Wealth-Insight - Aug 2023

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.
www.hdfcfund.com
Today’s
beginners
could be
tomorrow’s
leaders.
Invest in
HDFC Small Cap Fund
Why HDFC Small Cap Fund?
A broad investment universe Small Caps being generally
creates more opportunities under-researched present an
to generate alpha opportunity to generate alpha
Small caps offer investment The fund focuses on quality

opportunities outside of companies with strong
large cap segments financials and reasonable ROE
Aims to invest in companies

Aims to invest at sensible
with sustainable and
valuations in companies
understandable business
trading at reasonable
models, with good
multiples
management quality
This product is suitable for investors who are seeking* Riskometer #
• To generate long-term capital appreciation/income

• Investment predominantly in Small-Cap companies
*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
Date of Release: July 07, 2023
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
Discover the potential of
innovation.
Aim to grow wealth with companies
that adopt innovative strategies.
Invest in
ICICI Prudential
Innovation Fund
To invest, contact your Mutual Fund Distributor IPRUTOUCH App | www.iciciprumf.com
ICICI Prudential Innovation Fund (An open ended equity scheme following innovation theme) is RISKOM
ME ET
suitable for investors who are seeking*: HE erat
e
Mo
der E
C Mod Hig ately
R
S
h Investors
er o
• Long term wealth creation

e
od w t
Hi
at
understand that
gh
Low M Lo
• An equity scheme that invests in stocks adopting innovation strategies or themes their principal
Very
High
will be at Very
̴UŨǍğơƭųƙơ͘ơŀųƵŝė͘ĐųŨơƵŝƭ͘ƭŀğņƙ͘ǦŨñŨĐņñŝ͘ñėǍņơğƙơ͘ņķ͘ņŨ͘ėųƵĎƭ͘ñĎųƵƭ͘ǎŀğƭŀğƙ͘ƭŀğ͘ƖƙųėƵĐƭ͘ņơ͘ơƵņƭñĎŝğ͘ķųƙ͘ƭŀğŦ̩ High risk
0723
»ŀğ͘¦ņơř̿ų̿Ŧğƭğƙ͘ơƖğĐņǦğė͘ñĎųǍğ͘ǎņŝŝ͘Ďğ͘ğǍñŝƵñƭğė͘ñŨė͘ƵƖėñƭğė͘ųŨ͘ñ͘ŦųŨƭŀŝǔ͘Ďñơņơ̩
£ŝğñơğ͘ƙğķğƙ͘ŀƭƭƖơ̶̶̫ǎǎǎ̩ņĐņĐņƖƙƵñŦĐ̩ĐųŦ̶Ũğǎơ̿ñŨė̿ƵƖėñƭğơ̶ñŝŝ̿Ũğǎơ͘ķųƙ͘Ŧųƙğ͘ėğƭñņŝơ͘ųŨ͘ơĐŀğŦğ͘ƙņơřųŦğƭğƙơ̩
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

August 2023 VOLUME XVII, NUMBER 2
EDITORIAL POLICY
The goal of Wealth Insight, as with
all publications from Value
37 COVER STORY
Research, is not just limited to
generating profitable ideas for its
readers; but to also help them in
generating a few of their own. We
aim to bring independent, unbi-
ased and meticulously-
researched stories that will help
you in taking better-informed
investment decisions, encouraging
you to indulge in a bit of research
on your own as well.
All our stories are backed by
Too Hot
quantitative data. To this, we add
rigorous qualitative research
obtained by speaking to a wide
variety of stakeholders. We firmly
stick to our belief of fundamental
to Handle?
research and value-oriented
approach as the best way to earn
wealth in the stock market. Equally
important to us is our unwavering-
ly focus on long term planning.
Simplicity is the hallmark of our
style. Our writing style is simple
and so is the presentation of ideas,
but that should not be construed
to mean that we over-simplify. Worried about whether to buy stocks
Read, learn and earn – and let’s
grow and evolve as we undertake
or wait for a crash? Here’s the solution
this voyage together.
EDITOR-IN-CHIEF Dhirendra Kumar 44 INTERVIEW
Through a
COPYEDITING Debjani Chattopadhyay
and Mithilesh Bhaumik
RESEARCH & ANALYSIS Hemkesh

Khattar, Karthik Anand Vijay,
Udhayaprakash J and Vishal Goyal
DESIGN Anand Kumar, Aprajita Anushree,

professional’s lens
Harish Kumar Singh, Kamal Kant Koner,
Mukul Ojha and Sneha Verma Find out what industry veterans think of the present market boom
PRODUCTION MANAGER Hira Lal
DATA SOURCE FOR STOCKS AceEquity
MARKETING
Aastha Tiwari, Ashish Jain, Jash Ashar,
Sankaran Naren Jinesh Gopani
Kasturi Kaushik ED and CIO, Head Equity,
ICICI Prudential AMC Axis Mutual Fund
ADVERTISING CONTACT
Venkat K Naidu +91-9664048666
Biswa Ranjan Palo +91-9664075875
SUBSCRIPTION
Shipra Srivastava +91-9868891830
Chhaya Verma +91-9560200520
4 Wealth Insight August 2023

CONTENTS
7 Edit
34 Words Worth Wisdom
by DHIRENDRA KUMAR
“People trade on noise rather than signals”
Action vs Inaction Key investment ideas from Sanjoy Bhattacharyya
What is the right temperament to find
success in the present hot market?
48 Stock Advisor
by DHIRENDRA KUMAR
8 Twitter
What is your investment brand?
The disciplined investor How to build any kind of equity portfolio
D. Muthukrishnan | @dmuthuk | 493k
50 Main Street
10 Market Reporter by SAURABH MUKHERJEA
Buzz of the month The sweet spot of wealth compounding
Find out the key characteristics of
14 Stock Story wealth-compounding machines
Tech Mahindra: The power of acquisition
From a communications service provider to a 54 Everyday Economics
leading IT giant by PUJA MEHRA
Tomatonomics
16 Big Moves The humour, the stories and what could have been
The most significant price movements done about tomato inflation
20 Index Watch 56 Straight Talk

by ANAND TANDON
Market and sectoral moves
Have we crossed the peak of inflation?
22 Market Barometer Find out if the present macro scenario calls for tweaking
your portfolio strategy
Trends and trails
Here are some charts that will help you make sense of the
58 Stock Screen
current market in terms of valuations and return potential
Blue-chip and value stocks
Reliable front-line stocks at attractive valuations
24 Monthly Agenda and quality stocks available at a discount to their
Second innings for the banking behemoth book value
The much-anticipated merger has brought a win-win
situation for the bank and the NBFC 62 Wordsworth Now
Quotes of the month
26 IPO Tracker
IPO corner
Here is how the S&P BSE IPO index has performed over
© 2023 Value Research India Pvt. Ltd.
the last one year and how the biggest IPOs have fared
Wealth Insight is owned by Value Research India Pvt. Ltd., 5, Commercial
Complex, Chitra Vihar, Delhi 110 092.
28 Analyst’s Diary Editor-In-Chief: Dhirendra Kumar.
Printed and published by Dhirendra Kumar on behalf of Value Research India
z Success goes sour Pvt. Ltd. Published at 5, Commercial Complex, Chitra Vihar, Delhi 110 092.
z An unrealistic bet Printed at Option Printofast, 46, Patparganj Industrial Area, Delhi-110092
z Chasing fruitless arbitrage Total pages 64, including cover
DISCLAIMER
The contents of Wealth Insight published by Value Research India Private Limited (the ‘Magazine’) are not intended to serve as professional advice or guidance and the Magazine takes no responsibility or liability, express or implied, whatsoever for any investment
decisions made or taken by the readers of this Magazine based on its contents thereof. You are strongly advised to verify the contents before taking any investment or other decision based on the contents of this Magazine. The Magazine is meant for general reading
purposes only and is not meant to serve as a professional guide for investors. The readers of this Magazine should exercise due caution and/or seek independent professional advice before entering into any commercial or business relationship or making any
investment decision or entering into any financial obligation based on any information, statement or opinion which is contained, provided or expressed in this Magazine.
The Magazine contains information, statements, opinions, statistics and materials that have been obtained from sources believed to be reliable and the publishers of the Magazine have made best efforts to avoid any errors and omissions, however the
publishers of this Magazine make no guarantees and warranties whatsoever, express or implied, regarding the timeliness, completeness, accuracy, adequacy, fullness, functionality and/or reliability of the information, statistics, statements, opinions and
materials contained and/or expressed in this Magazine or of the results obtained, direct or consequential, from the use of such information, statistics, statements, opinions and materials. The publishers of this Magazine do not certify and/or endorse any
opinions contained, provided, published or expressed in this Magazine.Reproduction of this publication in any form or by any means whatsoever without prior written permission of the publishers of this Magazine is strictly prohibited. All disputes shall be subject
to the jurisdiction of Delhi courts only. ALL RIGHTS RESERVED
August 2023 Wealth Insight 5

EDIT
Action vs Inaction
What is the right temperament to find success in the present hot market?
market generally heading upward, are investing in? Or are we going

an all-time high is a fairly routine to be obsessed with what other
matter and should be taken as people are thinking about the
such. As I’d calculated for a recent same stocks?
column that I wrote, almost Certainly, all the inputs from
6 per cent of all days in the history social media and the legacy media
of the BSE Sensex have been all- are now quite breathless about the
time highs. Six per cent of all days market highs. The general refrain
is the arithmetic equivalent of is that everything will go up, and
22 days a year—not a rare event you’d better buy while stocks last.
by any stretch of the imagination. The train will leave the platform
By Dhirendra Kumar What makes it a serious issue is any time now. A minority of views
investors’ reaction to it. hold that everything has gone up
Depending on their perspective, too much, and you’d better sell
Y
ou may have assumed our some investors will feel that now while the prices are still high. The
cover story is about stocks that the market has reached so train will leave the platform any
and markets, but it’s not. high, it will surely pause and may time now. The general feeling is
Instead, it is about investor crash too. Others will feel that the that things are happening, so we
psychology. The markets look hot market is moving and will keep must do something.
and have looked hot for a while moving for a long while. As our In my way of thinking, these
now. But are they actually hot? cover story points it in a quote two views are not the opposite but
Only time can tell. I remember a from the renowned investment the same. They both ultimately
day in 2006 when the BSE Sensex manager and author (an unusual argue for continuous action in
first hit 10,000 points. Going from combination!) Howard Marks, response to external conditions.
a four-digit Sensex to a five-digit “...the essential inputs aren’t This concept of continuous action
one felt like a historic moment. economic data or financial is misguided. When I think of the
Psychologically, in terms of what statement analysis. The key lies in actual activity that should take up
investors felt about the future understanding prevailing investor most of the time of investors, then
prospects of their investments, it psychology.” it should be nothing. For most—
was a very big deal. However, the conclusion we almost all—of the lifetime of an
The only historical parallel was draw from this is not that we must investment, you should be doing
the day in July 1990 when the try to figure out the psychology of nothing about it, regardless of the
Sensex first crossed 1,000 points. the rest of the market or we won’t market conditions. The bulk of the
However, that was a different be able to create wealth for activity of investing is waiting.
India and a different stock market ourselves. That would be a waste The bottom line is that you
altogether. In any case, reaching of time. Instead, we’d like to side- should take the opportunity to fix
four digits is too entangled in the step the issue of what other people obvious problems, but on the whole,
painful memories of the Harshad are thinking and, as investors and this is not a time to act just because
Mehta scam. There will be a day analysts, focus only on our own the numbers are ticking up.
in a few years when the Sensex psychology. In other words, are
will reach 1,00,000 points. we, rationally and calmly, going to
These are major milestones, but consider the market value and the
every all-time high is not. In a intrinsic value of the stocks we

TWITTER
The disciplined
investor
Stocks are bought and sold based on short term price movements. Even
D. Muthukrishnan institutions don’t take more than few quarters view. As an individual investor,
@dmuthuk
you can completely ignore short term and take a decadal view. That’s why
each one gets different result from the same stock.
492.6k | Followers
If you feel twenty years is too long for wealth creation, need to come out of
Why Follow the mindset. Otherwise you may never create wealth. Very few have made it in
shorter time frames.
D
Muthukrishnan
calls himself an Why holding a stock for long term is difficult because there would be many
amateur investor periods when you would hear negative narratives from everyone in the
in his Twitter bio. But he markets. Holding on despite these narratives is a very difficult task. You need
tons of conviction and patience.
is anything but amateur.
He is a Certified Financial
Every investment should have commitment. Just because it is easy to sell, we
Planner (CFP), the founder buy without any sense of commitment. Without commitment, you can never
of Wise Wealth Advisors, build wealth from stocks.
and a licensed mutual fund
distributor. At present, he When you realise failure is the norm and success is an exception; you’ll be
is one of the most popular very careful in choosing companies to invest. Many companies die early. No
company would live forever.
investors on Twitter and
talks about market trends
If we can grow at say 6% over next 2 decades, many pension funds from
and businesses, focusing
west would chase Indian stock market. With many people entering old age
on long-term investing. and less birth rate, west wouldn’t have growth. They need India to fulfill their
But investing wisdom is pension commitments.
not all that he offers. His
tweets often venture into Success in investing comes more from avoiding mistakes of permanent loss
the territory of philosophy of capital.
and social commentary.
Follow us on
social media
@VROStocks vrostocks VROStocks

7HATDOYOUSEE
-ARKETVOLATILITYORAFLOCKOFBIRDS
3TAY#ALM3TAY"ALANCED
(MUDRSHM
-IRAE!SSET"ALANCED!DVANTAGE&UND
MNODMᮁDMCDCCXM@LHB@RRDS@KKNB@SHNMETMC
7HYTOINVEST
$YNAMIC!LLOCATION /PTIMIZE0ARTICIPATION 2OBUST-ODEL 0!PPROACH %QUITY4AXATION
3CAN12#ODE
352'8&7/$%(//,1* 6FKHPH5LVNRPHWHU
0RGHU

+LJ DWHO\

-IRAE!SSET"ALANCED!DVANTAGE&UNDISSUITABLEFORINVESTORSWHOARESEEKING
K

WR WH

Z UD
H
3NFDMDQ@SDKNMFᮁSDQLB@OHS@K@OOQDBH@SHNMHMBNLD

0/R

RG

+

LJK

(MUDRSLDMSHMDPTHSX DPTHSXQDK@SDCRDBTQHSHDRCDAS LNMDXL@QJDSHMRSQTLDMSRVGHKD

9
HU\

L@M@FHMFQHRJSGQNTFG@BSHUD@KKNB@SHNM
,QYHVWRUVXQGHUVWDQGWKDWWKHLUSULQFLSDO
(MUDRSNQRRGNTKCBNMRTKSSGDHQEHM@MBH@K@CUHRNQRHESGDX@QDMNSBKD@Q@ANTSSGDRTHS@AHKHSXNESGDOQNCTBS ZLOOEHDW+LJK5LVN &OR-ORE$ETAILS
&OLLOWUSON
-UTUAL&UNDINVESTMENTSARESUBJECTTOMARKETRISKS READALLSCHEMERELATEDDOCUMENTSCAREFULLY

MARKET REPORTER
IDFC First Bank to merge with

parent entity
IDFC First Bank will soon merge with
its main parent entity IDFC. First,
`24,000
IDFC Financial Holdings (the
cr promoter of IDFC First Bank) will

merge with IDFC. Next, IDFC will
is the amount NLC India plans merge with IDFC First Bank.
Shareholders of IDFC will receive
to invest in solar power projects 155 shares of IDFC First Bank for
by 2030. It has committed a total 100 shares held in IDFC. In April 2022,
of `75,000 crore for green IDFC sold its AMC arm to Bandhan
energy projects. Bank to go forward with the move.
The party in D-street IndusInd Bank’s

continues promoter eyes
Sensex hit a new all-time high of new acquisition
67,171 points on July 19, 2023. Along
IndusInd International
with the strong performance of
Holdings, the promoter
GIC and Genus
constituents, consistent FII
of IndusInd Bank, plans
investments fuelled this rally. In fact,
Power Infrastructure
to raise up to $1.5 billion
2023 has already witnessed the
(around `12,000 crore).
second-highest inflows from FIIs in
the last 10 years, with still five
$1.2 billion (`9,650 crore)
is expected to be used to
join hands
months to go. Genus Power Infrastructure and
acquire Reliance
Capital. The remaining GIC (Singapore’s sovereign
will be used to increase wealth fund) are collaborating to
its stake in IndusInd set up a platform to fund smart
Bank to 26 per cent. metering projects. The initial
investment planned by the
companies is about $2 billion.
GIC will hold a 74 per cent stake,
while Genus will have a 26 per
cent stake in the platform.
Genus would be the sole
supplier of smart metres to
the platform.
HDFC bids farewell to D-street

The HDFC-HDFC Bank mega-merger closed on July 13, 2023. Post-merger,
HDFC Bank became India’s third-largest company by market cap.
LTIMindtree would replace HDFC in the Nifty 50, while JSW Steel would
replace it in the Sensex. For more details on the merger, head over to our
Monthly Agenda.

