Category: Personal Finance

Interest rate and deposits

The government’s Kisan Vikas Patra (KVP) scheme is currently attracting an interest rate of 6.9%, which is compounded annually, as per recent rule. The minimum amount to open a Kisan Vikas Patra (KVP) account is Rs. 1000 and in multiples of Rs. 100. There is no bar on the maximum amount. It is a safe investment tool, with the security of the union government.

Benefits of the Kisan Vikas Patra (KVP) scheme

The invested amount, whatever is, will double in 10 years and 4 months (124 months), according to the rule. You can open any number of accounts under this scheme. So, using the KVP calculator, if you are investing a lump sum of Rs. 1,00,000, at once, your total return will be Rs. 2,00,000 after 10 years and 4 months. According to Post Office, “The deposit shall mature on the maturity period prescribed by the Ministry of Finance from time to time as applicable on the date of deposit.”

Eligibility

Any single adult can open the Kisan Vikas Patra (KVP) account under a Post Office. In the case of a Joint Account, up to 3 adults will be allowed. However, if you are a guardian, you can open the account on behalf of your children. Along with that, on behalf of a minor or on behalf of a person of unsound mind, you can open the account. On the other hand, a minor above 10 years can open an account in his name.

Premature closure

In case of premature closure, the Post Office has certain rules that follow:

(i) On the death of a single account, or any or all the account holders in a joint account.

(ii) On forfeiture by a pledgee being a Gazette officer.

(iii) When order by court.

(iv) After 2 years and 6 months from the date of deposit.

(f) Transfer of account from one person to another person.

One can also check Public Provident Fund (PPF) Scheme to get assured return after a certain period for better interest rate, guaranteed by the union government.

BPCL – Stake sale process to drive stock performance

The brokerage has set a target price of Rs 520 on BPCL for a 12-month period, implying a potential upside of up to 24% over the current market price of Rs 419.

Q2FY22 Results:

• In Q2FY22, BPCL announced better-than-expected performance.
• Revenue increased 13.3% from the previous quarter to Rs 101631.7 crore.
• GRM came in at US$6/bbl, which was higher than expected.
• The marketing segment saw an increase in inventories of Rs 227 crore. Subsequently,
• EBITDA came in at Rs 4477.7 crore, up 37.7% from the previous quarter.
• PAT came in at Rs 2694.1 crore, increasing 79.4 percent from the previous quarter.

Target and Valuation

“BPCL’s GRM improved during Q2FY22 and is likely to sustain at higher level given recovery in product cracks. We upgrade our rating on the stock from HOLD to BUY Target Price and Valuation: We value BPCL at Rs 520 i.e. average of P/BV multiple: Rs 527/share and P/E multiple: Rs 512/share,” the brokerage has said.

Key triggers for future price-performance:

Progress on divestment and favourable reaction from acquisition bidders Continued improvement in global refining product cracks (mostly diesel) Increased fuel demand and stable marketing margins.

Neogen Chemicals- Custom synthesis offers strong visibility ahead

The brokerage has set a target price of Rs 1570 on Neogen Chemicals for a 12-month period, implying a potential upside of up to 27% over the current market price of Rs 1236.

Q2FY22 Results:

• Because of improved utilisation of recently commissioned phase 1 capacity, numbers were higher than expected.
• Organic chemical segment (increased 36 percent YoY) and inorganic chemical segment (up 38 percent YoY) both reported revenue growth of 38 percent YoY to | 113.2 crore (up 63 percent YoY)
• Due to the absorption of fixed overheads, gross margins fell 184 basis points year over year to 43.3 percent, while EBITDA margin fell 80 basis points to 18.1 percent.

Target and Valuation

“The stock appreciated at 65% CAGR in last two years. We retain BUY rating on the back of better growth outlook from custom synthesis business Target Price and Valuation: We value Neogen Chemicals at 40x P/E FY24E EPS to arrive at a revised target price of | 1570/share (earlier | 1515/share),” the brokerage has said.

Key triggers for future price-performance:

A higher share of value-added business portfolio to improve profits profile of firm Allocation of incremental FCF towards organic/inorganic growth expected to expand return ratios further.

