Finally, India’s first REIT ( real estate investment trust ) opens for subscription on March 18

India’s first REIT (real estate investment trust), Embassy Office Parks REIT plans to raise Rs. 4,750 crore from the market.

The REIT will open for subscription on March 18 and the bid process will close on March 20. The unit price for investment will be determined by the book building process.

According to the document, India’s office real estate market offers 7.5%-8.5% p.a rental yield.

Embassy Office Parks is a joint venture between Blackstone Group and Embassy Group. It holds around 33 million square feet of commercial properties spread across four metro cities Bengaluru, Mumbai, Pune and Noida. Currently, it has leased 95% of its total properties of which, 43.4% have been rented to Fortune 500 companies.

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In December 2018, the portfolio had generated Rs. 1,611 crore of revenue from operations. It is expected to grow by 55.8% by FY2023, said the draft document.

Of the total sale offer, the Embassy Office Parks has allocated Rs.3900 crore for retail and institutional investors.

Of the 33 million sq ft, about 24 million sq ft is operational with 95 % occupancy, yielding a rental income of over Rs 2,000 crore annually. Another 3 million sq ft area is under construction and 6 million sq ft is in the pipeline.

The JV has top MNC clients in its commercial projects. Over 50 % of rent comes from Fortune 500 companies such as Microsoft, Google, Wells Fargo and JPMorgan.

What is a REIT?

REIT is an investment tool that owns and operates rent-yielding real estate assets. It allows individual investors to invest in using this platform and earn income.

REITs are listed entities that invest in income-generating properties and distribute at least 90 % of their income proceeds to unit-holders through dividends. After registration with SEBI, units of REITs will have to be mandatorily listed on exchanges and traded like securities.

Properties listed through a REIT are typically commercial assets that can generate steady and lucrative rental income. Even government-run buildings can be placed under REITs.

REITs offer investors, with Rs 2 lakh in capital, an opportunity to invest in the commercial real estate market. Like listed shares, small investors can buy units of REITs from both primary and secondary markets.

According to a CBRE- CII report, a successful REIT listing would prompt other prominent asset holding companies such as Xander, Brookefield and Canada Pension Plan Investment Board to issue their own offerings, thereby widening the real estate investment scenario in the country.

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.

 

Regulator tightens liquid fund norms to mitigate risks

After an introduction of side-pocketing in mutual funds, the Regulator has now tightened norms for liquid funds following a series of credit episodes.

As the market regulator looks to protect mutual fund investors from IL&FS-like default risks, debt schemes widely used by companies to park short-term cash are expected to turn less lucrative.

A regulator has decided to introduce mark-to-market valuation for debt securities having a maturity of 30 days and more. Simply put, liquid funds may become more volatile going forward.

Investors who are willing to ride the fluctuations that can come into a portfolio can consider liquid funds holding securities with longer tenors. But they should choose only those that come with good credit quality and have strict monitoring in place so that unexpected credit situations can’t bring down the values sharply.

“The residual maturity limit for amortization-based valuation by mutual funds shall be reduced from existing 60 days to 30 days.

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Currently, rules say that fund houses have to do mark-to-market valuations of securities having a maturity of 60 days and more.

Debt market experts believe that fund managers will reduce average maturity on their portfolio to less than 30 days to avoid doing mark-to-market valuation. Hence, they would sell debt instruments having a maturity between 31 days and 60 days.

“Liquid funds have been holding debt instruments with less than 60-day residual maturity so that they don’t have to mark-to-market it which helps in reducing volatility in liquid funds. As per the new rule, the market to market (amortisation) limit has been reduced to 30 days which means liquid funds will have to do mark-to-market for debt having residual maturity between 31 and 60 days. To avoid this, liquid funds will want to move to papers with residual maturity of less than 30 days. This will lead to an increase in yield for papers with residual maturity between 31 and 60 days and fund turnover will increase. With stamp duty coming into the picture, we can expect a marginal decrease in liquid fund returns.”

The regulator further said that the difference between traded price and price quoted by rating agencies of security should not exceed 0.025%. This was reduced from 0.1%.

The regulator has asked AMFI to appoint valuation agencies to provide a valuation of money market and debt securities rated below investment grade. Currently, most fund houses rely on ratings by agencies to derive NAV.

