Vol. 37. No.

01 • DEC 06 - 19, 2021

28
Cover Story 23
Contrarian
Investing
Is For All
Seasons!
Recommendations Regulars

10 12 13 06


07
08
Editor’s Keyboard
Company Index
Market View
Choice Scrip Low Priced Scrip Hot Chips 14 Technicals
38 Tax Column

16 Analysis
41
44 Reviews
45 Kerbside
QueryBoard

Poonawalla Fincorp
Potential To Outpace National Growth Subscribers can access
the complete databank

18
consisting of more than
3500 companies on our
Special Feature website www.DSIJ.in

Small is Profitable Too! Communication Feature sections

are advertorials provided by the
company & carried on “as is” basis.

4 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

 Think, Strategise and Reinvest
I
n the previous editorials our cautious tone and advice to book profits might have
looked out of sync when the markets just appeared to keep going up day after day. We
also highlighted our concerns regarding valuations and that the risk-reward
relationship was not in favour of the investors. The current market correction, which
has made the market cheaper since November 15, very much validates our advice. And
all those who paid heed are the ones smiling today. Do note that the bears have found a
perfect companion in the form of ‘Omnicron’ to puncture investors’ conviction on equity
returns.

The risk-off trade has already pushed FIIs on the back foot, leading to withdrawal of capital
from the markets. Added to this is the recent announcement of the Federal Reserve tapering
expected to commence earlier than anticipated. We continue to believe that the bulls are not
out of the woods yet. Yes, the markets correcting substantially will lead to creation of pockets
that can deliver outperformance in time to come. Nonetheless, it may be premature to buy
into such pockets as yet. Remain cautious as of now as the sentiment has once again entered
unknown territory. The new unknown may not negatively impact the market moods as it did
at the beginning of 2020.

On the positive side, the market that was relentlessly holding on to its levels at the top is now
providing some rational levels where investors can start negotiating for bargains. Cash, my
dear readers, will be worth in gold in the coming weeks as the equity market starts to get
attractive again. In our cover story on contrarian investing, we have spelt out in no
unambiguous manner the qualities one must possess to beat the markets and to be a
successful contrarian investor. It is in times like today that spell high volatility when the
qualities of a contrarian investor will ensure that you not only stay focused on your original
investment philosophy but also make handsome money.

In our special stories we have highlighted the additional efforts one must make to take
exposure in micro-cap companies. Micro-cap investing can lead your path to discover
multibaggers. The kind of returns one can gain by micro-cap investing is mindboggling;
however, the path towards micro-cap investing is not convenient and traditional investment
parameters may not apply most of the times. The current issue also carries an in-depth report
on the plastic industry and covers the various opportunities the plastic industry stands to
offer from an investor’s perspective. The bright outlook may excite some of our long-term
investor readers. Looking at the market condition which is in a corrective mood, it is
important that you stay away from the popular stocks that are over-owned.

It is easy to be clingy in times like now where our recent memory of select popular stocks’
outperformance does not allow us to get rid of them even when the so-called stocks are
showing weakness. It is time to be unemotional and it is time to protect gains and have some
cash to buy when the risk-reward ratio is utterly in favour of the investors. Trading by
headlines regarding the new variant of the virus in the past few days shows the lack of
confidence on the part of the bulls and it is likely that bears will have an upper hand in the
coming weeks. However, this does not mean one should short in the market. Churn your
portfolio and stick with high-quality defensive names for the moment. Pharmaceutical and
IT stocks can provide the alpha. A slow and staggered investment approach spread across the
next 4-6 weeks can be a strategy to consider.

RAJESH V PADODE
Managing Director & Editor

6 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

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Founder Graphics
Late V B Padode Vipin Bendale
Current Assets and Liabilities
Managing Director & Editor Subscription & Customer Service
Rajesh V Padode Utkarsh Sawale The cover story in your latest issue on the relevance of value investing was
simply bona fide. A particular criterion for stock selection using value investing
Executive Editors Compliances and Internal Audit
Arvind Manor
principles was that current assets should be at least two times the current
Yogesh Supekar
Shashikant Singh
liabilities. Could you elucidate the same? -
Marketing & Sales
Farid Khan - VP
 - Parul Agarwal
Copy Editors
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Huned Contractor Editor Responds: We appreciate your query and are pleased to hear that you
Anand Chinchole - Sr. Manager
found our cover story in the recent issue fruitful. Current assets are those assets of
Research Delhi: a company that are expected to be sold or used as a result of standard business
Srinivasa Sharan Shammo Teshwar - Sr. Manager operations over the next year. These include cash, cash equivalents, accounts
Karan Bhojwani
Domain Experts receivable, inventory, marketable securities and other liquid assets. Current
Vinayak Gangule
Anthony Fernandes Hemant Rustagi liabilities are a company’s short-term financial obligations that are due and
Shreya Chaware Jayesh Dadia expected to be settled within the next one year. These include accounts payable,
short-term debt, dividend payable and tax payable and are typically settled using
current assets. If a company has current assets at least two times its current
liabilities, it illustrates that the company is highly capable of remaining solvent for
a longer period and will rarely face problems to meet its short-term financial
obligations. Hope this helps. Keep writing to us!
DSIJ Private Limited
Recommendations
For Customer Service Company/Scheme Reco. Price (`) Column Page No
Affle (India) Ltd l Buy 1149.25 Queryboard 42
020-66663803 OR  service@DSIJ.in
Apollo Hospitals Enterprise l Buy 5726.65 Technicals 15
Mumbai Office
419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market
Goodyear India Ltd l Buy 966.55 Queryboard 43
Mumbai - 400034 022-43476012/16/17 HDFC l Hold 2676.40 Reviews 44

Pune Office Hindustan Unilever l Buy 2318.45 Kerbside 45

Office No. 211, Vascon Platinum Square, Indian Energy Exchange l Buy 744.05 Choice Scrip 10
Next to Hyatt Regency, Viman Nagar, Pune- 411014
020-66663-800 / 801 Indian Railway Catering & Tourism Corp. l Hold 794.35 Queryboard 43
IRB Infrastructure Developers l Hold 205.80 Queryboard 41
Kopran l Buy 258.85 Technicals 15
Max Healthcare Institute Ltd l Buy 380.20 Hot Chips 13
To advertise, mail us on ads@dsij.in
Minda Corporation Ltd l Buy 163.70 Kerbside 45
Printer and Publisher: Nitin Sawant, Editor: Rajesh V Padode for DSIJ Pvt
Ltd. on behalf of Achievements Merchandise Pvt Ltd. Printed at Mudran NMDC l Buy 133.25 Low Priced Scrip 12
Print N Pack Pvt Ltd, Plot No. – A-180/4, TTC Industrial Area, MIDC,
Koparkhairane, Navi Mumbai – 400703 and published from 419-A, 4th PI Industries l Hold 2876.70 Reviews 44
Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
 All rights reserved.  While all efforts are made to ensure that the Poonawalla Fincorp l Hold 188.30 Analysis 16
information published is correct and up-to-date, Dalal Street Investment
Journal holds no responsibility for any errors that might occur. All PVR l Hold 1272.95 Queryboard 42
material contained herein is based on fundamental and technical analysis
and other in-house methods, which though reliable, are not infallible. The Suryaamba Spinning Mills l Buy 183.40 Hot Chips 13
information given in the magazine is of an advisory nature. Readers are
advised to consult experts before taking any investment decision and Dalal Thermax l Buy 1751.60 Kerbside 45
Street Journal holds no responsibility for any losses that may arise due to
investment decisions made on the basis of information given within the Vascon Engineers Ltd l Exit 21.80 Queryboard 41
magazine. No reproduction is permitted in whole or part without written
consent from Dalal Street Journal  All disputes are subject to the Wockhardt l Buy 435.50 Kerbside 45
exclusive jurisdiction of competent courts and forums in Mumbai only.
 Dalal Street Investment Journal is a member of INS/ABCs.
BP - Book Profit • BPP - Book Partial Profits • BL - Book Loss

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 7

Market Watch
New Virus Variant Weakens The Markets
I
ndian frontline equity indices
BSE Sensex and Nifty 50 tumbled
by ~5.90 per cent each during the
fortnight. These benchmarks fell
to their lowest level in three
months, suffering their worst single-day
drop since April 12, 2021 on November
26, 2021 on weak global cues as a
consequence of the detection of the new
corona virus variant, the Omicron,
which could possibly be vaccine-
resistant. Nifty 50 briefly dropped below
its key psychological level of 17,000 to hit
an intraday low of 16,985 and Sensex
plunged by as much as 3 per cent i.e.
1,801 points. On similar lines, BSE
Mid-Cap and Small-Cap indices plunged
5.77 per cent and 3.97 per cent to close at
24,846.51 and 28,071.41, respectively.
BSE Realty index nosedived 10.68 per
cent over the recent two-week period,
emerging as the top loser. BSE Metal and
Auto indices corrected by ~7.60 per cent
each to close at 18,703.68 and 24,330.73,
respectively. Only the BSE Healthcare
index ended in the green territory with
gains of 1.86 per cent. As per the Reserve
Bank of India (RBI), India’s foreign
exchange reserves increased by USD 289
million to USD 640.401 billion for the
week ended November 19, 2021. Foreign
currency assets (FCA), a major
component of the overall reserves,
increased by USD 225 million to touch
USD 575.712 billion.
A Reuters’ poll of economists found that
India’s economic recovery has likely
strengthened in the previous quarter,
boosted by services activity that
recovered after pandemic-related
mobility restrictions were eased. During
the fortnight, shares of One 97
Communications, the operator of India’s
biggest financial technology platform
Paytm, hit the lower circuit of 20 per cent
on listing day, eroding its market
capitalisation by nearly a third as
compared to its IPO valuation of `1.50
lakh crore i.e. USD 20 billion, and
making it one of the worst debuts in the
8 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
Indian stock market history.
The Paytm debacle dimmed the mood
and added woes to investor sentiment.
As a consequence, other technology
start-ups such as MobiKwik and Oyo
may delay their IPO by a few months.
Goldman Sachs in its recent Macro
Outlook 2022 note has revised its
projection for gross domestic product
(GDP) to 9.1 per cent from the earlier
estimate of 8 per cent for calendar year
2022, while for FY22 it has pegged
economic growth at 8.5 per cent. The
global research and brokerage house
expects a rise in core inflation as
manufacturers pass on input cost
increases to consumers and pegs India’s
headline consumer price inflation at 5.8
per cent on a year-on-year basis in 2022
from 5.2 per cent in 2021.
Over the fortnight, Bharti Airtel
announced that it will raise tariffs for all
its prepaid users by up to 25 per cent
from November 26, 20221 in a major bid
Performance Of Indices
12th Nov., 26th Nov., Gain/Loss
Indices
2021 2021 (%)
Healthcare 25,158.06 25,626.80 1.86
Power 3,553.47 3,537.79 -0.44
FMCG 14,261.64 13,748.54 -3.60
Small-Cap 29,232.53 28,071.41 -3.97
IT 35,351.35 33,839.31 -4.28
Mid-Cap 26,368.78 24,846.51 -5.77
Sensex 60,686.69 57,107.15 -5.90
Nifty 18,102.75 17,026.45 -5.95
Bankex 44,235.06 41,117.95 -7.05
Auto 26,332.80 24,330.73 -7.60
Metal 20,259.94 18,703.68 -7.68
Realty 4,310.71 3,850.35 -10.68
A Reuters’ poll of
economists found that
India’s economic recovery
has likely strengthened in
the previous quarter,
boosted by services
activity that recovered
after pandemic-related
mobility restrictions were
eased.
to boost average revenue per user
(ARPU) and improve its financial
health. Immediately following Bharti
Airtel’s price hike, Vodafone Idea raised
its prepaid tariff plans today by 25 per
cent. Likewise, later in the week Reliance
Jio announced up to 21 per cent hike in
its prepaid tariffs starting December 1,
2021, indicating an end to the low tariff
regime in the telecom sector. Trading
data shows that both DIIs and FIIs were
net buyers during the fortnight to the
tune of `15,712.70 crore and 9,805.89
crore, respectively.
Net Investment In Equity Markets (`/Cr)
Date FIIs DIIs
26-Nov-21 (447.31) 2,294.11
25-Nov-21 (9,403.73) 1,367.80
24-Nov-21 (5,736.87) 3,809.62
23-Nov-21 (2,220.81) 1,412.05
22-Nov-21 3,463.76 2,051.18
18-Nov-21 1,198.52 1,885.66
17-Nov-21 13,985.53 (61.14)
16-Nov-21 1,577.82 577.34
15-Nov-21 3,766.66 1,524.67
12-Nov-21 3,622.32 851.41
Total 9,805.89 15,712.70
DSIJ.in
DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 9
Recommendations Equity
cent YoY basis. The robust performance
was driven by substantial increase in
electricity consumption as well as the
Indian Energy Exchange preference by distribution utilities. The
EBITDA exclusive of other income was

CHARGED FOR GROWTH `95.04 crore which saw a rise of 27 per cent
QoQ and an increase of 71 per cent YoY.

The net profit stood at `77.39 crore, again

HERE IS WHY an increase of 24.61 per cent QoQ and a
India’s first and the largest energy exchange rise of 74.55 per cent YoY. For over a
Strong growth momentum decade the company has never recorded

I
High returns for stakeholders’ capital
ndian Energy Exchange (IEX) is the
first and largest energy exchange in
India providing a nationwide,
automated trading platform for
physical delivery of electricity. The
exchange platform enables efficient price
discovery and increases the accessibility
and transparency of the power market in
India while also enhancing the speed and
efficiency of trade execution. It has the
following product offerings: Day-Ahead
Market (DAM) for next day delivery,
Term-Ahead Market (TAM) for delivery
up to 11 days, Real Time Market for
delivery within one hour, Green Term-
Ahead Market for intraday, daily and
weekly, and renewable energy certificates
(REC) along with energy saving certifi-
cates (ESCERTS).
All these products offer traders various
opportunities for strategic trading and
investing. The company reported net
sales of `317.85 crore in FY21 compared
to `257.13 crore in FY20. That is a
reasonable growth of nearly 24 per cent.
IEX’s electricity traded volume in FY21
grew by 37 per cent on a YoY basis. The
PBIDT stood at `289.01 crore in FY21 as
against `242.43 crore in the previous
year. That is a growth of around 20 per
cent. Also, the PAT stood at `205 crore
while it stood at `175 crore in FY20. PAT
Best of LAST ONE Year
Name of Reco Exit/CMP Absolute Annual
Company Price Price (`) Gains Returns
(`) (%) (%)
Trent Ltd. 659.20 928.80 40.90 3471.63
KPIT Tech. Ltd. 134.95 198.95 47.42 451.20
Gujarat Gas Ltd. 288.20 435.10 50.97 297.24
Polycab India Ltd. 824.95 1144.40 38.72 282.80
ICICI Bank Ltd. 497.45 674.00 35.49 252.48
increased by 17 per cent. The net profit
margin for the year ended FY21 stood at
64.6 per cent, which is phenomenal.
A strong operational performance with
efficient working capital management was
witnessed with a growth of nearly 142 per
cent in the cash flows from operating
activities increasing from
`306 crore in FY20 to `126 crore in FY21.
Net sales for the quarter ended September
2021 stood at almost
`110.38 crore. That’s a growth of 21.26 per
cent QoQ basis and a growth of 55.64 per
a drop in its annual profitability. The
earnings have been rising consecutively
year on year. The EPS recorded in fiscal
2011 was at `0.69 while in fiscal 2021 it
has grown to 8.87. This consistent growth
in profitability has led to exceptional
returns for its stakeholders such that the
ROE stood at 47.37 per cent and the
ROCE at 61.6 per cent. The company is
almost debt-free. The stock is trading
near the PE level of 84.
The company enjoys a near monopoly
status. IEX has an overall market share of
more than 95 per cent, (RTM – 99.9 per
cent, GTAM – 99.9 per cent, DAM+TAM
– 92 per cent). Electricity volume has
grown with a CAGR of 32 per cent since
2008, increasing from 2,616 units in FY09
to 74,638 in FY21. In FY21, highest yearly
volumes have been recorded at 74 BU.
IEX is leveraging and steadily investing in
technology and deepening the power
market through new products such as
Real-Time Market (RTM). IEX is
expected to launch some new products
like Long-Duration Contracts, Cross
Border Trade, Green TAM and DAM, and
Exchange-Based Ancillary Market. With
India’s power consumption expected to
grow at 8-9 per cent during FY 2022, its
management expects significant growth
for the exchange markets. By virtue of all
these factors, we recommend our
reader-investors to BUY the scrip. DS

CMP
Monthly Stock Market Returns
BSE Code: 540750 CMP: `744.05
FV: `1 BSE Volume: 6,48,490
Date: 30/11/2021
Shareholding Pattern Last Five Quarters (`/Cr) ( Consolidated)
(`)
as of Sept., 2021 Particulars Sep-21 Jun-21 Mar-21 Dec-20 Sep-20
Total Income 110.38 91.03 93.82 85.23 70.92
Promoters --
Other Income 11.92 11.85 6.52 10.86 7.79
Public 90.69 Operating Profit 106.97 86.71 83.97 80.45 63.25
Interest 0.47 0.55 0.48 0.52 0.51
Others 0.31
Net Profit 77.39 62.10 60.86 58.14 44.34
Total 100 Equity 29.86 29.86 29.85 29.85 29.84

10 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

 Recommendations Equity
NMDC
cent. PAT was reported at `2,338.81

GROWING WITH AN ‘IRON’ HAND

crore, up by 202.54 per cent from
`773.07 crore in the same quarter for the
previous fiscal year. The quarterly results
have been resilient because generally the
HERE IS WHY monsoon has a negative impact on the
production front. But still the company
Largest iron ore producer in India managed to achieve higher production
High returns on capital employed relative to Q1.

High dividend payouts The company has delivered excellent

returns for stakeholders. The ROE stood

N
MDC Ltd. engages in the
exploration of minerals. It
operates through the
following segments: iron
ore, pellets, other minerals
and reconciliation items. NMDC is
under the administrative control of the
Ministry of Steel, Government of India.
The company is India’s single largest iron
ore producer. Since 2008 the company
has been categorised by the Department
of Public Enterprises as ‘Navratna’ public
sector enterprise. NMDC also operates a
diamond mine, Diamond Mining Project
at Panna in Madhya Pradesh, which is
the only mechanised diamond mine in
Asia, with yearly production of around
38,149 carats as of FY 2019. It also has a
sponge iron unit of 200 TPD at Paloncha
in Telangana.
The company recorded net sales of
`15,370.06 crore in FY21, a 31.38 per
cent increase YoY. PBIDT was recorded
at `8,789.27 crore, higher by 46.44 per
cent. PAT increased significantly by 73.47
per cent when compared to the previous
fiscal to reach `6,247.47 crore.A strong
cash balance was witnessed with a
growth of nearly 241 per cent as can be
seen in the cash flows from operating
PRICED SCRIP
Best of LAST ONE Year
Name of Reco Exit/CMP Absolute Annual
Company Price Price (`) Gains Returns
(`) (%) (%)
AVT Natural 43.65 66.00 51.20 11071.27%
Indraprastha Medical 54.40 71.75 31.89 1852.67%
Ashoka Buildcon 80.25 116.95 45.73 525.13%
Bharat Electronics 96.65 145.90 50.96 336.53%
Marksans Pharma 58.00 79.80 37.59 270.09%
activities increasing from `2,125.97 crore
in FY20 to `7,266.11 crore in FY21. In
Q2FY22, revenue grew by 204.66 per
cent YoY to `6,793.51 crore from
`2,229.89 crore in Q2FY21. However, on
a sequential basis the top-line grew by 4.3
per cent.
PBIDT except for other income was
reported at `3,112.51 crore, up by 202.53
per cent as compared to the year-ago
period and the corresponding margin
was reported at 45.82 per cent, contract-
ing by 32 basis points YoY. On a QoQ
basis, the EBITDA declined by 25.5 per
at 21.71 per cent while the ROCE was
even better at 29.65 per cent. The stock is
trading at a price to earnings multiple of
just 3.76 versus industry PE of 6.46. It
has a debt-to-equity ratio of 0.07.
NMDC’s operational performance is
expected to remain strong over the next
two years with the potential to ramp up
in iron production given the recent
resumption of production from the
Donimalai mine and above historical
average domestic high iron ore prices.
Potential value unlocking from demerg-
er and strategic sale of its steel plant is a
key near-term catalyst.
The company has a history of paying
huge dividends. The dividend yield was
recorded at 5.75 per cent. NMDC’s
dividend payout could improve consid-
erably as the strategic sale of the steel
plant would improve its cash position
while the core iron ore mining business
is expected to generate steady EBITDA.
Valuation of the core iron ore business is
attractive given a steep discount to global
mining peers. NMDC has made a
comprehensive plan to enhance iron ore
production capacity to 67 MTPA to meet
the growing requirements of iron ore of
the Indian steel sector. By virtue of all
these factors, we recommend our
reader-investors to BUY the scrip. DS

CMP
Monthly Stock Market Returns
BSE Code:(`)
526371 CMP: `133.25
FV: `1 BSE Volume: 349,743
Date: 30/11/2021
Last Five Quarters (`/Cr) (Consolidated)
Shareholding Pattern
as of Sept., 2021 Particulars Sep-21 Jun-21 Mar-21 Dec-20 Sep-20
Total Income 6793.51 6512.21 6847.57 4355.10 2229.89
Promoters 60.79
Other Income 88.93 144.09 85.18 105.87 88.78
Public 39.21 Operating Profit 3201.44 4320.33 4325.45 2872.64 1117.62
Interest 1.72 3.00 4.13 1.64 1.72
Others --
Net Profit 2338.63 3191.30 2835.54 2108.05 772.53
Total 100 Equity 293.07 293.07 293.07 306.19 306.19

12 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in


The scrips in this
column have been
recommended
with a 15-day investment
horizon in mind and
carry high risk. Therefore,
investors are advised to
take into account their risk
appetite before investing,
as fundamentals may
or may not back the
recommendations.
DSIJ.in
Suryaamba Spinning Mills Ltd.
BSE CODE Volume Face Value
533101 5,084 `10
S
tarted in 1993, Suryaamba Spinning
Mills Ltd. is a leading manufacturer
of speciality synthetic spun yarns. The
core competitive strength of the company
is its innovative product range, specifically
tailor-made for its customers. On a
quarterly basis, net sales and operating
income were posted at `51.17 crore in
Q2FY22, a significant rise from `25.55
crore reported in Q2FY21. The operating
profit of Q2FY21 of `1.99 crore improved
to `5.91 crore in Q2FY22. The company
reported net profit of `3.10 crore in
Q2FY22 as against net loss of `0.36 crore
reported in Q2FY21. Synthetic yarn
products are the most preferred yarns in
the textile industry due to their unique
features like lower price and uniform
availability throughout the year. The future 29-Nov-2021 19,127
for the synthetic textile industry looks
promising, buoyed by both strong
domestic consumption as well as export
demand in segments of apparel, home
Max Healthcare Institute Ltd.
BSE CODE Volume Face Value
543220 1,28,774 `10
Scrip’s Movement
2021
Last Seven Days’ Volume Table
(No. of Shares)
Days Volume
22-Nov-2021 23,269
23-Nov-2021 43,369
24-Nov-2021 28,111
25-Nov-2021 1,56,221
26-Nov-2021 1,39,096
29-Nov-2021 35,832
30-Nov-2021 1,28,774
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL
CMP - `183.40
Target Stoploss
`205 `165 (CLS)
Scrip’s Movement
2021
Last Seven Days’ Volume Table
(No. of Shares)
Days Volume
22-Nov-2021 3,881
23-Nov-2021 2,197
24-Nov-2021 16,030
25-Nov-2021 26,464
26-Nov-2021 19,691
30-Nov-2021 5,084
furnishing, automotive and filtration,
personal care and hygiene applications.
Hence, we recommend BUY.
CMP - `380.20
Target Stoploss
`418 `358 (CLS)
M
ax Healthcare Institute Ltd. is one
of India’s largest healthcare
organisations. Almost 85 per cent
of its bed capacity is in metro and Tier I
cities. The company has witnessed a robust
jump of 56.44 per cent in net sales and
operating income from `650.94 crore in
Q2FY21 to `1,018.33 crore in Q2FY22. The
operating profit also soared from `127.34
crore in Q2FY21 to `270.36 crore in
Q2FY22. The quarter saw a net profit of
`144.65 crore as compared to `16.65 crore
in Q1FY21, clocking massive gains. The
impressive financial growth was led by
strong volumes on the back of robust
traction in non-pandemic business i.e.
ex-international business. Bearing a range of
short and long-term growth triggers namely
recovery in international business, improve-
ment in payor mix which is the percentage
of hospital revenue coming from private
insurance companies versus government
insurance programs as well as its expansion
plans, we recommend BUY. DS
(Closing price as of Nov 30, 2021)
13
Technicals
NIFTY Index Chart Analysis
OMG! IT’S OMICRON NOW!
T
he global and domestic
equity markets are breaking
down as fears of the new
Omicron variant send shivers
down the spine across the
globe. As the bears tightened their grip,
equity benchmarks across the globe
nosedived during last week. Barring the
pharmaceutical sector, all the sectoral
indices collapsed over 3-5 per cent last
week. Lack of leadership from the
defensive stocks and heavyweights pulled
down the market to its 13-week low. It
registered one of the biggest weekly falls
in the last 18 months as the Nifty went
down by 509.80 points on Friday. During
last week, Nifty declined by 744 points or
4.18 per cent and settled at just above the
level of 17,000.
The market breadth has been extremely
negative during the last three weeks. The
selling pressure from the FIIs intensified
as they had already sold over `31,124.46
crore during the current month, which is
the highest this year. On the monthly
chart, Nifty registered the biggest fall on
Friday after April 12 and formed a big
bearish body candle. Even after this big
fall, Nifty corrected only 9.79 per cent or
1,822 points from the recent top.
Earlier, during February-April, the
14 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
Roadmap for the next 15 trading sessions
Ideas Nifty Levels
Trading above 17,280 on a weekly closing basis
Resistance for the medium-term 17,280
would give momentum to the bulls
Close below 16,760 on the weekly chart would
Support for the medium-term 16,760
change the trend and trigger a retreat
correction was limited to 8.3 per cent.
Any correction above 10 per cent is
categorised as a clear downtrend. A
majority of corrections were limited to
just 5 per cent. Forming a bearish
engulfing candle on a monthly chart
confirmed the previous months’ shooting
star candle’s bearish implications. To
avoid the bearish implications of this
pattern, the Nifty needs to close above
the level of 17,672 that currently does not
seem probable. Interestingly, the 100-day
moving average is violated and the 50
DMA has begun its downtrend. As
cautioned earlier, 80 per cent of the head
and shoulders’ target has been met.
Importantly, the benchmark index
decisively closed below the downward
channel support too. It retraced 50 per
cent of the rally from the low of July 28.
In any case, if it fails to move above
17600, the next support is at 16,694,
which is a 61.8 per cent retracement
level. It would be a strong support zone.
Nifty entered into a near oversold zone as
Equity
Action to be Initiated Probable Targets
17,478-17,600
16,694
the RSI reached 32.2. The weekly RSI is
below the April swing low. This is a clear
sign that strength is weakening in the
market. The index closed much below
the lower Bollinger band and there is a
possibility of bouncing back into the
bands. Any recovery in market sentiment
may lead to a technical bounce towards
17,478.
The broader market suddenly
went into a bearish grip. As many
as 16 stocks in the Nifty 50 closed
below their 200 DMA last
weekend. The Nifty 500,
representing 95 per cent of the
market capitalisation, is just
hanging on the 100 DMA
support. Importantly, across
sectoral indices, the relative
performance is declining. Strong
and leading sectors like IT,
metals and pharmaceutical are
nowhere near the leading
quadrant. Sectors in the leading
quadrant such as realty, media,
energy and the PSU banks are
losing their momentum. As Nifty
breached the long rising
trend-line support drawn from the
March 2020 lows, it shows that the
18-month long uptrend is matured and
signalled a reversal.
The weekly MACD also has given a fresh
sell signal. The distribution day count at
six is also a bearish sign. As the market is
in a clear intermediate downtrend, avoid
new purchases for now. With the above
evidence, the outlook is very negative
and any bounce towards the 17,200-
17,300 range will be an opportunity to
trim down the portfolio. The 150 DMA is
the key support for the near term. Along
with the 61.8 per cent retracement level,
it could act as support for now.
DSIJ.in
 STOCK RECOMMENDATIONS

KOPRAN LTD. ............................ BUY ............................. CMP `258.85

BSE Code : 524280 Target 1 .... `305 | Target 2 ..... `340 | Stoploss....`240 (CLS)
Kopran is an integrated pharmaceutical company
manufacturing a large range of products that include
both active pharmaceutical ingredients and finished
dosage forms. It has state-of-the-art manufacturing
facilities and products with various accreditations and
approvals by major global regulatory authorities. It
exports to over 50 countries. Two products were
commercialised during the last six months. And
research and development for another two products has
been completed. Technically, the stock has broken out
of a 16-week cup pattern. For the last four weeks, the
volume has been above average and indicates
accumulation. The stock is trading well above the key
moving averages and 19 per cent above the 50 DMA
and 39 per cent above the 200 DMA. The MACD gave a
fresh buy signal last week and the histogram shows strong momentum. The RSI is in a bullish zone. As the stock is at a new
lifetime high, the ADX is very at 36.84 and displays trend strength. It is above the +DMI and -DMI. The Elders impulse system
shows a bullish sign. The Mansfield relative strength is at 2.62 and indicates outperformance compared to the broader market. It
is also above the anchored VWAP resistance. In short, the stock is in a strong bullish zone. A move above `261 is positive and it
can test `305 with medium-term target of `340. Maintain a stop loss at `240.

