2020, driven by a continued focus on diversification and risk management.” It states that the central banks globally bought 333 tonnes of gold in the first half of 2021. It is also 39% more than the average of the first half of the last 5 years.

The available data informs the gold reserves of different countries and how they increased their gold purchases. Thailand, Hungary, and Brazil are the largest buyers of gold in the first half of 2021. They all together bought 207 tonnes of gold. In the first half of 2021, Thailand has purchased 90.19 tonnes of gold, Hungary 62.09 tonnes, Brazil 53.74 tonnes, Uzbekistan 25.50 tonnes, and India has purchased 28.99 tonnes precisely. Thailand’s total gold reserves have now increased to 244.2 tonnes, Turkey’s 408.2 tonnes, Brazil’s 121.1 tonnes, and Poland 231.8 tonnes. These are some countries with the highest gold reserves at the present time.

Central banks around the globe expected that the inflation rates were going to reach far higher in the first half of this year, which has also proved to be true. Even in India, the inflation rate was highest in the last decade in May 2021. As gold is a safe investment against inflation and does not reduce its value during economic crises, central banks focussed on the yellow metal. As the inflation will go down the RBI might decrease the rate of its gold purchase.



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Stocks To Buy: 1 Smallcap Stock & 1 Midcap Stock From Sharekhan For 22% Returns

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Buy Century Plyboards says Sharekhan

Current market price Rs 505
Target price Rs 413
Gain% 22.00%

According to Sharekhan, among the key positives for the stock is the strong performance in revenues and operating profit margins in MDF and particle board.

In July 2021, the company reported revenues, which reached July 2019 levels, showing robust demand. According to Sharekhan the company has also affected a price hike across products to counter rise in raw material price rise.

“Century Plyboards is expected to witness a revival in demand and operating profit margins from Q2FY2022 onwards as it remains upbeat on demand emanating from residential segment.

The company has been able to generate strong operating cash flows increasing treasury surplus which should aid in capacity expansions going ahead. The stock is currently trading at a P/E of 30 times and 24 times its FY2023E and FY2024E earnings, which we believe provides further room for upside, considering its strong growth outlook and healthy balance sheet. Hence, we have maintained a Buy rating on the stock with an unchanged price target of Rs. 505,” the brokerage has said.

Buy the stock of Bata India, says Sharekhan

Buy the stock of Bata India, says Sharekhan

Current market price Rs 1705
Target price Rs 1905
Gain% 11.19%

Sharekhan has placed a buy on the stock of Bata India, though it is not as upbeat on the stock for gains as it is with Century Plyboards.

According to the brokerage revenue contribution from the online platform has increased to 15% in Q1FY2022. The Gross margin improved by 307 bps q-o-q to 56.2% due to better mix, Sharekhan has said.

Bata India posted resilient performance with revenue at Rs 267 crore and operating losses declining by 60.5% y-o-y to Rs. 34 crore, led by stringent cost-saving measures and better gross margins.

“We have broadly maintained our earnings estimates for FY2022 and FY2023. Post the easing of lockdown, the company has started witnessing growth in footfalls in its stores. Improvement in mobility in the coming quarter augurs well for faster recovery. Bata is focusing on expanding its presence through e-commerce/omni-channels and innovated its product portfolio with new relevant variants to drive growth in the medium to long term. Under the new leadership, growth is expected to improve with revamped strategies, backed by strong liquidity position. The stock is currently trading at 47.2 times its FY2023E EPS and EV/EBIDTA of 20.2x FY2023E,” the brokerage has said.