However, AMCs can deviate from the valuation provided by agencies by giving a rationale for such deviations.

Check the factsheet regularly if you are invested in debt and balance funds

A quick scan of a liquid fund as on 27 February 2019 shows that 41% of the funds have portfolios with less than 30 days to maturity and, thus, the new directive will not have much impact on their current portfolios. Of the rest, many of the funds have durations not exceeding 35 days where the impact will be negligible. A few funds have portfolio duration of 50-70 days and they may see some volatility. “With the change in valuation norms, liquid funds would witness a marginal reduction in maturity profile, to enable stability in the returns profile. We do not expect significant changes to the return profile with a marginal reduction in maturity.”

Overnight funds have been finding flavour with investors parking money for very short terms. The horizon of investments along with the spreads between liquid funds and overnight funds will continue to remain the key determinant for investors’ choice in this category of funds.”

Among other key decision for mutual funds is allowing fund houses to come up with commodity mutual funds and PMS. In India, mutual fund houses were not permitted to invest in commodities other than gold. However, a few fund houses have thematic funds, which invest in companies engaged in the commodities business.

Commodity funds would be able to invest in a broader spectrum of agricultural, metal and mining commodities such as food crops, spices, fibres, copper, aluminium, oil, gold, silver and platinum.

Note: Mutual fund investments are subject to market risks read all scheme related documents 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.

Provident funds investment in IL&FS bonds have no government guarantee: FinMin

The provident and pension fund trusts that invested in the IL&FS bonds now fear a loss of money as the debt-ridden company`s bonds are unsecured debt, and the Finance Ministry says superannuated bonds do not carry any government guarantee and all such instruments have to face all market-related risks.

“Since these are investments in bonds, the government does not ensure any guarantee on them as such and if these are invested in stock markets, they carry the market risks as applicable. It is between the bond issuer and bondholders…,” the Finance Ministry said in response to IANS queries.

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Thousands of crores of money of more than 15 lakh employees of both public and private sector companies have exposure to IL&FS bonds.

However, queries sent to the EPFO Commissioner and Labour Minister Santosh Gangwar remained unanswered.

Over 50 funds that manage retirement benefits of over 15 lakh employees have exposure to IL&FS. PF trusts of state electricity boards, public sector undertakings (PSUs) and banks are among them. The provident and pension fund trusts have filed intervening applications in the National Company Law Appellate Tribunal (NCLAT) stating that they stand to lose all the money since the bonds are under unsecured debt.

Usually, retirement funds have a low-risk appetite and invest in “AAA” rated bonds (which IL&FS bonds used to be once upon a time) and get assured returns with low-interest rates.

The worries of pension and provident fund trusts come from the classification of IL&FS profiling its companies as to which can meet the dues obligations. Many important trust managing funds of PSUs like MMTC, IOC, Hudco, SBI and IDBI are among those filing petitions. From the private sector, HUL and Asian Paints are among the petitioners.

IL&FS is currently under resolution process at the National Company Law Tribunal (NCLT). The process will decide under Section 53 of the IBC the order of priority for distribution of proceeds of the process.

The beleaguered company has informed the NCLT that of the 302 entities in the group, 169 are Indian companies, out of which only 22 are emerging as those which can meet all obligations (green), while 10 firms can pay to only secured creditors (Amber). There are 38 companies of IL&FS (red) which cannot meet any obligations of payment, and 120 entities are still being assessed.

These PF and provident funds trusts are worried that if payment is limited to secured creditors, then only financial creditors like banks will receive the dues while unsecured bond-holders will get any payments.

IL&FS bonds attracted investments by PF trusts as it had the shareholding of SBI and LIC giving its bonds the comfort factor.

( This story is auto-generated from a syndicated feed.)

Why home insurance should be your top priority

Here are a few reasons as to why home insurance is a must-have thing and how it can help one to avoid a huge financial setback in the event of any mishap.

