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Debt restructuring positive for Suzlon; looks attractive: Anand Tandon

Anand Tandon, an independent analyst, shares his views on Suzlon Energy and IPO by Inox Wind.

NT: Do you have a view on Suzlon? What is your take on INOX’s IPO?

Anand Tandon: It is indeed a good news that Suzlon’s debt has been restructured. The fact that a wealthy family is backing the company will now mean that you could have a situation where the company can separate the development of projects from the E&P part of it.

Suzlon could thus have a fairly healthy order book which needs not be on its own. One of the problem that Suzlon had was because it was developing its own projects, its balance sheet had become large and unwieldy .
If that were to be getting restructured, as a business, Suzlon is still a very attractive. Like for most IPOs, I have no view on Inox Wind. It is because until and unless the scrip starts trading, it is very difficult to predict how it will behave. A lot of things will depend on the management looks at minority shareholders.

 
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Posted by on March 19, 2015 in investment

 

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Inox wind IPO charges up Suzlon stock

As Inox Wind’s initial public offer (IPO) opened for subscription on Wednesday, investors lapped up peer Suzlon Energy, driving the stock up by 10.9% to a nine-month high of Rs 29.50. Analysts said investors are betting that Sun Pharma’s billionaire founder Dilip Shanghvi, who picked up a stake in Suzlon recently, may drive a turnaround in its fortunes. Brokers said the rise in the unofficial grey market premium for Inox has boosted sentiment in Suzlon too.

Grey market rates give investors an idea of the levels at which they expect the stock to list. “Suzlon Energy stock is rising due to the rub-off effect of Inox Wind IPO,” said Mehraboon Irani, principal and head-private client group business at Nirmal Bang Securities. Investors largely shunned Suzlon between 2008 and 2014 as the company was weighed down with debt woes. But, with Suzlon aggressively looking to reduce debt by selling assets and Shanghvi buying a stake in the company, the stock has more than doubled in the last one-anda-half months. The government’s focus on alternative sources of energy has also sparked investor interest in the sector.

“I would recommend investors to buy Suzlon Energy because the company has worked very hard to reduce its debt and Dilip Shanghvi’s investment into the company has provided a huge boost,” added Irani. Inox Wind’s IPO, which opened on Wednesday, was subscribed 0.16 times. The company is planning to raise Rs 1,000 crore. “One should always remember that in a bull market an IPO is always fully priced. hence the upside for Inox Wind is limited post listing,” Irani added. “I would say valuation of valuation of Inox Wind based on IPO price band is definitely expensive when compared to Suzlon Energy,” said P Phani Sekhar, fund manager at Karvy Stock Broking.

 
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Posted by on March 19, 2015 in investment

 

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Top 10 Consistently Performing Equity Mutual Funds

One of the most common questions that we come across from various investors is ‘Which are the best funds to invest in for long term financial goals?’

Our view is, for investors looking for wealth creation, our country presents attractive investment opportunities due to factors like large aspiring middle class consumers, young demographics and education led society.

Huge wealth shall be created by quality businesses over next 30-40 years and investors can participate in this wealth creation by investing portion of there savings in diversified equity funds, which in turn, investthe investors’ money in quality businesses across different sectors and themes.

Diversified equity funds provide attractive opportunities to investors who are looking for growth over long term. Listed below are top 10 equity funds thathave created huge wealth for investors with their long track record of consistent performance, have unique and diverse investment philosophies, and are well managed by experienced investment experts.

We have considered the following points while arriving at our list of 10 most consistently performing equity funds.

a. AUM of more than 4000 crores, through there is one exception in SBI Magnum Global fund, which we could not ignore due to its long and consistent performance
b. No two schemes managed by same fund manager
c. Consistent performance over long periods of 7 years and more in their respective categories
d. Different investment philosophies and styles of fund management

Schemes

1. BSL Frontline Equity Fund
Fund Manager – Mahesh Patil (9+ years)
Large cap oriented, Consistentlyoutperforming the benchmark for last ten years, focuses on stock selection while maintaining sector weightage as per benchmark

2. Franklin India Bluechip Fund
Fund Manager –AnandRadhakrishnan(7+ years), AnandVasudevan(3+ years)
Pure large cap fund, focuses on value investing, consistent performer, 1st private mutual fund launched in the country in 1993

3. HDFC Equity Fund
Fund Manager – PrashantJain(11+ years)
Growth oriented, momentum based large & midcap fund, best performing fund in its category with existence over 20 years

4. HDFC Midcap Opportunities Fund
Fund Manager – ChiragSetalvad(7+ years)
Investing in quality mid and small caps with blend of growth and value orientation, focuses on companies with competent and proven management