Indian Oil on an investment spree
India’s largest fuel refiner, Indian Oil, will invest `54,000 crore in various
projects in Tamil Nadu, including a 9 MMTPA grass-root refinery valued
at `35,580 crore. The rest will be used to install integrated lubes
manufacturing complexes, lay pipelines, and open new retail outlets.
Earlier this month, it announced a rights issue of `22,000 crore and a
JV with Sun Mobility for battery swapping business.
`2.8 lakh cr
Reliance Industries
hives off financial
is the investment planned by services arm
Suzuki Motors by FY31 on new
Reliance Industries will soon
launches and expansions with a demerge its financial services
focus on India. It aims to double arm and rename it Jio
its global turnover by FY31. Financial Services (JFS).
Shareholders of Reliance will
get one share of JFS for each
share held in Reliance. In other
news regarding the Reliance
conglomerate, Reliance Retail
will soon extinguish its public Foxconn ends
shareholding, and shareholders
will be paid `1,362 per share. chip pact with
Tech giants declare their Vedanta
Q1 FY24 results
Foxxcon Technology
has pulled out of its
YoY growth (%) TCS Infosys HCL Tech Wipro joint venture with
Vedanta to
Revenue 12.6 10.0 12.1 6.0 manufacture
semiconductor chips
Operating
PROlT 12.9 14.1 11.2 12.1 in India. The
companies had a 60:40
Operating
margin (bps) 7 74 -14 81 partnership, and
Foxxcon had planned
.ETPROlT 16.8 10.9 7.6 13.1 to invest $20 billion in
this venture.
The GST axe falls on

online gaming
Investor malaise surrounding online gaming was at its highest
recently after the government announced it would levy 28 per cent
GST. In addition, the government clarified that the tax will be
levied on the face value of bets.

MARKET REPORTER
ECONOMIC METRICS
Wipro to invest .:;JVSSLJ[PVU
$1 billion in AI 2,00,000 In ` cr
Wipro will soon launch Wipro 1,50,000

ai360, an AI-first innovation 1,00,000
ecosystem. It will invest $1 billion
(around `8,200 crore) in advancing 50,000
AI capabilities over the next three 0
years. The goal is to integrate AI Jun '21 Jun '23
with every platform, tool, and
solution used internally and
offered to clients. 0UMSH[PVU!*VUZ\TLY7YPJL0UKL_
8 % change YoY
Sheela Foam spends 6
`2,500 crore on two 5
acquisitions 4
Jun '21 Jun '23
Indian mattress giant, Sheela Foam,
plans to spend around `2,500 crore
0UK\Z[YPHSHJ[P]P[`!0UKL_VM
Proximus set to
to acquire a 95 per cent stake in
Kurlon (`2,150 crore), a market 0UK\Z[YPHS7YVK\J[PVU
buy Route Mobile leader in rubberised coir mattresses
and a 35 per cent stake in Furlenco
30
20
% change YoY
The Belgian Telecom giant, (`300 crore), an online furniture 10

Proximus, will acquire a retailer. Post acquisition, Sheela 0
controlling stake in Route Foam would command a 21 per cent -10
Mobile for `5,922 crore. market share in the overall Indian May '21 May '23
Post sale, it will also mattress market.
acquire an additional
26 per cent stake from the 059]Z<:+
open market at `1,626 per
72 Inverted scale
share. The total deal value,
including the open offer, is 75
expected to be around
78
`8,598 crore.
81
84
`42,000
Jul '21 Jul '23
cr *Y\KLVPS
($5.2 billion) is the
150 Brent $/barrel
investment planned by
Tata Group for an EV battery 120
plant in the UK. It will have
an initial capacity of 40 GW 90
and supply to Jaguar Land

60
Rover and Tata Motors. Jul '21 Jul '23

STOCK STORY TECH MAHINDRA
The power of acquisition

From a communications service provider to a leading IT giant, the journey of
Tech Mahindra is quite illustrious
T
ech Mahindra, the sixth- opportunity knocked on its doors While there were some high-
largest IT company in in the form of trouble-laden ticket acquisitions, Tech
India, is one of the flagship Satyam Computers. Mahindra largely focused on
companies of the Mahindra Tech Mahindra saw it as an small companies whose products
Group. It provides an array of opportunity to grow its business could be scaled up.
services to communication, and acquired a majority stake in This growth is evident in its
manufacturing, media, Satyam Computers for `2,890 crore numbers as well. Since FY08, its
healthcare, BFSI, retail, and a few in 2009. Thanks to the acquisition, revenue and net profit have
other industries. The company’s the company was able to become grown at 19 and 20 per cent per
journey started in 1986 as a joint the IT service provider for the annum, respectively. During the
venture between Mahindra & FIFA World Cup 2010. period, the company was able to
Mahindra and British Telecom Satyam’s acquisition maintain a median ROE of
under the name of ‘Mahindra catapulted the company into the 22 per cent.
British Telecom’. league of leading IT companies. Although the company’s FY23
Initially, the company catered Its acquisition drive continued performance was gloomy, its
to the telecom sector. Later, it unabated as the company aimed recent announcement to invest
started expanding significantly to expand its service offerings. `700 crore in its product and
on the back of acquisitions and Between FY14-23, it spent around platform unit has received a
geographical expansion. By 2005, `9,000 crore on acquisitions! positive reception. As a result,
it emerged as India’s eighth- with a return of 14 per cent, Tech
largest software exporter and was Mahindra has been one of the
renamed ‘Tech Mahindra’. But it best-performing large-cap IT
was way behind the heavy hitters stocks in the last six months.
of the IT industry. Then, a golden By Udhayaprakash
Sensex rebased to stock price

Tech Mahindra Sensex
Jun 05, 2013

`230
Jan 23, 2009
`53
Aug 28, 2006
`138
April 14, 2009 Sept 04, 2012 Sept 18, 2012 Jan 25, 2013
Acquires a Acquires Hutchison Acquires a Merger of
controlling stake Global Services for controlling stake Satyam with
in Satyam for `480 crore in Comiva Tech Mahindra
`2,900 crore Technologies
for `260 crore

9L]LU\LHUKUL[WYVMP[ 6WLYH[PUNWYVMP[HUKTHYNPU
Revenue (` cr, left side) Operating profit (` cr, left side)
Net profit (` cr, right side) Operating profit margin (%, right side)
60,000 6,000 7,500 20
48,000 4,800 6,000 16
36,000 3,600 4,500 12
24,000 2,400 3,000 8
12,000 1,200 1,500 4
0 0 0 0
FY14 FY23 FY14 FY23
96,HUK96*,
ROE (%) ROCE (%)
50
40
30
20
10
FY14 FY23
:LNTLU[^PZLYL]LU\L In %
Communications Manufacturing Technology BFSI Retail, Transport and Logistics Others
FY21 40.5 16.5 8.5 16.1 7.8 10.6

Dec 28, 2021
`1,806
FY22 40.4 15.8 8.9 16.4 7.9 10.6
FY23 40.0 15.7 10.1 16.2 8.0 10.0

July 10, 2023
`1,147
Jun 17, 2022
`965
Feb 28, 2019

Mar 11, 2015 `832
`730
July 10, 2023
Jul 27, 2017
1,147
`378
Mar 23, 2020
`491
Dec 14, 2015 Mar 06, 2017 Nov 05, 2019 Feb 24, 2020 June 03, 2022 Feb 27, 2023
Acquires Italian Acquires an Acquires the Acquires Zen3 Acquires Unveils
car design 84.7 per cent BORN Group for Infosolutions Thirdware Sandstorm, a
company stake in HCI `677 crore for `460 crore Solution for remote network-
Pininfarina for Group for `784 crore monitoring
`1,240 crore `589 crore service

BIG MOVES
Large caps Price to earnings Net profit (` crore)

3M returns (%) 3Y avg RoE (%) 3Y earnings growth (%) 3M price (`) movement
705
50.9 139.5 495

Macrotech Developers
It emerged as the top bidder for V Hotels, and its Q4 FY23 net
profit jumped 39 per cent YoY. 6.9 -12.9
467
80
50.3 - -971
Zomato
Its loss narrowed by `172 crore YoY in Q4 FY23.
-77.7 -8.0
53
82
44.6 2.1* 2,485

IDFC First Bank
While its loan book grew by 24 per cent, its net profit jumped
17 times in FY23. -4.4 27.9
57
1,164
38.6 6.7* 2,677

Cholamandalam Investment
Its Q4 FY23 net profit increased by 24 per cent, and it entered
into a partnership with Ashok Leyland. 19.4 36.4
840
223
38.1 0.7* 21,179

Power Finance Corp
It posted its highest-ever net profit in FY23 at `21,179 crore,
up 13 per cent from FY22. 25.5 30.8
162
4,417
37.7 103.9 901

ABB India
Operating profit and order book grew by 59 and 37 per cent,
respectively, YoY, in the March 2023 quarter. 14.4 52.2
3,208
612
31.8 53.8 1,104

Max Healthcare
Its FY23 net profit grew by 82 per cent, and FIIs increased their
stake in it by 8 percentage points. 2.7 1,371.5
464
246
30.5 8.8 10,727

Adani Power
Its net profit more than doubled in FY23, and GQG Partners
acquired stakes in Adani group companies. 32.7 88.7
188
2,408
30.1 111.0 2,209

Adani Enterprises
Its FY23 net profit tripled, GQG Partners invested in Adani
group companies, and it paid off $2.65 billion debt. 5.0 40.4
1,851
582
29.5 – 814
ICICI Prudential Life
Its value of new business and embedded value increased by
28 and 13 per cent, respectively, in FY23. 9.8 -8.6
450
*Price to book value. Our large-cap universe has 116 large companies, making the top 70 per cent of the total market capitalisation. The list mentions the stocks that have fluctuated most wildly in
the last three months. Data as on July 17, 2023

BIG MOVES
Mid caps Price to earnings Net profit (` crore)

1,718
139.8 31.0 1,046

Mazagon Dock
It signed agreements with the Indian Navy and Germany’s
ThyssenKrupp, and its net profit grew 83 per cent in FY23. 13.8 6.2
717
18
127.0 8.0 2,887

Suzlon Energy
The company bagged multiple orders, and its net profit
rose four times YoY in Q4 FY23. – 45.4
8
346
122.2 17.5 443

Jindal Saw
Sathavahana Ispat got merged with the company, and its
net profit doubled YoY in Q4 FY23. 5.3 -1.3
156
1,345
98.1 168.3 64
Olectra Greentech
It won a `10,000 crore contract from MSRTC, while its
net profit almost doubled in FY23. 2.6 68.1
679
563
96.2 – -289
Lloyds Metals
Its net profit more than doubled YoY in Q4 FY23.
0.6 -308.5
287
1,846
92.6 112.6 95
Kaynes Tech
It listed at a 33 per cent premium, and its net profit grew
200 per cent YoY in Q4 FY23. 14.1 62.4
959
1,477
88.2 140.4 125

JBM Auto
It won an order for 5,000 electric buses from several state
transport undertakings. 12.0 21.8
785
181
75.0 43.1 432

Kalyan Jewellers
Its revenue and net profit increased by 30 and 92 per cent,
respectively, in FY23. 4.8 263.6
104
1,113
70.0 33.4 448

Tanla Platforms
It recently acquired US-based ValueFirst for `346 crore.
21.2 60.5
655
86
60.8 5.7 2,617

Mangalore Refinery and Petrochem
Its revenue and operating profit increased by 45 and
38 per cent, respectively, in FY23. -4.1 38.3
54
Our mid-cap universe has 265 mid-sized companies, making the next 20 per cent of the total market capitalisation. The list mentions the stocks that have fluctuated most wildly in the last
three months. Data as on July 17, 2023

Small caps Price to earnings Net profit (` crore)
574
395.5 – -108
JITF Infra
Its net loss narrowed by `13 crore in Q4 FY23.
– 6.6
116
4,057
254.7 269.2 5
Remedium Lifecare
Its net profit jumped five times in FY23, and the board
approved a bonus issue. 36.3 176.4
1,144
48
215.5 20.2 179

Patel Engineering
It bagged a water tunnel project worth `520 crore
from CIDCO. -2.4 78.8
15
23
191.9 59.5 45
Shree Global Trade
The company’s revenue jumped eight times in FY23.
11.5 283.5
8
971
181.5 23.8 102

Aurionpro Solutions
Its operating and net profit rose by 33 and 35 per cent,
respectively, in FY23. -0.2 48.4
345
233
163.3 49.7 30
HPL Electric
It bagged an order worth `903 crore for smart meters.
1.8 11.3
89
198
151.3 19.7 104

Ddev Plastiks
Its operating and net profit increased by 57 and 90 per cent,
respectively, in FY23. – –
79
2,404
149.8 – -664
Inox Wind Energy
The government announced a waiver of transmission charges,
while it bagged a 150MW order. – –
963
331
146.6 11.0 66
Master Trust
Its net profit increased by 19 per cent in FY23.
13.5 74.9
134
692
131.8 13.2 116

Refex Industries
Its revenue quadrupled and net profit tripled in FY23.
40.6 12.8
298
Our small-cap universe (minimum market capitalisation of `550 crore) has 953 small-cap companies, making the last 10 per cent of the total market capitalisation. The list mentions the
stocks that have fluctuated most wildly in the last three months. Data as on July 17, 2023

