Indian Share Market Archives

August 7, 2023

Paradeep Phosphates Ltd. IPO Snapshot

About the Company:

Paradeep Phosphates Ltd. (PPL) is primarily engaged in manufacturing, trading, distribution and sales of a variety of fertilizers such as DAP, three grades of Nitrogen-Phosphorus-Potassium (“NPK”) (namely NPK 10, NPK-12 and NP-20), Zypmite, Phospho-gypsum and Hydroflorosilicic Acid (“HFSA”). It is also engaged in the trading, distribution and sales of Muriate of Potash (“MOP”), Ammonia, Speciality Plant Nutrients (“SPN”) and City compost. PPL’s fertilizers are marketed under key brand names such as ‘Jai Kisaan – Navratna’ and ‘Navratna’. The Company was incorporated in 1981. Zuari Maroc Phosphates Private Limited (“ZMPPL”), a joint venture of Zuari Agro Chemicals Limited (“ZACL”) and OCP Group S.A. (“OCP”), currently holds 80.45% of the equity share capital of the Company, with the balance being held by the Government of India.

PPL distributes products across 14 states in India through various private and institutional channels, as of March 31, 2022. As of the same date, it has set up a network of 11 regional marketing offices and 468 stock points in 14 states across India. Its network comprised 4,761 dealers and over 67,150 retailers, catering to five million estimated farmers in India.

The net proceeds from the IPO will be used for the following purposes –

Objective of the Issue

To part finance its funding needs for part financing acquisition of Goa facility (Rs. 520.00 cr.)
Repayment/Prepayment of certain borrowings (Rs. 300 cr.) General Corporate Purposes

Risks & Concerns

Dependence on the performance of the agricultural sector.
Business is subject to climatic conditions and is cyclical in nature.
Operates under regulated environment, so any change in government policies could adversely affect our business.
Shutdowns in our manufacturing facility or underutilization of manufacturing capacities could have an adverse effect on the business.
Any delay to acquire the Goa Facility or any acquisition, joint venture or partnership may have an adverse effect on the business.

August 7, 2023

Venus Pipes & Tubes Ltd. IPO Snapshot

About the Company:
Venus Pipes & Tubes Ltd. (VPTL) is engaged in the manufacturing and exports of stainless-steel pipes and tubes. VPTL is mainly engaged in manufacturing stainless steel tubular products in two broad categories – Seamless tubes/pipes and welded tubes/pipes. VPTL is currently manufacturing 5 product lines under these two categories (i) stainless steel high precision & heat exchanger tubes (ii) stainless steel hydraulic & instrumentation tubes (iii) stainless steel seamless pipes (iv) stainless steel welded pipes and (v) stainless steel box pipes (“Products”).

Brand “Venus” under VPTL supplies products for applications in diverse sectors including (i) chemicals (ii) engineering (iii) fertilizers (iv) pharmaceuticals (v) power (vi) food processing (vii) paper and (viii) oil & gas. The company has one manufacturing plant which is strategically located at Bhuj-Bhachau highway, Dhaneti (Kutch, Gujarat) having a capacity of 10800 MT/annum. Post completion of the expansion, its overall capacity will stand enhanced to 24000 MT/annum.

Particulars (Rs. Cr.)	FY20	FY21	9 Months ending FY22
Total Revenue	179.32	312.03	278.28
Profit After Tax	4.13	23.63	23.60

Competitive Strengths:

International Presence, Accreditations and product approvals • Specialized production of Stainless-Steel Pipes and Tubes
Customer Diversification
Multi-fold demand of the Products
Experienced and Qualified Team

Risks & Concerns:

Dependence and customer concentration on top ten (10) customers
High competition from other large and established competitors, reduced prices, operating margins, profits and further result in loss of market share
Inability to effectively utilize manufacturing capacities
Inability to raise additional capital for current and future expansion plans leading affecting business prospects
Adverse effects of pending outstanding litigations

If you want to check full overview kindly download PDF!

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November 17, 2021August 8, 2023

Which is a Better Index to Invest In?

When choosing a passive fund to invest, the selection often comes down to major two options — Nifty50 funds and Sensex funds. Both the indices fall under the large cap category but have indistinctive differences.

These major difference arises in the composition of the comparable indices. Sensex is made up of 31 top stocks while .

So, the question pinned here is which one should ideally choose for investments?