APOLLO HOSPITALS ENTERPRISE LTD. ......... BUY ....... CMP `5,726.65

BSE Code : 508869 Target 1 ..... `6,056 | Target 2 .... `6,552 | Stoploss....`5,410 (CLS)
Apollo Hospital was established in 1983 as India’s first
corporate hospital. It is acclaimed for pioneering the
private healthcare revolution in the country and has
emerged as Asia’s foremost integrated healthcare
service provider with a robust presence across the
healthcare ecosystem, including hospitals, pharmacies,
primary care and diagnostic clinics and several retail
health models. The group also has telemedicine
facilities across several countries along with health
insurance services, global projects consultancy, medical
colleges, medical university for e-learning, colleges of
nursing and hospital management and a research
foundation. The stock is trading at a new high with
better relative strength.

After an eight-week cup breakout, the stock has

consolidated within the range for the last eight trading sessions. It is comfortably placed above its key moving averages and
around 22 per cent and 49 per cent from 50 DMA and 200 DMA. Its relative price strength is at 75. The Mansfield relative
strength is as high as 4.15, a better strength compared to the broader market. The stock is above the anchored VWAP. For the last
two weeks, the volumes recorded above average and show accumulation. The weekly ADX of 56.03 shows solid strength in the
trend. The MACD histogram displays strong momentum. The RSI is in a strong bullish zone. A move above `5,700 is positive and
it can test `6,056 in the short-term and `6,552 in the medium-term. DS

*LEGEND: n EMA - Exponential Moving Average. n MACD - Moving Average Convergence Divergence n RMI - Relative Momentum Index
n ROC - Rate of Change n RSI - Relative Strength Index (Closing price as of Nov 29, 2021)
Disclaimer : Above recommendations are based on various technical parameters and any fundamental input has not been considered for the recommendations. Follow strict stop loss for the recommendation.

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 15

Analysis
POONAWALLA FINCORP
POTENTIAL TO OUTPACE NATIONAL GROWTH
The company is a diversified asset financier both in term of products as well as geographies, which helps
mitigate risks. It possesses a sound business model with a presence in high-yield, high-growth business
segments and superior sustainable returns
P
oonawalla Fincorp Limited (formerly known as
Magma Fincorp Limited) is a non-deposit taking,
non-banking finance company (NBFC), registered
with the Reserve Bank of India (RBI). Magma Fincorp
Limited went into business in 1988. In more than three decades,
the company emerged as a trusted NBFC, addressing the
growing and widening needs of more than 5 million customers,
largely rural and semi-urban. The Poonawalla Group of
Companies acquired a majority stake in Magma Fincorp
Limited in the first quarter of FY 2021-22, following which it
emerged as the promoter group of the company.
The new promoter owns 60 per cent of the company’s equity.
The company has a widespread coverage and presence across 21
states, 297 branches and the customer base stands at approxi-
mately 5.4 million with a loan book of more than `14,000 crore.
They offer a bouquet of financial products including SME
finance, mortgage finance, unsecured loans and general
insurance. The company’s physical presence is complemented
by a digital footprint that empowers field executives to conduct
business from channel and customer locations, enhancing sales
productivity, deepening market coverage and improving the
customer experience.
Sector Overview
NBFCs have become important constituents of the financial
sector and have been recording higher credit growth than
scheduled commercial banks (SCBs) over the past few years.
NBFCs are continuously leveraging their superior understand-
ing of regional dynamics, well-developed collection system and
personalised services to expedite financial inclusion in India.
Lower transaction costs, quick decision-making, customer
16 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
Equity
orientation and prompt provision of services have typically
differentiated NBFCs from banks. Considering the reach and
expanse of NBFCs, these are well-suited for bridging the financ-
ing gap. Systemically important NBFCs have demonstrated
agility, innovation and frugality to provide formal financial
services to millions of Indians.
Over the last decade, NBFCs have witnessed phenomenal
growth. From being around 12 per cent of the balance-sheet
size of banks in 2010, these are now more than a quarter of the
size of banks. The business model of the NBFC sector was
severely tested in FY21. The overall loans and advances
contracted in H1FY21 due to weak demand on the back of
nationwide lockdown. However, as the economic activities
gradually resumed, loan disbursements gained momentum in
H2FY21. Collection efficiency also gradually improved to be
near normal in Q4FY21. The fact that many NBFCs have
managed to overcome these severe stresses without significant
impact is a testimony to their resilience.
The growth in FY22 is envisaged to be driven by the improve-
ment in demand from all key target segments vis-à-vis the
current fiscal, which was impacted by the pandemic-related
lockdown. Growth would be contingent upon access to
adequate funding lines i.e. incremental bank loans to non-
banks, which would in turn depend on overall bank credit
growth. With superior capital adequacy, better margins, frugal
cost management and lower non-performing assets (NPAs), the
NBFC sector is well-poised to seize the opportunity provided in
the post-pandemic revival cycle. The revised regulatory
framework proposed by the RBI intends to make the NBFC
sector more resilient.
DSIJ.in
Financial Overview
Quarterly : In terms of quarterly consolidated
financial performance, the company registered a 15
per cent fall in its interest income to `483 crore in
Q2FY22 versus `566 crore in Q2FY21. Its total
income during Q2FY22 fell nearly 15 per cent to `513
crore as against `603 crore in Q2FY21. The company
reported a 2.53 times jump in its Q2FY22 net profit to
`96 crore, relative to net profit of `38 crore during the
corresponding quarter of the previous financial year.
The company continues to maintain a strong liquidity
position with around `1,700 crore of surplus liquidity,
with additional term loan sanctions in the hand of
`1,750 crore. Collections showed an improving trend
from 93.1 per cent in June 2021 to 98 per cent in July
to further 99.9 per cent in September 2021.
Source: Investor Presentation Q2FY22, Poonawalla Fincorp Ltd
Assets under management (AUM) grew nearly 6 per
cent quarter-on-quarter to `15,275 crore at the end of Septem-
ber 2021. In terms of annual consolidated financial perfor-
mance, the company registered a 8.21 per cent de-growth in
total income from `2,562.88 crore in FY20 to `2,352.48 crore in
FY21. The company reported net loss of `564.45 crore in FY21,
in comparison to a profit of `28.06 crore. The company’s net
interest margin (NIM) increased to 8.2 per cent in FY21 as
compared to 7.6 per cent in FY20 on account of decreased
finance cost. The write-offs and provision increased from
`485.79 crore in FY20 to `1,447.99 crore in FY21 as the
company has moved to stricter write-off policy and made
additional provision for likely adverse impact of the second
wave of the pandemic.
During FY21, the consolidated disbursements declined by 43
per cent i.e., from `6,428 crore in FY20 to `3,680 crore in FY21.
The decline was mainly due to disruptions in business, induced
by the pandemic. Within the company, there was a focus on
maintaining portfolio quality in the light of adverse economic
trends. Hence, the company followed a cautious policy with
respect to lending. Assets under management declined 12 per
cent i.e., from `16,134 crore in FY20 to `14,225 crore in FY21.
On a standalone basis, the capital risk adequacy ratio (CRAR)
for the year FY21 was 20.3 per cent as against the RBI stipulated
norm of 15 per cent for non-deposit-taking asset finance
companies.
Outlook
The company’s asset-backed financing (ABF) business is the
largest, accounting for 59 per cent of the company’s overall
assets under management as on March 31, 2021. With the
recent sizable net worth infusion by the new promoter group,
there is optimism of faster business growth than the retrospec-
tive average. The company intends to right-size its portfolio
with the following products being discontinued: pre- owned
trucks, pre-owned construction equipment, tractors and
automotive leads. The company plans to focus on the pre-
owned car segment, which is growing at 10-11 per cent CAGR
with increasing demand from the middle-income customers
DSIJ.in
upgrading from first-time buyers finding a value proposition in
pre-owned cars.
The company is increasing weight of the pre-owned cars
financing in their portfolio as financing penetration is ~20 per
cent of overall sales, which is less than one-third of the new
cars’ value sold under finance (which is 75 per cent). Only 30
per cent of the pre-owned car market access is organised; with
the digitisation of sale of products, focus of OEMs on second-
hand asset sales and increase in formal financing, the market is
getting organised. In FY21, Poonawalla Fincorp touched an
estimated 7 per cent market share in the organised pre-owned
car financing segment and is relatively well-positioned to grow
in the segment based on a low cost of funds.
Despite FY21 being unusually challenging, the company
emerged with a robust balance-sheet marked by a capital
adequacy ratio higher than that mandated by the Indian central
bank, relatively low delinquency when compared with the
Indian average for undocumented customers and multi-year
business sustainability better than the broad sectoral average.
The company prudently protected the integrity of its balance-
sheet with adequate cash on the books, unutilised credit limits
and a strong disbursement pipeline that could be growth-ready
at all times. With a conservative policy in place the company
holds provision of `1,192 crore as on March 31, 2021 to counter
the pandemic-related impact on their prospective profitability.
Poonawalla Fincorp is a diversified asset financier both in term
of products as well as geographies, which helps mitigate risks.
The company possesses a sound business model with a
presence in high-yield, high-growth business segments and
superior sustainable returns. The company is present in
business verticals that are likely to grow faster than national
growth and has invested heavily on technology as a
strategic enabler which has helped it to run operations even
during the pandemic. Other strengths include customer focus,
product innovation and superior delivery. Hence, we recom-
mend HOLD. DS
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 17
Special Report
Small is Profitable Too!
The biggest risk in equity market investment is not the volatility
but the risk of wiping out of the capital. The risk of capital erosion
is at its maximum when one invests in micro-cap companies – at
least that is what the perception is. Shreya Chaware explores
the pros and cons of micro-cap investing while also highlighting
the performance of the tiny treasures
W
hen it comes to equity investing, one of the
important questions every investor struggles to
find an answer to is how much of the total
portfolio money should be allocated to small-
caps, mid-caps and large-caps. Often the fine judgement of
portfolio allocation across market capitalisation comes with
experience and after studying the risk profile of individual
investors. For a conservative investor it is recommended that 90
per cent of the portfolio money allocated for equity investments
should be parked in large-caps and the remaining 10 per cent in
mid-caps and small-caps. If the investor’s risk profile suggests
higher risk-taking ability, in that case the allocation can be 50
per cent in small-caps and mid-caps with 50 per cent in
large-caps.
For a moderate risk-taker, the recommended portfolio
allocation is 70 per cent in large-caps and 30 per cent in
small-caps and mid-caps. If one sticks to the above suggested
portfolio allocation derived after a thorough risk profiling is
done, chances are the experience in the equity market will be
good as the portfolio will be aligned to the risk-taking ability of
the individual investors. Now, how does one accommodate
micro-cap stocks in a portfolio that shows promise? What are
micro-cap stocks and should micro-cap stocks be included in
the portfolio at all? It is perceived that micro-cap stocks are
highly risky and not for conservative investors. However, for
those investors with higher risk-taking ability, micro-cap
investing is not untouchable.
18 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
Micro-Cap Portfolio Building
To start with, it is important to distinguish between penny
stocks and micro-cap stocks. Penny stocks are the ones whose
share price is less than `10 per share or even `20 for that matter
and the market capitalisation is lower than the small-caps.
Micro-cap stocks have low market capitalisation and usually
trade with low volumes on the bourses. Typically, micro-cap
companies can be the ones below market capitalisation of
`1,000 crore. Then we also have something called nano-caps.
Stocks with market capitalisation less than `100 crore or even
`200 crore are at times called nano-caps. Historically speaking,
we find that micro-cap companies are almost always risky for
investment.
This is not only due to inherent volatility but also on account of
the probability of wiping out of the complete capital. Says
Chetan Tupe, a micro-cap investor: “I think micro-cap
investing is grossly underrated by individual investors. There is
lot of money to be made in micro-cap stocks and the so called
nano-cap stocks. If one applies the basics of investing principles
to micro-cap stocks, a market-beating portfolio can be
constructed. Yes, there is a risk of not only capital erosion but a
complete wiping out of the capital if a wrong micro-cap is
selected, but overall if a portfolio is constructed of hand-picked
micro-cap stocks after through research, beating market returns
is a cake-walk.”
“As to whether it is a high-risk, high-reward game, definitely
DSIJ.in
yes. It is an extremely rewarding experience in my view. In my
portfolio I have invested at least 20 per cent of my capital in Micro-cap investing is a great form of investing
micro-cap companies. The trick in micro-cap investing is for those who have the ability to operate in the
portfolio diversification and understanding the businesses of
small-sized companies. Reading the balance-sheet and profit market in a disciplined manner and believe in
and loss statements will not suffice while investing in micro-cap portfolio diversification. The diversification
companies. One will have to try to listen to the promoter.
Understand the strategic initiatives that the promoter is needs to be wider when one invests in micro-
focusing on and try to translate those initiatives into earnings. cap companies.
These days the promoters of micro-cap companies who have a
solid story to tell do interact with investors online. I ensure to
attend those investors’ meets on a regular basis,” he adds.
Conclusion
Attending such meets or interactions provides a realistic Micro-cap investing is a great form of investing for those who
perspective on a company’s business growth which in turn helps have the ability to operate in the market in a disciplined manner
build conviction. A basic hygiene check is just a mandatory task and believe in portfolio diversification. The diversification
to scan opportunities in the micro-cap investing world. A needs to be wider when one invests in micro-cap companies. By
thorough fundamental analysis is a must; however, there are wider diversification what we mean is that instead of holding
practical problems while analysing data for micro-cap 12-14 stocks in the portfolio one needs to have at least 20-25
companies because of the lack of comprehensive data on stocks with small allocation spread over 5-10 micro-cap stock
company financials. One has to dig deeper for the data and rely bets. Overall exposure can be restricted to 20-25 per cent of the
on annual reports for basic information about the micro-cap portfolio at the maximum if one is a high-risk investor. By
companies. The following table highlights the outperformance doing so the portfolio can generate an alpha and it will be
of the micro-cap companies: possible to beat the market in the long run. No advance
research technique is required to beat the markets. One just
Top Performing Micro Cap Companies needs to keep it simple and focus on the growth levers.
Latest Market Cap 1 year return
Company Name
(`crore) (%) It is more important to understand whether the promoter is
Equippp Social Impact Technologies 1016.00 30696.88 capable of delivering on the growth promises. A good amount
Flomic Global Logistics 144.61 14246.43 of time should be spent on understanding the capabilities of the
TTI Enterprise 122.45 6079.49 promoter. This additional effort of estimating promoter
Radhe Developers (India) 861.66 3639.89 strength while analysing the prospects of any micro-cap
Jindal Photo 474.04 3248.55 company can be the deciding factor. When one invests in any
Jindal Poly Investment and Finance Co. 441.76 3152.71 large-cap company the promoter track record is more or less
3I Infotech 1810.14 3145.59 proven. The promoter is assumed to be a wealth-creator. Such
NCL Research & Financial Services 95.54 2886.36 comfort is not available to investors of micro-cap stocks and
Ushdev International 173.99 2605.26 hence there is an additional unknown when investing in
Digjam 14.67 2501.06 micro-caps. The lack of track record of the promoter is clearly
Rohit Ferro-Tech 228.12 2437.97 the additional risk one takes while investing in micro-cap
JITF Infralogistics 495.18 2308.12 companies along with the unavailability of information about
Available Finance 100.56 2155.15 the company.
Cosmo Ferrites 229.05 2116.53
Gita Renewable Energy 56.32 1950.15 However, micro-cap companies these days are seen reaching
Mukat Pipes 18.30 1883.33 out to investors via various mediums and every attempt should
Xpro India 835.39 1824.22 be made by the investors to study the details of the business
Indian Infotech & Software 343.18 1700.00 model before investing in a micro-cap company. Micro-cap
Lloyds Steels Industries 1097.31 1644.29 companies are also notorious for being operated by certain
Pan India Corporation 67.92 1568.42 punters who tend to be manipulative. Because micro-cap
Unistar Multimedia 14.50 1511.11 companies are low-liquid stocks, even a small above average
GRM Overseas 2165.40 1471.64 buying quantity can move the prices substantially. Hence,
Sportking India 1733.51 1440.32 micro-cap companies are prone to manipulation by the
Sharp Investments 66.58 1427.78 so-called market operators. However, a carefully selected micro-
Waaree Renewable Technologies 431.28 1364.31 cap company with a durable business model will eventually see
Megri Soft 55.42 1346.31 buyers’ participation on the rise which leads to volume increase
ANG Lifesciences India 570.63 1319.60 in the counter in the long run, thus leading to profitable exit
Raghuvir Synthetics 1430.65 1309.16 opportunities. DS

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 19

Communication Feature


We Have Been What is flexible packaging? What is your take on global
flexible packaging markets and business outlook of UFlex?

Sailing On The Tide

Flexible packaging is a light-weight packaging made out of
polymer structures. While it is used for a variety of applications,
it’s most common use is in primary food packaging to protect

Of Expansion
In this exclusive interaction, Rajesh Bhatia,
Group CFO, UFlex, outlines the company’s
strategy in terms of sustainability while also
sharing information about how the company has
been on an expansion spree in recent times both
in India and outside
food from degrading and extending its shelf life. Flexible
packaging delivers several other virtues and values such as
barrier properties, aesthetics, convenience of transportation,
storage and use, security and easy recyclability to all its
stakeholders that includes manufacturers, brands and
consumers and finally for the environment as well. Common
examples of flexible packaging include bags, pouches, shrink
films, tubes, blister packs, etc.
As per a report by Allied Market Research, the global flexible
packaging market has been valued at USD 182.3 billion in 2020
and owing to its CAGR of 6.2 per cent is projected to reach
USD 325.6 billion by the year 2030. This growth is witnessed on
account of higher per capita income, increased focus on hygiene
and packaged foods since the outbreak of the pandemic and
innovation-driven focus of packaging converters and brands.
Also, the ease of recycling flexible packaging has seen an
increased shift from rigid to flexible packaging.

As the biggest flexible packaging company in India, UFlex has

been sailing on the tides of expansion, robust order book and
volume growth. Since the last fiscal, with the commissioning of
greenfield and brownfield projects for packaging film
manufacturing facilities at strategic locations across the globe,
UFlex has achieved almost 40 per cent YoY jump in its H1 sales
volume in FY22 for packaging films. In FY22, H1 revenues were
up by 37 per cent YoY and for the entire fiscal year 2021-22 as a
whole, we are confident of maintaining the momentum.

What steps are being taken by UFlex to grow its market

share?
UFlex’ strategy to grow its market share has been to identify
potential markets which have large population base but are
currently being fed largely through imports and just about ripe
to justify local production facility, which gives us the first mover
advantage. It is with this approach of manufacturing locally and
being close to customers that we planned our recent spate of
expansions in packaging films. In FY2020-21, we moved our
Dubai 30,000 TPA capacity BOPET line to Russia through
greenfield expansion to leverage on the already existing markets
we had created for our packaging materials.

Then, we commissioned a new BOPP line with capacity of

42,000 TPA in Hungary, which is the first BOPP facility in that
country. Likewise, our most recent expansion was in Nigeria
Rajesh Bhatia, Group CFO, UFlex where we have installed a first-of-its kind 10.6 m wide BOPET

20 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

packaging film line to manufacture 45,000 TPA, which again is
the first BOPET facility in Nigeria. As all our existing
packaging films plants were running at almost full capacities
owing to greater demand, we commissioned an additional
BOPET line in Poland with 45,000 TPA and 42,000 TPA BOPP
line in our Egypt plant.
With these expansions, we are today the largest thin BOPET
film producers in the European Union. We are also the
second-largest in the world and well on our way to become
world leaders in BOPET film manufacturing after the
commissioning of our new plant in Dharwad in South India.
We are also coming up with a CPP film line in our Dubai plant.
On the packaging front, our aseptic liquid packaging facility at
Sanand is also set to double its production capacity in the
short-run and will pack an additional 3.5 billion packs for
Asepto clients. Moreover, the portfolio of sustainability-led
products that we are offering is also helping us acquire more
clients in each business vertical, especially in packaging, and
thus helping us gain a larger market share as well.
What is the impact of the rising raw material prices on the
profit margins of UFlex?
Rising raw material prices in our industry are normally passed
on to the customers either instantly or with a bit of a lag,
depending on the customers’ contract. Our raw material prices
are linked to crude prices and well-established indices. Since the
onset of the pandemic last year, raw material prices have been
quite volatile. While initially the raw material prices declined
substantially in Q1FY21, these have been steadily increasing
thereafter and there has been a lot of volatility because of supply
chain as well as raw material availability issues due to local
lockdowns. In the last two quarters, the raw material prices have
been continually increasing, which impacted our margins in
Q2FY22. However, we believe that once the raw material prices
stabilise, the margins will also stabilise.
DSIJ.in
What are the new growth opportunities facing UFlex at
this juncture?
While flexible packaging is one of the best solutions to minimise
food waste due to its unmatchable barrier properties,
conversations around the menace of plastic waste have opened
doors to the dire need for sustainable formats of packaging. It is
interesting to take note of green packaging ruling the game and
combined with other critical aspects, desired by Gen Z, to drive
major changes in consumer packaging. This is further propelled
by regulators who are designing guidelines that prompt CPG
and other FMCG brands to make bold commitments to improve
both, the sustainability of their packaging and fundamentally
re-think their packaging ecosystem.
UFlex was able to identify, many decades ago, that sustainability
holds the key to a prosperous tomorrow for people and the
planet and this will also drive our business growth. Our
developments in products and technology has always held this
purpose at its core and is now gaining recognition and
acceptance due to regulatory reforms and brands’ interest. Some
of our flagship developments that helped brands move closer to
their sustainability goals includes our up to 100 per cent
PCR-based green packaging film ‘Asclepius’, paper-based tubes
‘Kraftika’, and water-based inks and adhesives along with easily
recyclable mono-material packaging structures.
We are also coming up with our ground-breaking enzyme-
based biodegradable development in flexible packaging that
quickly breaks down packaging waste into biomass, if left
uncollected for recycling. In a nutshell, the decade will witness
performance-based packaging where it will be judged not only
on the basis of its barrier structure and convenience but also by
its ability to define a life beyond its original use. In short, the
call of the moment is that all products manufactured across the
world must adhere to the norms of sustainability since it is our
responsibility and commitment to turn this world into a better
place. And this is where the opportunity lies ahead for us.
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 21
Communication Feature
Ang Lifesciences India
On A Healthy Growth Curve
A
NG Lifesciences India Limited was incorporated in
the year 2006. It embarked upon its journey as a
pharmaceutical formulation manufacturer in 2008
with a new plant at Baddi for the manufacture of
finished pharmaceutical formulations in a dosage
form of sterile dry powder injection (DPI) in vials. To implement
its plans related to growth and product diversification, the
company has acquired three pharmaceutical formulation plants
at Baddi recently. The company has already completed
acquisition of one plant at Jodapur, Barotiwala from MBP
Pharmaceuticals Private Limited and is manufacturing tablets,
capsules and dry syrups in the beta-lactum segment. The plant is
presently operating as Unit 4 of the company.
ANG Lifesciences India acquired the penicillin formulation unit
of Star Biotech in 2019. The plant is under modification and
expansion and is expected to be operational at the end of current
FY 2021-22. This plant will generate additional revenue of `250
crore. Moreover, ANG Lifesciences India acquired two
formulation plants of Ind-Swift Limited for `60 crore in August
2021. This plant is now running as Unit 5 and Unit 6, respectively.
The company expects a potential sales turnover of `500- 600
crore with 100 per cent capacity utilisation basis from this plant.
ANG Lifesciences India also acquired Mansa Print and
Publishers Limited located at Baddi as a wholly owned
subsidiary company on April 1, 2021 with the purpose of cost
optimisation and timely availability of packaging products for its
formulation business. In November 2021, ANG Lifesciences
India decided to acquire 51 per cent stake in Baddi Agro
Private Limited which will become a subsidiary company. The
purpose of this acquisition is to manufacture menthol API
derivatives and other products at the manufacturing plant
situated at Baddi in Himachal Pradesh. It was formerly known
as Surya Pharmaceutical Ltd. The plant capacity is 10,000 MT
which is 20 per cent of the global overall capacity.
The company has geographical presence across India, Africa,
Latin America, Gulf Countries & ROW etc . Presently, the
22 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
Total Revenue
H1FY22 (6 Month) `215.54 Cr 315%
H1FY21 (6Month ) `86.55 Cr
EBIDTA
H1FY22 (6 Month) `49.09 Cr 756%
H1FY21(6Month ) `6.49 Cr
PAT
H1FY22 (6 Month) `33.78 Cr 2221%
H1FY21(6Month ) `5.50 Cr
company owns and operates 7 state of the art manufacturing
facilities & manufactures over 1000+ formulations at Baddi
(H.P). These facilities are laced with latest machinery and
designed to meet the requirements of both advanced as well as
emerging market opportunities.
The Company’s products portfolio include 100+ products.With
strength of over 800+ employees, the company currently
operates a strong manufacturing setup consisting of 5
formulation facilities now under its 7 manufacturing locations.
These state-of-art facilities have integrated process development
teams with in-house engineering capabilities & maintains a
strong analytical capability presence through Quality Assurance
and Product Development Teams. The company is ISO
9001:2008 Certified & The plants are approved by WHO-GMP
and GLP.
Furthermore, in November 2021, ANG Lifesciences India
decided to acquire 100 per cent equity shares of ANG
Healthcare India Private Limited. Therefore, ANG Healthcare
India will become a wholly owned subsidiary company of ANG
Lifesciences India. This acquisition will help the company in
brand-building, domestic branding and direct marketing
initiatives for the purpose of staying close to the customer.
During 2017, the company came up with an IPO and got listed
on the SME platform of BSE. The company had announced a
bonus issue in the ratio of 1:1 in August 2021. The company
migrated from the SME platform to the main board of BSE on
November 8, 2021. Recently, the company declared for payment
interim dividend of `1 per equity share which is 10 per cent on
the face value of `10 each on the equity shares of the company
for the financial year 2021-22. During H1 of FY 2021-22 which
was the challenging phase of the second wave of the pandemic,
ANG Lifesciences India was able to generate EBIDTA of `49
crore in H1FY22 (6Month). The company is confident of
achieving revenue of `400 crore for FY 2021-22 and has given
revenue guidance of `800 crore for FY 2022-23 with healthy
bottom-line.
DSIJ.in
 D E M O C R A T I Z I N G W E A L T H C R E A T I O N

