Review of HDFC small cap fund

It was almost a decade from now when the HDFC small-cap fund was introduced on 10th April 2008. Well, at that time it was named as Morgan Stanley ACE fund and a multi-cap scheme was followed. But in mid-2014, Morgan Stanley MF was procured by HDFC Mutual Fund, that time the investments scheme were changed and the scheme was renamed as HDFC small and mid-cap fund. Again in November 2016, it was rechristened as HDFC small-cap fund.

The fund invests primarily in small-cap corporations and pursues to deliver long-term capital income. CMFR (Crisil Mutual Fund Ranking) rated it as the number one in the small-cap funds’ list for the first quarter of 2018. The manager of the fund since June 2014 is Mr. Chirag Setalvad who has more than 20 years of experience.

hdfc small

The fund’s AUM (Assets under Management) of the month-end arose more than 4 times which is ₹4578 Crores in May’18 from ₹909 Crores in June’15. Also, the fund has provided much higher average daily returns in more than last three years in comparison to the standard and rivals and with lesser volatility.

Refrain these mistakes while rebalancing the portfolio

Download the Fund Factsheet

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SIP Performance

chart1

Amount SIP Date  Start Date End Date Total Inv. Amount Worth of Investment CAGR
Rs.10000/- 25 1 st Aug. 2013 13 th Aug. 2016 Rs.610000/- Rs.1055000/- 21.66 % p.a.
1 Years 3 Years 5 Years
Fund 23.70% 18.71% 24.62%
Sector 5.99% 11.16% 26.82%

Overall returns

The fund has constantly surpassed the standard (BSE 200 TRI) and the listing (illustrated by funds placed in the small-cap funds listing in Crisil MF rank) overall dragging phase under analysis.

Risk analysis

Alpha 7.69
Beta 0.95
Downside Risk 18.91
Info Ratio Rel. 1.99
Jensens Alpha 7.34
Max. Drawdown -18.11
Max Gain 36.70
Max Loss -18.11
Negative Periods 11
Positive Periods 25
r2 0.96
Relative Return 7.17
Return 18.24
Sharp 0.62
Sortino 0.59
Tracking Error 3.60
Trenyor 11.25
Volatility 17.43

Portfolio analysis

Since last 3 years, the fund’s small-cap provided an average of 61.04%. The small-cap allocation has made a hike since November’16 after the fund was rechristened as a small-cap fund. Talking about sectoral level, in the last three years there were 5 primary sectors which contributed approx. 47% of the fund’s equity portfolio. During that phase, the main sector allocations involve construction projects, pharma companies, banks, industrial products and auto auxiliaries.

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One of the major contributors during that phase was VIP industries, Balkrishna industries, Aarti industries and KEC international.

In this listing, Dilip Buildcon has been the biggest contributor to the fund’s achievement. Up to May’18 Industrial products has been the highest component of the fund’s equity portfolio which was 16.2% then software-13.12%, banks-8.3%, auto auxiliaries-6.75% and pharma industries-5.3% respectively.

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The fund has invested in 124 stocks in the last 3 years, of which 22 were constantly clutched. The biggest contributors to the fund’s achievement between the constantly held stocks were Banco products, Swaraj Engines, NIIT technologies, Kalpataru power transmission and Carborundum Universal.

Note : Past performance of fund does not guarantee the future returns.

Mutual Fund Investment are Subjected to Market Risks, Read all Scheme Related Document Carefully.

Disclaimer: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here.

Refrain these mistakes while rebalancing the portfolio

Rebalancing portfolio has its own compulsion as rebalancing can help you to return on the route if you have deviated away from your primary asset allocation. Also, rebalancing can secure your portfolio from the volatility of the market in the case you want to minimize your investment risk. There can be several reasons that may lead you to rebalance your portfolio like a change in your financial situation or in the case if you have acquired your goals, rebalancing the portfolio is a must.

portfolio

But there is a set of rules while rebalancing the portfolio otherwise you will end up going beyond the defined level for your debt as well as an equity component. There are a lot of consequences and implications in terms of taxes, the effect on goals etc. while rebalancing the portfolio.

There are some common and avoidable mistakes that one must not do while rebalancing.

Focusing on the losers only rather than current winners

While rebalancing, it is a most important thing to keep in mind that it is necessary to take a look at the investments that are performing well while it’s alright to replace the investments that are leading you to lose your money otherwise you will end up exposing yourself to a big risk. It’s always a better plan to take a step back if you are willing to reorganize things throughout your portfolio.

