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https://www.kotaksecurities.com/demat-account/how-to-open-a-demat-account/ | How to Open a Demat Account? | Key Highlights:A Demat account holds your securities in an electronic formatVisit a broker’s official website, click on the open demat account tab, provide the relevant details and documents, and e-sign to open an accountCheck the broker’s reputation, fee, platform’s UI, and security before opening your demat accountOpening a demat account is integral to stock market investing. A demat account holds your securities in a dematerialised format and keeps them secure. The question, however, is how to open this all-important account. This blog lists the step-by-step procedure for opening a demat account. Let's begin.Steps to open a demat accountThanks to digitalisation, opening a demat account online has become very easy. The process is simple and convenient. While the specifics may differ across brokers, here are the common steps to open a demat account online:Choose a reliable brokerThis is the first step to open a demat account. Look for a broker with a robust track record.Visit the broker's official websiteAfter you choose your broker, visit the official portal. Today, all brokers have official websites. Visit your broker's portal and look
for the open demat account option.Fill out the demat account opening formFill out the account opening form. You need to provide your name, phone number, email ID, address, PAN card details, etc. You will receive a one-time password on your registered mobile ID. Input the OTP to move forward.Add bank details and upload the relevant documentsIt's important to enter your bank details correctly and upload the right KYC documents. These documents, which include identity and address proof along with bank details and PAN card, are a mandatory requirement. You can use your Aadhaar Card, voter card, passport, driving license, etc, as your identity and address proof.E-sign and submitAfter filling out the form, you'll need to electronically sign your application. This is a secure way to submit your application. Once you've done this, submit it to create your demat account. Your broker will then validate your application, and upon successful validation, you'll receive your demat account number and login credentials.Documents required to open a demat accountThe documents required to open a demat account are minimal and easy to provide. You need to provide the following documents:PAN cardIdentity proof, which could be your PAN card, Aadhaar card, voter card, driving licence, etcAddress proof, which could be Aadhaar card, passport, voter ID card, driving licence, etcCancelled chequePassport size photoBank statement or copy of passbookIT return or pay slip if you are interested in the derivative or currency marketCharges associated with opening a demat accountThe various charges associated with opening a demat account are as follows:Account opening feeYou need to pay a certain fee to your stockbroker when opening your demat account.Annual maintenance chargesIt's a recurring fee you need to pay your broker to maintain your demat account.Dematerialisation chargesYou need to pay this charge if you convert a physical share certificate into a digital form.Transaction chargesWhen you purchase or sell shares, your broker will deduct a small amount from the total transaction value. Some brokers may charge a flat fee, irrespective of the total transaction value.Along with these, various other charges come into play at different times, such as pledging charges and unpledging charges. You need to pay the former while pledging securities to avail yourself of trading limits, while you need to pay the latter when unpledging securities.Need for opening a demat accountWhile a Demat account is mandatory to invest in stock markets, several other reasons make it important. These are:Safety of securitiesIn their earlier physical avatar, shares were vulnerable to theft or misplacement. As a demat account holds them in an electronic format, they are much safer.Anytime accessAs all your securities are in one place, you can access them whenever needed from anywhere.Can hold multiple securitiesWith a demat account, you can hold several securities in one place, which facilitates tracking. You can also access them anywhere and anytime.Auto credit of dividendsIf you are eligible to receive dividends, they are automatically credited to your demat account.Important things to keep in mind while opening a demat accountNow that you know how to open a demat account, you need to keep certain important things in mind while opening it. These include:Safety and easy-to-use interfaceCheck the safety measures implemented by your broker. Ensure your chosen broker offers the highest levels of safety so that you don't fall victim to online fraud. Also, ensure your chosen broking platform has an easy-to-use interface for quick navigation.Fees and chargesFind out about the relevant brokerage charges. Opt for a broker offering the most cost-effective charges. That said, it shouldn't be the only guiding factor. Analyse the service quality and read online reviews to understand the standard of services offered.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.
FAQs on how to open a demat accountHow much money is required to open a Demat account?You do not need to pay anything to open a Demat account. However, you need to pay account maintenance charges to your broker to maintain the account.Can I have two demat accounts?Yes, you can have two or more Demat accounts. |
https://www.kotaksecurities.com/share-market/difference-between-fundamental-technical-analysis/ | Difference Between Fundamental and Technical Analysis | Key Highlights:Fundamental analysis involves analysing a company’s fundamentals
Technical analysis entails analysis of technical charts and tools to find out a stock’s future price movement
While fundamental analysis considers present and past data, technical analysis considers only historical data
Fundamental analysis factors in various macroeconomic factors, while technical analysis involves volume trend analysisAs an investor, it's essential to thoroughly analyse stocks before investing. Prudent analysis helps you make the right choice, which goes a long way toward wealth creation. Fundamental and technical analysis are two methods of analysing stocks.What is fundamental analysis?Fundamental analysis entails analysing a company's key fundamentals, such as assets, liabilities, revenues, management quality, etc. It helps you determine a stock's intrinsic value by understanding its growth and future earning potential. Fundamental analysis lets you determine if a stock is overvalued or undervalued. Here's how it works:Identifying the company's business model
Analysing the firm's key financial statements like balance sheet, cash flow statement, income statement, etc.
Evaluating the company's management and its position with respect to competitors
Calculating the company's intrinsic value through price-to-earnings (P/E) ratio, discounted cash flow analysis (DCF), etc.What is technical analysis?Technical analysis involves analysing technical charts and tools to determine a stock's future price movement. You can find out potential entry and exit points through technical analysis. Here's how it works:Plotting historical data to create chart patternsIdentifying different chart patternsUsing technical indicators to gain insights into price movementsImplementing volume analysis to confirm the validity of price movements
Fundamental vs technical analysis: The differencesThe table captures the key differences between fundamental and technical analysis across various parameters:ParameterPrimary objectiveFundamental analysisThe primary objective is to gauge if a stock is overvalued or undervalued.Technical analysisThe main aim is to use various tools and charts to find out a stock’s future price movements.ParameterInvestment time frameFundamental analysisIt’s typically used with a long-term investment horizon.Technical analysisIt’s typically used with a short-term investment horizon to find out short-term price movement.ParameterConsiderationsFundamental analysisTakes into account present and past data for analysis.Technical analysisConsiders only historical data.ParameterTools and techniques usedFundamental analysisIncorporates various metrics like financial ratios, discounted cash flows, etc.Technical analysisIncorporates various chart patterns and technical indicators such as moving averages, etc.ParameterFactors taken into accountFundamental analysisConsiders various macroeconomic factors (inflation, GDP, etc.) industry benchmark, and company’s performance, among others.Technical analysisFactors in transactional volume, trend analysis, moving averages, etc.ParameterFundamental analysisTechnical analysisPrimary objectiveThe primary objective is to gauge if a stock is overvalued or undervalued.The main aim is to use various tools and charts to find out a stock’s future price movements.Investment time frameIt’s typically used with a long-term investment horizon.It’s typically used with a short-term investment horizon to find out short-term price movement.ConsiderationsTakes into account present and past data for analysis.Considers only historical data.Tools and techniques usedIncorporates various metrics like financial ratios, discounted cash flows, etc.Incorporates various chart patterns and technical indicators such as moving averages, etc.Factors taken into accountConsiders various macroeconomic factors (inflation, GDP, etc.) industry benchmark, and company’s performance, among others.Factors in transactional volume, trend analysis, moving averages, etc.
Fundamental and technical analysis - What should you choose?Fundamental and technical analysis both have their respective benefits and drawbacks. While the former helps you identify stocks that could be multi-baggers in the future, the latter helps you gauge a stock's future price movement and the right time to buy or sell a stock. Through fundamental analysis, you can find out about companies with high growth potential while technical analysis tells you when you should invest in them.In conclusionBoth fundamental and technical analysis are essential in their own way in stock investment. Combine both to achieve the best results and get going. Happy investing!Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.
FAQs about difference between fundamental and technical analysisHow to do fundamental and technical analysis of stocks?Fundamental analysis involves analysing a company's fundamentals while technical analysis involves examining technical indicators like oscillators, overlays, and moving average convergence/divergence.How accurate is technical analysis?Technical analysis differs across different technical indicators. To achieve optimum results, complement one indicator with another. |
https://www.kotaksecurities.com/articles/difference-between-direct-and-indirect-taxes/ | Difference Between Direct and Indirect Taxes | Key Highlights:Direct taxes are taxes levied on income and profits
Income tax, capital gains tax, etc., are examples of direct taxes
Indirect taxes are imposed on goods and services
GST and customs duty are examples of indirect taxesTaxes are a crucial revenue source for the government. The government levies several types of taxes, which fall into two broad categories: direct and indirect.What are direct taxes?Direct taxes are taxes levied by the government directly on individuals and businesses based on their income and profits. These are collected by the Central Board of Direct Taxes (CBDT). The different types of direct taxes are:Income taxIt is the most common type of direct tax that you pay directly to the government. You need to pay this tax according to the rate for each tax slab specified by the government every year. For salaried employees, the employer deducts this amount from the salary directly. This is called tax deducted at source (TDS), and it is subject to your investment declaration at the start of the financial year.Corporate taxCorporate tax is levied on domestic and foreign companies operating in India. The rates vary depending on the company type and size.Capital gains taxThis tax is levied on the profits you earn from selling capital assets such as stocks, mutual funds, real estate, etc. The rate depends on the asset type and its ownership duration (long term or short term).
Advantages and disadvantages of direct taxesThe table below captures the advantages and disadvantages of direct taxes:AdvantagesHelps in revenue generationDisadvantagesSusceptible to tax evasionAdvantagesHelps reduce income inequalities by redistributing wealth from higher-income groups to lower-income sectionsDisadvantagesCumbersome documentationAdvantagesEnsures a steady flow of funds for public expenditureDisadvantagesCan put a greater tax burden on individuals in the higher income bracketAdvantagesDisadvantagesHelps in revenue generationSusceptible to tax evasionHelps reduce income inequalities by redistributing wealth from higher-income groups to lower-income sectionsCumbersome documentationEnsures a steady flow of funds for public expenditureCan put a greater tax burden on individuals in the higher income bracket
What are indirect taxes?Indirect taxes are taxes you pay on goods and services. You pay these taxes through an intermediary, and they are collected by the Central Board of Indirect Taxes and Customs (CBIC). The different types of indirect taxes are as follows:Goods and Services Tax (GST)GST is the most common indirect tax and has replaced several others, including excise duty, service tax, VAT, etc. GST rates vary according to different categories of goods and services.Customs dutyCustoms duty is imposed on the import and export of goods. The rates depend on the type of goods and the country of origin.
Advantages and disadvantages of indirect taxesThe table below captures the merits and drawbacks of indirect taxes:AdvantagesSame for everyoneDisadvantagesRegressive in natureAdvantagesConvenient payment optionsDisadvantagesMakes goods and services expensiveAdvantagesCollection is quite easyDisadvantagesLess transparentAdvantagesDisadvantagesSame for everyoneRegressive in natureConvenient payment optionsMakes goods and services expensiveCollection is quite easyLess transparent
Difference between direct and indirect taxesThe following table captures the major differences between direct and indirect taxes across various aspects:AspectsPayment typeDirect TaxDirectly to governmentIndirect TaxIntermediaryAspectsLevied onDirect TaxIncome and profitsIndirect TaxGoods and servicesAspectsTax rateDirect TaxDepends on income and profitsIndirect TaxSame for everybodyAspectsTax typeDirect TaxProgressive in nature. Higher the income, higher the taxIndirect TaxRegressive as tax rates are flatAspectsTax liabilityDirect TaxNot transferableIndirect TaxCan be transferredAspectsDirect TaxIndirect TaxPayment typeDirectly to governmentIntermediaryLevied onIncome and profitsGoods and servicesTax rateDepends on income and profitsSame for everybodyTax typeProgressive in nature. Higher the income, higher the taxRegressive as tax rates are flatTax liabilityNot transferableCan be transferred
Summing it upIrrespective of the type of tax liability, you should pay your dues on time. Failure to do so can attract stiff penalties and land you in trouble. Paying taxes on time not only helps you keep your record clear but also helps you participate in the country’s economic growth.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.
FAQs on direct and indirect taxesWhat is the difference between GST and income tax?GST is a type of indirect tax on goods and services, to be paid as and when they are availed. On the other hand, income tax is a direct tax on an individual’s income as per the income tax slab levied every financial year.What are direct and indirect taxes?Direct taxes are applied on income and profit acquired during the financial year, and indirect taxes are levied on goods and services that you avail from time to time. |
https://www.kotaksecurities.com/articles/go-digit-ipo-talk-of-the-town/ | Talk of the town - Go Digit IPO - here's a quick snapshot | Go Digit General Insurance Limited is one of the leading digital full stack insurance companies that believes in delivering a seamless customer experience through innovation and transparency.Their upcoming IPO has gained a lot of attention and encouraged potential investors to know more. So, here’s a snapshot of all the important information about Go Digit as a potential investment opportunity.Company overviewGo Digit, which was established in 2016, is one of the leading digital insurance companies in the country with a goal to simplify non-life insurance products for consumers. Their insurance products include motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products, which the customers can customise according to their needs. As a digital full stack insurance company, they offer a combination of insurance and technology solutions to assist in enrolment, insurance claims processing, underwriting, policy administration, data insights and fraud detection. Go Digit is one of the leading digital full-stack Non-Life insurers in India as per the commissioned RedSeer report by the volume of premiums received (GWP). They held an 82.5% market share among digital full-stack insurers for the first nine months of 2023.Source:RHPWhat's included in the IPO?Go Digit's IPO is a mixture of fresh issuance of shares (to raise new capital) and an offer for sale (existing shareholders selling shares). The new-issue net proceeds will be used to keep up with their solvency ratio as required by the regulations.Price & allocation:The price band of the public offer is in the range: ₹258 - ₹272 per share and the company is expected to raise ₹ 2,537.97 crore at the lower end of the price band and ₹ 2,614.65 crore at the upper end with a lot size of 55 shares at ₹ 14,960.Shares will be divided among institutional buyers (QIBs), non-institutional buyers, and retail investors.
Offer for sale details:Existing shareholders sell a portion of their shareholding as part of the offer for sale. The information below includes information about the selling shareholders, the quantity of shares offered, and their weighted average cost of acquisition per share.Selling ShareholderGo Digit Infoworks Services Private LimitedTypePromoter Selling ShareholderNumber of Shares OfferedUp to 54,755,614Aggregated Amount (? million)Not DeterminedWeighted Average Cost per Share (?)13.57Selling ShareholderNikita Mihir Vakharia & Mihir Atul VakhariaTypeOther Selling ShareholderNumber of Shares OfferedUp to 4,000Aggregated Amount (? million)Not DeterminedWeighted Average Cost per Share (?)172Selling ShareholderNikunj Hirendra Shah & Sohag Hirendra ShahTypeOther Selling ShareholderNumber of Shares OfferedUp to 3,778Aggregated Amount (? million)Not DeterminedWeighted Average Cost per Share (?)250.57Selling ShareholderSubramaniam Vasudevan & Shanti SubramaniamTypeOther Selling ShareholderNumber of Shares OfferedUp to 3,000Aggregated Amount (? million)Not DeterminedWeighted Average Cost per Share (?)221.2Selling ShareholderTypeNumber of Shares OfferedAggregated Amount (? million)Weighted Average Cost per Share (?)Go Digit Infoworks Services Private LimitedPromoter Selling ShareholderUp to 54,755,614Not Determined13.57Nikita Mihir Vakharia & Mihir Atul VakhariaOther Selling ShareholderUp to 4,000Not Determined172Nikunj Hirendra Shah & Sohag Hirendra ShahOther Selling ShareholderUp to 3,778Not Determined250.57Subramaniam Vasudevan & Shanti SubramaniamOther Selling ShareholderUp to 3,000Not Determined221.2Source:RHP
Key dates:Bid/Offer Opens: Wednesday, May 15, 2024Bid/Offer Closes: Friday, May 17, 2024Anchor Investor Bid/Offer Period: One Working Day before Bid/Offer Opening Date (May 14, 2024)UPI Mandate End Time: 5.00 p.m. on Bid/Offer Closing Date (May 17, 2024)Source:RHPTentative Timeline:Finalisation of Basis of Allotment: On or about Tuesday, May 21, 2024Refunds Initiation/Fund Unblocking: On or about Wednesday, May 22, 2024Shares Credited to Allottees: On or about Wednesday, May 22, 2024Trading Commencement: On or about Thursday, May 23, 2024Source:RHPKey takeaways:Go Digit is present in a large and fast-growing market with its primary addressable market being the non-life insurance market in India (the world’s fifth largest economy as of 2023).The insurance market is still unpenetrated and therefore has a lot of room for improvement and growth.Owing to the rapidly growing middle class, rising awareness about insurance protection, innovative products, growth in associated industries, and a favorable regulatory landscape, India’s non-life insurance market is expected to continue to grow.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP |
https://www.kotaksecurities.com/articles/everything-about-go-digit-general-insurance-limited-ipo/ | Want to Subscribe to Go Digit General Insurance Ltd’s IPO? Read This First | Key Highlights:Go Digit General Insurance Ltd’s IPO issue size is Rs 2614.65 crores at the higher price bandThe minimum investment is Rs 14,960The listing date on exchanges is 23rd MayGo Digit General Insurance Ltd has joined the long list of companies looking to launch its initial public offering (IPO) this month. If you want to know the key details of this IPO and whether you should subscribe to it or not, read this blog.About Go Digit General Insurance LtdGo Digit General Insurance Ltd is a leading digital full stack insurance company. It offers non-life insurance products, such as motor insurance, health insurance, travel insurance, property insurance, marine insurance, and liability insurance, among others.