P R E S E N T

Special Feature
on Plastic Industry
Special Feature
Plastic Takes A Profitable Turn
Even if activists around the world would rather put a complete ban on plastic products, several triggers
such as the pandemic-driven change in work and lifestyle, increasing urbanisation, growth in
infrastructure and demand from the agriculture industry, among other factors, have boosted production
in the plastic pipe and packaging sectors. In this report, Armaan Madhani highlights the salient growth
drivers while also pointing out the key challenges
M
arket growth and diversification – these are the
two factors that have contributed to the rapid
strides taken by the Indian plastic industry in
recent years. Latest reports indicate that the
industry is likely to see increasing demand in the post-pandem-
ic era. In fact, among the very few industries to have done so,
the Indian plastic industry has shown resilience by staging
healthy recovery from the pandemic-induced slowdown in the
first two quarters of FY21. In this special feature, we delve
deeper to understand the plastic piping and plastic packaging
sectors.
Plastic Piping Sector
The global plastic piping market is valued at USD 55.96 billion
and expected to grow at a CAGR of 2.8 per cent from 2021 to
2025 to reach USD 62.41 billion by 2025. In terms of volume,
the global PVC pipe market has reached 24.51 million tonnes in
2020 and is expected to reach a volume of 30.25 million tonnes
by 2025. The Indian plastic pipe and fittings industry is
expected to reach `500-550 billion by 2025, growing at a CAGR
of 10 per cent from the current level of `290-300 billion. The
primary driver of growth in the piping and fitting industry is
the rapid pace of urbanisation and infrastructure development.
Increasing urbanisation calls for larger and cost-effective
sewage lines, among other applications. This has also led to
24 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
demand in the chemical as well as the oil and natural gas
sectors. Other industries such as automotive and mining are
also likely to boost the demand for plastic pipes. The growth
drivers are as follows:
n Low Per Capita Consumption : Globally, the average per
capita consumption of plastic is around 30 kg while that of
India is only about 11 kg, which is relatively very low. Tradi-
tional materials dominate the applications of plastic. However,
over the past 3-4 years, low crude oil prices and superior
properties of plastic have increased the usage of plastic in India.
Hence, it is expected that the per capita consumption will inch
closer to the global average. CRISIL Research expects demand
for polymers to grow at a healthy 7-9 per cent CAGR from
2019-2024.
n Substitution and Replacement Demand : Superior real
estate properties and low prices have led to the substitution of
metal pipes by plastic pipes. The increase in the availability of
raw materials such as PVC, PE and PPR followed by the
commissioning of new petrochemical facilities in India will
further support the plastic pipe industry. Also replacement of
older pipes with plastic pipes will help in driving the demand.
n Sectoral Consolidation : In recent times, several smaller
players in the PVC pipe sector have been impacted by volatility
in PVC prices, liquidity crisis and working capital constraints,
which has led them to close their operations. It has been
observed that the market share of top players has increased due
to the shutdown of operations by the smaller unorganised
players. This creates an opportunity for sectoral consolidation.
n Focus on Irrigation : The irrigation sector is the key end-user
for plastic pipes, accounting for 45-50 per cent share of the
industry. India has 142 million hectares of cultivated land but
only around 50 per cent of the land is irrigated. Hence, in FY16
the central government converged irrigation schemes under the
Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) to expand
the area under cultivation by 2.85 million hectares in FY17 and
8 million hectares by FY20, outlining a spending target of `500
billion until 2020. The key schemes converged are Accelerated
Irrigation Benefits Programme, Integrated Watershed Manage-
ment Programme, On Farm Water Management and Per Drop
More Crop. Investment in the sector is expected to rise in the
next five years owing to the push from state governments to
DSIJ.in
increase irrigation penetration in the states.
Healthy growth in government investments towards water
supply and sanitation (WSS) and plumbing are the second-
largest segments for plastic pipes, accounting for 35-40 per cent
share of the plastic pipe market. In the past five fiscal years i.e.
from FY14 to FY19, the government expenditure on the sector
rose at 22 per cent CAGR to about `624 billion in FY 2019. This
was led by several central government schemes, coupled with
rising emphasis by municipal authorities. The government has
also proposed a ‘Nal se Jal’ scheme, a component of the Jal Jivan
Mission, which promises to provide piped drinking water to
every household in the country by 2024.
n Real Estate Development: Real estate is a key end-user
sector for plastic pipes and fittings in India. Housing for All
2022 – National Mission for Urban Housing will also provide a
boost to the industry. The Government of India has increased
the allocation for the Pradhan Mantri Awas Yojana (PMAY) to
`260 billion for FY21 from `80 billion to boost the housing
sector and has also relaxed an Income Tax provision to enable
developers to reduce property rates by up to 20 per cent
compared to the existing circle rates. The Indian government
will infuse `60 billion as equity in the National Investment and
Infrastructure Fund’s debt platform as India readies for a
massive `111 trillion infrastructure pipeline.
n Government Push for Infrastructure : The Indian govern-
ment and large private sector companies have planned capex
over the next 3-5 years with meaningful spending on applica-
tions such as plumbing, insulation, sewage drainage, fire
sprinklers and urban infrastructure. Plastic pipes account for
5-10 per cent of the total project capex and implies sustainable
demand for PVC pipes going forward. Given the country’s
ambition to modernise infrastructure, advance its cities with
smart development and boost employment, India is expected
to become the third-largest construction market in the world
by 2025.

Performance of Top 25 Listed Plastic Product Companies

Market Cap* (` Returns* (%)
Company Name TTM PE* ROE (%) ROA (%)
Cr) 1 Month 3 Month YTD 1 Year
Astral Ltd. 43,003.95 85.59 24.46 16.74 0.51 8.61 63.06 90.46
Supreme Industries Ltd. 26,955.74 23.37 30.65 21.06 (9.61) 4.54 25.94 33.24
Finolex Industries Ltd. 12,539.84 13.47 28.16 20.09 (10.67) 19.48 54.13 64.76
Prince Pipes and Fittings Ltd. 8,642.56 33.52 23.65 13.61 5.43 27.85 152.36 195.65
EPL Ltd. 6,247.92 26.53 15.25 8.47 (8.83) (13.74) (24.13) (22.72)
Polyplex Corporation Ltd. 5,608.73 12.15 28.35 14.07 5.23 20.37 149.39 138.57
Jindal Poly Films Ltd. 4,671.57 5.14 35.18 17.19 10.16 12.85 132.29 128.38
Tarsons Products Ltd. 4,469.33 64.90 24.35 17.60 - - - -
Nilkamal Ltd. 3,565.89 28.94 10.27 6.81 (3.85) (12.74) 58.75 76.86
Responsive Industries Ltd. 2,988.09 154.92 2.55 1.87 (4.84) (8.91) (40.23) (32.86)
Cosmo Films Ltd. 2,574.26 8.08 29.91 11.77 (2.84) 13.18 211.16 222.93
Apollo Pipes Ltd. 2,290.21 41.07 13.95 8.91 (0.20) 16.45 142.91 167.69
Jai Corp Ltd. 2,169.94 20.06 6.85 5.91 (3.26) (3.34) 28.34 34.07
Jain Irrigation Systems Ltd. 2,000.36 41.45 (12.61) (3.19) (8.41) 38.25 112.66 107.20
Mold-Tek Packaging Ltd. 1,955.01 31.31 21.93 11.59 0.15 39.97 142.56 138.43
Garware Hi-Tech Films Ltd. 1,933.75 12.62 8.49 7.15 (11.65) (18.34) 99.01 163.99
Huhtamaki India Ltd. 1,770.99 - 13.24 6.23 (2.26) (11.48) (24.80) (24.22)
Time Technoplast Ltd. 1,752.64 10.54 5.73 3.17 8.09 7.49 56.72 71.27
Shaily Engineering Plastics Ltd. 1,605.36 44.34 12.91 5.19 (4.02) (2.74) 113.69 181.26
Kingfa Science & Technology (India) Ltd. 1,132.33 50.46 1.51 0.84 (5.33) (13.13) 58.40 70.34
Ester Industries Ltd. 1,010.32 7.63 53.71 31.91 (12.62) (9.25) 1.76 (2.30)
Sintex Plastics Technology Ltd. 973.31 - (55.88) (11.35) 175.18 274.08 365.05 553.85
Shri Jagdamba Polymers Ltd. 855.61 15.26 36.36 24.37 (8.51) (25.05) 80.14 184.50
Xpro India Ltd. 835.39 26.20 9.72 2.70 29.66 112.29 1,949.71 1,920.43
Sintex Industries Ltd. 804.15 - (52.04) (12.80) 175.00 244.99 201.57 337.13
*Data as on 26 November 2021

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 25

Special Feature
full-fledged resumption of construction and development
Key Concerns or Threats activities will help post growth. In the coming years, different
Some of the key concerns that affect the plastic end-user applications, value-added products, a shift from metal
pipe industry are as follows: to plastic pipes, ongoing consolidation and infrastructure
demand will help the large domestic plastic pipe manufacturers
n Volatility in Raw Material Prices: The primary raw materials to post healthy double-digit volume growth. It is believed that
comprise UPVC, CPVC, PPR and HDPE resins, which are large organised manufacturers with pan-India facilities will
derived from crude oil by-products. Crude oil prices are volatile take advantage of this opportunity to increase market share
and any fluctuations in the prices of crude oil would lead to over the coming years.
fluctuations in the prices of the raw materials required to
manufacture its products. India is a net importer of PVC and PE
as demand growth has outpaced capacity addition. Although
capacity expansion plans are in action by major domestic
manufacturers, growth in domestic output won’t be evidenced
in the near term. Thus, companies are not only vulnerable to the
exchange rate but demand supply mismatch also is a key risk
faced by players in the pipe and fittings industry.
n Softening of Agriculture Pipe Demand: Commodity prices
skyrocketed in FY20-21 and this resulted in inflation and a
consequential hike in PVC prices. There is an imminent threat
of a decline in pipe volumes’ demand due to farmers deferring
agriculture pipe purchases in the hope of a price correction.
The first quarter of FY22, which is typically a busy season for
agriculture pipes, has been impacted by both the second wave
of the pandemic and higher PVC prices. However, this segment
is expected to do well in terms of volumes in H2FY22 as the
prices have slowly started to narrow down.

n Lower Spending by Consumers: In FY 2020-21, there was a

drastic shift of consumer spending towards more modest levels,
especially due to a lot of job losses and wage reductions during
the pandemic. The ongoing uncertainty will certainly play on
the minds of consumers and investors. In commercial real
estate, there is also some concern about the impact of wide-
spread ‘work from home’ policies adopted by Indian corporates
during the lockdowns. Spending on construction is projected
to be more cautious.

Future Outlook of Piping Sector

The plastic pipe sector has shown resilience by recovering from
the pandemic-induced slowdown in the first two quarters of
FY21. In the second half of FY 2020-21, plastic pipes and
fittings witnessed a sharp recovery in their volumes, mainly on
the back of a sustained rise in demand. The Indian PVC pipe
industry has witnessed greater realisation supported by a sharp
rise in PVC prices in FY21. However, PVC prices have now
started easing and may stabilise in the near future. The
Government of India’s initiative for affordable housing,
irrigation sector and focus on rural water management along
with higher capex for infrastructure growth continue to be the
major drivers for the growth of the PVC pipe industry in the
country, particularly for organised players.
Plastic Packaging Sector
The global packaging market is projected to grow to USD
1,012.6 billion by 2021. It was estimated to be valued at USD
909.2 billion in 2019. People are now more than ever conscious
about food packaging worldwide amidst this pandemic, due to
which demand for packaging is set to increase. The Indian
packaging market was valued at USD 75 billion in 2020 and is
expected to reach USD 204.81 billion by 2025, registering a
CAGR of 26.7 per cent during the period of 2020-25. Packag-
ing is amongst the high growth industries in India and the
country is becoming a preferred hub for the packaging
industry.

It is likely that going forward, market consolidation, steadiness With the arrival of the pandemic, people have become more
in higher PVC prices, opportunities in the infrastructure pipe conscious of the food products they consume. The food
segment that is expected to pick up with the government’s industry has increased its focus towards better and safer
strong emphasis on infrastructure in the budget and the packaging for its consumers, resulting in robust demand for

26 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in


packaging material. It has also helped in prolonging the shelf
life of many products. In fact, this validates the increasing
demand for packaged consumer goods. Moreover, in India, one
can find a large base of raw materials to manufacture packaging
products. Besides, there is an increasing trend of using
eco-friendly or recyclable materials in packaging. The com-
paratively low manufacturing costs open opportunities to
foreign companies and technology too.
The packaging industry has experienced rapid growth globally
as a result of greater innovation and customer preferences for
global brands. Packaging sales in the emerging markets are
expected to continue to show strong momentum as both
increased consumption and demand for consumer goods drive
the need for more sophisticated packaging. Currently the
fifth-largest sector of India’s economy, the industry has
reported steady growth over past several years and shows high
potential for much expansion, particularly in the export
markets. Costs of processing and packaging food can be
substantially lower than parts of Europe which, combined with
India’s resources of skilled labour, make it an attractive venue
for investment.
A high degree of potential exists for almost all user segments
which are expanding appreciably – processed foods, hard and
soft drinks, fruit and marine products. In India, the fastest
growing packaging segments are laminates and flexible
packaging. PET is produced in India in huge volumes and
majority of the demand in the country is satisfied by domestic
production. PET resin demand is projected to grow at a CAGR
of 6.75 per cent in 2022-2030, according to a report by
ChemAnalyst. India’s demand for PET in the packaging of food
and beverages has witnessed a further increase during the
pandemic, boosted by the higher awareness of hygiene and
enhanced procurement of disposable and packaged items for
reducing the chances of viral infection.
Growth Drivers
There are certain well-defined triggers to help the
DSIJ.in
plastic packaging industry move forward. These
include:
n E-Commerce: The already fast rise in e-commerce has got a
big boost due to the pandemic with consumers opting to buy
products online and with hygienic packaging. The rise in
e-commerce could place an intense focus on increased
packaging requirements, including new products, along with
last-mile delivery innovations.
n Digitalisation and Internet of Things (IoT): Digital efforts
are being used both to simultaneously drive down costs and
gain a competitive edge with consumers, as for example,
generating greater customer value and service by integrating
technology in packaging. With Internet of Things (IoT) already
ruling the roost, packaging as an enabler will be far more
intuitive and help provide instantaneous information to the
consumers about the packed products.
n Innovative Packaging: Brands are well-personified assets
and enjoy an image that the marketers are very conscious and
sensitive about. Several FMCG companies world over are
opting to give their packaging designs a fresher look in line
with the attributes that their brand stands tall for. The mantra
is: ‘good packaging protects your product, while great packag-
ing protects your brand’. Domestic players in the sector are
geared towards developing innovative packages that are aimed
at attracting customers to drive sales.
n Sustainability Requirements: Sustainability is ubiquitously
on the rise at every step of the value chain with rising activists’
scrutiny. Notably, while the use of plastic has soared, the
ecological burden is provoking heavier restrictions with the
demand for sustainable solutions becoming more vociferous.
Leading Indian companies in the segment are witnessing
escalating awareness on sustainable packaging requirements as
an opportunity and are developing capabilities to cater to the
impending demand.
Future Outlook of Packaging Sector
In the course of the pandemic consumers stocked up as
governments announced quarantines and stay-at-home
measures. This boosted packaging consumption – and thus the
demand for rigid plastics increased in many markets, including
Europe. Over the last few years, the packaging industry has
been an important sector driving technology and innovation
growth in the country and adding value to the various manu-
facturing sectors, including agriculture and FMCG. Change in
consumption patterns and lifestyle, consumer awareness
surrounding packaged food, and a boom in e-commerce and
organised retail is expected to enhance the growth of the plastic
packaging industry and per capita consumption in the near
future. Rising purchasing power due to the growth in the per
capita income of the Indian middle-class is fuelling the Indian
packaging market in adopting better packaging methods, mate-
rials and machinery to ensure quality factors for Indian
businesses. DS
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 27
Cover Story

Contrarian
Investing Is
For All
Seasons!
The market is finally showing signs
of weakness after a one-way
movement from the time it hit the
lows in March 2020. This correction
in stock prices will create
opportunities for investors. However,
the question is about which strategy
will work best in the current market
situation. Will contrarian investing
approach suit in the current market
conditions? Yogesh Supekar
explains why contrarian investing
approach is for all seasons and how it
works

T
he benchmark index Sensex has fallen by
about 8 per cent from its all-time high In the recent fall we have seen that metal stocks too have
levels. This fall has been across merely 27 tumbled along with those of private banks. The BSE Metal
trading sessions. Thus, a sudden change in index is down by more than 10 per cent in the past one month.
trend has taken several bulls by surprise Interestingly, even real estate and energy stocks have been a
even though, to be fair, a correction was part of this correction. If we look at the performance on YTD
expected by market participants. It is the
depth of the correction and the speed that
has surprised a few. What is interesting to note is the
performance of the private banks. BSE Private Banks index is
The trend is your friend, at least
now the worst performing sectoral index and is down by more until the bend in the end.
than 13 per cent in the past one month. Banks have indeed
underperformed the markets even though PSU Banks has
shown relative strength when compared to private peers. Anonymous

28 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

 basis it is the metal stocks, power-sector related stocks and real
estate stocks that have outperformed the markets handsomely.
The broader markets have been able to give confidence to
investors as the BSE Small-Cap index has fallen by less than 2
per cent while BSE Sensex is down by about 7 per cent in the
past one month. The broader market outperformance is
remarkable in the current fall.
The change in market trend is always a testing time for long-
term investors. The extent of market correction is not easily
estimated and more often than not investors have no clue as to
how long any such correction may last. The price and time
correction can frustrate even the best of investors. In such
difficult times when market volatility is unnerving and
valuations are stretched, what investing strategy can work best?
Follow the course opposite to
custom and you will almost
always be right.
Marc Faber
What if we apply the principles of contrarian investing in the
current times when the valuations are stretched and market
participation is at a record pace?
Contrarian Investing
In simple terms, contrarian investing is doing the opposite of
what the majority of investors are doing. In a contrarian bet you
are going against the market and hence the strategy of
Embracing risk and losses in
good times is the way to
prosper in a crisis.
Mark Spitznagel, Fund Manager
contrarian investing is not an easy strategy to adopt and execute.
It is the opposite of the trend following strategy or momentum
investing. In momentum investing strategy one just buys stocks
that are gaining momentum and on most occasions the
valuations are ignored. Comments Mandar Mulay, an equity
investor who believes in long term investing: “I have made
money in the market consistently by following market trends. I
do not think I need to change my investment style as I am
getting good returns on my risk capital. However, when the
market valuations are stretched, and the market trend changes
suddenly I tend to get lost a little bit.”
“A close friend mentioned that he has been following the
contrarian style of investing for several years and it has helped
him beat market returns. I have not practiced contrarian
investing because I am not aware of the detailed process that
one needs to adopt while practicing contrarian investing. I do
think, however, that a different approach to investing will come
in handy especially now that the market trend is a little
uncertain and volatility is on the rise. I am actively considering
adopting a contrarian style of investing. I sincerely believe that
searching in unpopular areas of the market certainly doesn’t
guarantee success but it can be a good way to explore
opportunities,” he adds. There are some basic rules to follow

What is Contrarian Investing?

Contrarian investing in simple terms means
going against the trend. It means that if
everyone is following the herd mentality by
buying stocks because of the bullish trend in
the market, a contrarian investor will short
sell his investments and vice versa. The
belief behind this strategy is that this type
of investor has a strong conviction that the
markets are overvaluing certain stocks and
undervaluing those which have real growth
potential in the future and that herding is
causing exponential valuations of the stocks
and the market in general.
How Does Contrarian Investing Work?
As a result of panic sell off,
people sell quality stock at
a low price
Market decline, leading to
massive sell off
Contrarian investor take
advantage of sell off and buy
Finally sell it when stock is quality stock at a bargain
trading at a fair price, making
multi-fold gains

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 29

Cover Story
Warren Buffet and Contrarian Investing
Warren Buffet is often
considered one of the best
exponents of contrarian
investing. Apart from being
super-smart and guided by
an overarching investment
philosophy, he is always
considered unemotional
and mentally flexible. These
are the very qualities that
make Buffet a top-notch contrarian investor. He is indeed an
iconoclast and true contrarian if one studies his investment
decisions.
however, Warren Buffet has repeatedly demonstrated his
ability and preference to invest at the bottom of the cycle. His
big-ticket investments during the global financial crisis are
legendary and most of his big contrarian bets have been
made when optimism was in short supply.
Another easy to recognize investment behaviour of Warren
Buffet is that he has long-term focus almost in all his
decisions and that he is unconcerned about the market
volatility. Warren Buffet is considered a perfect exponent of
his contrarian investment style as he has shown a tendency
to be fearless about his big bets and best ideas. His
willingness to remain inactive and high on conviction in his
ideas makes him successful in exploring contrarian investing.

When you observe the investments done by Warren Buffet, it Any investor willing to exploit a contrarian approach can
is not difficult to recognize that he is countercyclical. It is benefit by observing Warren Buffet’s investing pattern and
emotionally easy to invest when the economy is improving, behaviour.

while investing the contrarian way:
1) It is observed that when a stock begins to hit the
headlines, the positives are already factored in and there
is very little room left in the stock to outperform. In the
case of many stocks that create a buzz, by the time
investors make up their mind to invest in them the stock
starts underperforming as it is over-owned. For example,
the shares of Praj Industries climbed from `87 per share
in November 2020 to `398 per share in June 2021, thus
generating 326 per cent returns in quick time. The stock
started attracting investors’ attention and was in the news
almost on a daily basis. However, after being highlighted
by the media and analysts, it began to
heavily underperform the market. It is down by about
20 per cent since June 2021. Here, a contrarian investor
will avoid stocks that are popular or in favour by
investors.
2) Buy when everyone wants to sell and sell when everyone
wants to buy. When adopting a contrarian style, it is
important to have an independent view which is opposite
to what the majority of investors think. When the market
is at an all-time high and trending, it is common to see
investors actively participating since most are trend
followers. The uptrend and price momentum ensures
that more and more investors get on board on the long
side and that is where the contrarian investor must take a
view that goes against the market view. Contrarian
investors can use advance decline indicators and track

INTERVIEW
Roop Bhootra, CEO - Investment Services, Anand Rathi Shares and Stockbrokers
What is contrarian investing according to you and does it work in a bullish market environment like the current one?
Contrarian investing is a style of investing in stocks, sectors or themes that are currently out of flavour in the market. This investing
style works well even in bull markets, but it totally depends on the stock-picking ability of the investor. Yes, contrarian stock
selection works in any kind of market scenario, including the current one. The key trigger points can be the turn of an economic
cycle or a company’s business cycle

What contrarian bets would you suggest in the current market condition?
PSU banks, other PSUs, real estate and capital goods were out of favour for many years now and can be interesting contrarian bets
with a timeframe of 2-3 years. So far, in the last 3-5 years we have seen a strong performance in the consumption theme but now
may be the time to look at the investment theme. But focus more on stock selection and bet on those companies where there is
strong visibility of earnings with good corporate governance.

What are the most important things to keep in mind while taking a contrarian bet?
Contrarian investing requires deep understanding of the business cycles, future moats for business and management quality and a
track record of who is at the helm of the business. In a way contrarian bets are also known as turnaround stories. The contrarian
bets in your portfolio may underperform the market in the short term but over a long term can be a big positive surprise on the
upside. One should do a review of contrarian bets at least on a quarterly basis.

30 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

Contrarian Investing and High Dividend Yield Stocks
Value investing and contra investing is often used interchangeably. Value investing is often considered as contra investing because
value investor usually purchases those stocks that are out of fashion. Margin of safety should be high for a value investor to buy a
stock. High dividend Yielding stocks usually offer value and somewhat fit into the contrarian style of investing. High dividend
yielding stocks however are low growth stocks and do not promise extraordinary price gains, in short term at least. One need to be
patient while investing in high dividend yielding stocks.

Santosh Meena, Head of Research, Swastika Investmart Ltd.

Do high dividend-yielding stocks outperform?
It is utterly unclear to say that high dividend-yielding stocks
tend to outperform. They are generally considered low-risk,
low-return stocks. High dividend-yielding stocks are
conventionally a good investment idea as they provide a regular
source of income. In India, dividend yields above 5-6 per cent
are considered to be high dividend-yielding stocks. Typically,
the dividend story is not exactly a favourite among institutional
and small investors because dividend yield stocks are low-
growth stocks.
Also, the market is always willing to give a higher PE ratio for
growth stocks than regular income stocks. Therefore, dividend
yield stocks rarely see a re-rating of the PE ratio. A high
dividend yield stock is seen as a company that has limited
investment opportunities in the business and therefore market
remains conservative while giving valuations to these
companies. Globally and in India, high dividend-yield stocks
tend to be in sectors like utilities and commodities which are
not exactly high-growth stories.
How can one pick high dividend-yielding stocks?
Investors should look for dividend yield instead of dividend
amount while choosing any stock for the high dividend. The
dividend yield is a ratio that helps investors understand how
much dividend a company pays out each year relative to its
stock price. The formula for the dividend yield is annual
dividend ×100 per share price. This ratio is an excellent way to
compare the dividend-paying capability of different companies.
The primary thing that investors must keep in mind is that they
should not focus only on the dividend yield to make investment
decisions.
Since the yield is a ratio of dividends to stock price, if the
market price of the share falls, the dividend yield can be
high. Investing in such stocks without analysing the reason
behind the drop in the stock price can be risky. Some of the
important parameters that should be considered while
choosing stocks for dividend income are a history of paying
dividends consistently, consistent increase in the dividend yield
and payout ratio.
Which are your top picks from high dividend-yielding stocks?
ITC, Bajaj Auto, Britannia, VEDL and HCL Tech are our top
picks from the private sector while Powergrid, REC Ltd. and
BEL are preferred bets in the PSU basket.

