Category: Personal Finance

Gulf Oil Lubricants

The Current Market Price (CMP) of Gulf Oil Lubricants is Rs. 590, and according to Emkay Global, the Target Price for the stock should be Rs. 815. So, in the upcoming 12 months the returns can be 38.1% according to Emkay Global. Hence, the firm has maintained its ‘Buy’ tick on the company’s stock and said that the company’s earnings can beat estimates on better-than-expected volumes.

Emkay Global’s take on Gulf Oil Lubricants

Gulf Oil Lubricants’ Q2FY22 revenue/EBITDA/PAT of Rs. 5.34bn/Rs773mn/Rs587mn were up by 30%/down 1%/down 1% YoY (up 28%/83%/93% QoQ), beating Emkay Global’s estimates. Lube sales volume of Gulf Oil Lubricants increased 12% YoY/20% QoQ to 33mn ltr, with growth across segments primarily driven by B2C and overall recovery. Net realization rose 7% QoQ to Rs161.7/ltr, though unit COGS was also up as cost pressures continued.

Keeping a ‘Buy’ tick on the stock, Emkay Global said, “We raise FY22E EPS by 19%, considering the H1 run rate and building in 4% higher EBITDA/ltr and 10% higher volumes. We raise FY23E EPS slightly on better volumes and keep FY24E largely unchanged. We raise the Dec’22 TP by 2% to Rs815. Reiterate Buy.”

Aditya Birla Fashion & Retail

The Current Market Price (CMP) of Aditya Birla Fashion & Retail is at Rs. 289, and according to Emkay Global, the Target Price for the stock should be Rs. 340. So, in the upcoming 12 months the returns can be 17.8% according to Emkay Global. Hence, the firm has maintained its ‘Buy’ tick on the company’s stock and said that the company is expecting strong recovery and faster expansion, with an improved growth outlook.

Emkay Global’s take on Aditya Birla

Aditya Birla Fashion & Retail’s Q2 operating performance has been ahead of the firm’s estimates, despite a weak wholesale channel. Their Lifestyle segment recovered 92%, as Retail/Online channels surpassed pre#Covid levels, and Pantaloons recovery was slower at 73% due to higher mall presence. Emkay Global said, “We raise FY23-24 earnings estimates by 9-11% on a faster recovery and ethnic-wear consolidation. Considering a stronger recovery and higher growth visibility.”

Disclaimer

The above stocks have been picked from the brokerage report of Emkay Global Financial Services Ltd. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Buy Muthoot Finance

The brokerage has set a target price of Rs 1900 of Muthoot Finance.

According to Motilal Oswal the PAT (in line) grew by 11% YoY and 2% QoQ to INR9.94b. Despite higher-

than-estimated provisions, lower-than-estimated interest expenses (driven by lower CoB), and benefits of lower operating expenses led to an in line

performance.

Also, the brokerage believes that the NPAs in Gold financing are largely technical in nature, without any

significant write-offs. This deterioration – with gold prices remaining stable in 2QFY22 – suggests that Muthoot Finance is granting its customers (who would have perhaps borrowed at the peak of gold prices in Aug-Sep’20) leeway to repay their loans rather than rushing to auction the gold.

Target price of Rs 350 on the stock

Although Muthoot Finance has reported a deterioration in asset quality over the past two

quarters, it does not pose a significant concern. MUTH has aggressively avoided auctioning of gold until now.

This is driven by Muthoot’s inherent philosophy of

granting customers time to repay their loans, rather than rushing to auction their gold. Gold prices have remained stable for the last two quarters, but the

risk of a default by customers (who would have borrowed at the peak of gold prices in Aug’20) persists.

“The RoA/RoE is likely to remain robust (6%/23%) over the medium term. We cut our FY22E/FY23E EPS estimate by 2%/1% to factor in slightly higher credit costs. We reiterate our Buy rating with a target price of INR1,900/share (3.1x Sep’23E BVPS),” the brokerage has said.