Disclaimer

Disclaimer

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



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SBI Vs ICICI Vs HDFC Vs Axis Vs PNB: Know All About Cash Withdrawal Limits

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State Bank India (SBI) Cash Withdrawal Limit

Customers’ cash withdrawal limits at non-home branches have recently been raised by SBI. SBI customers can now withdraw Rs 25,000 cash per day for self at non-home branches using a withdrawal form accompanied by a savings bank passbook. The cash withdrawal limit for self using cheque was capped up to Rs 1 lakh per day at branches by the bank. SBI has also raised the amount of cash that can be withdrawn by a third party using only a cheque up to Rs 50,000. SBI has also stated via its Twitter account that the revised ceilings are valid up to 30.09.2021. SBI has also said that no cash payments to third parties by withdrawal limit will be allowed and KYC of the third party to be submitted. For the benefit of the customers during the pandemic, SBI on May 29, 2021 has increased the non-home cash withdrawal limits through cheque and withdrawal forms.

ICICI Bank Cash Withdrawal Limit

ICICI Bank Cash Withdrawal Limit

For cash transactions (deposits and withdrawals) at the base branch (all branches/Cash Recycler Machine (cash deposits) in the same city, ICICI Bank charges zero for the first four transactions in a month; thereafter, Rs.5 per thousand rupees or part thereof, subject to a minimum of Rs.150 in the same month (Maximum limit – self: Any Amount, Third party: Rs. 50,000 per day). ICICI Bank charges zero for the first cash withdrawal of a calendar month; thereafter, Rs.5 per thousand rupees or part thereof, subject to a minimum of Rs.150 (Maximum withdrawal limit – Self: Any Amount, Third party: Rs.15,000 per day). ICICI Bank charges zero for the first five transactions (both financial and non-financial) in a month from ICICI Bank ATMs / Cash Recycler Machines (cash withdrawals), and then Rs.20 per financial transaction and Rs. 8.50 per non-financial transaction after that.

HDFC Bank Cash Withdrawal Limit

HDFC Bank Cash Withdrawal Limit

Regarding the cash withdrawal limit HDFC Bank has mentioned on its official website that “Get anytime, anywhere cash from our network of over 12,000 ATMs. You can also withdraw cash from any non-HDFC Bank ATM. You can withdraw up to Rs 10,000 a day using an ATM card from an HDFC Bank ATM and Rs 25,000 or more using a debit card (depending on the kind of card you have). During banking hours, you can walk into any HDFC Bank branch and withdraw cash using a withdrawal slip or cheque or deposit cash after filling up a deposit slip.” According to the bank’s official website, non-home branch cash withdrawals are free up to Rs.1,00,000/- per day, after which charges apply at Rs.2/1000, with a minimum of Rs.50/- per transaction; third party cash withdrawals are limited to Rs. 50,000/- per transaction.

Axis Bank Cash Withdrawal Limit

Axis Bank Cash Withdrawal Limit

Axis Bank allows a cash withdrawal limit of Rs 40,000 per ay ATM for all Visa Classic/Platinum Debit Cardholders. For the convenience of the customers, Axis Bank has directly mentioned on its official website that “Cash withdrawal limit for use at the ATM of the issuing bank is set by the Bank during the issuance of the card and may depend on the type of account/card. For cash withdrawals at other bank ATMs, banks have decided to maintain a limit of Rs. 10,000 per transaction.”

Punjab National Bank (PNB) Cash Withdrawal Limit

Punjab National Bank (PNB) Cash Withdrawal Limit

Punjab National Bank (PNB) offers three types of debit cards i.e. Platinum, Classic, and Gold for its customers. For these three variants of cards PNB has set the below-listed limit for cash withdrawals:

Platinum

There are two variants under this. Rupay and Master.

