Grainspan Boosts Ethanol Output with ₹520 Crore Investment in Gujarat Plants

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 18, 2023

Suzlon Energy Ltd Result update Q1FY24

Suzlon Energy Ltd Result update: Q1FY24

Company Overview:

Suzlon Energy, established in 1995, is a prominent player in the wind energy industry, specializing in the manufacturing of wind turbine generators and the operation and maintenance of wind turbine generators. Over the years, Suzlon has made significant contributions to the renewable energy sector, boasting an impressive track record of installing over 20 gigawatts (GW) of wind energy across 17 countries. With 111+ wind farms and a combined capacity of 13,880 megawatts (MW), the company has firmly established itself as a global leader. Suzlon’s extensive clientele includes power utilities and electricity producers in both the private and public sectors.

Products and Services:

Suzlon Energy offers a diverse range of wind turbine generators to cater to various wind regimes. Their product portfolio includes the S144 Wind Turbine Generator, designed for low wind regimes in India, the S133 Wind Turbine Generator, optimized for improved energy yield across all wind regimes, and the S120 Wind Turbine Generator, suitable for low wind sites. Additionally, the company has phased out older WTG models but continues to provide support, operation, and maintenance services for all installed wind turbines. Suzlon also extends its expertise in operations and maintenance services to multi-make WTGs, offering turnkey project services and solar energy solutions. Their services encompass wind project planning, wind resource assessment, infrastructure development, power evacuation, and technical planning and execution of wind power projects.

Client Portfolio:

Suzlon Energy has established partnerships with a wide array of prestigious clients, including ACC, Adani Renewables, Aditya Birla Group, Bajaj, GAIL, Hero, ITC, ONGC, Reliance, SBI, Tata, TVS, Vedanta, among others.

Valuation and Key Ratios:

Currently, Suzlon’s stock is trading at a multiple of 110x with a share price of 23.8, while the industry P/E stands at 46.2. The stock is trading at 27 times its book value. The company reports a Return on Capital Employed (ROCE) of 20.6% and a Return on Equity (ROE) of 15.1%.

Q1FY24 Results Updates: consolidated

In the most recent quarter, Suzlon Energy faced some challenges. Consolidated revenue fell by 2.15% YoY and 20.2% QoQ, totaling 1,350 Crores. However, the company managed to increase its gross profit by 9.72% YoY (despite a 7.33% QoQ decline), reaching 540 Crores, mainly due to an 8.72% YoY reduction in the cost of goods sold (COGS). This cost optimization resulted in a significant improvement of gross margins by approximately 400 basis points YoY and 600 basis points QoQ, settling at 40%. EBITDA decreased by 7.21% YoY and 14.56% QoQ to 199 Crores, with EBITDA margins remaining relatively stable at around 15%. EBIT also declined by 7.33% YoY and 5.12% QoQ to 144 Crores, with EBIT margins holding at 11%. Profit After Tax (PAT) took a significant hit, dropping 95% YoY and 68.47% QoQ to 101 Crores, primarily attributed to a substantial reduction in exceptional items by 99% YoY. PAT margins stood at 7%, down from 19% in the previous quarter, and earnings per share (EPS) for the quarter amounted to 0.07 Rs, a 95% YoY decline.

Conclusion:

Suzlon Energy, a pioneer in the wind energy sector, has demonstrated its commitment to sustainable energy solutions through its extensive wind farm installations and a diverse product and service portfolio. While the company faces challenges reflected in its recent Q1FY24 results, including declining revenues and profitability, it continues to provide essential services to a robust clientele. Suzlon’s ability to adapt to market dynamics and optimize costs will be critical to its future success in the renewable energy industry. Investors should closely monitor the company’s financial performance and strategic initiatives as it navigates the evolving energy landscape.

Astral Pipes posted a net profit of Rs. 96 Cr.