A home is not merely a structure made of cement and bricks, it is a space filled with emotions. People earn for their lifetime and give everything to build a place where they could live comfortably with their family. You gave your all to have a home of your own, but do you have any backup plan to protect the same? There are few things which we as a human do not have control over, and to protect the ‘humble abode’ that you have instituted with the years of constant dedication and hard work, home insurance should be your top priority. However, the irony is, people, see it as an unwanted expense, but in fact, it is not. Let us check out some legitimate reasons as to why a house or home insurance is a must-have thing and how it can help you avoid a huge financial setback in the event of any mishap.

1. Natural Disasters

As mentioned earlier, there are few things which are beyond our control, and natural disasters like “Acts of God” are one of them. It can strike anytime, and anywhere. Remember the recent floods of Kerala, Uttarakhand and Mumbai that affected millions of lives with deaths, injuries, and destroyed homes. People witnessed houses and assets getting destroyed in front of their eyes and had to use their hard-earned savings to rebuild homes. It was a traumatic and emotional experience for them. Therefore, to protect yourself and your family against “Acts of God” such as landslides, floods, earthquakes, cyclones, etc., it is important for you to buy a home insurance plan.

Home insurance

2. Man-made Disasters

No doubt we live in a technology dominating society where we have the latest and fanciest of safety measures, such as CCTV security and gated communities, but we cannot rely on them completely for our security, can we? Man-made disasters such as riots, strikes, robberies, terrorism, thefts, etc., are a real risk and still prevalent. And this makes for a strong reason for you to have a proper home insurance plan. However, some insurers may not cover for the losses due to all these risks, but you can ask them for extra protection in the form of riders.

3. Protection for the Contents Within

Home insurance not just covers your house, but also the contents within. Things like electronics, furniture, jewellery, light fixtures, antique items, valuable home appliances, etc., are also covered under a home insurance policy. However, the scope of coverage might vary as per your preferences. In case of any damage or theft, you will get compensation for the same or even get them replaced with the new ones. So when choosing a home insurance plan, you can actually opt for the things that you want to get cover for along with your home insurance.

4. Not Expensive

For many, home insurance may seem like an unnecessary expense but a few know that it comes at a fairly low premium rate, which may be cost lesser than a rupee per day. And in return, home insurance buyers get significant benefits. Further, you get the flexibility to increase or decrease the premium amount as per your affordability by simply adding or removing the items to be insured under the policy.

5. Protection against Lawsuits

What if you incidentally damage someone else’s property owing to the spread of fire? You will be in a legal hassle. But, home insurance can save you from such hassles by covering the cost for the damage caused to another property due to any incident. Not only this, it also covers the cost for the medical expenses of the visitor or guest injured in your property during that event.

6. Coverage for Rent

If in case you experience a loss due to fire perils, and it makes your home inhabitable, be it owing to a natural disaster or manmade circumstance, you may have to find a temporary accommodation until your home gets reconstructed. In that case, your insurer pays for your rent. So, being a responsible individual, it is always wise to be prepared for the worst, and home insurance ensures financial support in such situations.

7. Peace of Mind

You cannot deny the fact that for most people, home insurance actually sounds like a certain expense for an uncertain reason. However, the peace of mind offered by home insurance is more than anything that money can actually buy for you. So, it does not matter whether you own a villa or an apartment, once you buy home insurance for it, you get the luxury of peace of mind because you know that you are prepared for the worse. Buying home insurance is indeed a proactive step you take to protect your home from unforeseen dangers. It signifies what extent you can go to protect your home. Moreover, home insurance is the right policy to provide protection from uncertainties not only to homeowners but to tenants as well. However, when you buy home insurance make sure you opt for the policy offering the best cover.

Follow the 5 simple rules to select debt schemes

The recent credit downgrades have unnerved mutual fund investors.

Follow the 5 simple rules to select debt schemes

  1. Invest in a fund matching your credit & interest rate risk appetite. Always factor in the possibility of default.

Rethink if, – AAA bonds < 50%

Duration > 2

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2. Check how diversified is the debt portfolio. A 10,000 cr AUM is invested in just 20-30 bonds, or is spread across 50-80 bonds? This ensures basic safety through diversification. If there are fewer bonds, ensure they are all highest rated, else concentration increases risk.

3. Check the concentration risk of the portfolio especially in lower-rated bonds. High exposure in a single paper means, higher loss in case of default. A high % exposure, say 5-9%, in a very low rated paper, shows recklessness. Much more in multiple papers is indicates higher risk.