Cash withdrawal limit per day: 50000

Cash withdrawal limit one time: 20000

ECOM/POS Consolidated Limit: 125000

CLASSIC

There are two variants under this Rupay and Master. Personalised and Non Personalised debit cards can be issued with the following usage limits:

Cash withdrawal limit per day: 25000

Cash withdrawal limit one time: 20000

ECOM/POS Consolidated Limit: 60000

GOLD

There is one variant under this, VISA. Personalized and Non Personalised debit cards can be issued:

Cash withdrawal limit per day: 50000

Cash withdrawal limit one time: 20000

ECOM/POS Consolidated Limit: 125000

Source: Punjab National Bank



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Hold crypto assets? Here’s how you are going to pay income-tax on it, BFSI News, ET BFSI

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A cryptocurrency is a decentralised digital asset and a medium of exchange. Bitcoin was the world’s first crypto currency launched in 2009. It was created by a software developer under the pseudonym Satoshi Nakamoto. Based on blockchain technology, over 1,500 virtual currencies such as Litecoin, Ripple, Ethereum and Dogecoin are being actively used and traded globally today.

The cryptocurrency space in India has been subject to significant regulatory challenges. It started with a circular issued by the Reserve Bank of India on 6th April 2018, which restricted banking facilities from being offered to participants involved in cryptocurrency transactions. In March 2020, the Supreme Court set aside the RBI circular, on constitutional grounds and affirmed the virtual currency exchanges’ fundamental right to trade. It is estimated that around 5 million traders in India traded across 24 exchanges, with trading volumes in the range of 1,500 Bitcoins a day translating to a volume of Rs 1 billion. According to moneycontrol.com, the trading volume of cryptocurrency in India increased by 400 percent during the nationwide lockdown.

On 24th March, 2021, in what could possibly mark the first move by the government to regulate cryptocurrencies and related transactions in India, the Ministry of Corporate Affairs has made it mandatory for companies dealing with virtual currencies to disclose profit or loss incurred on crypto transactions and the amount of crypto currency they hold in their balance sheets at the reporting date. These amendments were made in schedule III of the Companies Act with effect from April 1, 2021.

The Indian income tax law is still unclear regarding the tax impact on the gains earned from cryptocurrencies. It is worthwhile to note that India’s tax authorities have not yet categorized returns from cryptocurrencies under any specific bracket and there have been no judicial precedents in this regard.

To understand the taxability of the cryptocurrencies, one should examine the classification of cryptocurrency i.e. is it currency or goods/property?

How are tax cryptocurrency transactions in other countries?
USA: The Internal Revenue Service in 2014 decided cryptocurrencies should be treated as “property”, meaning they should be taxed as capital assets other than in situations when cryptos are earned from mining activities.

Singapore: Businesses that trade virtual currencies in the course of their business are taxed on profits as business income. Entities holding cryptocurrencies for long-term investment purposes are not taxed as there is no capital gains tax in Singapore.

UK: If a person buys and sells crypto assets with such frequency, level of organisation and sophistication that the activity amounts to a financial trade, then it will be taxed as trading profit/losses, else it will be subject to capital gains tax.

Taxation of cryptocurrency transactions in India
If cryptocurrency is to be classified as currency, then the said transaction will not be exigible to taxation under the Income Tax Act, 1961 (“ITA”). Cryptocurrencies are not recognized as currency by the RBI and the word ‘income’ as defined under section 2(24) of the ITA provides an inclusive list not covering ‘money’ or ‘currency’. On the other hand, if cryptocurrency is considered as property/goods, then it would fall under the heads of either ‘Capital Gains’ or ‘Profit and Gains from Business or Profession’.

The fact that crypto currency gains will be taxed is now certain with the Minister of State for Finance, Mr. Anurag Singh Thakur clarifying on 28th March 2021 that “the gains resulting from the transfer of cryptocurrencies / assets are subject to tax under a head of income, depending upon the nature of holding of the same”.

Thus, it is settled that cryptocurrencies will not be treated as currency by India and will be exigible to tax. The key issue is whether income from virtual currency is treated as capital gains or business income. If a seller is a trader by occupation, the income should be taxed as business income. If it is not business income, such income would be taxed in the nature of capital gains.

