Business, Equities, Markets - October 11, 2022

The new rich are fueling brand expansion of Titan

The new rich are fueling brand expansion of Titan:

There is a lot of latent demand for luxury items from India and high-class people. Titan gets maximum revenue from its jewellery business, which is about 90% and the remaining 10% from various businesses like watches , eyewear, and perfumes etc. Titan has four jewellery brands under its portfolio. They are: flagship tanishq, working women’s focused mia, online sales portal carat lane, and zoya . This caters to the rich customer base.

Expansion of business:

India anticipates a significant increase in high-end consumers, prompting Tata group’s jewellery unit to triple its zoya-branded stores by 2027.In the next five years, these stores will be expanded to a total of 15.which will cost around 3.64 million per store. Further revenues from the jewellery business could have the benefit of 80-90 basis points because, of that rest, all businesses have performed well.

India is already the world’s second largest market for the consumption of gold. During the COVID period, there was a disruption in the golden harvest related pieces, but now the business is doing very well and going forward. The company has just opened its second new store of fast rack eyewear, especially to address the youth segment, and tanishq has added 78 stores to its retail footprint, bringing the total number of stores to 582. The company’s aim is to take that number to 700 over the next couple of years. Carat Lanes handcrafted silver jewellery brand Shaya opened its first-ever physical stores in Mumbai and Bengaluru.

company has also plans to accelerate its international expansion in Zoya with Tanishq. Further, the CEO of the jewellery division said that they will utilise this experience to plan a global move for Zoya. Zoya has a collaboration with the Indian hotel company, Taj Hotels, Resorts, and Palaces, etc. and bespoke jewellery made with the design team and artisans. It will attract wealthy clients. Company is also aiming to incline up abroad extension in zoya in a offer to build a global luxury brand.

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Business, Equities, Markets, Research, Result Updates - October 3, 2022

Lupin ltd consolidated revenue fell by 14% YOY to Rs 3604 Cr.

In Q1FY23, Lupin ltd consolidated revenue fell by 14% YOY to Rs 3604 Cr.

Lupin limited is a multi-national pharmaceutical company based in Mumbai. The company specialises in branded and generic formulations, APIs and advanced drug delivery systems in biotechnology. It has 18 manufacturing sites and 9 R&D sites across the globe.

Lupin ltd consolidated revenue fell by 14.9% YOY to Rs 3604 Crores, in Q1FY23, due to subdued performance of its US business.EBITDA was down by 76% YOY to Rs 238 Crores. EBITDA margin falls by 1680 basis points.YOY to 6.6% due to raw martial inflation, higher employee spends and other expenses. Consequently , company reported a loss of Rs 89 Crores. As against of Rs 542 Crores profit a year ago. Company increasing market share, new product ,and scaling up of the Indian business indicate well for the company performance.

Financial highlights :

In Q1FY23, lupin ltd consolidated revenue declined by 12.3% YOY and QOQ to Rs 3.74Crores.it is mainly due to muted performance in the US business. Revenue from the US business declined by 24.2% YOY and 28.7%Quarter On Quarter to Rs 1010 Crores due to inventory writw down , shelf stock adjustments and price erosion. Company s Indian revenue stood at Rs 1492 Crores which is down by 8.85 YOY and up by 10.4% QOQ DRIVEN BY A 9.9% Quarter on quarter driven by a 9.9 % QOQ growth in domestic formulations. API revenue grew by 3.7% YOY and 15.8% QOQ to Rs 255 Crores. While revenue from growth markets rose by 27.3% YOY and 11.2% QOQ to Rs 424 Crores.

Margins impacted due to raw material inflation:

Gross margin of company contracted by 720 basis points YOY to 55.3% as the company pared down inventories and took shelf shock adjustments on select products consequently; EBITDA fell by 76% YOY to Rs 238 Crores. Company owing to further price erosion in the US business and inflation in input materials. EBITDA margin thereby shrink by 16.8% YOY to 6.4% reported a loss stood at Rs 89 Crores as against Rs 542 Crores .

Quarter highlights:

Capex stood at Rs 161 Crores against Rs 106 Cr in Q1FY22 and Rs 158 Crores in Q4FY22. R&D expense was at Rs 348 Crores against Rs 374 Crores in Q1FY22 And Rs 344 Crores in Q4FY22. Total marketed generic products stood at 167. It launched cyclosporine ophthalmic in the US in the quarter. Current pipeline includes 54 FTF, OF Which 21 exclusive FTFs are awaiting for the USFDA approval. In India business, the company has a revenue run rate of more than Rs 1000 Crores. In cardiac and anti-diabetics .GI, pain and gynae grew in double digits.

