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Nifty Bank 39508.95 (-3.34%)
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Adani Ports 688.10 (-7.74%)
Asian Paints 3116.30 (0.70%)
Axis Bank 758.35 (-3.70%)
B P C L 420.80 (-1.61%)
Bajaj Auto 3700.70 (-2.01%)
Bajaj Finance 7484.25 (0.03%)
Bajaj Finserv 17987.70 (-0.13%)
Bharti Airtel 689.75 (-1.79%)
Britannia Inds. 3681.90 (-0.43%)
Cipla 891.75 (-3.33%)
Coal India 166.55 (-4.06%)
Divis Lab. 5121.15 (-0.55%)
Dr Reddys Labs 4569.95 (-1.99%)
Eicher Motors 2527.50 (-2.18%)
Grasim Inds 1702.40 (-1.50%)
H D F C 2900.80 (-0.49%)
HCL Technologies 1152.00 (-2.14%)
HDFC Bank 1593.60 (-2.99%)
HDFC Life Insur. 683.10 (-1.55%)
Hero Motocorp 2667.75 (-0.83%)
Hind. Unilever 2389.65 (-0.29%)
Hindalco Inds. 468.80 (-2.30%)
I O C L 128.65 (-1.64%)
ICICI Bank 798.70 (-4.35%)
IndusInd Bank 1176.00 (2.93%)
Infosys 1703.90 (-1.45%)
ITC 225.10 (-5.60%)
JSW Steel 667.45 (-2.55%)
Kotak Mah. Bank 2098.50 (-4.10%)
Larsen & Toubro 1814.25 (1.66%)
M & M 883.85 (-0.33%)
Maruti Suzuki 7369.70 (0.18%)
Nestle India 18991.40 (-0.07%)
NTPC 137.35 (-2.80%)
O N G C 150.20 (-4.88%)
Power Grid Corpn 185.90 (-2.29%)
Reliance Industr 2598.60 (-1.10%)
SBI Life Insuran 1167.10 (-1.59%)
Shree Cement 28193.05 (0.30%)
St Bk of India 501.35 (-3.43%)
Sun Pharma.Inds. 807.60 (-2.12%)
Tata Consumer 809.70 (-1.11%)
Tata Motors 481.05 (-3.38%)
Tata Steel 1299.60 (-2.00%)
TCS 3421.65 (-1.95%)
Tech Mahindra 1533.30 (-2.20%)
Titan Company 2375.15 (-3.45%)
UltraTech Cem. 7446.65 (1.26%)
UPL 729.90 (-1.56%)
Wipro 656.90 (-2.12%)

5 Multi-bagger stocks for the next 5-years

top multi bagger stocks
by Nikita Bhoota 18/02/2021

Nifty50 and Sensex have doubled from March 2020 lows. The rally in the market was supported by huge global liquidity and coordinated efforts by countries across the globe to fight the coronavirus (Covid-19) pandemic. The successful introduction of covid19 vaccine, growth-oriented proposals in the budget across various sectors of the economy improved investor sentiments. Additionally, healthy corporate results also supported market performance.

Some of the investors may think to liquidate their portfolio to take the advantage of rise in the markets. However, investors can consider to add quality stocks in their portfolio to earn superior returns in the long run.

Thus, based on the positive outlook, future growth prospects, and management pedigree of the companies, we have selected the below 5 stocks that could be likely multi-baggers over the period of next 5-years.

SBI Life Insurance (SBILI)

SBI Life (SBILI) is our top pick for 2021. While SBILI marginally underperformed peers last year due to higher impact from pandemic-led lockdowns, we expect it to deliver strong growth in 2021, as its distribution channel comes back full force and the product mix stabilises with rise in share of protection. We believe SBILI will deliver top-quartile growth helped by a favourable base, backed by well-diversified distribution, rational cost structure, and an under-penetrated mass customer base. The stock is trading at discount to HDFCLI, despite offering similar growth. We forecast VNB Cagr of 18.3% over FY20-22E. The stock trades at 2.8x FY21E P/EV.