True Blue Contrarians Beaten Down Pharma Stocks

Latest Market 1 year
John Neff : He ran the Vanguard Windsor fund for 31 years and Company Name Cap (` crore) Return (%)
averaged 13.7 per cent growth per year, beating the S and P 500 by an Biofil Chemicals & Pharmaceuticals Ltd. 97.56 -72.32
average of 3 per cent. Hemo Organic Ltd. 2.79 -50.31
Bliss GVS Pharma Ltd. 1038.33 -41.77
Jesse Livermore : He took huge huge short positions before the 1906
IOL Chemicals And Pharmaceuticals Ltd. 2800.84 -38.88
San Francisco earthquake and the Wall Street Crash of 1929. Many of
Source Natural Foods and Herbal Supplements 67.17 -37.94
his bold moves are considered legendary today — in a time when Ltd.
analysis was a largely new concept and breaking away from market Strides Pharma Science Ltd. 4595.08 -33.04
sentiment and public opinion was far less common and far more risky. Kobo Biotech Ltd. 10.7 -32.48
Lasa Supergenerics Ltd. 237.12 -31.37
Ray Dalio: Famously quoted for saying, “You can’t make money agree
Astrazeneca Pharma India Ltd. 7946.88 -29.96
with the consensus view,” he is a powerhouse investor running the
Aarti Drugs Ltd. 4774.92 -27.92
largest hedge fund in the world. His contrarian style of investing has
Procter & Gamble Health Ltd. 8300.35 -27.31
allowed him to predict and act defensively regarding several market
Aayush Food & Herbs Ltd. 7.79 -26.61
drops, including the housing crisis of 2008.
Anuh Pharma Ltd. 528.68 -26.53
Marc Faber : He rallied against popular opinion to forecast Black Granules India Ltd. 7734.06 -24.39
Monday in 1987, the Japanese bubble in 1990, the gaming stock crash Tyche Industries Ltd. 170.61 -23.31
of 1993 as well as the Asia Pacific crisis of 1997. Aurobindo Pharma Ltd. 39735.43 -21.88

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 31

Cover Story
Beaten down Stocks
Company Name Industry 1 month return (%)
IndusInd Bank Ltd. Bank - Private -20.93
Graphite India Ltd. Electrodes & Welding Equipment -19.48
Manappuram Finance Ltd. Finance - NBFC -19.03
PVR Ltd. Film Production Distribution & Entertainment -17.13
BASF India Ltd. Pesticides & Agrochemicals -15.84
Firstsource Solutions Ltd. BPO/ITeS -15.78
Tata Steel Ltd. Steel & Iron Products -15.52
Jindal Steel & Power Ltd. Steel/Sponge Iron/Pig Iron -15.41
JM Financial Ltd. Finance - Investment -15.2
Dilip Buildcon Ltd. Construction - Real Estate -14.99

Company Name Sector YTD returns (%)

Dhani Services Ltd. Finance -45.43
Amara Raja Batteries Ltd. Automobile & Ancillaries -32.53
Yes Bank Ltd. Bank -31.14
Astrazeneca Pharma India Ltd. Healthcare -30.95
Jubilant Pharmova Ltd. Healthcare -29.95
Johnson Controls - Hitachi Air Conditioning India Ltd. Consumer Durables -29.41
Bandhan Bank Ltd. Bank -29.12
CreditAccess Grameen Ltd. Finance -28.91
Procter & Gamble Health Ltd. Healthcare -28.38
Aurobindo Pharma Ltd. Healthcare -26.92

the number of 52-week high stocks to estimate when the Conclusion

market is near its top.
Technical analysis also helps to estimate if the market
is in an overbought situation. In a bull run the market
tends to be in an overbought situation for months;
hence, a lot of patience if required to taste success while
adopting contrarian investing. The same can be said when
the markets are down and in a corrective phase. A
contrarian investor must show courage extraordinaire to
buy when a majority of investors are selling. It takes a lot
of practice to do so and the skill-set to think and act
contrarian comes with experience. As if often said, most
people fall prey to the herd mentality and would rather
take the path of least resistance. A contrarian investor
does the exact opposite and chooses to tread the
unknown path.
3) Don’t take tips or advice and don’t believe in external
research. As it takes loads of conviction to take a view and
position against the market view, a typical contrarian
works alone without tips or recommendations from any
brokerage houses. The decisions should not be made
based on the research reports published by brokerage
houses or any advisory services. At the heart of contrarian
investing is independent or original thinking that
contradicts the market opinion and view. If one works
with tips and acts according to the research reports one
may align his or her views as per the market trend.
It goes without saying that the market trend has reversed. The
‘sell on rally’ kind of market mood was visible for more than 2-3
weeks now and a broad-based correction was expected in the
markets. Now that at the key benchmark index level we are
down by almost 8 per cent, the question remains whether it is a
good time to buy and whether a contrarian investing style can
be adopted in the current market situation. Contrarian
investing, like any other strategy, succeeds depending on the
way it is executed. Looking at the current market situation there
are plenty of opportunities that may fit the description of
contrarian investing style, as for example, in sectors such as
pharmaceuticals, automotive and FMCG. Before finding a
contrarian bet it is important that we understand the ‘trigger’
that may lead to a rise in the stock price.
Whether it is an earning upgrade, selling of non-core assets,
change in government regulation, opening up of a sector for
private investments, etc., there are multiple factors that can
drive stock prices higher. However, there could also be just one
single factor that could be leading to the re-rating of the stock
prices, as for example, in the case of Zen Technology the trigger
was the government allowing drones for private commercial
purposes. This announcement re-rated the stock and its price
climbed by more than 100 per cent in no time. Till that time it
had been ignored by investors. Contrarian investing as a
strategy has no flaws but investors may make an execution error
that could lead to losses. Wrong selection of stocks and timing
can lead to losses and heavy underperformance. DS

32 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

Interview


We are focusing on increasing
our market presence globally
We are focusing on improving our product mix to better value-
added products over the next few years, says Parag Jhaveri,
Managing Director and CEO, Yasho Industries Limited.

What is your outlook on the Indian speciality chemicals

sector?
The Indian speciality chemicals segment continues to grow
significantly, with businesses all across the globe looking for an
alternate supplier to China. This has led to a steady increase in
demand for the Indian speciality chemicals domain.
Furthermore, India is the manufacturing hub of 70,000
chemicals, which can cater to a wide variety of speciality
chemical clients across the globe. Since speciality chemicals are
value-added chemicals with multiple uses across industries,
they will always find utility.
In Q2FY22, the company reported its highest quarterly and
half-year performance on various parameters. What factors
contributed the most to help you outperform?
As a company serving over 1,000 clients, and catering to some
of the largest companies across industries, we have always
focused on continuous growth and expansion. We have
continued this growth streak for FY22, recording our highest
ever quarterly and half-year performance, on the back of our
varied product offerings and steady focus on the future,
through activities like capacity expansion and further
improving our product mix for high margin products. Indian
chemical suppliers like us could also benefit from the
worldwide trend of de-risking the Chinese supply chain, with
many global MNCs looking for alternate suppliers.
Furthermore, our robust R&D strategy as well as steadily
building up our expertise in production and global distribution
over the last few years has further helped boost our profits. We
have also made it a priority to adhere to international standards
for our products. We have 35 products which are REACH
(Registration, Evaluation, Authorisation and Restriction of
Chemicals) registered, which has helped us to increase our sales
in the European region.
We have 35 products which are
REACH registered, which has
helped us to increase our sales in
the European region.
Yasho Industries has completed capacity expansion through
debottlenecking to serve incremental demand in H2FY22.
Can you throw some light on the same?
Our strategic presence across the major ports and relationships
with clients in over 50 countries has helped us to gain a
competitive edge in all our markets. The decision was taken in
order to cater to the growing demand for our products. At our
three units, we have extended our capacity from 9,200 MTPA to
11,000 MTPA. All three of our units are located in Vapi, Gujarat
to ensure easy access for import of raw materials and export of
finished goods. 1800 MTPA was added through
debottlenecking at Unit 1 and Unit 2.
What are your top strategic priorities?
Being a speciality chemical company, our R&D is the backbone
of Yasho Industries. It has contributed greatly to the growth and
expansion of our company and is one of our key priorities. We
are focusing on improving our product mix to better value-
added products over the next few years. The company has
recently opened an office in the Netherlands to increase its
reach in the European market. We now have 35 products that
are REACH registered. Exports contribute to more than 60 per
cent of our revenue so we are focusing on increasing our
market presence globally. DS

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 33

Interview

Our expertise lies in the express logistics
space, backed by a hub and spoke model
In this interview, Aneel Gambhir, CFO, Blue Dart, outlines the operational strategy of the company in the
logistics sector that is increasingly tilting towards providing sustainable solutions and cost-efficient delivery
Could you discuss in brief the recent announcement made by
the company regarding the 9.6 per cent increase in average
shipment price from January 1, 2022?
Our persistent need to consistently update our systems and
processes has ensured that we remain one step ahead of the
curve even during unprecedented times. To continue providing
a resilient, reliable and efficient solution to customers, Blue
Dart adjusts its prices annually, taking into account inflation,
currency dynamics, fuel cost fluctuations, rising regulatory
costs and other mandatory costs such as expenses related to
compliance for the workforce with enhanced security
regulations across the 35,000+ locations it services.
The general price increase (GPI) will be effective from January 1,
2022, with a shipment price increase of 9.6 per cent as compared
to 2021, dependent on the shipping profile. Customers signing
up from October 1 to December 31, 2021 will not be impacted
by the price increase. We want to make sure that our customers
receive high-quality service and the annual increase enables us to
sustain service quality and various cost increases.
According to the global outlook on the logistics industry,
companies will be focusing more on ‘green logistics’. How
does Blue Dart plan to adopt this trend?
Blue Dart has always been working towards being a ‘sustainable
provider of choice’ for all our stakeholders. We are amongst a
selected few companies world over that invest wisely in
promoting the Sustainable Development Goals (SDGs) to
34 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
safeguard the planet for future generations. As early as 2011, we
were the first in the nation to launch an end-to-end ‘go green’
solution across all the products we offered domestically and
internationally, called the Carbon Neutral Service (CNS). CNS
offers all our customers an ecologically friendly shipping option
to offset the carbon emissions generated during their
shipments’ journey.
Moreover, Blue Dart, as a part of the Deutsche Post DHL
Group, firmly aligns itself with the group’s credo of ‘Connecting
People, Improving Lives’ and makes an active effort, year on
year, to improve carbon efficiency by leveraging greener
solutions supported by digitisation. Our sustainability roadmap
guides the organisation towards creating positive change for all
our stakeholders by calling for cleaner operations for climate
protection by ensuring that we remain a great company to work
for all as well as building a highly trusted company. We have
launched many initiatives to aid the world in its battle against
climate change and global warming.
We also aim to achieve zero carbon emissions by 2050 under
the ‘Mission 2050’ target set by the Deutsche Post DHL Group,
wherein our goal is to limit global warming to less than 2
degrees Celsius and drive the business towards zero emissions
logistics. Blue Dart is also the first to set a quantified carbon-
efficiency target. Our goal was to increase our CO2 efficiency
by 10 per cent by the year 2012 and 30 per cent by the year
2020. Against the 30 per cent target, we have achieved 36 per
cent CO2 efficiency in 2020. Thus, we are setting the standard
DSIJ.in
for the future of the logistics sector and doing our part to help
the world.
A carbon credit is a permit that allows the company that holds it
to emit a certain amount of carbon dioxide or other greenhouse
gases. Blue Dart’s carbon credits go to a biomass power plant in
India, amongst others, for the generation of electric energy as per
the Certified Emission Reduction (CER) Gold Standard. Under
the Mission 2050 initiative, for over four years, Blue Dart has
contributed to over 10 per cent of the DPDHL Group’s global
target of planting 1 million trees every year.
Apart from our tree plantation drive that would offset over 9
million kg of carbon emissions on maturity and our digital
initiative to go paperless, we also incorporate various green
practices to improve our CO2 efficiency. This includes
introducing a fleet of electric vehicles and our soon-to-be
operated drones to incorporate dynamic route planning and
improve efficiency which helps reduce our carbon footprint.
We also improve our load factor utilisation, use bicycles for
pickup and delivery wherever possible, reduce emissions
through energy-efficient fixtures, equipment and temperature
control, and ensure that even our packaging is eco-responsible.
Setting up micro warehouses to cater to the increasing
demand for same-day and next-day delivery is gaining
attention. Do you plan to set up some micro warehouses for
faster and efficient last-mile logistics?
Blue Dart’s expertise lies in the express logistics space, backed
by a hub and spoke model. A hub and spoke model is a
distribution model that can be best explained using an example
of the shape of a bicycle wheel. In the middle of a wire-spoke
wheel is what is known as the hub. It is this hub that allows each
of the spokes, sprawled out in all directions around the wheel,
to meet at a centralised location at the centre of the wheel. This
model enables us to provide efficient and reliable services to our
customers in a time-definite manner, thereby tying in with us
being the nation’s most preferred express logistics provider.
Blue Dart has been an industry leader in the time-definite space
since 1984 and our premium service quality, which is only
propelled further, year on year, continues to provide reliability,
resilience, and responsiveness. Our supply chain network has
always prioritised a seamless first, middle and last-mile logistics
experience for our customers and this will only catapult further
as we move forward. As a customer-centric organisation, we are
consistently revisiting our product portfolio and updating it
based on market demand. Keeping this in mind, we will
continue to introduce new and more efficient ways of operating
to ensure better customer experiences.
What are your top strategic priorities?
Digitisation and automation, leveraging the power of
technology to strengthen our sustainable supply chain, risk
assessment and management across verticals and building on
DSIJ.in
resources provided to us by the Government of India are on the
list of our current strategic priorities. Technology has been our
backbone, and its significance was further reinforced during the
pandemic. As part of the DPDHL Group, we firmly adhere to
the group’s ‘Strategy 2025 – Delivering Excellence in a Digital
World’. The pandemic propelled innovation at Blue Dart further
to ensure supply chain continuity as the nation’s trade facilitator.
Our customised initiatives ensured lean operations that helped
us ramp up and achieve high service levels at short notice.
Adapting to the need of the hour, we pioneered the contactless
delivery service and activated payment through 16 digital
wallets, net banking, credit and debit card, UPI, BHIM and QR
code. To accelerate this seamless experience, we also launched
the ‘My Blue Dart’ mobile application that helps customers track
their package, find out the most cost-effective prices to send
their shipments across horizons as well as access important
contact information, etc. in a user-friendly and ‘on-the-go’
manner.
To turn this ‘crisis’ into an opportunity, we launched the Blue
Dart Med-Express Consortium to operate experimental drones
for delivery of vaccines and emergency medical supplies safely
and reliably to the remotest parts of the country. We successfully
concluded the Visual Line of Sight (VLOS) and Beyond Visual
Line of Sight (BVLOS) drone trials in September 2021. Going
forward, through the Blue Dart Med Express Consortium we
plan to deploy drone flights through an immersive delivery
model to optimise the current healthcare logistics within
Telangana.
We aim to be a brand that provides long-term sustainability and
shows corporate responsibility through our environmental and
societal initiatives. Following the sustainability roadmap that
we, as a part of the DPDHL Group, align ourselves to, we work
towards clean operations for climate protection (environment),
being a great company to work for all (social) as well as being a
highly trusted company (governance). We continue to innovate
in this area as well to reach our goal of being a sustainable
logistics provider of choice. One of the other lessons from the
pandemic was the importance of risk management. One cannot
eliminate risk but timely intervention can help minimise its
effects on business.
Risk management will continue to be a key priority to ensure
our stakeholders’ interests are safeguarded. Lastly, policies like
the National Logistics Policy, the National Air Cargo Policy, the
planned dedicated freight corridors, the new initiatives
announced in the Union Budget for FY 2022, and now the Draft
Drone Rules 2021 point towards bridging the gap, bringing
down cost and increasing efficiency for the logistics industry.
Further, the prime minister has announced around `100 lakh
crore for the ‘Gati Shakti’ master plan to accelerate the
development of transportation and logistics infrastructure in
the country. With all these policies in place, this sector is set to
become a lot more streamlined and a lot less fragmented. DS
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 35
Real Estate Market Watch
Anuj Puri
Chairman, ANAROCK Property Consultants
Technology Disrupting
The Construction Sector
By adopting innovative technologies like automation in construction, innovative
designs, sustainability, use of prefabricated material and online marketing, developers
can value-engineer their product, opines Anuj Puri, Chairman, ANAROCK Group
T
echnology has disrupted almost every facet of the real
estate business today. However, the creation of the
core product is and will remain the most important
aspect of this business, and advanced technologies are
certainly playing a major role there. By adopting innovative
technologies like automation in construction, innovative
designs, sustainability, use of prefabricated material and online
marketing, developers can value-engineer their product. More
so, with labour shortage looming large across cities due to the
pandemic, developers may look for alternate construction
methods that focus on saving time or subverting costs. If not
entirely, at least some stages of the entire construction cycle
may become labour-free. Let’s look at some of the existing and
upcoming technology disruptions in real estate construction.
3D Printing
Among the many new technologies already adopted by the
construction sector, 3D printing which is the large-scale
printing of homes is anticipated to change the way real estate is
built over the next decade. Though still very nascent, 3D
printing can potentially replace a substantial amount of
construction across major segments, including residential,
commercial or even retail. This will be a massive paradigm shift
in real estate development. Apart from seriously reducing
waste, cost and labour requirements, 3D printing will help
builders penetrate the hitherto inaccessible areas of dense
urban centres, where it is impossible to set up heavy machinery
for construction. 3D printing technology will eventually also
involve the printing of internal structures such as walls,
plumbing, electrical systems, venting, and so on.
36 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
Given the rapid rate at which technology is reimaging everything
in modern life, it would perhaps be rash to tag 3D printing in
construction as ‘hopelessly futuristic’. It will happen sooner than
we may expect. While 3D printing in the construction sector is
yet to kick-start in India, robotic construction company Apis
Cor built the world’s largest 3D-printed two-storey office
building in Dubai. As proclaimed by the company, it took 17
days to print the basic form of this 2,690 sq. feet office building,
which was made of a layered cement mixture. Interestingly, the
labour cost was claimed to be nearly 50 per cent less than a
conventional building of similar size.
Likewise, in Mexico, a gigantic 3D printer was used to print a
new neighbourhood with each house taking just 24 hours to
complete. The potential of this highly disruptive construction
technology is therefore beyond dispute. Of course, there are
considerable costs involved in this technology. 3D printing
machines usable in the construction sector can cost as much as
USD 2 million. Also, their current capacities are limited to
structures of less than 33 feet (10 metres) in height, with a
throughput of less than 550 pounds (250 kilograms) per hour.
In other words, 3D printing technology in the construction
sector can change the way real estate functions but currently it
is largely limited to printing small buildings. For large-size
buildings, including multi-storey offices or large malls,
machines of considerably higher capacities would be needed.
Building Information Modelling (BIM)
An existing construction technology which is fast gaining
ground is Building Information Modelling (BIM) software that
DSIJ.in
allows designers to produce 3D mock-ups of planned structures
along with providing critical information about costs and
construction timelines. Many small and medium organisations
are shying away from the adoption of BIM technology as it
involves high implementation fees and training costs, including
the cost of hiring experts and training the existing workforce
apart from the investment in the technology itself. Since many
of India’s developers simply don’t have budgets to meet these
additional expenditures, they prefer to follow traditional
methods.
However, BIM technology has certainly found a foothold in
India. Some examples of companies using BIM software include
the Nagpur Metro Rail Corporation (NMRC) that adopted 5D
BIM technology for practical completion of the project and
create an Issue-Based Information System (IBIS) for each phase
of the project. In Amritsar, a rapid transit system was
constructed using virtual design and construction technology.
Spread over 4 km, this rapid transit system is one of the finest
examples of the application of BIM technology in India.
Virtual or Augmented Reality
Technology
Across the globe, including India, construction companies
have begun using virtual or augmented reality technology to
enhance construction worker safety training. VR allows
workers and work managers to visualise the more serious
construction site hazards and prepare for them adequately.
Firms also use apps that link VR or AR technology to their
BIM software. This allows contractors and developers to
create virtual walkthroughs of a structure even before it is
complete, enabling them to make more informed design
decisions early in the construction stages and save on both
time and costs.
DSIJ.in
Some of the other major technologies disrupting construction
include:
n Drones: Although expensive, the use of drones is
gaining popularity for managing and inspecting sites.
Drones allow developers to map a site and create 2D as
well as 3D images. Most of the advanced drones use a
coordinate-based system which helps achieve absolute
accuracy in measurements.
n Bricklaying Robots: Construction is a highly labour-inten-
sive industry. However, labour costs can be significantly
reduced, and quality and precision standards considerably
increased by using robotics for repetitive, mechanical
functions such as bricklaying. We have already seen the
introduction of a semi-automated mason aptly called ‘SAM’.
This robot, which lays bricks rapidly and precisely, has been
designed and engineered by Construction Robotics. It is the
first commercially available bricklaying robot which works
in collaboration with human masons and increases their
productivity up to five-fold. For all its innovativeness, it is
definitely only the first iteration of many even more efficient
machines to come.
To conclude, all this is important if we consider that while
technology can and is replacing humans in various ways and
that an entirely new alternate ‘online universe’ has now
opened up, humans themselves will always require
constructed buildings to live and work in. There is no
immediate foreseeable way of catering to all the physical needs
of mankind purely by means of technology. In other words,
real estate will remain relevant no matter how rapidly
technology evolves – the virtual space has inherently
insurmountable limitations when it comes to serving organic
life forms. However, a lot of ‘human inputs’ related to the
conception and creation of the required real estate can and is
either being replaced or improved upon by technology. DS
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 37
Tax Column
Jayesh Dadia
Chartered Accountant
In the current financial year I have signed
one sale agreement as a power of
attorney holder on behalf of the property
owner. The sale consideration was
received in my name and was credited to
my bank account which subsequently I
have transferred to the account of the
owner. The agreement was registered and
my PAN is mentioned. Is there any tax
implication since the sale deed was
registered and disclosed my name? If the
owner does not disclose capital gain in his
hand, will the Income Tax Department
make me liable to pay tax?
As a power of attorney holder you
cannot be treated as the rightful owner
of the income which has arisen on sale of
property. Your action was only in
representative capacity. The sale deed
must clearly disclose the fact that you are
a power of attorney holder for a limited
purpose and it must also disclose the
details of the owner including his PAN,
address, etc. Therefore, under the
provision of the Income Tax Act, you
cannot be made liable for Capital Gain
Tax. Further, you have also transferred
the sale consideration received in your
bank account to the account of the legal
owner. Therefore, you are not a benefi-
ciary of any part of the sale consider-
ation. However, initially you may receive
an inquiry from the IT Department
regarding the sale transaction but if you
respond with the correct facts, I am sure
there shall be no further proceedings.
I am an individual and in employment
with a UAE company situated in Dubai. I
38 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
have been a non-resident up to the
financial year 2019-20. I was told that an
amendment has been brought to the
definition of resident or deemed resident
in the Income Tax Act. Can you explain
what that amendment is and what would
be my status if I am a resident of Dubai
where there is no tax liability on income?
My Indian income on account of interest,
capital gain and rental is approximately
`20 lakhs.
The amendment in the form of Sub-
Section 1 A to Section 6 of the Income
Tax Act was introduced in the Finance
Act with effect from April 1, 2021 where
an individual, being a citizen of India,
with total Indian income exceeding `15
lakhs during the previous year shall be
deemed to be resident in India in that
previous year if he is not liable to tax in
any other country or territory by reason
of his domicile or resident criteria. Since
there is no tax liability for a person
residing and earning in Dubai, by virtue
of the new Sub-Section 6 (1 A) read with
Section 6 (6) (d) of the Income Tax Act,
your tax status would be ‘resident but not
ordinary resident’ (RNOR). However,
your foreign income will not be taxed in
India even if you ceased to be non-resi-
dent as RNOR status also enjoys this
exemption. In case you stay in India for
more than 182 days, your status becomes
‘resident’ and your foreign income will
be taxed.
I am an individual and have sold a listed
company’s shares for a total consideration
of `5 crore. After considering the index-
ation cost, the long-term capital gain works
out to `3 crore. I want to invest in new
house as I don’t have any house in my
name. Thus, can I invest in a new house
with `3 crore being net capital gain?
Yes, since you don’t have any house in
your name, you can certainly invest in a
residential house and enjoy exemption
from Capital Gain Tax under Section 54
F of the Income Tax Act. However, if you
want full exemption, you have to invest
the entire sale consideration of `5 crore
in a residential house and not the capital
gain of `3 crore. If you invest a lesser
amount, you will get proportionate
exemption and the balance amount will
be taxable. For your information, if you
sell the residential house and buy a new
residential house by investing the capital
gain, you are entitled to full deduction
under Section 54 of the Income Tax Act.
The option of investing capital gain is not
available under Section 54 F of the
Income Tax Act.
The Government of India has extended
the due date for filing IT returns for the
current financial year i.e. assessment year
2021-22. Does this mean that the due
date of payment of self assessment tax
has also been extended? What about
interest and penalty chargeable on late
filing of return?
Vide Circular No. 17 dated September 9,
2021, the government has extended the
due date for filing IT return on account
of difficulties being reported by taxpayers
in the electronic filing of tax return on
account of technical glitches on the tax
portal. From the language of the circular
it is very clear that the Central Board of
Direct Taxes (CBDT) has extended only
the due date of filing the return but not
extended the due date of making
payment of self assessment tax. In other
words, self assessment tax shall will still
be required to be paid on or before the
original due date of filing the return to
avoid any levy of interest at 1 per cent per
month under Section 234 A of the
Income Tax Act. However, if self
assessment tax payable does not exceed
`1 lakh, there is no interest under Section
234 A of the Income Tax Act.
The circular extending the due date of
filing the return has specifically provided
that despite extension of the due date,
interest at 1 per cent shall be required to
be paid in case the balance tax payable
exceeds `1 lakh. Further, those taxpayers
who are liable to pay advance tax and
where such advance tax falls short of 90
per cent of the assessed tax will be
required to pay interest at 1 per cent per
month under Section 234 B of the
Income Tax Act. Thus, the present
circular has only extended the due date
of filing the return but not extended the
due date for payment of taxes. The only
relief by this circular is non-levy of fees
of `5,000 for late filing of the return
under Section 234 F of the Income
DS
Tax Act.
DSIJ.in
Global Market Watch

Virus Strikes
Again!
The threat furnished by the new virus variant is a
further addition to existing investor woes such as
slowing growth, spiralling inflation and possible
tightening of monetary policy in the near future

