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Indian Financial System

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Overview of Indian Capital Markets Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals and institutions. The financial market is to facilitate the transfer of funds from surplus sectors (lenders) to deficit sectors (borrowers). It consists of investors or buyer of securities, borrowers or sellers of securities, intermediaries and regulatory bodies. Financial Market does not refer to the physical location. Formal trading rules, relationships and communication networks for originating and trading financial securities link the participants of the market. Indian Financial System The phenomenon of imbalance in the distribution of capital or funds exist in every economic system.  There are areas or people with surplus funds and there are those with the deficit. A financial system functions as an intermediary and facilitates the flow of funds from the areas of surplus to the areas of deficit. A financial system is a composition of various institutions, market, regulations, laws, practices, money managers, analysts, transactions and claims and liabilities. The functions performed by Financial Systems: The functions performed by Financial Systems: The Saving function Liquidity Function Payment Function Risk Function Policy Function Financial Markets The Financial Market is a broad term describing any marketplace where trading of securities including equities, bonds, currencies and derivatives occur. Financial markets can be defined as the market in which financial assets are created or transferred. Financial assets represent a claim to the payment of a sum of money sometime in the future and/or periodic payments in the form of interest or dividend. Financial Markets are sometimes classified as Primary and Secondary Markets. But more often they are classified as Money Markets and Capital markets.  The term financial market is often used to refer just to markets that are used to raise finance; for long term capital markets and for short term finance, the money markets. Functions of Financial Markets Borrowing and lending Price discovery Information collection and distribution Risk sharing Liquidity Efficiency

Magic of compounding

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When we hear success stories in Share Market, we normally appreciate only the Stock-picking skills of that Investor. We don’t give them enough credit for their discipline and patience. Those who don’t believe in the power of Share market rubbish it calling gambling. If you will tell them about an Investor who has a portfolio worth more than Market capital of Small Cap companies, they will argue that either that Investor is born with a silver spoon or simply he might have started with huge Investment Capital. We can’t actually blame them. They don’t know about the most important concept of Financial Market ‘compounding’ and the most widely known phenomena of creating wealth – the Magic of compounding. To know the importance of the power of compound interest one should first learn the concept of ‘time value of money’. Time value of money is the greater benefit of receiving money now rather than later. It is founded on time preference. When I was in school I bought bus Ticket from my home to School in 50 Paise. Now to travel the same distance, I have to take the BEST bus ticket of Rs. 10. Even a layman knows a term for it – ‘Mehengai’ or ‘inflation’. But it is not only about ‘inflation rate’ alone. It is also because of ‘time value of money’. Time value explains why interest is earned or paid. FV = PV (1+r) I am sure you have come across this formula several times in life. Yes, it is the easiest formula to calculate the future value of money from its present value. here ‘r’ is obviously the rate of interest. This formula explains to us why one should Invest in avenues which can give returns with higher interest rates than the inflation rate. We also pay taxes on our Income, brokerages on our buying and selling of Equities. We must obviously consider them as our cost on Investment too. If your returns on investments are more than the factors discussed, then only we will call them ‘real return’. You don’t have to lose your heart after reading about how hard it is to earn from Share Market. Yes, for short term investors it is very difficult to earn good sizable and respectable returns from the share market. But it is very easy for long term Investors to do so thanks to the Magic of Compounding. “Compound Interest is the eighth wonder of the world. He who understands it earns it and who doesn’t pay it.” – Albert Einstein The phenomena of making returns on returns is called as power of compounding. In long term we see exponential growth in our wealth due to magic of compounding. The amount you invest today, Regular monthly investment, Investment period, Rate of interest on savings and compounding intervals etc. are the key parameters using which we can easily find what corpus we can generate in long term by systematic investments. By systematic investment, you have to invest good capital in the Portfolio of stocks you selected and then let the Compound interest play its role. We all know the simplest formula of compound interest that we all learned at school. Aren’t we? A = P (1 + r/n)^nt Where, A = Final Amount that will be received P = Principal Amount (i.e. initial investment) r = annual interest rate n= frequency of interest rate (e.g. quarterly,half-yearly, monthly etc) t = number of years. Compounding means that the initial returns that you earned on your investment shouldn’t be removed as profit. It should be re-invested as ‘added capital’. Over a longer duration, compounding creates enormous wealth. Only those investors who not only understand this secret behind the magic of compounding but also implement it with lots of discipline and patients have become super-rich investors. The early you start more returns you can generate. Now, as you too have learned the ‘Magic of compounding’, when are you stopping your short term trading to focus on becoming Long Term investor? Do let me know in the comment below.

Why Investing is important?

