“… going ahead with the issue will not be morally correct…” Gautam Adani, on Cancelled FPO

Adani’s FPO was withdrawn, meaning whatever money was raised will be returned to the investors. In a concise span of time the stock of the Adani enterprise corrected by more than 60% and so are the other shares of the group.

Even if the Hindenburg episode had not happened, the stocks would have corrected maybe in due course of time because of the high valuation it commanded.

I don’t want to talk about the allegations of Adani’s wrongdoing, but from a neutral ground would like to shed some light on the current valuation as I write this post.

If you look at the PE, PB, PC, and PS – the stock is still far from its 5-year average, and even after such correction it might appear expensive (refer to the image below).

As we use morning star work station their valuation technique which is based on discounted cash flow says otherwise all the stocks appear to be undervalued.

Now, whether the stock is expensive or available at a fair price will depend on the perception of the investor to the investor, as it varies from one person to another.

The stocks have been hitting lower circuit and some of the investors, specifically retailer might feel trapped and desperate to get out of their position, most of the mutual fund houses has already exited from Adani group stocks (except Adani Enterprise and Adani Green) as of 31.12.2022.

One of my known who has invested to the tune of 10 Cr., in Adani Green stock itself is now worried (just like every other normal human would be) about what should he do with such massive holdings as he has lost half of its value.

The same investor was happy and cheering when he made an astronomical gain when every other X, Y, and Z investor/trader was betting big on Adani Green.

‘Behti Ganga mein haat dhona’ – after the first lockdown, I recall sitting with some of my friends and their friends (mostly engineers); they were talking about how Green is the best stock to invest in and the profits they have already made, and how foolish I was to remain silent and say nothing.

But if I look back most of them have either closed their trading account or are sitting on a huge pile of losses.

I do get calls on whether they should enter the stocks right now or wait. The answer is simple – if you are an investor, the answer is ‘BIG NO’; its not wise to catch the falling knife. Let the price settle, then you can catch the bus.

If you are a trader and want to take advantage of the situation definitely a contrarian bet would be highly risky, but if your chart says otherwise then ‘Maybe’, you can try your luck. The regulators are keeping a close eye on the entire ADANI Saga, what’s going to happen next is an interesting watch, but to summarise the entire discussion –

1. Do not just blindly follow the mass.
2. Do not put all the eggs in one basket.
3. It is better to wait than to take the wrong ride.

Comment below with your thoughts.

Written by: CA Suraj Kar  

For more information, reach us at support@prudentwealth.in

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Read Next: Adani Group: Mutual Fund Holdings

Almost all the Adani stocks have seen reduced holdings, barring a few:

1. Adani Power:

Only index fund has position.

2. Adani Wilmar:

Only index fund has position.

3. Adani Green Energy Ltd.:

Only index fund has position.

4. Adani Transmission:

Only index fund has position.

5. Adani Total Gas:

Only index fund has position.

6. Adani Enterprises Ltd.

list of Mutual Fund Schemes which has holdings other than index funds –

7. Adani Ports & Special Economic Zone Ltd.

list of Mutual Fund Schemes which has holdings –

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How big will it be on a global scale?

It will be India’s second-largest bank after the State Bank of India (SBI) once the merger is approved by regulatory authorities. Also, it will be twice the size of ICICI Bank, the country’s third-largest bank. The combined banking beast’s balance sheet will be valued at over Rs. 17 lakh crore, with a net worth of over Rs. 3 lakh crore. In addition, the bank’s loan size will increase by 42% to Rs. 18 lakh crore ($237B), retaining its position as the country’s second-largest lender. In short, the bank will be able to expand its lending portfolio as the mortgage portion will climb to over 33%.

The HDFC twins fall under the top 10 companies in India according to their market cap having over Rs 11 lakh crore as of May 6th, 2022. On the day of the merger announcement, it soared to Rs 13.99 lakh crore, surpassing TCS’ m-cap of Rs 13.94 lakh crore. HDFC twins’ stocks had risen by more than 10% that day.

Another significant benefit for the bank will be the ability to cross-sell to HDFC customers, allowing it to increase its product portfolio. The company’s earnings per share (EPS) would skyrocket in the first year after the merger. 

With a $190B valuation, the combined entity would be the world’s fifth most valued lender. JP Morgan Chase is currently the most valued lender followed by Bank of America, and Industrial and Commercial Bank of China.  Also, it stands second biggest firm in terms of deposits and loans. 

