Aavas Financiers IPO Review and list of anchor investors

Aavas is a retail, affordable housing finance company, primarily serving low and middle-income self-employed customers in semi-urban and rural areas in India. A majority of its customers have limited access to formal banking credit. According to ICRA Report, the Company had the lowest GNPAs as of March 31, 2018, and the second highest growth rate of assets under management for the last three financial years, among affordable housing finance companies that had assets under management between Rs 25 billion and Rs 200 billion.

aavas

Aavas Financiers raises Rs 520 cr from 34 anchor investors

List of Anchor investors:

 

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IPO Dates & Price Band:

  • IPO Open: 25-September-2018
  • IPO Close: 27-September-2018
  • Issue Size: Approx Rs. 1734 Crore
  • Offer for Sale: 16,249,359 Equity Shares
  • Face Value: Rs.10 Per Equity Share
  • Price Band: Rs. 818 to 821  Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%

Market Lot:

  • Shares: Apply for 18 Shares (Minimum Lot Size)
  • Amount: Rs.14,778

Allotment & Listing:

  • Basis of Allotment: 03-October-2018
  • Refunds: 04-October-2018
  • Credit to demat accounts: 05-October-2018
  • Listing: 06-October-2018

Lead Managers:

  • Edelweiss Capital Limited
  • HDFC Bank Limited
  • ICICI Securities Limited
  • Spark Capital Advisors (India) Private Limited
  • Citigroup Global Markets India Private Limited

Company Promoters:

  • Lake District Holdings Limited
  • Partners Group ESCL Limited

share holder

Main object of the issue:

The Offer comprises a Fresh Issue by our Company and an Offer for Sale by the Selling Shareholders.The object for which the Net Proceeds of the Fresh Issue will be utilized towards augmenting its capital base to meet its future capital requirements arising out of growth in the business.

Competitive Strengths:

The company has a strong distribution network with deep penetration serving underserved customers in rural and semi-urban markets.

In-house sourcing model is leading to superior business outcomes: A direct sourcing and collection system enables a company to optimally price offerings and maintains asset quality.

The company has implemented a robust and comprehensive credit assessment, risk management and collections framework to identify, monitor and manage risks inherent in operations.

The company has access to diversified and cost-effective long-term financing.

The company has made significant investments in information technology systems and implemented automated, digitized and other technology-enabled platforms and proprietary tools, to strengthen offerings and derive greater operational, cost and management efficiencies.

Company’s management team has extensive knowledge and understanding of the housing finance business and the expertise and vision to organically scale up business.

penetration

loan penetration

U.S. Student Debt – The Next Financial Crisis?

Strategies:

The company intends to continue to expand in an on-ground contiguous manner, to drive greater and deeper penetration in the eight states in which it operates and sets up an additional 70 branches during Fiscal 2019.

The company plans to continue to focus on low and middle-income self-employed customers and increase the market share of existing products in the rural and semi-urban markets of India.

The company has been able to access cost-effective debt financing and reduced average cost of borrowings over the years due to several factors, including financial performance and improving credit ratings.

The company intends to increase product portfolio and improve cost efficiency through the use of technology and data analytics

The company intends to continue to undertake initiatives to increase the strength and recall of ‘Aavas’ brand to attract new customers.

world to gdpLoan penetration

loan penetration

The housing shortage in India

The housing shortage of india

CreditAccess IPO Review and the list of anchor investors

Financials:

  • The company consistently delivered high-profit growth in the last five years.
  • It invested in creating capacity and increasing the number of branches, which helped its loan book grow at an annualized rate of 58.6 percent and profit at 71.3 percent.
  • Gross non-performing loans were 0.34 percent of total advances as of March, while its net interest margin is high at more than 7 percent.
  • Aavas has a strong capital adequacy ratio of 61.55 percent, leading to a lower return on equity of 11.2 percent in the year through March.

Ownership vs rented scenario

ownership vs rented

Negative:

Aavas business requires substantial capital and any disruption in its sources of capital could have an adverse effect on its business, results of operations, financial condition and cash flows.

The risk of non-payment or default by borrowers may adversely affect its business, results of operations, financial condition and cash flows.

Aavas are affected by changes in interest rates for its lending and treasury operations, which could cause its net interest income to decline and adversely affect its business and results of operations.

Aavas downgrade in its credit ratings could increase its borrowing costs, affect its ability to obtain financing, and adversely affect its business, results of operations, financial condition and cash flows.

Aavas may face asset-liability mismatches, which could affect its liquidity and adversely affect its business and results of operations.

Aavas operations are concentrated in four states of western  India,  particularly Rajasthan and any adverse developments in this region could have an adverse effect on its business, results of operations, financial condition and cash flows.

Aavas inability to recover the full value of collateral, or amounts outstanding under defaulted loans in a timely manner, or at all, could adversely affect its results of operations.