INDEX WATCH
S&P BSE Greenex

S&P BSE Greenex, which tracks the most carbon-efficient companies, has given a
return of 14 per cent in the last three months. Reliance Industries and ICICI Bank, its
two biggest constituents, are the primary growth drivers. The index’s P/E and divi-
dend yield are near their five-year medians. However, it is overvalued in P/B terms.
2LÙ\TILYZ 0UKL_TV]LTLU[ 0UKL_:LUZL_4LKPHU
30.6 4.4
6,000
5,000
Price to earnings Price to book 4,000
1.05 74.5
3,000
2,000
Sensex rebased to index
1,000
Dividend yield (%) Market cap (` lakh cr) Jul ’18 Jul ’19 Jul ’20 Jul ’21 Jul ’22 Jul ’23
7YPJL[VIVVR]HS\L7)
0UKL_^LPNO[Z 4.5
Reliance 4.0
Others 36.7 Inds. 23.2
3.5
3.1
3.0
2.5
2.0
Jul ’18 Jul ’19 Jul ’20 Jul ’21 Jul ’22 Jul ’23
Bajaj Finance
5.0
ICICI Bank 7YPJL[VLHYUPUNZ7,
16.8
100
HUL 5.9 Infosys 12.4 80
60
=HS\H[PVUZKP]PKLUKZHUKYL[\YUZ 40
30.4
Dividend 1Y 20
Company P/B P/E yield (%) return (%)
0
Tata Motors 4.6 85.1 0.3 40.5 Jul ’18 Jul ’19 Jul ’20 Jul ’21 Jul ’22 Jul ’23
Titan 22.7 82.9 0.3 38.6
M&M 3.4 18.6 1.1 31.0
+P]PKLUK`PLSK
ICICI Bank 3.2 19.9 0.8 29.0 in %
1.6
Bajaj Finance 8.5 39.5 0.4 26.9
1.4
Sun Pharma 4.6 30.5 1.1 22.7
Reliance Inds. 2.3 28.4 0.3 16.4 1.2
Maruti Suzuki 4.7 35.6 0.9 10.3 1.0

HUL 12.5 62.2 1.5 4.3 0.8 0.91%
Infosys 7.9 24.5 2.4 -0.5
0.6
Data as of July 17, 2023 Jul ’18 Jul ’19 Jul ’20 Jul ’21 Jul ’22 Jul ’23

MARKET BAROMETER
Trends and trails

Here are some charts that will help you make sense of the current market in
terms of valuations and return potential
z Max Current z Median z Min
Sensex’s movement The Sensex is the most convenient indicator to

In ’000 tell the state of the Indian market. The 10-year
72
graph presented alongside shows the secular
66,590 run in the markets. However, this rally was
60 punctuated by several bearish phases. The
66,590
most prominent ones include the following:
48 Chinese growth concerns in 2015, demoneti-
sation blues in 2016, the sell-off in 2018 due
to US–China trade war, and the March 2020
36
COVID-19 shock. After staging a remarkable
recovery from the lows of March 2020, the
24 markets yielded to the Russian invasion of
17,906 Ukraine and rising interest rates. With reces-
12 sionary fears easing, Sensex reached a new
Jul ’13 Jul ’23 all-time high.
Sensex’s price to earnings The price-to-earnings ratio of the Sensex is a

40 simple market-valuation ratio. A general
guideline to help understand the valuation is:
35 35.1 Highly undervalued
(mouthwatering Fairly Dangerously
30 valuations) valued overvalued
25 22.9 P/E
24.6 12 16 20 24
20 Undervalued Overvalued
16.8
15 This graph is based on standalone data of Sensex companies.
Jul ’13 Jul ’23 If one takes the consolidated data, the P/E will likely be lower.
Sensex’s price to book value

4.0 The price-to-book-value ratio tells us how
3.83 many times an investor is ready to pay for a
rupee of net assets. Since book value is stable
3.6
3.50 and less volatile than earnings, some consider
it better than the P/E as a measure of
3.2 3.02 valuation.
If:
2.8 P/B > Median P/B = Overvalued
P/B < Median P/B = Undervalued
2.4 2.36
2.0
Jul ’13 Jul ’23

Sensex’s dividend yield
1.7% Dividend yield is nothing but the return an
1.61 investor gets in the form of dividend on his
investment. It is measured as dividend per
1.5 share divided by price per share. Generally
speaking, when stocks are cheap, dividend
yields are high.
1.3
1.25 If:
Dividend yield > Median dividend yield
1.1
1.22 = Undervalued
Dividend yield < Median dividend yield
= Overvalued
0.9
0.7
0.72
Jul ’13 Jul ’23
Market cap to GDP

115%
112 Here we have considered the market
capitalisation of all the listed companies on
the BSE.
100 100 This measure is Buffett’s personal favourite.
He said, “It is probably the single best
85
81 measure of where valuations stand at any
given moment.”
If:
70 Market cap > GDP = Overvalued
Market cap < GDP = Undervalued
55 57
Considering market cap of all the listed companies on
the BSE, revised estimate of FY22 nominal GDP and
advance estimates of FY23 and FY24 nominal GDP
40
FY14 FY24
10Y G-sec yield vs Sensex’s earnings yield

4.0% 3.97 The spread between G-sec yield and Sensex’s
earnings yield is another valuation measure.
G-sec yield is the yield of the 10-year
3.2 2.90 government bond. Sensex’s earnings yield is
3.01 the inverse of the Sensex’s P/E ratio. The
greater the deviation from the median in either
2.4 direction, the greater the degree of
overvaluation or the undervaluation of the
Sensex.
1.6
If:
0.94 Spread > Median = Overvalued

0.8 Spread < Median = Undervalued
0
Jul ’13 Jul ’23 All data as of July 17, 2023

MONTHLY AGENDA
Second innings for the

banking behemoth
The much-anticipated
merger has brought
a win-win situation
for the bank and
the NBFC
F
inally, HDFC – India’s largest housing finance while personal and credit card loans are considered
bank – and HDFC Bank – India’s largest private unsecured loans.
bank – joined hands. Their merger was The merger between HDFC and HDFC Bank has
announced over a year ago to strengthen HDFC paved the way for the latter to increase the
Bank’s position in the country. percentage of the secured loans in its total portfolio.
Given that 70 per cent of HDFC’s customers do not
Reasons behind the merger bank with HDFC Bank, this would give a huge boost
Although the Indian housing finance market has to the overall business.
grown significantly over the years, HDFC Bank’s On the other hand, the merger has enabled the
share in the pie was low. Generally, average deposits NBFC to access low-cost funds through the HDFC
maintained by home loan borrowers are five to seven Bank’s deposits and leverage the latter’s vast
times more than those of retail account borrowers. distribution network.
Hence, home loan borrowers give stability to a bank’s Although the merger has been under discussion
balance sheet. Besides, these loans are considered since 2016, the companies chose to act now because of
secured loans where the property acts as a mortgage, the changes in the country’s regulatory landscape.
The introduction of scale-based regulations and other
such measures made the regulatory scrutiny of large
Pre- and post-merger deposits and advances NBFCs as stringent as that of banks.
Advances have increased by nearly 40 per cent
Pre-merger Post-merger In ` lakh cr The RBI’s directives
For the merger, the Reserve Bank of India (RBI) has
19.1
Deposits issued a set of directives to the bank and the NBFC.
20.6
Some of them are as follows:
16.2 z Banks are required to lend 40 per cent of their loans
Advances to priority sectors. However, HDFC Bank’s exposure
22.5
to the priority sector will go below this mandated
Data as of June 2023. Post-merger advances are on a gross basis.
40 per cent mark following the merger. The RBI gave

the bank two years to bring it up to the mark.
z HDFC was granted permission to increase its Top 10 Indian banks by market cap
shareholding to over 50 per cent in HDFC ERGO Amongst this group, SBI and HDFC Bank account for 50 per cent of
General Insurance and HDFC Life Insurance. Post the advances
In ` lakh cr
implementation, both these entities have become a
FY23
subsidiary of HDFC Bank.
Bank M-cap Deposits Advances
z The RBI directed the NBFC to bring down its
HDFC Bank* 12.4 20.4 22.3
stake in Credila, the student loan arm, to less than
ICICI Bank 6.7 12.1 10.8
10 per cent.
SBI 5.2 44.7 32.7
The management’s view Kotak Mahindra Bank 3.7 3.6 3.6

Following the merger, HDFC Bank has now Axis Bank 2.9 9.5 8.7
embarked on a new journey. The country’s second- IndusInd Bank 1.1 3.4 2.9
largest bank is also looking at further expansion. In Bank Of Baroda 1.0 12.3 9.6
his first address post the merger, Sashidhar
PNB 0.7 12.9 8.4
Jagdishan, MD & CEO of HDFC Bank, said, “The
IDBI Bank 0.6 2.6 1.6
runway for financial services and mortgage, which
Canara Bank 0.6 11.8 8.3
are so underserved and under penetrated, is going to
*Data for the merged entity. M-cap as of July 14, 2023.
be very large. HDFC Bank – the combined entity –
with a large and growing distribution and customer
franchise, more than adequate capital, a healthy Top 10 Indian companies by market cap
asset quality and profitability, will be best ($&#"ANKISTHELARGESTINTERMSOFFREE mOATMARKETCAP
positioned to capture growth. The pace at which we
18.5 In ` lakh cr
aim to grow – we could be creating a new HDFC
Bank every 4 years!”
The bank’s network and efficiency should help it 12.9 12.4
make inroads in the underpenetrated housing
industry. “There will be a structural increase in the
demand for housing and housing loans in India,” 6.7 6.3 5.9 5.9 5.3 5.2
says Keki Mistry, CEO of HDFC, when talking about 4.5
the growth in the sector.
“HDFC Bank is excited at the prospect of cross-
selling an array of asset and liability products to Reliance TCS HDFC ICICI HUL Infosys ITC Bharti SBI Bajaj
home loan customers,” said Deepak Parekh, Ind. Bank Bank Airtel Fin.
Chairman of HDFC, in his final note. M-cap as of July 14, 2023
Top 10 banks in the world in terms of market cap

HDFC Bank has the smallest loan book among this lot
M-cap ($ bn)
438 238 232 172 167 163 159 151 143 135
5Y total return
63.9 12.1 14.5 29.8 41.7 -9.0 6.8 56.3 16.7 53.9
(% pa)
Loan book
($ bn)
1,116 3,419 1,047 2,916 2,705 1,075 1,028 271 3,072 692
JPMorgan ICBC Bank of Agricultural Bank of Wells HSBC HDFC China Royal Bank
Chase America Bank of China China Fargo Holdings Bank* Construction of Canada
Bank
$ATAFORTHEMERGEDENTITY- CAPASOF*ULY ,OANBOOKASOFLATESTÜSCALYEAR

IPO TRACKER
IPO corner
Here is how the S&P BSE IPO index has performed over the last one year and
how the biggest IPOs have fared
HIGHEST
LISTING-DAY GAIN 076PUKL_]Z[OL:LUZL_
Ideaforge Tech The IPO index has corrected significantly over the last few months
130
94.2% z IPO index z Sensex
124
120
HIGHEST
LISTING-DAY LOSS
110 115
Inox Green Energy
-6.9% 100
HIGHEST 90
POST-LISTING GAIN
Kaynes Tech 80 Rebased to 100
138.3% July 2022 July 2023
HIGHEST HIGHEST LOWEST BIGGEST TOTAL

POST-LISTING LOSS SUBSCRIBED IPO SUBSCRIBED IPO IPO ISSUE SIZE
Elin Electronics Ideaforge Tech Radiant Cash Mgmt. Mankind Pharma
-35.3% 106.1 times 0.5 times `4,326 cr `25,489 cr
;VW076ZI`PZZ\LZPaL
Subscription Issue Issue List Current Listing Change post Sensex Current
Company name Listing date ratio (times) size (` cr) price (`) price (`) price (`) gain (%) listing (%) change (%) P/E
Mankind Pharma 09-May-2023 15.3 4,326 1,080 1,300 1,844 20.4 41.9 7.8 57.6
Five-Star Business Finance 21-Nov-2022 0.7 1,593 474 450 628 -5.1 39.6 1.0 4.2*
Global Health 16-Nov-2022 9.6 1,571 336 398 707 18.5 77.5 -1.3 58.3
KFin Technologies 29-Dec-2022 2.6 1,500 366 369 374 0.8 1.4 1.4 32.5
Archean Chemical 21-Nov-2022 32.2 1,462 407 449 532 10.3 18.5 0.0 17.1
Fusion Micro Finance 15-Nov-2022 2.9 1,104 368 361 620 -2.0 71.9 -1.2 2.7*
Sula Vineyards 22-Dec-2022 2.3 960 357 358 478 0.3 33.5 1.7 48.0
Bikaji Foods 16-Nov-2022 26.7 881 300 321 431 7.1 34.1 -1.9 83.6
Kaynes Tech 22-Nov-2022 34.2 858 587 775 1,846 32.0 138.3 0.9 112.6
Uniparts India 12-Dec-2022 25.3 836 577 575 650 -0.3 13.1 -1.1 14.3
Tamilnad Mercantile Bank 15-Sep-2022 2.9 808 525 510 425 -2.9 -16.6 3.7 1.0*
Harsha Engineers 26-Sep-2022 74.7 755 330 444 442 34.5 -0.5 4.9 32.6
Inox Green Energy 23-Nov-2022 1.6 740 65 61 59 -6.9 -2.5 -7.1 -
Keystone Realtor 24-Nov-2022 2.0 635 541 555 619 2.6 11.5 -1.2 86.1
Syrma SGS 26-Aug-2022 32.6 628 220 262 490 19.1 86.9 5.8 72.3
*Price-to-book value. Data as of July 17, 2023

ANALYST’S DIARY
Success goes sour

Inaccurate financial statements
could be injurious to stock price
A
company’s public disclosures, including its
financial statements and annual reports, are
viewed as trusted information sources
investors can rely on. But what if the accuracy of
these documents comes under a cloud?
While going through a list of stocks that have
recently fallen significantly, we came across two
companies that made us rethink the accuracy of
official financial statements.
Here are their tales.
Rajesh Exports: All that glitters is not gold

This company deals in the flashy metal that we
Indians adore – gold. With a market share of
around 35 per cent, it is the world’s largest
processor of gold and India’s largest exporter of
gold products. But when we checked its financial
statements and annual reports, things smelled fishy.
On May 30, 2023, Rajesh Exports released its
Q4 FY23 results. Although the company
claimed that its financial statements were
audited, the auditor’s report was missing.
Moreover, it did not disclose its FY22 cash-
flow statement along with its FY23
numbers. Note that Indian accounting
standards require the disclosure of
comparative financials.
Given these irregularities, the National Stock
Exchange asked for clarification. On July 10, Rajesh (negative) `4 crore. That is a huge swing!
Exports re-submitted its results, along with the audit FY22’s annual report mentioned finance costs of
report and comparative cash-flow figures. However, around `90 crore in the profit and loss statement.
we spotted some However, the latest filing did not have the figure in
discrepancies in the cash- the profit and loss statement; rather, it was moved to
flow statement.
As disclosed in the +PZJYLWHUJPLZPU9HQLZO,_WVY[Z»JHZOMSV^
latest filing, the Different amounts in different documents for FY22
company’s cash flow from FY22 annual Q4 FY23
operations (CFO) for Metric report (` cr) statement (` cr)
FY22 was `104 crore. Cash flow from operating activities -4 104
However, in its FY22
Cash flow from investing activities -158 -110
annual report, CFO was
Cash flow from financing activities -326 -238
reported as

the other expenses section. This is puzzling, as the When a new auditor was appointed, it raised
company’s short-term borrowings were pegged at concerns over the company’s revenue recognition
`813 crore as of March 2022. policy, as it couldn’t find evidence for certain
Since the company doesn’t hold any earnings calls revenues recognised by the company in Q2, Q3 and the
and there is no official clarification, we can only first nine months of FY23.
speculate about the reasons behind these According to the new auditor, the company’s profit
discrepancies. Perhaps this is why the stock has been before tax was overstated by 32 per cent in the first
down significantly in the last six months. nine months of FY23. However, EKI stood its ground
and gave reasons for the recognition of revenue.
9HQLZO,_WVY[Z!.VPUNKVÛOPSS But its responses were inconsistent. In one
The price is down 45 per cent from its recent peak in February 2023 instance, the company said that it recognises revenue
1,000 in two phases: first, during the implementation of a
project and then, during the delivery of carbon
800
credits. Referring to a particular project, EKI revealed
600
that it had already recognised the first part of its
400
revenue following the implementation of the project.
200
However, at the same time, it stated that there
0 would be no sale transaction in the project’s second
Jan 2023 Jul 2023
Data as of July 14, 2023 phase and that the revenue for the second phase had
already been recognised in the first phase.
EKI Energy Services: Worrying signs? Against this claim, the auditor raised questions
A carbon credit developer and supplier, EKI Energy about the recognition of the revenue in the second
Services helps its clients reduce their greenhouse gas phase, which witnessed no sale transaction. Due to
emissions and sell resulting carbon credits. It has a this discrepancy, the auditor started re-auditing the
global market share of about 15 per cent. company’s financials for the entire year. So, EKI has
In May 2021, it was listed on the BSE SME not yet released its Q4 FY23 results.
platform, and in July However, in an extraordinary general meeting held
2022, it started trading on July 13, the board of directors approved the
on the main BSE removal of the new auditors because of an
platform. During the unreasonable hike in fee and an excessive delay in the
period, the stock conclusion of the audit.
returned 2,760 per cent! The market has not taken these events lightly, and
However, the good its share price has dramatically fallen.
days seem to be over
for the company. In ,20!(KLJSPUPUNMVY[\UL
November 2022, the The price is down 85 per cent from its peak in January 2022
company’s auditor 3,500
resigned, citing its
2,800
involvement in other projects. The auditor audited
2,100
the company’s financial statements till September
2022 (i.e., H1 FY23). 1,400
700
(SSPZUV[^LSSMVY,20 0 Jan 2022 Jul 2023
New auditors find the numbers to be overstated Data as of July 14, 2023
Change (%)
Q2 FY23 Q3 FY23 9M FY22 While we don’t know what lies ahead for either of
Total income -22.0 -4.3 -13.7
these companies, there is, however, one clear takeaway
of this story: read the financial statements (especially
Total expenses -12.3 -3.2 -7.6
those of small companies) with a grain of salt.
Profit before tax -44.3 -10.9 -31.8 By Vishal Goyal and Swastik Sharma