4. Check the levels of diversification across all the schemes of the mutual fund. That gives an idea of existence or otherwise of risk management across the fund house. That is a sign of a far greater sense of responsibility towards investors money, a sign of not being reckless.

5. While a fund, it’s fund manager & fund house selection is important, diversification across fund houses is VERY important. Even if a fund house conforms to your expectations today, there are no guarantees that it will continue to conform in the future.

 

Note: Mutual fund investments are subject to market risks read all scheme related documents 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.

What happens to MF exposure to DHFL debt after downgrades by CARE

For mutual funds with exposure to DHFL debt, a rating downgrade means that there will be a mark to market impact on individual bond prices, also affecting NAV

After CARE cut ratings from “AAA” to “AA+” for debentures, loans and deposits. Rating for commercial paper (“A1+) has kept under watch with developing implications.

With DHFL group companies debt mess coming under the lens, global brokerage Credit Suisse has warned that it could trigger a second wave of risk aversion in India’s debt fund industry.

Earlier, India’s debt mart faced a major risk aversion during September-October following a debt default by the IL&FS group.

The DHFL debt mess is expected to have a resonating effect as the company is among the larger borrowers from mutual funds (MFs) and their aggregate exposure stood at around Rs 8,650 crore as of December 2018. That amounts to about 0.7 per cent of debt mutual funds asset under management as of December 2018.

DHFL ALLOCATION

About Rs.7,800 crore of such debt has been purchased by open-ended MF schemes, while the rest of the money is with closed-ended funds. Open-ended funds are where investors have the highest liquidity since you can come in or go out anytime. Closed-ended funds don’t allow you to exit before maturity.

Several fund houses have large exposures to DHFL, at 2-15 per cent of total debt AUM, with some schemes having up to 30 per cent of their AUM to DHFL

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UTI Mutual Fund had the maximum exposure of around Rs 2,144 crore as of December 31, 2018, followed by Reliance AMC at Rs 1,488 crore, Axis AMC at Rs 771 crore and Franklin Templeton Rs 571 crore.

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The DHFL issue may result into more scrutiny of credit risk in debt funds, and considering the fact that NBFC funding relies on MFs for 10-30 per cent of their borrowings, debt funds flow will see some hiccups in the coming days.

Some schemes have taken mark-to-market (MTM) losses on this exposure with DHFL paper being repriced at higher yields. Credit Suisse warned if this continues and leads to redemption pressure, it may cause a second wave of risk aversion in domestic debt funds and volatility in their flows.

In the open-ended space, about Rs 300 crore of exposure is to Aadhaar Housing Finance, which will now become the responsibility of Blackstone. DHFL is a Rs 6,200 crore of debt exposure for funds.

Debt raised by firms like DHFL is repaid within a few months (or years) as per maturity. If DHFL at some point is not able to honour its obligations, then that will be default like situation eg. IL&FS. However, such a situation may not really happen.

As a precautionary measure, some mutual funds may, however, write down the value of the bonds.

There is also the option to segregate or side-pocket bad assets so that the impact of the downgrade does not lead to panic redemptions. However, side pocketing can happen only in extreme cases, and that too when there is a default-like scenario.

Existing investors – For mutual funds with exposure to DHFL debt, a rating downgrade means that there will be a mark to market (MTM) impact on individual bond prices. This means there will be an impact on the Net Asset Value (NAV) of the funds.

In some cases, the MTM impact of the first series of downgrades on bond prices can be as significant as 25%. This means a 5% position for the bond in a fund would result in a negative 1.25% MTM performance attribution due to bond holding.

Any redemption from such funds at this point would result in an actual booking of losses.

Keep an eye on schemes with 10-33% exposure to single DHFL security.

