M Value Research Wealth Insight SPECIAL ISSUE TOP TRENDS TO PROFIT FROM Dg aly som ony SECTO Gale (i mrA074) OUTLOOK 2GAim to build wealth over the long term + Save taxes. Invest in HDFC TaxSaver. To know more, contact your Mutual Fund Distributor / Registered Investment Adviser or give a missed call on 73974 12345 This product is suitable for investors who are seeking~: RISKOMETER# + To generate long-term capital appreciation / income + Investments predominantly in equity & equity related instruments. [maa ~Investors should consult their financial advisers, if in doubt, about whether the product is suitable for them. #For latest riskometer, investors may refer to the Monthly Portfolios disclosed on the website of the Fund viz. www.hdfcfund.com, ‘An Individual/HUF is entitled to deduction from gross total income for investments in Equity-Linked Savings Scheme (ELSS) up to Rs. 1.5 Lakhs (along with other prescribed investments) under Section 80C of the Income-tax Act, 1961. In View of the individual nature of the tax consequences, each investor is advised to consult his/her own professional adviser. HDFC NOT ELDa4 BHAROSA APNO KA Date of Release: December 15, 2021 MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.icici ty ~ MUTUAL FUNDWealth Insight JANUARY 2022 COVER STORY EDITORIAL PoLicy Tre goat eat ng wn patton ro at wt ection, enotagg you ee na ie sa yo seen cay canta ia. no pe one st rot Egy Zo Top trends to profit from ‘Shaply eral of gow ard oe as we ude Fis voyage tosh Dhienara Kumar Slr tar os Py a — oe 2 stock awison Bh ee See eee TATE fees oechie | sae sick nesting oe ee seesaa dco soe spec oman TTA 4 mo ines so th ign ed ico eect) | eee oe nate 1 Bee ‘Advisor provides you. en es ern Dream t Pe aren) Coen Bienes Biretioy Cesaton 4 | Wealth Insight January 2022Columns 7 + Bwsicur cor 2 yy as wi nesting with anak by DMIRENDRAKUMAR 2G How tobe Simplicity see a boring investor? D Muthukaishnan's In everything that Value Research ‘Twitter page does, our efor ist nk you to dul but - rewarding vestments and warn you ot the ‘ones that offer exeitoment but no sokty SPECIAL SUPPLEMENT Wealth Insight m= 51 MAIN STREET by SAURABH MUKHERJEA ‘The power of the S-curve Depicting initial investment, growth and fade, the S-curve can help distinguish a great business from a mediocre one “a Mn 54 EVERYDAY ECONOMICS by PUAMEHRA 4 ee 29 Animal spirits! 10 wanker moves 24 wanker compass If nian formers want to thrive, they should eam fom the ear? @ Market Reporter: @ TPO tracker Top 10 events of 2021 and not ect ike gant pandas # Big Moves of 2021 26 anatysrs viany Index Wateh: te Tuniny Indices in 2021 to poss 56 STRAIGHT TALK 58 stock screen byaunorangon 2 QQworoswornivisoon £ # Attractive Due chips Too costly to be beneficial The cost-benefit analysis of ‘mega government projects often turns out to be wrong, reveals a research paper ¢ Discount to book value f @ High dividend-yield stocks Best quotes of ‘Mohnish Pabrai 2 © © Best quotes of 2021 DISCLAIMER eae eee ee ee ee er races ta tiga ietncete tay jaan sspaaa January 2022 Wealth Insight | 5‘An investor education itv by 42) LIC MUTUAL FUND INDEX FUND } cme Fund that mimics a particular Index Index Funds are open-ended schemes which track the underlying benchmark where investors can buy and redeem units of the Mutual Funds at the end of day NAV. Benefits of Investing in Index Funds CG Diversification Lower Cost / Transparency within index/ ¢ sector, “_ Cost effective way to Long-Term Growth To know more, please consult your Financial Advisor "Visit here htto infolkYCredressal to learn more about KYC requirements, SEBI Registered Mutual Funds and Grievance redres Orrcmutuat — @icompanyfLicmutuat (100-256-5678 www. MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.ie How to be a boring investor In everything that Value Research does, our effort is to link you to dull but rewarding investments and warn you off the ones that offer excitement but no solidity 3 @@DHIRENDRA KUMAR Welcome to yet another issue of ‘Wealth Insight which hes a boring and dull set of cover stories, Actually the stories are not boring and dll ~ youl find them useful and informational and they will help you make more money from your investments However f you somehow havebeen seduced into tnking that being fan and exiting ate necessary characteristics for an investment tobe profitable, then yes, i's possible that you may find what we write tobe dul ‘Good business and good investing can be fun and may be interesting and exciting, but thats optional and just Incidental