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Future uncertainty: India is the second most populated country in the world with nearly a fifth of the world’s population. Its population growth rate is 1.13%. The average age of Indian is 29 years. As of September 2018, India had 31 million jobless people. Despite being one of the fastest growing economies of the world India has a significant problem of poverty. As a nation, we have completely failed to even fulfill the basic needs of Roti-Kapda-Makaan to every citizen. Most of the employed people are underpaid. They barely save anything in the month end. Competition is so high that one who has Job today can be replaced tomorrow by someone more competent. There is no ‘social security’ available in India. The government no more gives pension to employees in Government Jobs. Future is very uncertain. Financial planning has become so very important in today’s time. Every wise person will tell you that. Provision for future: Whether you are a Salaried Individual or a Businessmen, we all earn for our families. Most of us have only one Source of Income. Part of our Income goes into paying bills, buying groceries, paying un-avoidable expenses etc. We also have other liabilities like paying Wi-Fi Bills, Premium of Insurance policies, EMIs of Bank Loans and so on. So once all these expenses are taken care off, we spend the rest of the money for luxuries like watching movies in multiplexes, Pizza party with family, fine dining with loved one, holiday trips and so on. After spending money on everything mentioned above, we are hardly left with some money which we save regularly for meeting future expenses. That money is called Savings. Let Money Make work for you To increase our savings we have only two options available, either increase our Income or reduce the Expenses. Income can be increased by either working overtime, finding some additional source of income, shifting to high-paying jobs or moving to another country for currency difference. Expenses can be reduced by cost-cutting, adopting the simple lifestyle, buying only those things which are really very necessary. For normal people, Income minus expenditure is saving. Smart people save first and then spend the rest. It is important to make your hard-earned money earn you some more instead of lying idle. That is where Investing comes into Picture. A cash flow statement is essential to understand how much you should invest. It is important to make regular saving your habit and systematic investment your priority. The investment will generate us much needed alternate source of income. It not only earns a return on our idle resources but also helps us generate a specific sum of money for a specific goal in life. Above all it helps us make a provision for an uncertain future. For beating the Inflation: The day you earn your first salary, start your Systematic Investment Plan in a good Mutual Fund. It is important to start investing early. SIP helps you Invest regularly. Choose a long-term Investment plan as it will help you create good corpus in the future. .It is important to allow your investment more time to grow. In long term, it will give handsome returns. Little drops do make an ocean. When we talk about Money, we also talk about Time Value of Money. Inflation reduces our purchasing power. Whenever we Invest we must consider only those avenues of Investment which can beat the Inflation. If we need real returns from our Investment, we should invest in avenues such as mutual funds and equities which have a higher rate of return than the inflation rate. Re-investing your profits and dividends again will increase our capital invested. Compounding and High frequency of compounding of our Investment can create huge wealth for us in long term. So take your first step today. There is no point in investing in the financial instruments/products which our previous generation invested. Without sufficient risk, we can’t achieve our financial goals. Don’t let the noise of conservative people stop from entering in Market. Gain adequate knowledge and start investing today. (Disclaimer: Stocksbaazigar Mr. Deepak Doddamani is NSE’s Certified Investment Analysis Professional and NSE’s Marketing Professional Level – 4. This post is for Educational purpose.Thank you)