Such examples are DHFL Pramerica Ultra Short Term (Dewan Housing Finance Corpn. Ltd. TR-1(30-Apr-19), JM Income (Dewan Housing Finance Corporation Ltd. SR-I CATG III & IV 09.10% (09-Sep-19)), JM Short Term Fund (Dewan Housing Finance Corporation Ltd. SR-I CATG III & IV 09.10% (09-Sep-19)), JM Low Duration (Dewan Housing Finance Corporation Ltd. SR-I CATG III & IV 09.10% (09-Sep-19)), Baroda Dynamic Bond (Dewan Housing Finance Corporation Ltd. SR-III CATG III & IV 09.25% (09-Sep-23)), DHFL Pramerica Medium Term (Dewan Housing Finance Corporation Ltd. SR-II CATG III & IV 9.15% (09-Sep-21)), DHFL Pramerica Floating Rate (Dewan Housing Finance Corporation Ltd. SR-I CATG I & II 09.05% (23-Sep-19)), DHFL Pramerica Low Duration (Dewan Housing Finance Corporation Ltd. SR-I CATG I & II 09.05% (23-Sep-19)), BNP Paribas Medium Term (Dewan Housing Finance Corporation Ltd. SR-I CAT I-IV 08.90% (04-Jun-21)), BOI AXA Short Term Income (Dewan Housing Finance Corporation Ltd. CATG I & II SR-IV 9.1% (16-Aug-19)), Tata Medium Term (Dewan Housing Finance Corporation Ltd. SR-I CAT I-IV 08.90% (04-Jun-21)).

 

Note: Mutual fund investments are subject to market risks read all scheme related documents 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.

 

Mistakes investors make without an advisor

Easy access to financial information on the internet means that any investor can access a list of top performing schemes. Newer, easy to use online investment platforms have also taken the pain out of the transaction process. So do investors need expert guidance on financial matters?

The answer is a resounding yes. This is because an advisor’s role is not limited to identifying the best performing schemes; he matches client needs to right investments and helps them make wiser investment choices.

Here are seven investment mistakes that clients tend to make without the guidance of an advisor.

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Saving but not investing:

Most individuals save a certain portion of their earnings. However, these savings are often lying idle in their bank accounts. Owing to their busy work-schedule, investors may not get time to immediately research and invest their savings.

A financial advisor helps investor channelize his savings into investments. By helping an investor budget his earnings and expenses, he reduces the amount of cash lying idle in the bank. In short, an advisor helps an investor manage his money better and invest more.

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Starting late:

Delaying financial planning is quite common among investors. Goals like retirement and financial planning for a family seem far away for a millennial investor. However, many of them forget that time is the best friend of investments. Starting early gives investors more time to accumulate the required corpus. It allows them the flexibility to stop or adjust their investments temporarily in case of an emergency. Starting late can put a financial burden on investors, as they will have to save more to reach their key financial goals such as retirement.

Often people splurge their earnings on items they really don’t need.  Through a discussion on financial goals, an advisor can help the individual visualise the corpus he needs to accumulate to fulfil his financial dreams. This may encourage an individual to invest rather than spend frivolously.

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Wrong investment choices:

Wrong investment choices do not just refer to investments made in a Ponzi scheme; it also includes investments made out of line with an investor’s risk-return profile. To elaborate an investor may consider himself to be a risk-taker and invest in high yield bonds. Alternatively, he may invest a majority of his corpus in equities. However, in reality, his personal responsibilities and goals require him to take a more conservative approach. This is an example of a wrong investment choice.

A financial advisor makes a holistic evaluation of the investor’s risk tolerance, liquidity needs, goals and income before recommending an investment. This analytical and exhaustive approach helps advisors recommend the most suitable investment options to their clients. Moreover, an advisor can also help warn you against any investment scam.

New ImageInvesting based on the preconceived notion:

Our friends, family members often influence our investment decisions. For example, a young professional may invest the majority of his money in gold and FDs just like his parents. He may shun equities having seen his relatives lose money in day-trading. However, based on risk profile and age, he may be better off investing in riskier products.

Financial advisors can help clear any investment related misunderstandings from the minds of investors and guide them on making better investment choices.

LIC Jeevan Shikhar Plan : Tax Saver or Loser

Letting behavioural biases influence their decision:

Selling off their investments during a slight market correction, holding on to loss-making investment, ignoring research which does not align with the investor’s view are all examples of behavioural biases influencing investor’s decisions.