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Hindalco Industries plans to invest Rs. 15,000 crore in Madhya Pradesh

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 18, 2023

Coal India Ltd Result update Q1FY24

Coal India Ltd Result update: Q1FY24

Company Overview:

Coal India Ltd, incorporated in 1973, plays a pivotal role in India’s coal mining and production sector. Operating across approximately 82 mining areas in eight states, it contributes an impressive 82% to the nation’s coal production. The company primarily serves the power and steel sectors, with additional consumers from industries such as cement, fertilizers, brick kilns, and more. Recognized as a ‘Maharatna’ company under the Ministry of Coal, Government of India, Coal India Ltd is headquartered in Kolkata, West Bengal.

Product Portfolio:

Coal India Ltd’s product portfolio encompasses coking coal, essential for steel and metallurgical industries; semi-coking coal, utilized in steel production, merchant coke manufacturing, and metallurgical processes; non-coking coal, primarily for power generation and also in sectors like cement, fertilizer, glass, ceramics, paper, and chemicals; and washed and beneficiated coal, essential for hard coke manufacturing, power generation, cement, and sponge iron production.

Mining Projects:

The company has recently approved 24 coal mining projects with a combined capacity of 140.3 million tonnes per year, representing a sanctioned capital investment of Rs 22,130.22 crore. These projects are expected to significantly contribute to the company’s production capacity in the coming years.

Major Consumers:

Coal India’s major consumers include the power sector, accounting for 82% of its total output, and the steel sector, alongside various other industries such as cement, fertilizer, brick kilns, and numerous others.

Capital Expenditure in FY22-23:

During the fiscal year 2022-23, the company invested a substantial Rs 18,619.27 crore in capital expenditure, marking a remarkable 20.9% YoY growth. This robust capital investment is anticipated to yield positive results in terms of enhanced production and improved coal transportation in the future.

Coal Production in FY22-23:

In FY 22-23, Coal India achieved an impressive coal production of 703.2 million tonnes, surpassing its target with a 100.5% satisfaction rate. This represents a remarkable 13% growth compared to the previous year, with an increase of 80.6 million tonnes produced in a single year, an unprecedented achievement in the company’s history. Several coal-producing subsidiaries, including BCCL, MCL, NCL, WCL, and CCL, exceeded their production targets for 2022-23.

Capacity Utilization:

The year 2022-23 witnessed a significant increase in the volume of coal and overburden handled by Coal India, reaching approximately 2079 million cubic meters. The overall system capacity utilization rose to approximately 85.80%, a substantial increase from the previous year’s approximately 77%.

Q1FY24 Results Updates – Consolidated:

In Q1FY24, Coal India reported a 2.5% YoY revenue growth, totaling Rs 35,983 crore. Operating profit decreased by 14.2% YoY to Rs 10,514 crore, although it showed a notable increase of 52.4% QoQ due to reduced employee and repair costs, down by 29% and 52% QoQ, respectively. Coal offtake volume reached 187 million tonnes, a 5% YoY increase in line with provisional volume numbers. Profit after tax (PAT) declined by 9.8% YoY but saw a significant 44.1% QoQ improvement, totaling Rs 7,971 crore. EBITDA margins rose by 1113 bps QoQ while declining by 570 bps YoY to 29.2%. Earnings per share (EPS) for the quarter stood at Rs 12.9, down by 9.8% YoY.

Astral Pipes posted a net profit of Rs. 96 Cr.

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British Fashion Titan ASOS Makes Exclusive Indian Debut Through Ajio

Beauty, Business, Equities, Expert Views, Investor Forum, Life Style, Market News, Markets, Research, Research Reports, Result Updates - September 15, 2023

Nykaa Result update Q1FY24

Nykaa Result update: Q1FY24

Company Overview:

Nykaa, a digital consumer technology platform founded in 2012, has established itself as a leading provider of lifestyle retail experiences to consumers. The company boasts a diverse product portfolio encompassing beauty, personal care (BPC), and fashion products, including their own brand offerings. As of March 2023, Nykaa collaborates with more than 6,250 national and international brands and has amassed a substantial customer base of over 24 million individuals. Furthermore, they benefit from the support of 6,900 celebrities and influencers.