Year New Premuim Income (Rs Cr) VNB (Rs Cr) VNB margin (%) PAT (Rs Cr) EV per share P/EV (x)
FY20 40,324 2,010 18.7 1,422 263 3.3
FY21E 50,254 2,243 19.5 1,529 310 2.8
FY22E 60,477 2,815 20.4 2,046 360 2.4

Source: 5paisa Research, Price and valuations as on February 17, 2021

Sudarshan Chemicals (SCIL)

SCIL saw a pick-up in domestic demand from the month of August, reflecting the broader economy’s return towards normalcy. In terms of end-use industries, coatings, plastics and inks are doing well. The non-specialty portfolio saw a good recovery after subdued business in earlier quarters. Demand for specialty pigments remains strong, thanks to the company’s strong technical capabilities. Management expects the long-term demand trend for its products to remain unaffected. However, there are near-term challenges in getting technicians for installation of new capacities and testing of processes. Capex activity on new products was delayed by ~9 months due to COVID. Now, management expects to launch one new product by March-2021 and another by Sep-2021/3QFY22. We expect revenue, EBITDA and PAT CAGR of 10.7%, 20.6% and 27.7% over FY20-22E. The stock trades at 26.3 FY21E EPS.

Year Revenue (Rs cr) OPM (%) Pre-Exceptional PAT (Rs Cr) EPS (Rs) PE (x)
FY20 1,708 14.4 108 15.7 31.9
FY21E 1,740 16.1 131 19 26.3
FY22E 2,092 17.1 176 25.5 19.6

Source: 5paisa Research, Price and valuations as on February 17, 2021

Kaveri Seeds

Kaveri Seeds is one of India's leading seed producers, with a broad product portfolio that includes hybrids for cotton, corn, paddy, bajra, sunflower, sorghum and various vegetables. Kaveri Seeds has not raised any external money in the form of either equity or debt, and meanwhile has paid out ~₹850cr to shareholders (including FY20) via share buybacks & dividends. This reflect the company’s strong FCF generation. The non-cotton portfolio now contributes around half of total seed revenues but nearly 70% of total seed EBITDA. The non-cotton portfolio is likely to grow faster than the cotton portfolio (barring approval for new technology in cotton) and also generates higher margins. Kaveri remains ignored by most investors despite steady EPS growth, ~45% ‘core’ ROE (ex-cash), and a 7-8% dividend + buyback yield. At 9.6x FY21E PE, it looks clearly undervalued. We believe the shift in earnings mix towards the non-cotton business – which is less regulated, higher-margin and faster-growing – could drive an expansion in margins and an increase in valuation multiples over time.

Year Revenue (Rs cr) OPM (%) Pre-Exceptional PAT (Rs Cr) EPS (Rs) PE (x)
FY20 930 27.2 259 43.2 11.8
FY21E 1,048 29.2 320 53.3 9.6
FY22E 1,180 29.7 341 56.8 9

Source: 5paisa Research, Price and valuations as on February 17, 2021

UPL Ltd

UPL maintained its guidance for 6-8% revenue growth and 10-12% Ebitda growth in constant currency terms. The company is committed to lowering net debt-to-Ebitda to 2x by Mar-2021. Management expects fixed overheads to increase by ~3% in FY21. Over the longer term, management expect earnings to grow in double digits for the next 3-4 years. It expects to continue gaining market share, as it expands its presence in South East Asia and China. The company is performing well in Brazil and India, and is already the #1 company in Mexico, Chile and Columbia. Given the increase in commodity prices over the past few months, farm incomes are healthy and the next few years look promising for the company. We expect revenue, EBITDA and PAT CAGR of 9.3%, 18.5% and 27.8% over FY20-22E. The stock trades at 12.7 FY21E EPS.