Taxability under ‘Capital Gains’
Crypto currency can be deemed to be a capital asset if it is purchased for the purpose of investment by a taxpayer. As per Section 2(14) of the ITA, a capital asset means a property of any kind held by a person, whether or not connected with his business or profession. The term ‘property’, though has no statutory meaning, yet it signifies every possible interest which a person can acquire, hold or enjoy. Therefore, any gain arising out of the transfer of cryptocurrency may be considered as capital gains, if it is held for investment.

Infrequent crypto transactions could be treated as long or short-term capital gains, depending on the holding period. If investors hold cryptocurrencies for 36 months or more, the gains would be taxable as long-term capital gains, and if less than 36 months, it would be short-term capital gains. Short-term capital gains are taxable as per the slab rates applicable to a taxpayer. And long-term capital gains are taxed at the flat rate of 20% with the benefit of indexation.

Taxability under ‘Profit and Gains from Business or Profession’:
However, if the transactions are substantial and frequent, it could be held that the taxpayer is trading in cryptocurrencies and any profits thereon would be taxable as business income. Similarly, if cryptocurrencies are held as ‘stock in trade’, then income arising therefrom will attract tax under business income. Therefore, the continuous activity of trading in cryptocurrencies and profits realized will be taxable as business income. Although a position can be taken by the revenue authorities that such trading is treated as speculation income which would adversely impact taxpayers.

In conclusion, virtual currencies can boost India’s digital infrastructure and reduce banks’ infrastructure costs attributable to cross-border payments, securities trading and regulatory compliance. We still need clarity from the government on cryptocurrency taxation, particularly on issues such as treatment of capital gains or business income, classification as speculative income, allowability of set-off, and carry-forward of losses, and applicability of deemed gift tax provisions.

(The author, Harsh Bhuta, is a Partner at Bhuta Shah and Co LLP. The views are his own)



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Samit Ghosh, BFSI News, ET BFSI

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We would have to stabilise the organisation, reverse merge and then, we will take up the universal bank licence largely because it is more efficient to operate from a capital perspective because the capital adequacy requirement in small finance bank is 15% whereas an effective capital adequacy requirement in universal bank is about 8%, says Samit Ghosh, Founder, Ujjivan Financial Services.

Ujjivan Financial Services is the holding company of Ujjivan Small Finance Bank and we have seen the small finance bank reporting losses and higher NPAs which can be attributed to the second Covid wave. But what led to such losses and when can we expect to return to profitability?
As far as the business is concerned Nitin (Nitin Chugh, MD & CEO of Ujjivan SFB) is the right person to answer this question. From our perspective, obviously the impact was because of the second Covid wave, which took a toll on our portfolio and right now it is in recovery mode. But we do not know when the next wave is going to hit because not enough Indians have been vaccinated and with the festive season coming, there could be another knock down effect on us.

We have been very concerned about the portfolio quality and the management of the portfolio business. We are closely monitoring it and this is something we have been worried about not just now, but from last year itself. We are a very conservative organisation and we always believed that we should provide upfront and take appropriate action because that has been our philosophy in the past and that is what we would like to see again.

RBI has approved the merger of holding companies with small finance banks. When do you see that happening for your company?
We complete five years in the beginning of February and we can apply three months before that. So we would be applying three months before February, around November. Once RBI clears us for reverse merger, the whole process might take between 9 and 12 months. There are hurdles not only in the RBI but also from the Sebi perspective. There are a couple of issues for which they have to give us clearance. We are keenly watching what happens to Equitas because they are ahead of us in this process and we will follow suit. But our process will start in November and once our approval is there by February, it will take another 9 to 12 months.

