Does the Indian stock market have depth and breadth?
August 13, 2016
July 26, 2016
Maintenance work in Q1 for IbHF
Profit growth rates were sustained but net profit margin took a hit
Average operating profit growth rate of previous four quarters was
sustained by Indiabulls Housing Finance, one of the largest three housing
finance companies in the country, in the first quarter of current
financial year 2016-17 (Q1 of FY17).
IbHF announced its consolidated financials for Q1 on Monday which, as per
Capitaline database, showed a 35.0 per cent year-on-year (YoY) rise in its
operating profit to Rs 1,028 crore. The Q1 growth rate was a little higher
than the average growth rate of 32.0 per cent in the preceding four
But in absolute value terms the operating profit came off the all-time high
operating profit level of Rs 1,112 crore recorded in the preceding quarter
of Q4 of FY16.
The housing finance company said in a earnings update statement that it had
sold loans worth Rs 1,114 crore in Q1 of FY17, more than double that of Rs
522 crore in the same quarter of previous year. Its loan book stood at Rs
82,070 crore at the end of June, compared to Rs 59,960 crore a year prior
The incremental disbursals in Q1 of FY17 was driven by non-corporate and
mostly-retail housing loans which contributed 77 per cent, 100 basis points
more than the year-ago quarter's share.
Corporate mortgage loans share also went up by 100 basis points to 23 per
cent, while the share of commercial vehicle loans went from 2.0 per cent
last to almost nil. IbHF noted that the housing loan disbursal in Q1 was at
an average ticket size of Rs 25 lakh with an average loan-to-value ratio of
71 per cent at origination.
The consolidated net profit of IbHF in Q1 increased by 23.2 per cent, YoY,
to Rs 630 crore, which was the third highest rate of growth in the last 10
quarter. It also equalled the 23.3 per cent average growth rate in the
immediately-preceding four quarters of FY16.
The profit margin, however, took a bit of hit in Q1. Capitaline data placed
IbHF's profit after tax margin (PATM) at 28.1 per cent, which was the worst
PATM in the last 10 quarters. It was lower than the average PATM of 30.0
per cent in the preceding four quarters of FY16.
In Q1 of FY17, the housing finance company earned a yield of 12.43 per cent
while its cost of funds was 9.25 per cent. The loan book growth of IbHF was
at a spread of 3.18 per cent in Q1, the same rate as in the previous two
quarters of Q4 and Q3 of FY16.
The gross non performing assets (NPA), as a percentage of total loan
assets, of IbHF stayed flattish at 0.84 per cent at the end of June this
year, compared to 0.85 per cent at the end of June last year. The net NPA
too remained unchanged at 0.36 per cent.
July 25, 2016
#ThisDayThatYear 25July2013 Story analysing stock exchanges' own financials
July 24, 2016
IndexFunds vs indexETFs-former better for plainvanilla indices, latter for smartbeta indices
July 23, 2016
GS Junior BeES
WHAT IS IT
GS Junior BeES (GSJB) is a 13-year old index ETF tracking Nifty Next 50 (earlier called Junior Nifty) index.
Capital appreciation is what GSC500F aims for through corpus
deployment in the 50 companies of Nifty Next 50 index in the same proportion as they officially weigh in the index.
Any index fund or index ETF is best-suited for all those equity exposure-seeking investors who do not have the time or the wherewithal to analyse the fundamentals of various listed stocks and who prefer not to go by the recommendations from their stockbrokers or other sources.
Since it is an ETF, you can buy and sell only through your stock broker on the NSE
WHAT TO WATCH OUT FOR
Nifty Next 50 index, which GSJB is committed to mimic, has the second lot of largest 50 large cap stocks after the 50 companies of Nifty 50. There are several ETFs on Nifty 50. There are also a few on Nifty 100 index which is made up of stocks of both--Nifty 50 and Nifty Next 50.
Should you simply invest in Nifty 100 ETF to get a large-cap equity exposure, or should you invest in one ETF each on Nifty 50 and Nifty Next 50?