ANALYST’S DIARY
An unrealistic bet
High P/E comes with high expectations.
But can companies live up to them?
P
age Industries (a leading innerwear
manufacturer) has grown its revenue and net
profit by 14 and 11 per cent per annum,
respectively, over FY18-23. During this period, it
also successfully maintained a median ROCE
of 58 per cent! Impressive, isn’t it?
But despite this, the stock has returned
a measly 5 per cent per annum in the last
five years. An exorbitantly high P/E ratio
seems to be the primary culprit. In July 2018, the
stock had a P/E of 93 times. It breached the
100-mark in the following month. And as
on July 12, 2023, its P/E stood at 70 times.
So, despite the company’s good financial
performance, the stock fell victim to the humongous
7HNL0UK\Z[YPLZ»KPJOV[VT` expectations bestowed on it.
Falling P/E negates the effects of a rising EPS With a minor reconfiguration of the P/E ratio
Absolute Annualised formula, you can find the reason behind it. If you
Jul '18 Jul '23 (%) (% pa)
multiply the P/E ratio by the earnings per share
Share price 28,889 36,000 24.6 4.5 (EPS), the product will be the share price. Thus, the
EPS (FY) 311 512 64.6 10.5 two drivers of share price growth are P/E growth and
P/E ratio 92.9 70.3 -24.3 -5.4 EPS growth.
Data as of July 12, 2023 The P/E ratio generally increases when the
market expects high-profit growth. So, if a stock has
/PNO7,[YHUZSH[LZPU[VOPNOL_WLJ[H[PVUZ a high P/E, say 100 times, it sets a very high
Profit needs to grow substantially for a decent return expectation. The problem is that this kind of growth
10Y in earnings is almost impossible to sustain. So, when
share Required these hefty expectations are unmet, it results in a fall
10Y price EPS
M-cap Current FY23 ahead return growth
in P/E, ultimately bringing the
Company (` cr) P/E EPS P/E (% pa) (% pa) share price down.
Adani Enterprises 2,72,329 168 21.69 70 12.0 22.2 We have identified 29 companies in the S&P BSE 500
Index with a P/E greater than 100 (as on July 12, 2023).
Adani Green Energy 1,52,226 156 6.15 70 12.0 21.4
From the 100, we picked 10 companies that reported
Adani Total Gas 69,931 132 4.97 70 12.0 19.3
the highest five-year annualised growth in EPS.
Hatsun Agro Products 21,774 131 17.00 70 12.0 19.3
Next, we set out to find the rate at which these
United Breweries 39,607 130 5.05 70 12.0 19.2 10 companies need to grow over the next 10 years to
Westlife Foodworld 13,999 125 7.16 70 12.0 18.7 deliver an annualised return of 12 per cent (BSE 500,
Dixon Tech 25,828 122 42.90 70 12.0 18.4 on average, fetches 10 to 11 per cent in the same
Astral 49,421 110 17.00 70 12.0 17.2 period). We assumed that in 10 years’ time, the P/E
Trent 60,001 108 12.51 70 12.0 17.0 would come down to 70 times. As you can see, the
required EPS growth rates are quite high. How many,
ABB India 95,944 107 42.50 70 12.0 16.8
do you think, will be able to deliver?
Price data as of July 12, 2023
By Hemkesh Khattar

Invest with confidence
15 Quality Stocks to buy now

New Recommendations all year
Special coupon for you
17% WI 17
OFF Use code
at checkout
Available for WI’s annual subscription only Purchase with your registered email ID
valueresearchstocks.com
9999322422 C-103, Sector 65, Noida - 201301 support@valueresearchstocks.com

Independent Advisors Private Limited; Registered office: 5, DDA Commercial Complex, Chitra Vihar, New Delhi - 110092; SEBI Registration No: INA100008443; IA-BASL membership No: 1201; CIN: U74140DL2022PTC399760
Contact details: Principal officer: Name: Dhirendra Kumar | Email: principalofficer@valueresearch.in | Mobile No: 9711400789;
Compliance officer: Name: Rahul Rastogi | Email: compliance@valueresearch.in | Mobile No: 9899638444; Grievance cell: Name: Sahib Taneja | Email: support@valueresearchstocks.com | Mobile No: 9999322422.
Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Disclaimers: Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors

ANALYST’S DIARY
Chasing fruitless arbitrage

Decoding whether reverse merger offers any predictable arbitrage opportunities
Premiums diminish with time
I
n the world of investments, started reducing. This was
arbitrage opportunities are quite primarily because when investors
popular among investors. In spotted an arbitrage opportunity, ICICI
simple terms, they are opportunities they flocked to buy the stock,
10
that arise when a stock can be thereby reducing the price gap
acquired at different prices. For gradually. We also noticed that 5
instance, if a stock trades at near the end of a merger, the price 0

different prices on two different volatility was high as investors -5
exchanges, investors can gain from started buying and selling stocks -10
the arbitrage. rapidly to gain profits.
-15
There is a widespread belief that When the mergers came close to
Oct 25, 2001 May 30, 2002
arbitrage opportunities also arise their completion, the premium or
during reverse mergers (when the discount given to the parent
parent company merges with company converged towards zero. Equitas Holdings
its subsidiary). This is So, in short, exploiting arbitrage 24
because investors can opportunities during a reverse 18
acquire the parent merger is difficult, if not near
12
company’s impossible. However, a question
shares at a may arise: what if one buys 6
the stock on the date 0

of the announce- -6
ment of a merg- Jul 26, 2021 Feb 2, 2023
er? Once
again, this
Ujjivan Financial Services
does not
100
guarantee
profits. 80
A case in 60
point is the merger 40
premium or a discount through of Equitas. If you had bought
20
merger allotments. Equitas Holdings on the date of the
0
But is this always the case? We announcement of its merger, your
Oct 21, 2021 Jul 7, 2023
observed four reverse mergers – shares would have been valued at a
ICICI-ICICI Bank and Equitas discount of 0.2 per cent on its last
Holdings-Equitas Small Finance trading day. This clearly shows the HDFC
Bank, HDFC-HDFC Bank, and the unpredictability of arbitrage 6.0
ongoing Ujjivan Financial Services- opportunities, no matter when one
4,5
Ujjivan Small Finance Bank. buys the stock.
3.0
We found out that arbitrage These numbers and observations
opportunities did not exist during point to one thing: it is fruitless to 1.5
these mergers. Initially, there chase short-term arbitrage 0

were price fluctuations. However, opportunities. Investors are better -1.5
as a merger came to a close, off looking at long-term prospects. Apr 4, 2022 Jul 7, 2023
premiums or discounts, if any, By Udhayaprakash

Coming soon...
Stock investing is about

to get a lot simpler
or

WORDS WORTH WISDOM
:(516@)/(;;(*/(9@@(Managing Partner, Fortuna Capital
“People trade on noise

rather than signals”
Key investment ideas from Sanjoy Bhattacharyya
B
acked by an experience of 35 years, behavioural finance.
Sanjoy Bhattacharyya is an acclaimed In an event conducted by the CFA Society
Indian investor. He was the first Chief India, he talked about several behavioural
Investment Officer of HDFC Asset faults investors are privy to. This month’s
Management and is presently the Managing Words Worth Wisdom revolves around his
Partner at Fortuna Capital (an investment speech at the event. You can watch the video
advisory firm). A true value investor, of the event here: https://tinyurl.
Bhattacharyya has a keen interest in com/2s3m74df
RISKS AND RETURNS

He started his speech with a very
interesting question – “Why doesn’t
India have as many star investors as
the US has?”
He believes the answer lies in the
fact that US investors look at returns
in terms of returns earned per unit of
risk. This behavioural trait makes US
investors better equipped to assess
risk. In contrast, Indian investors
focus on finding the next multibagger,
which often leads to taking on
unnecessary risks.
He states, “The guy who has
rational expectations in terms of time
horizon and returns, obviously has
more rational risk tolerance. All
sensible investing is essentially about
how to manage risk.”
According to Bhattacharyya,
sensible investing has three major
risks: idiosyncratic risk, business risk
and behavioural risk. Of all these
three types of risks, investors have the
greatest control over behavioural risk.
Illustration: ANAND
So, he believes that if an investor is
able to get rid of this risk, she will
ultimately gain superior returns.

Four major behavioural risks
Investors are prone to these biases when making investment calls
1
EGO
“If I have to pick one reason for the biggest number of investing errors in
history, it’s overconfidence,” exclaims Bhattacharyya. He firmly believes
that the thought that we know more than others leads us to nothing but
losses in the market.
To avoid such investing hubris, Bhattacharyya suggests, “Whenever you
have an idea, look for things that are going to prove you wrong… Don’t
become rigid or stubborn in your view just because someone challenges it.”
The moment we fixate on something, we reject everything else.
2
MYOPIA
One of the age-old behavioural biases many investors suffer from is myopic
thinking, i.e., they often solely focus on averting short-term losses. And in
that process, they often end up missing out on long-term gains.
Bhattacharya says, “Don’t worry about how much you can lose in the
short term.” Great investors buy assets that are perceived to be riskier than
they actually are. Instead of intuitive judgements, if we have probabilistic
thinking, it will help us think in the long term and get out of losers.
3
CONFUSION
In the age of information, it is often easy to get lost in the data jungle.
Investors are often influenced by the wrong information or are just
bombarded with so much information that they are left confused.
He explained this in the context of investing in IPOs. In view of the huge
success of a few IPOs, people tend to invest in all the IPOs. Given this,
Bhattacharyya argues, “IPOs are stacked against the average investor, it is
the dumbest thing to do.” We ignore the probabilities.
This happens due to information overload, which clouds our judgement.
“People trade on noise rather than signals because it gives them a sense of
belonging and they don’t realise it’s noise,” he says. Avoiding noise or
unnecessary information helps us navigate this trap. It is always worth
looking for simple and straightforward solutions.
4
EMOTIONS
This is the most important element, according to Bhattacharyya. Greed and fear
are two main emotions that drive human behaviour. “Emotion is one of the most
dangerous things you’re dealing with because your view of risk is based on your
state of mind at that time and how it affected you,” he says. If we follow a
strategy and it yields us results, we continue to do it, regardless of whether it is
in our best interest.
It is quite challenging to overcome emotions. However, we can surely manage
them. “Framing is a huge part of coping with an emotion,” says Bhattacharya.
Besides meditation, the automation of tasks with the help of a set of rules helps.
Moreover, constantly checking our portfolio causes us to do irrational things.

COVER STORY
COVER STORY
Too Hot
to Handle?
Worried about whether to buy stocks
or wait for a crash? Here’s the solution
By Karthik Anand Vijay
owards the end of June 2023, an analyst of and some confirming.
T our team noted something interesting:

29 companies in the BSE 500 index were
trading at a P/E of over 100 times – nearly
6 per cent of the total constituents!
As our team sat down to dissect what was
But one thing became clear – you need to have the
right mindset. As successful investors often say –
investing is about picking the right businesses, not
stocks. These two are different. While both go through
ups and downs, stocks (and the stock market) fluctuate
happening, a barrage of questions was put forward. between extremes – from euphoria to manic depression.
Here are a few of them: This adds difficulties to an investor’s life. If you
z If a stock is overvalued, should we sell it? easily succumb to the market’s fluctuations, you won’t
z Should we invest in the current market? be able to generate good long-term returns, no matter
z Should we sell companies that have risen how many good companies you have in your portfolio.
considerably? Given the current all-time high market, we thought
We also deliberated on an investor’s approach it would be great to address some of these concerns and
to the current all-time high market phase. help you find some answers. So, read on to find out how
Arguments were made to and fro – some conflicting to be greedy in the long term.

COVER STORY
Predicting the unpredictable

Should investors be happy or cautious, given the current state of the market?
T
he Sensex recently breached
the 65,000 mark. In fact, many
stocks reached their all-time
high. Here are some data points (as
of July 7, 2023) that will provide
you with more insights into the
present state of the market:
z Of 1,380 companies with a
market cap of over `500 crore,
408 (or about 30 per cent) reached
their all-time high in 2023.
z Of the 4,491 companies trading on
the BSE or the NSE, 941 (or 22 per
cent) had a P/E of over 50 times.
z Of these 941 companies, 421 (or
10 per cent of all traded companies)
had a P/E of over 100 times.
z Alternatively, less than 40 per
cent of stocks had a P/E of less of several factors. And we cannot global financial crisis. But only a
than 30 times. identify these factors in advance. handful of people were able to spot
For example, three factors, these factors beforehand.
Is a market crash impending? including easy money, loose We can also cite a recent
Do these numbers indicate that lending standards and a bit of example here. In February 2022,
the market is overvalued? Maybe. financial engineering (read the Federal Reserve began
Does it foretell a market crash? trickery), created a financial increasing interest rates, and
We don’t know. maelstrom in the US housing Russia invaded Ukraine. Given
A market crash is the outcome market, resulting in the 2008–09 these, many experts opined that
the US (and consequently the
world) would enter into a recession
The P/E spread
by the end of the year or next year.
Distribution of P/E ratio over the years
100 % However, we are now in August
90 2023, and now the talks revolve
Negative around if the US enters into a
80
recession, it will be a soft one.
70
Over 50 All these show that one can’t
60
predict these events beforehand.
50 30 to 50 Long-term investors should accept
40 the fact that undervaluation and
0 to 30
30 overvaluation are an integrated part
20 of the market. As John Maynard
10 Keynes (the eminent economist)
0 aptly mentioned, “Markets can
June 2001 June 2023 remain irrational longer than you
For the month of June across all traded companies
can remain solvent.”

The ‘investor’ hidden in you
Find out your investment mindset and redefine your investment approach
do during such scenarios?