Growth Potential in India: large headroom for growth

India’s per capita spending on BPC and fashion is currently under-indexed, presenting a substantial growth opportunity. With India’s GDP per capita projected to reach $5,500 by 2030, per capita spending on BPC and fashion is expected to increase to $45-$50 and $160, respectively. India is currently in the early stages of growth, with per capita consumption in these categories being among the lowest in peer countries. The online BPC and fashion market in India is anticipated to grow at a remarkable 29% CAGR and 14% over the next five years, reaching values of 799 billion and 11,746 billion by 2027, respectively.

Business Segments:

Nykaa’s primary revenue driver is the Beauty and Personal Care (BPC) segment, contributing 87% of its revenue. This segment offers a wide range of products, with nearly 300,000 SKUs from over 3,100 global and domestic brands. The Fashion segment, although launched relatively recently in 2018, has quickly gained traction, contributing 8.5% of revenue. It features 1,553 brands and more than 4.3 million SKUs across various fashion divisions.

Key Metrics for FY23:

In FY23, Nykaa witnessed robust performance in both the BPC and Fashion segments. Monthly average visitors for BPC grew by 21% YoY to 22.7 million, leading to a total of 34.8 million orders, a 31% YoY increase, with a consistent average order value (AOV) of INR 1,857. Gross merchandise value (GMV) for BPC surged by 33% YoY to INR 66,491 million. In the Fashion segment, monthly average visitors increased by 13% YoY to 17.3 million, resulting in 6 million orders, a 21% YoY increase, and a growing AOV of INR 3,973. Fashion GMV showed remarkable growth, surging by 47% YoY to INR 25,696 million

Offline Reach:

Nykaa has extended its reach with 145 physical stores in 60 Indian cities, offering three store formats – Nykaa Luxe, Nykaa On Trend, and Nykaa Kiosks. The company has an extensive presence, serving 27,800 pin codes, covering approximately 98% of serviceable pin codes across India.

Valuation:

company’s current stock valuation is at a multiple of 2,348 PE, with a market price of INR 147, compared to the industry PE of 74.5. Nykaa reports relatively low return ratios, with ROE at 1.42% and ROCE at 5.55%. The stock is trading at 30.3 times its book value, and the EV/EBITDA stands at 136x.

Q1FY24 Results Update:

In Q1FY24, Nykaa continued its growth trajectory, with consolidated revenue increasing by 23.8% YoY to INR 1,422 crore. This growth was primarily driven by the BPC segment, which saw a 22.8% YoY increase to INR 1,130 crore, coupled with a 6.3% YoY increase in the Fashion business. Gross merchandise value (GMV) reached INR 26.7 billion, growing by 23.7% YoY, with substantial contributions from both BPC and the Other business. Notably, Nykaa’s distribution mechanisms boosted GMV across online and physical channels. The Fashion segment’s GMV grew by 12.3% YoY to INR 653 crore, driven by an 18.2% YoY increase in order count. EBITDA surged by 59.5% YoY to INR 73 crore, with margins expanding by 120bps YoY to 5.2% due to cost optimization. PAT increased by 8.3% YoY (and 138% QoQ) to INR 5 crore.

Conclusion:

Nykaa’s performance in FY23 and Q1FY24 demonstrates its strong position in the Indian beauty, personal care, and fashion markets. With a growing customer base, expanding offline presence, and a promising outlook for India’s per capita spending in these sectors, Nykaa is poised for continued growth. However, investors should carefully consider the stock’s valuation and return ratios as part of their investment strategy.

Astral Pipes posted a net profit of Rs. 96 Cr.

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SpiceJet Soars to Profit: Q4 Surge Delivers First Annual Gain in Seven Years

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 15, 2023

SpiceJet Result update Q1FY24

SpiceJet Result update: Q1FY24

Company Overview:

SpiceJet Ltd, a holding company incorporated on February 9, 1984, is a prominent player in the Indian aviation industry. It primarily operates in the air transport sector, providing passenger and cargo services. In the domestic aviation market, SpiceJet holds the second-largest market share of approximately 13%, while it maintains a similar market share in the international aviation market among domestic players, ranking as the third-largest, trailing Air India and Indigo Airlines. Notably, SpiceJet is the largest cargo operator in India. The company’s extensive network covers 53 domestic and 12 international destinations for its passenger services and a remarkable 107 destinations for its cargo business, making it India’s leading passenger airline concerning regional connectivity.