The Indian housing finance industry is highly competitive and its inability to compete effectively could adversely affect its business and results of operations.

Aavas are exposed to operational and credit risks which may result in NPAs, and Aavas may be unable to control or reduce the level of NPAs in its portfolio.

Aavas Company and its Directors are involved in certain legal and other proceedings. Any adverse outcome in such proceedings may have an adverse effect on its business, results of operations and financial condition.

The bankruptcy code in India may affect its rights to recover loans from its customers.

Valuations:

At the upper end of the price band, the company demands a price that is 4.1 times its post-infusion book value for the year 2017-18. That’s higher than its established peers, especially when it offers a lower return on equity.

Comparison with Peers:

PEERS

Grey market trend:

Current Grey market premium is Rs. 25/- ( Fall from Rs. 170/- )

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

U.S. Student Debt – The Next Financial Crisis?

Higher education has become one of the biggest money-making scams in America.  We tell all of our young people that if they want to have a bright future, they must go to college.  This message is relentlessly pounded into their heads for their first 18 years, and so by the time high school graduation rolls around for many of them it would be unthinkable to do anything else. And instead of doing a cost/benefit analysis on various schools, we tell our young people to go to the best college that they can possibly get into and to not worry about what it will cost.

Real estate rental yield is below one percent

We assure them that a great job will be there after they graduate and that great job will allow them to easily pay off any student loans that they have accumulated.  Of course most college graduates don’t end up getting great jobs, but many of them do end up being financially crippled for decades by student loan debt.

In all of American history, we have never seen anything quite like this student loan debt bubble.  Since 2007, the total amount of student loan debt in America has nearly tripled.

Let me repeat that again.

Since 2007, the total amount of student loan debt in America has nearly tripled.

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But of course the quality of college education has not tripled over that time.  Instead, it has progressively gotten worse.  At this point most college courses have been so “dumbed down” that the family pet could pass them.  If you would like to look into this more, you can find a list of 37 of the most idiotic college courses in America right here.

These days, most college courses do not require any actual writing.  Instead, your performance is judged by a series of “tests” consisting of multiple choice, fill in the blank, and true/false questions.  And the questions are usually ridiculously easy, because most of our high school graduates need to take remedial courses in basic skills when they get to college.

I spent eight years at public universities, and the quality of education that I received was a joke, and that was many years ago.  Now the quality of education has deteriorated so dramatically that most college degrees are essentially worthless from a practical standpoint, but for many professions you still need that “piece of paper” in order to “qualify” for certain jobs.

So the scam continues, and thousands upon thousands of “administrators”, “diversity specialists”, “career counselors” and “college presidents” are taking home massively bloated salaries at our expense.  Beautiful new lecture halls, residential complexes and sports stadiums are going up at colleges and universities all over the country, and textbook publishers are laughing all the way to the bank.

More than 4 lakh Pune flat buyers are victims of the builders

If everything but the basics was stripped away, the cost of actually delivering a college education to students would be quite low.  In fact, most learning could be done over the Internet.

But instead, the “college education industry” has convinced all of us that we desperately need their services, and that we shouldn’t care about the price.

Of course many of our young people are filled with regret once they get out into the real world and they realize that student loan debt is going to financially cripple them for the rest of their lives.

At this moment, America is drowning in more student loan debt than ever before.  The following are 11 rage-inducing facts about America’s wildly out of control student loan debt bubble…

#1 The student loan debt bubble has now grown to 1.4 trillion dollars.

#2 In 2007, the total amount of student loan debt in the U.S. was just 545 billion dollars.

#3 Over the previous ten years, student loan debt has grown by a staggering 176 percent.

#4 Americans now owe more on their student loans than they do on their credit cards.

#5 In 2003, student loan debt accounted for just 3.3 percent of all household debt.  Today, that number has grown to 10.5 percent.

#6 The current student loan 90-day delinquency rate is 11.2 percent.

#7 30 percent of all student loans in the United States are either in “deferment” or “forbearance”.  The most common reason a loan is placed into one of those categories is because the borrower cannot pay.

#8 It is being projected that a whopping 40 percent all student loan borrowers will default on their loans by 2023.

#9 From 2007 through 2017, “college tuition costs jumped 63 percent, school housing surged 51 percent and the price of textbooks by 88 percent.”

#10 In 2001, 18.6 percent of all U.S. households led by someone in the 18 to 34 age bracket were carrying household debt.  Today, that number has jumped to 44.8 percent.

#11 Each year, more than a million Americans default on their student loans.

 

This article originally appeared on The Economic Collapse Blog.  About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

Secure your Future with the Best Retirement Plan?