We found the answer in a
recent memo by billionaire
investor Howard Marks. Aptly
titled, ‘Taking the temperature,’
Marks writes:
“When markets are

at extreme highs or
lows, the essential
requirement for achieving
a superior view of their
future performance
lies in understanding
what’s responsible for
“I
f the markets are at an all- Speculators try to time the
the current conditions.
time high, shouldn’t I sell market. They try to profit from
my investments?” This is a betting on predictions and
Everyone can study
common question among investors. forecasts. But the problem with ECONOMICS lNANCE AND
However, its answer largely predictions is you win some and accounting and learn how
depends on an investor’s mindset. lose some. the markets are supposed
In that regard, we believe there are On the other hand, long-term to work. But superior
primarily two types of mindsets – investors are cut from a different investment results
speculation and investments. cloth. They sit through the ups
come from exploiting
and downs of the market and
Speculation vs investment benefit from a company’s long-
the differences between
In his book ‘The Intelligent term performance. They pay no how things are supposed
Investor’, famous value guru heed to the market’s cacophony. to work and how they
Benjamin Graham wrote, “An Importantly, they do not time actually do work in the
investment operation is one the market. real world. To do that,
which, upon thorough analysis,
the essential inputs
promises safety of principal and During market extremes
an adequate return. Operations
aren’t economic data
However, there are situations
not meeting these requirements where the market reaches an ORlNANCIALSTATEMENT
are speculative.” extreme. In such situations, analysis. The key lies in
We feel this could be boiled investors must decide whether to understanding prevailing
down even further. If you have get in or out of the market. A case investor psychology.”
invested with the objective of in point was the market crash of
selling, then you are indeed March-April 2020. Although panic
speculating. On the other hand, if gripped the investor community, He then gives a list of things
you have invested intending to some astute investors started that investors must do to
hold the company, then it is an investing aggressively. So, the determine the correct course
investment. question is: what should investors of action.

COVER STORY
Taking the temperature of the market

Taken from Howard Marks's memo
Cycles stem from excesses and corrections

A strong movement in one direction is more
likely to be followed – sooner or later – by a
Engage in pattern recognition correction in the opposite direction.
Study market history in order to better
understand the implications of today’s events.
Investor psychology and thus market cycles
mUCTUATEINWAYSTHATAPPROACHDEPENDABILITY In extreme times, practice contrarianism
z Most of the time, the consensus is as close
to right as most individuals can get.
"There's no price too high" z So to be successful at contrarianism, you
z Watch for moments when most people are HAVETOUNDERSTANDA WHATTHEHERDISDOING
so optimistic that they think things can only B WHYITSDOINGIT C WHATSWRONGWITHIT
get better. ANDD WHATSHOULDBEDONEINSTEADANDWHY
z Likewise, recognize when people are so z This is, however, very different from simply
depressed that they conclude things can only diverging from the consensus all the time.
get worse, as this often means they think a
sale at any price is a good sale.
z When the herd’s thinking is either Resist your own emotionality
Pollyannaish or apocalyptic, the odds increase Stand apart from the crowd and its
that the current price level and direction are psychology; don’t join in!
unsustainable.
Be on the lookout for illogical propositions

Take note of swings in investors’ emotions When you come across a widely accepted
Bear in mind that much of what happens in proposition that doesn’t make sense or one
economies and markets doesn’t result from a YOUlNDTOOGOODTOBETRUEORTOOBADTOBE
mechanical process, but from the to and fro true), take appropriate action. See something;
of investors’ emotions. do something.
Obviously, there’s a lot to grapple with when taking the temperature of the market. In my opinion, it has more to do with clear-eyed
OBSERVATIONSANDASSESSMENTSOFTHEIMPLICATIONSOFWHATYOUSEETHANWITHCOMPUTERS lNANCIALDATA ORCALCULATIONS
Marks’s framework in practice

Leveraging the ‘taking the temperature’ approach, However, following the collapse of Lehmann Brothers,
Marks and his team took advantage of the 2008 stock they invested with the pedal to the metal. His
market crash. Between 2004 and 2007, Marks began reasoning was, “...if we invested and the financial
noticing excessive optimism in the US housing world melted down, it wouldn’t matter what we had
market. Once he was convinced that the optimism done. But if we didn’t invest and it didn’t melt down,
would fizzle soon, he and his team accumulated a we wouldn’t have done our job. So, we made the
reserve fund of $11 billion between January 2007 and unsupportable assumption that the financial world
March 2008 to invest in distressed debt. would continue to exist and concluded that this meant
Initially, they started investing the funds slowly. we should invest aggressively.”

Not easy to master A misguided approach managing your portfolio. He says, “I
At this point, you must have realised Even if you have an investment think that a better model is of a
that calling the shots even when the mindset, you could still end up with drunk stumbling around in a bar
market is at an extreme is difficult. poor results. Guy Spier (a trying to find the drink. And he is
Indeed, it is true. In fact, during his Switzerland-based investor and the trying to grab a drink, not a handle.
over 50-year-long investment career, manager of the Aquamarine Fund) And he is sort of stumbling around
Marks only made five market calls, explains why. and his mind is all confused. I say
and all of those were accurate. “I feel that the way people want to that because we have a very bad
But here lies the catch. The five talk about their investing process is model of how our brains work. And
market calls were made over a span they want to put themselves into the the reality is that we are highly
of the last 23 years. He stated that it shoes or into the mindset or describe irrational.”
took him more than 30 years “to themselves as being like a fighter We bet you never thought such a
gain the insight and experience pilot. Fighter pilots are highly self-image would work in your
needed to detect the market’s trained, have all the instruments favour! But Spier reasons that “...if
excesses.” right there, has this finely tuned you perceive yourself as being a
machine and he selects the target, drunk in a bar, you’re going to set
The solution and he flies towards it, and he drops up different rules for yourself. What
Learning to look at the market and the precision bomb on the target. I am doing is I am trying to set up an
observe investors’ psychology, like That is our idealised and environment in that bar such that
Marks, is an arduous and long-term subconscious idea of how an when I finally lunge for the drink
endeavour. It is a useful tool to have investor goes about selecting stocks (an analogy for investment), I have
in your toolbox. But you can’t expect and managing their portfolio.” lunged for a good one. So that
to develop this skill just at the drop According to Spier, investors process starts with just don’t do
of a hat. mostly create their investing anything. Don’t engage in trading
However, there is another nifty approach based on some fees. Allow stocks to live in the
tool that you can use. This one assumptions. Then, they make their portfolio for an extraordinarily long
comes from one of our cherished lives difficult by constricting their time. Select stocks that you can
investors – Warren Buffett. In investing process – right from idea allow in the portfolio for an
particular, we can use his ‘Twenty generation to evaluation, investment extraordinarily long time without
Punches’ approach. He says: and re-evaluation. looking at them too hard.”
“You’d get very rich if you He explains that people who are Through this approach, investors
thought of yourself as having a card adept at subjects like mathematics can avoid falling prey to irration-
with only twenty punches in a tend to do this. Since such subjects ality. While rationality plays an
lifetime, and every financial require people to be highly focused, important role in investing, it is not
decision used up one punch. You’d they develop the mindset of a fighter possible to be rational all the time.
resist the temptation to dabble. pilot. They start believing that they Could this approach save you
You’d make more good choices and can hit the mark through superior from making two common mistakes?
you’d make more big decisions.” analytical ability.
These words hold immense Spier offers a more intriguing Top or bottom
significance. Buffett is saying that if approach to generating ideas and Two common mistakes investors
you know that you could make only
20 investments in your whole life,
then you would take a long hard Buffett's 20 punches approach
look at each investment opportunity.
“You’d get very rich if you thought of yourself as
This will dramatically increase your
odds of success by focusing your
having a card with only twenty punches in a lifetime,
energy on a few big decisions. ANDEVERYlNANCIALDECISIONUSEDUPONEPUNCH9OUD
It sounds simple but is hard to resist the temptation to dabble. You’d make more
follow, owing to people’s investment good choices and you’d make more big decisions.”
approach. Here is what we mean.

COVER STORY
commit are buying at the top and

selling at the bottom. But which one Buying high and selling low
is worse? Rolling returns of Sensex since January 1995
According to Marks, the answer Instances
is the latter. He explains, “If you of negative
buy at what later turns out to have returns 43.8 23.5 13.1 6.6 0
IN
been a market top, you’ll suffer a
downward fluctuation. But that
Avg. 3.5 8.4 9.7 10.5 11.7
isn’t cause for concern if the long-
return
term thesis remains intact. And, PA
anyway, the next top is usually
higher than the last top, meaning 1 year 3 years 5 years 7 years 10 years
you’re likely to be ahead eventually. Data as of July 14, 2023
But if you sell at a market bottom,

you render that downward value in a month and selling it at its term. You are willing to hold your
fluctuation permanent, and, even lowest value after one, three, five, companies through thick and thin.
more importantly, you get off the seven and 10 years? There will always be spells of poor
escalator of a rising economy and We performed this exercise on a performance. There will always be
rising markets that has made so monthly rolling basis starting unexpected events. But your
many long-term investors rich. This January 1995. As expected, the mindset will determine how well
is why I describe selling at the returns improved as we increased you perform. The principles (or
bottom as the cardinal sin in the time horizon. However, tools) mentioned above are aimed
investing.” surprisingly, there were no negative at helping you hone your
We ran a simple exercise to check returns over the 10-year horizon. investment mindset. By adhering to
for this: What is the average return If you have an investment them, you will certainly evolve to
of buying the Sensex at its highest mindset, you are greedy in the long be a better investor.
Mind your step

What should be your action in view of the current state of the market?
W
e have delved into what it expert’s opinion, your friend’s roof. You can revisit these
means to have an advice or something else. We get companies later if things cool down.
investment mindset. We buoyed by the pitch and invest
have also gone through the ways to without pondering the What not to sell?
hone it. Now, it’s time for you to consequences. Make use of the Don’t sell companies that have good
improve your portfolio. Here are current heightened market levels long-term prospects. Even if these
some points worth considering. and ditch these companies. companies are overvalued, you
You shouldn’t own a company shouldn’t sell them.
What to sell? unless you are confident of its
Even though companies with poor potential. After all, how can you What to buy?
fundamentals might get rewarded in evaluate a company if you don’t We never recommend buying
the short term, they can be injurious know the factors that drive its companies with poor fundamentals.
to your long-term returns. Your performance? Always look for quality companies
priority should be to remove such For companies with strong having good growth prospects and
companies from your portfolio. prospects, you should sell your trading at reasonable valuations.
At times, we buy companies based holdings (or at least trim them) if the Don’t fall for the “I’ll wait for the
on others’ opinions. It could be an valuations have gone through the prices to correct further” fallacy. If

something is reasonably priced
today, then don’t hesitate to buy. If
the valuation drops further and the
prospects are intact, then buy more.
Another useful buying tip is to
stagger your investments. Invest
weekly or monthly, as you see fit.
In that way, you can take
advantage of a potential steep fall
in the share price.
If you need help managing your
portfolio, head to our website. You’ll
find the tools to assess if a company
is a good bet, among many other
amazing things.
Do nothing comfortable with your current speed bumps and potential hazards.
This seems simple but is tough to portfolio, then doing nothing is the It is natural to be fearful during
practice. With so much optimum strategy. such times, but you must always
information around us, we feel Investing is a long journey. It keep your eyes on the horizon.
that we should act. But at times, requires you to be firmly seated in That is probably why the
the smartest thing to do is to do the back seat while the current market phase calls for you
nothing. If you don’t have any poor management steers at the front. to be short-term fearful and long-
companies to sell and are Along the way, you will encounter term greedy.
6XEVFULEH1RZ BUY A NEW

SUBSCRIPTION
Insights into the Indian stock market and companies DIGITAL

1 year for `299
Start my subscription from 6DYH
Name (Mr/Mrs/Ms) 3 year for `499

6DYH
Address
PRINT+DIGITAL
1 year for `1,350
6DYH
State Pin Code 3 year for `3,375

6DYH
Phone E-mail
Delivery by courier
Cheque Number Date
Savings calculated with respect
Bank & Branch to the single-issue price of `125.
Payable to Value Research India Pvt. Ltd., New Delhi
+91-98688 91830 C-103, Sector 65, Noida - 201301

www.vro.in +91-95602 00520 subscription@valueresearch.in

INTERVIEW
Through a
professional’s lens
Find out what industry veterans think of the present market boom
The market is at an all-time high, and the general mood is euphoric. But how are the industry veterans,
the ones who have witnessed similar booms, navigating the market?
To find out, we sat down with Jinesh Gopani, head of equity at Axis Mutual Fund,
and Sankaran Naren, CIO of ICICI Mutual Fund. We asked them how they view the current market
and the common investing mistakes one should avoid during market booms.
Focus on long-term quality instead of short-term bias

JINESH GOPANI Head Equity, Axis Mutual Fund
The Indian economy has been incredibly resilient to business, structural reforms and indigenisation will
the events of the last few years. What factors have play a pivotal role in India’s growth. Companies like
been responsible for this? Apple, Amazon, etc., shoring up their investments in
Globally, economies have faced multiple headwinds India has led to faster job creation and has
in the form of high inflation, slowing growth, augmented the nation’s growth. A stable government
aggressive interest rate hikes and other geopolitical with a thrust on policy reforms will further cement
risks. The silver lining is that despite the same India’s growth.
setbacks, India’s growth story has remained resilient.
Despite the obstacles in the form of Covid-19 and the This cheery outlook is perhaps getting reflected in
Russia-Ukraine war, the economy bounced back the stock market. Is it time to be greedy or fearful?
quickly, demonstrating its ability to adapt to Rather than being greedy or fearful, investors should
challenging circumstances. focus on long-term quality instead of short-term bias
Lower commodity prices, better-than-expected and stay invested at all times. Missing a handful of
numbers from companies and expectations that India best days in the market over long periods can
will grow faster than most economies led to further drastically reduce the wealth-creating opportunities
exuberance in the market. A confluence of all these an investor could gain by holding onto their
factors has led to the FPIs moving to market weight investments. As a fund house, we do not get swayed by
from an underweight position and the markets market movements, given that market rewards
touching lifetime highs. quality over most periods. That is what one should
focus on, building a portfolio of good-quality stocks.
What needs to change/continue to ensure we remain
the fastest-growing major economy in the world? Where do you see the most value for your buck today?
India has the potential to emerge as a powerhouse in The current macroeconomic data, such as better GDP
the next few years. Continued focus on ease of doing growth, strong industrial production numbers and a

INTERVIEW
Lower commodity prices, better-than-expected

numbers from companies and expectations that India
will grow faster than most economies led to markets
touching lifetime highs
manageable current account, have painted a fairly

positive picture for India. Headline inflation and
interest rates are both off their peak.
Cyclically stronger balance sheets, improving
macro stability – which reduces pressure on
policymakers to tighten policy stance – and structural
policy reforms are some of the keys to sustainable
growth. Accordingly, domestic consumption is also an
important theme. Furthermore, high-frequency
indicators such as improved auto sales and GST
numbers indicate robust growth both in volumes as
well as in net revenue.
Within financials, we prefer select names that have
seen an improvement in their balance sheets. The
underlying fundamentals of the banking sector
remain strong; hence, we have added some names
in this space. Our allocations in select IT
companies are purely stock-specific strategies.
These are companies we believe will be likely
disproportionate beneficiaries over the
medium term. To reiterate, our strategy
remains stock-specific and sector-agnostic.
Which long-term trends are you betting on?

