Category: Personal Finance

1. Karnataka Bank – Sell Rating With A Reduced Target Price Of Rs. 50

For this private sector lender, Axis Direct has retained its ‘Sell’ call and at the same time reduced the target price to Rs.

Q1Fy22 results- Karnataka Bank-A mixed in terms of performance

NIM or net interest margin for the bank improved and lower C-I but with higher restructuring and lower non-interest income. NII was up 7%/25% YoY/QoQ led by improvement in NIM by 9bps/57bps YoY/QoQ to 2.98%. The loan book was down 4.5% YoY and up 0.2% QoQ to Rs 51,791Cr, said the brokerage report.

In its loan book, the bank’s large corporate lending has come down to 14% from 30% in March 19.

C-I ratio has improved to 48.9% from 53.9% QoQ.

Gross/Net NPAs marginally improved to 4.8%/3% from 4.9%/3.2% QoQ. Provisions declined 28% YoY but wereup 8% QoQ to Rs 368 Cr. PAT was down 46% YoY and up 238% QoQ to Rs 106 Cr, supported by a tax write-back of Rs 60 Cr during the quarter. Slippages for Q1FY22 stood at Rs 414 Cr (vs. Rs 1,176 Cr in Q4FY21).

“While up-tick in NIMs is encouraging, concerns on high restructured book persist. Threat and potential impact from the third wave of Covid could be more detrimental for smaller banks such as KBL with higher credit costs and lagging loan growth affecting profitability. The proposal of QIP placement is keenly eyed. We maintain SELL on the stock with a target of Rs 50/share(~0.25x FY23E ABV).

Loan advances de-grew, Gold loan book to improve

-Advances to large corporate receded and was at 14% for the just ended quarter

– With major presence in the rural areas there is anticipated a better traction in gold loan book

– Retail deposits led primarily by growth in CASA accounts

-Slippages mostly from MSME, other sectors leading to weakening in asset quality have been agriculture, CRE, housing loan, mortgages, vehicle and personal loans.

2. Dixon Technologies:

With a tagline as “the brand behind brands”, Dixon Technologies offers design-focused solutions in consumer durables, home appliances, lighting, mobile phones and security devices across the globe. Along with that the company offers a host of refurbishment solutions for an array of products that include set top boxes, mobile phones and LED TV panels.

Though the recent PLI or production linked incentive has been a big boost to companies’ like Dixon, Axis Direct has downgraded the stock of Dixon to a ‘Hold’ recommendation, nonetheless has raised the target price to Rs. 4510, the stock last quoted at a price of Rs. 4230, this implies an upside of over 6%.

Resilient performance in Q1Fy22

Dixon reported a Consolidated Revenues of Rs 1,867 Cr up 261% YoY/ down 11% QoQ, as the second wave of Covid-19 impacted growth in April and May’21 while the recovery was seen in Jun’21. While the Gross Margins were adversely impacted by 460 bps, the EBITDA margins, too, declined to 2.6% (Vs 3.3% in Q1FY21) due to change in product mix (higher share of LED TV’s having lower margins), negative operating leverage, and a sharp increase in RM costs. The PAT stood at Rs 18 Cr as against Rs 2 Cr in Q1FY21.

Valuation and the rationale for the downgrade

“We believe Dixon will continue to ride on the strong order book by leveraging its execution capabilities to scale up its operations, enter new product segments, and capture PLI opportunities in other segments. We have adjusted FY22E revenue estimates lower by 4.5% and have marginally tweaked FY23E/FY24revenues by factoring in the growth recovery, going forward. We value Dixon at 50x FY24 E EPS of Rs 90.2 to arrive at a target price of Rs 4,510”, leaving little room for upside potential from the current levels. Given encouraging long-term potential but limited upside potential from CMP, we recommend a HOLD on the stock.said the brokerage firm in its latest report.

Future growth prospects sound for the company i) Healthy order book across segments, (ii) Addition of new clients, (iii) Significant contribution from the PLI revenues going forward.

Key downside risks a) Lower revenue contribution from PLI scheme and b) Slower ramp-up in the capacities. Although we continue to maintain our positive stance over the long term, the current price factors in the future growth prospects in our estimates.

Disclaimer:

Stock market investments are risky and do consider your risk profile and other details, the details listed out here are taken from brokerage reports. Do take financial help before taking any buy, sell and hold call on various investment products.