IPO details and objectivesThe table captures other details of the IPO that comprise a fresh issue and offer for sale:ParticularsIPO Open DateKey Information15th MayParticularsIPO Close DateKey Information17th MayParticularsIssue Price RangeKey InformationRs 258-Rs 272ParticularsIssue SizeKey InformationRs 2614.65 crore at the higher price bandParticularsLot SizeKey Information55ParticularsMinimum InvestmentKey InformationRs 14,960ParticularsFace ValueKey InformationRs 10ParticularsListing DateKey Information23rd MayParticularsKey InformationIPO Open Date15th MayIPO Close Date17th MayIssue Price RangeRs 258-Rs 272Issue SizeRs 2614.65 crore at the higher price bandLot Size55Minimum InvestmentRs 14,960Face ValueRs 10Listing Date23rd May
The company plans to use the proceeds received to:Maintain its solvency ratioBridge financing facilitiesSource:RHP,MoneycontrolandKotak Securities
Financial snapshotIt’s essential to be aware of the financials of a company before investing in its IPO. The table reflects some of the key financials of Go Digit General Insurance Ltd:ParticularsNet cash flow from operating activities (in crores)FY 23Rs 2249.752FY 22Rs 2478.997FY 211563.369ParticularsProfit after tax (in crores)FY 23Rs 35.547FY 22-295.851FY 21-122.764ParticularsGross written premium (in crores)FY 23Rs 7242.985FY 22Rs 5267.633FY 21Rs 3243.388ParticularsReturn on equityFY 231.5FY 22-15.9FY 21-10.8ParticularsDiluted earnings per sharesFY 230.4FY 22-3.55FY 21-1.5ParticularsFY 23FY 22FY 21Net cash flow from operating activities (in crores)Rs 2249.752Rs 2478.9971563.369Profit after tax (in crores)Rs 35.547-295.851-122.764Gross written premium (in crores)Rs 7242.985Rs 5267.633Rs 3243.388Return on equity1.5-15.9-10.8Diluted earnings per shares0.4-3.55-1.5
Source:RHPBasis of offer price, management and BRLMIn its RHP, the company has listed some qualitative business strengths that allow it to compete in the industry and form the basis for its offer price. These are:Simple and tailored customer experienceFocus on empowering its distribution partnersPredictive underwriting modelsAdvanced technology platformA nimble organisation with a skilled and experienced management teamThe company’s management includes the following people:Kamlesh Goyal (Non-executive Chairman)Jasleen Kohli (MD and CEO)Chandran Ratnaswami (Non-executive Director)Rajendra Beri (Independent Director)Vandana Gupta (Independent Director)Christof Mascher (Independent Director)The book-running lead managers (BRLM) of the company’s IPO are:ICICI Securities LimitedMorgan Stanley India Company Private LimitedAxis Capital LimitedHDFC Bank LimitedIIFL Securities LimitedNuvama Wealth Management LimitedFor a complete overview of the risks involved, refer to the company’s red herring prospectushere.Wrapping it upBefore subscribing, consider your financial goals and risk appetite. Seek help from a professional, if needed.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP
FAQs on Go Digit Insurance Ltd’s IPOIs Go Digit a listed company?Not yet. However, it will soon be a listed company after its IPO. The company will be listed on 23rd May.What is the issue price range of Go Digit Insurance Ltd’s IPO?The issue price range is Rs 258-Rs 272. |
https://www.kotaksecurities.com/articles/overview-of-go-digit-general-insurance-ltd-strengths/ | Go Digit General Insurance Ltd IPO - An Overview of the Company’s Competitive Strengths | Key Highlights:Go Digit General Insurance Ltd aims to provide a simple and tailored customer experienceThe company boasts of predictive underwriting models to accurately assess risksIt has an advanced technology platform along with an experienced management teamThe much-awaited initial public offering (IPO) of Go Digit General Insurance is finally here. As a potential investor, it’s crucial for you to be aware of the company’s competitive strengths.Competitive strengths of Go Digit Insurance LtdGiven below are the key strengths of the company:Simple and tailored customer experienceThe company is dedicated to establishing trust and promoting transparency in its relationships with its customers by simplifying insurance and offering easy-to-understand, customisable products that enhance customers’ experience. The company promotes a tailored customer experience by offering:Relevant, transparent and customisable coverageSimple and understandable documentationStraightforward, efficient and paperless processesPredictive underwriting modelsThe company has combined its expertise in the motor insurance market with its data bank to build extensive underwriting models to accurately assess risk and predict losses for its motor insurance products at a granular level. This has allowed the company to manage its costs better and tailor its products to serve more customers. Key attributes of its underwriting models include:Decoding a vast set of variablesAbility to automate underwritingGreater ability to identify and acquire profitable businessAn advanced technology platformThe company has an advanced technology platform, which enables it to achieve efficient underwriting. It has employed a hybrid model of AI-enabled analytics and human assessment to streamline the value chain, aid its customers, partners, and employees, and drive efficiency.It has developed in-house microsystems that allow it to facilitate a range of routine tasks, from policy design, underwriting, pricing, and issuance to servicing and claims management. Its platform is entirely cloud-based, making its system agile, connected, and scalable.Skilled and experienced management teamThe company's experienced management team promotes agile decision-making and execution. It includes experienced professionals from the banking, financial services, and insurance industries. Driven by their leadership, it has built an employee base aligned with its corporate culture and works cohesively to deliver on its vision.Source:RHPIn conclusionThe company’s IPO issue size is Rs 2614.65 crores at the upper price band. Read thered herring prospectusfor a complete overview before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP
FAQsWhat’s the lot size of Go Digit General Insurance Ltd’s IPO?The lot size of the IPO is 55.What is the minimum investment in Go Digit General Insurance Ltd’s IPO?The minimum investment is Rs 14,960.What is the closing date of Go Digit’s IPO?Go Digit’s IPO will close on 17th May. |
https://www.kotaksecurities.com/articles/everything-about-tbo-tek-ipo/ | Everything You Wanted to Know About TBO Tek's IPO | Key Highlights:The IPO size of TBO Tek is Rs 1550.81 crores at the upper price bandThe IPO’s price range is Rs 875-Rs 920The company’s listing date is 15th MayAs temperatures across India soar, the initial public offering (IPO) market seems to heat up, too. Several mainboard IPOs are in the pipeline, waiting for launch.TBO Tekis one of the mainboard IPOs opened for subscription on 8th May. If you wish to subscribe to it, you should know some essential aspects.About TBO TekTBO Tek operates a B2B travel distribution platform that simplifies travel by centralising transactions. Through its platform, several sellers in travel, such as airlines, hotels, rails, car rentals, etc., can connect with a host of buyers, including travel agencies, tour operators, online travel companies, independent travel advisors, etc. Buyers and sellers can use TBO Tek's platform to conduct transactions seamlessly.IPO Details of TBO TekThrough the book-building IPO, the company plans to raise Rs 1550.81 crores at the upper price band. In other words, the issue size of the IPO is Rs 1550.81 crores at the upper price band. Given below are some other essential aspects of this IPO:
ParticularsIPO open dateKey Information8th MayParticularsIPO close dateKey Information10th MayParticularsPrice rangeKey InformationRs 875 - Rs 920ParticularsTotal shares offeredKey Information16,856,623 at upper price of Rs 920ParticularsFace valueKey InformationRs 1ParticularsListing dateKey Information15th MayParticularsListing onKey InformationBSE and NSEParticularsKey InformationIPO open date8th MayIPO close date10th MayPrice rangeRs 875 - Rs 920Total shares offered16,856,623 at upper price of Rs 920Face valueRs 1Listing date15th MayListing onBSE and NSE
The company aims to utilise the funds raised for:Investment in technology and data solutions by the companyInvestment in its material subsidiary, Tek Travels DMCC, for onboarding platform users through marketing and promotional activities; and hiring sales and contracting personnel for augmenting its supplier and buyer base outside IndiaInvestment in sales, marketing and infrastructure to support organisation’s growth plans in IndiaUnidentified inorganic acquisitionsFinancial overview of TBO TekThe company's financial overview is a testament to its strong growth over the years. It has consistently achieved impressive results, as evidenced by the following snapshot:
ParticularsTotal income (in crores)FY 23Rs 1,085.77FY 22Rs 551.93FY 21Rs 176.55ParticularsTotal assets (in crores)FY 23Rs 2,557.93FY 22Rs 1271.42FY 21Rs 576.16ParticularsReturn on net worthFY 2344.04%FY 2214.54%FY 21-16.73%ParticularsDiluted earnings per shareFY 2314.07FY 223.32FY 21-3.28ParticularsFY 23FY 22FY 21Total income (in crores)Rs 1,085.77Rs 551.93Rs 176.55Total assets (in crores)Rs 2,557.93Rs 1271.42Rs 576.16Return on net worth44.04%14.54%-16.73%Diluted earnings per share14.073.32-3.28
The financials of the company show:The company’s total income nearly doubled in FY 23 compared to FY 22.The return on net worth in FY 23 has tripled compared to FY 22. Also, it has gone from negative in FY21 to positive in FY 22 and FY 23.Diluted earnings per share has been positive in FY22 and FY23 as compared with negative diluted earnings per share in FY21.Industry snapshotThe travel and tourism industry grew 18.2% year-on-year in 2023 from 2022 and is expected to grow at a CAGR of 8.2% to reach US$ 2.6 trillion in 2027.Source:RHPIn conclusionIt’s imperative that you read the company’sdraft red herring prospectusto be aware of the potential risks involved. This will help you make an informed choice and ensure your investment meets your needs.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP
FAQsWhen is the public issue of TBO Tek?The public issue of TBO Tek IPO has opened on 8 May and will close on 10 May. The issue size of the IPO is Rs 1550.81 crores.What is an IPO issue date?The IPO issue date is the date on which the IPO opens for investors. |
https://www.kotaksecurities.com/articles/aadhar-housing-finance-is-live/ | Aadhar Housing Finance Limited: The much talked about IPO is now live | Aadhar Housing Finance Limited’s initial public offering has opened for bid/ offer on May 8, 2024. Through the issuance of new shares at a price of ₹10000 million and an offer for sale of ₹20000 million, by the promoter selling shareholder (BCP Topco VII Pte. Ltd.).A closer look at Aadhar Housing Finance LimitedAadhar Housing Finance Limited is an HFC focused on the low income housing segment (ticket size less than ₹1.5 million), targeting primarily first-time home buyers in economically weaker and low to middle income segments. The company has shown an increase in the number of customers year on year.Key dates and application processBid/ Offer opens on:8th MayBid/ Offer closes on:10th MayFinalisation on the basis of allotment with the designated stock exchange:On or about 13th MayInitiation of refunds if any for Anchor investors:On or about 14th MayCredit of Equity Shares to demat accounts of the allottees:On or about 14th MayCommencement of trading of the Equity Shares on the Stock Exchanges:On or about 15th MayAbout Aadhar Housing Finance LimitedEstablished in 2010, Aadhar Housing Finance has been consistent in its efforts aimed at reaching out to the low income housing segment. Through its network of 487 branches (not including regional offices and corporate offices) and 109 sales offices in 20 states and union territories, the company has attained remarkable growth in terms of its reach and scale. The company operates as a financially inclusive, customer centric lending business and believes that their business model contributes significantly to the economic uplift of the target customers by contributing to an improvement in their standard of living. The loan product suite offered by Aadhar Housing Finance Limited includes loans for residential property purchase and construction, home improvement and extension loans, and loans for commercial property
construction and acquisition.Before you investThink about your investment aims and risk tolerance.Research Aadhar Housing Finance Limited's financials and future perspectives.Acquire an understanding of IPO fundamentals and their associated risks.Last wordsAn engagement in Aadhar Housing Finance's IPO gives the investor a chance to buy shares in the fast-growing affordable real estate segment. Take your time to analyse the company profile as well as the IPO parameters before choosing to invest.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP |
https://www.kotaksecurities.com/articles/aadhar-housing-finance-key-details-you-must-know/ | Aadhar Housing Finance Limited IPO: Get a download of all the important info before investing | Key highlightsAadhar Housing Finance Limited has launched its initial public offering (IPO) on 8th May. The IPO will close on 10th May. A fresh issue of 31,746,032 equity shares at the upper price band, seeking up to ₹10,000 million is floated via the equity market. The OFS segment includes selling 63,492,063 shares with the plan to raise ₹20,000 million at the upper price band by the promoter shareholder, BCP Topco VII Pte Ltd.IPO details:Dates: May 8–10, 2024, with May 8th being included as well.Issue Size: ₹30000 million at the upper price band price.Price Band: ₹300 - ₹315Minimum Investment: ₹14,805 (the lot size is 47 shares).Listing Date: May 15, 2024 (on BSE and NSE)Face Value: ₹10 per shareAadhar Housing Finance Limited IPO: Strengths & WeaknessesIPO StrengthsAadhar Housing Finance Limited had the highest asset under management and net worth among its analyzed peers (in FY2021, FY2022, FY2023 and nine months ended December 31, 2022 and December 31, 2023.It has a well established network of 487 branches (not including regional offices and corporate offices) and 109 sales offices in 20 states and union territories.The loan product offerings include loans for residential property purchase and construction, home improvement and extension loans, and loans for commercial property
construction and acquisition.The company has a strong, experienced and dedicated management team, with their senior management carrying an average of 25 years' experience in the financial services industry in India.They have a seasoned business model with strong resilience through business cycles.Robust, comprehensive systems and processes for underwriting, collections and monitoring asset quality are carried out.Access to diversified and cost effective long term financing with a disciplined approach to asset liability and liquidity management is seenSocial objectives are one of the core components of the company’s business model.IPO WeaknessesThe major types of risks that the company faces are liquidity risk, credit risk, operation risk, interest rate risk, cash management risk, collateral risk and information security risk.Qualitative advantagesThe strategic focus of Aadhar Housing Finance Limited is on the low-income housing segment along with diverse and dependable financing instruments that offer a sustainable value proposition. Its proven business model, ability to adapt with the economy, and strict approach to asset liability and liquidity management are additional strengths that secure its place in the market.ConclusionThe IPO of Aadhar Housing Finance Limited presents an opportunity for those wanting a share in India's developmental projects in affordable housing. By virtue of the sound financial results, the scope of the industry, and compelling market position, the company presents the opportunity for growth in the long run. Nevertheless, investors should do proper due diligence to find a balance between the risks and benefits that come with investing long-term.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP |
https://www.kotaksecurities.com/articles/review-of-aadhar-housing-finance-ltd/ | A quick review of Aadhar Housing Finance Limited | Aadhar Housing Finance Limited has launched its IPO on 8th May, with a 3-day window (8th to 10th May). As investors get ready to bid for the Aadhar Housing Finance IPO, let's first go through a quick summary of the company's strengths, risks, financial performance, and IPO terms.Company OverviewAadhar Housing Financehandles the low-income segment in the Indian housing sector, serving the economically weaker and medium-income groups. Established in 2010, this company provides a wide assortment of mortgage loan products, such as residential property purchase and construction, home improvement, and extension. On the other hand, it provides loan services for the acquisition and development of commercial properties.IPO DetailsThe IPO of Aadhar Housing Finance Limited, worth ₹30000 million at the upper price band, will feature a fresh issue of ₹10,000 million and an offer for sale by the promoters, BCP Topco VII Pte Ltd, of ₹20000 million. The stock size of the IPO is 47 shares, and the minimum investment is ₹14,805. Trading of the equity shares on the Stock Exchanges will start on or about May 15th.Business model and financial healthAadhar Housing Finance focuses its activities of financing for affordable housing towards the economically weaker section (EWS) and the low-income group (LIG). The company has strategies to expand their distribution network to achieve deeper penetration in key states.Financially, the firm’s assets under management (AUM) has grown to 198,651.6 million , while the net interest margins (NIMs) increased and have gone up to 9% as on H1FY24. Additionally, it keeps gross non-performing assets (GNPAs) within a reasonable range, which is indicative of a healthy asset quality.Source:RHPKey IPO details:Dates: May 8–10, 2024, with May 8th being included as well.Issue Size: ₹30000 million at the upper price band price.Price Band: ₹300 to ₹315 per shareMinimum Investment: ₹14,805 (the lot size is 47 shares).Listing Date: May 15, 2024 (on BSE and NSE)Face Value: ₹10 per shareUnderstanding the IPO StructureAadhar Housing Finance’s IPO will be an amalgamation of fresh issuance of shares and an offer for sale (OFS) by the promoter.Fresh Issue:The company gets access to new capital here, but the earnings per share (EPS) gets dilated, and also the equity ownership gets lowered. Aadhar Housing Finance will float a fresh issue of 31,746,032 equity shares at the upper price band, seeking up to ₹10,000 million via the equity market.Offer for Sale (OFS):This means offloading the existing shares owned by BCP Topco VII Pte Ltd (promoters). They will sell their 63,492,063 shares with the plan to raise ₹20,000 million at the upper price band.Source:RHPFinal wordsTo conclude, the IPO of Aadhar Housing Finance Limited offers a valuable chance to invest in the firm, which is aimed at satisfying the housing requirements of the low-income groups in India. Seasoned business model, extensive branch and sales office network and access to diversified and cost-effective long-term financing makes Aadhar Housing Finance stand out in the affordable housing finance sector. By conducting proper due diligence and assessing their respective investment goals, buyers can take advantage of the possible expansion of Aadhar Housing Finance in the housing finance sector.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP |
https://www.kotaksecurities.com/articles/deep-dive-into-aadhar-housing-finance-ipo/ | Unlocking Potential: A Deep Dive into Aadhar Housing Finance Ltd's IPO | Key Highlights:Aadhar Housing Finance Ltd’s IPO size is Rs 3000 croresThe IPO’s lot size is 47, with the price range between Rs 300 to Rs 315The company will get listed on stock exchanges on 15th MayIt’s raining initial public offerings (IPOs) for investors. The IPO juggernaut that started last year continues unabated. With the benchmark indices touching new highs, companies across industry verticals are looking to get listed on bourses.Aadhar Housing Financing Ltdis one of several companies all set to launch its IPO. Read on to find out essential details of this IPO.About Aadhar Housing Finance LtdAadhar Housing Finance Company is into housing finance catering to the low-income housing segment. It serves economically weaker and low-to-middle-income customers who need small-ticket mortgage loans. The company offers a range of mortgage-related loan products and has 487 branches, including 109 sales offices as of 31st December 2023.Source:RHP
IPO Details and ObjectivesAadhar Housing Finance Ltd has launched its IPO on 8th May. The IPO will close on 10th May. The table below highlights other key details of the IPO:ParticularsIPO sizeKey InformationRs 3,000 croresParticularsIPO lot sizeKey Information47ParticularsPrice rangeKey InformationRs 300 - Rs 315ParticularsMinimum investmentKey InformationRs 14,805ParticularsFace valueKey InformationRs 10ParticularsIPO issue typeKey InformationBook buildingParticularsListing dateKey Information15th MayParticularsListing onKey InformationBSE and NSEParticularsKey InformationIPO sizeRs 3,000 croresIPO lot size47Price rangeRs 300 - Rs 315Minimum investmentRs 14,805Face valueRs 10IPO issue typeBook buildingListing date15th MayListing onBSE and NSE