Going by the history, the decision doesn’t signify in the long run. If one looks at data of the last decade, both Nifty and Sensex have delivered almost similar returns at around 265% and 267% respectively. Even if the light is focused on the short period, the returns aren’t much different too. During the last year, Nifty has up trended 52% and Sensex has risen 50%.

There are various stocks that dominate both the indices may be the reason why the difference in components does not brings varied returns. If one looks at the composition, the top stocks which enjoy larger weightages are more or less the same in both the indices. The unique stocks are on the low weightage side and hence do not have much impact on the performance of the indices.

The other question arises here that is there any difference between the both from investment perspective?

The lower concentration risk is the one and only factor that makes Nifty50 a slightly better option. The broader the index, the lower is the risk of concentration. It’s not suggested to choose a least diversified index that brings high concentration risk.

However, it isn’t again a major affecting constituent. The Nifty is governed by the stocks that attribute in Sensex as well. The remaining stocks in Nifty carry lower weightage often less than 1% and hence have marginal hold on the index’s performance.

VSRK don’t suggest one over the other. Seeing through the past data, there’s hardly any difference in returns.

November 9, 2021August 2, 2023

The Market is Mounting the Bull; The Economy is Yet to Get Back to The Pre-Covid Level

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At present, the investors seem to be anxious about IPO flood in the equity markets. At the happening hinge, with valuation cycles, a sensible investor will focus on sectoral valuation, as investing in growing businesses may swirl towards losses, if incorrectly valued.

Today, end-user segments like staple, finance, retail, chemicals, information technology and metals, look extremely overrated sectors which are not advisable. Considering investing in domestic-centric businesses linked to the cyclical segments of the market can mark the market both reasonably and attractively valued.

Talking about the present market condition, understanding valuations between different sectors and stocks is possible with the price to book valuation matrix which easily gives an understanding of where the market stands. As the earning cycle is picking up massively, Nifty’s price to book valuation could extend to the tune of 1 lac till 2030. Earnings growth orbit will be the vital construct in the next five to seven years.

Perceiving the current valuation across market segments hinting at some corrections. Digital and technology-related sectors look extremely over-valued with no returns to brace. In continuation to this, ESG, Electric Vehicle and specialty chemicals can liquefy materially in the near future.

Sectors which seems to be performing in the future are pharma formulations, auto & auto ancillary and banking. Since the real estate sector is picking up, consumer goods linked to the home improvement segment will gain. There comes the concept of early cyclical sectors makes the economy on the uptrend.

As an amateur principle, 70% could be allocated in equity and balance 30% in debt. It is advisable that within equity, 20% may be invested in pharma & healthcare, 50% in multi cap funds, 20% in balanced advantage funds and another 10% in small cap funds.

The position of the mutual fund industry can be depicted from the mid cap and small cap segments. Multi cap funds have defined allocations across market caps, which can be a fruitful in the next few years for making reasonably good risk-adjusted returns over the long term.

The roaring, powered by a surge of cash untethered by central banks and the rise of individual investors, eager to buy a chunk of their favorite companies. The listings and record oversubscriptions of the pulsating universe have witnessed record oversubscription and listing gains. 2021 is all set to become the biggest year for primary markets in terms of fundraising.

October 27, 2021October 19, 2023

Should I Invest in an IPO

Many new and existing investors have been disappointed for unable to subscribe to the much talked Zomato IPO, a first by a Food Tech startup? One has not been able to grasp the opportunity because of the question that should one invest in an IPO or Buy after its listing on the Exchanges?

Huge liquidity in the economy and a horde of investors to invest given Indian businesses a raise of Rs.27.5 crores through an IPO in 1st half of 2021. Various Indian businesses are lining up for an IPO in the next few months boosted by the IPO stocks successfully listed in 2020. Gearing as much as 400% since listing in many cases and the uptrend of the stock market inject investing in an IPO an exciting opportunity for investors. With Zomato’s successful listing, there are some big names going public before the end of the fiscal year. Here are a few reasons to consider investing in the IPO.

Enjoy the first come first serve advantage. Investing in an IPO, one gets the opportunity to buy shares of a business with a high potential to grow at a lower price. The IPO is a chance to make a short-term profit and increase your wealth in the long term. What’s more, the share prices may rise sharply after listing on the stock exchange.

Fulfill your long-term objectives. Equity investments are likely to offer high returns in the long term. When investing in an IPO, one must wait for momentous gains. The amount earned in a few years will help fulfil financial goals. And, if you’ve managed to pick a worthy, you will near to buy your dream home.