GoodReturns.in

Nippon India Short-term Fund

Nippon India Short Term Fund Direct-Growth is a Nippon India Mutual Fund Short Duration mutual fund plan. Nippon India Short Term Fund Direct-Growth is a medium-sized fund in its category, with assets under management (AUM) of 9,249 crores. The fund’s expense ratio is 0.33 percent, which is comparable to the expense ratios charged by most other Short Duration funds. The latest NAV declared is Rs 44.092. The fund is benchmarked against CRISIL Short-Term Bond Total Return Index. There is no charge on withdrawal.

The fund’s top holdings are in India Infradebt Ltd., Reserve Bank of India, Housing Development Finance Corpn. Ltd., GOI, India Grid Trust.

Funds rating

ValueResearch: 4 Star

Morningstar: 4 Star

HDFC Short Term Debt Fund

HDFC Short Term Debt Fund Direct Plan-Growth is an HDFC Mutual Fund Short Duration mutual fund. HDFC Short Term Debt Fund Direct Plan-Growth is a medium-sized fund in its category, with assets under management (AUM) of 18,017 crores. The fund’s expense ratio is 0.24 percent, which is comparable to the expense ratios charged by most other Short Duration funds.

HDFC Short Term Debt Fund Direct Plan has a one-year growth rate of 6.06 percent. It has returned an average of 8.72 percent per year since its inception. The und is benchmarked against CRISIL Short-Term Bond Total Return Index.

The fund’s top holdings are in GOI, Rural Electrification Corpn. Ltd., Housing Development Finance Corpn. Ltd., State Bank of India, Mahanagar Telephone Nigam Ltd..

Funds rating

• Value Research: 4 Star
• Morningstar: 5 Star
• CRISIL: 2 Star

ICICI Prudential Short Term Fund

The ability of the ICICI Prudential Short Term Fund Direct Plan-Growth scheme to provide consistent returns is better than most funds in its category. It has a strong capacity to limit losses in a down market. ICICI Prudential Short Term Fund Direct Plan-Growth has a total asset under management (AUM) of Rs. 20,921 crores and is a medium-sized fund in its category. The fund has a 0.39 percent cost ratio. The CRISIL Short-Term Bond Total Return Index serves as the fund’s benchmark.

The growth returns of the ICICI Prudential Short Term Fund Direct Plan during the last year have been 6.03 percent. It has had an average yearly return of 9.13 percent since its inception. Reserve Bank of India, Uttar Pradesh State, Housing Development Finance Corpn. Ltd., State Bank of India, and Pipeline Infrastructure (India) Pvt. Ltd. are among the fund’s top holdings.

Funds Rating

Value Research: 5 Star

Morningstar: 5 Star

CRISIL: 4 Star

Canara Robeco Short Duration Fund

Canara Robeco Short Duration Fund Direct-Growth has assets under management (AUM) of 1,078 crores,, making it a medium-sized fund in its category. The cost ratio of the fund is 0.42 percent. The Scheme invests in a variety of debt securities and money market instruments with varying maturities and risk profiles in order to generate profits.

The fund’s credit record is outstanding, indicating that it has lent to borrowers of high quality. Because most funds in this category lend to similar borrowers, the risk of default is similar across the board.

Funds Rating

Value Research: 3 Star

Morningstar: 5 Star

CRISIL: 4 Star

Axis Short Term Fund

Axis Short Term Direct Fund-Growth is an Axis Mutual Fund Short Duration mutual fund plan. Axis Short Term Direct Fund-Growth is a medium-sized fund in its category, with assets under management (AUM) of 12,182 crores. The fund has a lower cost ratio than its peers, at 0.3 percent.

Returns for Axis Short Term Direct Fund-Growth over the last year have been 5.50 percent. It has generated an average yearly return of 8.84 percent since its inception.

The fund’s top holdings are in GOI, Food Corporation of India, Maharashtra State, Mahindra Rural Housing Finance Ltd., Housing Development Finance Corpn. Ltd..

Funds Rating

Value Research: 5 Star

Morningstar: 5 Star

CRISIL: 3 Star

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. 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 GoodReturns.in

Why should you consider investing in liquid mutual funds now?

