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Investing

Q: What is an Investment Advisory Firm?

An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

Q: Do we have SEBI registration as an Investment Advisory?

An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

Q: Why choose a SEBI Registered Investment Advisor?

An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

Q: What is the Role of an Investment/Stock Market Advisory Firm in India?

An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

January 20, 2025

Investing, News

SEBI’s New Nominee Rules: What Joint Account Holders and Nominees Need to Know

Families can find it challenging to manage their finances during difficult times. To help, the Securities and Exchange Board of India (SEBI) has updated its nominee rules, making it easier for families to access and transfer assets when a loved one cannot manage them.

SEBI has introduced new guidelines to simplify the nomination process for mutual fund folios and demat accounts. These updated rules, effective from March 1, 2025, aim to make asset transfers easier, particularly in case of an investor’s illness or death. Source: CNBCTV18.com

Announced on January 10, these rules are designed to offer families a financial safety net. These new rules let nominees handle the accounts of physically incapacitated investors without needing a power of attorney (POA). However, experts caution that there may still be some challenges and limitations. Source: Mint

Let’s dive into what these new nominee rules mean for investors and their families.

The Need for Revamping Nominee Rules

Streamlining Succession Processes
Previously, families often faced procedural delays and legal hurdles when accessing investments held by an incapacitated individual. This was primarily due to incomplete or unclear nominee designations, which could lead to disputes and complications.

Key Features of SEBI’s New Guidelines

Objective of the New Rules	Designed to assist mutual fund and demat account holders in managing investments during sudden illness or death.
Nominee Authorization	Single-holding investors can now authorize one nominee (excluding minors) to manage their accounts if they are physically incapacitated but mentally sound. SEBI now requires all investors to choose a nominee or formally opt out by submitting a declaration.
Up to 10 Nominees Allowed	SEBI has increased the number of nominees an investor can assign to their account or folio. Previously, the limit was three nominees, but now investors can nominate up to 10 individuals. Additionally, investors can edit or remove these nominations at any time.
Digitized and Simplified Process	Investors can register their nominees online, reducing paperwork and streamlining the process. This digital-first approach ensures accessibility and convenience for investors.
Comprehensive Disclosure Requirements	Investors must provide a PAN, driving license number, or the last four digits of their Aadhaar number. They must also share the nominee’s complete contact details, including address, email, phone number, relationship to the investor, and date of birth (if the nominee is a minor).
Asset Transmission Process	Only two documents are needed to transfer assets to registered nominees: a self-attested copy of the deceased investor’s death certificate and the nominee’s updated or reaffirmed KYC details. SEBI has clarified that no extra paperwork, such as affidavits, indemnities, undertakings, or notarization, will be needed.
Regulations for Joint Holdings	For joint accounts, SEBI requires clear instructions on the succession process. If no nominee is declared, the surviving account holder will take priority.
Restricted Access	Nominees cannot update critical details like bank accounts or contact information.
Redemption Proceeds	Funds from redemptions will be credited directly to the investor’s linked bank account.
Exclusions	These guidelines do not cover investors in critical conditions, such as those in comas or on ventilators.

Source: Source: CNBCTV18.com | Mint | Business Standard

Concerns Raised by Experts

Risk of Misuse: Nominees redeeming for incapacitated investors may misuse funds. Policing this activity poses significant challenges for SEBI, depository participants (DPs), and asset management companies (AMCs).
Increased Complaints: There could be a rise in disputes filed through SEBI’s Complaint Redressal System (SCORES). Online dispute resolution (ODR) could become a necessary alternative.

Issues with Redemption Safeguards

As per SEBI rules, redemption proceeds are credited to the investor’s linked bank account. If the nominee is a joint account holder, this safeguard offers limited protection against misuse.
Banks require a power of attorney (POA) or specific mandates to allow nominees access to funds, per RBI guidelines.
Discrepancies between SEBI and RBI rules can leave families without access to emergency funds.
Source: Mint

Ambiguity in the Rules

The new circular addresses many concerns but does not address what happens if an investor becomes incapacitated and unable to make legal decisions. In such situations, the existing rules require a guardianship certificate from the courts, which can be complex and time-consuming. However, this requirement helps ensure the investor’s funds are safeguarded and not misused.

What Is Needed

Experts believe the issue will remain unresolved unless the RBI aligns its stance with SEBI. They suggest an aggregator regulator to bridge the gap between regulatory bodies like SEBI, RBI, IRDAI, PFRDA, CERT-In, and MeITY. They also urged the Ministry of Finance to form a Joint Parliamentary Committee (JPC) to recommend changes whenever laws are amended, ensuring better coordination and consistency.

Benefits for Families of the Incapacitated

Faster Access to Assets

One of the most significant advantages of the new rules is the reduced time taken to access assets. By ensuring nominees are registered, and records are updated, families can bypass lengthy legal proceeding.s

Minimized Disputes

The comprehensive disclosure requirements eliminate potential ambiguities, reducing the likelihood of disputes among family members or legal heirs.

Empowering Investors

The process encourages investors to take a proactive role in estate planning. By designating nominees early, they can ensure their assets are transferred according to their wishes.