The merger might help India’s banking industry attract more international investment, as the combined entity’s foreign shareholding will be between 65-67%, leaving a 7% gap to the 74% foreign ownership limit in India’s banks.

What does the merger imply for the consumers?

Customers of HDFC Ltd and HDFC Bank will receive the added benefits of both companies, including savings accounts, mortgages, life insurance, health insurance, general insurance, investment products, credit cards, and personal loans. 

• Following the merger, HDFC Bank will be 100% owned by public stakeholders. Existing HDFC Ltd shareholders will possess 41% of HDFC Bank and will obtain 42 HDFC Bank shares (face value of Rs 1 each) in exchange for 25 HDFC Ltd shares (face value of Rs 2) with a ratio of 1:1.68. HDFC Bank will take over HDFC Ltd and its subsidiaries, its biggest stakeholder, in what’s being marketed as the largest transaction in Indian banking history.  
• HDFC Bank customers who do not currently have a mortgage product will be offered one as a core product in the future, with a seamless experience, of course. HDFC’s rural and affordable housing financing will assist the bank in meeting priority sector lending (PSL) standards. It will help the firm reduce its unsecured loan risk.
• A housing finance structure’s cost of funds will be higher than a banking structure’s cost of funds. As a result, when we shift to a bank, our overall cost of capital to service will decrease.
• Customers who have made fixed deposits with HDFC Ltd with an auto-renewal mandate will likely be allowed to withdraw the money or renew the deposits with HDFC Bank at the current interest rate. However, after customers renew their FDs, there will be a considerable benefit from increased deposit safety.
• Consumers will have access to a far larger and more comprehensive banking platform than they currently have and will have access to approximately 45 years of experience in making housing loans, which will be reflected in an extraordinarily low-cost structure and a vast quantity of expertise and asset quality over time.
• If a consumer has taken a loan from HDFC Ltd, then it is likely that there will be no impact on the terms and conditions. However, once the merger is approved, the interest rate charged on your home loan will likely be revised. Interest rate fluctuations will be more transparent for floating rate loan borrowers.
• The housing loan market is on the verge of a robust upswing, with all-time high positive industry fundamentals, and it offers a secure asset class with attractive risk-adjusted returns. 

The move seems beneficial to everyone, ranging from customers to investors and the banking system as a whole. Regulatory changes and reforms have created a favorable atmosphere for the merger of the twins, resulting in a “win-win” situation for all stakeholders.

Written by: Arpita Chatterjee 

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Devyani International Limited (DIL) is a multifaceted quick-service restaurant (QSR) operator that was founded in 1991. It is a well-known global brand and one of India’s largest QSR operators.

Core brands of the company:

KFC, Pizza Hut, and Costa Coffee.

Other brands of the company:

Vaango and The Food Street

Business Presence:

India, Nigeria, and Nepal.

Highlights of FY’22:

KFC:

Strong Performance: KFC has accomplished a lot, as it is now worth a total of ₹10,000 Million to DIL.

Pizza Hut:

Improved Growth Momentum: Pizza Hut’s annual revenue surpassed ₹5,000 Million, an increase of 85% over the past year.

Costa Coffee:

Impeccable Efforts: Costa Coffee Brand’s contribution margins were impressive in the disruptive times, giving them the confidence to rapidly scale up the brand.

Other Brands:

They also run stores for in-house brands, such as Vaango and The Food Street, along with the core brands. They usually run these outlets within larger food courts in shopping malls and airports.

Strengths: 

1. The industry is expected to grow at a multi-fold rate due to rising disposable incomes, busier lifestyles, and a higher percentage of young and working professionals.
2. Consumption patterns and spending habits are changing as a result of urbanization and family nuclearization, with more eating out and home delivery taking place.
3. The convenience of app-based ordering and delivery to the doorstep is expected to keep the market growing.
4. The industry’s growth is aided by low-cost internet access and higher penetration of low-cost smartphones and social media platforms.
5. +28.69% returns over the past 5 years, and +23.48% returns over the past 1 year.
6. Mutual funds have increased the holdings of their stocks.
7. Strong EPS growth and improved ROA (YoY).
8. Net profit improved with an increased profit margin YoY in the past 2 years.
9. Reduced and low-debt corporation.
10. Zero stock pledges from promoters.

