Category: Personal Finance

1. Reliance Infrastructure:

This is an Anil Dhirubai Ambani Group company, the company is primarily engaged in infra development and its core sectors include energy, infrastructure, E&C and defence. The company’s turnover as per the company website is Rs. 18,852 crore.

The company bagged ‘Best Metro of India 2016’ Award for having developed a marvel in Mumbai Metro one.

Stock price journey of Reliance Infra:

The company stock as in 2018 registered an all time high of Rs. 2641 and the last traded stock price of Reliance Infra is Rs. 76.85 per share, while its 52-week high and low are Rs. 109 and Rs. 19.2, respectively. The stock is part of the S&P BSe Small cap stock and is categorized in the ‘T’ category.

What weighed on Reliance Infrastructure stock?

For the last quarter of FY19, the company posted a huge loss of over Rs. 3000 crore and since then the stock has come crashing down. Now even as the group’s companies’ are under NCLT resolution there is a belief that recovery shall be much higher than what is owed to creditors and this is creating fresh interest for the stock.

Financials

As of now, regarding the company’s financials, its debt to equity is well below 1 i.e. a big positive, also the debtors turnover ratio is the highest at 4.6 times.

2. PC Jeweller:

It is the finest jewellery discovery platform offering a widest collection of curated designs to fit every occasion. The company takes pride in its policies that provide easy returns, free shipping, BIS Hallmark, 100% certified jewellery, life-time exchange, best and transparent prices and unique designs all under one roof.

Stock price journey

The jewellery company made its Indian stock market debut in the year 2012 and its price was fixed at Rs. 135 per share. The stock in the year 2018 made an all time high price of Rs. 600 and was last at July 20, 2021 quoted at a price of Rs. 26.40.

There were 2 concerns seen at the company then which led to a drag in its share price first there was a speculation made that the company’s promoters might have hidden information on its business association with Vakrangee. Also, one of the promoter in the company gifted his stake in the company to family members via off market transactions.

Latest financials and other metrics

For the June ended quarter the number of FIIs/FPIs in both number and % terms have increased their holding in the scrip, indicating positive momentum. The firm for the quarter ended March of FY21 posted positive financial results and for the complete financial year 2021, Profit figure came in at Rs. 60.84 crore. Another has been positive growth in PBT less OI of 186%.

3. Yes Bank:

Yes Bank was among the leading private sector bank in the country in existence since the year 2004. The commercial bank is into offering a host of services including investment banking, merchant banking & Brokerage businesses through YES SECURITIES and its Mutual Fund business through YES Asset Management (India) Limited, both wholly owned subsidiaries of the Bank.

What played havoc for Yes Bank scrip?

In mid 2019, Yes Bank scrip saw a lot of downgrades and even Moody’s placed private lender’s foreign currency issuer rating of Ba1 under review for downgrade. And from an all time high reached in Yes Bank’s scrip of Rs. 404 in 2018 again, the stock came tumbling down to Rs. 12.95 per share as of last trade.

Primarily the Moody’s note indicated that the liquidity pressure on the domestic finance firms is expected to impact the credit profile of YES Bank since it has substantial exposure to the weaker firms in the sector.

But later the crisis-ridden lender was rescued by RBI’s action plan and SBI led the bank’s recovery with a number of other banks taking the charge. Even after the recovery plan in place, the bank’s scrip didn’t saw much revival and it is substantially down from its all time high.

Yes Bank’s 52-week high and 52-week low price has been Rs. 20.75 and Rs. 11.1, respectively.

Financials still weak for the lender

– Net profit is -Rs. 3787.75 crore has fallen at 244%.

– NII is the lowest at Rs.968 crore

– Credit deposit ratio is also lowest at 102%

4. Vodafone Idea:

The telecom provider is an Aditya Birla Group and Vodafone Group entity offering a host of voice and data services across 2G, 3G and 4G solutions. The company is contributing immensely to the nation’s Digital India mission.