Revenue breakdown and Valuation:

SpiceJet’s revenue structure is diversified, with the air transport segment contributing around 71% of its revenues, encompassing passenger transport both domestically and internationally. The remaining 21% of its revenues come from Freight & Logistics Services, which include its cargo operations under the brand name Spice Xpress, offering cargo connectivity across India and internationally. As for valuation, the stock currently trades at a negative Price-to-Earnings (PE) ratio, with a share price of 40 Rs. The Return on Capital Employed (ROCE) stands at -24.4%, reflecting financial challenges. The current ratio is 0.22, indicating potential liquidity concerns, and the interest coverage ratio is -0.02, signaling difficulties in covering interest expenses. The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is 10.4.

Q1FY24 Results Updates:

In the most recent quarterly update, SpiceJet’s standalone revenue experienced an 18.52% YoY decrease (-6.67% QoQ) to 20,017 million Rs., largely attributed to a substantial 70% reduction in freighter and logistics services (-10% in air transport services). Nevertheless, the company managed to improve its EBITDA by 1.6x YoY (133x QoQ) to 2,675 million Rs. due to a remarkable 37% reduction in operating costs. EBITDA margins stood at 13.37% (PQ- 0.09%), demonstrating improved operational efficiency. Furthermore, EBIT grew by 108% YoY (127% QoQ) to 603 million Rs., primarily driven by a 26% fall in depreciation expenses, resulting in EBIT margins improving to 3.01% (PQ- -10%). Profits After Tax (PAT) witnessed significant growth, increasing by 125% YoY (12x QoQ) to 2,024 million Rs., thanks to a 12.3x increase in other income from non-core business activities. Earnings Per Share (EPS) stood at 3.39 Rs (PQ-0.28 Rs), reflecting a 125% YoY growth.

Conclusion:

SpiceJet Ltd, a key player in the Indian aviation industry, has shown significant resilience and adaptability in its financial performance. Despite challenges in the aviation sector, the company managed to improve its operational efficiency in Q1FY24, leading to substantial growth in EBITDA and PAT. However, it still faces financial hurdles, as evident from its negative PE ratio, low current ratio, and negative interest coverage ratio. The company’s cargo operations and regional passenger connectivity remain strengths in its portfolio, but it will need to address its financial stability to ensure long-term sustainability in a highly competitive market.

Astral Pipes posted a net profit of Rs. 96 Cr.

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Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 14, 2023

Indian Railways Finance Corporation Result update Q1FY24

Overview:

Indian Railway Finance Corporation (IRFC) Ltd, established in December 1986, serves as the financing arm for the Indian Railways. Registered as a non-deposit taking NBFC and infrastructure finance company with the RBI, its primary goal is to secure funds from the financial market for the acquisition and creation of assets, which are then leased to the Indian Railways and other entities. IRFC issues both taxable and tax-free bonds and obtains term loans from banks and financial institutions for its borrowing and lending activities within the Ministry of Railways (MoR).

Diversified Borrowing Mix :

IRFC boasts a diverse funding profile, encompassing taxable and tax-free bonds, term loans, commercial papers, and external commercial borrowings (ECB). Its strong CRISIL/ICRA ratings (AAA/A1+) have allowed it to secure low-cost borrowings. As of June 30, 2023, the company’s total debt stood at INR 4,10,099 crore, comprising ECB bonds (45%), term loans (32%), ECB (16%), and other sources. IRFC enjoys a margin of 40 bps/35 bps over the weighted average cost of borrowing for financing Rolling Stock and Project Assets, respectively, for FY23.

Clientele:

In addition to lending to the Indian Railways, IRFC extends loans to other entities within the Ministry of Railways, such as Rail Vikas Nigam Ltd and IRCON International Limited.

