Category: Personal Finance

1 PSB Stock To Buy For 2 Quarters As Suggested By HDFC Securities

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1. Indian Bank:

The buy has been given on this PSU Bank for a target price of Rs. 214 i.e. an upside of 14 percent from the current levels.

HDFC Securities’ take on Indian Bank:

There has been instilled confidence after the successful transaction of Air India that government will progress well on its divestment agenda. Also, for the PSBs that are considered to be weak IDBI Bank as well as Bank of Maharashtra there is seen cleaning of books and transfer of bad assets to the NARC as visible in the Q2 results.

The move augurs well for the PSBs which until some time faced huge NPA crisis. “Both of these developments augur well for the prospects of PSU banking stocks as they provide higher margin of safety in terms of valuation in an otherwise over-heated market”, said the brokerage report.

“We have been observing a sharp re-rating in the PSU banking space lately. Nifty PSU Bank Index has been making higher highs since last four weeks and is up by 12.8% during that time. Privatization theme is keeping them in the lime light and now the hope of earnings as wellas asset quality recovery would further sustain the rally. Some of the good quality names within the PSBs with loan book or CASA ratio as good as some top tier private banks, are available at almost half the book value of FY23E; as against about 2x to 3x Price-to-Book Value for private players”, added the report.

Re-rating prospects to increase with acquisition by big corporates

Re-rating prospects to increase with acquisition by big corporates

Lending quality has been worked on and there is no crisis amid the covid crisis. So, there are expectations that the valuation gap between private and public lenders will reduce faster. “We believe that the PSU banks might see goodaddition to the book value per share in the next year mainly on account relatively lower credit costs and recoveries. We further believecquisition of some PSU Banks by the any prestigious corporates/Institutions – local or foreign – at a good valuation may further re-rate the sector.

ICRA expects credit growth for banks

ICRA expects credit growth for banks

Amid increased vaccination pace and pick up in recovery there is expected pick up in credit offtake too. ICRA expects credit growth of 7.3-8.3% for banks

for FY22 compared to 5.5% for FY21. It believes that with the improved capital and profitability position of public banks, which accounts for a 62% share in bank loans, and abundant liquidity in the banking system, supply of credit does not appear to be a constraint.

Rationale for a buy

Rationale for a buy

1. Better managed PSB

2. low valuations

3. Required limited support from the centre in raising funds.

4. Not a single rupee loss in the last decade despite the credit blow that hit the overall banking industry.

5. Good dividend track record

Disclaimer:

Disclaimer:

The stock mentioned herein is taken from the report of HDFC Securities and investors need not construe the details given here as a suggestion to buy rather they should do their own study and analysis.

GoodReturns.in



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LIC’s Jeevan Shiromani: An High Return Investment Opportunity

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Personal Finance

oi-Kuntala Sarkar

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LIC’s Jeevan Shiromani has been designed by the public insurance corporation as an assured high return savings plan. The scheme is particularly targeted at high net-worth individuals. It is a non-linked, participating, individual, life assurance savings plan.

LIC's Jeevan Shiromani: A High Return Investment Opportunity

Policy benefits and sum assured

The minimum basic sum assured under this policy is Rs. 1 crore, with no maximum or upper limit. LIC informs, “Under this plan, Guaranteed Additions shall accrue at the rate of Rs. 50 per thousand Basic Sum Assured for the first five years and Rs. 55/- per 1000 Basic Sum Assured from 6th policy year till the end of premium paying term. In addition, the policy shall participate in the profits in form of Loyalty Additions.” The Basic Sum Assured will be in multiples of Rs. 5,00,000/-.

Eligibility

Any adult, till the age of 55 years can sign up for this plan. A person of 55 years old can take up this plan for a policy term of 14 years, similarly, a 51 years old can take up this for a policy term of 16 years, 48 years old can take up this for a policy term of 18 years, and a 45 years old can take up this for a policy term of 20 years.

Modes Of Premium Payment

The modes of premium payments are Yearly, Half Yearly, Quarterly, and Monthly, additionally a regular salary deductions (SSS) mode is also available under this plan.

Survival Benefits

The Survival Benefits on the life assured surviving to each of the specified durations during the policy term, a fixed percentage of Basic Sum Assured will be paid, according to the public life insurance corporation.

The fixed percentage for various policy terms has been mentioned as below:

Policy term percentage
For policy term 14 years 30% of Basic Sum Assured on each of 10th and 12th policy anniversary
For policy term 16 years 35% of Basic Sum Assured on each of 12th and 14th policy anniversary
For policy term 18 years 40% of Basic Sum Assured on each of 14th and 16th policy anniversary
For policy term 20 years 45% of Basic Sum Assured on each of 16th and 18th policy anniversary

Maturity Benefit

The Maturity Benefit on the life assured of the policyholder, surviving to the end of the policy term is the Sum Assured on Maturity along with accrued Guaranteed Additions will be paid.