Wealth Creator Stocks of 2018

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      Wealth Creator Stocks of Calendar year 2018     Last Calender year 2017 was really good for the Indian Share Market thanks to GST and other major economic reforms Government took after Economy recovered from the effect of the biggest fiasco of Demonetization in 2016. Analysts predicted that it will be very difficult to earn good returns in the calendar year 2018 and unfortunately their prediction is turning out to be correct. This year many indices gave single digit to negative returns. The market recovered when the tension between the USA and North Korea resolved for some period but it could not sustain at the top thanks to the USA-China trade war. In 2018, we saw Crude oil prices and Rupee mostly affected the sentiments of Investors. From 3rd of Oct, fortunately, things are in favor of Market and Nifty is showing great rally since then. The Assembly Elections Results of 5 states in December are already factored in in the Nifty level and right now we are witnessing a Santa-Rally. Before FIIs book their profits and go for their Christmas vacation, let us discuss how Indian Markets performed in the Calendar year 2018. This year some Bluechip stocks really performed well.  Let’s see which Nifty 50 stocks gave really good returns in the Calendar year of 2018 in the following table. This year Private sector banks like Kotak Bank, ICICI Bank and Axis Banks gave good returns to investors. The IL & FS Crisis affected NBFCs and HFCs really badly. Money from these sectors shifted to Private Sector banking stocks. That’s why Nifty Bank index could give 7% returns even in such a bad year. Financial Sector stocks like Bajaj Financial Services (22.39%) and Bajaj Finance (48.90%) too performed really well. The year 2018 was really good for IT sector stocks thanks to depreciation of Rupee for most of the year. Stocks like NIIT Technology (80.88%), MindTree (45.14%) and Tech Mahindra (40.95%) gave tremendous returns. The implementation of GST definitely helped some FMCG stocks which gave double-digit returns to their investors. Dabur (31.90%), UBL (33.58%), Marico (27.31%), Colpal (24.07%), GSKCons (22.63%) etc. stocks helped Nifty FMCG give 17.12% returns in 2018. Thanks to HUL (38.78%) which lead this pack. HUL-GSK deal announcement will definitely take HUL further up at new 52-w High level. Some Pharma sector stocks wiz. DivisLab (44.51%), Glenmark Pharma (26.92%) and Biocon (22.92%) managed to recover the Nifty Pharma index from the year lows. This index gave -4.24% return in last 365 days. NSE Auto Index traded in red for most of the year 2018. It gave 18% negative returns in 2018. Still, stocks like ExideIndustry managed to give 27.31% positive returns thanks to the decrease in raw material prices. US-China Trade war affected Nifty Metal sector really bad in 2018.  This index gave -13.65% return in 1 year. Surprisingly JSW Steel (22.19%) made to top 10 performers list of Nifty 50 stock this year. Apart from these stocks, there are many such stocks who created wealth for the Investors. wiz. V-Mart Retail, HEG, Vinati Organics Ltd, L & T Infotech, L & T tech Serve, VIP Industries, Bata, Jubilant Food etc. After the heavy selling of 40-60% in Midcaps and SmallCaps in last year, we can clearly see that Investors prefered to Invest in Large Cap and BlueChip stocks to avoid risk. We saw more buying in highly liquid stocks and front-runners in Market who are always favourites of leading Analysts.  Let’s see how these Wealth Creators of Calendar year 2018 performs till 31st March 2019. If you have followed my Facebook Live videos you will realize that I gave positional calls in most of these stocks at very correct levels wiz. HUL @ 1200 Axis Bank @ 460 Kotak Mahindra Bank @ 1050 Jubiliant Foods @ 900 LT @ 1100 and so on. (Disclaimer: Please note, this post is for educational purpose only. Stocksbaazigar does not take any responsibility of profits/losses of the reader. Please consult your financial Advisor before taking any Investment decision. Mr Deepak Doddamani is NSE’s Certified Investment Analysis Professional and NSE’s Certified Marketing Professional Level -4, but he isn’t SEBI registered Financial Advisor.)