Weakness:

1. The price is below the short, medium, and long-term averages, indicating a weak momentum. 
2. Promoters are decreasing their shareholding.
3. Net cash flow is declining as the company is unable to generate net cash.
4. RSI is stating price weakness.

Restaurant Brands Asia Ltd.

Restaurant Brands Asia Ltd., also known as Burger King India Ltd., is a publicly-traded company that was founded on November 11, 2013. The company prepares and sells ready-to-eat foods such as burgers, fries, and beverages.

Core brand of the company:

Burger King India Ltd.

Business Presence:

India

Highlights of FY’22:

• Restaurant Growth: 315 restaurants as of March 31, 2022; Q4 FY22 Net Addition: 21 restaurants (Opened: 22; Closed: 1); FY 22 Net Addition: 50 stores (Opened: 51, Closed: 1); 13 restaurants are under construction and 50 restaurants in the queue.
• BK APP: 3 Million APP installs; revenue growth of 24% QoQ; continuously growing in double digits for the past four quarters.
• BK Café: On November 9th, 2021, the first BK Café was launched; 18 BK Cafés opened in Q3 and in Q4, 17 BK Cafés opened, for a total of 35 BK Cafés as of March 31, 2022.

Strengths:

1. A strong consumer proposition helps BK restaurants attract customers and increase footfall.
2. Brand positioning that targets India’s large and growing millennial population.
3. Mutual funds have increased the holdings of their stocks.
4. Since the last two years, the return on equity (ROE) has been improving.
5. Net profit improved with an increased profit margin in both QoQ and YoY. Growth in revenue in the past 3 quarters.
6. Low-debt corporation.
7. Stock with Low PE.
8. Zero stock pledges from promoters. FII and Mutual Funds are increasing their shareholdings.

Weakness:

1. -17.74% returns for over 5 years, and -21.07% returns over the past 1 year.
2. QoQ, promoter holding decreased by more than 2%.
3. Non-core income is on the rise.

Jubilant FoodWorks Ltd.

Jubilant FoodWorks Limited is a subsidiary of the Jubilant Bhartia Group, which was founded in 1995 and began operations in 1996. With 602 Dominos Pizza Stores across India, the company is the largest and fastest-growing food service company in India (as of June 30th, 2013), with a market share of 67% in India’s organized pizza market.

Core brands of the company:

Domino’s Pizza, Dunkin’ Donuts, and Popeyes.

Other brands of the company:

Hong’s Kitchen and Ekdum!

Business Presence:

India, Nepal, Bangladesh, and Sri Lanka.

Highlights of FY’22:

• The revenue from operations increased by 12.9% YoY to Rs. 11,579 million.
• The delivery channel has retained its steady growth. In FY22, 80 new Domino’s Pizza outlets, 4 new Popeyes outlets, and 1 new Dunkin’ Donuts, Hong’s Kitchen, and Ekdum outlets opened.
• Procured a 100% stake in the Bangladesh subsidiary.

Strengths:

1. Over 2.8 years, the Nifty 500 returned 109%, and over 5.5 years, the Nifty 500 returned 336%.
2. Mutual funds have increased the holdings of their stocks in the last month.
3. Low-debt corporation.
4. The core business’s strong cash-generating ability has improved cash flow from operations over the last two years.
5. Mutual Funds increased their shareholding in Q4, FY22.

Weakness:

1. Net profit declined with a decreasing profit margin in both QoQ and YoY. Degrowth in revenue, profits, and operating profit margin in QoQ.
2. Declined net cash flow.
3. The price is below the short, medium, and long-term averages, indicating a weak momentum. 
4. High stock pledges from promoters. Insiders sold stocks.
5. Non-core income is on the rise.
6. Stock with a high PE.

According to the analyst, the market will remain choppy for the rest of the year as there is no foreseeable de-escalation between Russia and Ukraine, rising bond yields, high inflation, and adding cheery to the cake aggressive selling by FIIs, a rise in crude oil price and appreciating USD.

Not only in India but the Global market has corrected significantly if you look at US Benchmark; S&P 500 has corrected around 20% and NASDAQ has corrected around 30% YTD. This is not the first time that the world has experienced a war nor has the market corrected it for the first time. If we observe closely on an average during wars market has corrected around 10-15% post-war it has recovered by 20-25% in the six months.

What should we do?