The best part of retirement is when you get rid of a daily 9 to 5 job. But the worst part is there is the lack of a salary. To live the same life that you used to live before your retirement requires a substantial corpus which will last till your lifetime. If you will have a shortage of funds, then you will have to cut down your expenses and will have to compromise in every situation. And this is definitely not a solution to this problem. If you start investing wisely from the early stage, then you’ll don’t have to face any of these problems after your retirement.

secure

When we a look at the stats, it clearly says that India has more than 50% of its population below 25 years and 65% of the population is below 35 years. Before Jan 1, 2004, the government of India used to give pensions to their employees after the retirement which was quite important for the employees. Nowadays employees or people have to start Retirement planning their post-retirement from the early stage to make them financially independent.

Review of HDFC small cap fund

We all need money for our living. It is our first necessity. And to earn money a person needs to work. But we cannot work for a lifetime. There will come a day when we will have a loss of stamina to work. A fact says that, in India, average retirement age is 60 years. But, many retire before with their choice and sometimes with some other causes like job loss, disability, etc.

We can see that as per some of the norms of the profession, employees can even work till 70 if they are well. And in some professions, people have to retire early like in sports. In these cases, the different situation will have different financial consequences. Therefore, it is required to make a hand full of the corpus live a standard life after retirement.

Following are the factors which make an impact on your retirement corpus:

  • Cost of inflation-

Inflation reduces your purchasing power and also consumes your savings faster since due to inflation, the value of money goes on decreasing year on year.

  • Drop in rates of fixed income-

A few years back, you were able to maintain a particular income level by choosing fixed income instruments for investments, as they were providing high returns. But today, interest rates are dropping down which is the reason why this generation has to manage their income for their better living condition.

Parents are Better Teacher of Financial Planning than School

  • Increase in life expectancy-

Since the medical technologies are being advanced day-by-day and so people are expected to live more than usual. Due to this, more corpus is needed for the people to maintain their living after the retirement.

  • People shifting from joint family to nuclear family-

Earlier, there was the huge privilege of the joint family system in India due to which the younger generation could take good care of the old age person in the family. But due to the better employment facilities at different places, people are shifting from joint family to nuclear family. So, planning for the retirement from the early age has become must these days.

  • Medical expenditure-

When you get close to the old age, there can be several medical issues which require a huge amount of money which get add up on your daily or monthly expenses. And the medical cost is also rising up day-by-day. So, to get rid of this situation in future, you have to invest enough in your medical.

EXAMPLE:

retirement

reitrement 2

From the above example, Mr. X would just need to invest Rs 7,927 monthly. And, Mr. Y won’t be able to achieve the corpus, even if he invests Rs 40,000.

So, to generate a good corpus, early investment is very much required to get a standard living after the retirement.

Disclaimer:

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any agency of the Indian government. Examples of analysis performed in this article are only examples. They should not be utilized in real-world analytic products as they are based solely on very limited and dated open source information. Assumptions made within the analysis may or may not be reflective of the position of any entity.

The complete process of claiming Insurance of your Stolen Car

In the case, your car got stolen from anywhere, and you want to make an insurance claim of it; the first step you have to take is to notify the insurance company as soon as possible. You must also inform the police within 24 hours of the incident happened. The insurance company’s office will help through the entire process. The significant thing to know about is that the vehicle must be covered under the comprehensive policy from the insurer, which includes theft or fire, damage in the natural calamities, accidental damage to the car, and third party cover.

car

Action needs to be taken to claim your vehicle insurance-

First Information Report (FIR)

The owner of the vehicle has to file a police complaint within 24 hours of a period starting from the incident happened.

Insurance claim form

The car owner must provide the necessary information regarding the vehicle through calling customer care center of the insurance company such as details of the car, insurance policy number and also the description about the time and date of the incident. Customer executive will note those details for filling up of the claim form.

Why do I need a personal accident Insurance Policy?

Important Documents

The insured must submit all the necessary documents to the RTO office like duplicate copies of the RC (registration certificate) of the vehicle, a copy of the driving license, records of the insurance policies, correctly signed insurance claim form, FIR of the incident and a letter revealing the theft of the vehicle.

Claim approved/settled

The owner of the vehicle must transfer the registration of the car in the name of the insurance company and hand-over the keys along with a letter of subrogation to the insurer straight after the police submit its ultimate ‘non-traceable’ report of the vehicle, and the claim is approved/settled by the insurance company.

Repayment from the insurer

The owner of the vehicle must submit the authentic copy of the repair invoice and receipt of the payment to the insurance company. Post that, the settled amount will be compensated between the period of one week.

Why should you get a standalone cancer insurance plan?