HUL-GSK Deal explained

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      HUL-GSK Deal explained by Stocksbaazigar Let’s discuss some important points of HUL-GSK Deal before discussing what to do in HUL shares?  Hindustan Unilever Ltd. acquired GlaxoSmithKline Consumer healthcare at a share swap ratio of 4.39:1, valuing the all-stock merger at Rs. 31,700 Cr. Bank of America Merrill Lynch was the sole Advisor of HUL for this deal while GSK was adviced by Morgan Stanley & Co. International Plc and Green Hill & Co. International LLP. Following the issue of new HUL shares, Unilever’s holding in HUL will drop from  67.2% to 61.9%. GSK Plc. will become the second largest shareholder in merged entity with 5.7% stake. It can offload this stake to any Investors and HUL does not have exclusive rights to buy these shares. For HUL India Foods and Refreshment contribute 18% of the revenue, whereas the proportion for the parent Unilever is 41.7% After the merger, the combined revenue of HUL’s Foods and Refreshment revenue will cross Rs.10,000 Cr.   After completion of the deal, HUL will become India’s largest Food company listed on Indian Stocks Market.  Boost, Maltova and Viva brands will be owned by HUL. However, Horlicks brand which is currently owned by GSK Plc. is acquired by parent company Unilever. HUL will pay for its royalty in India. Horlicks is Market Leader in Malt-based Beverages with 43% Market share in India followed by Bourvita of Mondelez International which has Market Share of around 13%. HUL will get distribution rights of  Oral Health Care and OTC products of GSKCH like Sensodyne, Crocin, and Eno for five years. This deal in the health and wellness category is very strategic and transformative as there will be great synergy in topline and costs after the merger. HUL reaches 8.2 Million outlets. It will help GSK’s brand reaching three-fold of the current distribution. HUL’s Margin in food business will get enhanced by 900 basis points to 27% from the current 18% of sales with sustainable profitable growth. HUL will increase it’s margin by 8 to 10% in medium terms after this Merger. What to do in shares of HUL after the announcement of the deal now? From last three months Nestle, HUL and Private Equity were eying for this Merger. But Market knew that only HUL had the Muscles to Pull the deal as it offered all-stocks deal whereas others offered Cash or combination of Cash-Shares deal. HUL gave good valuations to GSK, which is evident from the Swap-ratio finalized in the deal.   GSK share should move up after this news while HUL share should correct. This seems Win-Win deal but if you will study it closely, you will realize that GSK got a slight advantage in it. Distribution Muscles of HUL will help GSK brand products penetrate the Indian Market more effectively. HUL definitely has long-term benefits of this deal as explained in the discussion. But on short-term we might see some profit booking in the stock as it has already priced-in this HUL-GSK deal in Stock Price of HUL. HUL reached to 1800+ from 1500+ in just 3 months. HUL is a bluechip stock which has given consistent returns to its shareholders. Analysts have given thumbs up to this deal and have increased its 1-year target from 1800 to 2010-2050 now. (Disclaimer: Stocksbaazigar Mr. Deepak Doddamani is NSE’s Certified Investment Analysis Professional and NSE’s Marketing Professional Level – 4. He is not SEBI Registered Advisor. Stocksbaazigar is not responsible for any of your Gains/Losses. Please consult your Financial Advisor before taking any investment related decisions. Thank you) Video explanation on HUL-GSK deal:

Corporate Governance Issues in Sun Pharma explained

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Corporate Governance Issues in Sun Pharma explained by Stocksbaazigar              In past, IT  & Pharma stocks always acted as ‘Defensive sectors’ in falling Market. But in the last few years, we saw that IT sector stocks showed good synergy about rising and falling patterns but Pharma sector stocks had no specific direction, all credit to USFDA. Investors had to be very stock-specific and approach individual stocks differently in this basket.         In 2015 when Founder and MD of Sun Pharmaceutical Industries Ltd. Mr. Dilip Sanghvi became the richest person of India for a very short time, the stock of Sun Pharma traded above Rs 1000 per share price for a while. But then the ‘Halol’ night-mare started haunting the investors. Halol plant of Sun Pharma contributed 8-10% of the total revenue to the company. The delay in the resolution of regulatory issues raised by USFDA at Halol plant affected the approval of new drugs coming from the facility, which delayed its pick-up in US markets. Dilip Sanghvi is known as a visionary leader who successfully acquired sick companies and converted them into profitable ones. Sun Pharma acquired companies Caraco, Taro, Ranbaxy, Dusa, Insite Vision and URL etc aggressively. These all acquisitions had strategic reasons and made Sun Pharma 5th largest company of the world in Speciality business. But Ranbaxy deal came with Insider Trading allegations and Taro deal came with price erosion in their product portfolio.  Promoter’s interest in investing in unrelated businesses like Oil & Gas, Solar, Wind energy etc. unrelated businesses also affected Investor’s confidence in Sun Pharma stock post-2015. In the month of June, when Gujarat facility received its first approval in Cancer drug after the gap of 4 years, Sun Pharma share rallied to give it’s 52 Week high of 678.80. After 2 months, Sun Pharma again came under the scanner of US Food and Drugs Administration (USFDA) which issued 6 observations related to deficient procedures at Sun Pharma’s manufacturing facility of Halol. Sun Pharma shares corrected from the top and tried to take some support at 600 price level. Unfortunately, bad quarterly results pushed Sun Pharma further down to the price level of 485. On 29th November 2019 SEBI decided to re-open the Insider trading case against Sun Pharma after a 150 pages letter from a Whistleblower  (perhaps an ex-employee). From 495 to 402 stock fell by almost 23% in just one week.  After some clarification by Mr Dilip Sanghvi himself and an Investor’s conference call share of Sun Pharma rose up to 425 levels but only to hold 400 level support intact. The overhang of Corporate Governance Issue will keep this stock volatile for some more time. Institutional Investors have already exited the stock, that’s why company reduced to 1/5th of it’s Market cap after Macquire’s report of 29th November on ‘Corporate Governance Issues’ in Sun Pharma Industries Ltd. It means only retail investors are stuck in this company and stock will move up again only after Management of Sun Pharma answers all the un-answered/avoided questions by Big Investors.   Clarifications on the allegations: Let’s discuss the important questions raised by Australian brokerage firm Macquarie on Sun Pharma in its note and what Mr Dilip Sanghvi clarified about it in his conference call 1) Inadequate disclosures related to promoter’s brother-in-law Sudhir  Valia in the company Clarification:  Sanghvi said Sudhir Valia doesn’t have anything to do with Operations of Sun Pharma. He only gave financial and strategic advice. 2) About Re-opening of ‘insider trading case’ by SEBI Clarification: Shanghavi said that company is not aware of that as SEBI didn’t inform them anything about a complaint of Whistleblower and re-opening of Insider Trading Case. 3) About guarantees  which were given to real estate firm Surakhsha reality whose founding member is Sudhir Valia Clarification:  Management said it didn’t give any loan or bank loan guarantee to Suraksha realty 4) Questionable selection of London-based firm Jermyn Capital for managing $ 275 million FCCBS issued during 2004-2007. A note says Indian arm of Jermyn Capital has links with Ketan Parekh and Dharmesh Doshi, banned traders who rigged stocks prices and caused Share Market Crash of 2002 Clarification: Mr Shanghvi said J P Morgan was lead Manager and Jermyn Capital only co-managed it 5) About Insider Trading in Sun Pharma during Ranbaxy acquisition Clarification: No Insider traded in Sun Pharma before Ranbaxy Acquisition. The decision of acquisition of Ranbaxy was taken in a meeting conducted on Sunday. Being trading Holiday decision was not shared with SEBI on the same day. 6) Macquarie notes that some of Dilip Sanghvi’s stocks investments in a personal capacity as Natco Pharma also had bulk deals done by Orange Mauritius. Orange is FII sub-account of First International Group which has links with Dharmesh Doshi and Jermyn Capital Clarification: Minority stake in Natco Pharma by Dilip Sanghvi was already disclosed by him 7) Some of Sun Pharma’s subsidiaries are audited by Valia and Timbadia, whose one of partners was allegedly involved in a Stock rigging scam leading to freezing of his accounts. Clarification: This matter is 20 years old. The Subsidiaries in question are non-material for the company and account only for 0.6% of the consolidated revenue of the company. None of the partners of this audit firm or the firm itself was a party to this investigation. 8) About forceful acquisitions Clarification: Management clarified that Sun Pharma never arm-twisted any entity for its acquisition. Taro Pharma’s acquisition was done after a favourable court ruling. 9) Sun Pharma’s domestic formulations business being routed through a related party, Aditya Medisales Ltd (AML) Clarification:  Domestic formulation business transactions with AML exists from past many years. It became a related party in FY18. This arrangement was done for tax-purpose and can be re-looked if Investors demand. 10) Why did Sun Pharma lend to four Individuals without Security? Clarification: This too is a 20+-year-old event which involved money of few lakh rupees only and the loans are fully recovered. The loans were given as per business policies and guidance of applicable laws … Read more