Any person with a rational mind (keeping aside the emotional bias) would suggest one thing Don’t Panic! A correction in the market is a window to new opportunity and those who will not get swayed by his/her emotions will sail through the tide, however bumpy it might be.

Said that here are 5 successful tips for you:

Investing requires patience, dedication, discipline, and the capacity for self-advocacy. When the market becomes volatile, people tend to panic, become swayed by what they read or hear, and end up making rash decisions.

Buy the Dip, whose dip?

You might have heard a lot about buying the dip and there are some interesting memes suggesting as the investors buy the dip market creates a new dip and it follows, I wouldn’t disagree with this suggestion but more importantly, one important question that needs to be answered is which or whose dip to buy? There are more than 5000 stocks in the market and during the market correction majority of the stocks appear to be on freefall, so which one to catch? The answer is simply to pick the one which is good in quality, in short, buy quality stocks and not just any stocks by quality I mean companies with good fundamentals, profitable businesses with potential future. If you know about fundamental analysis, I am sure you will be able to pick up some good apples which are really healthy.

Say Goodbye! to low-quality stocks:

This is quite straight, sell stocks that are fundamentally weak, declining sales, unprofitable businesses with no foreseeable future, during the bull run when everything appears to be rosy even those stocks will give you bumper returns but at the time of correction, they will have the hardest fall. So, it’s better to get rid of them, if not now, then when?

Invest in a staggered manner rather than in lump sum:

If you have surplus funds or you are planning to start investment fresh, it is suggested to do it in a phased manner maybe, it can be daily, weekly or monthly, investing in tranches would be better than investing in one go as you will be able to take advantage of market volatility.

A systematic Investment Plan (SIP) or Systematic Transfer Plan (STP) can be an effective tool for investing in this market.

Review your asset allocation and diversify:

As an investor, your portfolio should constitute not only equities but a mix of different asset classes, different asset displays a different level of volatility during uncertain times as compared to equities debt instruments are less volatile, and are relatively stable, further gold tends to perform well during macro-economic volatility. In short meaningful rebalancing and risk management strategies can be helpful in such times.

Take advantage of tax harvesting:

Capital Gains are profits made from the sale of stocks or mutual funds and are taxed according to capital gains regulations. By utilizing the strategy known as “tax-loss harvesting,” a decline in the stock market can be a great chance to boost your investment’s post-tax returns.

It is the practice of selling mutual funds or stocks at a loss to accumulate a capital loss. This capital loss can then be used to offset capital gains from other investments, lowering your tax liability and boosting your investments’ after-tax returns.

Towards the end of the fiscal year, that is, in February and March, investors often use the tax-loss harvesting technique. However, since this is not an absolute rule, the technique can be applied at any point in the financial year. A market crash is an excellent time to book a capital loss by selling some of your portfolio’s underperforming mutual funds or stocks and replacing them with potentially better-performing investments. 

Investors can also benefit from tax-loss harvesting when rebalancing their portfolios. In addition to enhancing the asset allocation mix of your investment portfolio, this can significantly lower your annual tax obligation.

Get in touch with your financial planner or advisor, who can give you the right advice if you’re unsure of what to do. It’s better to take no action than to take action that has serious consequences.

Written by:  Suraj Kar 

For more information, reach us at support@mygoalmysip

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Read Next: Food Wars: Financing disparity: Credit availability for female entrepreneurs.

By value, I mean the price of a coin; for example, XYZ stablecoin, whose price is pegged to the US dollar at a 1:1 ratio, meaning that if you liquidate one unit of XYZ coin, you will receive one dollar in return. There are other types of stablecoins too, such as those backed by gold, another cryptocurrency, and non-collateralized stablecoins, which are governed by algorithms.

The protagonist of our story, Luna, is the sister of UST, the 4th kind of stablecoin. Terra is a blockchain-powered by Terraform Labs, which produces Luna as its native currency. Luna is pegged to UST, which is an algorithmic or decentralized stablecoin.

How do the UST and Luna pegs work?

To create UST, you need to burn Luna. Before the great fall, Luna was trading at $85, which means you would get 85 UST for 1 Luna. But, in the process, Luna needs to be destroyed (burned). If more people buy into UST, more Luna would be burned, ensuring the remaining Luna supply is more valuable.

UST would always be exchanged for $1 worth of Luna. Now, if the price of UST falls, traders will be interested to buy UST and exchange it for Luna; in this process, UST will be burned, thus controlling the supply and pushing back the price.