The Sum Assured on Maturity has been mentioned as below:

Policy term percentage
For policy term 14 years 40% of Basic Sum Assured
For policy term 16 years 30% of Basic Sum Assured
For policy term 18 years 20% of Basic Sum Assured
For policy term 20 years 10% of Basic Sum Assured

Death Benefits

If the policyholder dies, during the first 5 years, the Sum Assured on Death benefits along with accrued Guaranteed Additions will be paid. If the policyholder dies, after 5 years of the policy, but before the date of maturity, the Sum Assured on Death benefits along with accrued Guaranteed Additions and Loyalty Addition (if any) will be paid. LIC will count the Sum Assured on Death benefits as the higher of 7 times of annualized premium or 125% Basic Sum Assured. This death benefit will not be less than 105% of all the premiums paid as of the date of death. Premiums are not included any taxes, while the extra amount is chargeable under the policy.

To know more details and application check this official LIC link: https://licindia.in/Products/Insurance-Plan/LIC-s-Jeevan-Shiromani-(Plan-No-947,-UIN-512N315V0

Policy Loan Loan facility is available under this plan, after payment of premiums for at least 1 full year’s premium has been paid and on completion of 1 policy year.

Taxation

As per LIC, “Taxes Statutory Taxes, if any, imposed on such insurance plans by the Government of India or any other constitutional tax Authority of India shall be as per the Tax laws.”



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Foreign brokerages not so bullish, market correction in the offing?, BFSI News, ET BFSI

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NEW DELHI: Foreign brokerages are downgrading Indian markets for being extremely expensive based on traditional valuation metrics, when compared to peers such as China and Japan in Asia.

The NSE Nifty is up 30 per cent in 2021 so far, while the BSE sensex is up 28 per cent, driven by financials, utilities, industrials and consumer discretionary stocks even as the broader MSCI Asia Pacific ex-Japan index has largely remained flat.

On Monday, Nomura downgraded India’s equity markets to neutral from overweight due to expensive equity valuations.

The Japanese brokerage firm prefers allocating to China and other Asean countries that have underperformed India in 2021. The brokerage feels while the upside is already priced in, headwinds could emerge that will prove to be risky in the future.

Nomura said 77 per cent of domestic stocks in the MSCI index are trading higher than pre-pandemic or post 2018 average valuations.

“We now see an unfavourable risk-reward given valuations, as a number of positives appear to be priced in, whilst headwinds are emerging. We, thus, downgrade India to neutral in our regional allocation and will look for better entry points given our still-constructive medium term view. We like China (significant under-performer seeing stabilising sentiment) and Asean (tactically laggard reopening play),” said equity strategists Chetan Seth and Amit Phillips in a note.

Ironically, in February Nomura had upgraded India to overweight, citing fiscal activism and declining Covid-19 cases.

“However, we think these positives are now adequately reflected in current valuations – that appear rich not only on absolute basis but also on relative basis. Even on two-year forward price-to earnings (PE) basis (incorporating India’s strong earnings outlook), India is trading at record high elevated premium relative to regional markets,” the analysts added.

What are the biggest risks for India?Elevated commodity prices, sticky core inflation and tentative signs of slowdown in demand are among the biggest risks for India.

Analysts at Nomura think if the current trend in prices of natural gas, crude, coal and electricity continue till the end of the calendar year, and increase by around 5 per cent till March 2022, then the potential impact on consumer price inflation (CPI) would be around 1 per cent.

Nomura not the only one

Nomura is not the only one advising clients to cut allocations to India. Last week, brokerage UBS echoed similar views and said India has become “unattractive” due to “extremely expensive” valuations when compared to the Asean countries.

The brokerage also said that earnings momentum is fading in India and there is less scope for an economic rebound this year, even as domestic stocks have outperformed markets like Indonesia by 31 per cent year-to-date.

Low real yield and expensive currency suggest some vulnerability for India in the tapering environment.

“India, like Taiwan, looks very poor on our scorecard framework. The relative valuation of India to Asean, two areas with similar growth dynamics and occasional perceived macro vulnerabilities, looks too wide to justify,” it said.

A Bank of America survey that was released last week showed global fund houses are underweight on emerging markets and want to cut exposure in the next 12 months, citing inflationary risks.

Global fund managers’ allocation in October to emerging market equities fell to the lowest level since September 2018, while allocation to US equities increased to the largest since November 2020.

In a newsletter titled Greed & Fear, Christopher Wood, the global head of equity strategy at Jefferies, has said India’s overweight position looks ‘vulnerable’.

What is triggering the market correction?

Rising fuel prices, inflation and high valuations are now triggering a correction in the market after months of record rallying.

While the sensex is down 1 per cent in the last five days, slipping below the 61,000-mark, the Nifty also slipped below 18,000 as experts are starting to caution investors because of stretched valuations and the impact of inflation on corporate earnings.

The BSE sensex last touched an all time high of 62,245 on October 19, but since then it has declined by 2 per cent.

More such calls for reduction of allocation to India is likely to result in further outflow of funds and a deeper correction in the markets.

Foreign portfolio investors (FPIs) have already turned net sellers by pulling out Rs 3,825 crore in October so far. FPIs had been net buyers for two consecutive months and had invested Rs 26,517 crore in September and Rs 16,459 crore in August.