Is it right time to buy G.M. Breweries?

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  About G.M.Breweries Ltd: G.M Breweries is one of the Multibagger stock of this decade. It gave multi-bagger returns to investors who spotted it in 2010 when it was trading in two digits only.  The 52-week high price of G.M. Breweries is 1057.95 and 52-Week low price is 491. This company is one of the best fundamentally strong small-cap company in the beverages and distilleries segment. The company was incorporated in December 1981 by Mr. Jimmy William Almeida. His aim was to create a quality country liquor brand available at cheaper prices for a cost-sensitive segment. It went public in 1993 when Almeida decided to share his wealth among stakeholders. GMBL  featured in Forbes 200 companies list. As per the website of G.M. Breweries, GMBL is engaged in activities of manufacturing and marketing of alcoholic beverages; such as Country liquor (CL) and Indian Made Foreign Liquor (IMFL). The GMBL company has state of the art fully automatic bottling plant in Virar, Palghar district of Maharashtra State, India.  It has a capacity of 13.76 Cr liter per annum. Around 49% of the capacity is being utilized to manufacture 50,000 cases a day. GMBL is a pioneer of introducing country liquor in PET bottles and also introducing 180 ml liter bottles in CL market. It boasts of 70% of Market share in Country Liquor in Mumbai, Navi Mumbai, and Thane areas while 25% market share in entire Maharashtra where it faces fierce competition with an unorganized player in CL category. G.M.Breweries has 4 main products in CL categories wiz. G.M. Santra, G.M Doctor, G.M. Limbu Punch, and G.M. Dilbahar Saunf. Apart from these it also markets its products brandy, rum and whiskey under brand names like Pioneer Doctor Brandy, Pioneer Special Doctor Brandy, Hot Shot Rum and Reporter Choice Whisky. But the most leading and prestigious blend of GMBL remains G.M. Santra which is made from premium distilled molasses based rectified spirit of Multi Pressure Vaccum Distillation Plant. G.M. Santra is no.1 Country Liquor brand in Maharashtra from last 12 years thanks to its Orange Blended organoleptic taste and aroma. Gas Chromatography is used to ensure the consistency of blend.  Clarity of liquor is due to fine filtration from 0.4-micron resin bonded cellulose cartridge filtration system. Basic Fundamental Analysis of G.M. Breweries: As  per the table data above recorded on 1st Dec 2018 1) You can see P/E of GMBL is very low compared to Industry P/E.  It is undervalued 2) The company gave 30% dividend  (Rs 3 per share) which makes it good investment stock too. As per the table data above 1) Revenue of G.M. Breweries is consistently increasing and so as the Net Profit (except the dip in 2017)or thanks to the increase in changes in inventory of FG, WIP, and Stock in trade. 2) While Sales in 2017 saw hike due to the ban on Poisonous Liquor in Maharashtra which may have increased demand for CL. Shareholding Pattern Promoter holds 74.43%, FIIs 2.38%, FIIs 0.3%  FIIs have increased their holding gradually. Total debt/ Equity ratio is 0 for 3 consecutive years. The company is  Debt free and Cash rich. Average ROCE is 26%  and Average ROE is 24% Company’s Net Worth has increased over the year and it has not yet its capacity fully. It means if it starts Double Shift company can easily increase its Production remaining Profitable and it can easily penetrate in other states too. This company has got enough experience now and it can definitely go for some Corporate Action now. It can enter in Foreign Markets like other Asian Countries first where CL type cost-sensitive segments can be targeted. G.M. Breweries had land in Wada, Thane too which can be used for expansion purpose in future. Is it right time to Buy G.M.Breweries? CMP of GMBL on 1st Dec 2018 is 670 on NSE. The stock is close to its important support of 665. It can reach 1000 again in the year 2019 if Maharashtra Government doesn’t include a decision to Ban Liquor in Maharashtra in its Manifesto. Govt is yet to decide GST level for Liquor segment. If it brings CL in a lower bracket, our target will be easily achieved. We are all aware of ‘Election time malpractices’ by Political parties in India, liquor consumption always increases during this period. Before 2019 Loksabha Election I see tremendous demand in CL category of liquor. GMBL will be the prime beneficiary. Also in the Winter, December is the month of highest consumption of liquor in India thanks to chilling cold and Christmas-New year vacations. To Summarize, G.M. Breweries is actually well-placed right now. The risk to Reward ratio is favorable in GMBL and one can definitely invest in it from the short-term view of 850 (most conservative target). (Disclaimer:  Stocksbaazigar Mr. Deepak Doddamani is not a SEBI registered Advisor. He is NSE’s Certified Investment Analysis Professional and NSE’s Marketing Professional Level – 4. Please consult your Financial Advisor before taking any investment related decisions. Stocksbaazigar is not. responsible for any of your Gains/Losses. Thank you.) Video explanation on G.M.Breweries