5. ICICI Prudential Value Discovery Fund
Fund Manager – MrinalSingh(3+ years)
Mid n Large cap fund, follows the principles of value investing, invest in strong companies which are out of market’s favour

6. ICICI Prudential Dynamic Fund
Fund Manager – SankaranNaren(2+ years), MittulKalawadia(2+ years)
Large cap oriented fund with P/B ratio based dynamic Equity:Debt allocation flexibility, functions like a pure equity fund during low market valuations and like a balanced fund in high market valuations

7. IDFC Premier Equity Fund
Fund Manager – Kenneth Andrade(7+ years)
Midcap oriented, looking for new business ideas with future potential, unique philosophy of inviting fresh investments primarily through sip mode only, opens for lumpsum investments only when clear opportunities are available to deploy large capital

8. Reliance Equity Opportunities Fund
Fund Manager – SaileshRaj Bhan(9+ years), Viral Berawala(4+ years)
Growth oriented multicap fund, invests across sectors in companies with high growth potential, one of the best and consistent performers since 2005

9. SBI Magnum Global Fund
Fund Manager – R. Srinivasan(5+ years)
Invests in larger size midcaps with proven track record and future growth potential, best performing midcap fund with a long history of 20 years of consistent performance

10. UTI Opportunities Fund
Fund Manager –AnoopBhaskar(3+ years)
Large cap oriented, investing across sectors with bottom up stock selection, focuses on companies with proven earnings with further growth potential

Scheme Performance

S.No. Scheme Name Category Compounded Annual Returns(%)
3 yrs 5 yrs 7 yrs 10 yrs
1. Franklin India Bluechip Fund Large cap 21.23 14.16 9.55 19.38
2. BSL Frontline Equity Fund Large & Midcap 27.91 15.79 11.48 21.85
3. HDFC Equity Fund Large & Midcap 27.67 16.59 12.89 23.07
4. ICICI Prudential Dynamic Fund Large & Midcap 26.29 16.91 12.13 22.97
5. UTI Opportunities Fund Large & Midcap 24.05 16.27 11.72
6. Reliance Equity Opportunities Fund Multicap 32.45 22.65 14.35
7. ICICI Prudential Discovery fund Mid & Large cap 36.23 23.33 18.62 24.93
8. HDFC Midcap Opportunities Fund Midcap 34.09 24.63 16.84
9. IDFC Premier Equity Fund Midcap 29.61 21.75 15.87
10. SBI Magnum Global Fund Midcap 32.05 21.52 10.36 23.84

The funds listed above are the ones where you can invest in for appreciation of money for your long-term financial goals. You may preferably invest through monthly sip mode and let your wealth grow with peace of mind without worrying too much about market fluctuations and other related noise.

Plan for your goals as early as possible and realise your dreams with proper structure and planning.

 
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Posted by on February 1, 2015 in investment

 

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Saving Habits in India

Indian has strong saving habits which are getting stronger day by day.

Household saving pattern is similar to other Asian economies in the region. We invest in safe savings. We generally invest very less in stock market and avoid and risky investments where as in western economies investments in stock market is high.

47% of the household savings are parked in bank deposits whereas only 4 to 5 % went to equities.

14% is parked in small savings and government deposits.

 Around 24% are invested in insurance, pension funds and provident funds. Majority of the pension funds, insurance and bank funds are essentially controlled by government and provide a safe investment avenue to Indian investors.

Mutual funds have minuscule shares of 3.34 %.

Mutual Funds have grown hugely in India but still people prefer to invest in PF, Bank deposits, pension funds and small savings. The trend remains unchanged.

Probably 15,000 to 20,000 tons of gold is stocked by Indian household. It is really difficult to arrive on a right figure as there is no recorded details are available.

Gold is loved by one and all and hoarded without thinking about return on investment (ROI) which is anyway a sentimental investment which can be used in bad times. Also important here is that most of the gold hoarded is in the form of jewelry which is not pure god

Fixed deposits have always been popular among risk-averse investors. Given the global economic uncertainties and persistent high inflation in India, many individual investors made a shift towards safer investment avenues like fixed deposits FY 11, as against direct equity in FY 10.

Fixed deposits have regained popularity in FY 11 to become the single-largest investment

Class. These instruments are expected to continue to be the largest and preferred investment Class, at least in the next couple of years.

One of the most convenient options for individuals, savings bank deposits offer high liquidity and low risk. Deposits in scheduled banks are quite safe due to RBI regulations.