We are looking at companies that have the
ability to pass on costs seamlessly and grab
incremental market shares in their respective
sectors. We believe such companies are likely
to benefit disproportionately as and
when normalcy returns.
As long-term investors, we are comfortable
with companies taking their time in building
levers for the next phase of growth and will
continue to support portfolio companies in their
respective growth agendas.
What are the common mistakes investors make

when markets are at an all-time high?
Most investors take profits in their mutual funds/stocks
or exit almost all their holdings with the belief of
catching a falling knife. We believe that short-term
volatility in markets should be used to buy or add to
dips. Staying invested in markets at all times is the
strategy we advocate as a fund house.

INTERVIEW
Ignoring asset allocation is a costly mistake
SANKARAN NAREN ED and CIO, ICICI Prudential AMC
The Indian economy has been incredibly resilient to no non-performing loan problems, the banking system
the events of the last few years. What factors have is robust, etc. No other country in the world has such
been responsible for this? a robust growth story for the next decade.
We are of the view that India has one of the best Due to all these reasons, Indian valuations are high
structural stories globally. It has good demographics, relative to the world. In the equity market, good news
the long-term growth prospects are good, corporates and high valuations come together, as do bad news
are in good shape, corporate earnings are improving, and low valuation. Today we have good news and high
valuations. The challenge now is the high valuation.
However, due to global macros, monetary
mon policy
decisions and the geopolitical environment,
enviro there
could be some challenges along the way.
w So,
intermittent volatility should not be ruled out.
Good news and high valuations come together, as do bad news and
low valuation. Today we have good news and high valuations.
There could be some challenges along the way. So, intermittent
volatility should not be ruled out.
What needs to change/continue to ensure we remain

the fastest-growing major economy in the world?
Continuation of supportive Governm
Government policies across
sectors, favourable macros, and susta
sustained corporate
balance sheet strength will help India remain in the
league of global fast-growing major economies.
e
This cheery
c outlook is
pe
perhaps getting
re
reflected in the
stock
st market. Is it
time to be greedy
fearful?
or fear
At ICICI Prudential,
P we
have been big
bi believers in
multi-asset and
an asset allocation
strategies. We believe it is imperative to
adopt a multi-asset approach for
f better
investment outcomes. We recommend
recomme investing lump
sum monies into hybrid categories like equity
savings, balance advantage, aggressive
aggressi hybrid and
multi-asset categories. Since hybrid funds
f invest in two
or more asset classes, investor outcomes
outcom could be more
46 We
46 Wealth
Weal
a tthh IInsight
nsig
ns ight
ig ht August
Aug
ugus
ust 2023
ust 20023
20 23
23

2010 and 2020 has been a lost decade for capex-related
The changing global trend, along with supportive
industries, such as capital goods. Similarly, the two-
government reforms, bodes well for manufacturing
wheeler industry did not see much growth over the
and manufacturing-allied companies. These
past six years. Some auto companies suffered due to
companies have been hurt over the past decade, and
semiconductor shortages. Typically, after a challenging
for that reason, they are still not richly priced but
phase/lost decade, such sectors tend to have a good
have reasonable growth potential.
period which is what we are seeing at this point.
favourable by adhering to a multi-asset approach Which long-term trends are you betting on?
rather than investing in a single asset class at this Manufacturing and housing are two long-term trends
point in time. we are positive about. Each of these trends holds the
The best way to invest for the long term is to use potential to boost several other underlying sectors. We
hybrid investing methods. In a hybrid product, we are believe growth is moving towards manufacturing
in a position to invest in attractive asset classes at outside of China. The changing global trend, along
attractive times. All the investment gurus, be it, with supportive government reforms, bodes well for
Warren Buffett or Howard Marks, say if you invest in manufacturing and manufacturing-allied companies.
undervalued asset classes, you actually make money. A These companies have been hurt over the past decade,
hybrid fund can do this because it always has cash. It and for that reason, they are still not richly priced but
can identify and invest in an undervalued asset class have reasonable growth potential.
when it is cheap. Hence, hybrid strategies can deliver
better risk-adjusted returns. At this point, investors can What are the common mistakes investors make
consider categories like the multi-asset, balanced when markets are at an all-time high?
advantage, equity and debt or equity saving, all exciting In an up-trending market, investors often tend to
categories in a booming or a correcting market. ignore valuations and risk-management practices. As a
means to tap into market gains, investors go overboard
Where do you see the most value for your buck today? with their equity allocation. Due to this, the portfolio’s
We remain positive on sectors aligned with the asset allocation gets distorted, leaving the portfolio
domestic economy like banks, auto, capital goods vulnerable to a change in market trends. Ignoring asset
related sectors and capex oriented sectors, allocation is a costly mistake and should be avoided at
manufacturing, etc. Pharma space also looks attractive all times. Investing based on past performance is
given the reasonable valuations. The period between another mistake one should be wary of.
Invest like pros

Learn the craft of investing by reading
about the investment styles of
world-class money managers
https://shop.valueresearchonline.com/store/

STOCK ADVISOR
What is your investment brand?

How to build any kind of equity portfolio
portfolios or just a set of However, dealing with stocks is an

individual, unrelated stocks. entirely different proposition.
So what is a portfolio? A Unlike mutual funds, which are
portfolio is a leather bag, a type of managed with investment goals in
briefcase. No, seriously, that’s mind, companies operate based on
true. The original meaning of the their business objectives, making
word is simply a bag designed to the assembly of a stock portfolio a
carry documents in. It became distinctively different process.
associated with investments The ultimate aim remains
because, in the early twentieth unchanged–to meet your personal
century, stockbrokers would keep financial aspirations. However,
each client’s share certificates in a the approach tends to be more
By Dhirendra Kumar
separate portfolio. From there, the intricate, given the inherent
word gradually came to mean any complexities of these investments.
A
re you a branded equity collection of documents. In The question is, does Value
investor? If yes, then what finance, it specifically came to Research Stock Advisor do this for
brand are you? Are you mean the investments held by you, and the answer is that it
puzzled by the question? Let me an investor. depends on you! When we began
explain. A lot of investors adopt a That’s the broad meaning. the service, our stock list was
brand, as in, “I’m a small-cap However, in investing, ‘portfolio’ relatively undifferentiated. The
investor”, “I’m a large-cap is used with many slightly number of stocks was small
investor,” or even I invest only in different meanings. It could compared to today–just ten–and
this or that sector or worst of all, simply mean all the investments creating subsections was a little
“I’m an F&O trader”. you have–your complete asset pointless. The focus was entirely
This question I’m asking you is base. It could mean one specific on choosing good investments,
a counterpart to the one I get type of asset class, as in your and they were likely to stay that
about Value Research Stock mutual funds being a funds way for years to come. Of course, I
Advisor: What kind of stocks do portfolio and your stocks being say ‘relatively undifferentiated’
we recommend? Small-caps or your equity portfolio. That’s a because, as our long-time
large-caps or which sector or split by what is in the portfolio. members would recall, we always
whatever. My normal answer to It could also be by a goal, as in had the concept of ‘All Weather’
this question is that we your retirement portfolio or your stocks, even in the beginning. The
recommend stocks that will make children’s education portfolio. name is self-explanatory, as is the
money for you. It sounds like a Or, as in the present discussion, it role such stocks would play in a
smart aleck answer, but as our could mean a particular type of portfolio. Hence, even back then,
longstanding members know very stock like large-cap stocks, small- despite the fact that the group of
well, it’s the literal truth. cap stocks, dividend stocks, value ten stocks didn’t constitute a
Still, that does not mean that stocks, or anything else. portfolio, our members could use
our members can’t choose and In the past, we’ve typically the ‘All Weather’ tag as a guide to
adopt a brand. That means that advocated for goal-based portfolios adjust their stock investments in
the answer is both yes and no. when it comes to mutual funds, line with their preferences.
This question is the same as given our ability to tailor specific From that point, almost six
whether we recommend entire fund types to various objectives. years ago, our recommendation

Illustration: ANAND
list has grown to as many as 15 sectors. We have stocks with all tions. Use this set to start build-
57 stocks. However, the set is kinds of ownership patterns. ing your portfolio right away!
larger, so more differentiated now, What’s more, we have a full z The complete investment thesis
and there are two that we classify range of research and analysis for all recommended stocks so that
as such: Best Buys Now and All tools to help you do this. It would you understand why you are
Weather. I prefer simplicity, and not be an exaggeration to say that investing
as such, the labels are pretty using the tools we have bundled z New recommendations as soon
straightforward. While there may into Value Research Stock as they are released
be subtleties in how we define Advisor, you can build a parallel z Continuous updates and
these terms, interpreting them set of recommendations, provided analysis on all recommended
based on their plain, literal you exercise your judgement and stocks straight from our dedicated
meaning won’t lead you astray. your experience about stock analyst team
However, these are only the investing. If you are still making z Tools and data to research and
readymade sets we offer. These that, we have our set thali ready analyse any other stock
are the thalis, but you can also to be served to you! To start immediately, head over
dine a la carte. Within the set of That’s available for a to valueresearchstocks.com, read
57 stocks, we have a full range of reasonable price, as part of the details and become a member.
capitalisations, with the largest all this: You can take the one-year
company at `12 lakh crore and the z Access to all our stock picks membership or get a 33 per cent
smallest at 1/830th of that. z Best Buy Stocks: Selected discount for three years. Either
We have 42 industries across stocks from our recommenda- way, it’s a great deal.
Value Research Stock Advisor is a premium service where you get promising stocks along with their full
analyses. We also actively track the underlying companies for you and keep you posted on the major
developments in them, including when to sell a stock. Additionally, members get exclusive access to a
range of tools and data which they can use to study any other stock. You can subscribe to the service
at www.valueresearchstocks.com or scan the QR code.

MAIN STREET
The sweet spot of

wealth compounding
Find out the key characteristics of wealth-compounding machines
in ideal wealth compounders with capital (money set aside to meet

three C’s - clean balance sheets, short-term obligations like pay-
competitive advantages and capital ments to vendors, etc.).
allocation skills. This potent combi- But why is it important? Well,
nation allows businesses to gener- income statement parameters -
ate free cash flows (FCFs) and grow like operating profit (EBITDA),
them sustainably over the long net profit (PAT) and per-share
term at a healthy rate. earnings (EPS) – do not adequate-
But before diving into why ly reflect how efficiently the
these are key characteristics of a capital of the company is
compounding machine, we must being utilized to generate
By Saurabh Mukherjea explore what FCF and return on earnings. Furthermore, metrics
capital employed (ROCE) are and like PAT are also prone to
why they are pivotal for long- accounting shenanigans (for
The ideal business is one that term growth. example, by tweaking the depre-
earns very high returns on capital ciation method and reducing
and that keeps using lots of capital Understanding FCF and ROCE: depreciation expenses to increase
at those high returns. That becomes key drivers of investment value reported profits).
a compounding machine. FCF is the cash left over after ROCE is the measure of how
Warren Buffett, The paying for operating expenses much profit a company can churn
Snowball: Warren Buffett and the (cost of raw materials, payroll out from using its invested capital
Business of Life expenses, etc.), capital expendi- in the business. To achieve future
Marcellus’ investment philoso- tures (new plants, machinery, profit growth, additional capital
phy has centred around investing etc.) and increases in working needs to be deployed back into the
/V^PZ-*-KLYP]LK
A measure of cash left for shareholders after operating
.ET/EPRATING0ROlT
after Tax (NOPAT) 100 expenses & taxes. Can be calculated as EBIT x (1-taxes)
Expenses incurred towards new plants and machinery

Net Capital Expenditure 30 as well repair/replacement of existing infrastructure
Net increase in Additional liquid funds required to be kept aside to meet

Working Capital 30 short term obligations like vendor payments, etc.
Money left over after all expenses for the given

Free Cash Flow (FCF) 40 lNANCIALYEARHAVEBEENTAKENCAREOF
Source: Marcellus Investment Managers

Illustration: ANAND
business. This additional capital How high ROCE leads to higher FCF cent, while Company B has a
is dependent on a company’s Let’s consider two companies, ROCE of 40 per cent.
ROCE. The higher the ROCE of a Company A and Company B, with This means that to generate a
company, the lower the addition- identical revenue, EBITDA and PAT of `100, Company A deployed
al capital required to generate PAT but different ROCE. `1,000 (i.e., 100/10 per cent) worth
profit growth. Company A has a ROCE of 10 per of equity capital. In contrast,
Company B deployed `250
(i.e.,100/40 per cent) to generate the
/PNOLY96*,HSSV^ZMVY-*-NLULYH[PVU same amount of PAT.
Company A Company B Now, next year, if Company A
Revenue (`) 1,000 1,000
wants to achieve a 10 per cent
PAT growth, i.e., grow its PAT
EBITDA (`) 500 500 from `100 to `110, it would need to
PAT (`) 100 100 deploy an additional capital of
`100 (`10 divided by ROCE of
Capital Employed (`) 1,000 250
10 per cent). However, Company B
ROCE (PAT/Capital Employed) (100/1,000) = 10% (100/250) = 40% would only need to deploy only `25
Targeted growth next year 10% 10% to achieve a similar PAT growth
of 10 per cent (`10 divided by
Incremental profit next year (`) (100 x 10%) = 10 (100 x 10%) = 10
ROCE of 40 per cent).
Additional capital needed for (10/10%) = 100 (10/40%) = 25 This additional capital that
growth (`; incremental Company A needs to fuel growth
profit/ROCE) would come from the PAT base of
Free cash flow (`; PAT - (100 - 100) = 0 (100 - 25) = 75 last year. So, Company A would
additional capital deployed) have to invest the entire `100 worth
Source: Marcellus Investment Managers
of PAT back into the business, leav-
ing it with no free cash. In contrast,