For now bond yields in the country have headed northwards and was last seen at 6.199% and now as the economy picks up pace owing to vaccination and ceasing of Covid second wave related ill effects, the talks around policy normalization will gather steam. And this shall only provide a boost to bond yield going forward over the next 1-2 years time.

And now as interest rates may see an upturn, liquid funds can be an ideal choice in the debt category as the impact shall be favourable for it. In a rising interest rate scenario, liquid funds get re-priced higher.

What parameters to look at when choosing a liquid mutual fund?

1. You invest in a liquid fund to redeem in the short term, hence liquidity of the underlying portfolio needs to be a prime concern.

2. Credit quality: There should be no risk to your principal investments as well as on the return part.

So, as against to opting for low-rate bank deposits you can park short term surplus in liquid funds. Also, fixed deposits are not able to gain the benefit of rising interest rate as the interest gets locked in for the entire term.

Objective with which liquid funds work

These mutual funds aim to provide short term investment avenue as well as preservation of capital and moderate income. Short term investments invested into by these funds include treasury bills, certificates ofdeposit, commercial paper and inter-bank call money, government securities, etc. Important point to note here is that these funds as against other funds do not witness high volatility.

1. JM Liquid Fund -Direct (Growth) Plan

This liquid fund offering is from the house of JM Financial Mutual Fund and commands an asset size of Rs. 1351.95 crore. The expense ratio for the fund is a meagre 0.22%.

The fund is CRISIL 5 star rated and is mainly invested into debt that comprises mostly G-securities together with low risk securities.

Started in the year 2013, the fund’s benchmark is CRISIL Liquid TRI and has given a return of 7.2% since inception. SIP in the fund can be started for Rs. 500 while for lump sum one needs to dole out a minimum of Rs. 500.

The top debt investments of the fund comprise T-Bills, Commercial Paper, CDs etc.

Further as per the Morning Star rating agency the fund enjoys a high credit rating.

2. Canara Robeco Liquid – Regular Plan – Growth

The fund commands an AUM of Rs. 2399 and an expense ratio of just 0.15%. The NAV of the fund as on July 28 is 2484.8217. The fund is classified as a low risk investment option.

Fund aims to enhance the income, while maintaining a level of liquidity through, investment in a mix of MMI & Debt securities. However, there can be no assurance that the investment objective of the scheme will be realized.

Now coming to its investments, the fund’s corpus is mostly parked in debt of which over 50% is in G-securities. Note the fund enjoys a rating of 5-Star by CRISIL.

Again the fund carries a high credit quality implying low risk in the underlying instruments. Launched in the year 2013, the fund since inception has offered a return of 6.99%.

In a 1-year period the fund has offered a return of 3.12% and SIP in the fund can be started for a minimum of Rs. 1000.

3. Edelweiss Liquid Fund – Direct Plan – Growth

The CRISIL 4-Star rated fund commands a low expense ratio of just 0.11% and an AUM of Rs.1064.23 crore.

NAV or net asset value of the liquid fund by Edelweiss as on July 28, 2021 stands at 2683.91. Mutual fund risk-o-meter defines the mutual fund to be low to moderate in risk.

Investments of the fund are primarily parked in debt (over 85%).Benchmark of the fund is CRISIL 10 year Gilt Index.

The fund kicked off again in the year 2013 had since inception generated a return of 7.11%. SIP in the fund can be started for Rs. 500 while for lump sum minimum investment needed is Rs. 5000.

SIP annualised return

Taxation of liquid funds

If the mutual fund units are sold after 3 years from the date of investment, taxed at the rate of 20% applies after providing the benefit of inflation indexation.

If the mutual fund units are sold within a period of 3 years from the date of investment, entire amount of gain is added to the investors’ income and taxed according to the applicable slab rate.

No tax is to be paid as long as you continue to hold the units.

In respect of the dividend, this income is added to investors income and taxed as per his or her tax slab. And in a case if dividend income exceeds over Rs. 5000 in a financial year then TDS at the rate of 10% is deducted by the Mutual fund.

Disclaimer:

The mutual fund investment is risky too and herein the discussed mutual fund category is to reap a better return than bank savings accounts. Investors can channelise their short term surplus into the funds category. Nonetheless, the investments listed on the website need not be construed as investment advice.