The company plans to utilise the funds obtained to meet:Future capital requirements towards onward lendingGeneral corporate purposesFurther, a portion of the proceeds from the fresh issue will be used towards meeting offer expenses.Financial SnapshotThe financials of Aadhar Housing Finance Ltd are impressive. Below are some of its key financials across different financial years:ParticularsTotal income (in crores)FY 23Rs 2043.52FY 22Rs 1728.56FY 21Rs 1575.55ParticularsProfit after tax (in crores)FY 23Rs 544.76FY 22Rs 444.85FY 21Rs 340.13ParticularsTotal assets (in crores)FY 23Rs 16,617.87FY 22Rs 14,375.81FY 21Rs 13,630.33ParticularsReturn on equityFY 2316.5%FY 2215.2%FY 2113.5%ParticularsDiluted earnings per shareFY 2313.4FY 2210.9FY 218.4ParticularsFY 23FY 22FY 21Total income (in crores)Rs 2043.52Rs 1728.56Rs 1575.55Profit after tax (in crores)Rs 544.76Rs 444.85Rs 340.13Total assets (in crores)Rs 16,617.87Rs 14,375.81Rs 13,630.33Return on equity16.5%15.2%13.5%Diluted earnings per share13.410.98.4
Industry OverviewThe housing finance market, focusing on low-income housing loans in was around Rs 4.4 trillion as of December 2023. As per CRISIL MI&A, the loans outstanding in housing finance focused on low income housing segment is expected to touch Rs 5.4-5.7 trillion by March 2026, translating into an 8-10% CAGR between fiscals 2023 and 2026.Source:RHPWrapping it upBefore investing in any company’s IPO, you should read its red herring prospectus (RHP), and Aadhar Housing Finance Ltd is no different. Read theprospectusto get an overview of its strengths and risks before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP
FAQsIs Aadhar Housing Finance a listed company?Aadhar Housing Finance will soon become a listed company after its IPO on 8th May. The company will get listed on the stock exchanges on 15th May.What is the old name of Aadhar Housing Finance?Aadhar Housing Finance was earlier known as Vysya Bank Housing Finance Limited. |
https://www.kotaksecurities.com/articles/indegene-ipo-gets-bumper-response/ | Indegene’s IPO Gets Bumper Response From Investors | Key Highlights:IPO of Indegene Ltd has been subscribed 1.67 times at the end of day oneStrong financials, robust client relationships, and domain expertise have contributed to investors' confidenceThe company's IPO consists of fresh issue and offer for saleThe much-awaited initial public offering ofIndegene Ltdhas opened for investors to subscribe. On expected lines, the IPO is already a run-away hit among investors as it has been subscribed 1.67 times at the end of day one. Offering digital-led commercial services for the life sciences industry, the IPO consists of a fresh issue of 1,68,14,159 shares with an offer for sale constituting 2,39,32,732 shares.What does the subscription number of the IPO reflect?The subscription number Indegene IPO reflects investors' interest in the company's prospects. The subscription shows that investors believe in the company's business model and ability to generate returns. It shows the company's value proposition and its potential for future success.Possible reasons for investors’ enthusiasmGiven below are some possible reasons behind investors’ enthusiasm leading to this subscription:A dominant player in its domainThe company is a dominant player in the healthcare domain. It has won several awards for its services.Strong financialsThe company boasts strong financials, with key financial metrics like profit after tax, net revenues, return on equity, and profit after tax, recording growth over the years.Robust client relationshipsThe company enjoys robust client relationships with attractive retention rates. This has had a positive impact on its revenues and operations.Global delivery modelThe company's global delivery model, which spans Asia, North America, and Europe, has helped it expand and strengthen its clientele.Wrapping it upIndegene Ltd’s IPO will close on 8th May. If you want to subscribe to the company's IPO, apply for the shares on or before it. With the life sciences industry poised to grow significantly in the coming years, adding shares of Indegene Ltd in your portfolio can help bolster your portfolio's returns. Happy investing!Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHPMoney ControlZee BusinessMany new IPOs are performing well these days, presenting good opportunities for investors. Some IPOs that have created a buzz among investors are about to launch between May 8th - May 10th.Click the below link to know more aboutupcoming IPOs:Aadhar Housing Finance IPOTBO Tek IPO
FAQsWhat is the issue price band of Indegene Ltd's IPO?The issue price band of Indegene Ltd's IPO is Rs 430 - Rs 452What is the lot size of Indegene Ltd's IPO?The lot size of the IPO is 33 shares.What is the listing date of Indegene Ltd?13th May is the listing date of Indegene Ltd. |
https://www.kotaksecurities.com/articles/risks-you-must-know-before-investing-in-indegene-ipo/ | Navigating Uncertainties: Key Considerations for Indegene Ltd's IPO | Key Highlights:Challenges within the life sciences industry can affect Indegene Ltd’s businessHigh dependence on revenues from clients in North America and EuropeThe company is exposed to counterparty credit risks with inadequate disaster recovery and business continuity plansIndegene Ltd operates in a highly competitive life sciences industryIndegene Ltd, offering digital services to the life sciences industry, has launched itsinitial public offering(IPO) on 6th May. An essential aspect of investing in a company’s IPO is being aware of the risks involved. Knowing them will help you make informed decisions. If you are looking to subscribe toIndegene Ltd’s IPO, here are the risks you must note.Risks Related to Indegene LtdSome of the associated risks with Indegene Ltd are as follows:1. Adverse impact in the life sciences industry can affect the company's businessAs Indegene Ltd caters to the needs of the life sciences industry, any adverse impact within the sector can affect its operations and hamper its growth. Be it regulatory hurdles related to product approvals, supply chain disruptions, or reputational damage arising from safety concerns, the hurdles can have a profound impact on the company.Economic factors and industry trends affecting life sciences companies can affect Indegene's business. The company can also be impacted by the trends affecting the life sciences industry, including healthcare reforms and outsourcing trends, among others.2. A significant portion of revenues comes from clients in North America and EuropeA significant portion of the company’s revenue comes from clients in North America and Europe. For FY 23, the company’s revenue from operations in North America and Europe stood at 68.28% and 27.36% respectively. If there’s any disruption in these markets, the same can affect Indegene Ltd’s business. Changes in regulatory framework and political situations accompanied with downsizing of economies in these markets can have an adverse impact on Indegene’s bottomline.3. Inadequate disaster recovery and business continuity plansThough the company has undertaken steps to augment its disaster recovery and business continuity plans, more needs to be done in this regard. Any disruption that the company has not factored in such plans, if it happens, can negatively impact the company’s financial conditions. If the company fails to start its key services within the said timelines, the same can negatively affect its financial positioning.4. Exposed to counterparty credit risksThe company has counterparty credit risks, and if it fails to receive payments on time, the company may be negatively impacted. For FY 22, the company's bad debts amounted to Rs 0.507 crores. The company can't ensure that it will receive all its outstanding dues on time, and it may fail to assess the creditworthiness of its clients accurately. Delayed payments from clients can negatively impact its growth.5. Highly competitive life sciences industryThe company operates in a highly competitive life sciences industry. With rivals eyeing market share and striving to outgrow each other, the company faces the pressure to stay ahead in the competition. Its future growth hinges on how well it can successfully compete with other companies providing similar solutions. If it fails to differentiate its solutions, it can potentially lose out clients and its market share.Some of the other risks are as follows:Unfamiliar business and revenue models to prospective investorsSubsidiaries contribute the majority of revenues, and any disruption can affect the company's financial conditionsDelay in the timing of revenue recognitionSubject to data protection and other lawsSubject to non-compete provisions limiting its ability to lap up business opportunitiesInadequate insurance coverageOutstanding legal proceedings against the companyIn conclusionGo through the company’sdraft red herring prospectus(DRHP) for a detailed overview of the risks. Make sure you are comfortable with the risks before subscribing to the IPO. At the same time, factor in your goals and risk tolerance before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP
FAQsWhat are the risks of an IPO?An IPO may fail to live up to its mark post-listing. Additionally, dissatisfied shareholders, insider trading, trade secret concerns, etc., are some of the other risks.Is it safe to invest in an IPO?If done with diligence, investing in an IPO can help you add high-quality stocks to your portfolio. |
https://www.kotaksecurities.com/articles/indegene-ipo-evaluating-strengths-and-allotment-status/ | Indegene IPO - Evaluating Strengths and Checking Allotment Status | Key Highlights:Indegene Ltd has domain expertise in its field with strong digital capabilitiesIt enjoys a long-standing relationship with its clientsThe company has strong financials and a global delivery modelThe issue size ofIndegene Ltd, known to offer high-end digital services to the life sciences industry, is pegged at Rs 1841.76 crores at a price band of Rs 430 - Rs 452. The competitive strengths of Indegene Ltd have further generated a buzz surrounding its IPO.Competitive Strengths of Indegene LtdHere are the company's strengths:Domain expertIndegene Ltd has a deep understanding of the healthcare domain. Due to its domain expertise, it can efficiently modernise and digitise key functions of the life sciences industry. The firm's expertise helps it optimise sales and marketing along with the time taken to make regulatory submissions. Over the years, the company has won several awards for the rich expertise it brings to the table.Robust digital capabilitiesIndegene Ltd boasts of robust digital capabilities and has developed several proprietary tools and platforms automating AI-based efficiencies. These tools have accelerated transformation across the company's solutions, driving efficiency and effectiveness. The tools have helped the firm drive outcomes across content management, regulatory intelligence, customer data management, and clinical trials.Long-standing client relationshipsIndegene Ltd enjoys a long-standing relationship with prominent biopharma companies, including the 20 largest firms in the world by revenue for FY 23. Apart from serving high-end clients, it also caters to the needs of mid-sized pharma firms. Its retention rates stood at an impressive 122.83%, 159.89%, and 129.90% for FY 23, 22, and 21, respectively.Global delivery modelThe company has a global delivery model from 6 operation hubs and 17 offices across Asia, Europe, and North America. Thanks to its streamlined global processes, the company can offer end-to-end scalable solutions to multiple regions and different clients. Also, the company's local presence in several countries has helped it forge better client engagement.Strong financialsIndegene Ltd boasts of strong financials. While net revenues have grown to Rs 2,306.13 crores in FY 23 from Rs 1,664.61 crores in FY 22, its return on equity has grown to 25.02% in FY 23 from 21.57% in FY 22. The firm's profit after tax has also grown to Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22.Along with these, the company boasts an experienced management team, the backing of marquee investors, and a track record of nurturing value via acquisitions.Checking Allotment StatusThese competitive strengths present a strong case for investors to subscribe to its IPO. If you subscribe to the company's IPO and want to know the allotment status of its shares, here's how you can do it:Visit thislinkof the registrar.Select Indegene IPO from the dropdown. You can find the name once the allocation process is complete.Choose among these available options to check the status - DP/Client ID or PAN or Application Number or Account Number.Provide the necessary details as per the chosenoption.Click on the 'Submit' button to complete the process.If you have received the allocation, you will get the shares directly in yourDemat account.In ConclusionBefore subscribing to a company’s IPO, it’s crucial for you to be well aware of the company’s strengths and risks. Read thedraft red herring prospectusfor a complete overview and ensure you have holistic knowledge about your financial goals and risk appetite before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP
FAQsIs Indegene a Listed Company?Indegene will soon be a listed company after its IPO. The listing date is 13th May 2024.Who is the CEO of Indegene?Manish Gupta is Indegene’s CEO and co-founder. |
https://www.kotaksecurities.com/articles/financial-insights-of-indegene-ipo/ | Insightful Analysis: Unveiling the Indegene IPO | Key Highlights:Indegene Ltd, a life sciences commercialisation company, has come out with its IPO with an issue size of Rs 1841.76 croresThe book-building IPO consists of fresh issues and offer for saleOver the years, the company has recorded impressive returns on equity, total assets and net revenuesAs Indian stock exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (BSE), touch new highs, investors’ confidence in the Indian growth story is evident. Several companies are looking to cash in on this optimism by going public, and Indegene Ltd is one of them.About Indegene LtdFounded in 1998, Indegene Ltd is a life sciences commercialisation company. It offers digital-led commercialisation services for the life sciences industry, including medical device companies and biopharma. With its healthcare domain expertise and technological prowess, the company assists life science companies in clinical trials, aids in launching their products in the market and supports their safety and regulatory operations. Enabling life science and healthcare institutions to be future-ready, the company has a global presence with 17 offices and 5000+ worldwide team members.IPO Details and ObjectivesIndegene Ltd has come out with its IPO. The table below captures other key details of the IPO:
Issue sizeFace valueRs 1841.76 croresRs 2Issue sizeMinimum investmentRs 1841.76 croresRs 14,916Issue sizeTotal shares offeredRs 1841.76 crores40,746,891Issue sizeFresh issueRs 1841.76 crores1,68,14,159Issue sizeOffer for saleRs 1841.76 crores23, 932,732Issue sizeIssue priceRs 1841.76 croresRs 430 - Rs 452Issue sizeLot sizeRs 1841.76 crores33Issue sizeIPO typeRs 1841.76 croresBook buildingIssue sizeListing onRs 1841.76 croresBSE and NSEIssue sizeListing dateRs 1841.76 crores13th MayIssue sizeRs 1841.76 croresFace valueRs 2Minimum investmentRs 14,916Total shares offered40,746,891Fresh issue1,68,14,159Offer for sale23, 932,732Issue priceRs 430 - Rs 452Lot size33IPO typeBook buildingListing onBSE and NSEListing date13th May
The company plans to use the funds obtained from fresh issues to:Fund its capex requirementsRepay and prepay debt of its subsidiary, ILSL HoldingsMeet general corporate needs
Financial SnapshotIndegene boasts of impressive financials. The table below captures some of the key financials of the company that show its impressive performance across different financial years:ParticularsNet revenues (in crores)FY 232,306.13FY 221,664.61FY 21966.27ParticularsProfit after tax (in crores)FY 23266.10FY 22164.76FY 21149.41ParticularsPAT marginsFY 2311.54%FY 229.90%FY 2115.46%ParticularsTotal assets (in crores)FY 232,203.87FY 221,353.47FY 21596.04ParticularsReturn on equityFY 2325.02%FY 2221.57%FY 2146.04%ParticularsEarnings per shareFY 2311.97FY 227.46FY 218.74ParticularsFY 23FY 22FY 21Net revenues (in crores)2,306.131,664.61966.27Profit after tax (in crores)266.10164.76149.41PAT margins11.54%9.90%15.46%Total assets (in crores)2,203.871,353.47596.04Return on equity25.02%21.57%46.04%Earnings per share11.977.468.74
The financials of the company reflect certain key things. These include:A significant jump in net profits along with an impressive return on equity. A high return on equity shows that the company has been able to successfully convert its equity financing into profits.The company's total assets and net revenues have considerably jumped. This reflects the company's acquisition of more resources with time and its effective management of expenses.Industry OverviewThe life sciences industry, which includes biopharma and medical device companies, is a thriving sector. Its combined sales stood at USD 1.8 trillion in 2023 and are projected to reach USD 2.1 trillion by 2026. A growing population coupled with the increasing prevalence of chronic is a strong indicator of the sector's potential for growth in the coming days, offering a promising outlook for investors.The company's unique business model and virtual monopoly position it for bright prospects in the future. Along with its strong domain expertise, its global delivery model can help it sustain its growth momentum in the future.Summing it upBefore subscribing to a company's IPO, it's crucial for you to be well aware of the company's strengths and risks.Read the draft red herring prospectusfor a complete overview and ensure you have holistic knowledge about your financial goals and risk appetite before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP
FAQsWhat is the size of the Indegene IPO?The issue size of Indegene IPO is Rs 1841.76 crores.Is Indegene profitable?Yes, Indegene is a profitable company. Its profit after tax stood at Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22, registering a growth of approximately 61.5%. |
https://www.kotaksecurities.com/articles/financial-metrics-of-indegene-ipo/ | Looking to Invest in Indegene Ltd’s IPO? Evaluate These Financial Metrics | Key Highlights:Indegene Ltd's total income has grown from Rs 1,664.61 crores in FY 22 to Rs 2,306.13 crores in FY 23 in FY 23The company's PAT has risen to Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22Its ROE has grown to 25.02% in FY 23 from 21.57% in FY 22The company's diluted EPS has grown to 11.97 in FY 23 from 7.46 in FY 22Indegene Ltd, has launched an issue size of Rs 1841.76 crores within the price range of Rs 430-452, and generated considerable buzz among investors. Essential financial metrics are among the several aspects to evaluate before investing in a company's initial public offerng (IPO). If you plan to subscribe to an IPO, here are some financial metrices that deserve your attention.Vital Financial Metrics to EvaluateTotal incomeTotal income refers to the company's aggregate money from all sources within a certain period. An increasing total income shows that a company generates more profit over time, which is a healthy sign. It shows a strong demand for the company's products and services with enhanced operational efficiency.
Indegene Ltd's total income has steadily increased over the years. It grew from Rs 966.27 crores in FY 21 to Rs 1,664.61 crores in FY 22 and then rose to Rs 2,306.13 crores in FY 23.Profit after taxProfit after tax or PAT is a company's net profit after deducting all expenses, including taxes, from its total revenues. A rising PAT suggests that a company's revenue is growing at a healthy rate. It also reflects a company's strong competitive positioning within the industry and shows that the company's management is efficiently allocating resources to boost profits. Like total income, Indegene Ltd's PAT has witnessed a considerable rise over the years. It grew to Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22.Return on EquityReturn on Equity (ROE) shows how efficiently a company generates profits from its shareholders' equity. A high ROE shows that a company is prudent in using its shareholders' equity and is effectively using its resources to generate returns. A rising ROE also indicates that the company has the potential for future growth. This boosts investors' confidence and can enhance a company's stock value. Indegene Ltd has recorded a high ROE over the years. It stood at 25.02% in FY 23, rising from 21.57% in FY 22.Diluted Earnings Per ShareA dilutedearnings per share(EPS) shows a detailed view of a company's profitability. Employing numerous criteria in the calculation, a rising diluted EPS shows that a firm's earnings are on the rise on a per-share basis.