A lot of people are watching very closely whether or not you have the intention to become a universal bank. Is that something that you are still considering and what work is being done towards that end?
Firstly we have to reverse merge. That is the first step and it will stabilise us. We are going through a very difficult time right now, not only from a portfolio quality point of view but also from a people retention point of view. Lot of the people who actually built Ujjivan have left and that makes life more difficult for us. We would have to stabilise the organisation, reverse merge and then, we will take up the universal bank licence largely because it is more efficient to operate from a capital perspective because the capital adequacy requirement in small finance bank is 15% whereas an effective capital adequacy requirement in universal bank is about 8%. That we will take up after our own reverse merger process is over,



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Multibagger Stocks: Best Performing Textile Stocks In 2021 With Returns Up To 1000%

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Adinath Textiles

Adinath Textiles Ltd., founded in 1979, is a Textiles-focused Small Cap business with a market capitalization of Rs 15.43 crore. The company currently has 4800 spindles installed.

The company has invested in cutting-edge machinery from (SAVIO) Italy and NSC (France). Adinath, as a responsible corporate citizen, strictly follows corporate governance standards to guarantee that the company’s resources are used to meet its duties to all stakeholders.

The stock has gained over 1,224.56% returns from January 2021 till August 13, 2021. The stock hit a 52-week high today.

Sportking India

Sportking India

Sportking India Ltd., founded in 1989, is a Textiles-focused Small Cap company with a market capitalization of Rs 1,413.58 crore. In 1993, SIL opened a spinning plant in Village Meharban, Rahon Road, Ludhiana, with a capacity of 6720 spindles for the production of acrylic yarns. Stock returned 2219.68 percent over three years, compared to 33.04 percent for the Nifty Smallcap 100.

The company reported a Standalone Total Income of Rs 451.81 Crore for the quarter ended June 30, 2021. In the most recent quarter, the company generated a net profit after tax of Rs 78.99 crore.

From January 2021 to August 13, 2021, the stock returned over 861 percent.

Raja Bahadur International

Raja Bahadur International

The Pittie family, renowned entrepreneurs, founded Raja Bahadur International Limited (RBIL), formerly known as The Raja Bahadur Motilal Poona Mills Ltd., around the end of the 19th century in pre-independent India, and it was incorporated as a Public Limited Company in 1926 for the purpose of manufacturing textile products. It is a small-cap company with a market capitalization of Rs 265.12 crore.

The stock appreciated almost 544 percent from January 2021 to August 13, 2021.

Betex India

Betex India

Betex India Ltd., founded in 1992, is a Textiles-focused Small Cap business with a market capitalization of Rs 15.71 crore. The company reported a Standalone Total Income of Rs 9.20 Crore for the quarter ended June 30, 2021, down 52.77 percent from the previous quarter’s Total Income of Rs 19.47 Crore but up 860.33 percent from the same period last year’s Total Income of Rs.96 Crore. In the most recent quarter, the company achieved a net profit after tax of Rs.19 crore.

The stock appreciated almost 456 percent from January 2021 to August 13, 2021.

Nahar Spinning

Nahar Spinning

Nahar Spinning Mills Ltd., founded in 1980, is a Small Cap company in the Apparels industry with a market capitalization of Rs 1,488.60 crore. The stock returned 345.73 percent over three years, compared to 33.04 percent for the Nifty Smallcap 100.

The company reported a Standalone Total Income of Rs 739.53 Crore for the quarter ended June 30, 2021, up 1.53 percent from the previous quarter’s Total Income of Rs 728.37 Crore and up 250.48 percent from the previous year’s same quarter Total Income of Rs 211.00 Crore. In the most recent quarter, the company generated a net profit after tax of Rs 100.34 crore.

The stock appreciated almost 462 percent from January 2021 to August 13, 2021.

Best Textile Stocks in 2021

Best Textile Stocks in 2021

Company Market Cap (Rs crore) Price on Aug 13,2021 YTD Returns (%)
Adinath Textiles 10.82 22.65 1224.56%
Sportking India” 1413.58 4468.2 893.37%
Raja Bahadur International Ltd. 265.12 10,074 544.56%
Betex India 16.53 104.70 548.30%
Nahar Spinning Mills Ltd. 1485.17 424 456.07%

Disclaimer

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.