LONG TERM AVERAGING OF EQUITY SIP’S IS RAPIDLY BUILDING WEALTH

To manage rebalancing by presumptions

Rebalancing is too important to be done only by one’s presumptions as you may assume that rates are going to get down in upcoming months and you move your debt portfolio in favor of funds that are long-dated. Reversely, you may have a feeling that the equities are going to get overpriced and a result of that you may want to shift more into low beta equities. Both views are based on just presumptions and may vary in reality. So, it is good to do rebalancing according to the rules.

Disregarding the tax factors

It’s very important to rebalance carefully when it comes to the tax bill. One must be attentive to how it might affect. You need to know while rebalancing that even the equity funds have to pay the LTCG tax on profits more than ₹1 lakh per year which is 10%. When you are exiting out of debt funds, tax bills can be higher. The taxes can be at the highest rate that is 20% after evaluating the benefit of indexation if you are selling out in less than 3 years. The tax costs can change the economics of rebalancing the portfolio.

Rebalancing without any supervision

It’s always a great decision to be on yourself and to do things on your own but sometimes a little guidance can take you out of the future risks. Like in rebalancing, it is always a better decision to take an advice of any expert while rebalancing your portfolio. An expert can help you in making quick and fruitful decisions and may tell you the do’s and dont’s of rebalancing. Those will make more comfortable for you to make further decisions about your long-term goals.

Rebalancing without any particular investment goal

One of the most common mistakes is rebalancing without any particular investment goal. Also, It is always a better decision to stay in liquid funds and not to rebalance it when you are close to your goals. Rebalancing is an important decision concerning the portfolio, the only thing is it must always be linked with your long-term goals and the costs do not exceed your benefits of rebalancing.

Conclusion –

Rebalancing portfolio is not as hard as it seems but if one is willing to take proper gains from the benefits it gives, then there is a necessity to follow some rules and take some guidance in order to maximize the returns of your investments and minimize the risk factor.

 

How Small cap Funds beat Nifty : A complete analysis of Different charts and Fact sheet

1. Cumulative Performance Chart (%)
 
2. Discrete Bar Chart
 
3. FACT SHEET OF SMALL CAP INDEX
 
4. Interactive Performance chart
 
5. Distribution Chart Period Type 3 years
 
6. Ratio Table
 
7. Rolling Bar Chart
 
8. Systematic Investment plan ( SIP ) Chart for last 5 Years SIP of Rs. 50000/- p.m.
 
9. Regular Withdrawal chart

Initial Investment: 10000000.00

Data Frequency: Monthly

Withdrawals Date: 10th of the Month

Withdrawals Amount: 100000.00 Monthly For 5 years

Data Frequency: Monthly

Withdrawals Date: 10th of the Month

Withdrawals Amount: 100000.00 Monthly For 5 years

10. Static Scatter Chart
 

Cumulative Performance Chart  (%)

Cumulative Performance (%) Cumulative PerformanceDiscrete Bar Chart

Discrete Bar Chart

FACT SHEET OF SMALL CAP INDEX

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Interactive Performance chartInteractive Performance chart 1Distribution Chart Period Type 3 years

Distribution Chart Period Type 3 years

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Ratio TableRatio TableRolling Bar Chart

Rolling Bar Chart

Do Not Compare Yourself with Other Investors While Making Investment

Systematic Investment plan ( SIP ) Chart for last 5 Years SIP of Rs. 50000/- p.m.

SIP CHART 4Regular Withdrawal chart

Initial Investment: 10000000.00

Data Frequency: Monthly

Withdrawals Date: 10th of the Month

Withdrawals Amount: 100000.00 Monthly For 5 years

Data Frequency: Monthly

Withdrawals Date: 10th of the Month

Withdrawals Amount: 100000.00 Monthly For 5 years

 

Regular withdrwal chart 2Static Scatter Chart

Static Scatter Chart

DISCLAIMER

Past performance of fund does not guarantee the future returns

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here.

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If you had invested Rs. 1 lakh in gold in 1979 then today its worth is Rs. 30.26 lakh…. while on the other hand, if you would have invested the same amount Of Rs.1 Lakh in equity then today its worth of Rs. 3.1 cr…..

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DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Know more About P/E Ratio and its Significance

We all know about that there are ups and downs in the stock market every day, we often hear about that the market is more than its value today or under-valued today also, that this or that stock is expensive or cheap etc. So what does that really means in the subject to stocks?