For one, portfolio concentration (and therefore the returns) would vry in all the three cases. As of May 31, Nifty 100 had top 10-weighted stocks making up for 46 per cent of the total, while the corresponding top 10 weighted stocks concentration of Nifty 50 and Nifty Next 50 were 54 per cent and 34 per cent respectively. The 1-year return, as of Friday, was 0.7 per cent in Nifty 50, 4.4 per cent in Nifty Next 50 and 1.1 percent in Nifty 100.
It is better to taken an exposure to top 100 large-cap stocks by investing separately in ETFs on Nifty 50 and Nifty Next 50, instead of in Nifty 100 ETF.
Performance-wise, tracking efficiency is what matters to an index investor. The returns by an index fund or ETF should mimic the index as closely as possible.
The only comparable fund to GSJB is ICICI Prudential MF's Nifty Next 50 Index Fund. The latter is an index fund which can be bought and sold directly with the AMC like any regular MF scheme.
As of March 31, the Nifty Next 50 Total Returns Index delivered a 1-year return of -2.2 per cent, as GSJB's latest factsheet. GSJB's 1-year return was -3.1 per cent while ICICI Pru's index fund's 1-year return was -3.2 per cent. With returns being almost same, choose whether you prefer an ETF or an index fund.
July 22-23, 2016
The revision in the terms for the merger of Cairn India with Vedanta,
announced by the two companies on Friday, will have a marginal effect
on the shareholders of Cairn India.
On Friday, the boards of the two companies and their UK-based parent
Vedanta Plc approved the new terms under which a Cairn India public
shareholder will get one equity share of Vedanta for each equity share
held, and received four redeemable preference shares in Vedanta.
The change from June last year, when the merger deal was announced, is
only in the preference shares number. Last year's term had the Cairn
shareholder receiving just one preference share in Vedanta for every
share held. Now, a shareholder will get four preference shares.
Additionally, the preference shares will get redeemed after 18 months
and carry a dividend rate of 7.5 per cent per annum till then.
The merger, which as per the June 2015 announcement was expected to
be completed by March this year, got delayed, and as per Friday's
announcement it is now estimated to be completed by March next year.
What emerged from a conference call the Vedanta and Cairn India
management had with analysts on Friday evening was that the companies
had over the last one year engaged with their respective minority
shareholders. Reports had suggested that the terms of the deal were
found to be un-attractive by some minority shareholders.
The oil price recovery in recent months was also a consideration
behind the revision, the two companies said in the conference call.
The companies have yet to get minority shareholder approvals and as
per the merger terms, they have to get a majority vote from the
minority shareholders of all the three companies which are parties to
the deal. In Friday's announcement the companies announced the
shareholder meeting dates to be September 8 for Vedanta and September
12 for Cairn India. Post shareholder approvals, the merger deal will
require approvals of high court, foreign investment board and the
petroleum ministry in the government.
Vedanta said that the new terms implied a premium of 20 per cent to
one month average price of Cairn India. At end of June last year,
Cairn India shares traded at Rs 182 while Vedanta traded at Rs 174.
The share price fell in both the companies and at the end of February
this year, Cairn was quoting at Rs 118 while Vedanta was quoting at Rs
71. By end of last month, the two stocks had recovered to levels of
Rs 141 and Rs 132 respectively. On Friday, Cairn closed at Rs 191.90
while Vedanta closed at Rs 169.30.
The share price trajectory seemed to indicate that the drastic fall in
Vedanta's share price in the one year period from average of Rs 185 in
May-June of last year to an average of Rs 120 in May-June this year,
was a consideration in increasing the number of preference shares from
one to four. In value terms, it adds Rs 30 per share to a Cairn
shareholder as the preference shares will have a face value of Rs 10.
The companies did not expect the ongoing tax-related arbitration cases
pertaining to Cairn India to affect the Cairn-Vedanta merger.
July 18, 2016
Retail inflation higher in rural India compared to urban India. https://t.co/KFayrXYBSy