Stock market journey of Vodafone Idea shares

Vodafone Idea made its listing on the bourses in 2007 at a issue price fixed between Rs. 65- 75 and the stock hit its all time high of Rs. 123 in 2015 but now as of last trade as on July 20, 2021 settled at a price of Rs. 9 per share on the NSE. The stock’s 52 week low and high are Rs. 8.9 and Rs. 9.35.

Financials weak yet fund managers bet on this cash-starved telecom provider

For the March ended quarter of FY21, the firm’s loss expanded to more than Rs. 7000 crore. Nonetheless, despite precarious financials, mutual funds with the highest asset base such as HDFC AMC and Aditya Birla have bet on the stock and added the Vodafone Idea in their kitty. In fact some other mutual funds have betted on the stock, implying mutual fund’s positive outlook on the stock.

Positives seen for the scrip

The company is gearing to raise funds and is in talks with investors to keep the firm as a going concern.

Rising net cash flow and cash from its operations

Conclusion:

So, as we have seen these scrips crashing down heavily from their all time highs, investors need to time to time evaluate their portfolio and get out of such stocks and hence this is where portfolio rebalancing comes to play.

GoodReturns.in

What is Dearness Allowance and Dearness Relief?

The Dearness Benefit is an inflation-adjusted allowance granted to government employees, public sector employees, and retirees. In order to offset the impact of inflation on people, Dearness Allowance is computed as a percentage of an Indian citizen’s basic wage.

Dearness Relief is calculated using the pensioner’s basic pension/family pension. The Dearness Relief on the pension is adjusted and paid by the Pension Disbursing Agencies.

The DA is determined by their basic salary, whereas the DR is determined by their basic pension. The effect of inflation varies according on the employee’s location, thus the dearness allowance is computed accordingly. As a result, DA differs depending on whether a person works in an urban, semi-urban, or rural setting.

How to calculate DA hike?

To figure out how much a central government employee’s DA arrears are worth, do some easy math for a 7th Pay Commission Level-1 employee with a Grade Pay of Rs 1800 and a salary range of Rs 18,000 to Rs 56,900.

Government employees currently receive a 17 percent dearness allowance. The DA is 3,060 if a government employee’s basic income is Rs 18,000. With a 28 percent increase, the dearness allowance will be Rs 5,040. From July 1, this calculation will be used.

The 7th Salary Commission recommends Rs 18,000 as the minimum basic pay for entry-level Central Government employees. Such employees received Rs 3060 as a dearness allowance until June 30, 2021, at the 17 percent DA rate. They would now receive Rs 5040 as a dearness allowance at a 28 percent rate.

Dearness Allowance % = ((Average of AICPI (Base Year 2001=100) for the previous 12 months -115.76)/115.76)*100

Dearness Allowance Percentage = ((Average of AICPI (Base Year 2001=100) for the previous three months -126.33)/126.33)*100

AICPI is an abbreviation for All-India Consumer Price Index.

Dearness Allowance: Important Things To Know

• Employees’ DA varies depending on their job location. Because DA is linked to the cost of living, it is not the same for all employees and differs depending on whether they work in rural, urban, or semi-urban settings.
• When a pay commission introduces a new salary structure, the pension for retired public sector personnel is also updated. The same is true for Dearness Allowance: whenever DA is increased by a certain percentage, it is reflected in the pensions of retired public sector personnel.
• The dearness allowance, also known as DA, is computed as a percentage of the basic income, which is then added to the basic salary, together with other components such as HRA (House Rent Allowance), to make up the total salary of a government employee.

Tax on DA

For salaried employees, DA is entirely taxed. If the employee is given unfurnished rent-free housing, it becomes part of the wage up to the point where it becomes the employee’s retirement benefit salary, assuming all other conditions are followed. The dearness allowance component must be reported separately in the forms submitted in India, according to the Income Tax laws.

Motilal Oswal Says These 4 Stocks Can Deliver Good Returns

(Returns

ICICI Prudential

India’s life insurance industry is well positioned to generate sustainable long-term growth. Insurers should expect good company growth thanks to a growing share of financial savings, higher discretionary incomes, and favourable demographics.