Indian Oil Corporation- GRM improvement drives profitability

The brokerage has set a target price of Rs 155 on Indian Oil Corporation for a 12-month period, implying a potential upside of up to 18% over the current market price of Rs 131.

Q2FY22 Results:

• On the profitability front, IOC’s results were better than expected.
• Revenue climbed 9.5 percent on a quarter-over-quarter basis to Rs 169770.8 crore (our estimate: | 157292 crore). Marketing revenues climbed 1% from the previous quarter to 18.9 MMT.
• GRM was reported at US$6.6/bbl, but core GRM was US$4.8/bbl. Core GRM improved from quarter to quarter. EBITDA was Rs 10628.1 crore, down 4.5 percent from the previous quarter.

Target and Valuation

“IOC’s core GRM improved in Q2FY22. We expect it to remain at current levels in coming quarters. Steady marketing margins and further sales pick-up are expected to lead to better profitability. We maintain our BUY rating on the stock. Target Price and Valuation: We value IOC at Rs 155 i.e. average of P/E multiple: Rs 151 /share and P/BV multiple: Rs 159/share,” the brokerage has said.

Key triggers for future price-performance:

Cracks in global refining product recovery (mainly diesel)

Demand for transportation fuels will continue to rise, while marketing margins will remain stable.

To promote total profitability, petrochemical prices are at a higher level. Profitability in the pipeline segment has remained stable over the last five years.

Payout of dividends on a regular basis.

Disclaimer

The above stocks are picked from the brokerage report of ICICI 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.

Tata Power

Motilal Oswal expects Solar EPC to give a leg up in earnings for the next two years. Recent award wins, particularly from NTPC, have seen its EPC order book inflate to Rs 85b, thereby providing strong visibility.

“EBITDA from Solar EPC is expected to post a 30% CAGR over FY21-23. This -coupled with the commissioning of renewable projects and the takeover of Odisha DISCOMs -should lead to a 33% PAT CAGR over FY21-23. Furthermore, the possible benefit from the merger of CGPL with itself provides an upside to profitability,” the brokerage has said.

Buy Varun Beverages

According to Motilal Oswal Varun Beverages is expected to deliver strong volume growth across all the three product segments, with an increase in consumption patterns to pre-COVID levels.

“We expect strong demand traction over the next few years due to: a) strong distribution network, b) rising penetration in the newly acquired region (south and west India), c) diversifying product portfolio, and d) growing refrigerator penetration in rural/and semi-rural areas per household and higher power availability hours. We expect a revenue/EBITDA/PAT CAGR of 20%/25%/56% over CY20-23E,” the brokerage has said.

APL Apollo

Motilal Oswal also has a buy on the stock of APL Apollo. “We expect strong volume growth and improved profitability on the back of: a) increasing shift towards structural tubes (from RCC structures), b) a pan-India presence, coupled with diverse product offerings, c) behemoth market share, increasing the share of value-added products. Several cost-control measures, kicking-in of operating leverage, and growing share of VAP is expected to lead to improved margin and higher cash generation. We expect a revenue/EBITDA/PAT CAGR of 26%/26%/36% over FY21-24E,” the brokerage has said.

Orient Electric

“With demand scaling back gradually and the upcoming festive season ahead, we believe Orient Electric is best placed to capture this trend, with its strong manufacturing and distribution capabilities. We forecast a revenue/EBITDA/adjusted PAT CAGR of 19%/21%/25% over FY21-24E,” Motilal Oswal Financial Services has said.

Trident

Trident is witnessing robust demand after the lifting of COVID-related lockdown restrictions. The demand trend in Home Textiles is expected to continue, with freight cost gradually subsiding and pent-up demand in the US and Europe market. The Paper segment is expected to see a sharp recovery with the opening of offices and educational institutes.

Improvement in balance sheet of corporate India

“The country witnessed the third consecutive year of normal monsoon which is also likely to aid rural demand, and with the government balance sheet in good stead, we expect the government to press the fiscal pedal to drive growth over the next 6-12 months. Corporate India too surmounted the challenges posed by Covid with unprecedented cost containment measures with parallel improvement in balance sheet as well as cash-flows,” the brokerage has said.

Disclaimer

The above stock is picked from the brokerage report of Motilal Oswal. 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.