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Is Investing in Cryptocurrency Better Than Investing in Gold?

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Investment

Bitcoin reached a record high of $65,000 (INR 48 lacs) earlier this year but only to retract back to $30,000 this May fuelled by China’s mining crackdown. However, Bitcoin has been making steady progress towards it’s all time highs again as it continues to attract investors all over the world. While worries about speculation and volatility in cryptocurrencies exist, investors who have firmly remained long-term with assets such as Bitcoin and Ethereum have better yields than other assets in their portfolios.

Asset Value of portfolio today if INR 1000 was invested
1 year back 3 years back 5 years back
Bitcoin 4159 6640 83549
Ethereum 8094 12441 303270
Gold 920 1520 1382
Silver 849 1699 1267

All numbers in INR. Data as of 1st Sep 2021.

Source: Giottus, coinmarketcap.com and goldprice.org

Against this backdrop, multiple altcoins (alternative cryptocurrencies) have also flourished, each with its own set of real-world use cases. However, they are yet to reach scale globally and hence remain primarily volatile.

Rising global adoption by institutional investors and companies such as Visa, PayPal, and Tesla means that the ecosystem will grow. Today, compared to a market capitalization of $10B for Gold, the crypto market is $2B. In five years, we expect the gap to close significantly.

Given the potential to grow, Bitcoin as an investment is a definite winner. Through a registered exchange, Indian investors can acquire Bitcoin or any other cryptocurrency and for as low as INR10 post a quick KYC process.

Security

Security

Gold (physical) has to be stored at home or in bank lockers. They can be a burden on occasions when transporting between cities etc. No insurance product caters to the storage of Gold, and hence it is always a risk to households.

Cryptocurrencies are stored in digital wallets that often have two-factor authentication. They can also be secured in physical wallets, which need similar safekeeping as physical Gold. Some global companies insure part of your crypto portfolio. There are crypto firms that allow users to store assets with insurance on their cold wallets.

Overall, there is no clear winner in terms of security between the assets. Investors can prefer one approach over the other depending on their service.

Liquidity and Borrowing capacity

Liquidity and Borrowing capacity

Cryptocurrencies are easily interchangeable between one another and with Indian Rupee. Unlike physical Gold, international exchanges allow customers to buy digital assets. A global market that is 24×7 and not restricted to the bank timings in India opens up many opportunities for investors and traders.

Via a registered Indian exchange, investors can quickly deposit INR to buy cryptocurrencies and withdraw to INR when required. Overall, Cryptocurrencies are more liquid than Gold, given the ease of selling them with a click of the button.

Banks and other unregistered lenders are often willing to give cash in quick time in exchange for Gold. Some products even let you earn interest on digital assets.

Grow your crypto portfolio steadily and be patient

Grow your crypto portfolio steadily and be patient

If you believe in the growth markers above and if the past is any indication, cryptocurrencies are a class of assets worth investing in for the long term. Given the familiarity, Gold continues to be a key driver of investments along with bank deposits.

On the other hand, cryptocurrencies represent the highest growth class with significant liquidity that suits Indian households. While you can’t display them like jewelry, you can always gain wealth and invest some in Gold again if that’s your thing.

A disclaimer, though, we suggest not to have more than 5% of your portfolio on cryptocurrencies at the start. This allocation can vary depending on your risk appetite.

About the author:

Vikram Subburaj is the Co-Founder and CEO of Giottus Cryptocurrency Exchange



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5 Listed Holding Company Stocks In India With M-Cap Over Rs. 10000 Cr.

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1. Bajaj Finserv:

The stock is among the priciest stocks last quoting at a price of Rs. 18,255, while its 52-week high price is Rs. 19325. The company commands a market cap of Rs. 2,90,846 crore.

Bajaj Finserv established in the year 2007 was the result of its demerger from the Bajaj auto group and was to further foray and expand in the area of financial services. The demerger enabled the company to independently handle lending, protection and savings. This is the holding company for the businesses dealing with the financial services domain of the Bajaj Group

The firm’s second quarter earnings are expected on October 28, 2021. In the previous quarter, the company’s total income from operations came in at Rs. 22.89 crore and net profit stood at Rs.0.37 crore.

For the fy21, the firm declared a total dividend of Rs. 8 per share.

2. Bajaj Holdings and Investments:

2. Bajaj Holdings and Investments:

This is an NBFC company and was demerged whereby its manufacturing undertaking has been transferred to the new Bajaj Auto Limited (BAL) and its strategic business undertaking consisting of wind farm business and financial services business has been vested with Bajaj Finserv Limited (BFS). All the businesses and all properties, assets, investments and liabilities of erstwhile Bajaj auto Ltd, other than the manufacturing undertaking and the strategic business undertaking, now remain with BHIL

Post-demerger, BHIL holds more than 30% shares each in BAL and BFS. Going forward, BHIL will focus on new business opportunities. BAL and BFS will be able to tap (on an arm’s length basis) into BHIL’s cash pool to support future growth opportunities. BHIL by having 30% stake in both BAL and BFS will benefit from the future growth of these companies.