For example, if the share price of a company is Rs.100 and share price of another company is Rs.500 that is the share price of one company are more than another one that does not mean the company having high share price is expensive than the company having low. Share prices of the companies are always identified regarding EPS (Earnings per Share).

PE RATIO

EPS

EPS is the portion of the profit of the company allocated to each outstanding share of common stock. EPS works as a calculator of profitability of any company. More often, sometimes the data sources make the calculation easier by using a number of shares that stands out at the end of a particular period. The term EPS represents the part of the net gross of a company, taxes and stock dividends. EPS is also a calculation of company’s profitability on the shareholder point of view.

EPS

When one is purchasing shares of any company then he is purchasing the future earnings on a stock of that company. Also, if the EPS is high you have to be prepared to pay the high price and if it is not, then you will not get prepared to pay a high price. EPS is calculated by dividing post-tax profits from the number of shares in issue.

P/E ratio

For a long time, the investors and stock analysts use price-earnings ratios which are named as P/E ratios. P/E ratios are the ratios of share prices to earnings. P/E ratio is calculated by the price of a share of a stock divided by EPS (Earnings per Share) of the stock.

PE

The P/E ratio is used to help the investors to know the time period in terms of years in the value of earnings a company will need to make the production to get its current market share value.

Two types of measurement issues are there while calculating P/E ratio. First one discusses the period at which price of the shares and earnings are calculated. The price shown in a P/E is generally the current market price of the stock such as weekly or monthly average ratio. Second one concerns about earning for the future predicted earnings for the next year.

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Limitations of P/E Ratio

P/E ratio shows nothing but the EPS growth prospects of a company to the investors and that is the big limitation of P/E ratio. The company having high growth rate seems comfortable to buy even having high P/E ratio, perceiving that increase in EPS will somehow assist the P/E back down to a low level. If the company has not that much growth rate, you may look after the stock has lower P/E ratio also it is often not easy to know whether a high P/E multiple is due to the growth or just the stock gets overvalued.

P/E ratio once calculated using an estimation of further earnings is not able enough to provide the information whether the P/E is suitable enough for the current growth rate of the company. To fulfill this limitation, another type of ratio is used named PEG (Price Earnings to Growth) ratio.

PEG

PEG Ratio is calculated by dividing PE to EPS growth rate over the next year. PEG ratio propose that the P/E is in the line of growth when a PEG is greater than one it means that the stock is overpriced.

Conclusion

Undoubtedly, the P/E ratio is very famous and easy to calculate, but also there are many drawbacks that the investors should keep in mind while using it to evaluate values of the stock market. Straightly, no single ratio can give you all the information you want to know about stocks. So, try to use multiple types of ratios to get full-proof information about stock and its valuation.

Bharat-22 ETF Complete Portfolio – Will u buy this basket?

Bharat-22 ETF Complete Portfolio to be launched on behalf of Govt by ICICI Pru MF Will u buy this basket?

The ETF will be a portfolio of six sectors–basic materials, energy, finance, FMCG, as well as industrial and utilities. There will be a sectoral capping of 20 percent and a single company stock cap of 15 percent.

Bharat22 is fairly diversified products which will represent the performance of India & Government’s agenda over the long-term.

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ICICI Prudential AMC will be the ETF Manager and Asia Index Private Ltd (JV BSE and S& P Global) will be the Index Provider.

bharat22The government raised Rs 8,500 cr by divesting through CPSE ETF in the last financial year 2016-17.

For FY17, the government had revised the divestment target to Rs 45,500 crore and had over-achieved it by raising a total of Rs 46,247 crore.

If investors remember the first government ETF (CPSE ETF) was launched in March 2014. The fund has outperformed the index by a wide margin. It is up over 22 percent in the past one year, more than the near-18 percent rise in the Nifty50 index, and 17% which is the average of top 3 ETF linked to the index.

CPSE ETF Further Fund offer 2 (FFO 2) at 3.5% Discount

Globally, ETF assets have grown significantly. There is USD 4 trillion worth Assets Under Management (AUM) and are expected to touch USD 7 trillion by 2021.

“Bharat-22 is adverse to political risk, changes in government policy and governance of PSU which was less active historically.