It is a positive sign for investors as it suggests that a company generates higher returns relative to the number of outstanding shares. Indegene Ltd's diluted EPS has been on a growth trajectory, rising to 11.97 in FY 23 from 7.46 in FY 22 and 8.74 in FY 21.Summing it upThese key financial indicators show Indegene Ltd’s solid financial position. They show that the company is financially well poised for growth and to capture market opportunities. That said, you must thoroughly evaluate the risks and consider your goals before subscribing to its IPO.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP
FAQsWhat is the profit of Indegene?Indegene Ltd's profit after tax has grown to Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22.How big is Indegene?Indegene is a large company with 17 offices across the globe and 5000+ team members worldwide. |
https://www.kotaksecurities.com/articles/indias-ev-revolution-and-is-it-here-to-stay/ | India's EV Revolution and Is It Here to Stay? | Kotak Insights | Date 03/05/2024Remember the movie scene where the hero jumps in a sleek car and zooms off into the sunset?Well, swap that traditional gas guzzler with an electric vehicle (EV), and that’s what’s happening in India right now.In FY24, the electric vehicle market in India saw a staggering surge in sales, marking a 91% increase in electric passenger vehicles from the previous year. According to the Federation of Automobile Dealers Associations (FADA), sales reached a new high of 90,996 units.That's a booming shift towards electric mobility in India.So, what is fuelling this growth?Let us understand this and learn about the sector’s challenges to answer if the EV revolution will continue its momentum.What's Fuelling the EV Boom in India?Let's break it down:Government Incentives Drive AdoptionThe government's been offering sweet deals on EVs through schemes like FAME-II, making them way more affordable than their gasoline-powered counterparts. This reduces the cost barrier significantly compared to traditional fuel vehicles. Launched in 2019, FAME II has so far subsidised sales of nearly 1.3 million two-wheelers, 150,613 three-wheelers, and 18,794 four-wheelers.So, these incentives drive consumers to choose more sustainable and environmentally friendly transportation options. Think of it as a green light for eco-friendly rides.Enhanced Policy SupportBeyond subsidies, the government has introduced several additional measures to accelerate EV adoption. These include substantial tax breaks and streamlined registration processes for electric vehicles, effectively rolling out the red carpet for them.The government recently also announced a new scheme called theElectric Mobility Promotion Scheme (EMPS), 2024. This scheme aims to promote sale of electric two and three wheelers in India and the government has allocated Rs 500 crore towards this.This scheme will offer a subsidy on EVs of up to Rs 10,000 per two-wheeler, Rs 25,000 per light three-wheeler (like e-rickshaws), and Rs 50,000 per heavy three-wheeler (like autos and commercial units).That’s a sweet deal, isn’t it?Expanding Vehicle ChoicesIndian automakers are capitalising on this shift by broadening their portfolios to include a wider variety of electric models.This diversity allows consumers to choose an EV that fits their needs and budget, making electric cars a more accessible option for a broader audience.Economic AdvantagesWith petrol and diesel prices going through the roof, EVs look mighty attractive to customers in the long run.So, EVs' lower operational and maintenance costs present a financially attractive alternative for long-term savings, adding to their allure.Environmental AwarenessIncreasing environmental awareness among consumers is also crucial. As the public becomes more conscious of the need to reduce pollution and greenhouse gas emissions, EVs are gaining traction as a preferable, cleaner mode of transportation.The Rise of Electric Two-WheelersThe good news doesn't stop with cars; the two-wheeler EV segment is also seeing impressive growth.Sales of electric motorcycles and scooters climbed by 33% in 2023-24 from the previous year, with over 9,10,000 units sold.Companies like Ola Electric and TVS Motor Company are leading this segment and are at the forefront of this transformative shift.The Road AheadDespite the positive trends, the journey towards a fully electrified transport sector is not without its hurdles.Concerns such as "range anxiety"—the fear of running out of battery without access to a charging station—and the scarcity of charging infrastructure, especially in rural and suburban areas, remain significant obstacles to EV adoption.However, these are already being worked on and companies are investing big time in EV infrastructure.Moreover, to overcome these challenges, a collaborative approach is essential. A few of these could be…Advancements in Battery Technology:Developing more efficient batteries that charge faster and last longer could drastically reduce range anxiety.Expanding Charging Infrastructure:The government and private sectors working together to build a wider network of charging stations across the country. This includes installing stations in various locations, from urban centers to remote areas, to ensure that EVs are a viable option for masses.Continued Incentives and Support:Sustaining and enhancing governmental incentives such as the EMPS scheme will be crucial in maintaining the momentum and making EVs accessible to a wider demographic.Conclusion: India Charges ForwardThe electric vehicle revolution in India is gaining momentum, with FY24 being a testament to its success.By addressing the challenges and fostering cooperative efforts, India is well-positioned to gain its position in the global EV market.The Indian government has set a target to achieve30% electrificationof the vehicle fleet by 2030 and has introduced several incentives and policies to support the growth of the EV industry.With continued progress, the vision of a cleaner, greener future dominated by electric vehicles is not just a possibility but also an impending reality.India, indeed, is taking the driver’s seat in this exciting transition!We will see you next week with another exciting story.Happy Learning!Sources and References:Economic TimesET Energy WorldMinistry of Heavy IndustriesDisclaimer:The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here. |
https://www.kotaksecurities.com/articles/sensex-crosses-75000-mark-the-rally-and-whats-next/ | Sensex Crosses 75,000 Mark: The Rally and What’s Next | Kotak Insights | 19/04/2024The Sensex soared past the 75,000 mark for the first time in April 2024.This marks a significant moment for investors and traders who have been tracking the market’s progress lately.For market participants, this brings up a question: "Is this the right time to dive into the market, or should we brace for a potential correction after such highs?"Let’s take a look into the factors driving the market rally to answer this question and understand what future trends we could expect.The 75,000 RallyFirst, let us understand what this rally is about.For the first time, theBSE Sensexbroke through the75,000barrier on 9th April, 2024.TheNifty 50also soared above the 22,700 level during the same week. The rally was also seen in broader markets and the combinedmarket capitalisationof BSE-listed companies hit theRs 400 lakh croremilestone first time ever.Strong domestic macroeconomic indicators and positive market sentiment supported this.Here are a few factors potentially pumping this rally…Key Factors Pushing the RallyEconomic Stability and Inflation ControlIn the quarter ending December 2023,India's GDP growthrate reached 8.4%, surpassing the RBI's projections. This reaffirms India's position as the fastest-growing major economy globally.Moreover, the recent moderation in March consumer price index (CPI) inflation to a 10-month lowe at4.85%and the stabilization of core inflation have played key roles in maintaining the market cheer. The inflation is not near, but slowly moving to RBI’s comfort level of 4%.Investment and Industrial Growth:India’s factory output growth, as measured by the Index of Industrial Production (IIP) rose5.7%in February, up from 3.8% in January. In February, mining production rose 8%, and power output increased 7.5%, while manufacturing output grew 5%.
Furthermore, the ongoing resilience in the investment and services sectors underline the economic vibrancy that is translating into market confidence.Monetary Policy and Growth Projections:The RBI’s steady stance on keeping the repo rate at 6.5% while focusing on monitoring inflation to achieve a medium-term target of 4% inflation has reassured investors about the market's stability.FPI’s Return to the Arena:Lastly, we have the foreign portfolio investors (FPIs) betting on India.As per NSDL data, overseas inflows into Indian equities rose to a three-month high ofRs 350.9 billion in March. In the 12 months ending March, foreign portfolio investors bought Rs 2.08 trillion worth of Indian shares, the second highest on record.What to Watch For: The Road AheadAs the market celebrates this milestone, investors should remain vigilant and consider several key aspects that could shape market dynamics in the near future:Global Economic Uncertainties:With increasing geopolitical tensions and unpredictable global markets, one should stay informed and agile to navigate potential volatility.Elections, Policies, and Fiscal Health:The outcome of general elections, changing government policies, especially those related to fiscal consolidation and public expenditure in key sectors like infrastructure, could potentially influence market movements.Q4 Earnings and Sector Performance:The ongoing fourth quarter results (Q4FY24) announcements could provide deeper insights into the market's sustainability and sector performance.Interest Rates and Inflation:Global central bank’s decision to keep interest rates higher, rising inflation across major economies, and soaring crude oil prices could also potentially influence the market sentiment.So, as traders and investors, it's crucial to keep these expectations in check.Invest or Wait?As the Sensex charts unknown territories, the dilemma is whether to invest now, hold off, or exit the market.Market participants should consider whether they are prepared for possible fluctuations and assess their investment strategies in light of current market environment.In this dynamic market environment, patience and strategic planning are key.So, as one goes about approaching the market, the emphasis should be on informed decision-making, adaptability, and a focus onmarket fundamentals.Here's a wise thought from Benjamin Graham to keep in mind:"In the short run, the market is a voting machine, but in the long run, it is a weighing machine."It's like a little reminder that the quick ups and downs in the market are a bit like voting – things can change in a short time. But what really matters, the big value, comes from looking at the underlying market fundamentals that shape how investments and markets succeed.We’ll be back with another exciting story next week!Until then - Happy learning!Sources and References:Economic TimesBSENSEPIBNSDLDisclaimer:The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here. |
https://www.kotaksecurities.com/ipos/differences-between-fpo-and-ipo/ | Differences Between FPO and IPO | Key Highlights:IPO occurs when a company goes public for the first timeFPO occurs when an already-listed company issues fresh sharesCompanies across industry verticals look to raise funds from time to time to sustain operations, fund expansion, invest in new technologies, and encash market opportunities, among other things. Aninitial public offering(IPO) and a follow-on public offer (FPO) are two ways through which companies can raise capital. Though they may look the same at first glance, they aren’t. This blog captures the key differences between an IPO and an FPO.What is an IPO?When a company offers its shares to the public for the first time, it is known as an IPO. Post IPO, a company gets listed on stock exchanges, either the Bombay Stock Exchange (BSE) or theNational Stock Exchange(NSE) or both.The company offering the shares is known as the issuer. Once the IPO is done, the company's shares are traded in thesecondary market. IPO is a complex process that warrants a high level of expertise. A company going for an IPO seeks help from external parties such as investment banks, underwriters, promoters, etc. There are two types of IPO, namely:Fixed price issue: In this type of IPO, the company's shares have a fixed price, as mentioned in the offer document. Here, you know the share's price beforehand, and the company fixes it with the help of a merchant banker or underwriter.Book-building issue: In this type of IPO, a company doesn't fix the price of shares but has price bands. The price is discovered during the IPO process as per the demand.What is an FPO?In an FPO, a company already listed on the exchange offers new shares to investors, just like Vodafone Idea. The telecom major has come out with its FPO with an issue size of ₹18,000 crores.To know more about the Vodafone FPO, watch this video:https://www.youtube.com/watch?v=ihLh5rLn2JgFPOs are of two types, namely:Dilutive: A company offers more shares to raise equity or to reduce debt in a dilutive FPO.Non-dilutive: In a non-dilutive FPO, the company's promoters and other large shareholders sell their existing shares. In this type of FPO, no new shares are created, and the proceeds received go to the shareholders placing it, and not the company.IPO and FPO: The DifferencesNow that you know the meaning of an IPO and FPO, let’s look at their differences. The table captures the key differences between them on various parameters:
ParameterStageIPOIPO happens when a company is going public for the first time.FPOFPO occurs when a company has already completed its IPO and is listed on the exchange.ParameterTimingIPOAn IPO is the initial step in a company's journey to becoming public.FPOA company goes for FPO when it needs more capital after an IPO to fund various corporate needs.ParameterPrice DeterminationIPOThe price is generally determined through an underwriting process involving market conditions, valuation, and negotiation.FPOPricing of FPO shares is determined based on investors' demand, the company's financial performance, and market conditions.ParameterOffer SizeIPOOffer size is usually large in an IPO as the company aims to raise substantial capital for growth and expansion.FPOAn FPO's offer size is generally less as it intends to meet specific funding needs.ParameterRegulatory RequirementIPOCompanies going for an IPO need to meet stringent regulatory requirements such as financial reporting, corporate governance standards, and disclosure obligations, among others.FPOFPOs are subject to fewer regulatory requirements compared to IPOs. However, they are still required to comply with certain regulatory laws.ParameterRisks InvolvedIPOAs the company doesn't have any past record of share performance, IPOs are a high-risk investment option.FPOFPOs are relatively less risky as you can analyse the performance of a company's shares in the past.ParameterComplexity in Investment DecisionIPOIPO investments are generally more complex as you need to evaluate a company in detail and go through its red herring prospectus.FPOIn FPOs, you have information on how a company has performed after its IPO. This makes investment decisions less complicated.ParameterIPOFPOStageIPO happens when a company is going public for the first time.FPO occurs when a company has already completed its IPO and is listed on the exchange.TimingAn IPO is the initial step in a company's journey to becoming public.A company goes for FPO when it needs more capital after an IPO to fund various corporate needs.Price DeterminationThe price is generally determined through an underwriting process involving market conditions, valuation, and negotiation.Pricing of FPO shares is determined based on investors' demand, the company's financial performance, and market conditions.Offer SizeOffer size is usually large in an IPO as the company aims to raise substantial capital for growth and expansion.An FPO's offer size is generally less as it intends to meet specific funding needs.Regulatory RequirementCompanies going for an IPO need to meet stringent regulatory requirements such as financial reporting, corporate governance standards, and disclosure obligations, among others.FPOs are subject to fewer regulatory requirements compared to IPOs. However, they are still required to comply with certain regulatory laws.Risks InvolvedAs the company doesn't have any past record of share performance, IPOs are a high-risk investment option.FPOs are relatively less risky as you can analyse the performance of a company's shares in the past.Complexity in Investment DecisionIPO investments are generally more complex as you need to evaluate a company in detail and go through its red herring prospectus.In FPOs, you have information on how a company has performed after its IPO. This makes investment decisions less complicated.
IPO or FPO: What Should You Opt For?Choosing between an IPO and an FPO depends primarily on your risk tolerance. You can subscribe to a company's IPO if you have a high-risk appetite. On the other hand, if you don't want to take too much risk on your investment, you can opt for an FPO. That said, with both, you must never take a blind call. Evaluate a company's fundamentals well before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions.
FAQs on the difference between FPO and IPOHow is FPO Different From IPO?In an FPO, a company already listed on the exchange offers shares to the public. On the other hand, in an IPO, a company going public for the first time offers its shares to the public. Also, FPOs are relatively less risky than IPOs.Is FPO Good or Bad for a Company?FPOs have pros and cons. While they help a company raise additional capital, the announcement of a FPO can sometimes lead to negative market reactions. |
https://www.kotaksecurities.com/share-market/what-is-joint-stock-company/ | No title found | Key HighlightsA joint stock company is a business owned by several individuals.All the shareholders of a joint stock company have voting rights. They can influence the appointment decision for the board of directors.There is a lack of confidentiality as companies must release financial reports regularly.What is a Joint Stock Company?A joint stock company is an organisation where people pool their capital to form a business with a common goal. This type of company is suitable for large-scale projects where one person cannot afford the entire cost.The shares represent the ownership of every member. They are usually traded on stock exchanges. However, share transfers in private limited joint stock companies may be governed by an agreement and restricted to family members only.Features of Joint Stock CompanyAfter looking at the definition of a joint stock company, let’s now understand its features. Here are the important ones.Independent Legal Entity:A joint stock company is an independent legal entity just like its shareholders. It may own property and also file or defend lawsuits. Hence, the joint stock company's members are not accountable to the company.Perpetual Existence:The company continues to exist even if the members change. It can only be dissolved by following due process as per the established laws.Limited Liability:The stockholders' responsibility is restricted in this kind of company. However, members cannot sell their assets to settle a company's debt.Transferable Ownership:Generally, a shareholder may sell his shares without the approval of other shareholders. However, there may be some exceptions due to pre-emptive rights or lock-in periods.Registration:A company must be established to get the status of an independent legal entity. Thus, it is mandatory to register a business as a joint stock company.Types of Joint Stock CompanyThere are three types of joint stock companies. They include the following.Chartered Company:A company established by the head of state.Statutory Company:Statutory companies are established by specific parliamentary acts. In this case, the act defines the powers, objectives, rights, and duties.Registered Company:A registered company is established by registering under the business's laws.Advantages of a Joint Stock CompanyThe advantages of a joint-stock company are as follows:Large Capital Base:Joint stock companies can issue shares and debentures, raising a large amount of cash. A company can utilise the funds for business expansion.Limited Liability of Members:Shareholders in a limited liability joint stock company are quite safe. The shareholders' personal assets don’t have any impact due to business losses.Share Transferability:Shareholders have no restrictions on selling their shares.Shareholders’ Rights:The shareholders can elect the board of directors.Transparency:A joint stock company must release its financial reports and other critical data.Disadvantages of Joint Stock CompanyThe following are the drawbacks of a joint stock company :Legal Formalities:Establishing and managing a joint-stock company involves complex legal requirements.Higher Costs:The incorporation and management of the firm require large expenses.Conflict of Interest:There can be disagreements and conflicts of interest among the stakeholders, which include lenders, workers, owners, and the Board of Directors.No Confidentiality:Disclosure of financial reports to the public is mandatory. Hence, there is not enough confidentiality.Double Taxation:Declaring a company's income and dividends makes shareholders liable to double taxation.Joint-Stock Company vs Public CompanyHere are the differences between a joint stock company and a public company.
FeatureOwnership TransferJoint Stock CompanyIt may have restrictions, as ownership can be limited to specific groupsPublic CompanyEasy transfer of ownership as shares are traded on stock marketsFeatureDisclosureJoint Stock CompanyFewer reporting requirementsPublic CompanyStrict reporting requirementsFeatureRegulationJoint Stock CompanySubject to company law but has fewer regulatory obligationsPublic CompanyMust follow all the rules of regulators and stock exchangesFeatureJoint Stock CompanyPublic CompanyOwnership TransferIt may have restrictions, as ownership can be limited to specific groupsEasy transfer of ownership as shares are traded on stock marketsDisclosureFewer reporting requirementsStrict reporting requirementsRegulationSubject to company law but has fewer regulatory obligationsMust follow all the rules of regulators and stock exchanges
ConclusionShareholders have a collective ownership in a joint stock company. Over time, joint stock firms have become a good way of business organisation. They can quickly obtain funds and attract new investments. This leads to the growth and innovation of the company. Hence, joint stock firms may continue to influence the business environment in the future. Understand how these companies work and the rules governing them if you’re looking to invest in their stocks.
