Category: Personal Finance

Invest in corporate FDs rather than bank FDs.

Corporate Fixed Deposits, like bank FDs, offer the security of guaranteed returns and the flexibility to choose the term. The Corporate Fixed deposits are in general offers 1% to 3% higher interest rates compared to what ban FDs offers for a similar period.

Bajaj FinServ is a good example of corporate FDs that offers a better return, higher than the bank FDs. These FDs offer assured returns, easy online application and accessibility, and Higher returns. These FDs schemes come with an option to receive a return at monthly or quarterly periods, depending on the options.

Compare the interest rates on FDs offered by different companies

Before going with a particular FD, it is better to compare the FDs interest offers that other companies are offering. Each lender offers a different rate of interest on FDs to their customer. Your goal should be to select the one that will provide you with the best return on your investment. Comparing the FDs interest rate will help you to choose the right FD and will improve and maximise your return.

For higher returns, choose a cumulative FD

After you’ve settled on corporate or bank FD, the next step is to maximise your fixed deposit returns. A cumulative and non-cumulative fixed deposit are both available to you. Choose a cumulative FD for a better and higher return on your investment. On maturity, a cumulative fixed deposit will pay you both the interest and the principle. The interest on a cumulative fixed deposit is added to the principal that could be monthly or quarterly. As a result, you are earning interest on interest. Because of the compounding effect, the effective rate of interest rises.

Go for the FD investments that offer Tax benefit

Some investments offer a tax benefit to the investors, choose the investments that offer you higher return savings. There are two types of tax benefits for you. The first one is under section 80c of the Income Tax Act, 1961. Under this section, the amount invested is deducted from the total income that is up to Rs 1.5 lakhs. These investments are Public Provident Fund (PPF) FDs. Etc. Fixed Deposit is one of them that comes under tax benefit.

The second one offers tax benefit on interest or return earned from the investments in the form of direct benefit to the investor. This allows the investor to avoid tax directly on the return.

Invest in a variety of FDs to increase your liquidity

Spending your money on a variety of fixed deposits can help you get consistent returns and liquidity at the same time. Build a ladder of FDs with different tenors to get the most out of your investment. For example, instead of investing all your money in one FD, split the amount into 2 or 3 and invest each one in a different FD. This will allow you to have the upper hand in liquidating the investment in case of emergency, and doing this also offer you a great return.

By following these steps you can improve your returns on fixed deposits. This will also allow you to have financial freedom.

Should you buy the stock of Coal India?

Last year at the same time, Coal India had declared an interim dividend of Rs 7.5 per share and this year it has given a better dividend. The company is regular on the dividend paying list, is a cash rich and also a debt free company. For the quarter ending Sept 30, the results of the company were not too impressive, but most brokerages are upbeat on the stock.

Recently, brokerage Motilal Oswal hiked the price target on the stock to Rs 200. According to the report, the Coal India stock trades at 3.4x/3x FY22e/FY23e EV/Ebitda, with an attractive dividend yield of 11%.

The brokerage has valued the stock at 4 times FY23e EV/Ebitda with a target price of Rs 200. “We maintain our Buy rating, with a revised target price of Rs 200 per share (from Rs 185 earlier). A surge in coal demand from the Power sector, which could squeeze supplies to non-regulated sectors through e-auctions, remains a key risk as it could hurt profitability,” it had said.

Even ICICI Securities had recently suggested a “buy” on the stock with a price target of Rs 234, implying a hefty upside from the current price of Rs 155.

Dividend yield should keep a floor price on the stock

The shares of Coal India have dropped from levels of Rs 200, following a shortage of Coal to the current price of Rs 155. If you buy the stock now, you are also entitled to a dividend of Rs 9 per share, which will bring down the cost of acquisition even further.

We suggest investors to but the stock as demand for coal is surging and prices are likely to remain elevated going forward. The dividend yield is consistently likely to remain over and above that 10% mark and anywhere between 11 and 15%. This makes the stock very attractive as the dividend yields are much better than the interest rates offered by bank deposits.