T
he new corona virus variant, Omicron, first detected GLOBAL INDICES
from South Africa last week, was recently designated as a Indices 12-Nov-21 26-Nov-21 Gain / Loss (%)
‘variant of concern’ by the World Health Organization Dow Jones Ind 36,100.31 34,899.34 -3.33%
(WHO). A ‘variant of concern’ is the WHO’s top S&P 500 4,682.85 4,594.62 -1.88%
category of worrying virus variants. Omicron is the fifth variant to Nasdaq 15,860.96 15,491.66 -2.33%
carry such a designation. The WHO has said that Omicron has a FTSE 100 7,347.91 7,044.03 -4.14%
large number of mutations, some of which are worrisome and DAX 16,094.07 15,257.04 -5.20%
preliminary evidence suggests an increased risk of re-infection CAC 40 7,091.40 6,739.73 -4.96%
with this variant, in comparison to other variants. There are Hang Seng 25,327.97 24,080.52 -4.93%
growing concerns globally that the pandemic and associated Nikkei 29,609.97 28,751.62 -2.90%
lockdown restrictions will persist for far longer than hoped. Shanghai 3,539.10 3,564.09 0.71%
Straits Times Index 3,228.45 3,166.27 -1.93%
News of the Omicron variant triggered an alarm of heavy BOVESPA 106,334.54 102,224.26 -3.87%
selling pressure which resulted in global equity indices falling S&P/TSX Composite 21,768.53 21,125.90 -2.95%
sharply. The US frontline benchmark indices Dow Jones, S & P OMX Copenhagen 20 1,897.09 1,806.59 -4.77%
500 and Nasdaq ended the fortnight in the red territory, down SET Index (SETI) 1,633.94 1,610.61 -1.43%
by 3.33 per cent, 1.88 per cent and 2.33 per cent, respectively. SZSE Component Index 14,705.37 14,777.17 0.49%
London Stock Exchange’s FTSE 100 index tumbled by 4.14 per Kospi 2,968.80 2,936.44 -1.09%
cent and on the last trading day of the two-week period suffered
S&P/ASX 200 7,443.00 7,279.30 -2.20%
its biggest one-day sell-off in percentage terms since June 2020.
European benchmark Brent Crude also plummeted by more month was double the 0.6 per cent gain in the month of
than 10 per cent on Friday, November 26, 2021, hitting a September. Concurrently, consumer prices rose 5 per cent
two-month low as the new variant added to concerns that a compared with the same period last year, the fastest 12-month
supply surplus could swell in the first quarter. gain since the same stretch ending in November 1990. Personal
incomes ascended by 0.5 per cent in October after having slipped
The US central bank policymakers had unanimously decided at by 1 per cent in the previous month, exhibiting a distinct
their meeting held last month to begin reducing the USD 120 reflection of a drop in government support payments.
billion in monthly purchases of treasuries and mortgage-
backed securities, which was initiated in early 2020 to help During the fortnight, the German DAX index and the French
nurse the economy through the pandemic. The minutes of the CAC 40 index corrected sharply by 5.20 per cent and 4.96 per
Federal Reserve’s latest policy meeting exhibited that the cent, respectively. Hong Kong’s benchmark index Hang Seng
policymakers would be open to speeding up the elimination of tanked by 4.93 per cent to close at 24,080.52. Technology giants
their bond-buying programme if high inflation held and moved JD and Netease along with China Resources Beer and ENN
more quickly to raise interest rates. Energy Holdings will be added to the Hang Seng index effective
December 6, 2021. The latest update increases the number of
Consumer spending in the United States staged a decent stocks under the main index to 64 from the current 60 stocks.
recovery in October 2021, rising by 1.3 per cent along with The threat furnished by the new virus variant is a further
inflation, rising over the past year at the fastest pace in more than addition to existing investor woes such as slowing growth,
three decades. The country’s commerce department reported on spiralling inflation and possible tightening of monetary policy
November 24, 2021 that the jump in consumer spending last in the near future. DS

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 39

Commodity Market Watch

Negative
Developments Spook
Global Markets
Increasing supply concerns due to release of oil
reserves following a request by the US amid fresh
virus outbreaks in Europe and increase in inflation
levels might keep oil under pressure

B
eing qualified as a ‘variant of concern’ by the World Commodities 12-Nov-21 26-Nov-21 Gain/Loss (%)
Health Organization’s technical advisory group, the
MCX Cotton 32360.00 31640.00 -2.22
new strain of corona virus has resulted in fresh travel
restrictions around the globe. In the commodity MCX Copper 744.95 727.65 -2.32
markets, investors are worried about hits to demand as MCX Lead 190.10 184.90 -2.74
recoveries potentially face speed bumps. The commodities MCX Gold 49314.00 47960.00 -2.75
were seen trading in negative territory during the recent MCX Zinc 277.20 268.85 -3.01
fortnight and the biggest hit was observed to be for oil prices.
MCX Aluminium 216.40 208.65 -3.58
WTI crude oil rattled by 15.57 per cent whereas Brent crude oil
declined heavily by 11.31 per cent. Oil slipped along with global MCX Silver 67144.00 62965.00 -6.22
equities markets on account of the fear that the variant Brent Oil 81.99 72.72 -11.31
Omicron could dampen economic growth and fuel demand. Crude Oil 80.72 68.15 -15.57

Britain and European countries have restricted travel from
South Africa where the variant was detected to find out if the
mutation is vaccine-resistant. Increasing supply concerns due
Gold traded lower as the dollar and the US’
treasury yield strengthened on expectations of
rate hike by the US central bank. Gold also
witnessed a fall after US President Joe Biden
nominated Federal Reserve Chair Jerome
Powell for a second four-year term which
increased bets towards an early rate hike
to release of oil reserves following a request by the US amid
fresh virus outbreaks in Europe and increase in inflation levels
might keep oil under pressure. On MCX, cotton and copper
futures were squeezed by 2.22 per cent and 2.32 per cent,
respectively. During the fortnight, most of the industrial metals
were seen under pressure as a stronger USD reflecting bets over
a sooner-than-expected rate hike undermined the outlook for
the entire pack. Copper futures faced slowdown amid the
decline in global prices.
However, the losses were somewhat curbed for MCX Copper
futures due to weakness in Indian rupee. On the other hand,
MCX Zinc descended by 3.01 per cent whereas MCX
Aluminium recorded a decrease of 3.58 per cent. Among
bullion, MCX Gold dipped 2.75 per cent during the fortnight
whereas MCX Silver contracted 6.22 per cent. Gold traded
lower as the dollar and the US’ treasury yield strengthened on
expectations of rate hike by the US central bank. Gold also
witnessed a fall after US President Joe Biden nominated Federal
Reserve Chair Jerome Powell for a second four-year term which
increased bets towards an early rate hike. DS

40 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

QueryBoard
Investment Horizon
Query-Specific

VASCON ENGINEERS LTD IRB INFRASTRUCTURE DEVELOPERS LTD.

I own 500 shares of Vascon Engineers bought at I had purchased 170 shares of IRB Infrastructure
an average price of `30 per share. Please advise Developers at an average price of `163.24 per
further action. share. Should I hold or exit?
 - Prateek D’Souza  - Pravin K

EXIT HOLD
BSE/NSE Code 533156 / VASCONEQ BSE Code 532947 / IRB
Face Value `10 Face Value `10
CMP `21.80 CMP `205.80
52-Week High `31.75 / Low `13.30 52-Week High `346.95 / Low `97.75
Your Current (27.33 per cent) Your Current 26.07 per cent
Profit/(Loss) Profit/(Loss)

V I
ascon Engineers has more than 30 years of experience in
conceiving, developing, constructing and managing
varied projects. It has a presence across multiple sectors.
The latest consolidated quarterly financials of the company show
that net sales and other operating income for Q2FY22 stood at
`152.87 crore, growing by 27.92 per cent from `119.50 crore in
Q2FY21. Operating profit for Q2FY22 came in at `6.77 crore
versus an operating loss of `0.13 crore in Q2FY21. The company
reported net loss of `3.13 crore in Q2FY22 relative to net loss of
`10.23 crore in Q2FY21.
In terms of annual performance on a consolidated basis, the
company recorded net sales and other operating income of
`506.88 crore in FY21, exhibiting marginal growth of 4.52 per
cent from `484.98 crore in FY20. Operating profit plunged by
99.68 per cent from `37.93 crore in FY20 to `0.12 crore in FY21.
The company recorded net loss of `39.17 crore in FY21 in
comparison to net profit of `3.80 crore in FY20. The company
has delivered a poor sales growth of -2.96 per cent over the past
five years along with a low return on equity of 0.19 per cent for
the last three years. Hence, we recommend EXIT.
RB Infrastructure Developers Ltd. (IRB) is India’s largest
integrated private toll roads and highways infrastructure
developer in India with an asset base of over `54,000 crore
in 10 states across the parent company and two infrastructure
investment trusts. The company’s quarterly consolidated
financials recorded net sales and other operating income for
Q2FY22 of `1,465.24 crore, up by 30.44 per cent from
`1,123.33 crore in Q2FY21. Operating profit also climbed by
26.02 per cent from `600.54 crore in Q2FY21 to `756.85 crore
in Q2FY22. Net profit for Q2FY22 stood at `77.93 crore,
soaring by 3.5 times relative to `22 crore in Q2FY21. In terms of
annual performance, the net sales and other operating income
were reported to be `5,298.63 crore for FY21, which descended
by 22.67 per cent in comparison to `6,852.22 crore in FY20.
Operating profit contracted by `14.68 per cent from `3,166.36
crore in FY20 to `2,701.56 crore in FY21. Consequentially, net
profit descended by 61.59 per cent from `736.71 crore in FY20
to `282.94 crore in FY21. With the onset of the festival season in
India and more relaxations announced by the government,
traffic movement is expected to significantly improve, further
resulting in much stronger earnings in the coming quarters.
Hence, we recommend HOLD.

Readers are requested to send only one query at a time so that more readers get a chance. For complaints regarding non-receipt of
dividend, bonus, rights and other matters, investors may write to www.investor.sebi.gov.in

Company Name: DEMOCRATIZING WEALTH CREATION

DEMOCRATIZING WEALTH CREATION

Query: Vol. No. 37 No. 01

Send in your queries:
Send in your queries:
DSIJ Pvt.
DSIJ Pvt. Ltd.
C-305, 3rd Floor, Trade Center,
Name: OfficeMain
North no 211,
Road,Vascon Platinum
Near Axis Bank,
Square,
Opp. LaneNext
No. to
6, Hyatt Regency,
Koregaon Park,
Address: Vimannagar,
Pune - Pune-
411001411014
E-mail: Email:editorial@DSIJ.in

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 41

QueryBoard
AFFLE (INDIA) LTD
Is it the right time to buy shares of Affle (India)?
 - N Nitesh
BUY
BSE/NSE Code 542752 / AFFLE
Face Value `2
CMP `1,149.25
52-Week High `1,259.25 / Low `705.09
Your Current --
Profit/(Loss)
A P
ffle is a global technology company with a proprietary
consumer intelligence platform that delivers consumer
engagements, acquisitions and transactions through
relevant mobile advertising. While Affle’s consumer platform is
used by online and offline companies for measurable mobile
advertising, its enterprise platform helps offline companies to
go online through platform-based app development,
enablement of O2O commerce and through its customer data
platform.
The company’s quarterly consolidated financials recorded
Q2FY22 net sales and other operating income of `274.70 crore,
growing two-fold relative to `134.95 crore in Q2FY21. On
similar lines, operating profit also soared by 86.6 per cent
from `36.04 crore in Q2FY21 to `67.24 crore in Q2FY22. Net
profit for Q2FY22 stood at `47.82 crore, jumping by 77.26 per
cent from `26.98 crore in Q2FY21. Their CPCU business
continued the growth momentum, delivering 4.9 crore of
converted users in Q2FY22, an increase of 73.3 per cent on a
YoY basis. In terms of annual performance on a consolidated
basis, net sales and operating income for FY21 came in at
`516.78 crore, growing by just a little over 50 per cent from
`333.78 crore in FY20.
Operating profit soared by 82.16 per cent from `93.98 crore in
FY20 to `171.19 crore in FY21. Net profit for FY21 stood at
`135.04 crore, surging two-fold from `65.52 crore in FY20.
With advertisers consistently accelerating their digital spends,
resulting in broad-based and persistent growth across the top
industry verticals coming from domestic as well as
international markets, the company continues to witness strong
optimistic market opportunity. Affle (India) furnishes a
differentiated business model, fundamentally inspired to deliver
innovation-led profitable growth backed by sustained
investments in augmenting their strategic defensibility globally
along with a prudent balance-sheet and robust cash flows.
Hence, we recommend BUY.
42 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
Investment Horizon
Query-Specific
PVR LTD.
I am holding 10 shares of PVR purchased at
`1,510.90 each. Should I book profit or hold?
 - Priya Jain
HOLD
BSE/NSE Code 532689 / PVR
Face Value `10
CMP `1,272.95
52-Week High `1,838.00 / Low `961
Your Current (15.76 per cent)
Profit/(Loss)
VR is the largest and the most premium film exhibition
company in India. Since its inception in 1997, the brand
has redefined the way entertainment is perceived in the
country. PVR currently operates a cinema circuit comprising
856 screens at 179 properties in 72 cities across India and Sri
Lanka, serving over 100 million patrons annually. PVR offers an
array of formats in the premium screen category, which stands
at eight screens of Director’s Cut, 39 screens of LUXE, four
screens of Sapphire, nine screens of IMAX, 18 screens of 4DX,
nine screens of P(XL), 13 screens of Playhouse and one screen
of PVR Onyx across the country.
The latest consolidated quarterly financials of the company
show that the company recorded three-fold growth in net sales
and other operating income from `4.45 crore in Q2FY21 to
`120.32 crore in Q2FY22. Operating profit for Q2FY22 stood at
`86.76 crore, relative to an operating loss of `14 crore in
Q2FY20. The company reported net loss of `153.27 crore in
Q2FY22 as compared to net loss of `183.62 crore in Q2FY21.
During the quarter, PVR continued with its strategy for keeping
operating costs low and maintaining adequate liquidity. In
terms of annual consolidated financials, the company recorded
net sales and other operating income of `280.01 crore in FY21,
down by 91.8 per cent from `3,414.44 crore in FY20 due to
countrywide pandemic-related restrictions on theatres, malls
and multiplexes.
The operating profit shrunk by 87.94 per cent from `1,114.38
crore in FY20 to `134.14 crore in FY21. The company reported
net loss of `747.20 crore in FY21 versus net profit of `27.84 crore
in FY20. PVR was able to successfully conclude discussions with
landlord partners for rental waivers or discounts in respect of 80
per cent of its properties and achieved savings of 75 per cent. The
total available liquidity on the balance-sheet is over `700 crore as
of September 30, 2021. A healthy recovery is forecasted from
Diwali onwards and business is expected to bounce back strongly.
Hence, we recommend HOLD.
DSIJ.in

INDIAN RAILWAY CATERING & TOURISM CORP. LTD. GOODYEAR INDIA LTD
I have bought 100 shares of IRCTC at `758.72.
Please advise whether I should sell, hold or book
profit?
 - Samanvay S
HOLD
BSE/NSE Code 542830 / IRCTC
Face Value `2
CMP `794.35
52-Week High `1,278.60 / Low `267.19
Your Current 4.74 per cent
Profit/(Loss)
I G
RCTC as a public sector undertaking provides a single-
window solution to all travel, tourism, internet ticketing and
hospitality-related services. It has completely redefined
travel and tourism in India. With a host of services ranging
from online ticket bookings to hotel and flight bookings, the
online portal meets varied travel needs with just a few clicks.
The company operates through four major divisions – catering
and hospitality, internet ticketing, travel and tourism, and
packaged drinking water under the brand name ‘Rail Neer’ –
offering a comprehensive range of products and services that
meet the needs and expectations of millions.
As regards the standalone quarterly performance of the
company, net sales and other operating income for Q2FY22
stood at `404.94 crore, recording a hefty rise as compared to net
sales and operating income of `88.56 crore for Q2FY21. The
company posted an operating profit for Q2FY22 at `227.63
crore which grew significantly as compared to an operating
profit of `14.58 crore registered for Q1FY21. The company
achieved net profit of `158.57 crore in Q1FY22 as compared to
net profit of `32.64 crore achieved in Q1FY21, clocking
attractive gains. In terms of annual performance, the net sales
and other operating income were reported to be `783.05 crore
for FY21, which squeezed by 65.42 per cent when compared to
`2,264.31 crore for FY20.
FY21 reported a decline of 64.55 per cent in operating profit at
`275.92 crore as compared to `778.44 crore for FY20. The net
profit stood at `189.90 crore in FY21 in comparison with net
profit of `513.11 crore reported in FY20, 62.99 per cent lower.
The company bears a resilient business portfolio that can be
scaled and based on core competencies. The expansion plans of
the firm indicate signs of potential upside in the stock in the
long run. Besides, the company has been expanding its business
to bus, air tickets as well as tour and travel planners. This is
likely to build up new potential opportunity for the firm to
strengthen its position. Hence, we recommend HOLD.
DSIJ.in
Investment Horizon
Query-Specific
What is your view on Goodyear India’s shares?
 - Jaya Ramachandran
BUY
BSE/NSE Code 500168 / GOODYEAR
Face Value `10
CMP `966.55
52-Week High `1,330.30 / Low `823.60
Your Current --
Profit/(Loss)
oodyear India is one of the world’s largest tyre
companies. It employs about 72,000 people and
manufactures its products in 54 facilities across 23
countries around the world. In the farm segment, the company
is a market leader in the original equipment segment and
supplies to all major tractor companies in India. The company
also trades in passenger car tyres and has been offering
technologically advanced products that offer better driving
experience to its consumers.
The company’s quarterly standalone financials reveal that net
sales and other operating income for Q1FY22 was at `534.15
crore, recording a rise of 135.38 per cent as compared to net
sales and operating income of `226.93 crore for Q1FY21. The
company recorded an operating profit for Q1FY22 at `50.33
crore which zoomed upward significantly as compared to an
operating profit of `7.9 crore registered for Q1FY21. Net profit
for Q1FY22 was `26.89 crore as against net loss of `4.49 crore in
Q1FY21. In terms of annual performance, the net sales and
other operating income were reported to be `1,791.71 crore for
FY21, which improved by 2.64 per cent when compared to
`1,745.57 crore for FY20. FY21 reported an increase of 40.04
per cent in operating profit at `239.34 crore as compared to
`170.91 crore for FY20.
The net profit stood at `136.26 crore in FY21 in comparison
with net profit of `88.84 crore reported in FY20. The company is
expecting the farm economy to further grow in financial year
2021-22 based on favourable monsoon outlook and high focus
from the government. The company will continue to
concentrate on sustaining leadership delivered by a best-in-class
team. After the opening of the lockdown, the company has seen
gradual recovery in the passenger tyre industry and this is
expected to continue to improve. Good Year India is optimistic
about the long-term industry outlook and would focus on
various strategic initiatives to strengthen its position in the
market. Hence, we recommend BUY.
(Closing price as of Nov 30, 2021)
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 43
Reviews
In this edition, we have reviewed PI Industries Ltd. and Housing Development Finance Corporation Ltd. We
suggest our reader-investors to HOLD PI Industries and Housing Development Finance Corporation

Change
PI Industries Ltd. HOLD 7.63 Per Cent
CMP - `2,876.70

BSE CODE Reco. Price Face Value

523642 `2,672.80 `1

W
e had recommended PI
Industries Ltd. in Volume 36,
Issue No. 12 dated May 10-23,
2021, under the ‘Choice Scrip’ segment.
The recommended price for the stock
was `2,672.80. We had recommended
the stock on the basis of the company’s
future growth potential, good return on
capital employed and focus on cost
reduction. PI Industries is a leading
player in the agro-chemicals space. The
company currently operates a strong
infrastructure set-up consisting 3
formulation facilities as well as 15
multi-product plants at its four
manufacturing locations. The quarterly
consolidated financial performance of
the company reveals that net sales and
operating income for Q2FY22 stood at
`1,354.20 crore, exhibiting growth of
16.97 per cent in comparison to
`1,157.70 crore in Q2FY21.
Operating profit climbed marginally by
1.91 per cent from `313.70 crore in
Q2FY21 to `319.70 crore in Q2FY22. Net
profit for Q2FY22 came in at `230.10
crore, up by 5.7 per cent from `217.70
crore recorded in Q2FY21. In terms of
annual consolidated financial perfor-
mance, the company posted net sales and
operating income for FY21 at `4,577
crore, up by 35.96 per cent from
`3,336.50 crore in FY20. Operating profit
ascended by 48.31 per cent from
`766.70 crore in FY20 to `1,137.10 crore
in FY21. Consequentially, net profit
climbed 61.01 per cent from `455.80
crore in FY20 to `733.90 crore in FY21.
Over Q2YF22, PI Industries has
increased inventory levels to avert supply
chain disruptions and meet customer
supply schedules or continued opera-
tions. The company has a surplus cash
net of debt of `2,062 crore including
recent QIP proceeds. The sector outlook
continues to remain positive owing to
late rains and adequate water level at
reservoirs. The company’s net sales to
fixed assets ratio has improved to 2.04
(September 2021) relative to 1.89 (March
2021). Over H1FY22, the company’s
production throughput improved
through process efficiencies, accommo-
dating the growth of other products. It
has also initiated manufacturing of
electronic chemicals with global
customers. The order book continues to
remain robust at USD 1.4 billion. Hence,
we recommend HOLD.

Change
HDFC LTD. HOLD 4 Per Cent
CMP - `2,676.40

BSE CODE Reco. Price Face Value

500010 `2,573.55 `2

W
e had recommended HDFC
Ltd. in Volume 36, Issue No.
11, dated April 26, 2021 to
May 9, 2021, under the ‘Cover Story’
segment. The recommended price for the
stock was `2,573.55. We had
recommended the stock on the basis of
the company’s strong balance-sheet,
collection efficiency and margin
expansion. Incorporated in 1977, HDFC
is a pioneer in housing finance in India,
engaged in financing the purchase and
construction of residential houses and
real estate. In terms of quarterly
consolidated financial performance, the
company reported 8.67 per cent growth
in total income from `64,049.79 crore in
Q2FY21 to `69,600.64 crore in Q2FY22.
Its net profit climbed marginally by 2.97
relative to `3,493.83 crore in Q2FY22.
The dividend income for Q2FY22 came
in at `1,171 crore, up by more than 3.63
times over the same period in the
previous year. The board has also granted
its approval for the issuance of secured
redeemable non-convertible debentures
aggregating to `75,000 crore, in various
tranches, on a private placement basis.
On the annual consolidated financial
performance front, FY21 total income
came in at `1,39,071.24 crore, exhibiting
a surge of 36.62 per cent relative to
`1,01,795.90 crore in FY20. On similar
lines, net profit descended by 20.58 per
cent from `17,080.37 crore in FY20 to
`13,566.08 crore in FY21.
The company’s asset quality improved
sequentially, particularly in respect of
performing assets (GNPAs) improved by
24 basis points to 2 per cent at the end of
Q2FY22, from 2.24 per cent in Q1FY22.
Individual gross NPA declined to 1.1 per
cent from 1.37 per cent and non-
individual gross NPA fell to 4.69 per cent
from 4.87 per cent sequentially. Collection
efficiency for individual loans on a
cumulative basis improved to 98 per cent
during the quarter ended September 30,
2021. Growth in home loans was seen in
both the affordable housing segment as
well as in high-end properties during
Q2FY22. The demand for home loans
continues to remain strong. Hence, we
recommend HOLD. DS

per cent from `3,392.98 crore in Q2FY21 individual loans. Its gross non- (Closing price as of Nov 30, 2021)

44 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

Kerbside
HEALTHY PROFITS
WOCKHARDT LTD.
BSE Code: 532300
CMP: `435.50
The company continues to
build on its intellectual
property base with
cumulative patents filed and
763 cumulative patents
granted as of March 31, 2021.
This demonstrates its deep
commitment to build a new
foundation in the next few
years. As such, this is a good
stock to accumulate at the
current levels.
DSIJ.in
The recommendations provided in this column are taken from various market
sources such as brokers, analysts, dealers and investment strategists, etc. These
recommendations may not be backed by strong fundamentals. Therefore we advise
readers to use their own discretion before investing in these recommendation
IMPRESSIVE ORDER BOOK Thermax a leading energy and
THERMAX LTD. environment solutions provider
BSE Code: 500411 and one of the few companies in
CMP: `1,751.60 the world that offers integrated
innovative solutions in the areas
of heating, cooling, power, water
and waste management, air pollution control and chemi-
cals. It has recently bagged an Rs 830 crore order from
an Indian power private sector company to set up flue
gas desulphurisation (FGD) systems for their three units
of 660 MW capacities each in Uttar Pradesh. The stock
technically looks poised for a decent up-move in the
near term as the prospects for the company are quite
bright in the long run.
BIG NEWS IN THE PIPELINE
Minda Corporation Ltd
BSE Code: 538962
CMP: `163.70
Minda Corporation is one of the leading automotive component
manufacturing companies with a pan-India presence and significant
international footprint. The company has a diversified product portfolio
that encompasses mechatronics, information and connected systems,
interior plastic and electronic components for automotive OEMs. These
products cater to two and three-wheelers, passenger vehicles,
commercial vehicles, off-roaders and the aftermarket. It has a
diversified customer base including Indian and global OEMs and Tier I
customers. As per our sources, the company may soon disclose a big
development in the coming weeks that could spark the stock price.
PRODUCTS IN DEMAND
Hindustan Unilever is a
HINDUSTAN UNILEVER LTD. consumer goods company and
BSE Code: 500696 its products include foods,
CMP: `2,318.45 beverages, cleaning agents,
personal care products, water
purifiers and other fast-moving consumer goods.
Considering the high volatility expected in the markets till
there is more clarity about the new variant of the corona
virus and whether the vaccines are effective against it,
defensive stocks are likely to witness buying interest. The
murmur on D-Street is that FMCG stocks could witness good
buying in the coming days. Given the scenario, it would be a
good option to buy stocks of this company at the current
juncture. DS
(Closing price as of Nov 30, 2021)
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 45
 MF Page - 01

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Vol. 37. No. 01 • DEC 06 - 19, 2021 www.dsij.in/apps.aspx

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Insurance is Must
Lower Your Return I have found your magazine to be very insightful. After going
through the article titled ‘Insurance is a Must’, I realised that I