Insurance claim refused

There are some chances that your insurance claim will not get accepted by the insurance company like-

  • If the car does not have a valid RC
  • If the car with a private registration certificate (i.e. white number plate) is given on rental purpose or any business purpose.
  • If any type of false representation and misleading facts regarding the theft incident are detected.
  • If one has purchased a used car and the registration of that car has not yet transferred to his name in the copy of the insurance policy, then the policy will be taken as a void and the claims will not get accepted.
  • If the vehicle is stolen by the carelessness of the owner. The claim might get rejected in the case where the owner forgets to lock the doors and close the side windows of the vehicle or leave the keys inside the car without locking the doors.
  • Furthermore, the insurance company will compensate the paid amount to the finance company or bank if the vehicle was purchased on loan.
  • The owner of the vehicle should attain a duplicate copy of the RC of the car from the office of RTO (Road Tax Officer) as soon as possible.

Parents are Better Teacher of Financial Planning than School

Many people prefer that adding personal finance in school syllabus is a good idea. According to them, a child should learn finance related concepts in school to get better with money like the adults. Both parents and school plays different roles in shaping the child. There are a lot of decisions in a child’s life like while choosing the language, sports, science, math, etc. at school, aside from implied skills of social behavior, authority, and structure, when the domain is in the hand of the household. The important thing to know about is that there are a lot of skills that the parents should teach like admiring and respecting the nature, eating good and healthy food, knowing about the human body and also how to use money properly.

parent

In addition, the Money Advice Service (UK) in cooperation with Cambridge University has performed numerous research projects about initiating financial skills in children and young ones. In that publication named ‘what drives financial behavior?’ Published in April’18, they give a very useful framework. They distinguish the enablers and inhibitors of financial ability in three sections i.e. ability, connection, and mindset.

Ability means the knowledge of financial products along with concepts about money as well as financial numeracy. Connection means arrangement and access to money and money transactions. Mindset signifies the value and viewpoint towards money like saving, confidence as well as the financial position of the family.

A WAY OF SUCCESS FULL FINANCIAL PLANNING

Moreover, teaching about the financial concepts and things to children has no special effect on how they are going to manage their money or make any decision with money. The connection and mindset elements determined these important financial behaviors. The duty to promote the right outlook about money lies mainly with parents and not at all with the school.

What should parents do?

In recent studies, it has been found that the money habits are developed in children by the age of seven years old. Children learn from many activities and tasks that assist them how money works in the family and parents must support it through on-going involvement and motivating children in making easy decisions. For instance, a kid whom you give some money to go out and purchase some fruits for himself is going to gain the experience of looking for the prices, making his own choice, paying money, then counting the change given back to him and at last enjoying the fruit. It is a very good experience that allows a connection with day to day financial decision-making.

One important thing to understand is that the kids learn from the speaking and behavior of their parents. So, instead of teaching them about the easy assumption that money can be withdrawn from the ATM and you can buy all stuff with your credit cards, make them learn that money is a limited resource and one can get it by pursuing a job and getting it done. Make sure that the family conversations’ include taking joint money decisions and including kids in the conversation is always a better option.

EMI VS SIP ( Be controlled or take control )

The kids had older age gain financial concepts like compounding very well. It has been seen that many kids took it upon themselves to earn, save and keep aside money for a particular game, a toy or any gadget that they wanted to purchase. They also understood and perceived the deals, discounts as well as bargains.

Outlook towards a financial situation is evolved from the decisions that the household takes and the experiences kids have in contributing in such decisions. The family that shows anxiety when money goes short; the family that is resigned to believe that their financial situation will not change; Families that are careful about borrowing are all completely communicating outlook towards money in the mind of kids. Self-confidence regarding management of money develops in when parents can actively show how to make a tough decision with a finite resource.

There is a lot to know about the financial literacy. For instance, when one wants to take a personal loan, understanding how the monthly EMI (By separating Principal and interest component ) will be calculated, how stabled and floating rates will be as well as how a loan must be compared to income, are all the important factors to know. And putting these concepts in a school syllabus many years before that decision probably will not attain much.

Why is equity the most preferable long-term asset class?

It has been an eminent journey for the Indian mutual fund industry since now. The MF industry has made outstanding steps over the past few years. The investors have raised a substantial ₹1.3 lakh crores in equity mutual funds in 2017. But, the percentage of mutual fund assets in household savings is very less in India.

equity

According to the data from RBI, the percentage of mutual funds in financial assets is as low as 13%. The percentage of mutual funds will be even lesser if we add household savings in the physical assets, i.e., gold, petroleum, real estate etc. Even after the immense success of the Indian MF industry, the most selected choice for people is still bank deposits which are approx. 50% of the household financial assets.mutualSource: RBI

One can see that mutual funds savings are even less than 22% of the total bank deposits. The similar percentage in the US (United States) is around 101%. Moreover, almost the top 60 district of India hold the immense percentage of the mutual fund industry AUM. Except for those districts, the penetration of mutual funds in household savings in remaining part of India is appallingly less. One of the numerous reasons behind the low penetration of mutual funds in the country is the deficiency of financial awareness.