Valuation:

The EPS was Rs. -1.96, compared to Rs. 10.15 in June 2021. The ROCE and ROE were at -7.16% and -11.8%, respectively. The book value of a stock is Rs 267. The company’s asset turnover ratio was 0.73x. The scrip is trading at Rs.717, up by 5.40%. on Monday.

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

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Business, Editorials, Equities, Markets, Research - September 30, 2022

the-cabinet-okays-a-rs-10000-crore-futuristic-revamp-of-three-major-railway-stations

The Cabinet okays a Rs 10,000 Crore futuristic revamp of three major railway stations.

The union cabinet meeting, which is chaired by the hon. prime minister, Narendra Modi, have gave approval for the redevelopment of 3 major railway stations with a total investment of Rs 10,000 crores. Further, union minister of railways Ashwini Vaishnaw has said that the stations will be develop with a futuristic design.
1. New Delhi railway station
2. b] The railway station in Ahmadabad, as well as
3. c] Mumbai’s Chhatrapati Shivaji Maharaj Terminus [CSMT].
A railway station is an important and central place for any city. PM Shri Narendra Modi has given importance to station development in the transformation of railways by using green building techniques method with solar energy, water conservation, recycling and improved tree cover. cabinet decision gives a new direction to the station dev.,work on development of 199 station on and from these tenders have been issued for 47 railway stations. For the remaining stations, the master planning and design is in progress. Work progression is fast for 32 stations and the cabinet has sanctioned an investment of Rs 10,000 crores for 3 big stations, namely New Delhi, CSMT Mumbai and Ahmadabad.

The components of railway station design will be:

Every station will have a spacious roof plaza of [38/72/108m] with all the passengers’ amenities in one place, along with spaces for retail, cafeterias, and recreational facilities..
Both sides of the city will be connected to the station, and with the station building on both sides of the railway tracks.

Facilities like food courts, waiting lounges, playing areas for children , and places for local products, etc. will be available.

To make stations comfortable , there will be a proper illumination , way finding, signage, acoustics, lifts, escalators, and travelators.

A detailed plan have been prepare for the smooth movement of traffic with adequate parking facilities.

There will be corporations for transportation like metro, buses, etc.

Green building techniques will be use in stations redeveloping with solar energy, water conservation, and recycling and improved tree cover.

Special care will be taking to provide Divyang with friendly facilities.

This stations will be built on the concept of elegant building.

There will be segregation of arrivals and departures, clutter-free platforms, improved surfaces, and fully covered platforms.

All stations will have a CCTV installation with remote access.

development benefits:

These will be iconic station buildings. However, shifting from the earlier stance, the ministry will no longer be looking at station redevelopment on a public–private partnership [ppp] basis, the minister said. The 3 stations will be develop completely through budgetary means, he added. The projects will be tendered out through the engineering procurement and construction [EPC] mode. This comes from the ministry had earlier floated a tender for the redevelopment of Chhatrapati shivaji maharj terminus under the build-operate-transfer [BOT] MODE. A form of PPP.

The benefits of the EPC mode are that it results in the creation of 35,744 new jobs; it improves the daily experience of more than two million travellers; it also helps the local economy through investment and additional business opportunities; and it promotes transit-oriented development of cities.

The development assumes significance with respect to the monetisation plans of the railway ministry , which is the second highest contributor to the centres The Rs 6 trillion national transportation .Further, Vaishnaw said that the Delhi station will take around 3.5 years to complete as it involves complex operational changes, and the other two railway stations, Ahmadabad and CSMT Mumbai, will be ready in 2.5 years. The redevelopment of the stations is to be complete in a time span of approximately 2–3.5 years.

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Business, Equities, Markets - July 22, 2022

Equity valuation: Definition, Importance and Process.

Equity Valuation

What is Equity valuation?

Equity Valuation is a process conducted by financial experts to determine the fair market value of a particular company’s assets or equity securities. Usually, investors evaluate the company’s true value of its equity before investing. They evaluate using various techniques by looking at their business management, capital structure and their performance, expected future earnings, and current market value of their assets. Commonly, there are two types of equity valuation methods. The first is the absolute valuation method. It finds the true value of a stock based on fundamental analysis. The second is the relative valuation method which uses comparison techniques. It compares the company with peer company ratios such as the P/E ratio to derive the equity value of a particular stock.

Significance of Equity Valuation:

Systematic – The stock market is largely dependent on equity valuation. The stock market includes varieties of stocks from all sectors and industries. So, the market value fluctuates every minute due to the change in information that the market receives on the basic equity valuation. Valuation is the backbone of the whole financial system. It allows companies to operate with strong business models. Only those who are fundamentally strong are in top valuations.

Individual – Along with the micro-level, equity valuation helps at an individual level also. Due to the equity valuation, the stock’s market value fluctuates every minute. This is due to the change in information that the market receives. So, a person evaluates varying effects and comes up with different results.