Sun TV Network

Motilal Oswal believes the stock of Sun TV Network can reach a price of Rs 670. Sun TV reported in-line nos – revenue/PAT was up 10%/14% YoY, with ad revenues reaching pre-pandemic (2QFY20) levels and delayed benefit from the IPL offering spillover. This was offset by a sluggish subscription revenue run-rate.

“Sun TV’s healthy liquidity, with net cash of over Rs 32.3 billion presently, offers room to intensify investments in the linear as well as OTT space – along with high dividend payout potential (45-85% payout policy) and low valuation offer support. Furthermore, adjusted for the recent high auction price from the newIPL teams, the stock is at below 10x on a Sep’23E basis,” the brokerage has said.

“However, an inherent risk is that while investments in movie production have delayed OTT investments by two years (now guided for FY23), the monetization

of the existing library remains a key concern as it has a risk of further delay.

We value the stock on P/E of 14x on Sept’23E to arrive at Target Price of Rs 670. We maintain a Buy rating,” the brokerage has said.

Disclaimer

The above stocks are picked from the brokerage report of Motilal Oswal Institutional Equities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Please also do exercise some caution as markets are trading at record highs.

Serious about retirement planning? Avoid life insurance

Senior citizens looking for ways to save tax before the end of the financial year are advised to avoid any life insurance product. Life insurance is vital only in your accumulation phase, you are in the accumulation phase when you are the main earner, and you have responsibilities towards the dependent members of your family. However, when you are retired and a senior citizen, your duties are automatically transferred to dependents.

Your priorities during this stage of life will be capital security, regular income generation, and managing expenses related to healthcare and retirement. Thus, while searching for schemes to save tax, always keep these top priorities in mind to properly meet your liquidity requirements. You can go with plans either having a short lock-in period or with one that offers decent returns with regular returns.

Equity Linked Savings Scheme (ELSS)

If we take a look at tax-saving plans that are available for senior citizens, Equity Linked Savings Scheme (ELSS) also known as tax-saving mutual funds shines brighter with its least lock-in period of 3 years. ELSS also has the potential to offer good market-linked returns over the period of 3 years, thus you can choose an ELSS fund carefully after considering several quantitative and qualitative factors.

Compared to other fixed income tax-saving plans like National Savings Certificate (NSC), tax-saver bank FD, Public Provident Fund, etc, ELSS has the potential to yield better market-linked returns in 3 years. However, a retiree should avoid the Systematic Investment Plan (SIP) way to invest in ELSS, because each of your SIP installments will be subject to a lock-in period of three years. Instead, consider making a lump sum investment in ELSS.

When the lock-in period in ELSS will be complete you can, the amount can be withdrawn via the Systematic Withdrawal Plan (SWP). This is a facility offered by mutual fund houses, which generates a cash inflow stream to meet retirement expenses.

Apart from ELSS, having investment in 5-year Tax-saver Bank FD as well as in Senior Citizen Savings Scheme (SCSS) will also be a great option for stability and diversification purposes. Tax saving FDs cannot be prematurely encashed before completion of at least 5 years from the date of receipt. But this lock-in is good in a way to keep the funds safe and stable.

In Tax Saver FD you can invest a minimum amount of ₹ 100 or its multiples, with a maximum limit of ₹ 1.50 lakh in a financial year. Noticeable thing is that the interest rate varies among banks.

A retiree can consider the Quarterly Interest Payout Plan or Monthly Interest Payout Plan as per liquidity needs and fund retirement expenses. The deposit can be made in one name or jointly, but the noticeable thing is that, if it is held in a joint holding, the section 80C deduction benefit is available only to the first holder who has a PAN (Permanent Account Number).

Senior Citizen Savings Scheme (SCSS)

Similarly, the Senior Citizen Savings Scheme (SCSS) is also a good tax-saving option for retirees. It is government-backed, and specifically designed for the empowerment and financial security of senior citizens. Additionally, it offers an interest rate of 7.40% per annum. It can be opened in an individual capacity or jointly with your spouse. The nomination facility is available before and after opening the account.

