Thursday, March 7, 2019

Ever Green Britannia:

  • Britannia was established in 1892.
  • Vision- To be "Global Total Food Company"
  • Britannia is a leading player in bakery  industry with major presence in 2 sub segments- 1- Biscuits 2- Cakes & Rusks
  • Biscuits is about 80% and Cakes & Rusk is 15% of company revenue.
  •  Britannia has strong domestic presence and sells its product in more than 60 countries across the globe
  • Biscuits is a $4Bn industry and Britannia is the market leader in India with 31% revenue share followed by parle and ITC.
  • Biscuits has 3 categories (cookies 40% share) (cream biscuits 20%) (Plain Biscuits 40%)
  • Some of the strong brand are Good day, Marie, Tiger & Nutri choice)
  • Election and Government push for rural consumption should help Britannia to grow faster in coming years
  • Britania continues to focus on distribution expansion.
  • It has 2.08mn direct outlet and likely to add 2lakh retail outlets every year under its direct distribution network.
  • It continues to expand its rural reach by via hub and spoke is present in all villages with population over 10k and plans to cover villages over 5k population.
  • There are 17900 prefered rural dealer
  • Distribution expansion in Hindi belt remains a key focus area for Britannia (Rajasthan, MP, UP, Gujrat & Chattisgarh)
  • Current ROCE of 64% & 70% for fy19E.

Saturday, March 2, 2019

Taking Stock of IPO:

When the going is good, everything gets going. In stock market terms it is called as sentiment. And sentiment is crucial for success of issues like Initial public offer. Majority of IPO's come when market is in good mood or the sentiment is positive.

And when the sentiment is positive, there is a feeling of goodness in the air and there is often mad rush for Share IPOs etc. Taking advantage of this, these share promoters quote a hefty premium which again gets bought for the simple reason - The Sentiment is GOOD.

And the worst part is these issues get oversubscribed by many folds, due to which these investors should be lucky to get an allotment. And on the listing day most of these stocks get listed at a huge premium.

But when sentiment turns bad, many of these premiums evaporate and some of them start quoting below their listing price if not their allotment price. The mad rush has ended and many of these 'darling' stocks are trading in the market without getting noticed. Literally they become out of flavour. And Some of these companies come up with some stock split or bonus - thereby effectively confusing the investor on the fall in stock price.

Genuinely speaking, Investors who found some of these IPO stocks and their businesses sensible, need to wait for the cycle to turn over and then pick these stocks at a fraction of their cost.

Below mentioned is list ofsuch IPO stocks. Kindly do your due diligence before investing.

Thursday, February 28, 2019

NRI Investments through Mutual Funds in India:

Non Resident Indians (NRI's) are attached to motherland. Though they live in different parts of the world, they have a native affinity to India and are well connected with their roots.

With India emerging as one of the fastest growing and promising economies of the world, it is natural that they would like to participate in India's growth story.

Though there are different immigrations status like PIO's / OCI's etc, from Indian tax law's point of view there is only one category called NRI's. Anyone who lives overseas, away from India for more than 182 days - they qualify to be an NRI.

And NRI's can have income from overseas or from India:

  • They can invest their overseas money from their NRE bank account in NRE status itself and can repatriate it at any time. 
  • On the other hand they can invest their domestic income in India - by way of rental / business / investment income - but they fall under Non Repartriable status.
Investing in Mutual funds in NRI status - be it NRE or NRO - is ultra simple. All they need to do is just complete their KYC registration, which is a one time physical documentation process. After that they can invest in mutual funds. 

(In direct stock market investing, it is mandatory for NRI's to open a Portfolio Information Scheme (PIS) account and then invest. Every share transaction - be it Buy or Sell - is communicated to RBI through your banker. Hence it becomes cumbersome and expensive. This PIS account is not required for Mutual Fund Investments).

NRI's from USA and Canada can invest in any scheme of the following fund houses:

  1. L&T Mutual Fund
  2. PPFAS Mutual Fund
  3. Sundaram Mutual Fund
  4. UTI Mutual Fund
  5. DHFL Pramerica Mutual Fund
  6. Birla Sun Life Mutual Fund
  7. SBI Mutual Fund
  8. ICICI Prudential Mutual Fund
NRI's from other countries can invest in any mutual fund schemes of the 40+Asset management companies. There is no restrictions.