Financial Performance:

Robust AUM Growth in Q1FY24:

In Q1FY24, IRFC’s Assets Under Management (AUM) reached INR 4,66,251 crore, reflecting an 8% YoY growth and a 5-year CAGR of 23.88%. These assets are diversified across railway assets (47.53%), rolling assets (38.10%), project assets (13.30%), and other assets (1.06%). With 98.94% of AUM exposure to the Ministry of Railways, the credit risk is minimal. However, Q1FY24 disbursements have declined over the last three years.

Cost of Borrowing Increase during FY22-23:

The weighted average cost of IRFC’s borrowings for rolling stock increased to 7.51% p.a. in 2022-23 from 6.62% in the previous year, attributed to the RBI’s rate hikes. Despite this, IRFC maintains a margin over its borrowing costs for FY23, and its Net Interest Margin (NIMS) stood at 1.33% in Q1FY24.

Zero Taxation, Nil GNPA + Robust Capital Adequacy:

IRFC’s lending to the Ministry of Railways, with an exposure of 98% of its AUM, results in a credit cost of Nil. This has led to a robust capital adequacy ratio of 627.57% in Q1FY24, contributing to high credit ratings from CRISIL (AAA) and ICRA (A+). The company’s tax-free status since FY19 has added value to its earnings.

Valuation and Key Ratios:

IRFC’s stock is currently trading at 2.30x FY23 (TTM) book value of INR 36 per share, with a market value of INR 82.8. Although the return ratios (ROE/ROA) have slightly decreased to 12.69%/1.33% in Q1FY24 from 14.83%/1.59% in Q1FY23, the company’s strong AUM growth, zero GNPA, healthy capital position, and cost-plus model suggest potential for higher valuations in the upcoming quarters.

Q1FY24 Results:

In Q1FY24, IRFC reported a notable 18.69% YoY increase in revenue, primarily driven by a 25% growth in interest income and a 15% growth in lease income. However, interest expenses also increased by 29.22% YoY due to rising borrowing costs, resulting in a 5.90% YoY decline in Net Interest Income (NII) to INR 15,882 million. Net profit decreased by 6.32% YoY to INR 15,565 million, with NIMS standing at 1.33% in Q1FY24. The EPS for the quarter was INR 1.19, reflecting a 6% YoY decrease.

Conclusion:

IRFC’s diverse borrowing mix, robust AUM growth, low credit risk, and favorable tax status position it as a strong player in the financing of Indian Railways and related projects. Although recent increases in borrowing costs have affected profitability, its capital adequacy and credit ratings remain strong, suggesting potential for future growth and improved valuations.

Astral Pipes posted a net profit of Rs. 96 Cr.

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Gabriel India Stock Rockets Nearly 80% in 13 Sessions: What’s Driving This Surge?

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - August 30, 2023

Shriram Finance Business Update Q1FY24

Shriram Finance Result update Q1FY24

Overview: Shriram Finance, a key constituent of the Shriram Group conglomerate, is a prominent non-banking financial company (NBFC) in India, specializing in a wide range of credit solutions including commercial vehicle, two-wheeler, car loans, home loans, gold loans, and small business financing. The conglomerate underwent a strategic consolidation in November 2022, merging Shriram Transport Finance, Shriram City Union Finance, and Shriram Capital to form Shriram Finance. This merger solidified its position as one of the largest NBFCs in the country with an impressive Assets Under Management (AUM) of INR 1,85,683 crore.

Operational Presence :

As of June 30, 2023, Shriram Finance boasts a robust presence with an extensive network of 2,930 branches across India. The company’s workforce stands at 66,343 employees, servicing a substantial customer base of approximately 7.54 million. This extensive reach covers rural, semi-urban, and urban areas, thereby facilitating a comprehensive market outreach.

Market Penetration and Position:

Shriram Finance holds a dominant position in the market for second-hand truck financing. Despite this, the market remains under-penetrated, with around 55-60% still served by private financiers and money lenders charging high-interest rates. This presents an opportunity for formal players to incrementally enhance their market share. Shriram Finance, leveraging its domain expertise, is strategically positioned to capitalize on this potential, thus cementing its foothold in the industry.