The prospectus includes transparent information about the company, its valuation, the number of shares offered to the public and the price per share. As an investor, one has access to real information. However, once listed, share prices vary based on dynamic market changes and the best price stockbrokers can offer.

Buy at a bargain price and earn big later as the IPO price band is usually the lowest a business offers to the public. In some cases, companies offer their shares at discounted prices, which is why many investors invest in an IPO. If you miss out on the investment, the stock prices may rise sharply, and you may find it hard to buy.

Does this mean that IPO is always the right choice? VSRK says, it is not always peachy-keen, as there can be an IPO that failed and did not offer the returns investors expected for each successful IPO. If one is not afraid of the wait and watch the play, then waiting for the stock to list on the exchange would be just your cup of tea. In such cases, buying when the shares are cheap makes perfect sense, but investing when prices vault-up means paying more for unworthy.

October 25, 2021August 16, 2023

Considering the Pros and Cons of Automated Trading

Because financial trading involves constant monitoring, automation in the space is often marketed as a silver bullet. Automated software programs employ algorithms that can execute trades on your behalf, typically based on established parameters you’re able to define in advance. For example, an automated program can execute a “buy” order of a stock if it falls below a certain price, reducing the need for the trader to monitor live price movements.

The convenience of functions like this has led to expanding use of automated trading tools. In fact, platforms by EBS and JP Morgan now estimate that some 70-80% of trades originate from algorithms –– whereas in 2004, EBS stated that all trade orders were executed by humans.

As appealing as all of this sounds however, automated trading may not be for everyone. So before you look to incorporate these tools and strategies, consider the following pros and cons.

The Benefits of Automated Trading

Timeliness: Timing is a key factor in maximising gains and minimising losses in trading. Unfortunately, humans are unable to monitor markets at all times…. But trading bots don’t have that limitation! Automated trading tools, then, can help day and swing traders alike keep up with market fluctuations and make timely decisions. This is also a helpful perk when it comes to maintaining a more diversified portfolio. Monitoring assets across different markets requires more attention, but here too a bot can help to handle the minute-to-minute attention and decision-making.

Objectivity: Earlier this year, a survey by MagnifyMoney revealed that 66% of retail investors regret decisions they make based on their emotions. Additionally, 58% are in agreement that it’s best to keep emotions in check. This is another issue that can more or less be solved by automated trading tools. Trading bots don’t hesitate or act based on emotion when they execute market orders. They operate with pure, emotionless objectivity, which can helpfully balance out a lot o human investors’ natural tendencies to be somewhat more impulsive.

Backtesting: Backtesting is more of an analytical tool than an active trading mechanism. But it is nevertheless another perk of automation in trading. If you’re not familiar with backtesting, FXCM’s guide to trading platforms notes that it is one of the features you can find through online investing platforms like Trading Station. And what it does is essentially to assess the viability of a user’s trading strategy by evaluating historical data. In other words, it’s an automated method that helps you to optimise your strategy based on historical trends and present conditions.

The Drawbacks of Automated Trading

Anomalies: Many traders trust automated software not to make mistakes. Unfortunately, these programs are not yet entirely foolproof. Program errors can occur, lost or interrupted internet connections can interfere with trading, and various other discrepancies can occur. This doesn’t mean automated trading tools are always unstable, but neither are they 100% reliable.

Overconfidence: Unless your strategy revolves around more long-term investment, automated trading is not equivalent to hands-off trading. Nevertheless, some traders are inclined to get carried away with the implications of “automation,” ultimately becoming too confident in (and too reliant on) software. These tools are meant to be leaned on to some extent, but it’s important for traders to remember that they are not infallible, and they also don’t guarantee profits on their own.

Scams: The growth of automation has unfortunately also led to a rise in fraud. In 2018 for example, BitConnect investors were scammed out of almost $2 billion in crypto holdings by a bot. The trading bot they used guaranteed returns, but was instead instrumental in siphoning funds away from their accounts. Of course this doesn’t happen often, particularly on such a massive scale. But traders need to apply caution when evaluating automated trading services, particularly given that so many of them are new, and relatively unknown.

Bottom-line: Should You Automate Your Trading?

Automated trading can be helpful if you want to evaluate your strategy, maintain objectivity, and execute orders at lighting speeds. That said, it is also an imperfect practice, and should be approached with care and caution, if at all.