GoodReturns.in

BNP Paribas Substantial Equity Hybrid Fund Direct-Growth

BNP Paribas Substantial Equity Hybrid Fund Direct-Growth is a aggressive hybrid mutual fund scheme launched by the fund house BNP Paribas Mutual Fund in 2017. This fund has been in existence for the last 4 years and has a 77.30% allocation to equity and 12.80% to Debt. According to Value Research, BNP Paribas Substantial Equity Hybrid Fund Direct-Growth returns over the previous year have been 38.77 percent, with an average annual return of 15.87 percent since its debut. The equity component of the fund is invested in the financial, technology, construction, automobile, and fast-moving consumer goods sectors whereas the debt component of the fund is allocated across financial, sovereign, and others.

ICICI Bank Ltd., Axis Bank Ltd., HDFC Bank Ltd., Rural Electrification Corpn. Ltd., and GOI are the fund’s top five holdings. The fund has Rs 625.8 crore in assets under management (AUM) and a current net asset value (NAV) of Rs 18.87 as of July 28, 2021. The fund has a low expense ratio of 0.58% and it levies a 1% exit load if units worth more than 10% of the investment are redeemed within 12 months.

Canara Robeco Equity Hybrid Fund Growth

In the year 2013, this fund was launched by the fund house Canara Robeco Mutual Fund. It is a medium-sized fund in the category, with a 73.30 percent equity allocation and a 23.00 percent debt exposure. Canara Robeco Equity Hybrid Fund Direct-Growth returns over the last year were 37.07 percent, according to Value Research data. Since its inception, it has generated an average yearly return of 15.52 percent. The financial, technology, healthcare, automobile, and construction sectors make up the majority of the fund’s equity holdings. Infosys Ltd., HDFC Bank Ltd., ICICI Bank Ltd., Reliance Industries Ltd., and GOI are the fund’s top five holdings.

The fund has an expense ratio of 1.95% which is much higher than other funds in the category. As of July 28, 2021, the fund has Rs 5,635.99 crore in assets under management (AUM) and a current net asset value (NAV) of Rs 229.97. If units worth more than 10% of the investment are redeemed within 12 months, the fund charges a 1% exit load.

Quant Absolute Fund Direct Growth

By the fund house Quant Mutual fund, this aggressive fund which is a small-sized fund of its category was launched in the year 2013 and has been in existence for the last 8 years. The fund has a 2.15 percent expense ratio, which is more than most other funds in the same category. The fund currently has a 77.90 percent equity allocation and a 2.10 percent debt exposure. According to Value Research, Quant Absolute Fund Direct-Growth returns over the previous year were 80.04 percent, and it has generated an average annual return of 18.38 percent since its inception.

The equity element of the fund is largely allocated to the FMCG, Financial, Metals, Construction, and Healthcare sectors. ITC Ltd., Indiabulls Real Estate Ltd., Godrej Agrovet Ltd., Tata Steel Ltd., and Fortis Healthcare (India) Ltd. are the fund’s top five holdings. The fund has Rs 52.52 crore in assets under management (AUM) and a current net asset value (NAV) of Rs 269.10 as of July 28, 2021. There is no exit load on this fund, and you can start a SIP with a minimum monthly contribution of Rs 1000.

Best Aggressive Hybrid Funds In India 2021

Here are the best aggressive hybrid funds in 2021 in terms of ratings and performance.

Should you invest?

In the long-term, the above discussed aggressive hybrid fund tends to be the best as they are less risky than pure equity mutual funds and one can start SIP in these funds when the market is at a record high. Since the funds have the allocation of 75% across equity and 25% across Fixed Deposits or FD-like instruments which is nothing but the debt part of the fund, one can estimate good returns in the long run by staying invested for more than 3 years. With a diversified portfolio of both equity and debt, investors can generate regular income through the debt part and higher risk-adjusted returns through the equity part in one fund.

The debt element of the fund is the most intriguing aspect since it delivers a buffer to give consistency in returns if the market collapses and equity struggles. Such an aspect of the fund could be appealing to equity investors with a high-risk tolerance and new investors with a moderate risk profile. Due to the presence of mid-cap and small-cap stocks and low-quality debt securities, investing in aggressive hybrid funds for short term can be risky which our readers should and should keep in mind before investing in the current market scenario.

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. 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 GoodReturns.in