to whether they are good. The common public definition of whata good business is has become severely distorted over the years. Asan investment analyst well as an entreprenetr who has btlta business over three decades, see this change accelerating now. Driven by the relentless cycle of media hype and the need of businesses to make themselves exciting forthe stack market, this strange new idea has spread like a disease, The job of a business isto create a useful product ot service, do ita a cost that allows customers to buy it and yet generato a reasonable profit forthe busineds, and do all this ina financially sustainable way I the busines is listed one, thon it must be structured in such a way as to generate good returns for investors, again in a sustainable manne At any point of time going back since the Indian economy liberalised, there have been waves of overhyped excitement hat has ripped its way through the investing world, At every point, some businesses have looked like great and exciting “bets for investors, Without fai, these have fallen by the wayside Remember the NBFC wave, the small IT firms wave, the infra wave and so many others? During these three decades, the ones that have generated amazing returns have always been duller Just to take a few examples, compared to the hype ‘machines of the past and the present, names like Asian Paints, HDFC and even Infosys are decidedly companies with the characteristics that I describe. They soldier ‘on, decade after decade, delivering to the customers as well as shareholders. In everything that Value Research does, whether ‘mutual funds or stocks, our effort is to link you to such ull investments and warn you off the flavour-of:the-day fad investments that offer excitement, but no solidity. The knowledge, analysis and information that we bring to you will cause a difference to your investments in the long term, if you work to steadily implement it year after year. It sounds boring and it is. It's like the difference between routinely eating big meals of fast food vs cooking your own healthy and nutritious food. The impact of one vs the other becomes clear only after years. Since equity investors are an optimistic lot by nature, they find it hard to resist the investment equivalent of fast food, but still, it’s important to tilt the balance towards the healthy stuff Even $0, it is not entirely fair to describe feverish speculation on the stock market as the opposite of the approach that Value Research advocates. As you read the detailed analysis of the sectoral business prospects that our team has put together, you ‘will notice one thing which is in sharp contrast with the IPO hype machine, Our analysis looks forward but uses ooking back at the past as an important clue to what will happen in the future. In a strong sense, the only actual factual input that you have as an investor is how a sector or a business or even a person did in the past. What companies say will happen in the future is just a story. Unless supported by evidence, it means little. However, ‘the past tends to feel dull and boring and that's actually a ‘good thing because it keeps us connected to the reality, January 2022 Wealth Insight | 7INSIGHT Investing with simplicity . Never plan your retirement based on bull market net worth, ‘See if you're retirement ready in bear market. D Muthukrishnan For a change, compete with your peers on savings instead of @dmuthuk ‘spending and see the difference in your life. 363.1K — . than being an amateur founder of Wise Wealth is no hope for financial freedom ever. Except home loan, if you've any other debt, repay it frst before olor starting to invest. Let repaying loans be your fst big Desire to make quick bucks and peace of mind cannot coexist. It takes decades to build wealth and only a short time to lose it The climb is difficult and the fall is easy. So every step matters For someone who calls himself an amateur investor Corrections and bear phases are good for the health of on his Twitter handle, markets. In that sense, i's good to see prolonged one way D Muthukrishnan has direction getting reversed massive following. Definitely, Corrections remove excesses and provide fresh opportunities there's much more to him too. investor. He is a certified Irrespective of your circumstances, the bare minimum you financial planner and the should save is 10% of your income, If you cannot do this, there Advisors, a financial-advisory emiHia iealetreng ad vocals Saving more, reducing some consumption is a pain during Bertin eaieeetsetnives