What Investors Should Know

While SEBI’s revamped rules offer numerous benefits, they also bring certain challenges that investors should be mindful of:

Ensuring Nominee Awareness

Investors need to inform their nominees about their roles and responsibilities. Without this communication, nominees may face difficulties when attempting to claim assets.

Regular Updates Are Crucial

Family dynamics can change over time due to events like marriage, divorce, or births. Investors should periodically review and update their nominee details to reflect these changes.

Potential for Overlooking Legal Heirs

While nominees are custodians of the assets, they may not always be the legal heirs. Investors should consider drafting a will to clarify their intentions and avoid conflicts.

How Financial Institutions Are Adapting

Enhanced Support for Investors

Banks, mutual fund companies, and brokerage firms are updating their processes to comply with SEBI’s guidelines. Many now offer online tools to help investors register and manage nominee details.

Educational Initiatives

Financial institutions are conducting workshops and webinars to spread awareness about the importance of nominee registration. These initiatives aim to empower investors with the knowledge to make informed decisions.

Case Study: A Family’s Journey with the New Rules

Let’s consider the story of Mr. Ramesh, a retired government employee. He invested in mutual funds and shares but had never nominated anyone. After suffering a stroke, his family struggled to access his investments. However, with SEBI’s revamped rules, they could quickly update his records and register his wife as the nominee. This allowed seamless access to his assets, providing financial stability during a challenging time.

Encouraging Financial Literacy

Promoting Proactive Estate Planning
SEBI’s rules remind investors of the importance of financial planning and promote a culture of preparedness by encouraging them to nominate beneficiaries.

Bridging Gaps in Awareness
Despite the availability of nominee registration, many investors remain unaware of its importance. SEBI’s efforts are a step towards closing this gap, ensuring more families are protected.

Making the Most of the New Rules

Act Early: Register a nominee as soon as you start investing. This ensures your family’s financial security in case of unforeseen events.
Keep Details Updated: Review and update nominee information regularly to reflect changes in family structure.
Communicate with Nominees: Inform your nominees about their designation and provide them with relevant documents.
Consider a Will: A will can complement nominee registration, providing additional clarity and legal backing.
Leverage Digital Tools: Use online platforms offered by financial institutions to simplify nominee registration and management.

Conclusion

SEBI’s revamped nominee rules are a significant step towards safeguarding the interests of investors and their families. These regulations ensure timely financial support for families during challenging times by simplifying the asset transfer process and reducing legal hurdles. However, the onus is on investors to proactively register nominees, stay informed, and regularly update their records. With these steps, they can ensure their loved ones are protected and supported when it matters the most.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

Can nominees manage accounts for incapacitated investors?
Yes. SEBI allows nominees to operate accounts if the investor is physically incapacitated but mentally capable. This ensures continued access to funds for essential needs.
How do these rules simplify matters for families?
The rules streamline the process of accessing funds for the care and well-being of incapacitated family members. This reduces delays and bureaucratic hurdles, allowing families to focus on their loved one’s care.
What if the incapacitated investor cannot make decisions?
In cases where the investor lacks mental capacity, the nominee’s role is limited. Legal avenues, such as guardianship or court orders, would be necessary to manage the account.
How can families ensure smooth access to funds?
Families should ensure clear nomination details are registered with the financial institution. It’s crucial to keep these details updated and understand the specific procedures for accessing funds in case of incapacity.

January 17, 2025

Investing

Understanding Goal-Based Investing: A Comprehensive Guide

From an early age, we are taught that setting clear goals is essential for achieving success in life. It’s challenging to reach a destination if you don’t know where you are headed. Once you identify what truly matters to you, setting goals becomes a compass that keeps you focused and committed to achieving them.

When it comes to building an investment portfolio, it’s a powerful strategy for growing your wealth. However, it demands consistent oversight and informed decisions at every stage. If your current approach is not yielding the desired results, it might be time to rethink your strategy.

One effective approach is goal-based investing. This strategy keeps your financial objectives at the forefront, allowing you to manage your investments with a clear purpose and direction.

Consider a fitness journey as an example: setting a goal to run a marathon requires a detailed training plan, consistent effort, and adjustments along the way. Similarly, goal-based investing involves setting financial targets, crafting a plan to achieve them, and staying adaptable as circumstances evolve.

In this article, we will dive into the concept of goal-based investing, guide you on how to set financial goals, and demonstrate how this approach can significantly contribute to your wealth-building journey.

What is Goal-Based Investing?

Goal-based investing is a strategy that involves determining specific financial goals and selecting investments that align with those goals. Unlike traditional investing, which focuses purely on returns, goal-based investing takes a more holistic approach by focusing on meeting financial objectives such as retirement, buying a house, funding education, or creating an emergency fund.

The first step in goal-based investing is to identify and define your financial goals. This can include both short-term and long-term goals. Short-term goals might include saving for a vacation or building an emergency fund, while long-term goals could involve retirement planning or wealth accumulation for future generations. Once these goals are clear, the next step is to determine how much money is required to achieve them.

How Goal-Based Investing Helps in Wealth Creation?