Where did things go wrong?

One of the earliest signs that things were going wrong for the stablecoin came when UST deposits on Anchor started dropping in the first week of May 2022.

Anchor offers market-leading yields of up to 20% a year to users who deposit their UST on the platform. Before UST started its decline late on Saturday, Anchor was home to 75% of UST’s entire circulating supply. That’s $14 billion of UST out of a total circulating supply of $18 billion.

With so much UST locked up in Anchor, it became clear that most investors were buying the stable coin with the sole intent of reaping those sweet, sweet Anchor yields.

Things got messed up when $285 million worth of UST was liquidated on Curve and Binance, which means a lot of UST was dumped, which pulled down the price of UST, pushing up the supply of Luna. When huge LUNA tokens flooded into the space, the demand eased out. Therefore, the price was negatively impacted heavily. The number of Luna tokens in circulation went up from 343 million to more than 6.5 trillion in just a week.

Will Luna be able to recover?

The current LUNA price is $0. 0.000060. It may be impossible unless a large part of the hyper-inflated circulating supply of LUNA (now 6.5 trillion LUNA coins) is burnt. Furthermore, a new chain called Luna V2 has been launched, and the earlier coin has been named Terra Classic.

Crypto investors should apply extreme caution while investing.

Writer: Suraj Kar 

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Read Next: Gautam Adani: Richest Asian Billionaire in History?

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Gautam Adani‘s remarkable journey to the top began in 1988 when he dropped out of college and turned down his father’s textile enterprise to start a commodities export company. Gautam Adani first entered the billionaire ranks in 2008, with an average net worth of $9.3 billion. Adani has stated that he intends to become the world’s largest green energy producer, with plans to invest up to $70 billion in renewable energy projects.

The Adani Group now has a market capitalization of over $100B, and is made up of seven publicly traded companies that operate in sectors such as power generation and distribution, renewable energy, gas and infrastructure, logistics (seaports, airports, shipping, and rail), mining and resources, and others.

How did Gautam Adani make the cut?

According to stock market professionals, the rise in commodity prices has caused Adani stocks to jump. The surge in commodity prices, particularly in the price of palm oil, has resulted in increased trade activity, which indicates more revenue for Adani Ports. Additionally, the increase in palm oil prices provides Adani Wilmar with a margin boost on its unsold inventories. 

Adani Group’s stock has performed excellently on stock exchanges, despite equity indices being beaten down by the Russia-Ukraine conflict for more than a month, which caused considerable market volatility. 

The following are some of the most notable events that have occurred in recent times, causing Adani stocks to skyrocket:

• Adani Power’s stock has risen after the Supreme Court ruled in its favor, ordering the Rajasthan-based 3 Discoms to pay the company’s debts in the last week of March 2022.
• Adani Wilmar, Adani Power, Adani Port, Adani Enterprises, and Adani Total Gas all achieved a new 52-week high on the National Stock Exchange on April 1.
• Goutam Adani’s fortune skyrocketed past the 12-figure threshold after the announcement that Abu Dhabi’s International Holding Co. made a $2 billion investment in three of his green energy-focused entities: Adani Green Energy, Adani Transmission, and Adani Enterprises, on April 8, 2022.
• Adani Wilmar gained by nearly 86%, while Adani Enterprises rose by over 26%, Adani Total Gas went up by more than 52%, Adani Port rose by over 15%, and Adani Transmission by around 17%. Adani Power has gained over 86%; on the other hand, Adani Green Energy gained more than 57% in a month on the NSE.
• Gautam Adani’s portfolio firms want to invest more than $50-70 billion in the renewable energy value chain and also have committed 70% of planned CAPEX till 2030 to the energy transition.

Gautam Adani holds a 75% stake in Adani Enterprises, Adani Power, and Adani Transmissions, as well as a 65% stake in Adani Ports and Special Economic Zone, a 61% share in Adani Green Energy, and a 37% stake in Adani Total Gas through the Adani Group. The Adani Group’s total market capitalization is Rs. 16.02 trillion (as of April 11, 2022). 

Gautam Adani now owns India’s largest port operator, a tightly guarded thermal coal plant, and a coal trader. He also bought a 74% share in Mumbai International Airport, India’s second busiest airport, in 2020.