Expectation need personal accident insurance. However, I have a doubt

about whether I should increase my life insurance if one more

I
member adds up in a family who is dependent on me?
n the world of investing, it becomes very difficult to  - Jaimin Shah
avoid the recency bias. Investors, while making their
Editor Responds : It’s good to know that you immediately
financial plan, extrapolate the recent returns. The reviewed your insurance requirement after reading the article. It
recency bias is more prominent among millennials or is very crucial to review your life insurance plan and implement
those who have started investing recently. They do not it if there are any changes in life. One needs to revise the life plan
have the experience of going through different cycles of in case there are any life changes such as marriage, childbirth,
returns. They believe that the current returns will continue death of any member, changes in standard of living, demise of
in the future too. Nevertheless, returns from investment the spouse, loss of income, etc. In your case, one dependent has
always revert to mean. Currently, about 400 equity- been added and so, you need to revise your life insurance plan
dedicated mutual funds are giving average SIP return of and need to consider the same member in your plan in order to
27.2 per cent for the last three years. protect all your dependents from any financial crisis.
Compare this with the average SIP return of 16 per cent
for five years and 10.64 per cent for 10 years. This shows
that in the long term you cannot expect the recent returns
to continue. Recency bias can lead investors to deviate
Content
from their carefully laid investment plans, which can have
damaging long-term consequences to their finances and
financial goals. For example, in 2019 there were many
Cover Story MF Page
02
funds such as Quant Small-Cap Fund and PGIM India Passive Or Active Funds:
Mid-Cap Opportunities Fund that were giving negative What’s The Right Choice?
SIP returns for a period of five years. The same funds are
now giving SIP returns in excess of 30 per cent for a period
of five years. Financial Planning MF Page
07
So, if you would have selected these funds for any reason at
that time and assumed them to generate similar returns,
you would have made more investment in these funds Special Report MF Page
10
than required. The takeaway is that short-term market Is It The Right Time To
moves caused by recency bias can determine long-term
results, making it more difficult for investors to reach their Invest In Credit Risk Funds?
financial goals. Hence, take a broader view of how the
markets tend to move over time and the larger trends
instead of short-term movements. Hence, the current fall
Special Report MF Page
14
in the equity market should help us to correct our recency Buying A Car? Opt For
bias and adjust our return expectation for future returns,
which should be lower than what we have seen in the last Subscription Instead!
18 months.
Special Report MF Page
20
SHASHIKANT A Guide To Claiming Life Insurance
DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 47
Cover story
MF page - 02

Passive Active
Funds Funds
Passive Or Active Funds:
What’s The Right Choice?
In the last few years we have been witnessing exponential rise in assets under management of
passively managed funds. These have outstripped growth in actively managed funds. Even in
terms of inflows, passively managed funds have seen better inflows than actively managed
counterparts. The report compares the two to know which is better

T
here is a massive shift that is happening globally in
the investment world. Since 2008, investors are now
moving towards passive investment strategies.
Worldwide, after the great financial crisis many
investors both at the retail level as well as at the
institutional level have started shifting their investments from
relatively expensive actively managed mutual funds to relatively
cheap index mutual funds and exchange traded funds (ETFs),
which together come under the term passive index funds. ETFs
and index mutual funds are technically different, but they share
the fundamental feature that both seek to replicate existing
stock indices while minimising expense ratios.
In contrast, active funds employ fund managers who strive to

48 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

 MF page - 03

buy stocks that will outperform, which leads to higher expense AUM (` Cr.)
ratios. Between 2009 and 2020, passively managed funds have Months Passive Funds Active Funds
witnessed their asset under management (AUM) increasing Mar-20 1,54,551.69 5,78,507.69
from USD 6 trillion to USD 22 trillion, showing an annual Apr-20 1,74,003.12 6,60,070.27
growth of 13 per cent compared to 10 per cent overall growth May-20 1,70,609.82 2,90,256.60
witnessed by the mutual fund industry. Passive products Jun-20 1,86,508.87 7,01,016.04
recorded their highest growth in the pandemic-affected year. Jul-20 2,10,551.41 7,37,608.12
Passive AUM rose by 17 per cent globally during 2020 with Aug-20 2,19,002.12 7,69,115.16
strong net inflows and market growth. India has not remained Sep-20 2,17,816.34 7,64,309.50
immune to this tectonic shift. Oct-20 2,23,348.47 7,77,292.19
Nov-20 2,47,969.86 8,57,510.40
In the last few years we have been witnessing exponential rise in Dec-20 2,71,496.33 9,06,766.98
AUM of passively managed funds. These have outstripped Jan-21 2,72,130.76 8,91,399.41
growth in actively managed funds. Even in terms of inflows, Feb-21 2,90,752.78 9,63,358.24
passively managed funds have seen better inflows than actively Mar-21 2,95,094.99 9,79,367.20
managed counterparts. Since the start of March 2020, passively Apr-21 2,97,996.86 9,91,362.64
managed funds, including ETFs and index funds, have seen a May-21 3,22,569.44 10,67,899.26
cumulative inflow of Rs 1.04 lakh crore. Comparatively, actively Jun-21 3,31,265.73 11,10,025.49
managed funds in the same period were able to garner little less Jul-21 3,40,392.75 4,11,901.60
than half of that at Rs 0.5 lakh crore. Aug-21 3,74,342.87 12,33,142.23
Sep-21 3,96,761.17 12,79,647.20
If we look at the monthly inflows we find that out of the last 20 Oct-21 4,07,864.04 12,96,559.44
months ending October 2021, in eight months between July
2020 and February 2021 actively managed equity funds saw a Growing Clout of Passively Managed Funds
continuous net outflow. Whereas in the case of passively The rise of passively managed assets in developed markets such
managed funds we saw that only in the month of October 2021 as the US was mainly due to the underperformance of active
was there some net outflow. The AUM of the passively managed funds compared to their respective benchmarks, the lower cost
funds in the last 20 months has increased by 263 per cent of passive funds measured through expense ratio as compared
compared to 224 per cent of actively managed equity funds. to active funds, and the change in regulations and policies that
They are now 31.5 per cent of the total equity-based mutual favoured passive investments. The same reasons stand true for
fund AUM compared to 26.5 per cent at the start of the Indian investors who are driven to embrace passively managed
pandemic. funds such as index funds and plain vanilla ETFs.

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 49

 Cover story
According to S&P Indices versus Active Funds (SPIVA)
scorecard for India for the period ending June 30, 2021, over 80
per cent of the funds in the equity large-cap category have
underperformed the benchmark over one, three and five-year
periods. For a ten-year period, almost 66 per cent of the
large-cap funds have underperformed their benchmark. The
SPIVA India scorecard compares the performance of actively
managed Indian mutual funds with their respective benchmark
indices over one, three, five and ten-year investment horizons.
The following table depicts that how many funds within the
category underperformed the benchmark in 1-year, 3-year,
5-year and 10-year:
1-Year 3-Year 5-Year 10-Year
Fund Category Comparison Index
(%) (%) (%) (%)
Indian Equity Large-Cap S&P BSE 100 86.21 86.67 82.72 65.93
Indian ELSS S&P BSE 200 53.66 76.19 76.19 48.57
Indian Equity Mid-/ S&P BSE 400
Small-Cap MidSmallCap Index
57.14 48.65 69.57
Indian Government S&P BSE India
Bond Government Bond Index
70.83 51.85 71.43
S&P BSE India Bond
Indian Composite Bond
Index
50 97.9 97.87
Source: S&P Dow Jones Indices LLC, Morningstar, and Association of Mutual Funds in India.
Data as of June 30, 2021. Returns are shown in per cent
The table shows the comparison of the performance of different
fund categories with respect to their benchmarks. It clearly
shows that in the last one year most of the equity-based funds
have underperformed their benchmarks. The worst underper-
formance comes from large-cap funds in the last three-year
period. On the surface, it looks that actively managed funds are
not able to outperform their benchmarks in different time
periods – which we will explain why this can be misleading –
and hence investors are moving towards passively managed
funds.
The second reason why passively managed funds are being
widely accepted is due to their low cost structure. Passively
managed funds by their construct have lower expense ratio. To
manage a passively managed fund, asset management does not
need a high paying research analyst or need a frequent
churning to generate alpha – all of this goes into savings for
passively managed funds and ultimately towards the returns of
the fund. So every rupee saved will add to the returns of the
fund. In case of actively managed funds, a fund manager is
supported by analysts and a research team to carry out research
and track the performance of the companies in which invest-
ment is being made.
Since the people involved in the process are well-paid, it adds to
the cost of the fund management, leading to comparatively
higher expense ratios of actively managed funds. Our study of
expense ratio for the large-cap dedicated funds shows that
index funds and ETFs have much lower expense ratio that helps
50 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
MF page - 04
them to perform better in the long run. It is a well-established
fact that expense ratio remains one of the few factors that have a
definite impact on the future performance of the funds.
Category Expense Ratio (%)*
Index Regular 0.68
Index Direct 0.48
Actively Managed Funds Regular 2.09
Actively Managed Funds Direct 0.97
*expense ratio of Large Cap and Index funds at the end of October 2021.
The table above shows that the difference in expense ratio
between a regular index fund and actively managed fund is
more than 1.4 per cent. This difference may seem insignificant,
but over a long period these costs add up. The cost of funds is
considered a significant factor in value creation over the long
term. For example, if you invest Rs 5,00,000 in a fund that has
an expense ratio of 2.1 per cent per annum, then it means that
40.3 you need to pay Rs 10,500 per year to the fund to manage your
money. Also, if the fund returns equal 20 per cent and has an
86 expense ratio of 2.1 per cent, you would get a return equal to
15.9 per cent. The net asset value (NAV) of a fund is reported
100 after deducting all fees and expenses.
The next big factor that is favouring the rise of index funds or
ETFs is government policies and the beneficial regulatory
environment that promotes passively managed funds. First, in
2017, Securities and Exchange Board of India (SEBI) came out
with the re-categorisation and rationalisation of mutual fund
schemes, according to which fund houses are required to
manage only one product offering in each style category and
also the investment universe. Earlier, a large-cap dedicated fund
would have invested only 50 per cent of its net assets into
large-cap stocks and rest into mid-cap and small-cap stocks still
benchmarked to a large-cap index. This would make large-cap
funds’ performance better than their benchmarks in the long
run assuming that the broader market stock performs better
than the large-cap stocks.
Now with rationalisation and categorisation such inconsisten-
cies have been weeded out and apples are being compared to
apples. This has enhanced transparency since investors can
easily compare the performance of fund offerings in each style
category. At the same time, it has made it difficult for large-cap
funds to show outperformance. SEBI also mandated that fund
managers should benchmark the performance of equity funds
against total return indices (TRI) and not the price return index
(PRI). This was done in order to emphasise the importance of
dividend payments in addition to capital appreciation when
evaluating portfolio returns.
Assuming dividend yield of 1.5 per cent, it increased the thresh-
old level for a fund manager by similar percentage to outper-
form their benchmarks. This has also helped passive investment
strategies as now even a lower number of funds can show
DSIJ.in
 MF page - 05

outperformance. Besides, the

government launched disinvest-
3-Year Rolling Returns Of Large-Cap Funds & Large-Cap Index
ment drives through ETFs. This
announcement helped create large
awareness and interest in ETFs. In
2015 it even allowed Employees’
Provident Fund Organisation
(EFPO) to invest in equities
through large-cap ETFs. The total
EPFO allocation in ETFs was Rs
1.03 lakh crore as of March 31,
2020.

Caveat Emptor
The report by SPIVA is quite
comprehensive in its coverage;
however, it represents a single
3-Year Rolling Returns Of Mid-Cap Funds & Mid-Cap Index
point of comparison out of many
such possible points. Hence we
decided to check the performance
of the funds and their outperfor-
mance or underperformance
compared to the benchmarks on a
rolling basis. This will give us good
enough points to come to a proper
conclusion. For our analysis we
took the average returns of the
funds on a daily basis and con-
verted them into rolling three-year
and five-year returns. Similarly, we 5-Year Rolling Returns Of Large-Cap Funds & Large-Cap Index
did this for their respective
benchmarks. We did this exercise
for large-cap-dedicated funds and
mid-cap-dedicated funds and took
the regular plan with a longer
history.

Following this exercise an entirely

different picture appeared in terms
of the average performance of
funds with respect to their
benchmarks. Large-cap-dedicated
funds have appeared to perform
better than their benchmarks most
5-Year Rolling Returns Of Mid-Cap Funds & Mid-Cap Index
of the times both in a three-year
and five-year timeframe. For
example, out of the total 2018
instances in large-cap-dedicated
funds there were only 337
instances when the funds’ average
return was worse than the index
return. What seems to be quite
clear is that the outperformance of
the large-caps fund has been in a
declining mode in the recent

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 51

 Cover story
period. The rolling return graph of the funds against their
benchmarks reflects the same.
Nevertheless, in case of mid-cap-dedicated funds in a longer
period of five years, we did not see any single period of
underperformance by them. Nevertheless, in a three-year
period there were some instances of underperformance by the
funds. The reason why mid-cap-dedicated funds on an average
do better than their benchmarks is because of information
asymmetry that still exists in this category. As compared
large-cap stocks, there is very less information asymmetry and
they are well-researched so that a fund manager has little
chance to generate alpha. Hence, where there is inefficiency in
the market, it gives opportunities to fund managers to identify
investment opportunities and generate superior returns,
resulting in a higher preference for actively managed funds
versus passive funds.
Passive versus Active
Now the moot question for an investor is whether he should
adopt a passive or active strategy to build his portfolio.
According to Prashant Joshi, Co-Founder and Partner,
Fintrust Advisors LLP, “Given the Indian context, there is no
strait-jacket answer to it. In the large-cap space, one can
allocate up to 40-60 per cent towards passively managed funds.”
52 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021
MF page - 06
The reason for such allocation, as he puts it, is, “Till 2015 many
actively managed funds were outperforming passively
managed funds; however, the table has turned since then as a
handful of funds have consistently been able to do so. Since
the expense ratio of the passively managed funds is significantly
lesser than the actively managed funds, a more significant
allocation can be justified.” Nevertheless, in the case of
mid-cap and small-cap funds, Joshi is of the opinion that
“many of the funds are consistently outperforming the passive
funds.”
However, a few deliver significant alpha over more extended
timeframes of three and five years. As a result, it may make
sense to veer away from passively managed funds and rely more
on an active investing style as there is a huge room for alpha
creation in the mid and small-cap space. We believe that the
Indian equity market and investor are yet to mature as a
developed market and till that time actively managed funds
especially dedicated to the broader market still stand a good
chance to generate better returns than their benchmarks.
Therefore, we suggest building a portfolio which is mix of both
actively and passively managed funds. Beginners would do well
to to mark large-cap allocation towards index funds and
well-managed active funds. DS
DSIJ.in
Financial Planning
Ambrish Agarwal
Director, Eastern Financiers Ltd
Asset Allocator:
The Right Choice
B
ull markets can spell tough times for prudent investors
trying to strike a balance between enjoying the ride in
stock prices and shielding the portfolio against a
sudden fall. The present bull market is no exception.
With the Sensex more than doubling from its March 2020 lows,
the last 18 months have certainly been rewarding for investors
who have kept faith in equities. But there’s no getting away
from the fact that with market valuations well above long-term
averages and macro risks looming, equity investors need to
brace for a bumpier ride ahead.
From the pace of India’s recovery post-pandemic to RBI and
Federal Reserve policies on normalising rates, to sticky inflation
and state elections, there are quite a few upcoming events that
could precipitate two-way market moves. Should earnings or
growth disappoint, investors also need to prepare for a valuation
reset. Faced with such known unknowns, investors often tend
towards extremes. Some over-cautious investors have jumped
completely off the equity bandwagon in early 2020 to wait for a
further correction, but that has led to missed opportunities.
Aggressive investors have let their equity allocations rise
without check, but they risk losing money as market volatility
picks up. The solution to this eternal dilemma lies in prudent
asset allocation. But this is easier said than done. Even if you
are good at timing and have your entry and exit strategy all
mapped out in your mind, putting tactical allocation moves
into action presents practical difficulties. First, there are
behavioural biases that will egg you on to postpone your
The writer is Director, Eastern Financiers Ltd n Email: Ambrish@easternfin.com
DSIJ.in
MF page - 07
rebalancing.
With FOMO, it’s quite difficult to jump off a speeding equity
train to invest in low-return debt investments. Two, you may
face time constraints in putting your tactical allocation plan
into action. If you own a fairly large portfolio, deciding what to
sell and what to retain, and implementing this, can take time.
You also need to factor in variables such as short versus
long-term capital gains implications and the exit load structure
of your funds, while rebalancing.
Asset Allocation Schemes
Helping an investor overcome such dilemmas is the balanced
advantage fund (BAF) or the dynamically managed asset
allocation scheme category present within the hybrid mutual
fund universe. This category of fund gets around your behav-
ioural biases by automating the rebalancing process mostly
based on quantitative models that take emotions out of the
decision. BAF juggles between equity and debt asset classes by
rebalancing the portfolio as and when required in an attempt to
deliver a smoother return journey to investors.
In order to take advantage of equity taxation, such funds always
own a gross equity position that is above 65 per cent. But to
reduce risks and usher in benefits of dynamic allocation they
use a combination of pure equity exposures and derivatives to
make up this equity allocation. When market levels are high,
BAFs own a low net equity position, with higher debt assets.
When markets fall, they add to their net equity positions,
thereby helping an investor to buy low and sell high. In a rising
market, the pure equity portion offers participation in upside.
In falling markets, derivative positions hedge against downside
and in flat markets, the debt allocation props up returns.
However, within this category, there is a wide variety in terms of
how the house houses choose to manage their portfolio. Broadly,
there are three ways in which funds are managed within this
category. There are schemes which maintain a high exposure to
equities, i.e. upwards of 70 per cent while on the other end there
are funds with very conservative equity allocation i.e. less than
20 per cent and the third option is the middle-of-the-ground
approach with equity allocation hovering between 35-40 per
cent. In an up-trending market, higher equity allocation will
surely be a winner but as the market turns volatile, middle-of-
the-ground approach tends to be very helpful.
In case an investor is looking to add gold to the mix of asset
classes, then an interesting option to consider is the Asset
Allocator Fund. The interesting aspect is that the fund has a
fund of fund structure which allows the fund manager to take
exposure to a wide spectrum of market instruments and
segments within a single fund. To conclude, if you are an
investor looking for lump sum investment opportunities in the
current market environment, an asset allocator or BAF can be
your first order of consideration. DS
n Website: www.easternfin.com
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 53
MF QueryBoard MF page - 08

I am a regular reader of DSIJ’s ‘Mutual Funds Unlocked’ section. I have started saving and investing for my child’s education
which is five years away from today. The total amount invested is `5,000 per month via SIP in the following funds: Parag
Parikh Flexi Cap Fund (`1,500), Mirae Asset Emerging Bluechip Fund (`1,500), Axis Small Cap Fund (`1,000) and Tata Digital
India Fund (`1,000). This is to request you to kindly review the funds and suggest changes, if any.
 - Athu Dhakshna

W
e assume that you have properly calculated the
requirement for your child’s education. As
regards to your mutual fund portfolio, these
funds are more suitable from a long-term
perspective. When we say long-term what we mean is an
investment horizon of seven years and above. However, the
investment horizon mentioned by you for your child’s education
is five years, which according to us is medium-term. Therefore,
your mutual fund portfolio should be a good mix of equity and
debt. That said, you have not mentioned your risk profile to
recommend you any asset allocation. Assuming you are a
moderate risk-taker, we would suggest an asset allocation of 40
per cent equity and 60 per cent debt.
After you assess your risk profile you can tweak the asset
allocation accordingly. If you are an aggressive investor then
have your portfolio tilted more towards equity and if you are a
conservative investor, increase your exposure more towards
debt. Considering your risk profile to be moderate, in equity as
well we would suggest investing in large-cap funds and mid-cap
funds and for debt consider investing in short duration funds,
banking, PSU debt funds and corporate bond funds. We
recommend having exposure to debt funds because presently we
are witnessing a bull run. However, when the markets will
correct or move southwards, it is debt funds that would cushion
your portfolio.
As far as your present allocation is concerned, we suggest you to
continue investing in Parag Parikh Flexi Cap Fund and Mirae
Asset Emerging Bluechip Fund. However, we would request you
to either divert your systematic investment plan (SIP) in Axis
Small Cap Fund and Tata Digital India Fund towards your
retirement goal or straightaway stop the SIP in these funds. The
rationale behind the same is that these funds are more suitable
for long-term goals. In fact, Tata Digital India Fund being a
sectoral fund requires active management. In case of debt funds,
we would recommend you to add SIP of `2,000 for Aditya Birla
Sun Life Corporate Bond Fund and `2,500 in Axis Short Term
Fund.
Assuming you get 12 per cent returns from equity funds and 8
per cent from debt funds, your total expected portfolio returns
work out to around 10 per cent. So, if we assume you invest
`7,500 (`3,000 in equity plus `4,500 in debt) per month at an
annualised returns of 10 per cent, at the end of five years you
would be able to accumulate `5.78 lakhs. Moreover, we would
recommend you to move the accumulated amount in equity
every year to debt. This will help you book profits in equity and
be in a comfortable position. It is not advisable to take
unnecessary risk when it concerns your child’s education.

The market is heading down day by day. So, is it the right time to invest in mutual funds?
 - Paras Jain

W
e agree with the observation that indeed the
market (hereon referred as Nifty 50) is not so
cheerful. From October 19, 2021 it has been
moving downwards. Moreover, on November
15, 2021 it failed to move above the high made on October 19,
2021. However, it did make a low of 17,216 which is lower than
the low made on October 29, 2021. That said, at present its
support zone is placed between the levels of 17,216 and 17,453.
On the upside, its resistance zone is between the levels of 18,342
and 18,605. Therefore, breaching the abovementioned levels on
either side would direct the market’s next move. Moreover, it
takes very good support on 100-day exponential moving
average (EMA) and 50-day EMA.
Therefore, unless it heads below the 100-day EMA it would be
difficult to say if the market is headed towards a big fall.
Moreover, a downfall would also be confirmed if it continues to
make lower highs and lower lows. Technically speaking, the
market is into a correction mode. Coming to your question, as a
mutual fund investor you do not need to time the market. In
fact, you can simply invest in a Nifty or Sensex index fund via
SIP and relax. SIP has the benefit of rupee cost averaging which
helps you tide the downside risk in the long run. Does this mean
you cannot time the market with mutual funds?
No, that’s not the case. In fact, there are sectoral funds which do
require timing the market. Also, one can try timing the market
with index funds as well. However, we do not advocate timing
the market if you are investing for specific financial goals.
Timing the market involves risk which you can take once you
have made provisions for your financial needs. Therefore, we
always recommend dividing a portfolio into core and satellite. A
core portfolio would be aligned with your goals and more
probably would adopt strategic asset allocation. When it comes
to a satellite portfolio where wealth creation is the main
objective, tactical allocation is preferred the most.

54 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

Expert Speak
Rocking The Boat
Never Helps
I
nvesting money judiciously is the key to achieving your
investment goals. It is equally important to imbibe certain
traits that can, not only help you in starting the process
right but also in ensuring that it remains on track through
your defined time horizon. However, despite investing money
judiciously, you may still have to face a number of challenges
during your defined time horizon. The level of investment
success that you may achieve over time will depend upon how
you manage to either avoid these surprises or tackle them
judiciously. Here’s what you need to do:
Create a Roadmap
You must create a roadmap at the start of your investment
process. It is quite common to see investors investing randomly
in different asset classes and exiting from them depending on
how these asset classes behave at certain points. Remember, a
haphazard approach like this can not only make you miss out
on opportunities in the market but also expose you to
unwarranted risks. Therefore, it is always advisable to look at
the bigger picture and establish your goals to be achieved over
short, medium and long-term horizons. A goal-based
investment process will encourage you to follow budgeting,
give risk management it’s due and follow an asset allocation
model.
Stay Committed to Time Horizon
Once it is ascertained how much time you have to achieve each
of your goals, you must remain committed to it. This will help
you in keeping focus on your goals without worrying too much
about the impact of intermittent volatility on the portfolio in
the short term. Besides, if you continue your investment
process without interruption during market uncertainties, you
benefit from averaging.
Keep Learning
Today, a lot of information is available on various investment
options and strategies to invest in them through different
mediums. However, the key is to make efforts to absorb this
DSIJ.in
MF page - 09
Hemant Rustagi
Chief Executive Officer, Wiseinvest Pvt Ltd.
knowledge and use it in your investment process. If you find it
overwhelming to analyse this information, take the help of an
advisor. Once you start working with an advisor, listen to him
or her carefully as that can go a long way in allowing you to
tackle the complexities of the investment world. The
unwillingness to listen and allowing behavioural biases to
impact your investment decisions can make it difficult for you
to adapt to the ever-changing investment and economic
environment.
Be Open to Realignment
Your investment process, as well as options, must provide
the flexibility required to realign the portfolio in line with
your changing circumstances as well as economic and
political environment. Besides, you may have to contend
with volatility and non-performance of some of the
investments in your portfolio. Therefore, investing in mutual
funds can be a much better option than investing in traditional
options that do not allow you to the required flexibility.
However, don’t get tempted to make frequent changes just
because you have the flexibility to do so. Another important
aspect is resisting the temptation of discussing your portfolio
with all and sundry as conflicting views on your portfolio
composition can make you lose your focus and compel you to
make investment decisions that may compromise your
financial future.
Avoid Emotional Investing
You must avoid getting emotionally attached to your
investments as that would make it difficult for you to make
changes, when required. While tracking the portfolio plays a
significant role in keeping investments on track to achieve your
investment goals, it is equally important to be open to make
changes in the portfolio in case some of the investments
underperform their peer group and benchmarks for prolonged
periods. However, it should be done only after giving sufficient
time to fund managers to perform and prove their worth over
different market cycles. DS
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 55
Special Report
MF page - 10

Is It The Right Time

To Invest In Credit
Risk Funds?
As this report indicates, there is room for credit
risk funds to provide better returns as the
spreads between AAA and AA are still attractive,
though not as attractive as they were in the
aftermath of the Franklin Templeton fiasco

M
oody’s on October 5, 2021 changed the outlook credit rating, thus giving them the name ‘credit risk’ funds.
on India’s sovereign ratings to stable from Credit risk funds in India are mandated to allocate at least 65
negative and maintained its rating at Baa3 for per cent of their portfolio in debt instruments which are rated
India’s foreign currency, local currency long-term less than ‘AA’.
issuer ratings and the local currency senior unsecured rating.
The change in outlook was because they believed that the Investors began to exit from this category when Franklin
downside risks from negative feedback between the real Templeton shut down its six debt MF schemes in April 2020. As
economy and financial system are declining. As previously of October 2021, the fund house has distributed around 88 per
anticipated by the rating agency, with capital cushions and cent (`23,999 crore) to investors of the total of `27,333 crore
greater liquidity, banks and non-bank financial institutions assets under management (AUM) of the six shut schemes.
carry much lesser risk to the sovereign. Nevertheless, another
rating agency, Fitch reaffirmed its BBB sovereign ratings on
India, which is the lowest investment grade to India’s sovereign
rating. Fitch Ratings maintained its negative outlook as it is of
the opinion that India has a high public debt, a weak financial
sector and some lagging structural issues.

Fitch Ratings warned that India might witness a rating

downgrade if it fails to reduce the general government debt and
GDP ratio. A structurally weaker real GDP growth outlook due
to continued financial sector weakness or lacking reform
implementation could further weigh on the debt trajectory.
That said, India is witnessing a rapid economic recovery from
the pandemic. Moreover, financial sector pressures are also
easing and even the risks are narrowing. The lending institu-
tions expect the demand for corporate loans to rebound by the
end of FY22. This is because in order to meet the rising demand
for goods and services amid revival in the economic activities,
corporates would look at capital expenditure.