Advisors can help investors identify these biases and encourage them to stick to their financial plan rather than acting under the influence of emotions.11111

Taking too much debt:

Many investors dream of building their own home or buying a car. Generally, investors fund these purchases through a loan or EMI. If the amount of debt is not kept in check, it can balloon and become unmanageable. Excess debt may also hurt an investor’s credit score which in turn lead to higher rates on future loans.

By budgeting their income and expenses, advisors help evaluate whether an investor can comfortably service a loan.

Future Supply Chain Solutions Ltd IPO Review

Future Supply Chain Solutions Ltd. (FSC) is a supply chain and logistics company. Future Supply Chain Solutions is part of Kishore Biyani’s Future Enterprise Ltd. The company was incorporated in 2006. The company offers automated and IT-enabled warehousing, distribution and other logistics solutions. It has customers in various sectors all across India, including ATMs, automotive and engineering, retail, fashion & apparel, food – beverage, FMCG, e-commerce, health-care, electronics and technology, home and furniture.

It has 42 distribution centers across India, which covers approximately 3,500,000 square feet of warehouse space.

List of anchor investors

Download (PDF, 601KB)

The company offers customers services in three key areas:

  1. Contract Logistics
  2. Express Logistics
  3. Temperature-Controlled Logistics

The promoters :

Future Enterprises Limited ( Kishore Biyani Group company)

Main objects of the issue are:

1. Avail the benefit of listing of the Equity Shares on the Stock Exchanges;
2.To Enhance stability and brand image and
3.To provide liquidity to its existing shareholders.

FUTURE

IPO Dates & Price Band:

  • IPO Open: 06-December-2017
  • IPO Close: 08-December-2017
  • IPO Size: Approx Rs. 650 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 660 to 664 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 9,784,570 Shares

Market Lot:

  • Shares: Apply for 22 Shares (Minimum Lot Size)
  • Amount: Rs.14,608

Allotment & Listing:

  • Basis of Allotment: 12-December-2017
  • Refunds: 14-December-2017
  • Credit to demat accounts: 14-December-2017
  • Listing: 18-December-2017

IPO Registrar:

Link Intime India Private Ltd

Lead Managers:

  • IDFC Bank Limited
  • IIFL Holdings Limited
  • Yes Securities (India) Limited

Do Not Compare Yourself with Other Investors While Making Investment

Risks and Upsides

Logistics service providers face the following general challenges in the market:

Foreign direct investment activity is uncertain and is dependent on global policies and market volatility.

A slowdown in the user industry could affect the volumes handled by logistics service providers.

Quality and availability of infrastructure could impact performance.

Intense competition and low barriers to entry in certain segments could affect logistics service providers.

Increasing scale could be challenging.

The express logistics industry is sensitive to high operating costs; and

There is a need to continuously invest in and evolve technology.

Strengths

One of the largest service providers with an extensive network of facilities in a fast-growing third-party logistics market.

Comprehensive solution for supply chain requirements.

Diverse customer base across many sectors.divrsificationAt the forefront in introducing new standards of technology and automation in the logistics industry in India.

Longstanding relationship with Future Entities.

Experienced management team with logistics and retail sector-specific knowledge.

Khadim India Limited IPO Review

Strategies

Capitalise on the growth of the third-party logistics industry in India.

Target growth by identifying new customers, increasing its share of existing customers’ third-party logistics spending and leveraging existing relationships.

Expand addressable market through customized and new service offerings.

Invest further in infrastructure and expand its network.

Explore inorganic growth opportunities.

Continue to improve operating efficiencies and implement technological and process enhancements.

indian log mktNegative

The Future Entities are its key customers and its Promoter and certain of its Group Companies account for a significant portion of its revenue. Any failure to maintain its relationship with these customers will have a material adverse effect on its financial performance and results of operations.

FSC’s business is affected by prevailing economic conditions in India and indirectly affected by changes in consumer spending capacity in the sectors we serve within India.

FSC may face competition from a number of international and domestic third-party logistics companies, which may adversely affect its market position and business.

Delays or defaults in payment by its customers could affect its cash flows and may adversely affect its financial condition and operations.

An inability to pass on any increase in operating expenses to its customers may adversely affect its business and results of operations.

FSC are heavily dependent on machinery and equipment for its operations. Any breakdown of its machinery or equipment will have a significant adverse effect on its business, reputation, financial results and growth prospects.