Financial Performance:

In Q1FY24, Shriram Finance exhibited commendable financial performance. Interest income surged by 13.3% YoY (+3.5% QoQ) to INR 76,880 million. Correspondingly, interest expenses witnessed an increase of 18.1% YoY (+7.5% QoQ) amounting to INR 34,875 million. Net Interest Income (NII) exhibited a robust growth of 9.7% YoY, reaching INR 42,004 million. The Net Interest Margin (NIM) contracted by approximately 25 basis points (QoQ) to 8.3%, attributed to declining yields and an uptick in borrowing costs.

Profitability and Efficiency:

The Profit After Tax (PAT) exhibited impressive growth, surging by 25.1% YoY (+28% QoQ) to INR 16,754 million. However, it’s noteworthy that the Cost-Income ratio stood at approximately 31% (compared to the previous year’s ~27%) due to a notable 33% YoY increase in employee expenses. This reflects the company’s focus on expansion and enhancing operational capabilities.

Valuations:

As of June 30, 2023, Shriram Finance’s Price to Book Value stands at 1.60, a notable improvement from 2.2 in FY22. Return on Equity (ROE) and Return on Assets (ROA) exhibited year-on-year improvements of 70 basis points and 30 basis points, reaching 15.19% and 3.08%,

Asset Quality:

A significant highlight of the quarter was the notable enhancement in asset quality. Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) ratios demonstrated improvement, declining to 6% and 3.1%, respectively, from 6.2% and 3.3% in the preceding quarter (Q4FY23). Additionally, the Provision Coverage Ratio (PCR) for Stage 3 loans witnessed a substantial increase of around 240 basis points (QoQ) to approximately 52%, underscoring prudent risk management practices.

Conclusion:

Shriram Finance’s merger-driven consolidation, comprehensive market outreach, dominant position in second-hand truck financing, commendable financial performance, and focused approach towards profitability and asset quality reinforce its stature as a leading player in the NBFC landscape. The company’s strategic maneuvers and operational excellence position it advantageously to harness future opportunities and navigate challenges, further bolstering its credibility and standing in the financial industry.

Astral Pipes posted a net profit of Rs. 96 Cr.

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Business, Economy, Editorials, education, Equities, Investor Forum, Market News - August 29, 2023

Wales government to discuss with welsh companies on investing in gift city in kochi:

The Kerala government has agreed on a student exchange programme and is sending the healthcare workers to Wales, which is held by the government. A Kerala chief minister has been on a tour of Europe, including a stop in London to promote a programme that will send health workers from Kerala to Wales, as well as student exchanges through the taith program.

The Taith programme is a five-year Welsh government initiative that brings students and educators from all over the world to Wales.with the aim of raising its benefits to the country’s international profile. Earlier, Kerala industries minister Veena George had been welcomed to Cardiff, in Wales.

ministerial delegation:

According to officials, chief minister Pinarayi Vijayans, who was part of the Wales ministerial delegation from Kerala, stated that the government will take the initiative to discuss with companies about investing in the gift city, which will be launched in Kochi, which is located in the southern state.

The chief minister officer stated in a statement that a decision was also made to sign a memorandum of understanding with the Welsh government for the purpose of sending health professionals from Kerala to the European country.and also said that the first batches of health professionals under the memorandum of association are expected to arrive in Wales by next year.

The discussion was held in between the Kerala delegation, which was held by the chief minister, Pinarayi Vijayan, and interaction with the first minister of Wales’ government, Mr. Mark Drake, as well as with the other members of his government, including along with the Welsh health minister and social service minister, Eluned Morgan.

Furthermore, the CMO stated that, according to a study conducted by the school of architecture, the problems highlighted by the port city of Kochi were noise pollution, water pollution, traffic, and other general pollution, among other things, faced by pedestrians.There should be a need to maintain biodiversity etc.

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Safe Havens in 2025: Gold, Yen and Alternatives in a Volatile Year

Business, Commodities, Economy, Equities, Expert Views, Investor Forum, Markets - July 31, 2020

What are Gold funds and what are the benefits?

What are Gold Funds and what are its benefits?