The scrip last traded at a price of Rs. 4744 per share on the NSE and commands a market cap of Rs. 52,729 crore. The firm’s latest earnings are due to be reported on October 28,2021.

The firm as an interim dividend declared a dividend of a hefty Rs. 90 per share for which the stock turned ex-dividend on September 28, 2021. This dividend declaration provided a huge lift to the stock.

3. Aditya Birla Capital:

3. Aditya Birla Capital:

This is again a financial sector holding enterprise. The stock’s m-cap stands at Rs. 24,281 crore. The company is again the holding company for the financial services businesses of the Aditya Birla Group.ABCL is a universal financial solutions group catering to diverse needs of its customers across their life stages. As of June 30th, 2021, Aditya Birla Capital Limited manages aggregate assets under management over Rs. 3,430 billion, has a consolidated lending book of approx. Rs. 572 billion, and an active customer base of over 25 million, through its subsidiaries and joint ventures.

Aditya Birla Capital Limited is a part of the Aditya Birla Group, in the league of Fortune 500.

The company’s stock last traded at a price of Rs. 100 per share. In the previous quarter, the company’s profit was at Rs. 26.49 crore lower than the preceding quarter wherein the profit came in at Rs. 62.4 crore.

4. L&T Finance Holdings:

4. L&T Finance Holdings:

L&T Finance Holdings (LTFH) is a leading, well-diversified Non-Banking Financial Company (NBFC) with a focused range of financial products and services across rural, housing and infrastructure finance along with mutual funds. The company is promoted by Larsen & Toubro Ltd. (L&T), one of the largest conglomerates in India, with interests in engineering, construction, electrical & electronics manufacturing & services, IT and L&T Financial Services (LTFS) is the brand name of LTFH and provides financial solutions to a diverse set of customer base through its lending and non-lending businesses.

L&T Financial Services (LTFS) is the brand name of LTFH and provides financial solutions to a diverse set of customer base through its lending and non-lending businesses. The lending business comprises of Rural Finance (Farm Equipment Finance, Two-Wheeler Finance, Micro Loans and Consumer Loans), Housing Finance (Home Loans, Loan against Property and Real Estate) and Infrastructure Finance.

The company’s scrip last traded at a price of Rs. 84.80 and its market cap is at Rs. 20,929 crore.

5. Cholamandalam Financial:

5. Cholamandalam Financial:

Part of the Murugappa group, this is the core investment company. The company’s stock last traded at a price of Rs. 691.5 while its market cap has been at Rs. 12981 crore.

Cholamandalam Financial Holdings Limited (CFHL) (formerly known as TI Financial Holdings Limited) was incorporated in 1949. Consequent to the scheme of arrangement (demerger) sanctioned by the National Company Law Tribunal, the manufacturing business of the Company was transferred to a separate company and the company retained its finance business.

Other holding companies listed in India

Other holding companies listed in India

Besides the list of other holding companies include names like Kama Holdings, JSW Holdings, Pilani Investment, Tata Investment, Kirloskar Industries, BF Investment, STEL Holdings, Equitas Holdings, Max Ventures, JM Financial, GFL, Max India, Tamboli Capital, Innovassynth Investments Ltd. and Toyam Industries.



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Residential vs Commercial: Where To Invest For Rental Income?

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oi-Sunil Fernandes

By Siddharth Maurya

|

Amongst the investment options available such as a fixed deposit, gold, mutual funds and PPF, people still consider real estate or property investment as one of the safest ones. Being one of the few tangible investment options around, real estate is still the most trusted one.

Residential vs Commercial: Where To Invest For Rental Income?

The opportunity cost of realty investment in comparison to other instruments is favourable. Real estate as a tangible asset class is less volatile when compared to equities. Despite a heavy toll due to a multitude of factors, the real estate segment, especially the residential realty segment, has withstood the pressure of time and is an ideal investment class for medium and low-risk appetite investors.

However, when they say, the land is the best investment option on the earth; they fail to specify the type. Residential or commercial? This is the million-dollar question a property investor, aiming to earn a rental income, asks before putting his hard-earned money in real estate. Honestly speaking, both residential and commercial property investments come with their own set of pros and cons. Let us analyse in greater detail.

Residential investment for rental income

The investors are primarily driven towards investing in residential properties and earning a rental income out of them. There are a multitude of factors behind this trend such as easier acquisition or construction of a residential property, lesser approvals, faster clearances, comparatively lower initial investment and easier resale. Moreover, residential properties are likely to get tenants faster than their commercial counterparts.

However, if we look at the historical ROI, rental returns from the residential property are way lower as compared to commercial properties. Rental returns from residential properties can be pegged at 2 percent per annum on an average.

Let us try to understand by an example, a luxury 3 BHK flat of Rs 2.5 crore in an upscale locality of Gurgaon is likely to fetch rentals at Rs 40,000 to 42,000 per month or Rs 4,80,000 to 5,04,000 lakh annually. In addition to this, the rate of appreciation is hugely dependent on a range of factors such as location, presence of physical and social amenities, city and connectivity quotient of the region.