As per the Bloomberg Billionaire Index, as of April 13, 2022, Gautam Adani’s net worth rose to $118B, taking him to the sixth rank, right after Warren Buffett, with a net worth of $127B, and leaving Mukesh Ambani far behind, with a net worth of $95.2B. His wealth has increased by $41.1B so far this fiscal year.

Bottom line:

You either need to become a technical inventor or a luxury retail mastermind if you want to move a little closer to getting on the list of the world’s wealthiest billionaires. You might also have to keep things simple and focus on value investing. Because, the greatest fortunes began with brilliant ideas that were implemented by people with creativity, determination, and connections to create some of the world’s largest corporations. 

Writer: Arpita Chatterjee 

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Read Next: Algorithmic Trading: A Cakewalk?

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Algorithmic trading is a method by which you can execute orders using pre-programmed trading instructions regarding time, price, and volume. These instructions can be selected from a wide range of options available or written.

When the market conditions meet the predetermined criteria, the trading algorithm produces buy-sell orders on your behalf, just as you would if you were placing an order manually.

These conditions can be anything based on indicators like RSI, moving average, Bollinger band, etc. based on various charting time frames. 

Let’s understand with an example: 

Suppose you want to buy 100 shares of a stock when its 100-day moving average rises above the 200-day moving average and sell 100 shares of a stock when it falls below its 200-day moving average, and your target is 20% profit from the entry price with a Stop Loss of 5%.

Using this set of simple instructions, a computer program can be written that will automatically monitor the stock price, as well as its moving average indicators, and place the buy and sell orders when the predefined conditions are met. There is no manual intervention required here. The trader no longer has to monitor the live prices and graphs or place orders themselves. This algorithm efficiently completes its tasks for the trader.

Algorithmic trading is also used for High-frequency trading, also known as HFT, it is a method of trading that uses powerful computer programs to transact a large number of orders in fractions of a second. It uses complex algorithms to analyze multiple markets and execute orders based on market conditions. 

In addition to the high speed of orders, HFT is also characterized by high turnover rates and order-to-trade ratios.

With the help of algorithmic trading, you can do whatever comes to mind, whichever method you want to use while taking your positions in the market.

Let’s have a look at the advantages of algorithmic trading:

1. You get the best price along with immediate and precise entry and exit. For e.g. you want to buy whenever the price of a particular stock crosses the 200 days EMA, the algo will trigger a buy order when this condition is met.
2. Automated checks on multiple market conditions. Say, you want to but a NIFTY Call option when 50 days moving average crosses above 100 days moving average and 200 days moving average.
3. The risk of having manual errors while placing the trade is less. Let me share with you one real-life experience while trying to place the trade for the put option I accidentally bought the call option.
4. No risks due to traders’ emotional and psychological factors. This is one of the biggest advantages algos are neither over-confident nor under-confident, they are neither greedy nor fearful.
5. Multiple trades can be executed at the same time without having to place them one by one. If you want to place multiple trades say across stocks you can easily do it as there is no human intervention, trades will be executed when the conditions are met.

Different Algo Trading software will come with different user interfaces, some might be easy to understand and execute while others can take a certain amount of time for you to master.

You can review the following algo trading platforms to check which one suits you the most.

1. Zerodha Streak
2. Algo trading by 5paisa
3. TradeTron
4. Angel Broking Algo Trading Softwares
5. Alice Blue Algo Trading Softwares

The success of your trade will be determined by your experience and knowledge; sometimes what may appear to your eyes, will not be visible to the algorithm such positions need to be executed manually.

Writer: Suraj Kar 

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Read Next: IoT: Internet of Things

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Team, MyGoalMySip.

Just Dial Limited (Justdial) is India’s leading local search engine with a vast database of over 30 million MSMEs. Millions of Indians get connected with these MSMEs via their platforms on a daily basis. The company provides local search-related services to users across India in a platform-agnostic manner. The multi-platform offering includes apps (Android, iOS), mobile websites, desktops, voice, and text.

The diversified offerings for the company’s customers include the transaction-enabled and mobile-friendly website for SMEs, a rating tool for SMEs to solicit online ratings from their customers, and payment gateway solutions.