The maximum lump sum deposit allowed under SCSS is ₹ 15 lakh and the minimum is ₹ 1,000. It is also eligible for deduction up to ₹ 1.50 lakh per annum under section 80C and interest earned under SCSS is payable on a quarterly basis and is exercisable from the date of deposition till March 31st / June 30th / September 30th / December 31st. However, make sure to claim the interest on time to earn extra.

While the interest earned is taxable, interest earned on bank deposits is exempt up to ₹ 50,000 annually, as per the provisions of section 80 TTB. For senior citizens having age between 60-80 exemption limit is ₹ 3 lakh, for over 80 years it is ₹ 5 lakh.

Union Budget 2021 & Health Insurance

Citizens aged 75 years and above don’t have to file their income tax return after Union Budget 2021 if pension and interest income is their only source of annual income. For a better tax-saving portfolio, you can follow 80:20 or 75:25 allocation to ELSS and the non-market linked tax-saving plans.

You can also take a health insurance cover, meanwhile, there are certain diseases and disorders, you can avail a deduction of Section 80DDB of ₹ 1 lakh or the actual amount spent, whichever is less. Similarly, for those who are engaged in charity, you can avail of deduction under section 80G of the Income Tax Act, 1961. Thus, Plan your tax-saving investment wisely.

It’s a very thoughtful process to choose your retirement plans and for the senior citizens, it should be a very serious decision, as it would be very important for the life coming ahead.

Amit Gupta is the Co-Founder and MD, SAG Infotech

Serious about retirement planning? Avoid life insurance

Senior citizens looking for ways to save tax before the end of the financial year are advised to avoid any life insurance product. Life insurance is vital only in your accumulation phase, you are in the accumulation phase when you are the main earner, and you have responsibilities towards the dependent members of your family. However, when you are retired and a senior citizen, your duties are automatically transferred to dependents.

Your priorities during this stage of life will be capital security, regular income generation, and managing expenses related to healthcare and retirement. Thus, while searching for schemes to save tax, always keep these top priorities in mind to properly meet your liquidity requirements. You can go with plans either having a short lock-in period or with one that offers decent returns with regular returns.

Equity Linked Savings Scheme (ELSS)

If we take a look at tax-saving plans that are available for senior citizens, Equity Linked Savings Scheme (ELSS) also known as tax-saving mutual funds shines brighter with its least lock-in period of 3 years. ELSS also has the potential to offer good market-linked returns over the period of 3 years, thus you can choose an ELSS fund carefully after considering several quantitative and qualitative factors.

Compared to other fixed income tax-saving plans like National Savings Certificate (NSC), tax-saver bank FD, Public Provident Fund, etc, ELSS has the potential to yield better market-linked returns in 3 years. However, a retiree should avoid the Systematic Investment Plan (SIP) way to invest in ELSS, because each of your SIP installments will be subject to a lock-in period of three years. Instead, consider making a lump sum investment in ELSS.

When the lock-in period in ELSS will be complete you can, the amount can be withdrawn via the Systematic Withdrawal Plan (SWP). This is a facility offered by mutual fund houses, which generates a cash inflow stream to meet retirement expenses.

Apart from ELSS, having investment in 5-year Tax-saver Bank FD as well as in Senior Citizen Savings Scheme (SCSS) will also be a great option for stability and diversification purposes. Tax saving FDs cannot be prematurely encashed before completion of at least 5 years from the date of receipt. But this lock-in is good in a way to keep the funds safe and stable.

In Tax Saver FD you can invest a minimum amount of ₹ 100 or its multiples, with a maximum limit of ₹ 1.50 lakh in a financial year. Noticeable thing is that the interest rate varies among banks.

A retiree can consider the Quarterly Interest Payout Plan or Monthly Interest Payout Plan as per liquidity needs and fund retirement expenses. The deposit can be made in one name or jointly, but the noticeable thing is that, if it is held in a joint holding, the section 80C deduction benefit is available only to the first holder who has a PAN (Permanent Account Number).