Risk factor

Doubtlessly equity is an uneasy and unpredictable asset class. There are sudden fluctuations in the stock market and this is called volatility. If you have invested in equity and your investment generally makes more hike in up-markets than it drops in down-markets, then it is a sign that your probability of getting impressive results are very high than of suffering loss over long investment tenure which is very low.

Mutual funds reached to 21% of total bank deposits

Performance in 5 years

The time period of five years, i.e. from 2014 to 2018 covers uncommon market conditions. 2014 was a year with a rising price. It was the year with a bull market with Lok Sabha elections and BJP coming to authority. 2015 was a good year stock market-wise having a correction worldwide as well as in India. 2016 started with a significant drop within the first 2 months, followed by an improvement. 2017 was a contrary year to a bull market. 2018 started with a volatility period of 3 months in the market, and since then the market is mostly seen as range-bound.

Different asset class

In this exploration, BSE-100 is taken as the proxy for the equities. BSE-100 symbolizes the large-cap province of stocks. Large-cap stocks hold the immense majority of overall market capitalization in the stock markets. CRISIL Composite Bond index represents the long-term i.e. more than 5 years, medium i.e. 3 to 5 years and short-term i.e. 1 to 3 years fixed income investment. CRISIL liquid fund index represents very short-term fixed investments i.e. less than a year and this index is similar to the savings bank.

Performance in 2014

2014Source: CRISIL, BSE, Goldprice.org

As mentioned 2014 was a year with a rising or a bull market year. All the asset classes performed well in 2014 except gold. And BSE-100 was outperformed.

Performance in 2015

20141Source: CRISIL, BSE, Goldprice.org

2015 started amazingly for equities but there was a great rectification in the month of March and there was high volatility in the stock market for the rest of the 9 months period with a downward bias. Predictably, equity not performed so well in such market-conditions but still is the best performer if we combine the 2014 and 2015 performance of all asset classes.

Warren Buffett that may help you to create wealth in long-term

Performance in 2016

2016Source: CRISIL, BSE, Goldprice.org

2016 started with under-performance by equity, driven mostly because of the slowdown in economy on the back of dropping prices of crude oil. But the stock market made a recovery in the month of March and maintained it or the remaining year.

Performance in 2017

2017Source: CRISIL, BSE, Goldprice.org

2017 was the great year for the stock market. Equity performed exceptionally well in 2017 and after the under-performing period of 2 years, BSE-100 provides more than 30% returns.

Performance in 2018

2018Source: CRISIL, BSE, Goldprice.org

2018, as many investors know, saw a lot of volatility and the market has been range-bound over the last few months. Let us how different asset classes have performed so far this year.

Large-cap equity vs. mid and small-cap

According to the data, mid-cap and small-cap stocks have dropped 20% to 30% in 2018. Even though mid-cap and small-cap funds are capable enough to provide high returns in the long-term period but large-cap funds and stocks are less volatile than them. Large-cap funds deliver balance to the investment portfolio and these funds should contain the core of the portfolio.

Conclusion

CONCLUSIONSource: CRISIL, BSE, Goldprice.org

Equity seems to be the worst performing asset class in 2018 but the outstanding performance between the period of 2014 and 2017 ensures that equity shows itself as the best performer over the entire period.

 

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.

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

Download (PDF, 158KB)

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.

Download (PDF, 120KB)

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.

How to disclose mutual funds capital gains while filing ITR

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.

A significant 25 years journey of Mutual Funds

“Active fund managers in India have convincingly outperformed benchmarks over 5, 10 and 20-year time frame.” The industry of mutual fund was open to private sector encounter for the first time in 1993.

The former Kothari Pioneer Mutual Fund which is named as Franklin Templeton MF introduced Prima & Blue chip fund on 1st Dec.’93. Initiating from these two funds, there were 9 equity fund schemes obtainable in India. A total of six schemes were introduced in 1993 and two were introduced before ’93. to develop the assets under their enclosure to nearly ₹7 lakh crores from ₹48,000 crores, it takes almost 20 years of efficiently period.

mf

Indian MFs have multiplied their assets to more the ₹23 lakh crores in the past 5 years without any exertion. Almost ₹70,000 crores of the yearly MF Flows now floats in through the SIP (Systematic Investment Plan). These days the SIPs capture prime recall for the new and upcoming investors but competing with the old preferences like insurance plans and bank deposits have never been such easy-going.

For the current position of the industry, the excellent ones are the asset managers, advisors, and the regulators. The credit must go to these three positives of the MF industry. There was a time when the fund managers have struggled in the developed markets to keep it and match up with the markets, active fund managers in India have definitely outperformed benchmarks over 5, 10 and 20-year time frames. The 10-year category returns on sincerely organized small-cap, mid and large-cap funds are ahead on the Nifty50, Nifty Midcap100 and Nifty Small cap 100 by compelling margins of 100, 300 and 700 basis points even in spite of recent fluctuations. The supremacy of the open-end funds has also made it clear that the worst performing ones lose assets to the good performing ones.