A key advantage for residential property is that the maintenance cost is far lesser in comparison to large commercial properties. It is an important factor as these charges can eat up a significant part of the rental income earned from property investment. If the budget is low, it is better to go for a residential property.

Commercial realty investment

The commercial properties generally include shops, offices, warehouses, Godowns and showrooms among others.

In comparison to the residential property investment, the commercial properties have a high rental yield. The rental returns from commercial property investment can be pegged at over 8 percent per annum.

Although commercial property investment attracts a large initial sum as compared to residential properties, the attractive rental returns compensate for the initial investment blues. If the rental returns are understood from an example, a 429 sq ft shop in Gurgaon, priced at Rs 35,000 per sq ft will fetch a rent of Rs 1, 07, 250 per month or over Rs 12 lakh per annum.

In addition to this, the rate of appreciation of commercial real estate is faster in comparison to residential properties. However, a dampening factor can be a high maintenance cost. It can range up to Rs 7-12 per sq ft per month, depending upon the type of property. Moreover, the lease or rent agreements of commercial properties are generally long term, leaving little room for frequent change of tenants and rent negotiations. They prove to be a consistent source of rental income than residential investment.

Conclusively, if the budget is low, maintenance capacity is poor and frequent change of tenants is not an issue, an investment into the residential realty segment is suggested. However, if budget is not a constraint, the commercial real estate investment will yield far better and faster returns than a residential flat or villa. The investors must use discretion and consider all the factors such as budget, amenities and connectivity, security and presence of markets before investing their hard-earned money into a property business for rental income.

Authored by Siddharth Maurya, Resource Specialist – Real Estate and Fund Management

Story first published: Tuesday, October 26, 2021, 15:09 [IST]



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Reliance Securities’ CEO says equities could gain another 10% by end of fiscal year, BFSI News, ET BFSI

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As far as Indian equity markets are concerned, the million-dollar question is valuations. Benchmark indices have soared so far this year and remain near lifetime highs. Last week UBS gave a pessimistic view on how much further equity indices could climb and speculation is rife that indices are set for a correction. Lav Chaturvedi, Chief Executive Officer and Executive Director, Reliance Securities, believes that there is an upside of 10 per cent by the end of the financial year. In a candid chat with ETMarkets.com, Chaturvedi explains his rationale. Edited excerpts:

My first question is about valuations. Nifty, Sensex both are at lifetime highs. Are valuations stretched? How much of an upside are you seeing for benchmark indices?
There are two aspects to it. I want to summarise and then I will answer your question specifically. Overall on the one year forward earning basis, the market is at around 30-35% premium which is from 18x to 23x. That is the multiple that we are at. However, having said that, there are still some components which are included in benchmark Nifty in recent years like HDFC Life, SBI Life, Shree Cements carry higher P/E multiple than excluded stocks. Hence, a part of the premium has come from there. Further, improved visibility of earnings rebound post second wave of Covid-19 resulted in higher premium for the market and also from the market cap to GDP perspective.

We further note that the spread between G-Sec yield and Nifty earnings yield has gone up to historical average of 190bps, which may be a cause of concern for the near term. Overall though, the markets have run up and from here on, we would probably see another 10% jump towards the fiscal year end. That is something that we see. There could be some corrections along the way, the journey will have some blips but overall whoever is invested probably will see around 10% to 15% from here on a year-to-year basis.

From the perspective of a midcap versus small cap or a large cap; which part do you think right now holds the most value?
It is in the front end. We have seen significant growth in the largecap stocks. But it is going to be more broad-based and the midcap and smallcap stocks will probably continue the momentum given improved visibility of sustained earnings growth. However, in addition to earnings growth, investors must focus on cash flow generation and corporate governance of companies.

There will always be specific stocks and specific opportunities within the indices will probably provide opportunity and corrections will provide an entry level and another opportunity for anyone in retail or anybody who would have not entered so far.

Notably, every bull phase creates some winners, which causes midcaps to turn into largecaps. We already have many examples like Shree Cement, Tata Consumers, Avenue Supermarts, Adani Ports, Divi’s Lab, SBI Cards, among others.

There has been a flurry of IPOs so far in the year. What are the challenges of valuing these new age entrants into the market?
In 2019, from around $2.5 billion in the primary market (which is IPO) to almost $12 billion so far in 2021, it has been a phenomenal journey. LIC and Paytm are among others that could come in this year. So clearly it is a year of fundraising.

A year when a lot of primary activity is happening is very good because that provides risk capital.

The valuations with regards to overall IPOs or more specifically new age companies will probably be the function of what has been expected and what the investment horizon is. Clearly, if one goes for LIC IPO versus the Zomato or Paytm IPO will be on a completely different perspective. While LIC IPO is on today’s base and some growth rate in future, the new age technologies like Paytm or Zomato will probably be more based upon a little longer term.

Whoever is in it for the long haul…these kinds of IPOs will definitely benefit them. However, there are some players who are not for the long term. Probably more conventional IPOs will be better for them.