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Cochin Shipyard IPO Review and GMP

Cochin Shipyard is the largest public sector shipyard in India in terms of dock capacity, according to CRISIL Report. The company caters to clients engaged in the defense sector in India and customers involved in the commercial sector worldwide. In addition to shipbuilding and ship repair, it also offers marine engineering training. As of January 31, 2017, Cochin Shipyard has two docks – dock number one, primarily used for ship repair (“Ship Repair Dock”) and dock number two, mostly used for shipbuilding (“Shipbuilding Dock”). The Ship Repair Dock is one of the largest in India and enables it to accommodate vessels with a maximum capacity of 125,000 DWT (Dead Weight Tonnage). The Shipbuilding Dock can accommodate vessels with a maximum capacity of 110,000 DWT.

Cochin Shipyard is in the process of constructing a new dock, a ‘stepped’ dry dock (“Dry Dock”). This stepped dock will enable longer vessels to fill the length of the dock and wider, shorter ships and rigs to be built or repaired at the wider part. The company is also in the process of setting up an International Ship Repair Facility (“ISRF”), which includes setting up a ship lift and transfer system.

In the last two decades, Cochin Shipyard has built and delivered vessels across broad classifications including bulk carriers, tankers, Platform Supply Vessels (“PSVs”), Anchor Handling Tug Supply vessels (“AHTSs”), barges, bollard pull tugs, passenger ships and Fast Patrol Vessels (“FPVs”). The company is currently building India’s first Indigenous Aircraft Carrier (“IAC”) for the Indian Navy. It has also grown its ship repair operations and is the only commercial shipyard to have undertaken repair work of Indian Navy’s aircraft carriers, the INS Viraat and INS Vikramaditya.

Cochin-Shipyard

 IPO Information

Issue Opens on: 01 August 2017
Issue Closes on: 03 August 2017
Issue Type: Book Built Issue IPO
Issue Size: 3,39,84,000 Equity Shares
Face Value: Rs 10 per Equity Share
Issue Price: Rs.424 – Rs.432 per Equity Share (QIB & NII)
Discounted PB: Rs.403 – Rs.411 per Equity Share (RII & Employees)
Market Lot: 30 shares
Listing proposed at: NSE, BSE

IPO Schedule :

31st July – Anchor List
01st Aug (Tuesday)– Offer Opens
03rd Aug(Thursday) – Offer Closes
08th Aug – Finalisation of Basis of Allotment
09th Aug – Unblocking of ASBA
10th Aug – Credit to Demat Accounts
11th Aug( Friday) – Listing on NSE & BSE

Allocation to QIB : 50%
Allocation to NII :15%
Allocation to RIII : 35%

Object of the Issue

1. Setting up of a new dry dock within the existing premises of our Company (“Dry Dock ”);

2. Setting up of an international ship repair facility at Cochin Port Trust area (“ISRF ”); and

3. General corporate purposes.

TOP 10 SHAREHOLDER

TOP 10 SHAREHOLDER1Outlook of the Firm:-

  1. The largest Public Sector Shipyards Caters;
  2. Offering diversified products and services maintaining quality;
  3. Maintain a robust and strong customer base;
  4. Competitive cost structure and efficient operations;
  5. Competitive financial records and performance;
  6. Skillful and experienced management and leadership team.

relianceReasons not to invest in Cochin Shipyard

There are outstanding legal and tax proceedings involving its Company. Further, in one of the outstanding legal proceedings, the Chairman and Managing Director of its Company has also been made a performa party. Any adverse decision in such proceedings may expose us to liabilities or penalties and may adversely affect its business, financial condition, results of operations and cash flows.

Worldwide demand and pricing in the commercial shipbuilding industry are highly dependent upon global economic conditions. If the global economy fails to grow at an adequate pace, it may adversely impact the commercial ship building industry which may negatively affect its business, financial condition and growth prospects.

Loss of any of its major customers or a reduction in their orders, or failure to succeed in tendering for shipbuilding or ship repair projects for the Indian Navy in the future, despite its previous track record will have a material adverse impact on its business, financial condition, results of operations and growth prospects as company are dependent on a few of its major customers.

The company cannot assure you that its proposed Dry Dock or International Ship Repair Facility will become operational as scheduled, or at all, or operate as efficiently as planned. If company are unable to commission its new proposed dry dock or the new ship repair facility in a timely manner or with out cost overruns, its business, results of operations and financial condition may be adversely affected.

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The cost estimates by the Dry Dock Project Consultant and the ISRF Project Consultant have been derived from and benchmarked against similar maritime and dry dock/shipyard projects carried out by the Dry Dock Project Consultant and the ISRF Project Consultant respectively in recent years and may not be accurate.