Area of Operation: Just Dial Ltd

1. Justdial has launched JD Omni, an end-to-end business management solution for SMEs, through which it intends to help thousands of SMEs efficiently run their business online and have an adequate online presence via their own website and mobile site.
2. Apart from this, it has also launched JD Pay, a unique solution for quick digital payments for its users and vendors, and JD Social, its official social sharing platform to provide curated content on the latest happenings to users. The organization also aims to make communication between users and businesses seamless through its Real-Time Chat Messenger.
3. With the launch of JD Mart in FY21, they operationalized a dedicated platform for the B2B marketplace. JD Mart will connect bulk buyers with wholesale sellers (manufacturers, distributors, wholesalers, and other bulk suppliers) across product categories.
4. Their upcoming developments are JD Xperts, JD Partner, DIY Concept, and Hyperlocal Services.

Board of Committees: Just Dial Ltd

Subsidiaries:

• Just Dial Inc., USA
• JD International Pte. Ltd., Singapore
• MYJD Private Limited
• Except for Just Dial Inc., USA, both the other companies have not yet started their operations.

Competitors:

No direct domestic competition but they face competition from more established multi-national players, who are richer in terms of capital and other resources. They enjoy a first-mover advantage which translated into the largest user database in the country.

Shareholding pattern: Just Dial Ltd

Top Shareholdings:

• Reliance Retail Ventures Ltd – 66.96%
• Quant Mutual Fund – 1.88%
• DSP Mutual Fund – 1.84%

Industry Overview:

The Indian e-commerce market is expected to grow to US$ 99 Billion by 2024 at a CAGR (2019-24) of 27%, with grocery and fashion/apparel likely to be the key drivers of incremental growth. With the rise in ‘Digital India’, disruptions due to COVID-19, and the growth of smartphone adoption, online sales are expected to grow to a great extent. The e-Tail (Retail sales facilitated through the internet) market is expected to register a CAGR of over 35% to reach ₹ 1.8 Trillion in 2020.

There is a huge growth potential for e-commerce in the Tier-II, III, IV, and V areas, due to greater access to the internet, higher smartphone penetration, as well as raising awareness and people’s aspirations. There lies a largely untapped market, as the internet continues to not be readily available in these areas. However, with greater reach and better infrastructure, more people can benefit from internet-based services. These factors will encourage established service providers on the internet and related technological offerings.

Profit and Loss Statement: Just Dial Ltd

Consolidated P&L (in Rs. Crores):

Key Pointers:

1. Their prime source of revenue comes from the SME packages. 
2. Almost 80% of the company’s expense includes Employee costs.
3. In the last two FYs, the company’s financials have deteriorated to an extreme level.
4. While there is continuously negative growth in revenue, their expenses have been increasing.
5. Net profit is deteriorated by more than 70% in the last 2 years.
6. Their EPS growth has been drastically hit.

Balance Sheet: Just Dial Ltd

Consolidated Balance Sheet (in Rs. Crores):

Cash Flow: Just Dial Ltd

Consolidated Cash Flow (in Rs. Crores):

Financial Ratios: Just Dial Ltd

Stock Price:

Ratios:

Strength:

1. Just Dial is India’s largest local search engine and enjoys a first-mover advantage which translated into the largest user database in the country.
2. Promoters have increased their holdings from 33% to 77% in a duration of 2 years.
3. Company with Low-Debt and High-Investment.

Weakness:

1. High remuneration of key Ex. Directors in the light of the fact that their employee cost is 80% of the total company’s cost.
2. FIIs have reduced their shareholding from 51% in 2019 to 3% in March 2022.
3. The company has shown distressing financials, with Net profit and EPS Growth decreasing by more than 70% in the last 2 years and have recorded a negative operating profit in the last FY.
4. Focusing more on non-core business rather than using the investment money in core business operations.
5. The company is having a negative cash flow. Negative 3-Yrs CAGR Sales & Net Profit at -15.97% & -41.48% respectively.

Opportunity:

1. The company is trying its hand in different domains with JD Omni, JD Pay, JD Mart, etc as they have the advantage of huge customer data.
2. The rise in SMEs and Internet connectivity can help boost their business.

Threat:

1. Continuos negative revenue and profit growth alongside increasing expenses can prove to be a huge financial threat.
2. Stock with High PE.

For more information, reach us at support@prudentwealth.in

Team, MyGoalMySip.

Read Next: Shanthi Gears Ltd.: Should you invest?