FAQs on Joint Stock CompanyWhich legal documents must a joint stock company have?Joint stock companies must have legal documents like articles of association and memorandum of association. These documents are necessary to obtain the status of a legal entity and manage the firm properly.Why do joint stock companies need a board of directors?Joint stock companies need a board of directors to ensure efficient governance and management. The shareholders elect them.How is a joint stock company different from a partnership or sole proprietorship firm?Joint stock companies allow several shareholders to pool their funds. However, there is only one or a small number of people in partnerships or sole proprietorships.How are dividends distributed in a joint stock company?Dividends are paid from the profits in a joint stock company. The amount of dividends paid to shareholders depends on the number of shares they own.Are joint stock companies privately held or publicly traded?Joint stock companies can be both privately held and publicly traded on stock exchanges. The members have the right to decide whether to list the company on a stock exchange. |
https://www.kotaksecurities.com/share-market/what-is-hammar-candlestick-pattern/ | What is Hammer Candlestick Pattern? | Key TakeawaysThe Hammer Candlestick Pattern occurs after a downtrend and signals a potential bullish reversal or a pause in the bearish momentum.The long lower shadow indicates that sellers initially pushed prices lower, but buyers eventually regained control.There are two main types: Classic Hammer, which has a small body and long lower shadow, and Inverted Hammer, which has a small body and long upper shadow.You have to look for a long lower wick, a small real body, and formation during a downtrend to recognize a Hammer Pattern.Setting a stop-loss below the Hammer's low and identifying potential resistance levels for taking profits is crucial.The higher trading volume during the Hammer formation adds credibility to the reversal signal.What is Hammer Candlestick Pattern?The Hammer Candlestick Pattern appears after a period of falling prices. This type of candlestick has a small body and a long shadow at the bottom. To understand it well, let’s consider an example.Suppose that the Indian stock market has been experiencing a bearish phase, with prices consistently declining. The price opens lower on a particular day which reflects the downtrend. However, as the session progresses, buyers step in and push the price back up, eventually closing near the opening level. This results in a candlestick with a small real body and a long lower shadow, resembling a hammer shape.The long shadow at the bottom shows that sellers initially pushed the price down, but then buyers took control and pushed it back up. This suggests that the bearish momentum might be decreasing. This pattern is seen as a potential signal for a bullish reversal, as it implies that the selling pressure has been absorbed and buyers are regaining control.Types of Hammer Candlestick PatternsThere are generally two types of hammer candlestick patterns. This includes the following:1. Classic HammerThe Classic Hammer is the standard form of the pattern. It has a small real body at the upper end of the trading range and a long lower shadow. This shadow is generally twice the size of the real body or more. This pattern signifies a strong rejection of lower prices by buyers which sets an opportunity for a potential bullish reversal.2. Inverted HammerThe Inverted Hammer candlestick pattern is a different type of Hammer pattern. While it shares similarities with the Classic Hammer, it has a long upper shadow instead of a lower shadow. This pattern occurs during a downtrend and can also signal a potential bullish reversal, but with slightly less strength compared to the Classic Hammer.How to Recognise Hammer Candlestick Pattern?A hammer candlestick suggests that the selling pressure is losing momentum, and buyers are starting to regain control. This pattern can be an early sign of a potential trend reversal or a pause in the existing downtrend. You should look for the following characteristics to recognize a hammer candlestick pattern.Long Lower Wick:The lower wick/shadow should be at least twice the length of the actual candlestick body. This indicates significant selling pressure during the trading session.Small Real Body:The real body should be relatively small compared to the lower wick as it represents the open and close prices.Formation in a Downtrend:The hammer pattern should be made during a downtrend, as it shows a potential reversal or pause in the existing bearish momentumDifference between Hammer Candlestick Pattern and Doji PatternBoth the Hammer and Doji patterns can show that a trend might change, but they have important differences. A Hammer looks like a candlestick with a small body and a long lower shadow. It suggests that after a drop, buyers are stepping in. On the other hand, a Doji has a small body with upper and lower shadows. It means that buyers and sellers are in balance, indicating uncertainty in the market. Let’s explore some key differences between these patterns.
FeatureShapeHammer CandlestickIt has a small real body with a long lower shadow.Doji PatternIt has a small or no real body with equal upper and lower shadows.FeatureImplicationHammer CandlestickPotential bullish reversal.Doji PatternIndecision or potential reversal (bullish or bearish).FeatureOccurrenceHammer CandlestickIt can occurs after a downtrend.Doji PatternIt can occur in any market condition.FeatureHammer CandlestickDoji PatternShapeIt has a small real body with a long lower shadow.It has a small or no real body with equal upper and lower shadows.ImplicationPotential bullish reversal.Indecision or potential reversal (bullish or bearish).OccurrenceIt can occurs after a downtrend.It can occur in any market condition.
How to Use Hammer Candlestick Pattern Effectively?The Hammer Candlestick Pattern is a popular technical analysis tool used by traders to identify potential price reversals in a downtrend. However, it's important to follow certain steps to use this pattern effectively and increase your chances of success.1. Identify the Pattern CorrectlyThe first step is to ensure that you have correctly identified the Hammer Candlestick Pattern on the price chart. A Hammer Pattern is characterized by a small real body with a long lower shadow, which should be at least twice the length of the real body. Additionally, the Hammer Pattern should appear during a downtrend, which is identified by a series of lower highs and lower lows.2. Look for ConfirmationAfter identifying the hammer pattern, you should wait for confirmation of the potential reversal. This confirmation comes in the form of the next candlestick, which should close above the closing price of the Hammer Pattern. Many traders choose to enter a long position during the formation of this confirmation candle, as it signals the potential start of an uptrend.3. Set Stop-Loss and Take-Profit LevelsIt is important to manage your risk by setting a stop-loss order while trading. A good way to limit losses is by setting a stop-loss just below the lowest point of the Hammer Pattern. If this level is breached, it suggests the downtrend might continue. However, deciding when to take profits is more personal. Since the Hammer Pattern doesn't give clues on where prices might go next, you might need to look at other indicators or resistance levels to figure out good times to take profits.4. Monitor and AdjustIt is also important to monitor the price action closely after entering the trade. If the price moves in your favour, be prepared to exit the position at your predetermined stop-loss level to minimize losses.Remember, the Hammer Candlestick Pattern is just one tool that helps traders. It is suggested to use the pattern with other technical indicators and risk management strategies.Benefits and Limitations of Hammer Candlestick PatternThe hammer candlestick pattern has its advantages and drawbacks, which traders should be aware of before making any trading decisions. The following is the breakdown in table format explaining the benefits and limitations of the hammer candlestick pattern.
BenefitsIt helps to recognise the potential trend reversal from bearish to bullish.LimitationsThis pattern may generate false signals which leads to incorrect trading decisions.BenefitsThe hammer candlestick pattern provides entry points for long positions.LimitationsIt requires confirmation from subsequent candlesticks or additional technical indicators.BenefitsIt can be used in combination with other technical indicators for added confidence.LimitationsThe pattern's significance may vary depending on the market context and trading timeframe.BenefitsThe pattern highlights the presence of buying pressure, even in a downtrend.LimitationsThe interpretation of this pattern can be subjective, as the pattern's appearance can differ slightly.BenefitsLonger shadows indicate stronger reversal potential.LimitationsHammer patterns with small bodies and short shadows may be less reliable.BenefitsHigher trading volume during the hammer formation adds credibility to the signal.LimitationsThe low trading volume during the hammer formation may weaken the reversal signal.BenefitsLimitationsIt helps to recognise the potential trend reversal from bearish to bullish.This pattern may generate false signals which leads to incorrect trading decisions.The hammer candlestick pattern provides entry points for long positions.It requires confirmation from subsequent candlesticks or additional technical indicators.It can be used in combination with other technical indicators for added confidence.The pattern's significance may vary depending on the market context and trading timeframe.The pattern highlights the presence of buying pressure, even in a downtrend.The interpretation of this pattern can be subjective, as the pattern's appearance can differ slightly.Longer shadows indicate stronger reversal potential.Hammer patterns with small bodies and short shadows may be less reliable.Higher trading volume during the hammer formation adds credibility to the signal.The low trading volume during the hammer formation may weaken the reversal signal.
ConclusionThe Hammer Candlestick Pattern provides valuable insights into potential bullish reversals after a downtrend. However, it is important to remember that no single pattern is foolproof, and traders should always consider the broader market context and use additional technical indicators to confirm the signal. Traders can potentially enhance their trading strategies and improve their chances of success BY understanding the aspects of the Hammer Candlestick Pattern and using it effectively.
FAQs on Hammer Candlestick Pattern1. Is a Hammer Candlestick Pattern always bullish?Yes, the Hammer Candlestick Pattern is considered a bullish reversal signal, which indicates a potential change in trend from bearish to bullish.2. What is the difference between a Classic Hammer and an Inverted Hammer?The key difference between a Classic Hammer and an Inverted Hammer is that the classic hammer has a long lower shadow, while the inverted hammer has a long upper shadow.3. How can I confirm a Hammer Candlestick Pattern?The next candle closing above the Hammer's closing price confirms this candlestick pattern, which indicates that the bullish momentum is continuing.4. Can a Hammer Candlestick Pattern occur on any time frame?Yes, the Hammer Candlestick Pattern can be observed on various time frames, including intraday, daily, weekly, and even monthly charts.5. Can a Hammer Candlestick Pattern provide a specific price target?No, the Hammer Candlestick Pattern itself does not provide a specific price target. Traders may need to use additional technical indicators or analysis to determine potential resistance levels. |
https://www.kotaksecurities.com/share-market/what-is-share-market/ | What Is Share Market? | The share market, or stock market, is a place where companies sell shares to the public to raise capital. When you buy shares, You become a part owner of the company and receive perks such as voting on important company decisions and receiving a portion of profits in the form of dividends.Types of Share MarketNow that we know what the stock market is, let's explore the different types of share markets in India. There exist primarily two categories within the share market:1. Primary MarketThe primary market is the initial platform where fresh securities like stocks or bonds are introduced and sold to the public for the first time. It facilitates companies in gathering capital to support their activities by issuing new securities directly to investors.2. Secondary MarketThe secondary market is where securities already issued in the primary market are exchanged among investors without the company's involvement in the trading process. It offers liquidity to investors and helps in establishing the value of securities by facilitating the purchase and sale of already existing securities.Participants In Share MarketThe key participants in the share market includes:Investors:These are individuals or entities who engage in buying stocks, investing a minimum amount in share market, with the anticipation of reaping profits through either capital appreciation or dividends.Traders:Individuals or entities involved in the frequent buying and selling of shares and stocks, often in the short term, aiming to capitalise on market fluctuations and generate profits.Stockbrokers:These are professionals who serve as intermediaries between buyers and sellers, executing transactions on behalf of their clients in the share market.Stock Exchange:A platform where securities are exchanged between buyers and sellers. Two well known stock exchanges in India are NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).Regulators:Government bodies regulate and supervise the share market, ensuring its fair and transparent operation, and safeguarding investors from fraudulent practices.Issuers:Companies that issue stocks and shares to procure capital and support their operational needs.Why Invest In the Share Market?Investing in the share market offers a path to potential financial progress through acquiring shares in publicly traded companies. Acting as a marketplace for the exchange of these shares, the stock market attracts individuals and institutions for various reasons:Ownership Stake in Profitable Companies:Shareholders own a stake in the company's assets and profits, enabling them to participate in its growth and expansion.Potential for Capital Growth:Share prices have the potential to increase over time, offering investors the opportunity to sell their shares at a higher price than their initial investment.Income from Dividends:Certain companies distribute a portion of their profits to shareholders as dividends, providing a reliable source of income.Portfolio Diversification:Investing in a range of stocks allows for the spreading of risk across different sectors and industries, enhancing portfolio stability.Enhanced Liquidity:The share market provides liquidity, facilitating the buying and selling of shares with relative ease compared to other investment platforms.How to Invest In the Share Market?Investing in the share market can be an exciting and rewarding journey. Let's explore how to invest in the share market effectively to maximise your chances of success.1. Educate YourselfGain a solid understanding of essential terms like stocks, dividends, and market indices. Expand your knowledge across various industries to develop a comprehensive understanding.2. Establish Financial ObjectivesDefine clear investment goals and evaluate your risk tolerance based on factors such as age, financial commitments, and investment horizon.3. Select a Brokerage AccountResearch and opt for a reputable brokerage platform that suits your investment objectives. Compare fees and features to make an informed decision.4. Conduct Thorough ResearchBefore making investment decisions, analyse company financials, industry trends, and overall market conditions. Stay informed by following reliable financial news sources.5. Implement Your PlanOpen a brokerage account and start executing your investment strategy based on thorough research and a well-defined plan.6. Stay InformedStay updated on market developments and news that may impact your investments. Consistent learning is vital for achieving success in the stock market.7.Seek Professional GuidanceIf necessary, seek advice from a financial advisor to refine your strategy and ensure it aligns with your overall financial goals.ConclusionThe share market stands as a cornerstone of modern economies, offering individuals and institutions a platform to participate in the ownership and growth of publicly traded companies. Through the purchase of shares, investors gain access to potential financial growth, dividends, and a voice in corporate decision-making. The share market serves as a dynamic marketplace where supply and demand interact to determine share prices, reflecting the collective sentiment and outlook on companies and industries.