Improving Economy and Credit Risk Funds

For a mutual fund investor who is interested in investing in
debt funds, improving economic growth presents a good
opportunity to take exposure to credit risk funds. Last year due
to erratic credit events along with some headwinds faced by the
economy, credit risk funds had begun to witness the heat well
before the pandemic. Credit risk funds are a type of debt-ori-
ented mutual funds that invest in securities that have a lower

56 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

 MF page - 11

As can be seen, the AUM of credit risk funds had fallen

drastically post the Franklin Templeton fiasco. Even though
the AUM has been stable thereon, the net inflows have been
rising from February 2021 and in May 2021 these moved
into positive territory. This shows that gradually interest is
building up in credit risk funds. Institutional investors, who
are considered to be smarter than retail investors and
dominate debt-oriented schemes (almost 63 per cent of the
AUM), have increased their investment in these funds,
which is reflected in the accompanying graph. Hence, AUM
and rise in net inflows towards credit risk funds gives a lot of
idea on what we can expect going ahead. Besides, what also
favours credit risk fund is better credit off-take. Although
there is no direct relationship between rise in credit and
returns by credit risk funds, better credit growth signals
good economic revival and lower risk towards low-rated
papers. During FY22, credit off-take improved with
non-food credit growth increasing to 6.8 per cent year-on-
year (YoY) basis on September 24, 2021 from 5.1 per cent a
year ago. This is more evident from the chart below.

Credit growth among public sector banks remained modest, while there has been some uptick in case of private sector banks that
have provided the bulk (56.7 per cent) of incremental credit extended by scheduled commercial banks (SCBs) on a YoY basis as on
September 24, 2021. On the back of a favourable monsoon and measures to support the farm sector, even public sector banks
recorded credit growth on YoY basis in August 2021.

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 57

Special Report
MF page - 12

It is quite evident from the above graphs that the bank credit to industry has started to improve and can see a good improvement
on YoY basis. Credit to infrastructure – which accounts for around 38 per cent of industrial credit – also showed improvement, led
by credit to roads and airports. The primary driver of the overall credit growth to industry was infrastructure, followed by textiles.
Credit growth to the services sector slowed to 3.5 per cent in August 2021 from 10.9 per cent in the same month last year. This can
largely be attributed to the slowdown in credit to NBFCs that have been raising resources mainly from money and debt markets.

The above graph clearly shows that the overall domes-

tic credit growth has been improving after making a
decadal low of 5.35 per cent in May 2021. Credit
growth has not yet reached its pre-pandemic levels.
However, looking at the revival in economic activity, it
seems that the credit growth is going to be robust in the
near future. The second factor that gives some sense of
how these funds can perform is debt-weighted credit
ratio. The credit ratio, calculated as number of
upgrades to downgrades, has maintained its ascending
stance in the first half of FY22. According to CRISIL,
there were 488 upgrades and 165 downgrades for the
first half of FY22. When we calculate the ratio giving
weight to debt, it shows debt-weighted credit ratio.

Historically we have seen there is a positive relation between debt-weighted credit ratio and returns generated by credit risk funds.
In years 2014 and 2016 we saw credit risk funds generating returns in double-digits and it is no coincidence that both these years
we saw the debt-weighted credit ratio improving. During FY17 we saw that although the credit ratio remained flat, the debt-
weighted credit ratio was at a five-year high. Similarly in 2014, we saw a marked improvement in debt-weighted credit ratio from
below 0.3 to around 0.5.

Rising credit ratio means lower risk and hence higher return as yield declines and value of bond increases. At the end of H1FY22,
debt-weighted credit ratio stands at greater than 2, which is a positive sign for such funds. The year-till-date returns from this
category of funds already give a sense of the returns that we can expect from such funds. The following table shows the calendar
year returns of credit risk funds:

Fund Name 2014 2015 2016 2017 2018 2019 2020 YTD On a YTD basis credit risk funds
UTI Credit Risk Fund - Regular Plan 11.46 8.86 10.3 6.9 5.45 -4.79 -27.78 20.92
on an average gave 8.56 per cent
Baroda Credit Risk Fund- Plan A - - 11.3 8.43 5.9 2.09 2.4 18.71
returns but there were funds such
IDBI Credit Risk Fund - Regular Plan - 8.6 8.94 5.2 5.62 -5.36 -3.5 15.55
as UTI Credit Risk Fund, Baroda
Credit Risk Fund, IDBI Credit
Franklin India Credit Risk Fund 11.89 9.29 8.71 8.27 8.4 3.99 -0.18 12.82
Risk Fund, Franklin India Credit
Nippon India Credit Risk Fund 10.97 8.78 10.01 7.03 6.03 1.94 -5.89 12.8
Risk Fund and Nippon India
BOI AXA Credit Risk Fund - Regular Plan - - 11.22 9.32 -0.29 -45.23 -44.43 9.11
Credit Risk Fund that gave
PGIM India Credit Risk Fund - Regular Plan - 10.79 9.98 7.27 5.04 3.02 -2.18 8.3
double-digit returns of 20.92 per
HDFC Credit Risk Debt Fund - Regular Plan - 9.01 10.96 6.57 5.33 8.65 10.91 6.43
cent, 18.71 per cent, 15.55 per
Aditya Birla Sun Life Credit Risk Fund - Regular Plan - - 10.3 8.09 6.56 2.09 9.36 5.83
cent, 12.82 per cent and 12.80 per
ICICI Prudential Credit Risk Fund 10.97 9 9.54 6.77 6.61 9.48 9.79 5.79
cent, respectively.
Axis Credit Risk Fund - Regular Plan - 8.7 9.79 6.43 5.86 4.35 8.21 5.51
L&T Credit Risk Fund 11.42 9.41 10.05 7.2 5.55 2.26 4.98 5.36
Kotak Credit Risk Fund Regular Plan 11.13 9.09 10.43 6.56 6.17 8.97 6.61 5.09 Should you Invest in
SBI Credit Risk Fund 10.62 9.71 10.48 6.89 6.15 6.5 9.78 4.56 these Funds?
IDFC Credit Risk Fund - Regular Plan - - - - 4.97 9.15 7.44 3.63
To conclude, we believe that still
DSP Credit Risk Fund 10.76 9.64 10.6 6.43 -2.61 4.39 4.83 2.65
there is room for credit risk funds
Invesco India Credit Risk Fund - Regular Plan - 9.09 10.92 7.09 4.07 -4.53 7.98 2.54
to provide better returns as the
spreads between AAA and AA
are still attractive, though not as attractive as they were in the aftermath of the Franklin Templeton fiasco. We are of the opinion
that this is for an aggressive risk-taking investor who should not invest more than 10 per cent of his debt portfolio in credit risk
funds. Moreover, this should be included in the satellite portfolio and not be made a part of your core portfolio. Also, credit risk
funds need to be managed actively depending upon the credit situation and overall performance of the companies and the
economy. So, if you understand these nuances you can always invest in such funds as part of your tactical investment strategy.

58 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

MF Select
MF page - 13

Canara Robeco Bluechip Equity Fund - Direct Plan

Equity: Large Cap 19.59%
Scheme Category *Expected Return In Next Two Years

S&P BSE 100 TRI

`5,070 Cr 44.89 0.37%
Expense Ratio (%)
AUM (`Cr): Oct. 31, 2021 NAV (`) Nov., 26, 2021 Oct 31, 2021 Benchmark

1% for redemption within 365 days Shridatta Bhandwalkar & Vishal Mishra
Exit Load Fund Manager
Reason for recommendation TOP 10 Holdings
COMPANY NAME % TO NET ASSETS
The equity market across the world is at present on slippery ICICI Bank 8.01
ground with the emergence of the new variant of the corona
Infosys 7.84
virus. This has also put a question mark on the continuation of
the current pace of economic recovery. Therefore, it makes HDFC Bank 7.32
sense to invest in large-cap-dedicated funds as they have more Reliance Industries 7.29
levers to manage any economic downturn. In such a scenario, HDFC 4.38
Canara Robeco Bluechip Equity Fund remains one of the best Larsen & Toubro 3.73
funds from the large-cap category. What favours the fund is its State Bank of India 3.60
beta of 0.85 which is lower than that of the market i.e. 1 and Axis Bank 3.42
also is less than the category average of 0.95.
Bajaj Finance 3.22
In a volatile market it helps to contain loss in case the market Tata Consultancy Services 2.80
falls further. The fund has one of the best Sortino ratios of 1.18 sector. Even in the financial sector it has allocated more
as against the category average of 0.89 and S & P BSE 100 TRI towards banking stocks. Given the underperformance of banks
which is 0.94. If we look at the fund’s one-year rolling returns to the market in the last one and half years, we believe that they
spread across the period November 2015 to November 2021, are going to outperform in the future. Therefore, this fund
only 10 per cent of the times has it given negative returns makes more sense in the current market situation. Moreover,
whereas 36 per cent of the times it generated return between 10 investing in a staggered manner would be more beneficial as
to 20 per cent. In terms of its portfolio, the fund is quite bullish investors won’t have to worry about catching bottom of the
on financial, technology and energy sectors. downward move. Therefore, in view of how the overall
economy is developing at present the fund seems to have the
It has the highest weightage of 34 per cent in the financial highest potential to withstand turbulent times. DS

Monthly Returns

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 59

Special Report
MF page - 14

Buying
A Car?
Opt For
Subscription When it comes to owning a car, the first and
sometimes the only option that comes to mind is
that of purchasing it through a vehicle loan that

Instead! offers the advantage of easy monthly

instalments. But now there is an alternative –
the subscription model in which case you use the
car for a fixed fee every month. What works out
better? Read ahead to know

W
hen it comes to buying a car, all of us wish to In association with Revv, which is engaged in the car subscrip-
possess one that can cater to our needs, be tion business, Hyundai Motor Company offers the scheme
comfortable and not be too heavy on the wallet. across its entire model range but limited only to 20 cities. On
Thus, most people prefer to buy a car through a the other hand, Maruti Suzuki provides such a service in
vehicle loan. A majority of lenders provide 80 per cent of collaboration with Orix Auto Infrastructure Services India,
finance on the on-road price while some go up to 90 per cent which is a subsidiary of Japan-based Orix Corporation.
on the ex-showroom price. There have been instances when Currently, Maruti Suzuki offers its subscription model across
even 100 per cent finance has been provided to buyers with eight cities. The table below offers a comparison between taking
sound financial credentials. The advantage is that such a loan a Hyundai car on loan as against subscription. We have
can be paid off in easy monthly instalments. But there is assumed a loan tenure and subscription period of 36 months
another way of using a car as its owner – the subscription and rate of interest at 7.5 per cent. Moreover, we have assumed
model – which is gaining traction these days. So how does it that an individual can get 90 per cent of the ex-showroom price
work? as a loan while he bears the cost of down payment.
Hyundai's Grand i10 Nios - Sportz - Petrol – Manual
A subscription model for a car works on similar lines to Particulars Loan Subscription
subscribing for a magazine or a direct-to-home (DTH) A] On-Road Cost 7,95,043 7,95,043
connection. When you subscribe to a car, you need to pay a fee B] Ex-Showroom Cost 6,66,950 N/A
every month or for a pre-decided period in order to use the car C] % Loan on ex-showroom price 90.00% N/A
during the specified subscription period. Therefore, a subscrip- D] Loan Amount (90% x B) 6,00,255 N/A
tion service allows an individual to drive home a vehicle of his E] Down Payment (A – D) 1,94,788 N/A
choice for a monthly fee. This gives him full access to the F] Rate of interest 7.50% N/A
vehicle without having to make any down payment. In fact, G] Processing Fees @ 0.25% of Loan Amount 1500 N/A
subscribers only need to pay an all-inclusive monthly fee that H] Loan Tenure (in Months) 36 N/A
takes care of complete maintenance, insurance as well as I] Loan EMI 18672 N/A
roadside assistance. There is an option for the subscriber to opt J] Insurance Renewals (Monthly) 1150 N/A
out for maintenance. While Hyundai Motor Company started K] Maintenance Cost (Monthly) 300 300
such a subscription scheme in March 2019, it was soon L] Net Total Monthly Outflow (I + J + K) 20122 18630
followed by Maruti Suzuki in September 2020.
M] Total outflow during 36 months (L x 36) 7,24,380 6,70,680

60 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

The difference, you might opine, is not too much. As indicated,
during the period of loan and subscription, the total outflow for
loan works out to `7.24 lakhs whereas for subscription it is
`6.7 lakhs. This creates a difference of `53,700 which translates
into a monthly variance of `1,492. However, when you opt for
subscription you also save the one-time cost of `1.95 lakhs for
down payment and `1,500 as loan processing fee. Moreover, the
subscriber also saves on insurance renewals worth `1,150 per
month. If the saved amount is invested in a debt fund for three
years offering 6 per cent rate of returns, then at the end of 36
months your savings of `2.91 lakhs will grow to `3.38 lakhs. If
you buy a car, there is an additional cost of `72,000 by way of
interest.
Hyundai's Grand i10 Nios - Sportz - Petrol – Manual
Particulars Loan
A] Down Payment 1,94,788
B] Net Total Monthly Outflow 20122
C] Total outflow during 36 months (B x 36) 7,24,380
D] Total amount paid for the car (A + C) 9,19,168
E] Insured Declared Value (IDV) / Market Value after
3,45,000
36 Months
F] Net amount post resale of car after 36 months (D – E) 5,74,168
In the above table we can clearly see that if you choose to sell
the car after three years, you stand to benefit when compared to
subscribing. Here we have assumed that the insured declared
value would be the market value of the car post 36 months.
Interestingly, as a subscriber you have an option to buy a car at
the market value post the subscription tenure. So, logically after
36 months you can buy the same car at almost 43 per cent lower
than the original on-road price. Moreover, you have already
saved the one-time cost and monthly savings that post 36
months would be worth `3.38 lakhs. Technically, in case of
subscription, your actual cost would be `3.33 lakhs i.e. `6.71
lakhs minus `3.38 lakhs. Moreover, if you buy the same car at
`3.45 lakhs, your total cost of owning the car would be `6.78
lakhs. In case you buy a car, your total ownership cost after 36
DSIJ.in
The Subscription Model
As a customer, you only need to subscribe to the service and pay a
monthly fee. Of course you have to pay for the fuel yourself. All other
expenses including maintenance and insurance would be taken care
by the leasing company and the operators. The subscription plan
offers tenure options of 24 months, 36 months and 48 months. Once
the subscription tenure is completed, the subscriber has various
options such as extending the tenure, opting for an upgrade of the
vehicle or buying it at the market price. There are two kinds of
number plates that are offered in the subscription model – white and
black. In case of a white number plate, the car is registered in the
subscriber’s name and is hypothecated to the leasing company while
Subscription for a black number plate the car is registered in the name of the
N/A leasing company.
18630
6,70,680
6,70,680 months would be `9.19 lakhs.
N/A
Conclusion
6,70,680
There are two ways of using a car – either you can buy it or you
can choose the subscription model. In order to understand the
better option of the two, we carried out a study, arriving at the
conclusion that subscribing a car financially makes more sense
than owning it. However, there is one thing that is not available
with the subscription model and that is the positive emotion of
owning the car. Logically and financially though, the subscrip-
tion model makes more sense. In fact, it makes even more sense
for those who have a tendency to change the car every three to
four years. It also works in favour of those who have a transfer-
able job. Also, those having poor CIBIL score can drive the car
of his choice via subscription model without having to worry
about getting a loan and high interest rates. So, if you are not
too high on the emotional quotient, choose the subscription
model.
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 61
MF Data Bank
MF Page - 16

With Ranking

T
he following table lists top-ranked equity funds based on
DSIJ's proprietary research methodology. We have
evaluated each funds underlying portfolio of stocks and
ranked them based on their expected portfolio returns. In a similar
way we calculated the risk of a fund based on its constituents. This
helps us to ‘rank’ and assign ‘risk’ to newly launched funds also.
We continuously evaluate equity funds based on the changed
ratings of their underlying stocks and the change in their prices.
Therefore, this list is quite dynamic and reflects the best possible
return potential of the funds for the next two years.
You can use this ranking to create your own mutual fund
portfolio. Depending on your risk profile, return expectations and
overall asset allocation, you can add the best performing fund
category to your portfolio. For clarity and to include more funds,
we have not included ‘Direct’ and ‘close-ended’ funds. You can visit
our website (www.dsij.in/mutual-fund) to check the entire list
along with equity-oriented hybrid and close-ended funds.
This ranking can also be used for reviewing different holdings
in your fund portfolio. Hence, a consistently laggard performer of a
category can be looked at as 'Switch' or 'Exit' advice.
Key To Databank
Category Rank: Category wise ranking as on Nov. 26th 2021
Scheme Name: This is the name of the mutual fund scheme
NAV (`): Net asset value per unit of a mutual fund or an exchange-traded fund
(ETF) on a specific date
AUM (`Crore): This is the total market value of financial assets held by the mutual
fund scheme on a specific date.
Weightage: Large-Cap: This is a percentage of total assets held by a fund in the
large-cap stocks as defined by AMFI for the current period.
Mid-Cap: This is a percentage of total assets held by a fund in mid-cap stocks as
defined by AMFI for the current period.
Small-Cap: This is a percentage of total assets held by a fund in small-cap stocks as
defined by AMFI for the current period.
Total No of Companies: This is a total number of securities held by a mutual fund
scheme at the end of a specific month.
Expenses Ratio: This is the latest expense ratio disclosed by the mutual fund scheme
Return_1Years: This is the past one-year return given by the scheme.
Expected 2-yr return: This is based on our analysis of the portfolio of mutual fund
scheme and their expected growth in the next one year, assuming the underlying
remains the same.
Current Rank: Rank as on Nov. 26th 2021
Previous Rank of Nov. 11th 2021 is shown under bracket ()
Risk : Risk as on Nov.26th 2021

Category NAV AUM

No of Expense 1Return Expected DSIJ Current
Weightage (%)
Scheme Name Years 1 yr return Rank Risk
Rank (`) (` Cr)
Companies Ratio (%) (%)
Large Cap Mid Cap Small Cap (%) (26 Nov., 21)
Equity - Large Cap
1 DSP Top 100 Equity Reg Gr 290.11 2,882 81.57 18.43 0.00 28 1.12 36.41 21.26 31 (99) Low
2 Aditya BSL Frontline Equity Gr 343.01 22,461 88.40 10.39 1.21 65 2.37 28.06 20.89 55 (59) Moderately Low
3 PGIM India Large Cap Gr 246.18 360 86.94 9.38 3.68 38 2.52 53.66 20.49 60 (79) Moderately Low
4 HDFC Top 100 Gr 687.69 21,596 90.49 8.70 0.81 49 2.10 32.64 20.34 65 (83) Moderate
5 Mahindra Manu Lrg Cp Pragati Yjn Reg Gr 15.82 137 97.37 2.63 0.00 31 2.14 49.43 20.25 68 (123) Moderately Low
6 SBI Bluechip Reg Gr 61.49 32,031 85.28 13.25 1.46 55 2.51 39.54 19.97 74 (89) Moderately Low
7 Baroda Large Cap A Gr 21.80 51 93.19 6.81 0.00 34 2.15 43.36 19.67 86 (73) Moderately Low
8 Principal Large Cap Reg Gr 14.81 429 96.80 0.00 3.20 47 2.05 52.43 19.63 88 (71) Moderately Low
9 HSBC Large Cap Equity Gr 317.30 806 94.40 5.60 0.00 31 1.73 45.52 19.61 89 (106) Moderately Low
10 Canara Robeco Bluechip Equity Reg Gr 41.62 5,055 90.40 9.60 0.00 48 1.65 37.80 19.59 90 (107) Moderately Low
11 Taurus Largecap Equity Gr 102.36 34 87.09 7.51 5.40 54 1.97 41.28 19.58 91 (116) Moderately Low
12 Axis Bluechip Fund Gr 46.60 33,967 100.00 0.00 0.00 32 2.60 48.25 19.55 93 (90) Moderately Low
Equity - Large & Mid Cap
1 DSP Equity Opportunities Fund Reg Gr 357.48 6,969 53.17 39.09 7.74 57 2.11 17.65 20.97 49 (62) Moderately High
2 IDFC Core Equity Gr 69.11 2,414 54.58 36.40 7.74 60 1.00 41.37 20.37 64 (88) Moderately Low
3 Tata Large & Mid Cap Reg Gr 327.60 2,705 52.97 38.72 8.31 39 2.11 14.36 17.63 178 (120) Moderately Low
4 Kotak Equity Opportunities Reg Gr 193.44 8,206 54.79 40.40 4.81 55 2.00 58.82 17.39 193 (244) Moderately High
5 UTI Core Equity Reg Gr 100.20 1,212 48.61 38.32 13.08 62 1.68 45.62 17.34 198 (240) Moderately High
6 HSBC Large & Mid Cap Equity Reg Gr 15.94 539 50.86 37.92 11.22 59 2.30 31.57 17.15 210 (239) Moderate
7 Principal Emer Bluechip Gr 182.11 3,200 50.86 40.35 8.79 62 2.45 51.02 16.60 239 (193) Moderately High
8 Quant Large and Mid Cap Gr 67.81 33 59.82 35.92 0.00 22 2.39 26.68 16.41 255 (226) Moderately High
9 Nippon India Vision Gr 824.86 3,301 53.74 46.26 0.00 91 2.65 49.65 16.09 269 (299) Moderately High
10 BOI AXA Large & Mid Cap Eq Reg Gr 55.74 212 54.31 39.28 6.41 51 1.58 36.74 15.60 293 (269) Moderately High
11 Canara Robeco Emerging Eqs Reg Gr 163.17 11,773 55.47 40.56 3.96 60 2.07 53.92 15.58 295 (291) Moderate
Others - Index Funds
1 Motilal Oswal Nifty Bank Index Reg Gr 13.38 148 94.44 5.56 0.00 12 2.60 32.36 25.08 9 (7) Low
2 DSP Equal Nifty 50 Fund Gr 15.51 262 100.00 0.00 0.00 51 0.55 38.00 21.46 29 (33) Moderately Low

() There are some blanks in the previous ranking column. This is because these funds were not in our last ranking
** These funds are yet to complete one year

Asset Under Management of passively managed funds has significantly risen from 2,49,099.48 Cr. in October
2020 to 4,49,185.82 Cr. in October 2021. That represents 80.32 per cent increase in assets over October 2020.

62 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

 MF Page - 17

Expense Return 1Expected

Category Weightage (%) DSIJ Current
NAV AUM No of
Scheme Name
Companies Ratio (%) 1 Years
yr return Rank Risk
Rank (`) (` Cr)
Large Cap Mid Cap Small Cap (%) (%) (26 Nov., 21)
3 DSP Nifty 50 Index Reg Gr 16.34 130 100.00 0.00 0.00 51 1.28 44.02 21.19 33 (45) Low
4 Tata Index Nifty Reg 105.90 208 100.00 0.00 0.00 51 0.50 40.42 21.19 34 (41) Low
5 Motilal Oswal Nifty 50 Index Reg Gr 14.37 111 100.00 0.00 0.00 50 0.89 39.40 21.19 35 (34) Moderately Low
6 IDBI Nifty Index Gr 31.94 221 100.00 0.00 0.00 50 0.40 41.12 21.19 36 (35) Low
7 SBI Nifty Index Reg Gr 150.11 1,609 100.00 0.00 0.00 50 0.30 41.41 21.19 37 (38) Low
8 HDFC Index Nifty 50 160.49 4,085 100.00 0.00 0.00 50 0.50 40.75 21.19 38 (36) Low
9 UTI Nifty Index Reg Gr 115.93 5,380 100.00 0.00 0.00 50 1.05 40.03 21.19 39 (37) Moderately Low
10 Nippon India Index Nifty Gr 29.01 401 100.00 0.00 0.00 50 0.59 40.64 21.19 40 (39) Moderately Low
11 Aditya BSL Index Gr 172.24 293 100.00 0.00 0.00 50 0.52 40.57 21.19 41 (40) Low
12 L&T Nifty 50 Index Reg Gr 19.58 79 100.00 0.00 0.00 50 0.70 40.72 21.19 42 (42) Moderately Low
13 IDFC Nifty Gr 36.63 340 100.00 0.00 0.00 51 0.37 40.27 21.19 43 (43) Low
Equity - Sectoral/Thematic
1 HDFC Infrastructure Gr 20.55 604 51.69 6.82 41.50 40 2.58 43.16 106.21 1 (335) High
2 UTI Infrastructure Reg Gr 78.96 1,512 52.44 28.85 18.71 42 2.55 35.92 29.85 2 (410) Moderate
3 SBI Banking & Financial Svcs Reg Gr 24.91 3,106 79.07 13.73 7.20 20 2.33 73.26 26.49 5 (12) Low
4 Baroda Bank & Fin Srvs A Gr 29.34 55 92.23 5.89 1.88 16 2.80 29.66 26.10 6 (4) Low
5 Sundaram Fin Services Opp Reg Gr 60.67 485 84.57 6.59 8.59 25 1.03 32.14 25.91 7 (2) Low
6 LIC MF Banking & Fin Serv Reg Gr 14.04 63 86.63 6.85 6.52 16 2.47 39.39 25.69 8 (6) Low
7 IDBI Banking & Financial Serv Gr 13.66 100 84.76 10.31 4.93 25 2.20 44.35 24.93 10 (9) Low
8 UTI Banking & Fin Svcs Gr 119.52 768 86.93 6.56 5.21 22 2.46 47.11 24.30 11 (13) Low
9 Aditya BSL Bkng & Fin Srvcs Reg Gr 39.32 2,228 82.01 3.40 14.58 26 1.97 34.25 23.82 12 (10) Moderately Low
10 DSP Quant Reg Gr 16.98 1,212 79.80 20.20 0.00 48 2.67 38.48 23.79 13 (16) Moderate
11 Mahindra Manu Rural Bharat&Consmp Reg Gr 13.88 49 74.34 17.54 8.12 28 0.40 38.19 23.66 15 (8) Moderately Low
12 Invesco India Financial Serv Gr 79.02 393 79.69 1.68 18.63 21 2.61 34.59 23.52 16 (15) Moderately Low
13 Nippon India Banking & Fin Srvs Gr 358.85 3,282 68.05 17.23 14.71 26 1.84 57.11 23.03 18 (21) Moderately Low
14 ICICI Pru Banking & Fin Svcs Gr 85.20 5,242 70.01 10.78 17.63 26 2.64 25.85 22.44 20 (23) Low
15 Sundaram Rural & Consumption Gr 58.72 1,289 55.30 32.74 11.96 38 2.06 57.03 22.34 21 (17) Moderately Low
16 Tata Banking & Financial Svcs Reg Gr 26.27 856 87.56 4.95 6.87 20 1.08 37.18 21.70 28 (27) Low
17 DSP Nat Res & New Engy Reg Gr 53.04 785 70.41 28.09 1.51 17 0.30 37.98 21.44 30 (5) Moderately Low
18 HDFC Housing Opportunities Reg Gr 12.99 1,572 72.53 4.99 22.49 36 0.80 55.83 21.25 32 (57) Moderate
19 Aditya BSL PSU Equity Reg Gr 13.94 861 66.41 23.30 10.28 30 2.23 40.97 21.13 47 (72) Moderate
20 ICICI Pru FMCG Gr 328.87 900 70.56 21.36 8.08 22 2.55 36.11 20.80 56 (22) Low
21 Quantum India ESG Equity Reg Gr 17.04 54 67.59 30.57 1.84 45 2.13 52.61 20.76 57 (26) Moderately Low
22 Tata Quant Reg Gr 10.53 56 93.90 6.10 0.00 30 2.60 16.63 20.33 66 (124) Low
23 Invesco India PSU Equity Gr 26.85 356 47.36 30.43 22.20 22 1.74 48.43 19.92 76 (207) Moderate
24 UTI India Consumer Reg Gr 40.61 357 69.86 16.66 13.48 34 1.84 29.62 19.76 82 (85) Moderately Low
25 SBI PSU Reg Gr 12.99 448 68.39 20.06 11.56 22 1.61 46.17 19.54 94 (177) Moderate
26 Tata India Consumer Reg Gr 26.57 1,344 53.47 26.30 20.23 32 1.74 48.14 19.02 112 (103) Moderate
27 ICICI Pru ESG Reg Gr 13.81 1,827 54.28 23.94 21.78 30 2.13 44.55 18.79 120 (65) Low
28 Nippon India Quant Gr 39.68 32 85.68 14.32 0.00 35 2.04 44.83 18.76 122 (195) Moderately Low
29 SBI Equity Minimum Variance Reg Gr 15.55 125 100.00 0.00 0.00 50 2.45 33.53 18.58 124 (77) Low
30 UTI Transportation & Logistics Reg Gr 134.41 1,525 72.48 16.74 10.78 32 2.47 42.38 18.54 128 (117) Moderately Low
31 SBI Magnum Global Reg Gr 289.30 5,387 46.78 22.09 31.13 33 2.10 50.16 18.42 137 (58) Moderately Low
32 Franklin India Opportunities Gr 123.60 702 80.01 8.22 11.78 28 2.43 41.74 18.29 142 (282) Moderate
33 IDBI Healthcare Reg Gr 18.45 75 70.82 17.73 11.45 29 2.58 45.73 17.68 175 (24) Moderately Low
34 Aditya BSL Pharma & Hlthcare Reg Gr 18.59 567 64.78 25.56 9.66 25 2.38 49.43 17.67 176 (61) Low
35 UTI Healthcare Reg Gr 160.77 828 54.86 19.20 25.93 30 1.58 22.03 17.58 184 (55) Moderately Low
36 ICICI Pru Pharma Healthcare Diag Gr 19.90 3,045 56.21 26.31 17.49 27 2.52 30.14 16.97 217 (127) Low
Equity - Focused
1 Sundaram Sel Focus Gr 272.03 1,403 87.67 12.33 0.00 29 1.68 45.18 21.91 26 (47) Moderately Low
2 JM Core 11 Gr 11.70 46 82.48 10.01 7.50 11 0.68 40.08 21.01 48 (163) Moderately Low
3 HSBC Focused Equity Reg Gr 16.18 603 72.15 22.71 5.14 29 2.47 13.13 20.21 69 (84) Moderately High
4 DSP Focus Reg Gr 34.23 2,134 66.73 29.86 3.41 22 2.61 43.25 19.82 81 (183) Low
5 Motilal Oswal Focused 25 Reg Gr 33.31 1,830 77.24 20.17 2.59 20 2.73 40.74 19.58 92 (96) Low
6 Aditya BSL Focused Eq Gr 92.58 5,381 91.60 6.84 1.56 29 2.20 30.95 19.51 96 (162) Moderately Low
7 Axis Focused 25 Gr 46.81 20,404 92.04 7.96 0.00 21 2.44 53.10 19.38 100 (94) Moderate

Net Inflow of passively managed funds has risen from -1,877.74 crores in
October 2020 to 10.758.85 crores in October 2021.