What is the earnings season telling us so far? Is the financial sector out of the woods in terms of asset quality?
Earnings so far have been decent and hence the markets are doing well. However, input cost inflation turned out to be a key concern for the market in the last couple of days.

With regards to whether the asset quality is out of the woods or not, the financial stability report from RBI says that it may take around four to six quarters for banks or for the lending companies to recover from the complete impact of any recession or any significant event like Covid-19.

So far so good but I would like to keep an eye on this for another couple of quarters at least so that we can see how it is going to pan out but all the policy responses that have been done so far both on the monetary and fiscal space have been supportive.

But we have another couple of quarters to look out for.

We have seen that so far this month the rupee has taken quite a beating because of a combination of factors; we have oil prices, we have the US Fed talking about tapering etc. Some companies like those in the IT space could benefit from this but what are the broader market implications of depreciation of the rupee?
The rupee usually is a function of two main components; one is the internal policies — how are the interest rates and second are the external fund flows and the liquidity in addition to the crude and other commodity prices.

There was an interesting article that says that the option strike in the US is going as far as above $200 for the Brent crude. It is phenomenal to even read that.

Obviously in the near term, crude probably has an upward trajectory till some correction is brought in by OPEC.

There are two key things that are going to play for currency in the near term future; one will be what steps Fed takes to taper or in what form and fashion.

That will probably determine the liquidity flow and that is where the currency play will come.

And the second is how the local interest rates or the domestic interest rates pan out. These two combinations will probably see where the rupee goes from here. Overall, it may be hovering around the range on a bit of a weakening but it is not going to be too much.

It is going to be around the range depending on what Fed does and how the domestic interest rates pan out.

Recently even the Bank of England governor has been talking about tightening monetary policy. The Fed has given a clear timeline that by November, bond purchases will be tapered. In terms of FII flows coming into India, do you think there would be a meaningful impact once all of this starts out in the advanced economies?
As we have seen in the past, tapering in itself does not cause the reverse fund flows. It is more if something is done beyond expectations.

Whatever has already been priced in or already been considered will not cause any impact on the FIIs.

If something is done over and above what has been expected, there may be some impact. However, the good part is that India being a strong story and robust inflow; that will probably offset some of those reversals because of interest rate arbitrage or the currency.

So overall, we do not expect on a more structural basis FPIs or FIIs flows to be reversed.

Yes, there could be some few months here and there, there could be some correction based upon the event but overall we should be okay.

We have been seeing a lot of talk recently about inclusion of India’s bonds in global indices. RBI has been talking about it. Many research reports including big foreign brokerages have been talking about it. Would that be a game changer for Indian financial markets?
I personally believe it will be and if you would have noticed, there was a recent comment by the deputy governor also that inclusion of the Indian bonds in the global indices in a way is a journey towards the capital account convertibility.

That kind of the roadmap that we are heading toward is very transformational for India to have a foreign flow like that. But it comes with its own impact and as long as that has been managed, I it is going to be a big, big plus for a country like India where there will be a debt fund and infrastructure funding and a lot of that positive funds will probably flow in.

We just have to ensure that the ecosystem has been addressed in a way where we are ready for the capital account convertibility which we have been speaking about for a long time.

In the last policy, the RBI kept interest rates unchanged but it stopped its government security acquisition programme and increased the size of its variable rate reverse repos. Some have taken that as a precursor to some degree of normalisation. Do you think that RBI could run the risk of falling behind the curve if it does not do something like a reverse repo hike by December?
I personally do not believe so. Whatever is being done is along the lines of expectation. There are a lot of reports out there that actually forecast when the interest rate cycle by the central bank will start normalising to pre-Covid level.

A timeline of over the next 12 to 18 months is probably a reasonable timeline because we have to see that it is not just the price stability but it is also about the economy and the growth which needs to be balanced. Anything which is done prematurely on one dimension has an impact on the other dimensions as well?
Yes 100% India will be. I personally believe that India will be both in top 5 and top 3 with regard to the best performing market. The only thing we have to see is that hopefully it will be on a dollar basis because that is where the currency will come into play and that probably will be a much more robust story and I do believe even there we have a fair chance.



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Kotak Mahindra Bank Net Profit Falls 7% In Q2; Shares Gain 3 Percent

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oi-Sneha Kulkarni

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On Tuesday, Kotak Mahindra Bank reported a 7% year-on-year (YoY) drop in standalone net profit of Rs 2,032 crore, compared to Rs 2,184 crore in the previous quarter. On a quarterly basis, it increased by 24% from Rs 1,642 crore in the June 2021 quarter. Following the earnings report, Kotak Bank’s stock jumped about 3% to 2217 per share on the BSE in Tuesday’s trading.

Kotak Mahindra Bank Net Profit Falls 7% In Q2; Shares Gain 3%

The bank’s net interest income (NII), which is the difference between interest received and interest expended, increased by nearly 3% to 4,020.6 crore from 3,897 crore the previous quarter. Provisions and contingencies at the private lender fell to 424 crore from 703.5 crore quarter-on-quarter (QoQ), but increased from 333 crore year-on-year (YoY).