Shanthi Gears, a subsidiary of Tube Investments of India, is a pioneer in gear manufacturing and is currently ranked among India’s top gear manufacturers. They are in the business of designing, manufacturing, and supplying gears and gearboxes, as well as providing specialized gear reconditioning services, and have been the preferred name for some of the industry’s biggest names for over four decades. The company also serves as engineering design consultants, advisors and providers of technical know-how and applied technology, solution providers and business process outsourcers in the fields of engineering design and drawing, software programming, and so on.

The company’s rich engineering heritage dates back to 1960, when P. Subramanian, an engineer himself, laid the groundwork with a modest small gear manufacturing unit in the town of Coimbatore. Shanthi Engineering and Trading Company, the forerunner to Shanthi Gears, began with simpler processes like milling and grew steadily under visionary leadership and with the hard work of its employees to become a private limited company—Shanthi Gear Products (P) limited—in 1972.

Area of Operation:

Shanthi offers a wide range of Standard and Custom Gearboxes for power transmission needs. The product in this series includes:

• Worm Gear Box
• Helical & Bevel Helical Gear Box
• Geared Motor
• Custom-Built Gear Box
• Mill Gear Box
• Open Gearing
• Products for Textile Industries
• CNC Machine Tools

Board of Committees: Shanthi Gears Ltd.

Subsidiaries:

The Company has no subsidiaries.

Competitors:

• L G Balakrishnan & Bros Ltd (Market Cap of Rs. 1,952 Cr )
• RACL Geartech Ltd (Market cap of Rs.669 Cr)

Shareholding Pattern:

Top Shareholdings:

• Tube Investments Of India Limited – 70.46%
• Pacific Assets Trust Plc – 2.90%
• Nimesh Sumatilal – 1.27%

Industry Overview:

The global industrial gearbox market was valued at USD 24.90 billion in 2020 and is expected to reach USD 32.43 billion by 2027, growing at a CAGR of 4.20 percent between 2022 and 2027. Due to increasing demand for gearboxes in various applications such as the manufacturing sector, power industry, and so on, the Asia-Pacific region accounted for a significant share of the industrial gearbox market in 2020. Countries such as India, China, Japan, Korea, and Australia are among the region’s major contributors.

With India’s population and income levels increasing, industries such as FMCG, Steel, Cement, Power, Infrastructure, and Mining are renovating and expanding their manufacturing facilities to meet public demand. The estimated market size of industrial gearboxes in India is 2,000 crores, with a growth rate of 2,600 crores over the next four years. In addition, India is focusing on renewable energy sources to generate energy, with the goal of achieving 40% of its energy from non-fossil sources by 2030, creating an opportunity for the windmill segment.

Shanthi Gears Ltd.: Profit and Loss Statement

Consolidated P&L (in Rs. Crores):

Key Pointers:

1. 95% of the Revenue comes from the Sale of Products whereas just around 2% is of Sale of Services.
2. Just around 8% of the revenue is from Exports while the rest are Domestic sales.
3. Almost 50% of the company’s expense is material cost and around 20% is employee cost.
4. The last two FYs have deteriorated the company’s as well as the industry’s financials due to the global pandemic.

Shanthi Gears Ltd.: Balance Sheet

Standalone Balance Sheet (in Rs. Crores)

Shanthi Gears Ltd.: Cash Flow

Standalone Cash Flow (in Rs. Crores)

Financial Ratios:

Stock Price:

Ratios:

Strength:

1. Shanthi Gears is the leading gear manufacturer in India and is the preferred name for some of the industry’s biggest players.
2. Their Board of Directors is well experienced in this business segment and are associated with the company for a long time.
3. They are a completely debt-free company.
4. The company has been maintaining a healthy dividend payout.

Weakness:

1. The company has been registering poor profit growth of just 4.5% over the past 5 years and has below par revenue growth.
2. Their Balance Sheet and Cash Flow are not as appealing as their peers.
3. The financial ratios don’t seem good as the company reported ROE and ROCE and negative revenue growth.
4. Trading at a high P/E ratio of around 40.
5. Insufficient use of shareholders funds – ROE, ROCE, ROA continuously declined in the last 2 years.

Opportunity:

1. The Indian industrial gearbox market is expected to grow at a good pace as India is one of the major global contributors in this segment.

Threat:

1. Both the FIIs & DIIs have trimmed their holding in the company.
2. The company has been continuously registering poor EPS.

For more information, reach us at support@prudentwealth.in

Team, MyGoalMySip.

Read Next: PW Insider: April 2022 Edition