Year Revenue (Rs cr) OPM (%) Pre-Exceptional PAT (Rs Cr) EPS (Rs) PE (x)
FY20 35,756 19.9 2,399 31.4 17.1
FY21E 39,315 22.4 3,227 42.2 12.7
FY22E 42,681 23.4 3,921 51.3 10.5

Source: 5paisa Research, Price and valuations as on February 17, 2021

RBL Bank:

RBL Bank, one of India’s fastest growing private sector banks with an expanding presence across the country, is an attractive play given the steep discount to peers and improved business model. Stronger internal accruals, potential resolution and Corporate portfolio consolidation will ensure good capitalisation for the near-to-medium term. RBL’s overall profitability is expected to improve going ahead on account of improvement in NIMs and lower credit cost. Improvement in NIM going forward would be driven by the increasing share of retail loans, deposit rate cuts and run-down of excess liquidity while improving asset quality is expected to bring down credit cost from peak levels.  The stock trades at 1.2x FY21E P/BV.

Year NII (Rs cr) Pre-Exceptional PAT (Rs Cr) P/BV (x)
FY20 3,630 510 1.4
FY21E 3,790 580 1.2
FY22E 4,260 1,190 1.1

Source: 5paisa Research, Price and valuations as on February 17, 2021

 

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What are different types of corporate actions?

Corporate actions in stock market
by Nikita Bhoota 26/02/2021

If individuals want to be a successful investor or a trader, then he/she should have a thorough understanding of the market fundamentals. An important fundamental aspect of investing is understanding the various types of corporate actions. 
Corporate actions are initiatives taken up by a company that brings in a change to its stock. A good understanding of them gives a clear picture of the company’s financial health and determines whether to buy or sell a particular share.
There are many types of corporate actions that an entity can choose to initiate. It can be mainly divided into three types mandatory, mandatory with choice and voluntary corporate actions. 
Let us take a look at the most common types of corporate action under each category.

Mandatory Corporate Action
It is decided by the company’s board of directors and it affects all shareholders once implemented. There is nothing much a shareholder can do when it comes to mandatory corporate actions. 

  • Stock Split and Reverse Stock Split
    It is a scenario when a company announces that it is splitting the face value of its shares. Thus, if the face value is Rs 10 and the company announces 1:5 stock split, the new shares will have face value of Rs 2. The shareholder receives 5 shares for each share that he owned. The market price of the stock falls but the market capitalization of the company does not change meaningfully.
    However, the opposite happens in case of a reverse stock split. the number of outstanding shares is reduced to increase the share price. 
  • Bonus Issue
    These are free shares that the shareholders of the company receive against the shares that they already own. Bonus shares are issued out of the reserves in shareholder funds. Companies announce a ratio by which new shares are allotted to existing stockholders. If the ratio is 3:1, the stockholder receives 3 shares for each share held. When bonus shares are issued, the number of shares increases but the value of the total shares remains unchanged.
  • Merger and Acquisitions
    In a Merger two or more companies agree to merge themselves in order to increase the scale of operation and profit. Similarly, an acquisition is an event where the bigger company acquires a smaller company for further expansion.
  • Spinoffs:
    Spinoff leads to the creation of an independent company through the distribution of new shares of an existing business. In other words, it’s a type of divestment.

Mandatory with Choice Corporate Action

  • Dividend Payout:
    Cash rich companies which do not have adequate opportunity to deploy cash in lucrative business opportunities return a portion of cash to its shareholders. Most often, dividends are paid out of profits though it is not strictly necessary. Dividends are announced periodically (semi-annually, annually etc). Generally, high growth companies do not pay much dividend, while stable cash generating businesses do. To be eligible to receive dividend, one should own the stock on the record date.

Voluntary Corporate Actions

  • Buyback
    A company can offer to buy back its shares from the existing stockholders either because it thinks the share price is too low or because it has surplus capital that it cannot put to good use that it plans to return to the shareholders. Buybacks reduce the number of shares in issue and lead to increase in EPS.
  • Rights issue
    In this a company offers new shares to all the existing stockholders in the ratio of their holding in the company. Shareholders are offered new shares at a discount to encourage them to apply in the issue. This is a primary issue in which the money paid by the shareholder accrues to the company. A 3:1 rights issue indicates that the stockholder can buy 1 share for every 3 shares that he owns in the company.

Conclusion:
As an investor, it is necessary to have an in-depth understanding of the different types of corporate actions and how it affects stocks. It will also help investors to understand the mindset of the management. Additionally, it will guide investors to decide the type of corporate action to participate in.

Next Article

New rules for Insurance Sector, a positive or a negative move?