FAQs on What Is Share Market?Is investing in the share market risky?Yes, investing in the share market carries inherent risks, including market volatility, company-specific risks, and regulatory changes. However, with careful research and diversification, investors can manage and mitigate these risks.How do I choose which shares to invest in?Selecting shares for investment requires thorough research into company fundamentals, industry trends, financial performance, and growth prospects.What are stock exchanges?Stock exchanges serve as platforms where shares are traded.They facilitate trading by matching buy and sell orders from investors and provide transparency through price discovery mechanisms.Can anyone invest in the share market?Yes, anyone with sufficient capital and access to a brokerage account can invest in the share market.What factors influence share prices?Share prices are influenced by a number of factors, including company performance, economic indicators, geopolitical events, investor sentiment, and changes in interest rates.How long should I hold onto my shares?The ideal holding period for shares depends on individual investment goals and risk tolerance. |
https://www.kotaksecurities.com/articles/pe-ratio-explained-lessons-from-the-mango-season/ | P/E Ratio Explained: Lessons from the Mango Season | Kotak Insights | Date 12/04/2024The anticipation of the mango season is palpable in India. It's a time when the air is filled with the sweet aroma of ripe mangoes, and every fruit stall turns into a treasure trove.And as we indulge in the joy of selecting the perfect mango, little do we realize that there are valuable lessons to be learned, not just about fruit selection, but also about the intricacies of investing.Well, ask our Indian mothers who know how to pick perfect mangoes!If we were to draw parallels from their mango picking skills, we could learn a few investing lessons.Let’s look at one such lesson on P/E ratio – A powerful stock picking tool.A Trip to the Mango StandImagine you're strolling through a bustling market, surrounded by the enticing smells of fresh mangoes. As you stand beside your mother, observing her meticulous mango selection process, you couldn’t help but draw parallels between her method and the world of finance. "So, Mom, how do you always manage to pick the best mangoes?" you inquire with curiosity."It's all about finding the right balance, beta," she replies with a knowing smile. "You want mangoes that are ripe and flavorful, but you also don't want to overpay for them."Understanding P/E Ratio and EPSIn the realm of investing, this balance is reflected in the concept of thePrice-to-Earnings (P/E) ratio.Just as you would not want to overpay for a mushy, overripe mango, investors don't want to overpay for a stock that's not delivering earnings.TheP/E ratiois one method that helps investor assess whether they are getting a good deal on a stock by comparing itspriceto itsearnings.To delve deeper into the analogy, let us consider the components of the P/E ratio. Think of it as dissecting the anatomy of a mango to understand its sweetness and flavor. Similarly, understanding the P/E ratio requires examining two key components: the Price and the EPS.Here's where the concept ofEPSalso comes into play. EPS, orEarnings Per Share, tells you how much profit a company is generating per share of its stock. This metric serves as the core essence of a company's profitability, much like the sweetness of a mango defines its quality. Just as we seek mangoes bursting with flavor, investors look for companies with robust earnings.For example, if a company makes Rs 100 in profit and has 10 shares outstanding, its EPS would be Rs 10 (Rs 100 profit divided by 10 shares). If the market price of each share is Rs 200, the P/E Ratio would be 20 (Rs 200 market price divided by Rs 10 EPS).So, in a nutshell:Price-to-Earnings (P/E) Ratio:The P/E ratio is a measure of how much investors are willing to pay for each unit of a company's earnings. It indicates the relationship between the stock price and the company's earnings per share.Formula:P/E Ratio= Market Price per Share / Earnings Per Share (EPS)Earnings Per Share (EPS):EPS is a key financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock. It provides insights into a company's profitability on a per-share basis.Formula:EPS= Net Income / Number of Outstanding SharesPaying the Right Price: Using P/E Ratio and EPS WiselyIt's all about finding that perfect balance between price and quality, whether you're shopping for mangoes or investing in the stock market.Let's bring this home to the Indian stock market.Imagine two companies in the mango industry:Company Ahas a P/E Ratio of 10, whileCompany Bhas a P/E Ratio of 20. At first glance, it seems like investors are more willing to shell out for Company B’s earnings. But wait, there's more to the story.AlowerP/E Ratio like Company A’s might indicate that it'sundervaluedcompared to its earnings potential. It could be a hidden gem waiting to shine. On the other hand, Company B’s higher P/E Ratio suggests that investors are paying a premium for its earnings. It might be riding high on market hype.Why P/E Ratio MattersA savvy investor looks for stocks with a low P/E Ratio relative to their peers. This doesn't mean blindly picking the cheapest stocks, just how you wouldn’t just pick mangoes with the cheapest tag. It’s about finding those stocks with strong fundamentals and growth potential.Also, remember that P/E Ratio isn't a crystal ball. Always do your homework, consider the company's performance, industry trends, and broader economic conditions before investing.So, next time you are picking mangoes at the market or eyeing stocks in the market, remember to think about the P/E ratio and EPS and make the juiciest choice possible.Happy learning!Sources and References:InvestopediaForbesDisclaimer:The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions.Read thefull disclaimer here. |
https://www.kotaksecurities.com/articles/nhais-historic-invit-monetization-a-new-era-for-indias-road-infrastructure/ | NHAI's Historic InvIT Monetization: A New Era for India's Road Infrastructure? | Kotak Insights | Date 05/04/2024India is on the move!With a rise in capital expenditure, there's a push to enhance everything from railways and telecommunications to electric vehicle charging infrastructure.This surge is powered by a combination of government spending, a revival in private investment, and strategic initiatives like the Production Linked Incentive (PLI) Schemes.But as you know, these big plans need big money.Traditionally, the government might sell off some assets or seek public funding to gather the necessary capital. But imagine a scenario where it could retain ownership of these assets and still offer investors a sweet deal.This is whereInfrastructure Investment Trusts (InvITs)come into play, offering a novel solution for both the government and the investors.But why are we talking about InvITs today?It’s because of a recent monumental InvIT monetization, which marks one of the largest transactions in the history ofIndian road sector.This comes as during the last month, theNational Highways Authority of India (NHAI)successfully concluded its third round of fundraising through its InvIT known asNHIT, raising a record sum of overRs 16,000 crorefor889 kilometers of national highway.So, let us understand what InvITs are, the significance of NHAI’s fundraising, and how it could impact the economy and related sectors.So, What’s an InvIT?AnInfrastructure Investment Trust (InvIT)is an investment trust created for investors to buy into infrastructure projects without direct ownership.Imagine you could invest in big infrastructure projects without actually buying them outright. That's what InvITs offer.So, investors in an InvIT effectively become part owners of operating assets ranging from tolled highways to any other infrastructure asset that generates an annuity return.Companies or the government can monetize their assets by transferring them to these trusts. And the trust then package and offer them to market participants for a unit basis ownership.In essence, InvITs resemble mutual funds but are distinct in that they are traded on stock exchanges.The Purpose and Advantages of InvITsInvITs function as a mechanism to raise capital forinfrastructure developers, thereby facilitating the development and maintenance of critical assets like roads, bridges, power plants, and communication networks.By investing in InvITs, investors become beneficiaries of the cash flows generated by the underlying infrastructure assets. This is in the form of income throughdividendsandinterest payouts.One of the key advantages of InvITs is the potential for steady income streams. Infrastructure assets often generate predictable cash flows due to long-term contracts or toll collection mechanisms, providing investors with a stable source of income.Additionally, InvITs typically invest in multiple projects across various sectors, reducing the risk associated with individual projects.NHAI’s Largest InvIT MonetizationHere’s what’s happening in a nutshell…NHAI’s infrastructure Investment Trust - theNational Highways Infra Trust (NHIT)- recently concluded its fund-raising through‘InvIT Round-3’.The above round secured financing for national highway stretches totalling 889 kilometers, with an Enterprise Value surpassing Rs 16,000 crore.Investors subscribed to theInvIT unitsthrough a book build process at a cutoff price ofRs 124.14per unit.With the investments, NHIT secured approximately Rs 7,272 crore in unit capital from marquee domestic and international investors. Additionally, it obtained debt totaling around Rs 9,000 crore from Indian lenders.This third monetization round has elevated the total realized value of all InvIT rounds toRs 26,125 crore,with NHIT now managing a diversified portfolio of15 operational toll roadsacross nine states, covering a combined length of approximately1,525 kilometres.InvIT as an Investment?Real estate investment trusts (REITs)have been rocking for years, and it’s time for InvITs to gain the same popularity in India.Potential investors should understand how InvITs typically generatereturnsfrom the asset they own.This can come from direct asset ownership with earnings flowing from toll collections, power transmission fees, etc.InvITs can also earn by owning assets in special purpose vehicles (SPVs) which may pay them dividends. Moreover, an InvIT can also generate returns by lending money to an SPV, which will, in turn, own assets, and pay the InvIT interest on the loan.So, just as any other financial instrument, one needs to evaluate InvITs as per their fundamentals and assess their risk profile before considering investing in them.With over 20 InvITs currently in India, mostly private, and more expected to emerge, investor interest in this space could see potential growth.As awareness of InvITs increases, so too does the potential for these instruments to contribute significantly to India's economic growth.See you with another interesting market story next week.Stay tuned!Sources and References:Press Information BureauSEBIEconomic TimesDisclaimer: The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here. |
https://www.kotaksecurities.com/articles/will-indian-economy-continue-growth-momentum-in-fy25/ | Will Indian Economy Continue Growth Momentum in FY25? | Kotak Insights | Date 28/03/2024The Indian economy has captured global attention for its resilience and growth potential.As we step into the fiscal year 2025 (FY25), the question on everyone's mind is whether India will sustain its growth momentum?Let's explore this query through insights from the recently publishedMonthly Economic Review Reportby the Department of Economic Affairs.From key indicators, global investor sentiment to trade dynamics – here’s how some key factors have shaped the Indian economy in FY24 and how are they expected to move in FY25.The Monthly Economic Review ReportLooking at the review from the last month, India's economic performance in February 2024 remained robust, bolstered by sustained growth momentum and stable macroeconomic fundamentals.The key highlights include:Growth Trajectory:India surpassed expectations with a six-quarter high growth rate in Q3FY24, continuing its upward trajectory.Capital Market:Despite geopolitical challenges, India's capital markets remained resilient.Inflation Management:Retail inflation remained stable within the target range for six consecutive months, supported by strong domestic growth and favorable commodity prices.Employment Trends:Positive trends emerged in employment, with a decline in the unemployment rate and increased labor force participation in 2023.Let us have a closer look at some of these…India’s Growth TrajectoryIndia's gross domestic product (GDP) growth estimate for FY24 has been revised upwards to7.6%, showcasing the enduring strength of the economy.This growth trend, above8%for three consecutive quarters, positions India as a standout performer globally.And it’s not just the data, but various agencies who also echo a similar sentiment.In line with the official statistics and the upward revision of various growth estimates, SBI Research and Moody’s expect India’s GDP growth for FY24 to be 8%. Fitch and Barclays raised their growth forecast for FY24 to 7.8%.Which factors drove this growth?Effective Capex:The government’s focus on capital expenditure (capex) has spurred private investments, with effective capex expected to reach4.6% of GDP in FY25,as per the Interim Budget. This is a substantial 200 basis point increase from 2.6% of GDP in FY20.Steady Private Consumption:There is a steady consumption demand which is backed by resilient urban demand and anticipated rural consumption growth due to a normal monsoon forecast in FY25.Strong Manufacturing Growth:Manufacturing sector sawdouble-digit growthin Q3 of FY24 driven by an investment surge, improved investor confidence, and strong domestic demand. The volume indicators like the Index of Industrial Production have also observed growth of 5.8% during Q3 of FY24.Rising Construction and Housing Growth:India is witnessing a robust increase in cement and steel production, which bodes well for a sustained rise in construction activity. Aided by government interventions and increased demand for residential properties in tier-2 and tier-3 cities, the construction sector is capturing new markets.Service Sector Growth:Continued expansion in non-contact-intensive service sectors also contributed to the overall economic growth momentum. The sector supported growth by registering a7%YoY growth in Q3FY24.
Let us now have a look how Indian capital markets fared in FY24.Capital Markets Stand Out TallDespite geopolitical risks and volatile commodity prices, Indian capital markets remained one of the best performing among emerging markets in FY24.In the first eleven months of FY24, capital worthRs 98,112 crore(equity + debt) was raised by the corporates from the primary market through public and rights issuances.During April 2023 to February 2024,345 companieswere listed on stock exchanges.India’s equity market also witnessed a rise in the number of demat accounts. As per the NSDL and CDSL data, the number of demat accounts in India opened in February 2024 soared to over 43.5 lakh, 38.6% higher compared to the corresponding period last year. This reflects growing investor participation and confidence.And according to a Bloomberg report, India became thefourth biggest equity marketin January 2024, surpassing the stock market capitalisation of Hong Kong.Global Trade Remains SubduedThere are hiccups on the global trade front for India.This is because global trade growth is still subdued. As per the report, export orders are generally modest, particularly in manufacturing, and new supply disruptions are appearing.Moreover, attacks on shipping in the Red Sea have also resulted in trade flows being re-routed so that the shipping costs have risen sharply, and delivery times have lengthened, especially for trade from Asia to Europe.Nevertheless, there could be good news as the Organisation of Economic Cooperation and Development (OECD), in its February 2024 Interim Economic Outlook, forecasts an improvement in global trade in the near future. And Asia's reviving production of semiconductors and electronics, coupled with a rise in car sales, is providing a much-needed lift to its merchandise trade.Inflation Under Control?Retail inflation has remained within the Reserve Bank of India’s (RBI) tolerance range of 2% to 6% for six consecutive months, with headline inflation at 5.1% in February.Core inflation has also moderated, reflecting stability in inflationary pressures.Inflation in February moderated mildly in all groups in the core CPI basket – clothing, footwear, housing, household goods & services, health, transport and communication, recreation and amusement, education, personal care and effects.Overall, inflation averaged5.4%in FY24, lower than the 6.8% recorded in the corresponding period of FY23.In Conclusion…India's strong economic performance, as reflected in the recent data releases and announcements, stands out amidst the sluggish global growth.While robust investment activity is underway, strengthening private consumption demand is evident from indicators like rising air passenger traffic and sale of passenger vehicles, digital payments, improved consumer confidence and expectations of a normal monsoon.Additionally, the increased demand for residential properties in tier-2 and tier-3 cities augers well for furthering construction activity.The announcement by Bloomberg that India would be included in its bond index from January 2025 should bolster further capital inflows.In FY25, however, the current account deficit will bear watching.So, on the whole, India looks positively towards the dawn of FY25, driven by resilient domestic demand, robust investment activity, and supportive government policies.Nevertheless, we will have to wait and watch how FY25 pans out for the economy as well as the capital markets.We will be back with another exciting story next week!Until then…Stay Tuned!Sources and References:Department of Economic AffairsMonthly Economy Review – February 2024Disclaimer:The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here. |
https://www.kotaksecurities.com/articles/india-to-emerge-as-a-global-semiconductor-hub/ | India to Emerge as a Global Semiconductor Hub? | Kotak Insights | Date 22/03/2024Rs 1.25 lakh crore.That’s the monumental investment the Cabinet approved last week for three semiconductor plants in India.This comes as the Prime Minister of India addressed ‘India’s Techade: Chips for Viksit Bharat’ program on 13th March, 2024, and laid the foundation stone for these pivotal projects.The facilities launched under this program are –Semiconductor Fabrication Facility in GujaratOutsourced Semiconductor Assembly and Test (OSAT) facility in GujaratOSAT facility in AssamLet us understand more about this development, India’s vision of becoming a semiconductor hub, and how it could impact the economy.India’s Vision of a Global Semiconductor HubYou see, it has been the Prime Minister’s vision to position India as a global hub for semiconductor design, manufacturing and technology development.Talking of the recent past, the launch of theIndia Semiconductor Mission(ISM) in 2022 is a strategic move to build a robust semiconductor ecosystem, essential for powering all electronic devices in India.But firstly, it’s essential to grasp the fundamental importance of semiconductors, commonly referred to aschips, in today’s world. These components are the lifeblood of most electronic devices, from smartphones and laptops to automobiles.The Covid-19 pandemic highlighted the fragility of the global semiconductor supply chain, heavily dependent on a few countries, leading to a worldwide reassessment of semiconductor strategies.Against this backdrop, theISMwas launched on December 15, 2022 with the aim of establishing a robust semiconductor ecosystem within the country.This initiative, housed under the Digital India Corporation, is tasked with catalysing semiconductor manufacturing, packaging, and design capabilities in India.The initiative also gained financial support in December 2022, with the announcement of aRs.76,000-croreincentive package to encourage the establishment of semiconductor and display fabrication plants. This financial boost aimed to attract significant industry players and stimulate investment in India's semiconductor infrastructure.Since then, there have been many developments in the semiconductor space. And the recent approval of the above three facilities, with a huge investment and manufacturing capabilities, signifies a big stride forward for India.A Look at the Three FacilitiesThe Dholera Special Investment Region (DSIR) inGujaratwill host a semiconductor fabrication facility established byTata Electronics Private Limited(TEPL) under a Modified Scheme for Semiconductor Fabrication in India. With a staggering investment of overRs.91,000 crore, it marks the country's first commercial semiconductor fabrication facility.In Morigaon,Assam, another OSAT facility will be set up byTEPLunder a Modified Scheme for Semiconductor Assembly, Testing, Marking, and Packaging (ATMP), with an investment of approximatelyRs.27,000 crore.Similarly, the OSAT facility in Sanand,Gujarat, will be established byCG Power and Industrial Solutions Limitedunder the same scheme for ATMP, with an investment of aboutRs.7,500 crore.These facilities are expected not only to strengthen India's semiconductor ecosystem but also to generate employment and stimulate growth in related sectors such as electronics, telecom, and much more.The Broader Implications for IndiaAccording to a report by Deloitte, the semiconductor industry in India is expected to play an important role in enhancing the global value chain, expanding to a market size ofUS$ 85 billionand generating employability for 600,000 people by2030.Note that only a handful of nations manufacture semiconductors today. So, there’s a need for a reliable supply chain after the disruptions caused by the coronavirus pandemic.India's entry into semiconductor manufacturing positions it among a select group of nations capable of producing these critical components.The strategic move to establish three big projects, amplified by the Prime Minister's vision of 'Made in India' and 'Designed in India' chips, aims to propel the country towards self-reliance and modernization.The initiative is further supported byProduction Linked Incentive(PLI) schemes and the creation of electronic clusters, fostering the growth of the electronic ecosystem.These developments are expected to establish India as a semiconductor hub.Conclusion: A New Chapter in Chip ManufacturingWhile India had capabilities in chip design, it would be opening a new chapter of chip fabrication now.Chips find applications in critical industries like defence, aerospace, drones, communication networks, and much more.With the government's proactive involvement in the semiconductor industry, India aims to reduce its dependence on imports.Moreover, the above strategic move not only positions India as a key player in the global semiconductor supply chain but also opens up opportunities in associated industries.In all, by fostering a robust semiconductor ecosystem, India is set to enhance its standing in the global tech landscape, driving job creation, technology diffusion, and economic growth.We will be back with another exciting story next week!Until then…Stay Tuned!Sources and References:PIBISMIndBizBusiness TodayDisclaimer: The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read the full disclaimer here. |
https://www.kotaksecurities.com/mutual-funds/registrar-and-transfer-agents-learn-the-meaning-and-role-of-rtas/ | Registrar and Transfer Agents: Learn The Meaning and Role of RTAs | Registrar and transfer agents (RTAs) are among the key players in India’s mutual fund ecosystem. RTAs help mutual fund companies and investors in equal measures and are pivotal in the smooth operations of the industry. So, who exactly are RTAs, and what’s their role? Let’s find out.Who are RTAs?RTAs act as mediators between mutual fund houses and investors. They are SEBI-registered organisations offering vital record-keeping and administrative services to mutual fund companies. They maintain all records of mutual fund investors and provide single-point access to information related to your mutual fund investments.Role of RTAsRTAs provide a variety of essential services to mutual fund investors and fund houses.1. Services offered to mutual fund investorsStatement generation: An RTA generates various types of statements related to your mutual fund investment. These include a consolidated account statement (CAS),capital gainsstatement, portfolio valuation statement, etc. You can study these statements and review your mutual fund portfolio. They are also required while filing income tax.
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Ad-hoc services: RTAs also provide various other ad-hoc services to investors. With the help of an RTA, you can:Place a cancellation or stop request for your mutual fund SIP,SWPor STPMake changes in the bank mandatePlace a redemption request for your mutual fund unitsUpdate nominee details2. Services offered to mutual fund housesRTAs work with AMCs, taking care of various responsibilities, investor services and distribution. They help AMCs maintain accurate records of all mutual fund investors and their transactions. Thanks to their PAN-India presence, they help mutual fund companies reduce operational costs. They have offices across locations in India, meaning fund houses aren’t required to open their offices in these places.Apart from mutual fund companies, RTAs also help mutual fund distributors by buying and selling funds on investors’ behalf.In conclusionRTAs are like the unsung heroes of the mutual fund industry, working diligently behind the scenes to ensure the smooth functioning of the industry. By balancing the needs of investors and fund houses, they help maintain trust and transparency among investors and fund houses.
FAQs on registrar and transfer agentsWhat is the role of a registrar and transfer agent?The role of a registrar and transfer agent is to maintain investors’ records and their transactions in mutual funds. They also work in tandem with fund houses, taking care of investor services and distribution responsibilities.How are RTAs compensated for their services?Different RTAs may charge differently for their services, the cost of which is passed on to investors. |
https://www.kotaksecurities.com/mutual-funds/what-are-mutual-funds-meaning-definition-and-benefits/ | What are mutual funds? Meaning, definition and benefits | By this time, you must be familiar with mutual funds. Skim through newspapers, watch television, or browse the internet; in all likelihood, you would have encountered several ads related to mutual funds. But what exactly are mutual funds, and why is there so much talk surrounding them? Let’s find out.Meaning and definition of mutual fundsA mutual fund is a financial instrument. Its underlying portfolio may consist of stocks, bonds, commodities, etc., and it pools money from various investors to build this portfolio. In other words, mutual funds consist of a large sum of money pooled by several investors and invested in the fund’s underlying portfolio. Professional fund managers oversee investments in mutual funds and take calls aligning with the fund’s objective.When investing in a mutual fund, you are allocated a fixed number of units as per the fund’s net asset value or NAV. A fund’s NAV may increase or decrease depending on market valuations.Benefits of mutual fund investmentsNow that you know what mutual funds are, let’s see the advantages they bring to the table.Professional managementIt’s one of the most significant advantages of mutual fund investments, particularly active funds. A fund manager manages your investment in a fund. The manager, with a team of research analysts, studies market movements, tracks the movement of securities, and invests money accordingly. Each fund has a particular objective, and the fund manager tries to achieve it while helping you boost your wealth.When it comes to investing your hard-earned money, professional management can make a significant difference in the final outcome. As an investor, it gives you much-needed peace of mind as you know experts are handling your money.Pocket-friendly investmentTo invest in a mutual fund, you don’t need a large sum of money. You can start with as little as ₹100 or ₹500 per month throughsystematic investment plans(SIPs). SIPs are a way of investing a fixed amount at chosen intervals into mutual funds.The flexibility to start small makes mutual funds suitable for everyone. Even a modest SIP of ₹1000 in a month in a fund offering annualised returns of 10% for 10 years can help you amass a corpus of over Rs. ₹2 lakhs, subject to the fund’s performance. That’s not all.Mutual funds also allow you to increase your investment with time. Through a top-up SIP, you can enhance your investment by a certain percentage or a fixed amount every year. With this, you can accumulate even a bigger corpus for your goals.