Process of equity valuation:

Understanding various factors in macro environments – Firstly, it is important to understand the industry in which the company operates as its performance is highly influenced by the economic factors, their factors, and their operations. Economic parameters create a strong base for any equity valuation.

Forecasting – Investors forecast performance after considering not only currently trending but after evaluating all the past performances as a strong evaluation and analyzing technique is needed for coming to a final forecast. Cost and sales are important factors too in any forecasting for which investors need strong intricate knowledge base and experience.

Choosing the appropriate equity valuation model – As there are multiple valuation techniques and models available for investors they need to choose after understanding the sector, industry, and company’s business model. It is the responsibility of an analyst to select appropriate techniques.

Valuation Figure – After applying the valuation model, the next step is the final valuation. Analysts can come up with a single figure or range. However, investors prefer figures which have ranges. Different analysts may come up with different values because of using different models or considering different factors.

Final decision – It is based on all the factors and considering all the possible uncertainties. Finally, analysts come up with the final decision for a particular stock whether to buy, sell or hold depending on the current market price and intrinsic value.

Various Methods of Equity Valuation:

Based on different factors such as liquidity value, book value, replacement value, discounting factor, earnings ratios, price to book value, and profitability ratio, different equity valuation methods are broadly classified.

Balance sheet techniques – It utilizes all the information available on the balance sheet. It considers all the standards of accounting. Some of the major techniques in the Balance sheet method are Book value Method, liquidation method, and replacement method.

Discounted cash flow method – This model first evaluates the present value of future dividends for getting the present value of equity. They have different assumptions in different models like the single growth model, multi-period model, constant growth model, free cash flow model, two-stage model, H model, and zero growth model. One of the known methods is the dividend discount method.

Earnings multiple technique or Relative valuation – It is also known as the comparable method. It uses peers’ and competitors’ values to determine the value of equity. Earnings or relative valuation includes ratios such as price-to-earnings ratio, price-to-book value ratio, and price-to-sales value ratio.

What are Gold funds and what are the benefits?

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Editorials, Expert Opinions - July 20, 2022

Real estate equity waterfall : How they work and what to look for.

Real estate equity waterfall : How they work and what to look for.

Equity Waterfall:

When we buy a property, we choose a combination of equity and debt to fund it. In exchange for their equity investment, our buyers are entitled to the profit and revenue of the real estate. The waterfall determines how earnings and profits are split between you and our investors.

The layout of the waterfall may vary from one contract to another, and it is necessary to look at the specifics of each agreement to evaluate if the separation is equal and fair for all the parties concerned. All information is presented in a contract called an operating agreement, that will be thoroughly and carefully reviewed in anticipation of the allocation of capital to the real estate deal. A waterfall, also known as a waterfall model, is a legal term included in an operating agreement which specifies how money is paid out, where it is paid out, and to when it is paid out during real estate equity transactions.

Waterfall Features:

1. Preferred Returns:

Preferred returns are described as the first claim benefit of the project before the target return is achieved. Preferred return simply generates another cash fund stream, and after the cash flow has been allocated to preferred owners, the remaining stream capital transfers to the next stage and divides as decided.

2. Lookback Provisions:

Lookback clauses are used as cash flow is distributed before the asset is disposed of. If the Limited Partners do not get a guaranteed rate of return decided upon settlement, the General Partner is forced to offer up a percentage of the cash income that was allocated to them before the transaction.

3. Catchup Provisions:

A catch-up clause ensures the Joint Partner 100 percent of the profits of the agreement before the negotiated rate of return is reached. If the specific rate of return has been met, all the residual earnings should go to the General Partner before the defined rate of return has been reached.

Operating agreement:

1. Members:

The partners of the agreement are those who are eligible to benefit from the successful transaction of the real estate. In certain instances, there seems to be a variety of limited partners and general partner. The GP is liable for identifying the opportunity, reviewing it, acquiring it, completing it, and handling the asset until the sale is complete. Usually, the GP will invest a limited portion of the total equity used to fund the deal. The LP’s are purely individual investors. They put their money with the GP and hope to obtain it back, plus a profit, from the cash flow produced by the real estate. The LPs offer the remaining of the capital required to finance the transaction.

2. Capital:

If the cash flow generated by the estate fails to reach the necessary return threshold in a specified period, the cash flow shortfall can or can not be carried forward to the next year. If the investor ‘s financial flows are accumulated, the deficit will continue over the following cycle before the cash flow is adequate to clear it. Cumulative cash holdings are beneficial to the LPs as it ensures that the GP does not obtain any funds before the deficit is erased. When the capital investments are not combined, they are more beneficial to the GP.