Sector Update Insurance
by Nikita Bhoota 01/03/2021

The Indian Government, in its FY22 Union Budget, has made two major announcements, (1) increased the permissible FDI limit from 49% to 74% in insurance companies and allowed foreign ownership and control with safeguards, (2) allowing tax exemption for maturity proceeds of ULIP policies having aggregate premiums of only up to Rs250k per annum (vs. no limit earlier). While increase in FDI limit is positive for the sector, it will increase competitive intensity for the larger and well-capitalized players where FDI was anyways significantly below 49%. On ULIPs taxation, it removes the tax arbitrage benefit that ULIPs used to enjoy vs. mutual funds, thereby reducing its relative attractiveness as a savings vehicle, though certain low cost ULIPs launched by bigger players remain more efficient than Mutual funds for investors.

Increase in FDI limits:

The Government has proposed to increase the permissible FDI limit from 49% to 74% in insurance companies and allow foreign ownership and control with safeguards. Under the new structure, the majority of Directors on the Board and key management persons would be resident Indians, with at least 50% of Directors being Independent Directors, and specified percentage of profits being retained as general reserve. This initiative is likely to provide much required capital to some of the smaller players in the industry as well as an exit to some of the existing JV partners. Given that most of the listed players are well capitalized and have seen their foreign JV partners exiting their holdings, except in case of IPRU, we do not see them as beneficiaries of these FDI changes. On the contrary, it could raise competitive intensity in the sector, especially in the non-life segment where companies may resort to aggressive pricing if equipped with easy capital. Hence, we view this as a marginally negative development for the listed insurance players but positive for the overall sector.

Taxation of proceeds from high premium ULIPs: 

Under Section 10(10D) of the Income Tax Act, proceeds from life insurance policies are tax free if the sum assured is at least 10X of the annual premiums. As per the government, this has resulted in instances of investing in ULIPs with huge premiums to claim the exemption which defeats the legislative intent of this clause, to provide benefit to small and genuine cases of life insurance. Hence, it has been proposed that (1) the tax exemption shall not apply with respect to any ULIP issued on or after February 1, 2021, if the amount of premium payable for any of the years during the term of the policy exceeds Rs.250k, and, (2) if premium is payable by a person for more than one ULIPs, issued on or after Feb 1, 2021, tax exemption shall be available only with respect to such policies where aggregate premium does not exceed Rs250k. However, any sum received on the death of a person will remain exempt. The tax rate applicable on the non-exempt policies will be similar to the concessional capital gains taxation regime as available to the mutual funds (@10% + surcharge/cess).

Stock Performance

S&P BSE Sensex was up only 1% (February 01, 2021- February 26, 2021) post Union Budget FY22 announcement, Here, we have discussed some insurance companies’ stocks that have given positive returns or have underperformed the benchmark index S&P BSE Sensex in the same period. 

 

Company 1-Feb-21 26-Feb-21 Gain/ Loss
ICICI Pru Life 490.25 461.3 -5.90%
HDFC Life 699.05 701.4 0.30%
SBI Life 875 855 -2.30%

 

Source: BSE

The stocks in the insurance sector have underperformed the BSE benchmark in the past 1 month. ICICI Pru Life tanked 5.9% from February 01, 2021- February 26, 2021. Similarly, SBI Life fell 2.3% in the same period. However, HDFC Life gained marginally 0.3% from February 01, 2021- February 26, 2021.

Next Article

IIFL Finance NCD - All you need to know

IIFL NCD
by Mrinmai Shinde 04/03/2021

IIFL Finance Ltd has launched IIFL Bonds, a Non-Convertible Debenture (NCD) issue of up to ₹1,000 crore, offering an effective yield of up to 10.03%. This latest issue of unsecured NCDs has a base size of ₹100 crore with a option to retain oversubscription of up to ₹900 crore. The funds raised through the issue would be used for onward lending, financing, and for repayment or prepayment of interest and principal of existing borrowings of the company apart from general corporate purposes. 

This issue has a long-term credit rating of AA/Negative by Crisil, AA+/Negative by Brickwork.