Venkys Ltd : The best stock to buy for Winter

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In India, after the October heat ends, we enter in Winter. Till December, the temperature falls further and we normally face very chilling days during Christmas vacation. Room Heaters, Liquors, Woolen Clothes etc. industries earn good profits during Winter in India. Smart Investors take an early position in the shares of companies like Bajaj Electricals, Havells, United Spirits, Radico Khaitan, Monte Carlo etc. As per my experience, Venky’s Ltd is one of the best stock to buy for the Winter season. SKM Egg Products Export (India) Ltd. is one more company which also performs well in Winter but we will discuss the Market Leader in its Sector today i.e. Venky’s Ltd. Venkateshwara Hatcheries group (V H Group) was started in 1971 by ‘Father of Indian Poultry Industry’ Dr. Banda Vasudev Rao who revolutionalized the Poultry Industry of India. For his contribution to the Indian Poultry Industry in India, he received one of the highest honor conferred by the President of India ‘Padma Shri’.       Banda Vasudeo Rao was born in 1935 in Chanchalguda in Hyderabad. His involvement in Poultry business started in the 60s. Before it, he did various jobs like trained for Railways Police, Telephone Operator, Secretary to State Minister etc. One day he responded to the Advertisement of ‘Poultry and Dairy Farm training Program’ by RajendraNagar Agriculture University and ended up taking Admission in the same. He became the best pupil of Prof. Moore under whom he did his first Project of tending 500 birds satisfactorily. Impressed by this, Moore transferred all the knowledge he had to B.V. Rao. Uttara Devi,  wife of B.V.Rao sold her Jewelry to buy 7 Acre land in Pune where he started Venkateshwara Hatcheries. Since then there was no looking back. In his lifetime, B.V. Rao started various companies related to his core business and created one of the largest Conglomerate which pioneered the Modern Poultry Business in India. He also founded The National Egg Coordination Committee (NECC) on 14th May 1982 to decide the prices of eggs across the country and help marketing of eggs on the line of Kuril’s Co-operative Movement of distribution of Milk. Rao served as the President of World’s Poultry Science Association (WPSA) India Branch from 1993-1996. After the death of Dr. B.V. Rao, his daughter Anuradha Desai served as Chairman and his sons Balaji and Venkatesh Rao are sitting on the Board of V H Group (now known as Venky’s – a name of one of the flagship company of V.H. Group). Currently, the group has various companies under it ranging from the Poultry industry, Animal Vaccines, Humans Vaccines, and Healthcare products, and sports. etc. The Group includes: Venkateshwara Hatcheries Pvt. Ltd Venky’s Ltd Venco VRB B.V. Bio-Corp Ltd Uttara Foods and Feeds Pvt Ltd Uttara Implex Pvt Ltd. Eastern Hatcheries Ltd Venky’s Brazil Ltd Venky’s London Ltd Venky’s Vietnam Ltd Venky’s Singapore Pvt. Ltd V.H. Group Bangladesh Bala Industries and Entertainment Pvt Ltd. Venky’s is headquartered in Pune and has offices in more than 13 different countries.  It has production facilities in India, Bangladesh, Switzerland, and Vietnam and it exports to more than 42 countries. India is the third largest producer of Eggs after China and the USA. In India, the per capita consumption of Eggs is 68 eggs per annum and that of Chicken is 2.5 Kg per annum. As per Nutrition Standards, the per capita consumption of Eggs should be 180 eggs per annum and that of Chicken is  10 Kgs per annum minimum. It means Indian Poultry Industry has great opportunities ahead. Venky’s SPF Eggs is at par with the Internationally accepted quality of Eggs. That’s the reason, it is India’s leading exporter in foreign countries. Venky’s Stock was one of the Multibagger of FY 2017-18 and gave excellent returns to investors. It gave a dividend of as high as Rs. 6 per share in last quarter. Unfortunately, it posted bad results in the quarter ended in September 2018 where Standalone Sales were down by 14.55%. But if you will compare the results of the Last Three Years, you will realize that normally their September quarter results are always subdued.  But the best part is the company has given good profit growth of 52.57% in last 5 years and it has been reducing its debt significantly.  The fair value of the Stock is 2810. Currently, it seems to be undervalued. One can definitely buy it with SL at 2100 for the short-term target of 2800. (CMP 2351.60). In winter demand for Eggs and Chicken increases, the prices will surely go up. It will help boost the profit margin of Venky’s Ltd and December quarter results will be very good. Considering all these factors, I feel Venky’s Ltd can be a good bet as a Winter stock. In the comment, do let me know what do you think about this? (Disclaimer: Stocksbaazigar Mr. Deepak Doddamani is not a SEBI registered Advisor. He is NSE’s Certified Investment Analysis Professional and NSE’s Certified Marketing Professional Level -4. Please consult your Financial Advisor before taking any investment related decisions. Thank you.) Video explanation for Venky’s Ltd