With the demand for power likely to surge, there is likely to be a corresponding surge in the demand for coal, which should augur well for the company.

At a time when there are threats of a new omicron virus, it would be a good idea to stick to strong dividend paying stocks, as the dividend yield on these companies would put a cap on the stock fall. We have been advising caution to investors not to invest large amounts and hence stick to debt free companies, with a strong track record of paying dividends.

Disclaimer:

Investing in equities poses a risk of financial losses and investors should exercise due caution before a large-scale exposure. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article.

Nifty on the new Covid variant worries collapsed last week by a great deal and in trade on November 30, 2021 is currently almost 8.5% percent down from its peak level of 18,604 scaled on October 19, 2021. Already the markets world over have been factoring an earlier than expected rate hike by the US Federal Reserve amid spiking inflationary levels.

“Due to the various global factors (Fed’s taper announcement, rising bond yields, higher crude oil prices, and strengthening of the US Dollar Index) and detection of a new COVID-19 variant – Omicron – in South Africa, Nifty has toppled sharply. A big fundraise in the primary market also put some pressure on the secondary market. Sentiments were battered globally, with global markets correcting by 2-3%, bond yields easing, and Brent Crude prices plunging by 11%. India’s VIX rallied 25% to 20.8.

Since these are early days for the new variant, limited information regarding its transmission and impact is available. We expect the Centre/ state governments to remain proactive, given their experience from the second COVID wave in Apr-May’21, and guidelines to evolve as the trajectory of the new variant becomes clearer. We expect the market to witness elevated volatility in the near term. However, valuations after the pullback, are relatively reasonable now at 23.3x/19.5x FY22E/FY23E Nifty EPS. Hence we would advise investors to buy into this correction. advise investors to buy into this correction”, says Mr. Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Likewise, different brokerages have come up with ‘Buy’ recommendations from different sector for considerable gains in a 1-year period:

1. UPL:

Jefferies has a ‘Buy’ on the scrip of UPL for a 1-year target price of Rs. 945. The ‘Buy’ has been retained given the various triggers including focus on margin accretive differentiated solutions, robust pricing, launch of new platforms and ESG could underpin its future growth.

2. IPCA Lab:

Motilal Oswal has a ‘Buy’ call on the pharma scrip for a 1-year price target of Rs. 2600. The brokerage is bullish on the counter given superior execution in branded generics exports, capacity expansion in API and better traction in the institutional anti-malarial segment.

3. PNC Infratech:

This construction and contracting real estate entity has been given a ‘Buy’ call by Geojit for a price target of Rs. 370 to be realised in 1-year. The buy on the stock has been reiterated given the strong order book and a healthy balance sheet. The company’s Q2 revenue that scaled 53 percent YoY in the second quarter has been better than the estimates.

4. Escorts:

Emkay has given a buy on the tractor major for a target price of Rs. 2140 in the 1 year horizon. The stock has been upgraded to a ‘Buy’ as Kubota’s takeover would substantially improve the company’s medium term growth outlook; via technology support and using Escorts for meeting Kubota’s global component needs.

5. Dixon Technologies:

The electricals firm has been again upgraded to a ‘Buy’ by Anand Rathi for a 1-year price target of Rs. 5936. After becoming strong in Indian contract manufacturing, Dixon has global aspirations and is now targeting the global LED bulb market.

6. Blue Dart Express:

Nirmal Bang has maintained its buy call on the couriers company for a price target of Rs. 7776 apiece. As per the brokerage, the company’s market share has gained despite premium pricing by as much as 25% in comparison to peers owing to unbeatable record in safety and reliability.

Stock	Brokerage firm	1-year target price	Last traded price as on November 30, 2021	Potential upside
UPL	Jefferies	945	690	37.00%
IPCA	Motilal Oswal	2600	2116	23.00%
PNC Infratech	Geojit	370	299	24.00%
Escorts	Emkay	2140	1860	15.00%
Dixon	Anand Rathi	5936	5068	17.00%
Bluedart Express	Nirmal Bang	7776	6737	15.00%

Disclaimer:

The above stocks from different sectors are recommended by different brokerages for potential gains. 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.