3. The Return Hurdles:

Return hurdle is the rates of return at which the capital investment divides between the LP and GP varies. These are designed to enable the GP to manage properties as profitably as practical. The better the profit that the property makes, the more income the GP gets to earn compared to their original investment.

4. Calculating Returns:

The return hurdle can be evaluated using several different approaches, although the two most popular are the multiple of equity and the internal rate of return. The internal cost of the return is the average discount rate, which determines the net present value of the potential cash flows, equal to zero, negative, and positive. The capital multiple is measured as the ratio of the capital received to the money invested and represented as a sum out of the second decimal point.

5. Simple Split:

The final way of deciding the configuration of a waterfall is a straightforward break and might have no desired return to investors. For example, 50 percent of all capital investment and profit is paid to LP and 50 percent of all capital investment is paid to the GP. This is popular in purchases where there might not be a high degree of complexity or a lot of costs, so the goal is to make distributions very easy.

The profitability of an investment from the investor’s point of view of return can rely on well-defined allocations that are properly distributed to the appropriate entities also during the investment holding period.

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Business, Equities - July 7, 2022

How do stocks work?

Being mindful about stocks and how they function is essential for strong returns on investment. This will provide substantial financial benefits. Wisely spending your capital is extremely necessary to achieve monetary prosperity and financial goals. It is possible that if you are working on an investment strategy, it will probably include some form of stocks. The stock markets historical success makes this type of investment so common. The S&P 500 index recorded an average return of 9.7% between 1930 and 2013. Although, this includes years and exceptional years which are extremely tough. This high average return on investments in stocks provides a strong basis for buying them.

Stock market investment can look like a scary task. However, as soon as concepts are learned and the right strategies are implemented, the benefits are significant. While there are many vehicles for stock exposure such as mutual funds and ETFs which do not actually require investors to pick up their stocks from the market. However, it remains necessary to understand what stocks are and what they work to achieve when investing.

Straightforward meaning of equity stocks:

Stocks are equity investments that constitute a company’s ownership. If you buy the stock of a particular company, it includes certain rights.

Companies sell shares to collect substantial capital amounts. This capital is then used to fund various projects. This ultimately leads to the growth of business and generate a return for investors and revenue for the company. When a company wants to go public, it must also choose 1-4 separate letters for the distinctive identification called stock ticker symbols. Companies can sometimes even become creative when choosing their ticker symbols.

The stock price of a public company is simply a determination of the value of the company by the market. This value depends among other things, on its assets, current profits, and expected future profits. While raising capital, stock offerings is a great way for a business to grow quickly and expand rapidly. However, there are also disadvantages. In addition to the high charges paid for exchange listing, public firms have to disclose their financial reports as per the rules and regulations.

Categories of stocks viz. Common and Preferred:

Common stock offers you a part and voting rights of the company. With common stock, you aim for capital gains together with dividend collection. However, companies are not obligated to pay dividend to common shareholders. A dividend is a distribution of some amount from total revenue to shareholders or a kind of investment reward.

However, the preferred stock works somewhat differently. The preferential stock does not give you any voting rights. The preferred stock guarantees you more return as compared to common stock. For example, if a corporation pays a dividend, it must first pay its preferred shareholders. Dividends are first paid to preferred shareholders and then to common shareholders. Unless the company cannot pay the dividend in one year on preferred stock, it will proceed to pay it in the future years. They have a right to claim on firms assets in any uncertainty if the firm comes in a position of bankruptcy. Preferred share owners have more significance than common shareholders.

Common stocks are more riskier than preferred stocks. Portfolio must include a perfect blend of both common and preferential share.

Taxation on stocks:

After 1st September 2004, any buying and selling of securities will include the Security Transaction Tax (STT) applied to them. STT is payable on stock trading in India. Inventory income sold within 1 year from the date of acquisition is considered to be STCG. STCG is obliged to taxes and is taxed at 10%. If short-term capital losses are incurred, then it can be compensated for short-term gains in the same financial year. Benefit from stocks sold after 1 year comes in LTCG. Since 1st September 2004, long-term capital gains have been exempt from tax. Long term capital loss is considered to be a loss on inventories sold after one year from the date of purchase. Long term capital losses cannot be substituted with long term capital gains.

Adani Wilmar enters the coveted large-cap category by AMFI

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LIC plans to sell RCap bonds worth Rs. 3,400 crore hit another roadblock.

Banking, Business, Editorials, Expert Views, Investor Forum, Markets - April 8, 2020

What are AT1 bonds? How do AT1 bonds work

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Expert Views - January 31, 2019

A Complete Guide to Financial Planning

In order to financially secure our future and to achieve every financial goal Financial planning is a must. It is a process of an individual to plan his/her finances in...

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