Jet Airways Financial Crisis Explained

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Is Jet Airways the next KingFisher Airlines? Can Tata Group really acquire control of JetAirways? Will Naresh Goyal cede his control? Will Etihad buy more stake of JetAirways? What role will Government Play? What should an Investor of Jet Airways do? Is it safe to trade in such a volatile stock? Let’s discuss the current Financial Crisis in Jet Airways in detail in this post. Current Updates: On 26th Nov. 2018 Jet Airways handed over pink slips to 16 more employees. Last month it laid off 20 employees. Jet Airways is rationalizing the human resource for the cost-cutting purpose. They have been delaying Salaries of employees from last few months. September Salary dues will be paid to employees on 5th December 2018. Jet Airways has around 16000 employees and more lay-off is possible in near future. What is the Crisis all about?  Recently, one of the leading Newspaper claimed that Jet Airways has left with only 60 days of funds for carrying out its Operations. On the same day, Management of JetAirways denied this News and ensured the Investors that Jet Airways posted losses for 3 consecutive quarters and it is definitely facing a Financial crisis due to increasing Aviation Fuel prices and depreciating Rupee but Management of JetAirways is taking all the right steps to overcome the Financial Crisis. Effect on Share Price of Jet Airways:  52-week high of Jet Airways was 883.65 and a 52-week low was 163.  Clearly, when Brent Crude Oil price rallied from 45 to 87 Jet Airways stock price fell from 883.65 to 163. From 3rd Oct 2018, Brent Oil started correcting again which resulted in some delivery based buying in JetAirways. When the stock was trading near 220, the Speculation that Delta Airways will buy 24% stake from Etihad in Jet Airways and Tata Group too will buy Majority stake from Naresh Goyal created a buzz in the Market. The stock reached 280 within no time. On the previous day of Tata Group’s Management Meeting stock rose by 25% in a single day and more 8% rise took Jet Airways to 346 on next day (16th Nov 2018). After the Market hours. Jet Airways released a press note in which it clarified that any such news of Tata Group buying Jet Airways is only a Speculation and only preliminary discussion is going on. Profit booking dragged Jet Airways down after that. But for few days it managed to hold SL of 300 intact.  On 26th November 2017 stock broke the resistance of 300 as Market came to know that Naresh Goyal is not ready to cede its control in JetAirways and looking for more cash from its old Stakeholder Etihad Airways for its Operations. Why Tata Group deal isn’t materializing?  Founder Naresh Goyal and his wife have 51% stake in Jet Airways. Etihad Airways own 24% stake in Jet Airways. Rest 25% of shares are held by minority shareholders and retail investors. Tata Group owns AirAsia and Vistara Airlines which is a joint venture with Singapore Airlines. Tata wanted to buy out entire 51% of Naresh Goyal to acquire the Jet Airways which can make them second largest Airline in India after Indigo. But Naresh Goyal was ready to dilute his equity to as low as 15%. This meant that Tata Group should give profitable exit to Etihad by buying their 24% to reach the magic figure of 51%.  The government wanted Tata to help Jet Airways in this Crisis as they themselves can’t bailout Private Airlines and crash of Jet Airways is not good for Customers as well as 16000 employees of Jet Airways. What steps did Goyal take after Tata Group – Jet Airways deal didn’t Materialize?    Naresh Goyal and his team met Tony Douglas, Group CEO of Etihad Airlines last Sunday. Goyal offered to dilute his equity from 51% to as low as 15% and requested Etihad to double its stake in Jet Airways in exchange of Cash Infusion. Naresh Goyal prefers dealing with Etihad than accepting the deal offered by Tata Group. This way Etihad Airlines may hold as high as 49% in Jet Airways in the coming future depending on how much Cash they will infuse in the beleaguered Jet Airways. This is not the first time Aviation sector facing Financial Crisis. In India, we saw consolidation in this sector since 2010. Kingfisher Airlines closed its operation in 2012. Since then Jet Airways is handling 17.8%  passenger market share with its fleet size of 124 which serves 67 destinations across the world.              What to do in Jet Airways shares now?  The rally in stock was due to Speculation that Tata Group will acquire Jet Airways. But now as we all know that Naresh Goyal is taking help of Etihad to revive debt-ridden Jet Airways, the stock has started to cool off. We may see stock falling up to levels of 240-260 again this week. The fundamentals of Jet Airways company are really bad and this stock is no more an Investment bet. High-risk traders can trade in stock but Stop Loss of the Stock can be as deep as 240 which doesn’t make any sense to trade in stock. I would suggest you, stay away from this stock for now. Indigo is always a better option if you want to invest in the Aviation sector. Disclaimer:   This post is for Educational Purpose. Stocksbaazigar Mr. Deepak Doddamani is NSE’s Certified Investment Analysis Professional and NSE’s Certified Marketing Professional level – 4. He is not SEBI registered Financial Advisor. Please consult your Advisor before taking any Investment related decisions. Thank you. Video explanation on Jet Airways crisis.

Muhurat Trading Stocks for Vikram Samvat 2075

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Stocks to buy on Muhurat Trading of Samvat 2075 Samvat 2074 went really bad thanks to increasing crude prices and depreciating Rupee. We have seen how Stocks corrected by 50-60% in a year. Portfolios of Investors who invested in last Muhurat trading day is now in deep red. Loksabha Elections and States Elections are all aligned in Samvat 2075. The market will remain volatile and rangebound till results of Loksabha elections. After which we can get a good rally of more than 1000 points in Nifty in one year.  12000 on Nifty can be achieved within the next 18 to 24 months. So clearly, this correction in Market should be utilized to build your Portfolio rather than short-term trading in it. In Samvat 2074, many of the Investment Ideas given by Stocksbaazigar Mr. Deepak Doddamani gave very good returns. This year we believe that one should focus on investing in Bluechip Stocks which are now available at lower valuations than last year’s Diwali. The volatility in Midcaps and Smallcaps will increase in recent future. Every dip will be used for buying in these stocks but at every rise, same stocks will be sold. Effectively, from this Diwali to next Diwali these indices will not perform the way it performed in calendar years 2016-2017. The trend of 2018 will continue for some more time till the global scenario gets normalized. This is the reason, we are betting on Bluechip companies like Maruti Suzuki, Bajaj Finance, Britannia, HDFC Bank, ICICI Bank, HUL, Infosys, Asian Paints, Titan and Reliance Industries etc. We have shared a list of 50 stocks which can give good results in Samvat 2075. These stocks are recommended by leading Financial Services of India and compiled for benefits of Investors. You can select your Muhurat trading picks from this list itself. Disclaimer: Please consult your financial advisor before taking any investment decision. This blog is only for educational purpose. Do not consider it as recommendations. Stocksbaazigar is not responsible for your gains/losses. You can Instamojo @Stocksbaazigar to support this Blog. Thank You

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