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 63

MF Data Bank
MF Page - 18

Expense Return 1Expected

Category Weightage (%) DSIJ Current
NAV AUM No of
Scheme Name
Companies Ratio (%) 1 Years
yr return Rank Risk
Rank (`) (` Cr)
Large Cap Mid Cap Small Cap (%) (%) (26 Nov., 21)
8 Kotak Focused Equity Reg Gr 16.50 2,236 65.07 30.98 3.95 30 1.95 33.25 19.26 104 (137) Moderately High
9 IIFL Focused Equity Reg Gr 30.51 2,480 70.58 17.54 11.88 30 2.55 43.23 18.93 114 (98) High
10 ICICI Pru Focused Equity Gr 49.50 2,387 82.61 9.31 8.07 30 2.00 43.84 17.93 162 (231) Moderately High
Equity - Mid Cap
1 DSP Midcap Reg Gr 91.44 14,190 14.98 68.17 16.85 50 2.46 32.67 21.90 27 (76) Moderate
2 Taurus Discovery Gr (Mid-Cap) 74.12 78 8.63 70.27 21.10 61 2.48 90.90 15.96 274 (322) Moderately High
3 Franklin India Prima Gr 1,535.72 8,083 21.55 68.85 9.60 50 2.07 48.35 15.93 278 (297) Moderate
4 Tata Mid Cap Growth Reg Gr 246.05 1,460 15.24 66.00 18.76 53 1.21 17.05 14.97 318 (326) Moderately High
5 Mahindra Manu Mid Cp Unnt Yjn Reg Gr 17.42 845 10.13 67.85 22.02 59 0.80 50.72 14.60 334 (312) Moderate
6 HDFC Mid-Cap Opportunities Gr 91.57 31,629 6.63 65.45 27.92 63 2.01 50.57 14.58 336 (359) Moderately High
7 Kotak Emerging Equity Reg Gr 72.28 16,485 11.24 68.46 20.30 68 1.96 84.74 14.43 340 (321) Moderately High
8 BNP Paribas Mid Cap Gr 58.58 1,089 7.30 73.69 19.01 55 2.54 17.68 14.05 355 (409) Moderate
9 L&T Midcap Gr 207.98 6,909 9.59 69.92 18.79 59 2.28 89.71 13.73 366 (379) Moderately High
10 Quant Mid Cap Gr 119.53 205 20.57 74.25 2.28 26 2.75 6.87 13.21 376 (350) Moderately High
Equity - Small Cap
1 Tata Small Cap Fund Reg Gr 21.90 1,721 0.00 8.64 91.36 39 2.48 24.44 17.12 212 (172) High
2 ITI Small Cap Reg Gr 15.47 426 0.00 1.29 98.71 20 2.14 91.82 15.93 277 (323) Moderate
3 HSBC Small Cap Equity Gr 90.60 350 2.79 23.76 73.44 40 1.89 56.95 13.09 382 (381) High
4 IDFC Emerging Businesses Reg Gr 22.24 1,433 9.21 10.31 80.48 64 2.11 74.53 12.95 384 (383) High
5 DSP Small Cap Reg Gr 108.59 8,270 0.00 17.79 82.21 64 1.90 62.16 12.36 401 (378) High
6 Kotak Small Cap Reg Gr 168.86 6,180 2.77 22.32 74.91 69 2.49 70.23 12.08 405 (372) Moderately High
7 Sundaram Small Cap Gr 150.26 1,541 0.00 19.49 80.51 64 2.32 66.05 11.68 410 (386) Moderately High
8 ICICI Pru Smallcap Gr 51.91 3,304 0.00 7.88 92.12 56 2.14 74.33 11.16 417 (429) Moderately High
9 BOI AXA Small Cap Reg Gr 26.12 194 1.71 17.39 80.90 68 2.72 60.06 11.16 418 (396) High
Hybrid - Aggressive
1 Shriram Hybrid Equity Reg Gr 22.90 64 92.47 5.66 1.87 49 1.85 53.37 20.44 62 (53) Moderately Low
2 LIC MF Equity Hybrid Gr 138.91 471 72.31 14.13 13.55 47 2.08 48.96 20.27 67 (54) Moderately Low
3 DSP Equity & Bond Fund Reg Gr 237.40 7,559 60.63 24.74 14.63 56 2.46 37.45 19.84 79 (118) Moderate
4 IDFC Hybrid Equity Reg Gr 17.01 593 74.30 14.43 11.27 35 2.03 52.18 19.32 102 (128) Moderate
5 Nippon India Equity Hybrid Gr 66.49 3,500 90.16 6.51 3.33 45 2.42 36.24 19.06 108 (134) Moderately Low
6 Canara Robeco Equity Hyb Reg Gr 245.08 6,902 75.97 22.98 1.05 52 2.44 12.47 19.05 109 (119) Moderately Low
7 Principal Hybrid Equity Gr 112.38 1,107 76.60 19.63 3.76 59 1.97 36.76 19.04 110 (97) Moderately High
8 HSBC Equity Hybrid Fund Reg Gr 15.81 515 71.69 19.38 8.94 49 2.61 47.38 19.03 111 (115) Moderate
9 Tata Hybrid Equity Reg Gr 302.61 3,428 76.34 13.06 10.60 32 1.92 33.10 18.83 119 (110) Moderate
10 UTI Hybrid Equity Reg Gr 251.62 4,326 68.01 16.91 15.08 61 2.69 48.00 18.71 123 (147) Moderately High
11 PGIM India Hyb Eq Gr Opt 98.32 185 51.32 29.48 19.20 52 2.62 51.94 18.49 132 (108) Moderately High
12 Motilal Oswal Equity Hybrid Reg Gr 15.31 416 72.75 21.29 5.96 26 2.48 58.30 18.21 150 (160) Low
13 Mahindra Manu Hy Eq Nivesh Yjn Reg Gr 16.76 315 74.59 13.95 11.46 50 2.55 42.23 18.20 151 (222) Moderately Low
Equity - Multi Cap
1 ITI Multi Cap Reg Gr 14.34 326 36.03 30.92 33.04 21 2.70 28.41 26.90 4 (3) Low
2 Sundaram Equity Reg Gr 16.62 847 45.37 24.84 28.73 60 2.21 11.63 16.80 224 (283) Moderately High
3 BNP Paribas Multi Cap Gr 77.48 599 44.11 25.04 30.85 56 2.13 32.45 16.69 234 (285) Moderate
4 ICICI Pru Multicap Gr 449.97 6,585 44.38 26.11 29.51 76 1.88 47.54 16.06 270 (294) Moderately High
Equity - Flexi Cap
1 Shriram Flexi Cap Reg Gr 14.80 68 69.03 20.59 10.38 40 2.53 22.66 22.00 24 (56) Moderate
2 Parag Parikh Flexi Cap Reg Gr 51.01 17,220 68.01 14.04 17.95 21 1.75 56.01 21.92 25 (18) Moderately High
3 DSP Flexi Cap Fund Reg Gr 67.18 7,345 60.10 25.87 14.03 57 2.65 35.38 20.15 70 (102) Moderate
4 HSBC Flexi Cap Gr 133.65 408 68.37 21.13 10.50 53 0.74 36.81 19.92 77 (78) Moderate
5 SBI Flexicap Reg Gr 76.66 15,462 67.19 17.07 15.74 52 2.52 46.20 19.87 78 (95) Moderate
6 LIC MF Flexi Cap Gr 67.38 428 66.15 18.67 15.18 55 2.81 47.14 19.68 85 (70) Moderate
7 IDBI Flexi Cap Fd Rglr Gr 34.88 385 72.60 14.69 12.71 50 2.13 57.27 19.65 87 (60) Moderately High
8 Motilal Oswal Flexicap Reg Gr 34.70 11,505 85.61 9.10 5.30 29 2.55 34.67 18.39 139 (130) Moderately High
9 Taurus Flexi Cap Gr 148.83 269 70.09 13.59 16.32 58 2.19 15.71 18.25 148 (204) Moderate
10 Kotak Flexicap Reg Gr 52.39 38,521 71.13 26.78 2.09 49 2.25 36.97 18.17 153 (216) Moderately High
Equity - Value/Contra
1 UTI Value Opportunities Reg Gr 100.67 6,661 68.02 20.07 11.03 56 1.75 46.12 20.60 59 (67) Moderately High

Income/Debt Oriented Fund for the month of October 2021, saw net inflows to the tune of 12,984.38 Cr.

64 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in

 MF Page - 19

Expense Return 1Expected

Category Weightage (%) DSIJ Current
NAV AUM No of
Scheme Name
Companies Ratio (%) 1 Years
yr return Rank Risk
Rank (`) (` Cr)
Large Cap Mid Cap Small Cap (%) (%) (26 Nov., 21)
2 Quantum L/T Equity Value Reg Gr 77.05 921 79.45 20.55 0.00 28 2.79 39.74 20.00 73 (52) Moderately Low
3 Kotak India EQ Contra Reg Gr 82.55 1,189 73.50 26.50 0.00 53 1.75 47.55 19.69 83 (125) Moderate
4 Tata Equity P/E Reg Gr 198.93 5,168 67.99 18.93 11.11 36 1.82 49.97 19.51 95 (91) Moderately Low
5 Invesco India Contra Gr 77.81 8,458 69.44 16.76 13.79 47 2.21 39.11 19.46 97 (112) Moderate
6 Union Value Discovery Fund Reg Gr 16.90 138 70.31 13.92 15.77 41 1.90 40.99 19.08 107 (155) Moderate
Equity - ELSS
1 ITI Long Term Equity Reg Gr ) 14.51 109 32.92 27.65 39.43 24 2.64 44.11 27.51 3 (1) Low
2 Parag Parikh Tax Saver Reg Gr ) 18.49 324 71.03 11.82 17.15 25 1.07 20.66 23.00 19 (11) Moderate
3 DSP Tax Saver Reg Gr ) 81.15 9,805 65.01 23.81 11.19 55 2.04 49.31 22.13 23 (25) Moderately Low
4 Sundaram Diversified Equity Gr ) 147.60 2,177 71.93 18.76 9.31 48 2.33 13.75 20.37 63 (68) Moderate
5 Quantum Tax Saving Reg Gr ) 76.27 103 79.91 20.09 0.00 28 2.35 41.48 20.13 71 (50) Moderately Low
6 Taurus Tax Shield Gr ) 111.97 68 71.84 17.25 10.92 49 2.23 45.26 19.30 103 (121) Moderately Low
7 SBI Magnum Long Term Equity Reg Gr ) 225.97 11,094 64.53 23.21 12.26 61 1.83 37.90 18.85 118 (192) Moderate
8 Shriram Long Term Equity Reg Gr ) 15.80 46 69.07 14.18 16.75 57 0.00 55.53 18.56 126 (139) Moderate
9 Indiabulls Tax Savings Gr ) 13.45 51 80.25 15.29 4.46 45 2.38 15.35 18.43 136 (153) Moderately Low
10 Mahindra Manu ELSS Kar Bachat Yjn Reg Gr ) 18.54 424 71.39 14.68 13.94 49 2.08 46.81 18.30 141 (150) Moderately Low
11 BNP Paribas Long Term Equity Gr ) 60.63 557 66.94 13.90 19.16 49 2.57 43.47 18.29 143 (223) Moderate
12 LIC MF Tax Gr ) 100.30 410 74.23 19.37 5.38 50 2.22 19.92 18.28 145 (143) Moderate
13 HSBC Tax Saver Equity Gr ) 56.42 207 69.19 17.20 13.61 42 2.49 52.18 18.25 146 (164) Moderate
14 PGIM India Long Term Eq Reg Gr ) 23.45 334 76.15 8.27 15.57 31 2.03 46.55 18.25 147 (181) Moderate
15 Kotak Tax Saver Reg Gr ) 72.23 2,323 64.53 24.71 10.75 55 2.53 113.15 18.07 157 (167) Moderately High
Hybrid - Equity Savings
1 DSP Equity Savings Reg Gr 15.83 382 70.27 22.59 1.93 52 2.24 41.06 23.47 17 (14) Low
2 Sundaram Equity Savings Reg Gr 12.57 157 87.02 9.40 0.00 47 2.29 63.30 20.09 72 (69) Moderately Low
3 IDFC Equity Savings Reg Gr 24.73 65 79.01 20.28 0.64 44 2.43 46.95 19.69 84 (63) Moderate
4 UTI Equity Savings Reg Gr 13.15 275 98.15 0.00 1.85 32 2.61 34.81 18.90 116 (259) Moderately Low
5 Kotak Equity Savings Reg Gr 18.35 1,626 78.97 20.44 0.59 71 2.03 17.29 18.28 144 (148) Moderate
6 Axis Equity Saver Reg Gr 16.98 1,053 90.74 8.02 1.24 67 2.57 29.03 18.06 158 (145) Moderate
7 Mirae Asset Equity Savings Reg Gr 14.60 405 64.40 26.35 9.24 85 2.62 58.57 17.62 180 (129) Moderately Low
8 L&T Equity Savings Gr 22.87 102 59.96 29.77 10.27 48 2.37 45.16 17.62 182 (184) Moderate
9 Nippon India Equity Savings Gr 12.33 239 95.15 2.28 2.57 28 2.26 38.40 17.58 185 (355) Low
Hybrid - Dynamic Asset Allocation
1 HDFC Balanced Adv Gr 279.70 42,776 69.69 17.58 12.73 69 2.42 18.59 23.69 14 (248) Moderately High
2 ITI Balanced Advantage Reg Gr 10.89 305 58.74 19.09 22.17 23 2.69 36.01 22.21 22 (20) Moderately Low
3 Shriram Balanced Advantage Reg Gr 13.02 49 89.71 6.28 4.00 62 2.56 27.38 20.47 61 (66) Low
4 Aditya BSL Balanced Advantage Gr 73.14 6,124 84.08 8.83 6.70 90 0.94 54.48 19.37 101 (51) Moderately High
5 Edelweiss Balanced Adv Gr 35.88 6,331 77.43 16.78 5.18 120 2.41 48.28 18.86 117 (82) Moderate
6 Invesco India Dynamic Equity Gr 37.16 693 76.09 15.62 8.29 30 1.78 29.99 18.51 130 (140) Moderately Low
7 Nippon India Balanced Adv Gr 121.83 5,130 72.10 15.17 12.73 69 2.33 19.51 18.30 140 (131) Moderately Low
8 Motilal Oswal Dynamic Reg Gr 15.66 1,144 86.62 8.95 2.46 22 2.15 49.02 17.93 161 (242) Low
9 IDFC Balanced Advantage Reg Gr 18.29 2,743 82.26 12.84 4.90 47 2.07 38.86 17.61 183 (135) Moderately High

Solution Oriented
1 Axis Retirement Savings Cnsrv Reg Gr 12.64 107 55.15 28.18 10.43 24 1.97 53.19 20.61 58 (49) Moderate
2 HDFC Retirement Svgs Hybrid Equity Reg 25.40 748 52.83 7.31 39.86 46 2.47 41.30 18.14 154 (74) Moderate
3 Nippon India Retmnt Wlt Creation Reg Gr 17.98 2,378 67.17 20.49 12.35 64 2.03 51.46 18.07 156 (156) Moderate
4 HDFC Retirement Svgs Hybrid Debt Reg 16.51 145 53.07 3.29 43.64 32 2.44 25.16 18.03 160 (109) Moderate
5 ICICI Pru Ret Hybrid Cnsrv Plan Reg Gr 12.80 70 95.87 4.13 0.00 10 2.04 33.64 17.45 191 (209) Moderately Low
6 Tata Retirement Saving Cnsrv Gr 24.99 189 70.84 19.66 9.50 46 1.94 57.00 17.35 197 (224) Moderately Low
7 Franklin India Pension Plan Gr 160.48 461 77.30 19.04 3.66 30 1.57 40.40 16.98 216 (307) Low
8 Tata Retirement Saving Mod Gr 43.61 1,608 69.55 19.04 11.41 48 2.36 36.39 16.91 218 (234) Moderately Low
9 Aditya BSL Ret Fd 40s Reg Gr 13.27 95 46.34 40.20 13.46 41 2.09 51.82 16.88 219 (212) Low
Equity - Dividend Yield
1 Aditya BSL Div Yield Gr 252.42 860 45.32 20.31 30.70 45 1.80 35.57 18.21 149 (100) Moderately High
2 ICICI Pru Dividend Yield Eq Gr 26.42 530 76.36 11.35 12.29 36 2.20 39.34 17.74 173 (194) Moderate
Global - Other
1 Aditya BSL Intl Equity B Gr 27.18 106 46.83 10.24 42.93 38 2.50 39.41 19.95 75 (81) Moderate

All the NAV figures are for date Nov., 26, 2021. Trailing returns are also calculated for the same date. AUM, weightage of a stocks, number
ofcompanies and expense ratio are for the period ending October 2021.

DSIJ.in DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 65

Special Report
MF Page - 20

A Guide To Claiming
Life Insurance
The article explains in detail the kinds of maturity benefits that may be claimed from the insurance company in

N
case a policy has matured or the policy owner has expired before the maturity date
owadays people are well aware about the fact
that life insurance is a crucial component of
their financial planning. A majority of people
possess life insurance in order to secure their
dependents and family in case of the
unfortunate demise of a policyholder. Life
insurance is a contract that pledges payment of an amount to
the person assured (or his nominee) on the happening of the
event insured against. This insurance comes as a breather in
difficult times. Whenever anyone purchases a life insurance
policy, he or she would always want to know how much money
would be due to him and when.
of the surplus ‘with profit’ to the policyholders in the form of
bonus. Insurance companies invest a huge proportion of
premiums collected from policyholders in government-secured
debt instruments and a minor proportion in equities. And
based on earnings from the investments and claim experience,
the company distributes a part of the surplus ‘with-profit’ to the
policyholders, often known as a participating policy, in the
form of bonus. The rate of bonus is determined after taking
into account several factors like return on investments, level of
bonus announced in the preceding years and other actuarial
assumptions.

That is precisely the aim behind purchasing a policy. Presently,

life insurance companies being empathetic are creating
hassle-free processes for the deceased’s family as they face
emotional breakdown due to sudden demise. Insurance
companies have an obligation to settle claims promptly as it is
one of the significant services that an insurance company can
provide to its customers. The insurance contract is valid for
payment of the insured amount during the date of maturity or
specified dates at periodic intervals or in case of unfortunate
demise if it occurs during the policy term.

Life insurance is universally acknowledged to be an institution

which eliminates ‘risk’, substituting certainty for uncertainty
and comes to the timely aid of the family in the unfortunate
event of death of the breadwinner. Life insurance, in short, is
concerned with two hazards that stand across the life path of
every person:
n That of dying prematurely, leaving a dependent family to it is accumulated to be paid at the time of claim or at
paddle their own canoe
n That of living till old age without visible means of
support.
Let’s discuss some of the benefits which come along with the
insurance policies. Life insurance companies distribute a part
1. Simple Reversionary Bonus: Such bonus is declared as a
percentage rate, applied to the sum assured in respect of
the basic policy benefit. Under this type of bonus, the
calculation is done on the basis of simple interest. At the
end of each policy year, an annual bonus is declared and
maturity. The interest of the bonus which has been
accrued does not earn cumulative interest and only the
principal amount is considered in the interest calculation.
2. Compound Reversionary Bonus: The calculation is
done on the basis of compound interest i.e. the bonus is
computed as a percentage on the sum assured and on all

66 DALAL STREET INVESTMENT JOURNAL I DEC 06 - 19, 2021 DSIJ.in


preceding accumulated bonuses.
3. Interim Bonus: Interim bonus is payable for those
policies that mature as a result of a death claim in
between two bonus declaration dates. While the policy
has already accrued the bonus declared at the end of the
last financial year, there may be a short period in between
the bonus declaration date and the maturity or claim date
for which the policy has not received bonus. In such
cases, a bonus is added on a pro-rata basis using the
interim bonus rates declared by the company.
4. Cash Bonus: This provides the policyholder an
opportunity to receive the bonus year on year rather than
the usual way of accruing till bonus maturity. The
insurance company may decide to give the bonus in cash,
i.e. bonus accruing in a year is paid to the policyholder at
the end of the year.
The most common types of claims are maturity
claim and death claim:
1. Maturity Claim: At maturity, the insured gets the sum
assured, vested bonus and loyalty additions, if any.
Maturity claim is associated with the maturity benefit of
the policy. It means that when the policy completes its
tenure, a certain amount of money, called maturity claim
amount, is settled towards the life assured. It is paid only
if the policy completes its due course of time and the
policy has been continued properly, i.e. all due premiums
have been paid on time.
Maturity Value = Sum Assured +
[(Sum Assured*Bonus per 1,000*Term of Policy)/1000]
2. Death Claim: The primary feature of a life insurance
policy is the death benefit it provides. Permanent policies
provide a death benefit that is guaranteed for the life of
the insured, provided the premiums have been paid and
the policy has not been surrendered. The death claim
amount is payable in case of policies where premiums are
paid up to date or where the death occurs within the days
of grace. Payment from the policy may be lump sum or as
an annuity, which is paid in regular instalments for either
a specified period or for the beneficiary’s lifetime.
Surrender Value
If in case any policyholder is not willing to continue his or her
insurance policy during the policy term then he or she has the
option of surrendering the policy. When the policyholder
surrenders a policy before the maturity period for its cash value,
life insurance protection ceases and the insurer has no further
obligation under the policy. When an insured surrenders the
policy before maturity, he or she does not get 100 per cent of
paid-up value but a percentage as mentioned in the policy.
What is the disadvantage of exiting the policy before maturity?
Once you exit the insurance policy, all the benefits associated
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with it including protection cover will cease to exist. Therefore,
ideally, you should consider terminating the policy only if you
believe that you have been sold a policy that does not fulfil your
requirements, or the features prove to be different from what
was promised to you.
Proceeding with the Claim
When a family faces any sudden or unfortunate demise of their
loved one who is the sole breadwinner of the family then they
may be in need of immediate cash in order to pay off any
hospital bills or follow any proceedings related to death. So, in
this case, beneficiaries need to know how to collect life
insurance payments they are entitled to as proceeds from life
insurance policies provide quick income for surviving family
members. It is common for the policy beneficiary to deal with
the insurance company directly, get the claim process started as
soon as possible and collect benefits. For the same reason one
must have answers to the following questions:
n What type of life insurance policy or policies did the
deceased have?
n Were the policies still in force at the time of death?
n What benefits they will be entitled to?
n Who are the beneficiaries?
n How much claim will the beneficiaries receive?
To claim life insurance benefits, the beneficiary should contact
the insurance company’s local agent, office or check the
company’s website. Subsequently, a claim form needs to be
submitted with detailed information. One should not leave out
any details while filling out the claim form. This can lead to
outright rejection of your claim. The companies ask
beneficiaries for the following requirements: claimant’s
statement giving details of the deceased, death certificate, ID
proof of the beneficiary, insurance policy papers, discharge
form (if any), post-mortem report (if death is due to any
unnatural cause).
In some cases, insurance companies seek for additional
information in case of suspicious death or a large policy
amount. This additional information is required in order to
verify the genuineness of the claim. Further, if more than one
adult beneficiary was named, each should submit a claim form.
If the insured’s death is suspicious and the policy amount is
large, the insurer may investigate the circumstances
surrounding the death before deciding whether it has an
obligation to pay the claim.
Conclusion
To conclude, while making claim one should be aware of
various components discussed in the above article as it might
help you in receiving the right amount of claim with all the
benefits. Before claiming insurance the beneficiary should go
through the policy document of the deceased so that he does
not miss out on any information and ends up with a rejection of
the claim from the insurance company. DS
DEC 06 - 19, 2021 I DALAL STREET INVESTMENT JOURNAL 67