Senior Citizen Savings Scheme (SCSS)

Similarly, the Senior Citizen Savings Scheme (SCSS) is also a good tax-saving option for retirees. It is government-backed, and specifically designed for the empowerment and financial security of senior citizens. Additionally, it offers an interest rate of 7.40% per annum. It can be opened in an individual capacity or jointly with your spouse. The nomination facility is available before and after opening the account.

The maximum lump sum deposit allowed under SCSS is ₹ 15 lakh and the minimum is ₹ 1,000. It is also eligible for deduction up to ₹ 1.50 lakh per annum under section 80C and interest earned under SCSS is payable on a quarterly basis and is exercisable from the date of deposition till March 31st / June 30th / September 30th / December 31st. However, make sure to claim the interest on time to earn extra.

While the interest earned is taxable, interest earned on bank deposits is exempt up to ₹ 50,000 annually, as per the provisions of section 80 TTB. For senior citizens having age between 60-80 exemption limit is ₹ 3 lakh, for over 80 years it is ₹ 5 lakh.

Union Budget 2021 & Health Insurance

Citizens aged 75 years and above don’t have to file their income tax return after Union Budget 2021 if pension and interest income is their only source of annual income. For a better tax-saving portfolio, you can follow 80:20 or 75:25 allocation to ELSS and the non-market linked tax-saving plans.

You can also take a health insurance cover, meanwhile, there are certain diseases and disorders, you can avail a deduction of Section 80DDB of ₹ 1 lakh or the actual amount spent, whichever is less. Similarly, for those who are engaged in charity, you can avail of deduction under section 80G of the Income Tax Act, 1961. Thus, Plan your tax-saving investment wisely.

It’s a very thoughtful process to choose your retirement plans and for the senior citizens, it should be a very serious decision, as it would be very important for the life coming ahead.

Amit Gupta is the Co-Founder and MD, SAG Infotech

CCL Products

With a total manufacturing capacity of 35k tonnes, CCL Products (CCLP) is India’s largest maker and exporter of instant coffee.

The firm has set a target price of Rs. 430, while the stock last traded on the NSE on November 6, 2021, at a price of Rs. 381 per share. Though a 6- to 9-month investment horizon is preferable for such ideas, our recommendations may bring some profit potential even for short-term investors.

US business a key growth driver over the long term

CCLP has done well in the US markets, and management expects to become the primary supplier for one of its biggest clients, which would be a significant lift for the company moving forward.

Target and Valuation

“Management of CCLP has revised its volume guidance upwards of more than 15% for FY22 from earlier 10-15% guidance on the back of commercialization of new capacity at Vietnam. It also expects a steady improvement in EBITDA/kg. Overall for FY22 topline is likely to be driven by a combination of volume and price/mix led growth. Despite sharp rise in RM prices and other Operating Costs, CCLP maintained its EBITDA Margin at 24%+ levels on the back of improved mix and better price realization. We recommend BUY with TP of Rs. 430/share,” the brokerage has said.

NOCIL Ltd

The firm has set a target price of Rs. 300, while the stock last traded on the NSE on November 8, 2021, at a price of Rs. 268 per share.

Strong industry growth prospects going ahead

The Indian tyre industry’s medium to long-term prospects have improved following the impact of COVID-19, with stable demand growth. Replacement demand and the OEM segment are projected to rebound quickly. Demand from export markets is also expected to be strong. NOCIL has claimed some market share increases in the local market as demand has improved significantly.

Target and Valuation

“We revise our FY22/23/FY24 estimates downwards to factor in the near-term pressure on business and profitability. Maintain BUY with a revised TP of Rs 300/share (previously Rs 315/share) valuing it at 20x FY24E EPS,” the brokerage has said.

Disclaimer

The above stocks are picked from the brokerage report of Axis Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article