The company could incur losses under its fixed price contracts as a result of cost overruns, delays in delivery or failures to meet contract specifications which may have an adverse effect on its business, financial condition and results of operations.

The companies entire business operations are based out of a single shipyard at Kochi. The loss of, or shutdown of, its operations at its shipyard in Kochi will have a material dverse effect on its business, financial condition and results of operations.

Reasons to invest in Cochin Shipyard

Build a strong order book by bidding vigorously for projects to be awarded by the Indian PSUs and defence sector pursuant to ‘Make in India’ initiative.

Continue to enhance its construction quality and delivery time and enhance its price competitiveness in order to increase its market share.

Continue to leverage its market position and its relationships with customers, suppliers and other business partners to support its growth and improve its competitiveness.

One of India’s leading public sector shipyards catering to both commercial clients as well as clients engaged in the defence sector with a multitude of offerings for a broad range of vessels across life cycles.

Modern facilities and infrastructure and integrated capabilities to deliver quality products and services.

Order book with a strong customer base of reputable ship owners and marquee clients.

Competitive cost structure and efficient operations.

Led by a dedicated board, long serving and experienced senior management backed by a strong pool of experienced professionals Continuous profits leading to robust financial performance.

INDIA SHIP1Key drivers

Strategic positional advantage

India’s strategic position along the east bound and west bound international trade routes offers an opportunity to cater to vessels plying on these routes. A main container route connecting America and Europe to the East passes very close to the Indian coastline presenting a major opportunity for repairs.

Capacity additions

Cochin Shipyard is in the process of adding one more dry dock of size 310 x 75/60 x 13 M, which will enable it to undertake repairs of vessels like LNG carriers, semisubmersibles, jack up rigs, and drill ships.

Full commissioning of the international ship repairing facility at Cochin port with state of the art ship repair facilities  will  enable  Cochin  to  position  itself  as  a  major  ship repair  hub.  The target  is  to  enhance Cochin Shipyard’s ship – repair capability by 70 – 90 ships per annum.

Phase 3 and 4 of development (the expansion and up gradation of infrastructure at Goa Shipyard) are under progress. This development is expected to enhance its capabilities for the repair of ships for clients engage in the defence sector.

The construction of a floating dry dock facility at V O Chidambaranar port is in the feasibility study phase.

This  facility would enhance its capacity to carry out under water repairs of tugs, launch boats and other watercrafts.

The project to modernise ship repairing facilities at Kolkata dock is expected to improve  its capabilities to service both Indian and foreign vessels. The project is still in the planning stages.

There is a proposal underway for refurbishment of the existing Hughes dry dock at Mumbai port. This project aims to provide adequate wet berth facilities to complement dry docks to cater to afloat repairs.

In  order  to  create  adequate  dry  docking  facilities  and  maintenance  capacities  for  vessels  plying  through Andaman and Nicobar waters, a project to create a ship repair facility (ship lift/slipway) capable of handling 5000  DWT  vessels  is  underway  and  is  in  the  pre -feasibility  stage,  according  to  a  report published  at  the Maritime India Summit 2016.

Industry peers

PEERS

Company Financials

For the year ended March 2017, the company reported revenue of Rs. 2208.5 crores. Profit figure for the year stood at Rs.312.1 for the year ended March 2017. Basic EPS for the year ending March 2017 is Rs. 27.56 whereas last three years weighted EPS comes to be Rs. 23.38.

Revenues from shipbuilding and ship repair operations in recent fiscals

Valuation

Company revenue grew by 3% to Rs 2059.49 crore for the year ended March 2017. But its operating profit margin declined by 120 bps to 18.5% and thus the operating profit was down by 3% to Rs 380.20 crore. Eventually gained by higher other income and lower interest, the net profit was up by 7% to Rs 311.12 crore. The EPS for FY17 works out to Rs 23.0 on post issue equity.

The offer price of Rs 424-432 discounts the FY17 EPS by 18.4 times on lower price band and 18.8 times on upper price band. The listed comparable peer Reliance Defence Engineering has reported a net loss for FY17 and thus its EPS was in negative.

The EV/order book of CSL is at 1.2 times. The EV/sales and EV/EBITDA was 1.9 times and 7.6 times compared to 23.9 times and 183.8 times that of Reliance Defence Engineering.

Grey market premium

 Grey market premium is Rs.160/-, Kostak is Rs. 1100/-,

Conclusion: Investors may consider investment for medium to long term