Indian insurers are expected to trade at a premium to their global counterparts, according to Motilal Oswal.

“The share of banca (excluding ICICI Bank) increased to ~11% v/s 5% in FY18. Persistency rate has improved, reflecting strength in business quality. We expect this trend to continue, aided by a higher mix of the Non-Linked Savings/Protection business, both of which have a higher persistency rate. Howe ver, profitability has been affected due to higher settlement of COVID-19 claims (3.2x rise over FY21) and increased provisions. We estimate IPRU to deliver ~32%/36% CAGR in new business APE/VNB growth over FY21-23E, led by improving margin (29% by FY23E), thus enabling an improvement in operating RoEV to ~17%. We maintain our Buy rating with a TP of INR700/share (2.6x FY23E EV),” Motilal Research report said.

ICICI Prudential

Large corporations have a significant opportunity to offer Group term plans because employee immunization rates have improved dramatically. Credit Life has also recovered to pre-COVID levels. As a result, while short-term difficulties in Retail persist, the share of Group Protection has climbed.

CMP: Rs 605

TP: INR700

Upside: 16%

Rating: BUY

HCL Tech

HCLT grew by 0.7 percent QoQ (CC), falling short of our forecast of 2.4 percent, due to weak growth in IT Services. EBIT margin was down 80bp QoQ in 4QFY21, excluding the impact of a one-time bonus, and missed our forecast by 130bp due to COVID-related charges of 90bp, according to Motilal Oswal research report.

“We downgrade our FY22E/FY23E EPS estimate by 4%. We factor in a revenue miss and lower growth in the Products and Platforms business. We have reduced our margin estimate to factor in higher sales and marketing investments in FY22E. We maintain our Buy rating as we expect traction in the Services business in 2HFY22E and FY23E, driven by higher IMS/Cloud focused deals. Our TP of INR1,180 per share implies 20x FY23E EPS.” Motilal Oswal said in its research report.

HCL Technologies

Broad-based sequential growth, coupled with healthy deal wins and a robust pipeline, indicates an improved outlook. We estimate strong performance in the Products business, led by HCLT’s capabilities to rightly align and sell these products in the long run, added further.

CMP: INR1,000

TP: INR1,18

Upside: (+18%)

EPL

The results and significant initiatives in the Personal and Oral Care categories are highlighted in EPL’s FY21 Annual Report. The research also examines company performance and trends in each of the four geographies: AMESA stands for Americas, EAP stands for Europe, and Europe stands for Europe.

“We expect a revenue/EBITDA/PAT CAGR of 13%/17%/24% over FY21-23E. With the impact of COVID-19 gradually subsiding, we expect Personal Care products to gain traction across geographies, particularly in Americas. We value the stock at 26x FY23E EPS. A steady increase in revenue share from the Personal Care segment (higher margin business and lower sensitivity to RM cost) and new product launches is expected to aid growth. Our TP of INR320 per share implies a 34% upside. We maintain our Buy rating” Motilal Oswal said in its report.

EPL

The earnings momentum would continue on the back of:

a) higher revenue sustainability owing to long-term contracts in the Oral Care segment

b) a steady increase in revenue contribution from the Personal Care product category,

c) growing traction in the volume of recyclable tubes (viz. Platina), along with an increasing shift toward Laminated Tubes (from plastic/aluminumtubes), and

d) a volume uptick across product segments and geographies (with the impact of COVID-19 gradually subsiding).

CMP: Rs 238

TP: Rs 320

Upside: (+34%)

Rating: Buy

Bajaj Finance

Bajaj Finance’s (BAF) 1QFY22 PAT was up 4% YoY but down 26% QoQ to INR10 billion (27 percent miss). Opex was generally in line, with NII at INR37b (5 percent miss) up 12 percent YoY. Provisions came in at INR17.5 billion, compared to our expectation of INR15 billion. The company wrote off INR9.2 billion in loans while keeping COVID overlay provisions at INR4.8 billion, resulting in significant provisions, Motilal Oswal said.