ite working years. Not having money for necessary consumption is inarcaae eiaeeened eae ‘a pain during retirement, Pain today or tomorrow? Choose = to create wealth. Apart wisely. from his take on investing and personal finance, Muthukrishnan's feed is full of interesting articles and quotes that he’s shared over time. Extraordinary ise, if not backed by fundamentals, can lead to spectacular fall Inadequate savings forces people to chase high returns, They make not one but two mistakes of saving less and risking more. Need to remember that there is no substitute for high savings. Many new young investors want to make money very fast. This has never ended well. To paraphrase Buffett; in every cycle, a new set of investors learn some very old lessons. 8 | Wealth Insight January 2022J MIRAE ASSET Mutual Fund f THE p DIRECTION ETEs’ follows the direction of the market Index’s an DESTINATION You may consider Investing in a fund that replicates the index and does not deviate from it. “Exchange Traded Fund y, J x | VIM MAI NN ‘An Investor Education and Awareness initiative by Mirae Asset Mutual Fund. All Mutual Fund investors have to go through a one-time KYC (Know Your Customer) process. investors should deal only with Registered Mutual Funds (RMF). For further information on KYC, RMFs and procedure to lodge a complaint in case of any Brievance, you may refer the Knowledge Center section available on the website of Mirae Asset Mutual Fund, Followusonr: @ OOOO Mutual Fund investments are subject to market risks, read all scheme related documents carefully.MARKET VIO) TS) MARKET REPORTER TOP 10 EVENT 01 .The mega bull run amidst the pandemi ‘The Indian stock market continued its bull run, which had started in April 2020, well into 2021. For the calendar year 2021, Sensex returned 17.7 per cent (as of December 21, 2021). In fact, the streak continued even amid the scary second wave (April June 2021). Also, as was the case last year, retail investors continued to flock to the markets. NSE. stated that retail investors accounted for 45 per cent of the total trading market share in FY21. This is also evident from the 73.5 per cent growth in active demat accounts of individuals with CDSL. 2021: Sensex and new monthly COVID cases © sent "© New men eases 0000 000,000, 55000 600,000 45000 2000000, ooo z= ° Active demat accounts of individuals with CDSL For 2021, incr 524 10 | Wealth Insight January 2022 02.The IPO boom Dalal Street witnessed a massive IPO boom this year with 63 IPOs (excluding SMEs) during the period, the best since 2010 (67 IPOs). A whopping €1,18,704 crore was raised, out of which approximately 64 per cent was OFS (offer for sale), In 2021, the market also witnessed its biggest IPO yet, Paytm, with an issue size of %8,300 crore. But despite all the hype and its large size, the stock listed at a discount and the stock price fell post listing. No. of IPOs and amount raised © taue sen 2) 140,000 1.200000 1,00,000 80,000 2h | eee aoe eer a No. otter The Paytm IPO stats tase ee Subscription ato Ustinglons Post %18,300cr 1.9times 9.10% 32. Von.MARKET TON TSS) 03 .Cyclicals post record profits (04 . Air India’s ghar wapsi While most sectors witnessed remarkable growth, itis the cyclicals (in As a significant milestone in the particular the commodity sector) that stole the limelight. And for good government’s privatisation reason. The BSE Metal Index returned 69.7 por cont in the calendar initiative, Air India was sold to year 2021 (as of December 21, 2021). The stock performance was Talace Pvt Ltd, a wholly-owned backed by record profits as the top 10 cyclical companies (excluding subsidiary of Tata Sons for an financials) reported an 87 per cent increase in profit after tax (at %2.51 enterprise value of 718,000 lakh crore) in the twelve months ending September 2021 when crore. The government compared with the pre-pandemic period (12 months ending September transferred the entire 2019) of 8.34 lakh crore. ownership for €2,700 crore in cash and the remaining in the Top 10 cyclicals (ex financials) by their net profit, form of reduction in debt worth Wher © TIMPATSep 2019 © TM PAT Sep 2021 215,300 crore. With this 60000 acquisition, the Tata group got a third airline in its portfolio (the other two being AirAsia India 50000 ee and Vistara). 