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Different types of mutual fundsMutual funds give you an array of investment choices. You can put money in different types of mutual funds as per your life goals and risk tolerance. For instance, you can invest in large-cap equity funds for long-term goals. On the other hand, if you have a low-risk tolerance, you can invest in debt funds. If you are new to mutual fund investing, you can start with index funds or hybrid funds.
The table below shows the varioustypes of mutual fundsbased on different aspects.AspectsAsset classTypes of mutual fundsEquity, Debt, Hybrid and CommoditiesAspectsInvestment goalsTypes of mutual fundsWealth Creation, Income Generation, Tax Savings, Pension, Children’s EducationAspectsStructureTypes of mutual fundsOpen-ended, Close-endedAspectsTypes of mutual fundsAsset classEquity, Debt, Hybrid and CommoditiesInvestment goalsWealth Creation, Income Generation, Tax Savings, Pension, Children’s EducationStructureOpen-ended, Close-ended
DiversificationThere’s a common saying in personal finance: don’t put all eggs in one basket. Doing so can backfire and bring down your portfolio in case of non-performance of the asset class. Mutual funds help mitigate the risk by spreading your investments across asset classes. As they invest in a wide range of securities, they help you diversify your investments.In many equity funds, the money is distributed across various companies from different industry verticals. It diversifies the risk within the portfolio. With mutual funds, you can invest across asset classes - equity and debt - to diversify out your investment risk.LiquidityImagine a situation when you need money on short notice. With mutual funds, you can access your money on the go. Upon placing a redemption request, the money is credited into your bank account within a working day or two. With digitalisation, you don’t need to visit the asset management company’s (AMC) office for redemption. You can request a redemption online indicating the money you need or the number of units. The money will be credited to your account accordingly.Low costMutual funds are low-cost investment options. While you need to pay a fee in the form of an expense ratio to the fund house, it’s pretty competitive. If you invest in a direct plan, the expenses are further reduced. In a direct plan, the fund house doesn’t pay any commission to the intermediary and passes on the benefits to you.In conclusionWith mutual funds, you can build a corpus for essential life goals like children’s higher education, retirement, etc. Before investing, study the fund well and check if its objective aligns with your goals. Evaluate its past performance across market cycles and seek professional advice if needed.
FAQs on mutual fundsWhat is the main objective of a mutual fund?A mutual fund’s main objective is to invest in securities whose value appreciates with time. This leads to wealth building for investors.How many mutual funds should I invest in?The number of funds you invest in depends on your individual financial goals, risk appetite, budget and tenure. Consult a financial advisor for a detailed recommendation.How do I choose a mutual fund?Choose a fund based on your investment goals and risk tolerance. Read the scheme objective and check if it is in line with your own financial goal. Look at the fund’s long-term track record and see how consistent the returns have been. |
https://www.kotaksecurities.com/articles/is-the-india-efta-trade-deal-a-win-win-situation/ | Is the India-EFTA Trade Deal a Win-Win Situation? | Kotak Insights | Date 15/03/202416 years of negotiation and 21 formal rounds.That’s what went into gettingIndiaand theEFTAcountries shake hands on a free-trade agreement (FTA).This development is getting the limelight for all the right reasons. It’s because the trade agreement may be instrumental in India receiving a whopping$100 billionas foreign direct investment (FDI) in 15 years with1 million jobs!Let us understand this trade agreement in detail and know how it could influence various Indian sectors.The EFTAEFTA stands for theEuropean Free Trade Association.It is the intergovernmental organisation ofIceland, Liechtenstein, Norway and Switzerlandand it promotes free trade and economic integration between its members.How big is EFTA?The four EFTA States are open, developed economies with trade figures substantially higher than might be expected from a total of less than 14 million people.In 2021, EFTA was the10th largest traderin the world in merchandise trade and the 8th largest in trade in services. And EFTA is among the most important trading partner in goods and services for the European Union (EU).
So, that says that any trade agreements with the EFTA could be a potential win-win for Indian trade as well unlocking economic benefits and improving bilateral trade relations.The FTAMoving on to the FTA – which stands forFree Trade Agreement.
A FTA is a pact between two or more nations aimed at reducing barriers to imports and exports among them. So, under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange. And countries get into these FTAs to spur up the trade between them.For instance, India has signed a couple of free trade agreements (FTAs), and six preferential pacts with its trading partners to promote exports and ensure greater market access for domestic goods and services.But are all FTAs good for the countries in it?The answer is a no because there may be instances where these trade agreements don’t do as much good for an economy as desired.The upside is that a FTA could offer Indian manufacturers free access to certain foreign markets without having to pay needless custom duty. And foreign manufacturers can get the same privilege in return.The downside is that Indian manufacturers could potentially have a lot to lose if cheap goods from foreign countries begin to flood our markets.So far, so good.Let’s now bring up the topic of the hour – the FTA agreement between India and EFTA.India-EFTA Trade Agreement a RealityOnMarch 10, 2024, India and the EFTA signed a big deal called the Trade and Economic Partnership Agreement (TEPA). The Indian government, led by the Prime Minister, approved of this.Here are some of the key highlights of this TEPA:EFTA will help bring in $100 billion investment to India and create 1 million jobs in the next 15 years. (The investments do not cover foreign portfolio investments)EFTA is offering 92.2% of its tariff lines which covers 99.6% of India’s exports. The EFTA’s market access offer covers 100% of non-agri products and tariff concession on Processed Agricultural Products (PAP).In return, India is offering 82.7% of its tariff lines which covers 95.3% of EFTA exports, of which more than 80% import is Gold. The effective duty on Gold remains untouched. Sensitivity related to PLI in sectors such as pharma, medical devices & processed food etc. have been taken while extending offers and sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list.India has offered 105 sub-sectors to the EFTA and secured commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.A Win-Win Deal?The agreement between India and the EFTA could bring benefits to both parties.This is because EFTA is a key group in Europe, offering opportunities to grow trade in goods and services. It's one of the top three economic block in Europe, along with the EU and the UK.The trade agreement provides an opportunity for India to integrate into EU markets. Note that over40%of Switzerland’s global services exports are to the EU. So, with the trade agreement, Indian companies can look to Switzerland as a base for extendingmarket reach to EU.The agreement will also give impetus to "Make in India" and "Atmanirbhar Bharat" campaigns.It encouragesmanufacturingin sectors such as Infrastructure and Connectivity, Manufacturing, Machinery, Pharmaceuticals, Chemicals, Food Processing, Transport and Logistics, Banking and Financial Services and Insurance.The India-EFTA deal is also expected to spurtrade investments. India could see investment flow into the pharma, chemical sectors, food processing and engineering sectors. In fact, government officials have said that EFTA is also looking atjoint ventures(JVs) in the above-mentioned sectors that will help India diversify imports away from China.Lastly, TEPA would stimulate India’sservices exportsin sectors of key strength and interest such as IT services, business services, personal, cultural, sporting and recreational services, other education services, etc.However, one must also note that Switzerland, which is India’s biggest trade partner among EFTA countries, has decided to eliminate import duties on all industrial goods forall countriesstarting from January 1, 2024.So, the abolition of tariffs on all industrial products, including chemicals, consumer goods, vehicles and clothing is a concern for India as industrial goods accounts for98%of India’s $1.3 billion merchandise exports to Switzerland (in FY2023). And due to this development, India’s goods could face stiffer competition despite any tariff elimination that would be part of the above deal.In Conclusion…As the Minister of Commerce and Industry, Food and Consumer Affairs and Textiles - Piyush Goyal said that TEPA is a modern and ambitious Trade Agreement.This is the first time that India is signing a free trade agreement with four developed nations - an important economic bloc in Europe.Moreover, for the first time in history of FTAs, a binding commitment of $100 billion investment and 1 million direct jobs in the next 15 years has been given.In all, the agreement can give a boost to Make in India, provide opportunities to young & talented workforce and will provide a window to Indian exporters to access large European and global markets.However, ensuring the deal's benefits trickle down to most sectors of the economy, mitigating the risks of increased competition, and navigating the global trade dynamics will be essential.As India continues to assert its position on the world stage, this agreement could be a testament to its influence and the collaborative spirit of international trade partnerships.We will be back with another exciting story next week!Until then…Stay Tuned!Sources and References:PIBEFTAIndian ExpressBusiness StandardDisclaimer: The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here. |
https://www.kotaksecurities.com/articles/the-indian-housing-dilemma-to-buy-or-rent/ | The Indian Housing Dilemma: To Buy or Rent? | Kotak Insights | Date 07/03/2024Should we buy or rent our home?In India, owning a house is just a dream.Today we'll dive into this age-old debate of Indian real estate. More than being right or wrong, it is a matter of choice and affordability.Owninga home provides security, but also comes with high costs and debt.Rentingmay be cheaper if the housing is expensive and you have limited funds.In this blog, we explore both the options.Owning a Dream HomePicture Raj and Priya stepping into their own little fortress. It’s all about stability, investing in the future, and being the kings & queens of your castle without worrying about landlords or rent hikes.Interestingly, do you know where does India invest the most?As per a Jefferies report, majority of the Indian household assets ownership include investment in properties with share ofover 50%. |
Source: Jefferies , TradingQ&AComing back to Raj & Priya, they go ahead, take huge home loans and make sure they are able to pay theequated monthly installments (EMIs).Suppose they choose fixed interest rate. Note that, interest rates play a crucial role in this decision.With afixed rate, your monthly payments stay the same, giving you peace of mind and stability. But with afloating rate, they can fluctuate with the market, which can be risky but might save you some money in the long run.Imagine Raj eyeing a sweet pad in bustling Mumbai. The buy vs. rent debate here is a real head-scratcher – property prices, rental rates, maintenance costs, and potential appreciation, oh my!Let’s do a quick number crunching for him. | Buying Scenario:Property PriceDown PaymentRs 1 croreRs 20 lakh (20%)Property PriceLoan AmountRs 1 croreRs 80 lakhProperty PriceLoan TermRs 1 crore20 yearsProperty PriceFixed Interest RateRs 1 crore7%Property PriceEMI (Fixed)Rs 1 croreRs 59,000 (approx.)Property PriceFuture Value Assumption (10 years)Rs 1 croreRs 2 croreProperty PriceRs 1 croreDown PaymentRs 20 lakh (20%)Loan AmountRs 80 lakhLoan Term20 yearsFixed Interest Rate7%EMI (Fixed)Rs 59,000 (approx.)Future Value Assumption (10 years)Rs 2 crore | |
https://www.kotaksecurities.com/equity/stock-sip/ | Stock SIP - A Systematic Way to Invest in Stocks | Key highlightsStock SIP allows systematic investment in stocks.Stock SIP gives you the benefit of rupee cost averaging and lets you take advantage of the power of compounding.SipIt by Kotak Neo allows you to systematically invest in equity shares and exchange-traded funds.You must have heard aboutsystematic investment plansor SIPs, right? SIPs are amongst the most preferred ways to invest in mutual funds and build a corpus for various life goals. However, can you start SIPs in mutual funds and stocks? Yes! Stock SIP is the new flavour of the stock market through which you can systematically invest in your chosen stocks. Read on to learn what stock SIP is and its benefits.What is Stock SIP?Like its mutual fund counterpart, a stock SIP entails investing a fixed amount at regular intervals, typically monthly. The difference? Instead of mutual funds, you put your money into stocks. Over time, you accumulate many stocks without breaking a sweat.Benefits of Stock SIPNow that you know the meaning of stock SIP, let’s examine its benefits. A stock SIP brings these benefits to the table:-Disciplined Investing Without Lumpsum InvestmentIt’s a common belief that investing in stock markets requires enormous capital upfront. However, it’s not true. Stock SIPs allow you to invest a small sum in your chosen stock at predefined intervals. You need not worry about having a sizeable investible surplus to get started. Regular investments through stock SIPs help in building a consistent and disciplined investment habit, which is essential for wealth creation in the long run.The Advantage of Rupee Cost AveragingLike in mutual funds, a stock SIP allows you to benefit from rupee cost averaging. Regularly investing a fixed amount leads you to buy more shares when prices are down and less when prices are high, potentially lowering the average acquisition cost.Bringing Compounding into PlayStock SIPs allow you to benefit from the power of compounding, a phenomenon that can significantly enhance the growth of wealth over time. Many stocks pay dividends, which are a distribution of profits to shareholders.With a stock SIP, these dividends can be reinvested to purchase additional shares. This reinvestment amplifies the compounding effect as you earn returns not just on the initial investment but also on the accumulated returns.Enter Market With Lower RiskThis is another significant benefit of stock SIP. As stock SIP entails investing a small amount and not a lump sum investment, it allows a strategic entry into stock markets at a lower risk, regardless of the market condition. Additionally, it ensures your participation in markets over different market cycles. This could enhance overall risk-adjusted returns in the long run.Maximise Benefits from Stock SIPs With SipItWith these host of benefits, it will not be an understatement to say that a‘Stock SIP Sahi Nahi…Kaafi Sahi Hai’. SipIt by Kotak Neo allows you to start an SIP in Equity Shares and Exchange-Traded Funds (ETFs).That’s not all. SipIt allows you to explore curated lists like:Most SIP’d– A list of Stocks/ETFs in which most numbers on SIPs have been startedBuzzing Stocks– A list of Stocks/ETFs in which most numbers on SIPs have been created in the last 7 daysTop Gainers- A list of Stocks/ETFs with the highest CAGR in the last 5 yearsPowered by Kotak research section- A list of Buy Calls given by Kotak Research teamSectors that drive the marke’- A list of top-performing stocks bifurcated based on their sectors.So, what are you waiting for? Make the most of Stock SIPs with SipIt today. |
https://www.kotaksecurities.com/mutual-funds/mutual-funds-in-a-low-interest-rate-environment/ | Mutual Funds in a Low-Interest Rate Environment | Over the years, the popularity ofmutual fundshas gone up by several notches, with retail investors investing in them to build a corpus for various life goals. While several categories of funds have given impressive returns, investors often question their utility in a low-interest rate environment.With the Reserve Bank of India (RBI) pausing key rate hikes in subsequent monetary policy meets, there’s a growing consensus about rate cuts in the coming days. So, how will funds perform in a low-rate environment, and should you invest in them in such a scenario? Let’s find out.What is a Low-Interest Rate Environment?A low-interest rate environment is when the prevailing interest rates are relatively lower than historical averages. In such an environment, borrowings become cheaper. The primary goal of implementing a low interest rate is to stimulate economic activities and encourage borrowing and spending.Bond Funds Expected to Do WellDebt funds, especially bond funds, are expected to perform well when interest rates are low. Bond funds invest a significant portion of their assets in bonds issued by government and corporations. Bond prices and interest rates are indirectly proportional. It means when interest rates are low, bond prices are high, and vice-versa.In a low-interest rate regime, bond prices increase. This, in turn, increases the fund’snet asset valueor NAV, which potentially translates into higher returns for investors. Also, in a low-rate environment, the yield or the interest income from fixed-income securities in mutual funds goes up. This results in potentially higher gains from mutual funds.Impact on Equity FundsEquity fundsalso benefit from a low-interest rate regime. When interest rates are low, borrowing becomes less expensive for companies. This, in turn, can boost a company’s performance and profitability. This enhances returns from equity mutual funds and increases your portfolio’s value.On the other hand, when interest rates rise, borrowing becomes expensive for companies, and it hurts their profitability. This brings down the returns from equity funds.Investing Mantra in Mutual Funds When Interest Rates Are LowInvesting in mutual funds when interest rates are low doesn’t need to be any different. The basics remain the same. Ensure:Optimum DiversificationMake sure to diversify well across funds - debt and equity. This ensures you capture the upsides well and benefit from both these funds. The right dose of equity and debt offers stability to your portfolio in the long run.Regularly Review Your PortfolioMutual fund investment is not a one-time exercise. You need to review your portfolio regularly and ensure your investments align with your goals. Rejig your portfolio if necessary to take advantage of the upside during bull runs and protect the gains from eroding when markets are down. Don’t act under impulse and seek help from a professional when in doubt.In ConclusionAs evident, both debt and equity funds tend to benefit from a low-interest rate regime. With inflation peaking and major central banks, including the RBI, hinting at lowering rates in the coming days, we could be heading towards a low-interest rate regime. Stay invested and reap the benefits!
