Category: Personal Finance

Chip shortage a near-term issue; long-term view remains intact

Tata Motors (TTMT) is a significant worldwide car company that produces a wide range of vehicles including PVs, SUVs, buses, trucks, pickup trucks, and defence vehicles.

JLR’s profitability to improve, driven by market recovery and ramp-up in newly launched Defender

According to Motilal Oswal, beginning in 2HCY19, JLR volumes began to show early indications of recovery, fueled by the new Evoque, a ramp-up in I-Pace, and a course correction in China – which was initially derailed by the COVID impact and is now stalled owing to the semi-conductor shortage.

“We expect JLR (including JV) to post a 13% volume CAGR over FY21-23E (after 13.3% CAGR decline over FY18-21). This, coupled with the possibility of mix improvement and reduced variable marketing spend, would lead to a ~15% revenue CAGR,” the brokerage has said.

India business on recovery path; PV nearing cash breakeven

Motilal Oswal believes that COVID 2.0 had a significant impact on the turnaround of the Indian business. Nonetheless, the India CV market is on solid ground, with M&HCV (42 percent CAGR over FY21-23E) and LCV (21 percent CAGR) poised for robust cyclical recovery. 2HFY22 is expected to be better than 1HFY22, with momentum continuing for the following 2-3 years.

TTMT’s revised product portfolio would allow for a sustained recovery in the PV sector (34 percent CAGR) as well as market share increases, putting the company on track to achieve FCF breakeven by FY23E. In the medium term, it aims for a 15% market share in India PV, with EBITDA margins in the high single digits.

Valuation and view

“Recovery is underway in all the three businesses of TTMT. While the India CV business would see cyclical recovery, the India PV business would witness structural recovery. JLR is witnessing cyclical recovery, supported by a favorable product mix. However, supply-side issues would defer the recovery process. While there would be no near-term catalysts from the JLR business, the India business would post continued recovery. The stock trades at 9.6x FY23E consolidated EPS and 3.2x EV/EBITDA. We maintain our Buy rating, with a Target Price of Rs 400 per share,” the brokerage said in the report.

Head start in EV

India PV has two scalable and electrified platforms: Alpha Arc (Altroz and Punch) and Omega Arc (larger vehicles such as Harrier and Safari). PV has a 70 percent market dominance in EVs in India, giving it a head start in the EV industry – the competition isn’t as well-equipped. It expects to launch 1-2 electric vehicles every year by converting existing ICEs to electric vehicles, with a total of 10 pure electric vehicles on the road by 2025. By 2025, it wants EVs to account for 25% of PV volume.

Disclaimer

The above stock is 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. The above report is for informational purposes only.

Buy Federal Bank, says Motilal Oswal

According to Motilal Oswal Institutional Equities, gross advances at Federal Bank grew 9.7% YoY to Rs 1.4 trillion. The bank has reported a strong recovery in business trends with a 3.4% sequential growth (v/s a 1.6% QoQ decline in 1QFY22 affected by the second COVID wave). The growth is largely contributed by a recovery in retail assets such as gold, home, and auto loans.

According to Motilal Oswal Institutional Equities the bank continues to maintain a high liquidity coverage ratio (LCR) of 226 per cent (v/s 216% in the first quarter of FY22).

“Federal Bank posted a strong recovery in business trends, despite higher COVID-19 cases in its core state. It reported a strong performance, despite many odds. The Current Account Savings Account trend remain healthy, with the liability franchise holding up well for the bank. We expect an improvement in margin in 2QFY22, supported by a recovery in credit trends and lower cost of funds. We maintain our Buy rating with a target price of Rs 110 per share (1.2 times FY23E anticipated book value).

The stock of Federal Bank was last seen trading at Rs 84.

Buy HDFC, says Motilal Oswal Institutional Equities

According to the brokerage HDFC sold down loans worth Rs 71.3 billion in 2QFY22 v/s Rs 30.3 billion YoY and Rs 55 billion QoQ. “We expect the company to report an upfront assignment income of Rs 3.2-3.3 billion from the sell-down. Note that in the prior fiscal, it sold down Rs 190 billion worth of loans,” the brokerage has said.

“HDFC is our preferred pick in the Housing Finance sector. We like HDFC’s ability to gain profitable market share, despite significant competitive pressures. The Real Estate market saw a swift turnaround in 2QFY22. We expect this sector to remain reasonably buoyant even in the absence of any stamp duty cuts. With incremental cost of funds from the capital markets at

5.5-6%, the company has been able to manage spreads, despite the sharp cut in home loan yields, led by the largest Public Sector Bank in India. HDFC has built a large provision buffer to guard against contingencies in non performing assets from COVID-led disruptions. We expect it to deliver a core Return on Equity of 12-13% over the medium term.

The Motilal Oswal Institutional Equities report does not suggest any target on the stock. The shares of HDFC were last seen trading at Rs 2754 on the NSE.

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. The above report is for informational purposes only.

DSP Small Cap

The fund’s goal is to achieve long-term capital appreciation by investing in a portfolio that is mostly made up of small-cap stocks. The NAV of the DSP Small Cap Fund for Oct 01, 2021 is 112.75.

DSP Small Cap Direct Plan is in charge of assets worth Rs 8,000 crores (AUM). The fund’s expense ratio is 1.04 percent, which is higher than the expense ratios charged by most other Small Cap funds. The last year’s returns were 75.49 percent. It has returned an average of 23.57 percent per year since its inception.

Chemicals, Textiles, Automobiles, Metals, and Construction make up the majority of the fund’s holdings. Nilkamal Ltd., Ipca Laboratories Ltd., Atul Ltd., Chambal Fertilisers & Chemicals Ltd., and TI Financial Holdings Ltd. are the fund’s top five holdings.