Ultimately it’s up to each individual trader to evaluate the pros and cons. And in most cases, even if you do decide to try automated trading, advice and guidance from human professionals is still the best way to improve your trading practices. If you feel you could use further guidance on this topic or on trading in general, get in touch with VSRK Wealth Creator here.

September 18, 2021August 18, 2023

Nuts & Bolts of Cashing the Stock Market Gains

Triumph in timing the market

This incidence may give this client or anyone reading this, an impression, that timing the market is as easy as breathing and a good shot. But that’s not right. The market is unpredictable and no one can time it perfectly not even any scholar. It can be accepted as a one-off instance. It won’t be ethical to expect same returns from investments in the future.

Score on the flourishing days of the market

Trying to time the market, the possibilities are failing to experience the best days of the stock market gains. Glancing the long-term perspective, missing a single day gains will deprive one from the benefit of compounding of the missed returns.

Redeem at reaching goal

Equities are meant for a time horizon of at least 5 years or say 3 years in today’s market scenario. Never invest if one will need the money before the time period. One should stay invested throughout the tenure and avoid making unnecessary transactions. You will gain maximum benefits from equities if you stay invested for a longer time period, as you get to benefit from compounding.

A must asset-allocation Strategy

Having a planned asset-allocation scheme assures an investor to book profits in a systematic manner. Apply a rule for rebalancing, be it at the end of financial year or as the allocation diverges by more than 10% of the planned ratio.

Try for a SIP not lump sum

Anyone should spread the investments over a period of time especially in case of equities. Investing systematically through an SIP or STP helps in entering the market at the right time, as the purchase cost is averaged out.

Points to Focus

Emergency fund: Preserve the funds equivalent to at least six months’ expenses either in a liquid fund and sweep-in deposit which can be handy during uncertain scenario.

Life insurance: Cromulent life cover is important specially term plans if one has financial dependents.

Health insurance: Owing to 2020 uncertainty, adequate health cover has become vital for the family.

Should you cash out of the stock market?

When the stock market falls, it is only a paper loss but actually, no monetary loss. However, the moment any investor converts stocks to cash in this period, one turns paper loss into an actual one. Investors should know that the cashing out will not give you the chance to benefit from market rebounds. A market uptrend can give you the scope of a break-even if not the opportunity to profit. If you cash out, then there is no hope for sure. As Inflation also has a devastating effect by eroding the value of money and reduces its purchasing power.

September 6, 2021August 18, 2023

Difference Between Stocks and Mutual Funds

As the red blood cells contain hemoglobin and transport oxygen. Similarly, the stocks supplies funds to the market for their capitalization. White Blood cells protect the body from infections. Similarly, Mutual Funds protects the market from downfall. Both Mutual funds and stocks are very distinct concepts and prospective the new investor clan often confound these to be similar. If anyone is prospective about the financial market entrance, he/ she has these options to put their funds in. One can choose to park their in equities straightforwardly through the stock market or one can choose the other way out of investing in equities through the mode of mutual funds.

“All the Financial Market’s a body,

The Finance’s a blood,

And all the mutual funds and stocks merely white and red blood cells.”

Shares or stocks are floated by the corporates through Initial Public Offer to raise money for expansion and other operations. The stocks are bought or sold through a trading account. Depending on future goals, any investor invests in ventures by buying their stocks for some period. The investor gets the benefit in the form of enhancement of value of the stock.

Mutual funds are an investment vehicle that pools money from different investors and invest in various assets such as equities, bonds, money market, currencies, derivatives etc. These investment are managed professionally. One can invest in the mutual funds either in the lump sum mode or the SIP mode. The returns generated on mutual funds are distributed in proportion of the units held by the investor.

Difference between Shares and Mutual Funds

In mutual funds, the funds are pooled by the team of professionals and invested in the securities of different companies. It leads to diversification of investment. This type of assortment is not possible with the investment in stocks directly.

Investing directly in shares is a tedious responsibility as a lot of analysis of a venture is to be done, say finding the price worth or future prospects etc. The professional research is done in Mutual funds before investing.

Investing in shares of a firm, investor becomes a part of their growth story and will get dividends as the company performs well. Investing in Mutual funds, purchasing the units, investor is connected to the average growth or progress of all the ventures involved.

Investing in shares exposes to the risk of the particular company, hence it’s more risky. Whereas in mutual funds, the risk is mitigated with the help of bouquet of diverse stocks.