Fact sheet of Women fund managers who have outperformed or Underperform over the long-term

By continuously prioritizing investor’s concerns, SEBI has shown that it’s a strong regulator. SEBI has played a crucial role in establishing MFs by the’ advanced tightening of its rules on revelation, efficient exposures, and governance.

Despite the outstanding performance of the MF industry, there are some misses that should be developed. Indian MF industry is mainly marketed on their current 1-year, 3-year, and 5-year records. According to the sources, approx. 55% of retail investors had only 2-year holding period on equity funds and that time is too less and barely provide the benefits of investing in equity. A large number of domestic equity funds exhibit portfolio turnover ratios of more than 50% that means minimum half stocks are replaced within a year. The industry must shift the goal-line to more long-term performance course to entice better fund managers and more stable assets. The salary of fund managers must benefit into constancy and tenure, and not just to master the 1 to 3-year rankings.

Mutual funds reached to 21% of total bank deposits

In India, Equity MFs are still categorized on the basis of a sole-dimensional market-cap viewpoint which is an idea introduced in 1993 by the Kothari Pioneer MF. Debt funds are even adapted more to corporate treasuries than the new and retail investors. Also, ETFs and good passive funds are lost in action while there is a group of many active funds. In the past years, new launches have focused around common closed-end funds, thematic funds or equity saving funds, intended to utilize tiny loopholes in constantly changing tax laws. Rather than, investors will like to invest in 10 to 15-year debt funds and pension funds that provide tax-efficient income or ETFs with micro-cap or wide-market portfolios.

After putting barriers on liquidity and declaration with their open-end funds MFs have been reverting recently, by turning out series after series of closed-end funds with indefinite instruction. Close-end schemes at 1002 are numerous than open-end schemes i.e. 811.

It can be strange to worry about diminishing competition in an industry with about 2000 schemes and 40-odd players. But the reality is that the industry is rapidly becoming a horse race. Talking about today, the topmost 5 AMC in the industry manage almost 57% of the assets. Moreover, this listing has rarely any changes in the past 10 years with large AMCs easily growing larger.

In addition, it seems to be a far better option that MF industry self-regulates itself on these particular outlooks. Without remaining awaited for the SEBI to add some more pages to its already long rule-book.

 

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

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.

CreditAccess IPO Review and the list of anchor investors

CreditAccess Grameen is a Bengaluru-based leading micro-finance institution, focused on providing micro-loans to women customers predominantly in rural areas in India. It is the third largest NBFC-MFI in India by gross loan portfolio end March 2017. The wide range of lending products addresses the critical needs of customers throughout their life cycle and includes income generation, family welfare, home improvement and emergency loans. The customer-centric business model, wide range of product offerings, as well as well designed product delivery and collection systems, has enabled the company to achieve high customer retention rates and low credit costs.

The company focuses on customers in rural areas in India, who largely lack access to the formal banking sector and present a latent opportunity for offering micro-loans. The products are built on a deep understanding of the requirements of customers. The flexibility of products in terms of ticket sizes, end-uses and repayment options etc. and the manner of their delivery differentiates it from competitors and generates customer loyalty.

CreditAccess

CreditAccess Grameen raises Rs 339 cr from anchor investors.

The company has allotted 80,41,617 equity shares to 21 anchor investors

Among the anchor investors are Neuberger Berman Emerging Markets Equity Fund, Eastspring Investments India Equity Open, Pictet – Indian Equities, ICICI Prudential Banking and Financial Services Fund, Sundaram Mutual Fund, Citigroup Global Markets Mauritius and BNP Paribas Arbitrage.

List of anchor investor

Download (PDF, 1.13MB)

IPO Dates & Price Band:

  • IPO Open: 08-August-2018
  • IPO Close: 10-August-2018
  • IPO Size: Approx Rs.1130 Crore (Approx)
  • Face Value: Rs.10 Per Equity Share
  • Price Band: Rs.418 to 422  Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 1,02,81,317 Shares

Market Lot:

  • Shares: Apply for 35 Shares (Minimum Lot Size)
  • Amount: Rs.14,770

Allotment & Listing:

  • Basis of Allotment: 16-August-2018
  • Refunds: 20-August-2018
  • Credit to demat accounts: 21-August-2018
  • Listing: 23-August-2018
  • Category-wise Break up:

Anchor – 80,41,618 Shares = 339.36Crs

QIB – 53,61,079 Shares = 226.24Crs

NII – 40,20,809 Shares = 169.68Crs

RII – 93,81,888 Shares = 395.92Crs (Lot size: 35 = 2,68,054 Forms)