The restriction for US / Canada based NRI's is because of the cumbersome compliance requirements under FATCA or Foreign Account Tax Compliance Act. Under FATCA, it is compulsory for all financial institutions to share the details of transactions involving US citizens, including NRIs with the US Government. FATCA ensures that there is no deliberate tax evasion by US citizens on income generated overseas. India signed the Inter-Governmental Agreement (IGA) with the USA on July 9, 2015, for improving International Tax Compliance and implementing FATCA. The documentation is standard for all investors, whether they are NRIs or RIs.

With in each fund house, you have a plethora of schemes under debt and equity categories: 
  • Under Debt funds
    • Liquid funds, 
    • Ultra short term funds, 
    • Short term fund, 
    • Medium term funds, 
    • Long term funds, 
  • Under Equity Funds:
    • Large cap funds - investing in Top 100 companies by market cap
    • Mid cap funds - investing in 101 to 250th stock by market cap
    • Small cap funds - investing from 251st stock
    • Multicap funds
    • Theme funds
    • Goal oriented funds
  • Hybrid funds - that invest in mix of equity and debt, following specific asset allocation model.
Documents required for NRI Investing are:
  • PAN card 
  • Passport copy 
  • Visa copy 
  • Indian address proof 
  • Overseas address proof 
  • Overseas Tax ID card 
For further clarifications/ documentations / forms, do email us at :

Tuesday, February 12, 2019

Rakesh JhunJhunWala Interview on 7th Feb 2019:

When we are confused, we look upon some expert for clarity. And for Stock markets, one such person is Mr.Rakesh JhunJhunWala - a self made investor whose views are much tracked in the market.

Few days back his interview came up on Bloomberg Quint Channel and fortunately it is in below mentioned youtube link. Worth watching once.

Following are some of the point (may not be the exact phrase) that captured my attention:

  • Markets are like Women. They humble you. Don't try to brow beat them. You need to accept, respect and learn from them.
  • Growth and prosperity of nation comes from Chaos.
  • Advantage of India:
    • Genetically skilled
    • Favorable demography for 30 years, which is irreversible.
    • Democracy
    • Entrepreneurship
    • Natural resource
    • Inward looking economy with potentials for exports.
  • India grows not because of politicians, but in-spite of politicians.
  • Positives of  Present govenrment
    • Doing Social welfare without leakage - Direct benefit transfer
    • Inviting investments - increasing size of market
    • Push towards common civil code
  • Advise for Retail investors:
    • Investing is NOT EASY
    • Investing needs full time attention
    • Many invest in stock market for excitement.
    • Allocate 10% of money for such direct equity investing.
    • Invest rest 90% through mutual funds and Portfolio Management services.
  • Problems of Retail investors
    • Attitude of Expectations
      • If you compound at 21%, your money doubles in 3.5 years which is excellent
      • If Debt returns are8-9%
      • Expected equity returns could be 15% to 18%
  • Equity Investing is not T-20, it is Test Match.
  • Lessons learnt:
    • Be realistic in expectations
    • See reality as it is and accept it.
    • Don't be too pessimistic or too optimistic.
    • Dont be afraid to make a mistake
    • Rely on intuition
    • Invest in Future but keep in mind that Future is uncertain.
    • Don't be too predictive.
    • Do Financial Due Diligence AND Business Due Diligence.
Wealth is Comfort. Wealth is Independence. Wealth is NOT HAPPINESS. 

Friday, January 18, 2019

Dividend Yield Stocks...Updated

Everyone would be happy when money is credited to bank account. And it is very true with investors, when dividends get credited at set periodicity and predictability.

As the company grows and makes more profits, it is logical for long term investors to expect more and more dividends. Since dividends are paid out of profits and/or reserves, healthy and consistent dividend payout is an indicator of the companies health.

While many of us know this concept well, but we assume that the bluechip names to be dividend yield stocks. Not necessarily. There are quiet a good number of good quality businesses, some of them recently listed - with good business model - and qualifying to be a dividend yield stock in our portfolio. 

Below mentioned is such an indicative list. Request readers to do your own due diligence before investing.

Though you may have many stock in your demat holdings, having dividend yield stocks among them can keep some money trickling in automatically!!!