In the September quarter, the gross non-performing assets (GNPA) ratio was 3.19 percent, which was lower than the June quarter’s 3.56 percent but higher than the year-ago quarter’s 2.70 percent.

Tax expenses for the quarter ended September fell to 664 crore from 744 crore the previous fiscal quarter. In contrast, its capital adequacy ratio (Basel III) was 21.76 percent, down from 23.11 percent QoQ and 22.05 percent year over year.

COVID-19’s future direct and indirect impact on the Bank’s results of operations, financial condition, and cash flows is unknown and will be determined by current and future events, including attempts to restrict or reduce its spread, it said. As of September 30, 2021, the bank had made provisions of Rs. 1,279 crore for the COVID-19 pandemic.

Over the last three years, net profit per employee has been steadily increasing, with a 13.34 percent increase last year. The stock returned 85.96 percent over three years, compared to 76.81 percent for the Nifty 100. Over a three-year period, the stock returned 85.96 percent, while the Nifty Bank provided investors a 61.47 percent return.

Parameter Values
Market Cap (Rs. in Cr.) 436536.94
Earning Per Share (EPS TTM) (Rs.) 37.13
Price To Earnings (P/E) Ratio 59.29
Book Value Per Share (Rs.) 299.66
Price/Book (MRQ) 7.35
Price/Earning (TTM) 59.29
ROCE (%) 12.26
PAT Margin 25.95
Dividend Yield 0.04
Face Value 5



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EPFO Issues Advisory In The Interest Of Its Members: Check It Here

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oi-Roshni Agarwal

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The EPF and pension administering body EPFO via a tweet alerted its members on various scams and asked its members to not deposit money via any of the social channel. Also, it asked subscribers to not respond to similar calls and messages.

EPFO Issues Advisory In The Interest Of Its Members: Check It HereEPFO Issues Ad

IIn a tweet, EPFO said the organisation never asks its members to share their personal details likeAadhaar, P, UAN, Bank Account or OTP over phone or on social media.

And for any type of grievance redressal, the organisation’s members can take up the issue at https://epfigms.gov.in. Additionally members can connect over toll free number 1800-118-005. Also EPF related services can be availed on the government routed platform – UMANG app.
The application offers all such services such as passbook balance, raise as well as track claims, activate UAN as well as other certficates.Pensioners can also get various services related to the passbook, Jeevan Pramaan submission and can also download pension payment orders as well.
GoodReturns.in

Story first published: Tuesday, October 26, 2021, 14:24 [IST]



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List Of Maharatna Company Stocks In India 2021

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To qualify as a Maharatna PSU, a CPSE must meet the following criteria: –

1. Navratna status should already be in place.

2. Listed on the Indian stock exchange with a minimum public shareholding requirement set by SEBI regulations.

3. Sales/turnover of more than Rs. 20,000 crore on an annual basis for the previous three years

4. A net worth of greater than Rs.10,000 crore on an annual basis for the past three years.

5. In the last three years, the company has made an average yearly net profit of more than Rs. 2,500 crore.

6. International businesses or a significant global presence

Maharatna Company: Bharat Heavy Electricals Limited

Maharatna Company: Bharat Heavy Electricals Limited

BHEL is one of India’s leading engineering and industrial conglomerates. It works on a wide range of products and services, including design, engineering, construction, testing, and maintenance. It has more than 180 product offerings to fulfil the ever-increasing demands of the economy’s major sectors.

Only 2.33 percent of trading sessions in the last 16 years had intraday drops of more than 5%. The stock returned 1.78 percent over three years, compared to 92.25 percent for the Nifty Midcap 100. Since August 27, 2001, Bharat Heavy Electricals Ltd. has issued 35 dividends.

Bharat Petroleum Corporation Limited

Bharat Petroleum Corporation Limited

Maharatna is a government-owned oil and gas firm based in Mumbai, Maharashtra. It is India’s second-largest downstream oil company and ranks 342nd on Fortune’s list of the world’s largest corporations as of 2016. In Forbes’ 2018 list, BPCL was rated 672nd. After the ongoing up-gradation and expansion at several refineries are completed, the gross refining margins have the potential to improve.

In FY-20, BPCL added 1,447 outlets to its broad network of rural and urban locations, bringing the total number of outlets to 16,234. It has the highest throughput per outlet among PSU oil companies, while there is still room for improvement through outlet rationalization.

Maharatna Company: Coal India Limited

Maharatna Company: Coal India Limited

Coal India Limited (CIL), a Maharatna corporation, is an Indian state-controlled coal mining business with headquarters in Kolkata, West Bengal, India, and is the world’s largest coal producer. CIL produces coal through seven completely owned subsidiaries. It owns and runs 413 mines in 82 mining districts throughout the country. Coal India Africana Limited (CIAL), a wholly-owned subsidiary of CIL in Mozambique, is seeking coal mining potential in that country.

Any re-rating of the company faces tremendous hurdles as fossil fuels and climate change become a key issue with global investors. The stock returned -38.06 percent over three years, compared to 76.81 percent for the Nifty 100. Over a three-year period, the stock returned -38.06 percent, while the Nifty Metal returned 71.76 percent to investors.