0000 3 hihi os .Key government initiatives Over the course of the year, the government was busy devising policies with a focus on manufacturing and infrastructure Here isa quick brief of some of them. PRODUCTION-LINKED INCENTIVE (PL) PLls announced so far development of semiconductor SOVEME:To boost domestic ee owt sezaystem inthe country ‘manufacturing and provide a fillip nd spect seen ‘TELECOM REFORMS: Nine structural ‘to ‘Make in India’, the PLI scheme 40,951 and procedural reforms to address ‘was announced for 10 key sectors the short-term liquidity needs as ‘with a total outlay of €1.72 lakh jaa ones well as long-term issues of telecom crore tien 18,100 companies. A four-year moratorium GATISHAKTETo improve the planning Phamavvaeat dus 15,000 on payment of adjusted gross and implementation of revenue (AGR) and spectrum dues infrastructure connectivity projects, was offered this is a master plan to increase the heii ‘VEHICLE-SCRAPPAGE POLICY: ‘use of digital tols to enhance Commercial and passenger vehicles coordination amongst 16 ministries, 10,683 _older than 16 years and 20 years including railways and roadways respectively to be mandatorily TACKLING SEMICONDUCTORS SHORTAGE: A a i 7,350 scrapped if they do not pass the 275000 crore programme forthe tauainenewrale fitness and emission test; forma ad se incentives for scrapping old vehicles con and buying new ones. (ao ‘Spec sta BAD BANK: National Asset White goods (AEs & LED) 6.238 Reconstruction Company Limited (NARCL) was set up by banks to 4,500 aggregate and consolidate stressed Meal dovees 3,420 assets; central government Bulk rug pars 3,000 guaranteed 230,600 crore of security Meal deve parks 400 receipts issued by NARCL, January 2022 Wealth Insight | 11MARKET ies) @ Major merger/ acquisitions of the year ‘ZEE-SONY MERGER: The entertainment industry witnessed one of the biggest mergers, with Zee Entertainment's board of directors approving merger with Sony Pictures Network, Post merger, Sony will, hold a majority stake of 50.86 per cent in the merged. entity, which is set to be one of the largest entertainment networks in the count’. /ADANI GREEN'S ACQUISITION OF SB GREEN: In India's largest M&A deal in renewables, Adani Green Energy acquired SB Energy Holdings at an enterprise value ‘of %26,000 crore. Adani Power also got the nod to acquire Essar Power's 1200 MW thermal plant. DFC LIFE'S ACQUISITION OF EXIDE LIFE: HDFC Life acquired 100 per cent stake in Exide Life Insurance owned by the batter-maker Bxide Industries. The deal was finalised for %6,887 crore, out of which 8725 crore was paid in cash and the balance by issuing 8.7 crore shares of the company. RELIANCE INDUSTRIES’ ACQUISITION OF REC SOLAR: Ina push towards renewable energy, Reliance Industries, through its wholly-owned subsidiary Reliance New Energy Solar, acquired 100 per cent shareholding of REC Solar Holdings from China National Bluestar ‘group. The deal was closed at an enterprise value of {771 million. Reliance also bought a 40 per cent stake in the listed entity Sterling and Wilson Solar for 22,845 crore ESCORTS-KUBOTA DEAL: The Japanese tractor major Kubota invested 21,870 crore in Escorts India to increase its stake in the company from existing 9 per cent to 14.9 per cent now. The Japanese promoter plans to increase its stake to 53.5 per cent in the future. Insight January 2 07 .Major business feuds of the year AMAZON-FUTURE: The logal tussle between the Future Group and Amazon over the former's acquisition by the Reliance Group continues to rage as multiple cases have been filed at different forums. In the latest round, the competition regulator, CCI, fined Amazon ®202 crore and cancelled its approval for Amazon's original investment in Future, thereby giving the latter a strong victory. Both parties will carry on the fight in 2022. ZEE-INVESCO: After Zee Entertainment refused to consider the demands of Invesco, its largest shareholder, both parties initiated litigation on different forums. While the cases were still being heard, rival Sony Entertainment emerged as a white knight as it announced a deal to merge with Zee and infuse $1.5 billion. PNB HOUSING-SEBI: SEBI stopped a badly needed cash infusion in PNB Housing by an investor: group led by Carlyle after SES, a proxy firm, alleged that minority shareholders were being treated unfairly. Though Carlyle-ed investors dragged SEBI to court, they decided to pull out of the deal as they got limited success. YES BANK-DISH TV: Dish TV blocked YES Bank's attempt to replace the entire board of directors after the former decicled to go ahead with its fund-raising plans. After the bank managed to thwart a last-minute attempt by the company’s promoters to prevent it from voting, the promoters filed new cases even as the bank's petition in the NCLT is yet to be