  • Total Issue – 2,68,05,394 Equity Shares = 1,131.19Crs.
  • Lead Managers:

ICICI Securities Limited

Credit Suisse Securities (India) Private
Limited

IIFL Holdings Limited

Kotak Mahindra Capital Company Limited

  •  Registrar to the IPO

Karvy Computershare Private Limited

The Promoters:

The  Promoter is CreditAccess Asia N.V., a multinational company specializing in MSE financing (micro and small enterprise financing), which is backed by institutional investors and has micro-lending experience through its subsidiaries in four countries in Asia. The Promoter has provided capital funding to the company, from time to time and provides with access to potential fundraising opportunities in the debt capital markets.

Objects of the Issue:

The Offer comprises of the Fresh Issue and the Offer for Sale.
The Company will not receive any proceeds from the Offer for Sale.
The net Proceeds from the Fresh Issue will be utilized towards augmenting the capital base to meet future capital requirements of the company which are expected to arise out of growth in the Company’s assets, primarily the Company’s loans and advances and other investments.

HDFC AMC IPO Review, Current GMP and List of Anchor Investors

Adult population with bank account

111

Strengths:

Customer-centric business model resulting in high customer retention.

Deep penetration in rural areas characterized by low competition and built through contiguous district-based expansion.

Robust customer selection and risk management policies resulting in healthy asset quality.

Strong track record of financial performance and operating efficiency.

Diversified sources of borrowings and effective asset-liability management

graph

Negative:

Operations of the company are concentrated in Karnataka and Maharashtra, with 191 of 516 branches located in Karnataka and 144 branches located in Maharashtra. About 58.1% of gross AUM is originated in Karnataka and 26.7% in Maharashtra. In the event of a regional slowdown in the economic activity in these states, or any other developments including political unrest, drought/floods and other natural calamities, or social upheaval in these states can affect its financials and prospects adversely.

Microfinance loans are unsecured and are susceptible to various operational and credit risks which may result in increased levels of NPAs, thereby adversely affecting business. Furthermore, as there is typically limited financial information available about focus customer segment and many of customers do not have any credit history supported by tax returns, bank or credit card statements, statements of previous loan exposures, or other related documents, it is difficult to consistently carry out credit risk analyses on customers.

An increase in its portfolio of non-performing assets and its provisions may materially and adversely affect its business and results of operations.

The past performance and growth of its business are not indicative of its future performance and growth.

Creditaccess’s business is particularly vulnerable to interest rate risk, and volatility in interest rates could have a material adverse effect on its net interest income, net interest margin and its financial performance.

Any downgrade of its credit ratings may increase its borrowing costs and constrain its access to capital and debt markets and, as a result, may adversely affect its net interest margin and its results of operations.

Creditaccess’s Promoter has invested in Sahayata Microfinance Private Limited, which has been involved in various financial irregularities and discrepancies in the past.

Competition from banks and financial institutions, as well as state-sponsored social programs, may adversely affect its profitability and position in the Indian microcredit lending industry.

There are outstanding legal proceedings involving its Company and some of its Directors, and adverse outcomes in such proceedings may negatively affect its business and results of operations.

There is significant competition from other MFIs and banks in India (including SFBs). Some commercial banks are also beginning to directly compete with for-profit MFIs for lower income segment customers in certain geographies.

The rise of digital platforms and payment solutions may adversely impact the business model and there may be disintermediation in the loan market by fintech companies.

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Au Financiers (India) Limited IPO! Put in or out ?

Valuation:

The annualized EPS on post-issue equity works out to Rs 8.69 for FY2018. At the price band of Rs 418 to Rs 422, P/E works out 48.1 to 48.5 times.

Post-issue, the book value (BV) is Rs 143.41 at the issue price of 418 and Rs 143.55 at the issue price of Rs 422. P/BV works out to 2.91 times at lower price band and 2.94 times at the upper price band.

Among peers, Bharat Financial Inclusion is trading at P/BV of 5.69 times, Satin Creditcare at P/BV of 1.55 times and Equitas Holdings at P/BV of 2.19 times.