Maharatna Company: GAIL Limited

Maharatna Company: GAIL Limited

GAIL (India) Limited, a Maharatna PSU and India’s flagship Natural Gas firm, integrates all components of the Natural Gas value chain and related services in India.

The stock returned -13.14 percent over three years, compared to 76.81 percent for the Nifty 100. GAIL (India) Ltd., founded in 1984, is a Large Cap company in the Gas & Petroleum sector with a market capitalization of Rs 66,183.94 crore.

GAIL is attempting to usher in a new era of clean fuel industrialization by constructing a quadrilateral of green energy corridors connecting India’s major consumption centres to major gas fields, LNG terminals, and other cross-border gas sourcing sites.

Maharatna Company: HPCL

Maharatna Company: HPCL

Hindustan Petroleum Corporation Limited

Hindustan Petroleum Corporation Limited is a subsidiary of Oil and Natural Gas Corporation, which is owned by the Government of India’s Ministry of Petroleum and Natural Gas and is headquartered in Mumbai, Maharashtra. The stock returned 43.39 percent over three years, compared to 76.81 percent for the Nifty 100. Hindustan Petroleum Corporation Ltd., founded in 1952, is a Large Cap firm in the Gas & Petroleum sector with a market capitalization of Rs 46,287.23 crore.

Since July 27, 2000, Hindustan Petroleum Corporation Ltd. has announced 32 dividends.

Hindustan Petroleum Corporation Ltd. has declared an equity dividend of Rs 22.75 per share in the last 12 months.

This equates to a dividend yield of 7.04 percent at the current share price of Rs 323.05.

Maharatna Company: Indian Oil Corporation Limited

Maharatna Company: Indian Oil Corporation Limited

Indian Oil Corporation Limited (IOCL) is an Indian state-owned oil and gas business with headquarters in New Delhi and a registered office in Mumbai. It’s usually referred to as Indian Oil. It is owned by the Ministry of Petroleum and Natural Gas of the Government of India, which is based in New Delhi. In the fiscal year ended March 31, 2021, the company delivered a ROE of 19.34 percent, surpassing its five-year average of 14.96 percent. Over a three-year period, the stock returned -5.23 percent, while Nifty Energy returned 78.38 percent to investors.

Since Aug. 27, 2001, Indian Oil Corporation Ltd. has declared 33 dividends. Indian Oil Corporation Ltd. declared an equity dividend of Rs 12.00 per share in the last year. This equates to a dividend yield of 9.16 percent at the current share price of Rs 131.00.

Maharatna Company: NTPC Limited

Maharatna Company: NTPC Limited

National Thermal Power Corporation Limited (NTPC) is a Maharatna company (public sector undertaking) that was established by the Indian government in 1975. The National Thermal Power Corporation (NTPC) is the world’s largest electric power generation corporation. With a total installed capacity of 63 GW, it is India’s only power major that generates electricity using coal, gas, liquid fuel, hydro, solar, nuclear, wind, and renewable energy.

The stock returned 8.4 percent over three years, compared to 76.81 percent for the Nifty 100. In comparison, the S&P BSE Power Index returned 8.4 percent during a three-year period, whereas the S&P 500 Index returned 78.92 percent. NTPC Ltd., founded in 1975, is a Large Cap firm in the Power sector with a market capitalization of Rs 140,456.21 crore.

Maharatna Company: Oil & Natural Gas Corporation Limited

Maharatna Company: Oil & Natural Gas Corporation Limited

One of India’s largest Maharatna enterprises is Oil & Natural Gas Corporation Limited (ONGC). The ONGC is India’s largest crude oil and natural gas company. It accounts for over 70% of Indian domestic output and is used by firms such as IOC, BPCL, and HPCL to make products such as gasoline, diesel, and cooking gas. Only 1.51 percent of trading sessions in the last 16 years saw intraday gains of more than 5%. The stock returned 6.32 percent over three years, compared to 76.81 percent for the Nifty 100.

Maharatna Company: Power Grid Corporation of India Limited

Maharatna Company: Power Grid Corporation of India Limited

Power Grid Corporation of India Limited is an Indian statutory corporation that is governed by the Ministry of Power of the Indian government. With an 85% share of India’s ISTS (Inter-State Transmission System) and inter-regional power transfer capacity, the company is the largest power transmission company.

The stock returned 36.34 percent over three years, compared to 76.81 percent for the Nifty 100. Over a three-year period, the stock returned 36.34 percent, compared to 78.92 percent for the S&P BSE Power index.

Maharatna Company: Steel Authority of India Limited

Steel Authority of India Limited (SAIL) is India’s largest steel producer and one of the country’s seven Maharatna Central Public Sector Enterprises. Annual sales growth of 11.83 percent surpassed the company’s three-year CAGR of 6.4 percent. The stock returned 82.67 percent over three years, compared to 76.81 percent for the Nifty 100 index.

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 house are not liable for any losses caused as a result of decisions based on the article. This article is for educational purpose.



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