IIFL Group's non-banking finance arm, IIFL Finance Limited, is a systemically important Non-Banking Financial Company not accepting public deposits and engaged in the business of home and property loans, gold loans, loan against securities, SME business and micro-finance loans.. 

The promoters of the company are Mr. Nirmal Jain and Mr. Venkataraman Rajamani. As at 31st December 2020, the company’s consolidated assets under management was Rs 4,22,641.05 million. 

Issue Opens on 3rd March, 2021
Issue Closes on 23rd March, 2021
Registrar Link Intime India Pvt Limited
Allotment First Come First Served Basis
Listing On BSE Limited and National Stock
Exchange of India Limited
Issue Price ₹1,000 per NCD
Face Value ₹1,000 per NCD
Minimum Application ₹10,000/- only
Issue Size ₹10,000 million (₹1000 cr)
Nature Subordinated Redeemable Bonds
Credit Ratings CRISIL AA/Negative and
Brickwork AA+/Negative
Tenor 87 Months
Payment Frequency Monthly, Annually, At Maturity

 

What is NCD? 

NCD, also known as Non-convertible debentures, is a fixed income product that offers far better returns when compared with Fixed Deposits or convertible debentures. They are usually issued by high-rated companies in the form of a public issue to accumulate long-term capital appreciation. Investing in NCDs helps you earn better returns, offers the liquidity, is a low-risk instrument and offers tax benefits when compared to convertible debentures.

Why IIFL Bonds 2021?

1. IIFL Bonds offer annualized returns of 10% p.a., which means you can double your money in 87 months.

2. Offers monthly, yearly and cumulative income options

3. Rated AA by CRISIL, which indicates high degree of safety regarding timely servicing of financial obligations

4. No TDS on interest income

5. These bonds will be listed on NSE & BSE


How to Invest in IIFL NCD?

1. Visit invest.5paisa.com/ncd

2. Enter your UPI Id.

3. Enter the quantity of NCDs you wish to apply for. Total application amount should be between Rs.10,000 (10 NCDs) and           Rs.2,00,000 (200 NCDs)

4. Submit your application

5. You should receive an UPI mandate on your UPI app within approx. 2 hours, please authorize it.

Cilck here for more details

Next Article

Kalyan Jewellers IPO Note

Kalyan Jewellers IPO
IPO
by Nikita Bhoota 17/03/2021

Kalyan Jewellers IPO Details

Issue Opens: March 16, 2021
Issue Closes: March 18, 2021
Price Band: ₹86 -87 per equity share
Issue Size: ~₹1175cr
Bid lot: 172 Equity shares
Issue Type: Book building
 

About the Company
 

Kalyan Jewellers India Limited is one of the largest jewellery companies in India based on revenue as of March 31, 2020. It is a pan-India jewellery company with 107 showrooms located across 21 states and union territories in India, and 30 showrooms located in the Middle East.

The company designs, manufactures, and sells a wide range of gold, studded, and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, to daily-wear jewellery.

Kalyan Jewellers was one of the first jewellery companies in India to voluntarily have all of its jewellery BIS hallmarked and accompanied by a detailed price tag detailing the price of various components used in the final product. This initiative along with customer education and awareness campaigns around the lack of transparency in the Indian jewellery industry has helped the brand become a trusted name in jewellery in India.

 

Objects of the Offer:
The IPO proceed will be utilized towards following purposes:

  • To meet the working capital requirements and
  • To meet general corporate purposes.

Financials

(₹ Cr., unless specified) FY18 FY19 FY20 Dec 20
Total Assets 8,551 8,060 8,218 8,122
Total Income 10,580 9,814 10,181 5,549
Profit after Tax 141 -4.8 14.2 -79.9

Source: RHP

Strengths:

  • The Indian jewellery industry has largely been unorganised and fragmented, comprising more than 500,000 local goldsmiths and jewellers, as per the Technopak Report. Indian jewellery customers have historically struggled with a lack of transparency embedded in the purchase process for jewellery, finding it difficult to verify gold purity and weight and to deconstruct the various components of jewellery prices, including differentiating between raw material costs and jeweller mark-ups or making charges. The company have endeavoured to establish a strong brand in the Indian jewellery market that our customers associate with trust and transparency. According to the Technopak Report, Kalyan Jewellers is among the pioneers in the Indian jewellery market in (a) educating consumers about the aforementioned industry issues; (b) instituting the highest quality standards for our jewellery, and (c) introducing complete price transparency with our products. Through the following initiatives, coupled with concurrent customer education and awareness campaigns, particularly through “My Kalyan” network, the company have helped strengthen its brand by building customer trust and promoting transparency.
  • Kalyan Jewellers is one of the largest jewellery companies in India based on revenue as of March 31, 2020, according to the Technopak Report. We have a pan-India presence with 107 showrooms located across 21 states and union territories in India and also have 30 showrooms located in the Middle East, as of December 31, 2020. In Fiscal 2020 and in the nine months ended December 31, 2020, 78.19% and 86.21% of our revenue from operations was from India and 21.81% and 13.79% was from the Middle East.
  • The company has a hyperlocal strategy where it localizes its product portfolio, brand communication & strategy, showroom experience, and My Kalyan network, according to each market segment.


Strategies:

  • Leverage scalable business model to expand our showroom network and diversify our channels of distribution.
  • Widen product offerings to further increase our consumer reach.
  • Leverage “My Kalyan” network to deepen customer outreach and strengthen the distribution network in our core markets
  • Invest in CRM, marketing and analytics to more effectively target consumers and drive sales


Know more about Kalyan Jewellers IPO by visiting the given link.

Next Article

Rail Vikas Nigam Limited OFS

RVNL OFS
by Nikita Bhoota 24/03/2021

About Rail Vikas Nigam Ltd (RVNL):
Rail Vikas Nigam Limited (RVNL) was incorporated in New Delhi as a public limited company on 24 January 2003. The Company was issued its Certificate of Commencement of Business on 18 February 2003. The Company has been conferred the status of ‘Schedule A - Public Sector Enterprise'. Further, the company has the status of `Category-I Miniratna Company'. The Company is a wholly-owned government company as a project executing agency working for and on behalf of the Ministry of Railways (MoR). It is in the business of executing all types of railway projects including new lines doubling, gauge conversion, railway electrification, metro projects, workshops, major bridges construction of cable-stayed bridges, institution buildings etc. As part of the mandate of RVNL to undertake project development, mobilization of financial resources and to implement projects pertaining to strengthening of Golden Quadrilateral and better connectivity to various ports, six Special Purpose Vehicles (SPVs) as Joint Ventures (JVs) have been created.

All About OFS

  • The central government is all set to sell its 15% stake in Rail Vikas Nigam Ltd via an offer for sale to raise around Rs 800 crore. The issue opened on Wednesday (March 24, 2021) for non-retail investors, and on Thursday (March 25,2021) for retail investors, the company informed in a regulatory filing on Tuesday. The RVNL OFS shall take place on a separate window of the stock exchanges on March 24, and March 25 from 9:15 a.m. to 3:30 p.m

  • The initial plan would be to sell 10% of the total equity or 20.85 crore shares, according to latest exchange filing. The government will have a greenshoe option to sell another 5% of the total equity or 10.4 crore shares. 

  • As of December, the government held an 87.84% stake in the company, which on full 15% stake sale will fall to 72.84%.

  • In a revised notice, the company stated that there would be Offer for sale of equity shares of face value of Rs 10 each of Rail Vikas Nigam Limited (RVNL) by its promoter, the President of India, acting through Ministry of Railways, Government of India, through stock exchange mechanism.

  • Rail Vikas Nigam Limited (RVNL) share price fell over 8% intraday on March 24 as the government said it will sell 20,85,02,010 equity shares (or 10 percent of total paid-up equity) of Rail Vikas Nigam via offer for sale route on March 24-25.

  • In case of oversubscription, the government will sell additional 10,42,51,005 equity shares (or 5 percent shareholding) in the company. The floor price for the offer has been fixed at Rs 27.50 per share.

How to Apply for RVNL OFS from 5paisa?

  1. Login to 5paisa
  2. go to invest.5paisa.com/ofs 
  3. Enter the quantity and bid amount
  4. Click on Place order