You may read our earlier article on Dividend yield stocks here: ALL ABOUT DIVIDEND YIELD STOCKS

Thursday, January 17, 2019

Bharat Forge:

  • Largest exporter of Auto components from India
  • 10 Manufacturing locations across 5 countries.
  • Total Forging capacity: 6,25,000 mtpa.
  • Global leader in power train and chassis components catering to power, Oil and  gas, Construction, Mining, Rail, Marine, Aerospace and defence industries.
  • Revenue break up:
    • 50% from commercial vehicles
    • 33% from non auto
    • 17% passenger vehicles
  • Global revenue break up:
    • Europe: 40%
    • India: 30%
    • US : 28%
  • Acquired 45% stake in Tork Motorcycls in FY 2018 - to gain technical expertise in EV power train development
  • Opened R&D in Mira Technology park in UK to develop components and subsystem focused on EV's.
  • Fully automated manufacturing facility in Andhra to desine and make compnents for automotive and industrial application - to be commissioned in CY 2019

All about CESE:

  • CESE = Calcutta Electric Supply Corporation
  • History of CESE:
    • The first demonstration of electric light in Calcutta was conducted on July 24, 1879 by P W Fleury & Co. In 1881, 
    • 36 electric lights lit up a Cotton Mill of Mackinnon & Mackenzie. 
    • The Government of Bengal passed the Calcutta Electric Lighting Act in 1895. 
    • The first license covered an area of 5.64 square miles (14.6 km2). 
    • On 7 January 1897 Kilburn & Co. secured the Calcutta electric lighting license as agents of The Indian Electric Company Limited. 
    • The company soon changed its name to the Calcutta Electric Supply Corporation Limited and in 1897, The Calcutta Electric Supply Corporation Limited was registered in London.
    • On 17 April 1899, the first thermal power plant of The Calcutta Electric Supply Corporation Limited was commissioned at Emambagh Lane near Prinsep Ghat, heralding the beginning of thermal power generation in India. 
    • The Calcutta Tramways Company switched to electricity from horse-drawn carriages in 1902. 
    • Three new power generating stations were started by 1906. 
    • The company was shifted to the Victoria House in Dharmatala, Kolkata in 1933, and still operates from this address.
    • In 1970, the control of the Company was transferred from London to Calcutta. 
    • In 1978 it was named "The Calcutta Electric Supply Corporation (India) Ltd." 
    • The RPG Group was associated with The Calcutta Electric Supply Corporation (India) Limited from 1989, and the name was changed from The Calcutta Electric Supply Corporation (India) Limited to CESC Limited. 
    • In 2011, CESC became a part of the RP-Sanjiv Goenka Group, which was formed on 13 July 2011 by Sanjiv Goenka, the youngest son of Dr RP Goenka, the late founder of RPG Enterprises.
  • Currently, CESE is the Sole distrubutor of Electricity for 567 sq km of Kolkata and Howrah - serving 2.9 million domestic, industrial and commercial users.
  • Operates 3 thermal plants for 1125MW
  • In house power generation takes care of 88% of electricity requirements.
  • 50% of coal used for power generation from captive mines
  • T&D system comprises 474 km circuit of transmission lines.
  • Restructuring plans: for Value unlocking
    • Split into 4 entities with specific focus. 10 Shares of CESE will get
      • Power generation - 5 shares
      • Power distribution - 5 shares
      • Retail - Spencer's Retail - 6 shares
      • Other busiensses - 2 shares.
    • Spencers retail has presence in 35 cities.
    • All 4 companies to be listed in the market.

Stocks for Long Term:

While building up portfolio, many investors get carried away by the bull market and invest in flavour of the season stocks. But in reality they may not survive a market cycle.

While investing, investors needs to distinguish between Long term, Momentum, Short term and trading stocks. Long term stocks are those that would survive market cycles and keep growing slowly in the long run. Such are the stocks many investors should ideally be investing. These stock can be called as foundation stocks in a portfolio. And given their stability, they should occupy atleast 50% of your total portfolio, if not more.