FSC business is highly dependent on technology and automation and any disruptions of or failure to update such technology or automation could have an adverse effect on its results and operations.

Changing regulations in India could lead to new compliance requirements that are uncertain.

The trend toward outsourcing of supply chain management activities, throughout India or within specific sectors, may change, thereby reducing demand for its services.

Conditions and restrictions imposed on FSC by the agreements entered into with some of its customers could adversely affect its business and results of operations.

The performance of its express logistics and temperature-controlled businesses may continue to decline.

Dependence on third-party vendors could have an adverse effect on its business financial condition and results of operations.

Some of its lease agreements may have certain irregularities.

FSC’s Promoter, Group Companies, and Directors are involved in certain legal proceedings and potential litigation.Any adverse decision in such proceedings may render us/them liable to liabilities/penalties and may adversely affect its business and results of operations.

Compititive positioning of Logistics service providers 

KEYFinancials

For FY 2017, 2016 and 2015, the revenue from operations was Rs. 5,611.83 crores, Rs. 5,198.70 crores, and Rs. 4,079.63 crores, respectively. (A CAGR of 17.3%.)

For FY 2017, 2016 and 2015, the net profit was Rs. 457.54 crores, Rs. 294.27 crores, and Rs. 246.57 crores, respectively, (A CAGR of 36.2%.)

For FY 2017, 2016 and 2015, the EBITDA was Rs. 742.82 crores, Rs. 699.40 crores, and Rs. 639.40 crores, respectively, (A CAGR of 7.8% during the last three Fiscals.)

Financial snapshot of Key companies.

financial snapshotValuations

On the upper price band of Rs.664/- and Restated FY17 EPS of Rs.11.69, P/E ratio works out to be 56x. Even based on last three years restated EPS of Rs. 9.41, P/E ratio works out to be 70x. Means, companies are asking higher price band of Rs.664/- in the P/E ratio of 56x to 70x. Its only listed peers Mahindra Logistics Ltd. is trading at P/E ratio of 68x. Hence we compare this way; Future supply chain is overpriced.  

Grey market premium

Currently, Grey market premium is Rs. 20/- ( Seller )

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.

 

Under performance of Equity Mutual Fund against their respective Benchmarks

A large number of equity mutual funds in the country has underperformed against their respective benchmark indices over the last five years.

Around 44% of the open-ended diversified equity mutual fund schemes failed to beat their benchmark in the last year. Nine schemes underperformed their benchmarks by over ten percentage points. 31 schemes underperformed by five to ten percentage points. There are 275 open-ended diversified equity schemes.

MFEven the schemes that managed to beat their benchmarks in the last year, 26 schemes outpaced their benchmark by only up to two percentage points.

Moving to specific categories, out of 65 large cap schemes, 30 schemes underperformed their benchmark.

What are Dynamic Funds? ( Video )

The mid-cap category was the worst hit, with 62 percent schemes underperforming. We had a total of 34 mid-cap schemes on our list. 

Around 50 percent multi-cap schemes failed to beat their benchmark. Four in seven small-cap schemes remained under-performers.

Sectoral schemes, which are considered risky because of their focused sector exposure, had 11 under-performing schemes out of 49 schemes in total.

We have compiled a set of top under-performing funds in one-year period across equity categories given in the following table.

return

The scorecard reveals a majority of large-cap equity funds failed to beat the S&P CNX Nifty, the benchmark for large caps, with 53.33 percent underperforming their benchmark over the last five years, 57.14 percent during the previous three years and 52.63 percent over the previous year.

The percentage of actively managed equity funds underperforming the benchmark indices has seen a declining trend since December 2010. However, their number still exceeds those outperforming the index.

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Many actively-managed equity mutual fund schemes have failed or struggled to beat their benchmarks. Always place a lot of emphasis on consistency of performance while choosing a scheme to invest. As a rule, ignore short-term scorching performance while picking a scheme.

However, data from the diversified funds and equity-linked saving schemes (ELSS) suggests a percentage of funds outperforming the benchmark in both one-year and three-year period is stable as compared to five-year period.

Active managers of equity-oriented hybrid funds have also fallen behind benchmarks over both the one-year and five-year time frames.

 

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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.