A 3-year SIP of Rs 10,000 would make a profit of Rs3.08 Lakh with the current value of investment of Rs 6.68 lakh.

DSP Flexi Cap Fund

DSP Flexi Cap Fund Direct Plan-Growth manages assets of Rs 6,744 crores (AUM). The fund’s expense ratio is 0.91 percent, which is comparable to the expense ratios charged by most other Multi Cap funds.

DSP Flexi Cap Fund Direct Plan has a 1-year growth rate of 65.62 percent. It has generated an average yearly return of 17.00% since its inception.

ICICI Bank Ltd., HDFC Bank Ltd., Ultratech Cement Ltd., Infosys Ltd., and Bajaj Finance Ltd. are the fund’s top five holdings. The scheme aims to achieve long-term capital appreciation through a portfolio that is primarily comprised of equities and equity-related assets, with a portion of its corpus invested in debt and money market instruments.

With a current investment value of Rs 5.81 lakh, a three-year SIP of Rs 10,000 would yield a profit of Rs 2.21 lakh. The fund has a 4 Star rating from the CRISIL rating agency.

DSP Tax Saver

The DSP Tax Saver Direct Plan-Growth manages assets of Rs 9,675 crores.

The DSP Tax Saver Direct Plan’s 1-year growth returns are 69.27 percent. It has returned an average of 18.86 percent per year since its inception. ICICI Bank Ltd., Infosys Ltd., HDFC Bank Ltd., Axis Bank Ltd., and State Bank of India are the fund’s top five holdings.

The scheme aims to generate medium to long-term capital appreciation through a diversified portfolio that is primarily comprised of corporate equity and equity-related instruments, as well as provide investors with a tax benefit under the income tax act. The NAV of the DSP Tax Saver Fund for Oct 01, 2021, is 87.22.

DSP Equity Opportunities Fund

DSP Equity Opportunities Direct Plan-Growth manages assets of Rs 6,956 crores (AUM). The fund’s expense ratio is 0.97 percent, which is comparable to the expense ratios charged by most other Large & MidCap funds.

The DSP Equity Opportunities Direct Plan’s 1-year growth returns are 66.21 percent. It has had an average yearly return of 17.94% since its inception.

The fund’s top 5 holdings are in ICICI Bank Ltd., HDFC Bank Ltd., Infosys Ltd., Axis Bank Ltd., State Bank of India.

The scheme aims to generate long-term growth through a portfolio of large and midcap companies’ equity and equity-related securities. DSP Equity Opportunities Fund’s NAV on October 1, 2021, is 391.62.

With a current investment value of Rs 5.72 lakh, a three-year SIP of Rs 10,000 would yield a profit of Rs 2.12 lakh. The fund has a 4 Star rating from the CRISIL rating agency.

DSP Natural Resources and New Energy Fund

DSP Natural Resources and New Energy Fund Direct Plan-Growth manages assets worth 735 crores (AUM). The fund’s expense ratio is 1.23 percent, which is higher than the expense ratios charged by most other Thematic-Energy funds.

DSP Natural Resources and New Energy Fund Direct Plan-Growth returns were 94.00 percent in the previous year. Since its launch, it has delivered 17.88% average annual returns. The fund has 5-star rating from the CRISIL Rating agency.

The scheme will invest in equity and equity-related securities of Indian companies, as well as a portion of equity and equity-related securities of foreign companies whose primary economic activity, is the discovery, development, production, or distribution of natural resources, such as energy, mining, and so on.

5 Best Performing Equity Mutual Fund SIPs From DSP Mutual Fund

DSP Equity Opportunities Fund

SIPs are best way to invest in Equity Mutual Funds

The most significant advantage of SIP is rupee cost averaging. SIP can help you cost average your investments even if you invest at highs and markets fall. Wealth is built over a long period of time. As a result, do not interrupt your SIP at any cost. When it comes to investing, a time horizon is critical in determining where to place your money based on your financial goals. For a long-term aim like retirement, for example, the investments should be more growth-oriented. In the meantime, a 3-year target is “near-term and urgent,” thus capital protection is the first priority.

Disclaimer

Investing in mutual funds poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only and investors should exercise some discretion.

After the company’s shareholders authorized a sub-division of the company’s shares, Steel Strips Wheels‘ stock gained more than 4% on NSE in the morning session on October 4.

Shareholders accepted the appointment of Siddharth Bansal as a non-executive independent director from November 9, 2020, to September 30, 2025, according to another exchange filing.

“Subdivision of the Company’s equity shares from 1 (one) equity share with a face value of Rs. 10/- to 2 equity shares with a face value of Rs. 5/- each. The Record Date for the purpose of subdividing equity shares will be announced as soon as possible “In a BSE filing, the company stated.

Steel Strips Wheels Long-Term Issuer rating was improved to ‘IND A-‘ from ‘IND BBB+’ by India Ratings and Research in September, with a positive outlook.

Steel Strips Wheels is a company that specializes in developing and manufacturing steel and alloy vehicle wheels. Its facilities serve a diverse variety of domestic and international automakers. Tata Steel and multinational players like South Korea’s Kalink Co are among the companies with which the corporation has partnered.

The stock was up Rs 73.20, or 4.09 percent, at Rs 1,865 at 11.00 AM. It has traded between an intraday high of Rs 1,881 and a low of Rs 1,838 on NSE.

On September 1, 2021, the stock reached a 52-week high of Rs 1,958 and a 52-week low of Rs 445, in October 2020.

Annual sales growth of 11.37 percent surpassed the company’s three-year CAGR of 4.81 percent. The stock returned 66.87 percent over three years, compared to 76.83 percent for the Nifty Smallcap 100. Over a three-year period, the stock returned 66.87 percent, while the Nifty Auto provided investors a 9.7 percent return.