MAIN STREET
FCF is negative in this phase, i.e.,

-YLLJHZOMSV^SPMLJ`JSL the company needs external capital
infusions to move forward.
z Reinvestment z.ETOPERATINGPROlTSz Free cash
In the Growth phase, as the
NASCENT GROWTH MATURE DECLINE
company reaches a decent size and
High rate of High growth in FCF scale, operations become profitable
reinvestment as revenue growth outpaces the
without FCF
growth in costs. However, given the
Consistent healthy growth prospects (driven by
compounding market and/or market share expan-
of FCF sion), a large part of operating profit
must be reinvested into the business.
Hence, the growth in operating prof-
it doesn’t fully translate into FCF
Source: Marcellus Investment Managers. Reinvestment includes both working capital and fixed
assets/intangible investments. growth. In fact, FCF is often negative
during the early stages of this phase.
Company B would only need to This ‘optionality’ of FCF makes However, as the company continues
invest `25 and will be left with `75 FCF generation a much more its growth journey, operating profits
worth of free cash flow. important measure of business become sizeable enough to cover the
Notice that prima facie of both quality than simple profit measures working capital and capex require-
companies look the same – same like PAT. ment. This turns the FCF positive,
profits, margins and growth. and it starts growing exponentially.
However, the difference in their A key growth driver but not the The revenues and profits of the
ROCE is the defining difference; one biggest one company hit their peak in the
company is left with no cash after All of this being said, the ability to Maturity phase. So, the quantum
growth capital is taken out, while generate high FCF in future is not of FCF needed for reinvestment
the other is left with 75 per cent of the biggest driver of value for a ebbs off due to plateauing growth.
its PAT from last year. shareholder. An even bigger value The peak in FCF usually super-
driver is the firm’s ability to sus- sedes the peak in operating profits
Why FCF generation is important tain a high rate of growth in in this phase.
Free cash flow can be used in FCF in the future. As growth opportunities dwin-
three ways: To understand why this is the dle, competition intensifies and/or
z Return capital back to case, we must first explore FCF redundancy in products sets in and
shareholders through dividends/ during the different phases of a the company enters its Decline
share buybacks. business’s life cycle and how it phase. Revenues and operating
z Invest higher amounts into the ties up with the intrinsic value of profits start to descend, and cash
business to generate even faster a business. flows eventually follow suit.
growth. For example, Company B During the Nascent phase, a Now, a company’s fair value (or
can redeploy the entire profit of company’s revenues are growing, intrinsic value) is the net present
`100 and generate `40 of additional but they are insufficient to cover value of all its expected future FCFs
profit (or 40 per cent growth) vis-à- the operating costs (most of which over its life cycle. The future FCFs
vis only 10 per cent for Company A. are fixed), resulting in operating that the company generates over its
z Build its cash buffers to be losses. However, at the same time, life cycle are, in turn, dependent on
able to capitalize on opportuni- the company needs to give credit to the length of the FCF curve (i.e., the
ties during times of distress. For its customers, build inventories and longevity of the cash flows) and the
instance, Company B in the above invest in capacities. Non-existent slope of the FCF curve (i.e., the
example can just set aside `75 for operating profits but unavoidable growth in cash flows).
later use when an opportunity to investment needs lead to reliance Thus, the longer a company stays
acquire high-quality assets at dis- on outside cash flows (equity or in the zone of high FCF growth, the
tressed prices presents itself. borrowings) to stay afloat and grow. higher the intrinsic value generated

generate higher FCFs.
/PNO96*,HUKOPNOYLPU]LZ[TLU[HSSV^ZMVYOPNO-*-NYV^[O z Companies that reinvest these
FCFs back into business embark on
a high growth trajectory - which is
+ =
reflected in their FCF and share
price compounding.
However, the truly special com-
panies are able to take this idea up
High return on capital High reinvestment rate Sweet spot of a notch by consistently improving
employed (ROCE) exponential FCF growth their ROCE, which translates into
Source: Marcellus Investment Managers their FCFs growing faster than
their earnings.
by that company (as such compa- The stock price followed suit over ROCE can be improved by
nies have much longer as well as this period (FY12-22), with Astral sweating the assets harder to gen-
higher FCF generation). generating an annualised total erate higher sales (higher asset
As we’d discussed earlier, FCF return of about 56 per cent versus turnover) and/or improving work-
generated by a company can either just around 13 per cent for Colgate. ing capital management – by reduc-
be returned back to shareholders or Thus, while generating high ROCE ing inventory/receivable days or
redeployed back into the business and FCF is indeed a desirable quali- increasing payable days (freeing up
for future growth. Companies that ty, it is not enough to make a great capital otherwise locked up for
choose the latter path (i.e., reinvest- wealth compounder. For wealth meeting short-term obligations).
ments of FCF back into the busi- compounding, the profits must be
ness) are able to extend the sweet ploughed back into the business to Investment implications
spot period of exponential FCF consistently grow the FCF. z The best candidates for wealth
growth and make for much better creation are the companies which
investment candidates. Taking it up a notch are at the ‘sweet spot’ of exponential
So far, we have established FCF compounding within their life
Case study: Colgate vs Astral the following: cycle - implying they can grow FCF
Let’s exemplify this idea using two z Companies with superior capital and their intrinsic value for several
dominant and successful businesses efficiently vis-à-vis their peers years (if not decades) to come.
- Colgate and Astral. Both these z Such companies are valued using
firms generate healthy ROCE. In the discounted cash flow (DCF)
fact, Colgate’s ROCE has been much *VSNH[L]Z(Z[YHSV]LY-@ method, i.e., discounting the future
higher than that of Astral over the FCF and determining the fair or
10-year period till FY22 (the last z Colgate z Astral intrinsic value of a business. This
available full financial year results). 100.9 is the value that determines the
However, Astral’s FCF growth is degree of under/overvaluation vis-
far superior than that of Colgate. 76.8 à-vis the stock market quote.
The reason is related to the differ- z The FCF for such companies
12.6
ence in the capital reinvestment grows at a rate faster than earn-
rates of these companies. As can be ings (i.e., PAT). For such compa-
seen in the table below, Colgate 24.5 28.3
nies, the P/E multiples have no
returned most of its profits to its 7.4 bearing on their future com-
shareholders in the form of divi- pounding potential.
dends (average dividend payout Average FCF growth Average
ratio of about 77 per cent over FY12- ROCE (%) (% pa) dividend- Saurabh Mukherjea is part of the
22). In contrast, Astral reinvested payout Investments team at Marcellus
most of its profits back into the busi- ratio (%) Investment Managers (www.marcellus.
in). He is the author of ‘Diamonds in the
ness (average dividend payout ratio Source: Marcellus Investment Managers, Ace Equity Dust: Consistent Compounding for
of about 7 per cent over FY12-22). Extraordinary Wealth Creation’.

EVERYDAY ECONOMICS
Tomatonomics
The humour, the stories and what could have been done about tomato inflation
a vegetable seller in Pune the other man’s reply.

smacked a customer in the face Another one in a newspaper
with a weighing scale for bicker- has two men kneeling before a
ing over tomato prices. And, in puzzled-looking woman. Both
Varanasi, a politician hired two have a ring case in their hands.
bouncers to prevent people from One of the cases has a sparkling
haggling over tomato prices at diamond ring, and the other, you
his shop. guessed it, has a tomato. Tomato
Worried over the political fall- prices even made it to the Amul
out, the government launched a Girl joke series. “See yellow, not
Tomato Grand Challenge red”, she says, dour-faced, toma-
By Puja Mehra Hackathon in Delhi to collect to in hand. The best, though, is
ideas from the public on possible the one in which a woman is
ways to tackle the rising prices. cooking in the open, squatting
I
t’s time for inflation jokes Meanwhile, there have been beside a firewood challah.
again – high prices of toma- reports of people stealing toma- Various cooking implements are
toes in India have caught car- toes from fields and toma- scattered about her. The pot on
toonists’ attention. But first, the to-transporting trucks. In other the challah is simmering. From
real news stories about some news, McDonald’s has dropped the pot, a tomato has taken off
incredible stuff that has hap- tomatoes from its menu in a like a projectile into the sky and
pened. According to a report in number of outlets. on it hangs light clouds. The
Quartz, people in the district of spry tomato has reacted to the
The subsequent rise in prices
Pithoragarh, Uttrakhand, are woman saying, “Prices likely to
beating the soaring prices of
consequent to the next crop cross hundred rupees”.
tomatoes by crossing over to turning out to be poor could have Prices crossed twice that level
Nepal and picking up the kitch- been avoided if farmers had in some places eventually.
en stable from there, as the pric- recourse to selling their produce What’s going on? Bad weather
es there are about half the going to food processing industries damaged crops, creating short-
rates in India. ages in the market. Cultivators
Most newspapers, including These reports of overreactions lost as much as half their crop to
The Times of India, have a rath- to unusually high tomato prices rain. The excessive flooding in
er interesting story from the are hilarious. As are the car- states like Himachal Pradesh
Shahdol district in Madhya toons, such as the one in the and Uttrakhand disrupted sup-
Pradesh. A man, who runs a tif- Economic and Political Weekly plies besides ruining crops.
fin business, ended up in a fight that has two men, backs to the Supplies falling short of
with his wife after he had used viewer, pointing at a whiteboard. demand pushed prices up.
two tomatoes while cooking a “MONEY EXCHANGE” is scrib- However, this could have been
meal without asking her. His bled on the top of the board, and avoided. Just a few weeks before
wife then packed her bags and below are symbols “$”, “£”, “€”, the shortages cropped up, farm-
walked out along with their and “`”. The first man wants to ers were dumping crates of toma-
daughter, forcing the man to know what the fifth sign on the toes, protesting the crashed
seek the police’s help to secure board, a capital ‘T’ with a double wholesale prices of the crop that
their return. BBC reported that strikethrough, is. “TOMATO” is had plunged to `2-3 a kilo due to

Illustration: ANAND
excess supplies following a and bumper crops, thus stabilis- the Parliament had to repeal.
bumper harvest. That price sig- ing market prices by reducing But it may still be possible to do
nal is a dampener for cultivators. supply-demand mismatches. It this, at least in those states
They naturally prefer lower sup- isn’t rocket science. where there are fewer restric-
plies so that the glut in the mar- An ecosystem needs to be creat- tions in agriculture markets.
ket clears out and prices return ed in which doing business is Locating such industries close to
to normal. Clearly, the subse- easy, credit is accessible, and the farms has the added benefit
quent rise in prices consequent power and water supplies are of creating jobs for the excess
to the next crop turning out to be affordable. In addition, a tax sys- labour on the farms. This would
poor could have been avoided if tem, including lower goods and improve their productivity,
farmers had recourse to selling services tax rate, is needed that incomes, consumption spending
their produce to food processing will then encourage food proces- ability, and, in turn, fuel GDP
industries. That would reduce sors such as puree-makers. growth. It’s not only good eco-
output wastage, offer consumers Transporting processed tomatoes nomics but probably also good
a wider choice of products, and from excess supply to deficient politics. Sudden sharp move-
smoothen out the cycles of poor supply areas is also easier. A vast ments in prices of staples in the
food processing industry for the Indian diet, such as tomatoes
whole variety of India’s horticul- and onions that are not as easy
An ecosystem needs to be created
ture and other farm produce – for to import as cereals or pulses in
in which doing business is easy, supplying not only the Indian con- times of shortages, are known to
credit is accessible, and power sumption market but also for upset electoral results and cause
and water supplies are affordable. exports – should be a policy goal. political setbacks.
In addition, a tax system, Doing this, of course, would
including lower goods and have been easier had noisy poli- Puja Mehra is a Delhi-based journalist and the
author of ‘The Lost Decade (2008-18):
services tax rate, is needed. tics and fear of corporate buyers How the India Growth Story Devolved
not derailed the farm laws that into Growth Without a Story’

STRAIGHT TALK
Have we crossed the peak

of inflation?
Find out if the present macro scenario calls for tweaking your portfolio strategy
been a definite trend down in only 0.5 points. This will mean that
inflation, with the latest print if the index continues to maintain
coming in at 3 per cent. The graph its 0.48 per cent monthly growth
‘USA CPI inflation’ seems to justify witnessed this year so far, inflation
the optimism. Year-over-year at the year’s end will be 5.79 per cent.
inflation has slowed to 3 per cent, If it remains flat, the inflation still
and the trend seems to be headed exits at 2.8 per cent - not a lot
lower. But it isn’t as easy as this. different from the 2.97 per cent
witnessed in June. For inflation
<:(*70PUMSH[PVU to continue to fall meaningfully,
YoY MoM (annualised) the index has to drop.
18 %
By Anand Tandon
<:(*700UKL_
12
HSS\YIHUJVUZ\TLYZ
T
he favourite pastime of all
2022 2023
macro-economists is to 6
312
second-guess the US Fed and
0
all other central bankers on what
304
they would do to policy rates.
-6
Investors can only react to
Jan ’22 Jun ’23 296
changes, and it rarely, except at
turning points, affects the overall 288
portfolio strategy. We live in one of The graph ‘USA CPI Index (all
those turning points. There is some urban consumers)’ shows why this 280
reason to participate in the occurs. The CPI index itself Jan Dec
speculation – if, as some think, the continues its upward trend, and
US rate increases are over, then inflation is the change in this
there is reason to make some index over the year (the difference Sticky Price CPI
changes in portfolio allocation and between the two lines as a (less food and energy)
start looking for assets that can percentage). The first half of 2022 “The Sticky Price Consumer Price
benefit from stable to lower had a sharply rising index, which Index (CPI) is calculated from a
interest rates. If not, it may be then flattened in the second half. subset of goods and services
early to make the shift and In H1 2023, the average monthly included in the CPI that change
portfolio performance can suffer in growth in the index has been price relatively infrequently.
the short term. 0.48 per cent. This allowed inflation Because these goods and services
to fall in the first half as the gap change prices relatively
What is the market betting on? between the two graphs narrowed. infrequently, they are thought to
Opinion, as always, is split. The In H2 2022, however, the index incorporate expectations about
bullish economists (if there is a stabilized – from July 2022 to future inflation to a greater degree
tribe like that) argue that there has December 2022, the index changed than prices that change on a more

frequent basis. One possible
explanation for sticky prices could
be the costs firms incur when
changing price,” says the
economic research website for the
St. Louis Fed.
Sticky price CPI remains at
5.63 per cent, and the downtrend is
slow. Worse, the job market in the
US is tight, with unemployment
remaining low. Some economists
are predicting that the US may not
go into recession as various Illustration: ANAND
economic sectors have gone into
and emerged from a slowdown have enough slack), this has the index weakens and investors hedge
cyclically, without the cycles potential to increase local supply, between betting on inflation (and
overlapping. As a consequence, if disrupted by attempts to de-link interest rates) peaking and
the Fed were to backpedal on from China. potential recession in the second
interest rates, keep them stable or Policy confusion, however, half of the year. With China
start cutting back, the economy prevents fast execution. re-opening for business, interest in
could accelerate and inflationary Environment protestors and an emerging markets is high.
pressures may return. attempt to mix social policy goals Interestingly, here too, the themes
with business incentives have remain split between betting on
:[PJR`WYPJL*70SLZZMVVK ensured that off-take is slow. visible growth (India), the revival
HUKLULYN` Companies wanting to benefit from of growth (China) and alternatives
YoY per cent change; monthly frequency the Chips and Science Act meant to to China as a manufacturing base –
8 increase semiconductor production Japan, Vietnam etc.
in the US are now required to offer The Indian market seems to
6 day-care facilities to workers and have become exuberant yet again,
are “urged” to offer adult care, trading at its higher range of over
4 transportation and housing. 21 times current year earnings.
Bloomberg reports that in the These earnings expectations
2
11 months since the Act has been themselves may require to be
passed, no money has yet been moderated if we assume that
0
utilized from the $50 billion fund. inflation is definitely under control
Oct ‘20 Jun ‘23
– analysts’ estimates do not, in my
Muddling through view, factor in the softening prices
On-shoring manufacturing jobs The US market will likely muddle that will feed through to margins
US President Biden has made through this turbulence. The first and profits. However, the
on-shoring of manufacturing jobs a set of corporate reports for the environment remains benign, and
cornerstone of his re-election quarter has been good, with front- a slew of upcoming elections will
campaign. If implemented, this line banks and United Health ensure that broad-based demand at
could bring high-paying jobs back (UNH), the bellwether for the lower income range remains
to the US. Job creation will be healthcare, reporting earnings well supported by government
somewhat limited, with many beats. NVIDIA has already upped spending. The rally in small-cap
manufacturers using robots its revenue guidance by a massive companies is showing signs of
instead of people, but it would still $5 billion for the quarter – from heating up. Careful stock
make a material change in job earlier $6 billion to $11 billion. selection is recommended in
creation. While inflationary in the Despite this, money continues to terms of management and
short term (the job market doesn’t move out of the US as the dollar business quality.