FAQs on Mutual Funds in a Low-Interest Rate EnvironmentHow are Mutual Funds Affected by Interest Rates?When interest rates are high, bond funds suffer due to a price drop. Equity funds, on the other hand, are also affected by high interest rates as they affect a company’s profitability and subsequently hurt returns.Should I Increase My Mutual Fund Investments in a Low-interest Regime?While most funds tend to do well when interest rates are low, whether you want to increase your investments or not depends on your goals, risk appetite, and the availability of investible surplus. |
https://www.kotaksecurities.com/mutual-funds/relationship-between-mutual-funds-and-interest-rates/ | Relationship Between Interest Rates and Mutual Funds | Interest rates impact several aspects of finances, and mutual fund investment is one among them. One of the key economic indicators, interest rate, has a profound impact on how mutual funds perform, and as an investor, it’s essential for you to understand it for informed decision-making. Let’s start.What are Interest Rates and Why Do They Change?Before delving deep into the impact of interest rates on mutual funds, let’s first understand what interest rates are. Simply put, interest rate refers to the rate of borrowing money set up by the RBI. It is the base that decides the cost of borrowing for all financial transactions, including bank-to-bank loans and bank-to-customers.Several factors drive the dynamics of interest rates. The RBI closely monitors key economic indicators such asinflationand economic growth to compute appropriate interest rate levels. When inflation is high, the RBI increases interest rates to bring it down and prevent a further price uptick. On the other hand, when there's a slowdown in the economy, the RBI raises interest rates to stimulate borrowing and spending.Impact of Interest Rates on Mutual FundsBoth debt and equity funds feel the impact of interest rates. Here’s how:Interest Rate Impact on Debt FundsDebt fundsthat invest in fixed-income securities, such as bonds, treasury bills, commercial papers, etc., are negatively impacted when interest rates are high. The impact is more profound on debt mutual funds with bonds as their underlying portfolio. This is because bond prices and interest rates move in opposite directions. When interest rates are up, bond prices are down, and vice-versa.When interest rates are high, new bonds offer better returns than old bonds, and your investments in them are likely to suffer. The greater the maturity period, the higher the chances of them being susceptible to interest rate risk. That said, funds with shorter durations that invest in floating-rate bonds are less likely to be affected by changes in interest rates as against funds that invest in fixed-rate bonds.Interest Rate Effect on Equity Mutual FundsInterest rates also influenceequity mutual funds. When rates are low, borrowings become less expensive for companies. This, in turn, can boost their profitability and returns. If it happens, it enhances returns from equity mutual funds. On the contrary, when interest rates go up, borrowing becomes expensive for companies, and their profitability takes a hit. In such a scenario, equity funds may see a dip in returns.Also, in a high-interest rate regime, generally, a negative investor sentiment adds tomarket volatility. In such a scenario, most investors tend to pull out money from equities and shift to safer investment options. This shift in preference could lead to selling pressure in equities, thereby affecting their performance.Ways to Navigate Interest Rate Risk in Mutual FundsWhile you can do little to control interest rates, what you can do is tailor your investment strategy in a manner that allows you to cushion your investments against interest rate risks. Some strategies you can adopt are as follows:Understand the Interest Rate EnvironmentStay informed about the prevailing interest rate environment and keep a tab on RBI’s monetary policy meets. Decisions regarding key policy rates are taken during these meetings. Following them closely can help you know RBI’s take on the current interest rate environment and the economy in general.Invest in Short Duration Debt FundsDebt funds with a higher maturity duration are more likely to be impacted by adverse interest rate movement. Hence, it’s crucial for you to invest in short-duration debt funds that are likely to be less sensitive to interest rate movements.Monitor and RebalanceReview your portfolio regularly and rebalance it to maintain your desired asset allocation. Changes in interest rates can impact the balance of your portfolio. Rebalancing helps make sure that your investments align with your risk tolerance and investment goals.In ConclusionAs evident, interest rates profoundly influence the performance of various asset classes, particularly bonds within mutual fund portfolios. Flexibility and a readiness to adapt to evolving market conditions are key elements in mitigating interest rate risks. By staying informed, adopting a diversified approach, and, when necessary, seeking professional advice, you can better position yourself to weather the impact of interest rate fluctuations and make informed decisions in sync with your financial goals.
FAQs on Relationship Between Interest Rates and Mutual FundsHow do Interest Rates Influence Mutual Funds?Mutual funds, both debt and equity, suffer when interest rates are high. On the other hand, when rates are low, they are likely to perform well.Do Mutual Funds Go Down When Interest Rates Go Up?Generally yes. When rates go up, underlying securities' value go down, which subsequently pulls down returns from funds. |
https://www.kotaksecurities.com/intraday-trading/timing-for-intraday-trading/ | What is the Timing of Intraday Trading and Its Importance? | Key Highlights:Intraday trading timings for the equity segment are from 9:15 am to 3:30 pm and 9 am to 11:30 pm for commodities.Importance of timings:Trade execution: Helps you execute your trade efficiently.Manage volatility: Aids in managing market volatility.Monitor liquidity: Allows you to execute trade at favourable prices.An essential aspect ofintraday tradingis knowing its timings. In this form of trading, stocks are bought and sold on the same day. Knowing intraday trading timing can help you make the most of the available time, which plays a vital role. If you are looking forward to intraday trading, this blog will help you understand the timing of intraday in India and its importance. Let's begin.Intraday Trading Timing in IndiaAs intraday trading involves settling trades on the same day, its timing is the same as that of the stock market, i.e., from 9:15 am to 3:30 pm (Monday to Friday), barring Saturdays, Sundays and other designated market holidays. That said, though theoretically, intraday ends at 3:30 pm, you don't get to trade till then. Based on their risk management policy, most brokers square off your position five to ten minutes before the market closes.Note that the above-mentioned intraday trading timing is for the equity segment.Commodity trading timesare much longer, from 9 am to 11:30 pm (Monday to Friday).Timing of Intraday in India: ImportanceKnowledge of intraday trading timing is essential because of the following reasons:Trade executionKnowledge of the timings helps you efficiently execute your trade. As you need to buy and sell securities on the same day, knowing precise timings enables you to do that within a reasonable timeframe and gain from short-term price movements.Volatility managementEffective management of market volatility is the key to successful intraday trading. You can effectively manage it by knowing the timings as to when markets are likely to be more volatile, which can be during the opening hours or at the closing hours following significant announcements. This allows you to tailor your strategies to ride through choppy waters easily.Liquidity considerationsAs an intraday trader, you need to monitor liquidity levels closely. Liquidity is how quickly you can buy and sell a security without compromising its price. This is important as it allows you to execute trades at a favourable price. If you know the timings, you can find out when you are likely to witness higher liquidity during the day.This allows you to enter and exit your position efficiently, thus boosting overall profitability. On the other hand, when liquidity is low, which can be towards the end of the trading session, you need to adopt a more cautious approach to your trade. If you try to trade in large volumes during such times, there are chances of losses.Maximising opportunitiesKnowledge of intraday trading timings can help you maximise the opportunity for maximising profits. You can focus on precise times when markets are more favourable and tailor your trading strategies accordingly.Optimal Intraday Trading TimingsWhile there’s no fixed time, experts generally recommend the first couple of hours to be the most beneficial. Every trader is different, and you should trade as per your goals and risk tolerance. As a good practice, wait for some time after markets open to gauge their movement and monitor stock prices before trading.Wrapping it UpKnowing the intraday trading timing, you can make the most of the available time. Be disciplined with your trade and do the necessary homework for maximising profits from this form of trading.
Frequently Asked QuestionsWhat is the time frame for Intraday Trading?Timing for intraday in India for the equity segment is from 9:15 am to 3:30 pm and from 9 am to 11:30 pm for commodities.Which Time Interval is Good for Intraday Trading?Though there's no rule of thumb; generally, a couple of hours after the markets open is the optimum time for intraday trading.How Many Times Can I Do Intraday Trading in One Stock?There's no limit on the number of times you can purchase or sell a stock in intraday trading.How Long Do Intraday Traders Hold?Intraday traders can hold positions for hours, minutes or even seconds.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. |
https://www.kotaksecurities.com/share-market/what-is-gap-up-and-gap-down-in-share-market/ | What is Gap Up and Gap Down in Stock Market Trading? | Key Highlights:Gap up is when a stock’s opening price is higher than the previous day’s closing price; gap down is when it’s lower than the last day’s closing price.Gap up signals:Bullish sentiment - Indicates strong buying interest.Growth potential - Indicates potential growth opportunity.Gap down signals:Bearish sentiment - Suggests loss of confidence among investors.Market uncertainty - Indicates broader market uncertainty.If you are intostock market investment, you must have often heard two terms - gap and gap down. These two terms describe a situation when a stock's opening price is higher or lower than the previous day's closing price. Gap refers to the difference in price levels between a day's close and the next day's opening.What is Gap Up and Gap Down?Let's understand the meanings of gap up and gap down with an example. Suppose a stock's closing price on Monday is Rs 200. When markets open on Tuesday, its opening price is Rs 220. Gap up refers to this situation. On the other hand, if the stock's opening price on Tuesday is Rs 190, it refers to a gap down.Gap up and gap down are essential as they indicate the market's sentiment towards a particular stock. Gap up and gap downs can be complete or partial (see table below):
Full Gap UpIt happens when a stock’s opening price exceeds the previous day's.Full Gap DownIt occurs when a stock’s opening price is lower than the previous day.Partial Gap UpIt happens when the opening price is higher than the previous day's close price but not higher than the last day's high price.Partial Gap DownIt happens when the opening price is lower than the previous day's close price but not lower than the previous day's low price.Full Gap UpFull Gap DownPartial Gap UpPartial Gap DownIt happens when a stock’s opening price exceeds the previous day's.It occurs when a stock’s opening price is lower than the previous day.It happens when the opening price is higher than the previous day's close price but not higher than the last day's high price.It happens when the opening price is lower than the previous day's close price but not lower than the previous day's low price.
What Does Gap Up Signal?A gap up signals:Bullish sentimentA stock's gap indicates bullish sentiment. It indicates increased buying interest from buyers. When you see a gap up in a stock, it means investors are confident and optimistic about a company's prospects. It attracts more buyers and can further appreciate a stock's price.Potential for growthA gap up can signal potential growth opportunities. You can capitalise on a stock's growth momentum and profit from the price increase. That said, it's essential for you to analyse the sustainability of the uptrend thoroughly.What Does Gap Down Signal?A gap down signals:Bearish sentimentsA stock's gap down can signal bearish sentiments among investors. It may suggest a loss of confidence in the company among investors. It can be because of several reasons, such as poor earnings, legal troubles, or any internal issues with the company.Market uncertaintyA gap down can also indicate broader market uncertainty. Several factors, including domestic and geopolitical events and economic indicators, can impact stocks, resulting in a gap down.In ConclusionGap up and gap down are essential components of technical analysis and are an essential input for trading. However, you need to use them with other technical indicators such as volumes, moving average convergence divergence (MACD), and moving averages to identify trends and make an investment decision.Read More:Allied Blenders and Distillers IpoVraj Iron and Steel Ipo
Frequently Asked QuestionsHow Would I Know If the Market Will Open a Gap Up or Gap Down?If the underlying sentiment is positive, chances are for a gap up. If not, chances are of a gap down.Do Down Gaps Get Filled?It may or may not. Once a stock's price records a fall, filling the gap becomes difficult.What Happens After a Gap Up?There could be increased profit-taking, and the stock's demand can dry up.What Causes a Stock's Gap Up or Down?A gap up can occur due to positive market sentiment and robust company profits. On the other hand, a gap down can happen due to economic indicators, poor company performance, geopolitical events, etc.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. |
https://www.kotaksecurities.com/mutual-funds/understanding-mutual-fund-regulation-and-compliance/ | Understanding Mutual Fund Regulation and Compliance | With mutual funds becoming one of the most sought-after financial instruments among investors to grow their wealth, the SEBI has drafted certain regulations and compliance to protect investors’ interests and ensure transparency and smooth functioning of the industry. As an investor, it’s crucial for you to know them so that you can make an informed choice.SEBI Guidelines for Mutual Fund InvestmentsSEBI, the capital market regulator, oversees mutual fund operations in India. Time to time, it comes up with regulations to keep the interest of investors intact. While there are many regulations and compliance guidelines, here are the ones that matter to you the most as an investor:Be KYC-CompliantIf you are a new investor willing to invest in mutual funds, you need to beKYC-compliant. It’s a customer identification process and is mandatory under the Prevention of Money Laundering Act 2002. From 1st January 2012, a centralized KYC registration process through SEBI-registered KYC Registration Agencies (KRAs) is in force. For KYC, you need to provide basic documents (address and identity proofs) along with your PAN card.You can do KYC online or offline. For offline KYC, visit any of the registered KRAs with your documents and fill out the KYC form. You can download the KYC form from the website of fund houses or registrar and transfer agents. You can get your KYC done online on websites of fund houses. In the online process, your in-person verification is done via video call, where you need to show your original documents.KYC is a one-time process, and once done, you can invest in any number of funds across fund houses.Add a NomineeYou must abide by this essential compliance while investing in mutual funds. Your mutual fund investments need to have a nominee who will get the proceeds in case something happens to you. If you don’t want to add a nominee, you need to opt out of it. However, if you don’t do so and fail to add a nominee, your mutual fund folio may be freezed.If freezed, you cannot withdraw units from your mutual funds. Inmutual funds, you can add up to three nominees, indicating the percentage of shares you want them to receive. If you haven’t added a nominee, you can do so online or by visiting the nearest branch of the fund house.Disclosure of Portfolio and PerformanceSEBI has mandated that all fund houses must disclose their portfolio and performance regularly. Whileportfoliodisclosure is required once every six months, the fund’s performance must be disclosed monthly. The disclosure must include information on investment strategy, sector-wise allocation, top holdings, etc.Its purpose is to ensure transparency and boost investors’ confidence. You can get vital information by reviewing these disclosures and gauging whether the fund’s objectives align with your goals. You can also find out about any major changes in the fund’s asset allocation strategy and credit quality of the securities.Ad Code RegulationsAs per SEBI’s regulations on mutual fund ads, fund houses must resort to ethical practices during advertisements and not resort to any false or misleading information. Recently, the Association of Mutual Funds in India (AMFI) has directed fund houses to use only the 10-year CAGR to showcase investment returns in their ads. It has also asked fund houses not to show future returns, which could mislead investors.While numerical illustrations can be used for SIP, SWP, and STP, fund houses can only show the CAGR returns prescribed by AMFI. The table given below showcases the maximum past returns that fund houses can use for various schemes are as follows:
Scheme TypeEquityMaximum Permissible Returns12.64% for Sensex; 12.93% for NiftyScheme TypeFixed-income FundsMaximum Permissible Returns7.20%Scheme TypeEquity Hybrid FundsMaximum Permissible Returns11.5%Scheme TypeBalanced Hybrid FundsMaximum Permissible Returns10.07%Scheme TypeDebt-inclined Hybrid FundsMaximum Permissible Returns8.56%Scheme TypeMulti-asset FundsMaximum Permissible Returns9.92%Scheme TypeMaximum Permissible ReturnsEquity12.64% for Sensex; 12.93% for NiftyFixed-income Funds7.20%Equity Hybrid Funds11.5%Balanced Hybrid Funds10.07%Debt-inclined Hybrid Funds8.56%Multi-asset Funds9.92%
In ConclusionThe above mentioned regulations are designed to create a secure and transparent environment for investors. By adhering to these regulations, investors and the industry can build trust and contribute to their financial well-being. As an investor, understanding these regulations empowers you to make informed decisions and navigate the mutual fund landscape with confidence.
FAQs on Understanding Mutual Fund Regulation and ComplianceWho is Responsible for Legal Compliance in Mutual Funds?The Securities and Exchange Board of India (SEBI) ensures legal compliance in mutual funds.What is Mutual Fund Compliance?Mutual fund compliance refers to adherence to regulatory guidelines and laws governing the operation and management of mutual funds, ensuring transparency, fairness, and investor protection. It involves monitoring and ensuring that fund activities comply with legal requirements set by SEBI. |
https://www.kotaksecurities.com/mutual-funds/asset-management-companies-and-their-impact-on-mutual-funds/ | Asset Management Companies and Their Impact on Mutual Funds | Asset management companies, or AMCs as they are popularly known as, play a crucial role in the realm ofmutual funds. They are architects behind the success and performance of mutual funds and influence how investors' money is managed and invested. The success of a mutual fund hinges largely on the investment philosophy adopted by the AMC. That said, there are several ways through which AMCs impact mutual funds. Let’s see how.What are Asset Management Companies?AMCs are firms that invest funds pooled from investors in securities to earn optimal returns in exchange for a fee. They maintain a diverse portfolio by investing in both high and low-risk securities such asstocks, debt, bonds, and pension funds, among others. AMCs have professionals known as fund managers who manage investments on behalf of their clients. In simple words, an AMC is the fund house that manages and runs various mutual fund schemes.Impact on Mutual FundsHere’s how AMCs impact mutual funds:Research and AnalysisTo boost investors' wealth, AMCs conduct extensive research on market trends. They have a team of researchers who study macroeconomic and microeconomic factors and market trends. Based on this, appropriate securities are chosen to meet investors' return expectations.The success of a fund depends greatly on how well the research is conducted and its subsequent analysis. If done well, it boosts returns. If not, the fund suffers, and so does your wealth.Performance and ReturnsThe strategic decisions undertaken by AMCs directly influence the performance of mutual funds. Each AMC has its investment style based on which it employs fund managers. Based on the AMCs investment philosophy and the funds' objective, the fund managers curate the investment portfolio by selecting various assets such as stocks, bonds and other securities.The strategic decisions AMCs make regarding asset allocation, timing of investments, and risk management all contribute to the overall performance of mutual funds.Asset AllocationOptimum asset allocation is one of the fundamental investing principles. Based on the research, the AMC allocates its assets through its fund manager. For example, in debt-oriented mutual funds, the AMC may distribute a certain portion of its assets in bonds, commercial papers, and treasury bills.On the other hand, for equity funds, it may allocate a high amount towards equity and the rest in debt. Even in that, it may choose to invest in different companies across industry verticals to achieve optimum diversification. AMCs ensure that funds mitigate risks effectively by adopting a prudent asset allocation strategy.Innovation and Product DevelopmentAMCs play a vital role in introducing new mutual funds and adapting existing ones to meet changing market conditions and meet investor preferences. Their ability to innovate and offer attractive investment opportunities can impact a fund's competitiveness in the market.During innovation and the change of its existing product portfolio, AMCs ensures compliance with SEBI’s regulations. If they fail to do so, not only do they need to pay a penalty, but their reputation also takes a hit. This can negatively impact a fund’s return. An AMC’s commitment to regulatory compliance ensures that funds operate within the legal framework, protecting investors’ interests.Summing it UpAs evident, the impact of an asset management company on a mutual fund is comprehensive. It encompasses strategic decision-making, risk management, performance outcomes, and adherence to regulatory standards. You should carefully consider the reputation, expertise, and track record of AMC when choosing a mutual fund for your investment portfolio.
FAQs on Asset Management Companies and Their Impact on Mutual FundsWhat is the Purpose of an Asset Management Company?The purpose is to pool funds from investors and invest in various securities, including stocks, bonds, etc.How Does the AUM of an AMC Affect Mutual Funds?You can consider AUM as the performance gradient of a mutual fund. A higher AUM of an AMC indicates better investment inflow for a fund house. It also says about the quality and management experience. |
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