CreditAccess Grameen: Financials
1403 (12) 1503 (12) 1603 (12) 1703 (12) 1803 (12)
Income from operations 142.34 268.16 456.95 701.75 865.55
Other Income 5.49 13.27 9.77 7.52 9.65
Total Income 147.83 281.43 466.72 709.26 875.21
Interest Expended 72.25 129.05 208.25 316.54 354.57
Operating Expense 44.52 68.70 112.31 155.39 194.50
Operating Profits 31.05 83.68 146.17 237.33 326.14
Depreciation / Amortization 0.53 1.92 2.61 4.43 5.17
Profit before tax and Provisions 30.53 81.76 143.56 232.90 320.97
Provisions and write off 5.73 6.84 14.02 108.60 128.12
Profit before tax 24.80 74.92 129.54 124.30 192.86
Provision for tax 8.17 26.19 46.30 44.00 68.22
PAT 16.63 48.73 83.24 80.30 124.64
EPS*(Rs) 1.16 3.40 5.81 5.60 8.69
* Annualized on post issue equity of Rs 143.36 crore, Face value Rs 10 per share, Figures in Rs crore
Source: Source: CreditAccess Grameen Prospectus

The following table sets forth our key financial and operational metrics as of or for the periods indicated

The following table sets forth our key financial and operational metrics as of or for the periods indicated

Comparison with Listed Industry Peers

PE

Grey market premium:

GMP as on 8th Aug 2018 @ 16.00 is Rs. 10 /- , Kostak is Nil /- 

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

Analysing the Axis Long – Term Equity Fund

Axis Long Term Equity Fund is an ELSS (equity-linked savings scheme) fund managed by the AMC Axis Mutual Funds. It is designed to provide subscribers with tax savings benefits under section 80C of the IT Act 1961. This fund invests exclusively in equity and equity-linked instruments such that it features a high degree of growth with the potential of providing high returns to those investing the Axis Long-Term Equity Fund scheme. Like any other equity mutual fund, the Axis Long-Term ELSS is traded in stock markets, and its unit price is subject to daily change.

axis

Fund features:

This ELSS mutual fund is an open-end scheme, i.e. investors are free to invest in it or liquidate it as per their investment requirements. Additionally, it is an equity-linked savings scheme (ELSS) hence it provides tax deduction benefits under section 80C with the mandatory 3-year lock-in requirement. It is, however, important to note that investors can choose to remain invested in the scheme beyond the mandatory 3 year lock-in period to make his/her wealth grow even further.

Risk Level:

The expected level of risk undertaken by an investor of this key mutual fund is classified as moderately high due to its high equity exposure. However, this does increase the chances of potentially high returns for those remaining invested in the scheme for a longer tenure.

Facts about the fund:

Launching date- 29th December’09

Categorisation- Equity

Type- ELSS (Equity Linked Saving Schemes)

Average AUM – ₹ 17,299.43 Crores

Benchmark – S&P BSE 200 Index

NAVs {as on 06 Aug ’18}

Growth option – ₹ 45.12

Dividend option – ₹23.53

Minimum investment amount – ₹ 500

Minimum SIP – ₹ 500

Exit load- nil

Manager of the fund- Mr. Jinesh Gopani

Tenancy period- 7 years 4 months

Education (degree)- B.Com (H), MMS

10 things I have learned about investing

Fund manager:

Mr. Gopani is a B. Com (H) and MMS from Bharati Vidyapeeth Institute of Management Studies and Research. Before joining Axis AMC he has worked with Birla Sun Life AMC, Voyager India Capital Pvt. Ltd., Emkay Shares & Stock Brokers Limited and Net worth Stock Broking Limited.

Investment Philosophy:

As mentioned earlier, this scheme is designed to provide income and long-term capital appreciation to investors by investing in a wide range of equity and equity-linked investments. As a rule, this ELSS mutual fund from Axis has focused on organizations that have robust growth prospects or have proven performance track record in their area of expertise. The fund invests in company equities across key segments such as large cap, mid cap and small cap irrespective of the sector the companies belong to.

Performance of the fund so far:

The fund has surpassed the benchmark index (12.07%) and the bracket average i.e., 13.66% providing a return of 19.22% within 7 years. The fund has made an outstanding track record of outshining since the initiation.

BENCHMARKAnnual performance (in percentage):

The fund has provided exceptionally good performance beyond time periods.

axis graph

‘Ujjwal Bharat’: ABSL Resurgent India Fund – Series 6 Review

Year-wise performance (in percentage):

The fund saw a drop in return profile in the past 2 years

axis graph 2Where does the fund make its’ investments?

The fund draws huge positions in its uppermost picks, keeping a compact portfolio.

Latest Portfolio:

portfolio axis

Download the portfolio:

Download (PDF, 115KB)

Risk factor:

ratio final

The fund has appeared to be more vigorous in this year, overcoming all its peers easily after a small drop in the return profile in past two years. The fund manager’s uncompromising attention on the standard of underlying portfolio and leaning towards large caps has improved it to deliver outperformance between the deficiencies in the broader market. The fund takes a top-heavy approach with a huge position in its uppermost picks even it constantly runs a compact portfolio with a gush in its asset base. It also acquires a high benchmark skeptic perspective, comfortable in taking remarkably higher exposure about an index. With its big skew to towards financials, this adds a portion of aggression to the fund even its firm stance on retaining the quality. A supportable pick-up in return profile will show its long-term achievements.

 

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.