Gold funds are unique type of mutual funds, through which investors can invest directly or indirectly in Gold Reserves. They can invest in the gold producing stocks, mining company stocks or in physical gold. Gold funds are the most convenient asset to invest, without the risk of theft or paper work as they are in digital form. This fund is kind of an open ended investment, where investor can issue or redeem at any point of time based on the units which they hold. However, their price directly depends on the metal (gold). Some investors use gold funds to hedge and diversify their portfolio and protect against uncertain economic condition. Many investors diversify around 10 to 20 percent of their portfolio by investing in gold funds. Golds funds are regulated by the SEBI and it is ideal for investors who are risk averse.

Types of gold funds available across globe for investors:

Gold Mining Funds:

In this, funds are invested in stocks of the mining companies and returns depends on the performance of these stocks. However, investment does not get affected due to any fluctuation in economy as gold price is affected mainly due to the fluctuation in demand and supply of gold. Gold exchange traded funds were first introduced by Benchmark Asset Company in India. This funds basically invest in the gold through Demat account. Returns and value of the investments totally depend on the price of gold. Investment in Gold Fund of Fund is same as exchange traded funds as in this, investments are made in particular unit of the Exchange traded funds without opening the Demat account.

Main purpose of Gold Funds:

Main purpose for investors to invest in gold funds is to grow their investment value and create wealth in whatever period the investment is made with protection against the market fluctuation. Price of Underlying asset varies according to change in demand of gold and at the time of maturity returns are calculated on current gold price. If gold price is increased, it gives more returns at the time of redemption.

What are tax charges for Gold Funds?

Normally, the tax which is charged on the Gold Jewellery is applicable to the Gold Mutual Funds schemes. But, taxes also vary according to the tenure. If investments are made for less than three years than revenue is added to the total gross income and considered as short term. But if investments are made for more than three years than 20 percent tax is applicable with indexation norms and CESS charges. However, if capital gains is through exchange traded funds (Gold ETFs), tax exempt is given. No TDS is applicable to Golds Mutual funds. During the time of buying or selling of funds, same tax is applicable as on Gold Jewellery.

Benefits of Gold Funds:

Flexibility in investment:

Gold funds allows investors to invest according to their convenience, comparing to the physical purchase of the gold. Investment can be made as low as Rs 500 and even small income class can also invest in this fund rather than purchasing physical gold which costs higher than these funds and gives flexibility. Gold mutual funds are one of the safest investment as these funds are regulated by Security exchange board of India and they continuously monitors the performance of this type of funds so that investors can analyse their future returns. Gold Funds are also safer than holding physical assets (Gold) as it is in de-materialized form.

Highly liquid:

Gold funds are high liquid funds as investors can redeem them in short term and are also protected against the uncertain economic situation. However, during market hours only, it can be buy or sell and net asset value of previous day is considered at the time of selling and trade is offset in one or two working day. To balance the overall portfolio, investor may always choose gold funds. Gold price is not directly affected to one investor’s overall investment and stocks in which investment is made. Gold fund is considered as one of the safest investment with good returns.

Some finest Gold Mutual Funds in India:

Axis Gold Funds has given return in a year up to 26% and for 3 to 5 year period 4%.
SBI Funds has given returns up to 22% in a year and 6% in 5 years.
HDFC Gold Fund has given returns of 22% in a year and 6% in 5 year period.

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HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth

Business, Economy, Equities, Investor Forum, Market News, Markets - July 26, 2020

Importance of Financial Literacy. Why it is a must have today

Importance of Financial Literacy.

One of the main concern is Financial literacy in this present situation, as it is directly affects the country’s economic development. India stands way behind in financial literacy level comparing to other countries. As per the media reports, India accounts for nearly 20% of the world’s population, but 76% of India’s adult population is not even mindful of the simple financial theories. It discloses that financial literacy is very low in India vs. the rest of the world.

Financial literacy, like other developed nations, has still not been a priority in India. The lack of basic financial knowledge contributes to deprived investment and decision-making. Thus a maximum of Indian people invest in plans which have short maturity and physical assets to achieve their personal goals, which offer fewer benefits and do not contribute to the country’s economic growth.