STOCK SCREEN
Blue-chip and value stocks

Reliable front-line stocks at attractive valuations and quality stocks available at
a discount to their book value
A
stock screen filters out companies based on are less risky than their smaller counterparts. However,
certain criteria. Its main advantage is that it these stocks have already been ‘discovered’ (i.e., known
helps you generate stock ideas with just a few to most investors). For this reason, they generally trade
clicks. Once you have the list of ‘deserving’ at a premium.
stocks, you can research them further to find the ones Discount to book value: This screen is an old-school
worth investing in. value investor’s dream. The usual belief is that
The Value Research website provides you buying a stock for less than its book value
many ready-made stock screens. Here we will give you a margin of safety. However,
will be covering two such screens: that might not be true. Therefore, we
‘attractive blue chips’ and ‘discount to have applied additional filters to weed
book value’. We have also given a out poor companies.
concise stock list from the other
screens. To get the full list in real time, A word of caution
visit www.valueresearchonline.com/ Note that mere inclusion in a stock
stocks/selector. screen does not mean that a stock is
investment-worthy. Consider the output
What do these screens offer? of stock screens as the starting point for
This month we have got two stock screens for your research. You must apply your own
you. The first one will help you invest in blue-chip analysis to select companies.
companies at attractive valuations and the second one However, if you are interested in a list of stocks to
can help you profit from companies at a deep discount. invest in right away, then subscribe to our
Attractive blue chips: Blue-chip stocks are the largest and recommendation service at Value Research Stock
the most consistently profitable companies. Owing to Advisor. You can access the details by visiting
their strong balance sheet and high market share, they www.valueresearchstocks.com.
Key terms
<UP]LYZLJVTWHUPLZ ratio, while a value stock will have a market price of the stock. Since the two can service more than twice its
relatively lower P/E ratio. denominator in this ratio is the market current interest charges.
Should have traded on all the days for
7YPJL[VIVVR]HS\L7) price, a stock’s dividend yield changes 9L[\YUVULX\P[`96,
the last two quarters and should have
every day.
a market capitalisation of more than The ratio of the price of a stock to the Measured by taking profit after tax as
`500 crore, the lower cut-off for small- book value per share of the company. +LI[[VLX\P[`+,) a percentage of the net worth of the
cap stocks as per the Value Research It shows how much premium investors Calculated as the ratio of total company. Indicates how efficiently the
criteria. are willing to pay for the underlying outstanding borrowings of the company has been able to utilise
4JHW net assets of the company. company to its total equity capital. investors’ money.
7YPJLLHYUPUNZ[VNYV^[O7,. Tells us which companies use :[VJRZ[`SL
Stands for market capitalisation.
excessive leverage to achieve growth.
Obtained by multiplying stock price by Ratio of price to earnings to the EPS Derived from a combination of the
Conventionally, a debt-to-equity ratio
the total number of shares. Shows a (earnings per share) growth of a stock’s valuation – growth or value –
of less than two is considered safe.
company’s market value or size. stock. Demonstrates how high a price and its market capitalisation – large,
we are paying for the growth that we 0U[LYLZ[JV]LYHNLYH[PV0*9 mid and small.
7YPJL[VLHYUPUNZ7, Growth Value
are purchasing. In all our analyses, This indicator is generally used to For example,
The ratio of the stock price and
we have taken five-year historic gauge whether a company has the here is the Large
earnings per share (EPS). It shows in
EPS growth. ability to service its debt. Calculated stock style of
multiples how much investors are Mid
+P]PKLUK`PLSK as the ratio of operating profit to a large-cap
willing to pay for the earnings. The
interest outgo. For instance, a growth stock. Small
thumb rule of valuing a stock is that a Defined as the percentage of the
company with an ICR of more than
high-growth stock will have a high P/E dividend paid per share to the current

Attractive blue chips No. of companies that
CLEAREDTHElLTERS
380
Reasons to invest The filters 336
Liquidity Market cap more than `9,860 cr 279
Large companies in respective Debt-to-equity between 0 and 2
businesses 99
Interest-coverage ratio more than 2
Strong balance sheets 5Y avg ROE more than 20% 36
Liked by institutions 5Y EPS growth more than 20%
12
5Y PEG between 0 and 1.5
5Y ROE consistency without losing 20% year on year
3
Solid foundation
Company Stock Debt-equity Interest 5Y avg 5Y EPS Market cap Share 52-week
Industry style P/E PEG ratio coverage ratio RoE (%) growth (%) (` cr) price (`) high/low (`)
SRF 30.8 0.85 0.4 14.8 20.7 35 66,497 2,241 2,865-2,082

Diversified
Coromandel International 13.9 0.58 0.0 15.2 26.8 24 27,995 951 1,094-838
Other Fertilisers
Angel One
13.6 0.38 0.4 14.1 32.2 48 12,610 1,504 1,805-999
Brokerage Services
Data as of July 19, 2023
Discount to book value No. of companies that

CLEAREDTHElLTERS
Reasons to invest The filters
1,388
Really cheap Market cap greater than Companies must have a five-year
Relatively undervalued `500 cr earnings growth of more than 1,217
Debt-equity ratio of less than 10%
Companies with assets
1.5 times Price-to-book should be between 829
Return on net worth of more than 0.01 and 1
10% in the most recent year 535
26
Bargain hunt
Company Stock 5Y EPS Dividend Debt-equity Market cap Share 52-week
Industry style P/E P/B growth (%) yield (%) ratio RoE (%) (` cr) price (`) high/low (`)
ONGC 5.9 0.75 14 3.0 0.4 19.9 2,09,650 167 170-122

Oil & Gas Exploration
Bank Of Baroda 6.9 0.98 43 2.8 1.0 14.9 1,03,401 200 211-107
Banking
Canara Bank 5.5 0.87 26 3.5 0.8 16.4 61,399 338 342-208
Banking
Union Bank Of India 6.8 0.80 18 3.5 0.6 12.2 58,095 85 96-37
Banking

STOCK SCREEN
Company Stock 5Y EPS Dividend Debt-equity Market cap Share 52-week
Industry style P/E P/B growth (%) yield (%) ratio RoE (%) (` cr) price (`) high/low (`)
Indian Bank 7.3 0.93 10 2.6 0.5 13.0 40,489 325 335-166
Banking
SAIL 17.2 0.69 45 1.7 0.3 24.6 37,501 91 94-71

Finished Steel
Oil India 3.2 0.72 31 7.8 0.5 24.8 27,755 256 274-168
Oil & Gas Exploration
Tamilnad Mercantile Bank 6.6 0.98 21 1.2 0.0 16.6 6,757 426 549-399
Banking
Nava 5.3 0.82 37 1.8 0.5 22.2 4,928 340 345-178

Diversified
Shipping Corporation 5.3 0.67 37 0.4 0.3 10.0 4,609 99 151-79

Shipping
DCB Bank 8.4 0.91 13 1.0 1.0 11.5 3,894 125 141-81
Banking
Jindal Poly Films 8.7 0.66 30 0.7 0.3 36.9 2,777 635 1,187-485
Packaging & Containers
India Glycols 15.1 0.99 58 1.2 0.6 20.9 1,889 610 978-512
Organic Chemicals
Andhra Sugars 7.9 0.95 15 1.9 0.0 11.9 1,461 108 155-101
Misc.Chem.
Excel Industries 14.8 0.95 52 1.2 0.0 16.1 1,183 942 1,575-752
Pesticides
Elpro International 22.6 0.86 176 0.4 0.0 151.3 1,084 64 86-53
Electrical Machinery
Nahar Spinning Mills 8.6 0.61 40 0.6 0.6 40.2 949 262 379-214
Cotton & Blended Yarn
Balmer Lawrie Inv 8.3 0.83 11 7.3 0.1 12.5 918 414 434-351
Misc. Fin.services
RSWM 7.4 0.69 19 2.6 1.1 26.3 914 194 279-144

Cotton & Blended Yarn
Man Industries 12.3 0.83 24 0.0 0.1 11.5 838 140 161-71
Steel Tubes & Pipes
Shreyas Shipping 3.9 0.95 15 0.4 0.4 39.0 779 355 413-215
Shipping
Panacea Biotec - 0.91 85 0.0 0.0 347.7 767 125 164-107

Drugs & Pharma
Tamilnadu Petroproducts 7.7 0.88 67 1.9 0.1 26.2 725 81 112-68

Organic Chemicals
Nahar Poly Films 13.5 0.75 39 0.6 0.2 11.9 584 237 431-199
Packaging & Containers
Jindal Poly Inv. and Fin. 2.1 0.25 32 0.0 0.8 127.9 579 549 675-276
Misc. Fin.services
Data as of July 19, 2023. This is not the full list. For the full list, visit https://tinyurl.com/bdz329kn

Want more? Here you go
Other screens available on the Value Research website, along with their themes
and some of their stocks
P/E P/E
Reasonably priced Steelcast 14.3 Godfrey Phillips India 12.3

growth stocks Cholamandalam Fin Holdings 13.4 Nitta Gelatin 9.6
Combines growth and value investing and LT Foods 13.3 Pearl Global Inds. 9.1
spills out companies with high earnings growth Monte Carlo Fashions 13.3 JK Paper 4.6
trading at a cheap valuation D-Link (India) 12.3 Triveni Engg. & Inds. 3.5
Linc 26.3 Fiem Inds. 17.9

Quality stocks
Cantabil Retail 24.4 WPIL 14.5
available cheap
Gujarat Fluorochemicals 23.3 Jubilant Inds. 12.6
Companies that clear our essential checks on
solvency, accounting, recent financial CMS Info Systems 19.8 Speciality Restaurants 10.9
performance and valuation Dr. Reddy’s Labs 19.3 GE Shipping 4.3
Prudent Corp. Advisory 37.6 Balaji Amines 22.0

Small-cap growth
Jyoti Resins & Adhesives 36.1 Likhitha Infrastructure 18.2
companies
Globus Spirits 28.6 Greenpanel Inds. 17.3
Wades through the small-cap maze and gives
out fundamentally strong small caps that are Route Mobile 28.4 Meghmani Finechem 11.1
available at a reasonable valuation Gufic Biosciences 27.6 Kama Holdings 6.4
IEX 36.4 Sharda Motor Inds. 11.8

Value Guru
Tanfac Industries 28.8 Hindalco 9.8
screens
Elpro International 22.6 Nitin Spinners 8.9
A set of five screens, these give you lists of
companies based on the criteria of legendary Excel Industries 14.8 GOCL Corp 8.9
investors, viz., Benjamin Graham, Joel Cigniti Technology 13.3 Tamilnadu Petroproducts 7.7
Greenblatt, John Neff , Peter Lynch and
Walter Schloss
Dividend yield (%) Dividend yield (%)
Gloster 9.3 GNFC 5.0

High dividend
GSFC 6.0 Rashtriya Chemicals 4.6
yield stocks
PFC 5.9 IRFC 4.6
A screen for those looking for a steady stream
of dividends Gulf Oil Lubricants 5.2 Sundaram Finance Holdings 4.0
REC 5.1 Gujarat Alkalies and Chem. 3.5
For all the screens and to customise them

as per your requirements, visit
z Customisable filters z Value Guru screens z Easy peer comparison
www.valueresearchonline.com/stocks/selector

WORDSWORTH NOW
NITHIN KAMATH SASHIDHAR JAGDISHAN MD & CEO, HDFC Bank

Founder & CEO, Zerodha HDFC Bank - the combined entity - with a large and
Overtrading is one of growing distribution and customer franchise, more than
the biggest reasons adequate capital, healthy asset quality and profitability,
why traders lose will be best positioned to capture growth. The pace at
money. It might sound which we aim to grow - we could be creating a new
weird coming from HDFC Bank every 4 years.
me, but low brokerage Outlook India, July 2, 2023
costs can trigger
people to trade more.
Twitter, July 4, 2023
RAJIV BAJAJ Managing Director, Bajaj Auto
There was a famous

bank robber in
America called
William Francis
Sutton. When asked
why do you rob a bank
he said that’s where
the money is. So if AMITABH KANT
Former CEO, NITI Aayog
Royal Enfield is where Startup innovators
JANET YELLEN
Secretary of the Treasury, USA
the money is then we start innovating and
lose out on good
Friendshoring is an have no choice but to governance. Today’s
important foundation of
our approach to rob that bank. startup is tomorrow
increasing resiliencece of CNBC TV-18,
TV 18, July 5, 2023 a Fortune 500
our supply chains, and company. So issue of
we see India as an financial proprietary
pro
indispensable partnertner and governance
govern is
in that and I hopee to important. W We must
use this trip to deepen
epen build culture of great,
what is already a governance
good gove
significant relationship
ship startups.
among sta
with respect to
o Mint,
t July 44, 2023
friendshoring that the

US and India have.ve.
The Economic Times,
July 17, 2023

FLEXIBILITY OFFERS
OPPORTUNITY
Franklin India Flexi Cap Fund has the
flexibility to invest in large, mid and
small sized companies depending on
their growth potential in the near future.
Over 320,000 unique investors^ in this fund,

call your Mutual Fund Distributor or visit
www.franklintempletonindia.com
PRODUCT LABEL
Alternative to: Suitable for: This fund is suitable for investors who
are seeking*:
• Long term capital appreciation
• Dynamic Investing in large, mid and
small cap stocks
Investments In Retirement Long Term Education
Large, Mid And Small Corpus Wealth Corpus
*Investors should consult their financial Investors understand that their principal
Sized Companies Creation will be at Very High risk
advisers if in doubt about whether the
product is suitable for them. Riskometer is as on June 30, 2023
âs on June 30, 2023

Wealth-Insight - Aug 2023

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Wealth-Insight - Aug 2023

Uploaded by

Copyright:

Available Formats

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

Small caps offer investment The fund focuses on quality

Aims to invest in companies

This product is suitable for investors who are seeking* Riskometer #

• To generate long-term capital appreciation/income

*Investors should consult their financial advisers, if in doubt

Date of Release: July 07, 2023

To invest, contact your Mutual Fund Distributor IPRUTOUCH App | www.iciciprumf.com

• Long term wealth creation

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

EDITOR-IN-CHIEF Dhirendra Kumar 44 INTERVIEW

RESEARCH & ANALYSIS Hemkesh

DESIGN Anand Kumar, Aprajita Anushree,

DATA SOURCE FOR STOCKS AceEquity

4 Wealth Insight August 2023

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

20 Index Watch 56 Straight Talk

August 2023 Wealth Insight 5

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

market generally heading upward, are investing in? Or are we going

August 2023 Wealth Insight 7

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

$YNAMIC!LLOCATION /PTIMIZE0ARTICIPATION 2OBUST-ODEL 0!PPROACH %QUITY4AXATION

 (MUDRSLDMSHMDPTHSX DPTHSXQDK@SDCRDBTQHSHDRCDAS LNMDXL@QJDSHMRSQTLDMSRVGHKD

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

IDFC First Bank to merge with

cr promoter of IDFC First Bank) will

The party in D-street IndusInd Bank’s

HDFC bids farewell to D-street

10 Wealth Insight August 2023

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

The GST axe falls on

August 2023 Wealth Insight 11

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

Wipro will soon launch Wipro 1,50,000

Sheela Foam spends 6

`2,500 crore on two 5

The Belgian Telecom giant, (`300 crore), an online furniture 10

and supply to Jaguar Land

12 Wealth Insight August 2023

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

The power of acquisition

Sensex rebased to stock price

Jun 05, 2013

14 Wealth Insight August 2023

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

FY21 40.5 16.5 8.5 16.1 7.8 10.6

FY23 40.0 15.7 10.1 16.2 8.0 10.0

Feb 28, 2019

August 2023 Wealth Insight 15

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

Large caps Price to earnings Net profit (` crore)

50.9 139.5 495

44.6 2.1* 2,485

38.6 6.7* 2,677

38.1 0.7* 21,179

37.7 103.9 901

31.8 53.8 1,104

30.5 8.8 10,727

30.1 111.0 2,209

16 Wealth Insight August 2023

Subscription copy of [prsbhjee@gmail.com]. Redistribution prohibited.

$YNAMIC!LLOCATION /PTIMIZE0ARTICIPATION 2OBUST-ODEL 0!PPROACH %QUITY4AXATION

(MUDRSLDMSHMDPTHSX DPTHSXQDK@SDCRDBTQHSHDRCDAS LNMDXL@QJDSHMRSQTLDMSRVGHKD