Investing in shares requires good research of the companies which is time consuming. Contrarily, mutual fund has easiness and simplicity attached to it. Because they are maintained by the fund managers.

The basic requirement to invest in shares is Demat Account for the purchase or sale of securities in the Indian financial market. One can invest in Mutual funds directly.

Mutual funds gives higher returns if invested for a longer period of time. With the right strategy of buying, selling or holding any stock, one can earn high in short period as well.

Trading in shares involves brokerage whereas mutual fund investment includes management fees, entry load, exit load, etc.

What to choose?

A common dilemma which all the prospective investors have, is to choose which one is the better. The fact remains that both these avenues are distinctive from each other. One must choose which suits risk appetite and financial goals. Check your risk appetite at VSRK and our executives will help you take the right investment decision.
Therefore, selecting any justified investment will be based on individual’s preference, financial goal and style of investment.

Conclusion

Every investment avenue is favorable in its own way. If selection is puzzling, one is free to contact VSRK. Our professionals help you in selecting the best mutual funds for investment. In addition, you can open a Demat account with us and invest in shares on the basis of our regular research reports.

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing

September 4, 2021August 18, 2023

WHAT NEXT WHEN MARKET TOUCHES 17K

The Indian equity markets have ended on a record high. The 30-share Sensex rose 514 points to end at 57,852 while the 50-pack Nifty settled at 17,234, up 158 points. This has led to many of the readers and investors wondering, what next?

It’s simple really! VSRK has always maintained that successful investing depends more on ‘Time in the market’ as opposed to ‘Timing the market’. While valuations and prices are absolutely significant, it is more important for investors to spend time with high-quality businesses than time their ups and downs. Around 50 stocks that have rallied over 500% in the last few years bear testimony to this.

The questions still remain unanswered: Is the market going to rise further or is it going to fall? One should be a pessimist and wait or cheer up and invest right away?

Waiting for a market correction to start investing would result in a loss of opportunity. This is the only reason why one should get going ASAP. If one will wait for some correction, surely will stay dwell. Therefore, one should invest. Even at a market high, the markets are only going to go higher in the long-term orientation. One can expect a few jerks on the way, but the general market course is going to be largely upward-looking. But remember, Investing should be played for a long-term.

Step #1: Avoid the temptation of booking profits!

Equity as an asset class is habitual of giving superior returns in the long term due to the power of compounding. VSRK insists & helps in cutting the losses short and riding on winners. This selling rule is deeply embedded in our policy. You should always have an investment plan and remain disciplined.

Step #2: Asset allocation is important

The fact remains intact that market volatility affects your portfolio’s asset allocation. It could be possible that your portfolio is composed only of small-cap or mid-cap stocks. In up trending market, a concentrated portfolio may increase chances of loses. One should diversify when the markets are really high. Diversification means flexible market capitalization. The best way to keep your portfolio up to date is by utilizing an active investment strategy such as VSRK.

Step #3: Get rid of under-performing investments

When you initially constructed a portfolio, markets must have been quite different. Now that considerable time has elapsed, chances are that the valuations have changed. The reasons that made you buy those particular stocks might no longer exist. The market leaders might have changed ranks. In such a situation, sticking to laggards can result in losses. So, use this time to review your entire portfolio and weed out stocks that don’t seem valuable anymore.

Step #4: Invest according to a proven investment strategy

It is rightly said that a plan without a strategy is merely a vision. Investing in accordance with a strategy can help you achieve your various financial goals and understanding your risk appetite will keep you away from making impulsive or ill-informed investment decisions based on greed and fear. VSRK is a smart investment strategy that is complete with selling rules and can help you invest in accordance with your risk appetite.

Step #5: Consult your Investment Advisor

The art of investing includes doing the basics of investing right i.e. knowing how much to invest for your goals, where to invest, understanding your risk appetite, proper asset allocation and re-balancing, investing systematically and remaining disciplined in your plan irrespective of market conditions.

An investment advisor can not only help you understand your financial objectives but will also help you curate your equity portfolio in order to achieve those objectives. An advisor will act as a guiding light in navigating your way through the volatility of financial markets.

All said and done, market highs and market lows shall come and go. The volatility shouldn’t bother long-term investors. You should always aim to keep an eye on your goals and invest in a systematic manner. VSRK would be delighted to assist you in your investment journey so that you can fulfil all your financial goals.

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