“We estimate ~4.8% RoA / 23% RoE over the medium term. BAF’s return ratios have not only been consistent but are also the highest in our Coverage Universe (ex-gold financiers). Given the strong recovery in Jul’21 and the healthy progress made in the digital transformation program (including wallets/payments), we reiterate Buy, with Target Price of INR6,750 (7x 1HFY24 BV), Motilal Oswal said in its research report.

Bajaj Finance

The Auto Finance (AF) division was the hardest hit, accounting for the majority of the asset quality decline during the quarter. Auto finance is a type of secured loan in which the item can be repossessed. As a result, it expects to be able to reclaim asset quality in the AF market if there are no additional lockdowns. Even in this area, the 3W business (30 percent of the AF market) has been the most badly damaged.

CMP: Rs 5,938

TP: Rs 6,750

Upside: 14%

Rating: Buy

Disclaimer

These four stock picks are from a Motilal Oswal Research report; however, before betting on any of the stocks, investors should conduct their own analysis and research. The brokerage recommendation made here should not be interpreted as investment advice.

Buy Tata Elxi Stock for price target of Rs 5,000

Sharekhan has a buy on the stock of Tata Elxi with a price target of Rs 5,000, as against the current market price of Rs 4,100.

Sharekhan believes that growth is likely to remain strong for Tata Elxi in the coming years, as it focuses on high growth sectors (media and healthcare) and emerging technology areas (connected, autonomous, OTT, digital health, and medical devices, etc.), where the client allocates a higher budget.

The firm also believes that revenue for Tata Elxi is set to grow at twice the industry average, margin profile is superior and company has differentiated technological capabilities

“At the current market price, the stock is trading at 53x/44x/37x its FY2022E/FY2023E/FY2024E earnings, which though expensive is justified against anticipated 2x revenue growth as compared to industry’s average growth rate, superior margin, and solid execution. We maintain our Buy rating on Tata Elxi Ltd with a revised a target price of Rs. 5,000, given a strong balance sheet, consistent dividend payout, improving cash generation and its status as a preferred partner for clients,” the brokerage has said.

Shares in Tata Elxi last closed at Rs 4,100 on the NSE.

Buy HDFC Bank

HDFC Bank did not report a great set of quarterly numbers and the stock has been falling ever since the bank reported its numbers. The stock has seen sharp fall on Monday and Tuesday. Nonetheless, broking firm Sharekhan has set a price target of Rs 1800 on the stock as against the current market price of Rs 1,433,

According to the brokerage, the bank’s consistency is buoyed by its robust underwriting capability, risk measurement standards and focused on high quality corporates, which support the valuations.

“We find the management’s focus for stable NIMs, and a structurally improving cost-income ratio encouraging, while the high provisioning buffer should support asset quality and profitability. We have fine-tuned our estimates and the target multiple for the bank considering the dynamic environment. We retain a Buy rating on the stock with a unchanged price target of Rs. 1,810,” Sharekhan has said in its report.

L&T Infotech

The broking firm has also recommended the stock of L&T Infotech after its latest results. Sharekhan believes that there would be strong hiring, timely wage revisions, investments in sales and capabilities and strategies around on cloud & data would aid sustainable growth in coming years.

“We expect revenue to clock 17% CAGR over FY2021-24 “We expect L&T Infotech to deliver USD revenue/earnings CAGR of 16.7%/17.4% over FY2021-FY2023E. At the current market price, the stock is trading at 34x/29x/25x its FY2022E/FY2023E/FY2024E earnings, which, although expensive, is justified given possibilities of its strong revenue growth momentum with stable margins and a robust business model. Hence, we maintain our Buy rating on the stock of L&T Infotech with an unchanged price target of Rs. 4,800,” the broking firm has said.

Disclaimer

The above three stocks are picked from the brokerage report of Sharekhan. Neither the author, nor Greynium Information nor the brokerage would be responsible for any losses incurred based on a decision after reading the article. We at goodreturns.in have been constantly emphasizing the need to reduce over exuberance in stocks and invest with caution. So, please do be careful.