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9.7% Edelweiss Financial Services Aug 2021 NCD Issue To Open On August 17: Should You Invest?

Personal Finance

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1. About the NCD issue:

Edelweiss Financial Services (EFSL) August 2021 NCD offer period -August 17- September 6,2021.

The NCD issue will be secured in nature, meaning that if there will be a financial crisis situation at the company then investors interest will be put on priority and they will be paid back their principal amount together with the applicable interest rate, if any.

The base size of the NCD will be Rs. 400 crore.

If the investor already owns NCD issue of EFSL or group companies then he or she shall be entitled to an additional pay out of 0.2 per cent per annum.

Lead manager of the NCD: Equirus Capital Private Limited

2. About Edelweiss Financial Services:

2. About Edelweiss Financial Services:

It is the country’s leading financial services conglomerate catering to both local as global customers. The company’s financial services are in areas including credit both retail and corporate, investment and advisory services encompassing asset and wealth management and life and general insurance.

3. Purpose of NCD issuance: Major proceeds from the NCD i.e. 75% will be deployed towards repaying or pre-paying the company’s existing debt and the rest shall be utilized for corporate purposes.

4. Rating:

4. Rating:

ICRA has rated the NCD issue of EFSL as A+ with a negative outlook, while the rating accorded by Acuite Ratings and Research Ltd is AA, again with a negative outlook. The ratings signify that these NCDs come with low credit risk nonetheless they aren’t as safe as AAA-rated securities.

5. Return:

5. Return:

The issue offers an effective yield of up to 9.7% i.e. highly lucrative given the low interest rate structure of the economy currently.

Here is given the 8 series of the NCD issue with the pay-out options

Series Payment frequency Tenure Coupon rate Effective yield
Series 1 Monthly 36 months 8.75% 9.1
Series 2 Annual 36 months 9.1% 9.09
Series 3 Cumulative 36 months NA 9.1
Series 4 Monthly 60 months 9.15% 9.54
Series 5 Annual 60 months 9.55% 9.54
Series 6 Cumulative 60 months NA 9.55
Series 7 Monthly 120 months 9.3% 9.7
Series 8 Annual 120 months 9.7% 9.69

6. Taxability:

6. Taxability:

Interest income on NCD is taxable similar to fixed deposits. But in the case when the investment is not held until maturity and redeemed within a period of one year from investment date then short term capital gain tax applies and the rate for the same is determined based on the income tax slab applicable to you. For, NCDs sold after 1 year term, LTCG is charged at 20 percent with indexation benefit.

7. Whether or not should you invest in 9.7% Edelweiss Financial Services secured NCDs?

7. Whether or not should you invest in 9.7% Edelweiss Financial Services secured NCDs?

Investors with investible surplus are looking at bagging splendid returns and that too in the short term of may be as less as a day. This can we validated as we lately saw record subscriptions for IPOs, in the hope of huge listing gains in line with the fundamentals of the company going public and the overall bullish market momentum.

Now in the case of NCDs, the gains cannot be realized in a day or so nevertheless, investors may be paid out interest along with principal amount either on a monthly, quarterly, annual or on a cumulative basis.

Coming on to this specific Edelweiss NCD issue that will be thrown open for investment from August 17 (Tuesday), investors need to keep in mind the rating which suggests that the instrument lags on the safety parameter. Furthermore, while the return offered on the instrument is substantially higher when compared to traditional fixed deposits, they are low on liquidity despite being available for trading on the exchanges. Edelweiss NCD is proposed to be listed on NSE.

Experts suggest that at a time when economy is just recovering from the Covid-led fall out, it will not be prudent to lap up instruments with even low-credit risk. Nonetheless if your risk appetite allows, you can deploy a small portion of your investible surplus into the NCD issue for a shorter term horizon of 3 years. Also, note holding NCD for less than a year will not make sense because of the taxation implication.

GoodReturns.in



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