Below mentioned is a list of stocks along with brief note on their businesses:

  • Incorporated in 1977
  • Total loan outstanding: Rs.4,30,210 Crores
  • 332 offices across India
  • Loan break up:
    • Individuals : 73%
    • Construction finance : 12%
    • Lease rental discounting : 9%
    • Corporates : 6%
  • Key source of borrowings:
    • Debentures etc : 54%
    • FD's " 28%
    • Term Loans: 18%
  • Gross NPA : 1.13%
  • Capital adequacy ratio: 18.40% 
  • Key associates
    • HDFC Bank : 21.4% equity stake
    • HDFC Standard life : 51.6% equity stake
    • HDFC AMC : 52.80% 
    • HDC Ergo General Insurance : 50.5%
    • Gruh Finance : 57.9%
    • HDFC Credila : 90.80%
  • HDFC Bank
    • FD Base : Rs.8,33,360 Crores
    • 4825 Branches
    • 13018 ATM's
  • HDFC Standard life
    • 21% market share of new business premium among private insureres.
    • Manages US$ 40 Billion assets
  • HDFC Ergo Gen Insurance:
    • 9.80% Market share
  • Gruh Finance:
    • Rs.16700 Crore loan portfolio
  • 10.90% market share in automobiles
  • Presence in
    • Aerospace and defence
    • Automobile after markets
    • Agriculture
    • Farm Equipments
    • Financial servides
    • Hospitality
    • Information techonology
    • Real estate
    • Organized retail
    • Logistic
    • Two Wheelers
  • Largest Utility vehicle manufacturer 
    • 2nd largest Commercial vehicle producer
    • Largest small CV producer.
    • 25.40% Market share
  • India's largest tractor manufacturer : 42.90% market share
    • 16 plants in India
    • 6 plants in USA
    • 7 plants in Africa
    • 2 plants in Australia
    • 2 plants in Turkey
    • 2 plants in Korea.
    • Sold in over 100 Countries
  • Listed subsidaries:
    • Tech Mahindra : 26.15% equity share
    • Mahindra Holidays
    • M&M Financial Services
    • Mahindra Life space
    • Swaraj Engines
    • EPC Industries
    • Mahindra Logistics
  • Other subsidaries:
    • Ssang Yong Motors : 4th largest south korean based automobile
Aravind Ltd:
  • India's largest textile, apparel and fashion player
  • Total Revenue: US$ 1.7 Billion
  • Production capacity: Over 100 Million meters of Denim and 132 million meters of Woven fabirc in FY 2018.
  • Converts 10% of fabrics manufactured to garments.
  • BrandsL
    • US Polo
    • Tommy Hilfiger
    • Calvin Klein
    • Arrow
    • Flying Machine
    • Gap
    • Sephora
  • Over 1200 Retail Stores in India, apart from 3rd party distribution network.
  • Demerger of business in Dec 2018:
  • Textile business is expected to grow @ 10%
  • Branded apparel business is expected to grow at 20%
Hero Motor Corp:
  • 50% market share in domestic motorcycle market
  • 35% market share in domestic two wheeler market.
  • 6500 Dealers across India
  • Product portfolio : 20 two wheeler models
  • Key portfolio:
    • Splendor,
    • HF,
    • Passion,
    • Glamour.
  • 2 new products in 125cc scooter segment in pipeline.
  • Global presence in 37 countries across Asia, Africa, South and central america.
  • Technology centre in Jaipur with an investment of US$125 million commissioned in March 2016.
  • New plant in Chitoor (AP) coming up
  • One manufacturing plant under construction in Srilanka and Bangladesh.

  • Established in 1974
  • FMCG Player with over 300 products - mainly ayurvedic.
  • Popular brands
    • Boroplus
    • Navaratna
    • Fair and Handsome
    • Zandu Balm
    • Mentho Plus Balm
  • Acquired Zandu Pharma in CY 2008
  • Acquired Kesh King in 2015 
  • 3rd Party unit started in Srilanka to manufacture country specific items.
  • Products sold in 60 Countries:
    • Guldf
    • Europe
    • Africa
    • Common Wealth nations
  • Debt equity ratio : at 0.21 times
Grasim Industries:
  • Started in 1947
  • Belongs to Aditya Birla Group
  • Products 17% of global viscose fibers.
  • India's largest Chlor Alkali and cement producer
  • India largest Caustic Soda manufacturer
  • Subsidaries:
    • Ultratech cement : 
    • AB Capital

Monday, December 24, 2018

Is it Time - Women adorn the 'Hat of Investor' and contribute to their families?

Below mentioned is an article published in the NEWS WHEEL - The news letter of Inner Wheel Club of Madurai City in August 2017. The write up is relevant to every women. Hope this motivates them to take active part in managing the investments of their family and contribute towards Financial Freedom.

A Penny Saved is A Penny Earned : (சேமிக்கும் பணம் சம்பாதிப்பதற்கு சமம்)