Savings deposits are popular, constituting a considerable portion of the total deposits of scheduled commercial banks. Savings accounts can be opened in: (a) Scheduled commercial banks; and (b) Scheduled co-operative banks. The total savings bank deposits held by Individuals amount 7.13% of total Individual Wealth.

 
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Posted by on August 8, 2013 in investment

 

5 Reason for you to invest in Shriram Transport Finance – NCD

Shriram Transport Finance Company (STFC) was established in 1979 and has a long track record of over 3 decades in the commercial vehicle financing industry. This is a part of Shriram Group of Industries which has strong presence in finance sector in India.

STFC is issuing secured redeemable non convertible debentures (NCDs). The terms for investments are 3 years and 5 years and the interest rates are upto 11.5 % per annum.

Shriram Transport which is one of the biggest truck financing companies in India is issuing NCDs for 36 months & 60 months. In case of company going bust which is a distant possibility looking at the current track record of the company, you will get back your principal investment and interest.

Here are the main features of Shriram Transport NCDs:

  • The issue closes on 29th July 2013.
  • The NCDs are available for 36 months that is 3 years and 6o months, which are 5 years, so please plan for at least 3 years if you want to invest in this NCD.
  • Interest payable is annually or at maturity depending on the series.
  • Face value of the Bond is Rs. 1000
  • Minimum investment is for at least 10 bonds that is you have to shell out minimum 10000 Rupees.
  • Off course you can invest in any number of bonds depending on your capacity to invest.
  • The best part is these NCDs will be listed on NSE & BSE so no issues related to liquidity
  • NCDs are backed up with security
  • 50% of the NCDs are reserved for retail investors who can invest upto Rs. 5 lacs
  • 30% of NCDs are reserved for high net worth investors (HNI) who will have to shell out Rs 5 lacs plus for investment here.
  • 10% reserved for Institutional investors and 10 % for Non institutional investors
  • NRIs cannot invest here in this NCD.
  • The issue size is Rs. 375 crores with an option to retain Rs 375 crores aggregating to Rs 750 crores.

 Tax issues:

If the NCD is purchased through DEMAT, no TDS would be deducted by the company.

If the NCDs are purchased in physical form, TDS would be deducted if the interest exceeds Rs 5000 as per tax rules.

Income tax will be based on individual tax slabs. You need to show the income in the tax return  and pay necessary tax .

Where to apply?

You can download prospectus from www.stfc.in

Demat account holders can use their demat account to do this purchase. Check the exact location on the website of your broker.

You can also use a physical form which you can get from your local financial advisors

Ratings if you believe in it:

CRISIL Ratings are AA/Stable and CARE is AA+ which denotes high degree of safety for timely serving financial obligations and carry low risk.

Attractive interest rates of 10.09% for 3 years and 11.15% for 5 years term.

 Risks from my point is view is that investments in financial firms are little risky, if the interest payment increases , profitability may get hit so there will be margin pressure but Shriram Transport NCDs are secure and safe for high returns. Liquidity is not an issue since these are trades on stock exchanges.

I don’t think this is a risky investment at all.

IMPORTANT: Please read the prospectus of this issue before investing any amount.

 

 


Shriram Transport NCD offers interest rate up to 11.75%

Shriram Transport Finance has announced the launch of its second secured redeemable non-convertible debentures issue to raise Rs. 500 crore.

The company said the Rs. 250-crore issue, with a greenshoe option adding up to Rs. 500 crore, will open on October 7 and close on October 21. Each bond carries a face value of Rs. 1,000 each. This is the second issue in four months.

The company is offering a return of 35 bps more than its last issue at up to 11.75 per cent. The issue carries a AA/stable rating from Crisil and AA+ from Care.

Shriram Transport Finance is the largest and one of the oldest NBFCs in auto finance, primarily in the second hand commercial vehicles sale space in the country.

Close to 85 per cent of its assets worth Rs. 50,120 crore are in second-hand commercial vehicle funding, its managing director Umesh G Revanker said.

This is the sixth NCD issue by the company in past five years, he said, adding the present issue has three

tenures of, three, five and seven years. The coupon for series I, series II and series III having the tenure of 36 months, 60 months and 84 months, respectively, shall be 10.75 per cent per annum, payable annually, Revanker said.

However, on any record date retail investors shall receive an additional incentive of 0.50 per cent for series I, 0.75 per cent for series II, 1 per cent more for series III, aggregating up to 11.25, 11.50 and 11.75 per cent per annum respectively.

JM Financial and AK Capital are the lead managers to the issue, while IDBI Trusteeship Services is the debenture trustee and Integrated Enterprises the registrar to the issue.

 
 

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