As per the media reports, nearly 76% of Indian adults do not grasp the fundamental financial principles and are thus financially illiterate. The studies suggest that India always had a low rate of financial literacy relative to the rest of the world. In fact, we are still far behind other countries and now is the time for developing countries like India to realize the value of financial literacy.

Why it is Important?

It is important because it will help us to know how money is to be invested and handled and how it can be used in ways that makes a person financially more secure in the future.

Justification for its importance is as follows:

Value of money:

Firstly, it is very imperative for all of us to know the value of money. This will help us to handle our finances efficiently. Financial literacy will teach us the importance of saving and appropriately budgeting the funds. We should not waste our money on unnecessary and expensive products. We can understand better, the difference between our wishes and needs and we should prioritize things in our daily lives according to our quintessence.

Keep the Debt in Control:

Being financially literate will help us to have a proper check-in our debt. Too much debt will make us profoundly troubled. If we are financially competent, we can decide how debt can be afforded and will be able to pay off timely, especially if we have mortgage and insurance bills. This will teach us to plan for the education and future needs of our children as well as medical and hospital expenses without the need to lend money.

Imparting financial Knowledge among Youngsters:

Being financially aware will enable us to protect the future of the coming generation. We should teach them how to make budgets and save for years to come. They will also understand how their parents work hard to fulfill all their needs, even at their young age. In making them understand the importance of financial literacy, responsibility and reverence for their parents will also be taught. This will also help them realize that they will be financially secure as soon as they age. Imparting financial knowledge will help them to be more responsible and street-smart.

To be ready for any kind of uncertainties and to add other income streams:

We face emergencies that need cash, or resources to sustain or overcome our financial and emotional crises. In times like these, being financially educated saves us the trouble of borrowing money, which only brings us more problems. Financial literacy will benefit us to invest in stocks and develop more income sources besides our salaries. The creation of multiple revenue streams gives us the buoyancy that financial crises can survive.

Assistance in old-age:

If you are financially literate at a young age, you will be stress-free for the rest of the life, as all the provisions to secure the future would be initiated earlier itself. An appropriate retirement and pension plan at the age to 30 will be rewarding for an entire life.

Works as a helping hand:

If we spend a certain amount of money for instance we invest in stocks, we assist the company’s business to expand. This will generate more jobs and will help the company to generate more profits. This results in improving jobs and helps to create a more progressive nation. Being financially stable gives us the opportunity to share our blessings with the poor. Helping others brings us an overwhelming feeling of fulfillment.

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Dalmia Bharat Reports Disappointing Q3 Results, Sees Limited Short-Term Growth

Business, Equities, Expert Views, Investor Forum, Markets - May 15, 2020

Credit risk funds. Should you invest?

Credit risk funds. Should you invest?

Credit risk funds are debt funds that lend not less than 65% of their portfolio in the lower rated instruments (less than AA rated papers). The borrowers have to shell out higher interest charges to compensate for their lower credit rating, which translates into a higher risk for the lender due to an increased possibility of default. Although, these funds lend mostly for short duration. They are still one of the riskiest in the category.

These funds are ideal for an investment horizon of at least 3-5 years. There is a high probability of incurring losses if held for short term.These funds tend to deliver higher returns than Bank Fixed Deposits thereby involving higher risk.

Portfolio with Credit Risk Funds fetches:

• Higher Return : These funds take high risks and invest that money in the low risk instruments and the returns generated are higher as compared to other funds.

• Tax Benefits: These funds are tax-efficient as the Long Term Capital Gains (LTCG) is flat 20% where as if the assessee is in 30% slab still LTCG will be taxable at 20%.

• Extended Supervision: In these funds, fund managers play a very significant role in obtaining remarkable returns. Credit rating alone is not the only basis of decision making. There are various parameters such as the company’s scope of expansion, its potential and business model.

For instance,

ICICI Prudential Credit Risk Fund is presently giving return of +8.64% p.a.

Kotak Credit Risk Fund is presently giving return of +7.44% p.a

HDFC Credit Risk Fund is presently giving return of +7.55% p.a

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