decided. The saga is set to continue next year,os. Chip shortage haunts automakers Despite all industries limping back to recovery post pandemic, automakers had and continue to have a difficult time due toa shortage of semiconductor processors. An overwhelming demand for these ‘chips’ from various industries has Jed to a supply shortage affecting automakers all over ‘the world. As leading Indian auto manufacturers saw their profits dip, ACMA, an industry body, pegged industry-wide losses of 3,000 crore. Lately, the government has announced a package of 776,000 crore for localised manufacturing of chips. @ Vodafone Idea’s travails 2021 was a roller-coaster year for Vodafone Idea. The debt-laden Crypto to the moon Cryptocurrencies and NFTs (non-fungible tokens) had their best time in 2021 Tesla ‘bought $1.5 billion worth of Bitcoin in February 2021 and also announced that it would take payments via Bitcoin. El Salvador became the first eountry to accept Bitcoin a legal tender Biteoin touched a high of $65,000 mark for the first time. The crypto craze resulted in the mushrooming of erypto exchanges, which also raised huge capital Bitcoin price chart (SUS) 10,000 70900 60,000 50,000 40,000 30,000 20,000 1,000 ° company constantly reported losses and lost subscribers. ne Vodafone PLC ruled out putting any more equity in it and Kumar" Mangalam Birla offered Aditya Birla group's entire stake in the 18 ‘company to any entity for free. He also stepped down from the “ company’s chairmanship. Vodafone Idea got some relief in September 2021 when the ® government announced a four-year moratorium on AGR 0 {adjusted gross revenue) dues for telecom operators. As of ‘ September 2021, Vodafone Idea's debt stood at 21.94 lakh crore, : out of which 63,400 crore was in the form of AGR dues. : Joni 20at Vodafone Idea: Stock price ee 3, 2038 Vodafone Idea: No. of subscribers January 2022 Wealth Insight | 13MARKET VIO) TS) BIG MOVES OF 2021 ps 12M rts (%) wm te Large ca avg OE (2) Ne pot rr) ‘eanngs pow (8) 12M pice (2) movement ‘Adani Total Gas ts dream run continued onthe back ofan increase inthe prices of crude ol and natural gs. 379 333 275 587 463 Adani Transmission ‘The growing power demand, coupled with new powertrading norms, boosted the stock price. 309 144 166 1413 49 JSW Energy In adiion to siging several agreements related to renewable- energy projects, plans to venture into green hydrogen 307 60 70 77) 874 8 ( Adani Enterprises Te bagged the Ganga Exressway projec worth 217,000 core (the arg est ever awarded to a private company under he PP framewor) 259 123 38 814 229 8 \ MindTree ‘The stock price soared due to stellar 1 F22 and Q2AZ2 numbers and is expansion plan in Europe and Asia-Pacific IReTC ‘he resumption of allay operations, 1:5 sock split and strong 2 FY22 growth triggered the stock, 200 5 248 150 29.1 1,386 263 423 AT . Tata Power Growing electricity demand postive outook for renewable energy and an order book of €50 core fred the stock. 46 43 286 522 Tata Motors Its electric vehice segment wil receive investments from the Company and TPG Rise Climate. BB -13,086 3255 UA LaT Technology Shares surged after the management guided for $1. bilion revenue and 18 per cent EBIT margins by F2S. 136 64 296 830 7] z Mphasis Strong 1 F922 and g2 F122 numbers, Blackstone's commitment and acquston of Bink Ux pushed the stock rice up. 130 44 205 1324 105 (tage una an 05 ge campanas, akg ap 7p etl mah capes The marr a sac Pate ua os Pes eras +4 | Wealth Insight January 2022kotak Mutual Fund Kotak Global Innovation Fund of Fund Invest in global innovators KOTAK GLOBAL INNOVATION FUND OF FUND: eee ae Re spendin «Investment in units of Wellington Global novation Fund or any other similar overseas mutual fund schemes/ETFS investors should consult their financial advisor iin doubt about whether the product is sultable for them, Mutual fund investments are subject to market risks, read all scheme related documents carefullyMARKET VIO) TS) BIG MOVES OF 2021 () Midcaps Brightcom Group ‘Growing consumption of egal media, £56 roc capital infusion andthe acqistionof Medan ted the stock, 404 Tata Teleservices (Mah) It oped forthe deferment ofthe AGR dues under the sovernment's rei paclage. 2,146 -1,218 116 Trident The launch af its dret-t-consumer website and a capex plan of 1,37 crore pushed the stack up. 465 630 46 Poonawalla Fincorp ‘tock surged due to its acquisition by Adar Poonawala group and its pln to grow AUM to 245,000 core by 2025. 36/ 48] 221 WUE & €G Power & Industrial Solutions ‘The divestment of non-