Goal-based investing helps in wealth creation by guiding the investor toward a more structured and disciplined investment strategy. When you invest with a specific goal in mind, you can determine the best investment vehicles and risk levels based on the timeframe and the financial target you are aiming to meet. Here are the key ways goal-based investing helps:

Clarity of Purpose: When you invest with a clear goal, you are more likely to remain focused and avoid impulsive decisions. You know exactly how much money you need, by when you need it, and how much risk you are willing to take.
Strategic Allocation of Assets: Different goals require different investment strategies. For instance, retirement savings may need to be invested in equity markets, while short-term goals may require safer options like fixed deposits or debt funds. Goal-based investing allows for customised asset allocation.
Time-Based Planning: With clear financial milestones, goal-based investing helps you determine how long you have to achieve each goal. This influences the risk you take on and the type of investments you make.
Flexibility in Rebalancing: As your financial situation or goals change, goal-based investing allows you to periodically rebalance your portfolio to ensure it aligns with your evolving needs.

Steps to Implement Goal-Based Investing

To make goal-based investing effective for wealth creation, follow these key steps:

Identify Your Goals: Whether it is buying a home, funding education, or saving for retirement, the first step is identifying what you are saving for and when you want to achieve it. This will guide your investment strategy and asset allocation.
Set Specific, Measurable Targets: A goal like “I want to retire comfortably” is vague. Instead, set a specific target like “I want ₹1 crore by 2050 for retirement.” This gives you a concrete figure to work toward.
Choose the Right Investment Options: Once you know your goal and target, you can select the right investment options. For long-term wealth creation, stocks, mutual funds, and ETFs might be ideal, whereas, for short-term goals, debt funds or fixed deposits may be more appropriate.
Regularly Monitor and Adjust Your Strategy: Periodic reviews of your investments help ensure that you are on track to meet your goals. Adjustments may be necessary if your financial situation changes, or if you are not hitting the desired return targets.

How to Invest Your Monthly Surplus Savings?

An illustrating how to allocate savings across these options:

Emergency Fund	Planning for unknown situations
SIPs	Equity/Debt funds
FDs	Guaranteed returns
Stock Market	Direct investments
Real Estate	REITs or property
Retirement	PPF/NPS
Gold	Digital Gold/SGBs

In conclusion, investing your monthly surplus savings is a powerful step towards financial independence. By diversifying across multiple asset classes like mutual funds, fixed deposits, stocks, and gold, you can balance risk and reward effectively. Prioritise your financial goals and start small if needed—consistency and discipline will yield compounding benefits over time. Make your surplus savings work harder for you and secure a brighter future.

FAQ

How does goal-based investing differ from traditional investing?
Goal-based investing focuses on achieving specific financial objectives, while traditional investing aims to maximise returns or outperform the market. This personalised approach helps in aligning investments with individual life goals, offering more structured and meaningful results.
Can goal-based investing be applied to all types of investors?
Yes, goal-based investing is suitable for all types of investors, regardless of their financial situation or investment knowledge. Whether you are a beginner or an experienced investor, this approach can be tailored to meet your unique financial goals and timelines.
What are the key factors to consider when setting financial goals?
When setting financial goals, consider factors such as the time horizon, risk tolerance, expected returns, and the monetary value of each goal. It is also important to regularly review and adjust your goals based on changes in your financial situation or market conditions.

January 16, 2025

IPO, News

Laxmi Dental IPO Oversubscription Hits 114 Times! Allotment, Listing Date & GMP Update

Are you among the many investors who bid for the Laxmi Dental IPO? If so, you’re not alone. The Laxmi Dental IPO has attracted unprecedented attention from investors across categories, leading to an oversubscription of 114 times. This response showcases the strong demand and investor confidence in the company’s prospects.

However, with such high levels of interest, many are left wondering about the next steps. How will the allotment process work? What can investors expect on the listing day? And what role does the grey market premium (GMP) play in shaping expectations? We’ll break down each aspect step by step, helping you navigate through the allotment status, listing details, and market trends with ease.

Laxmi Dental IPO Subscription Details

The Laxmi Dental IPO opened for public subscription on January 13, 2025, and closed on January 15, 2025. It raised ₹698.06 crore, comprising a fresh issue of 32.24 lakh equity shares aggregating ₹138 crore and an offer for sale (OFS) of 1.31 crore shares worth ₹560.06 crore. The IPO price band was set between ₹407 and ₹428 per share.

Investor Category	Subscription (times)	Shares Offered	Sharesbid for	Total Amount (₹ Cr.)*
Anchor Investors	1	73,39,395	73,39,395	314.13
Qualified Institutions	110.38	48,92,931	54,00,81,366	23,115.48
Non-Institutional Buyers	147.69	24,46,464	36,13,21,158	15,464.55
bNII (bids above ₹10L)	167.68	16,30,976	27,34,89,216	11,705.34
sNII (bids below ₹10L)	107.7	8,15,488	8,78,31,942	3,759.21
Retail Investors	75.1	16,30,976	12,24,80,688	5,242.17
Total	114.14	89,70,371	1,02,38,83,212	43,822.20

Source: Mint

The strong response on the final day highlights the high demand across all investor categories.
If you were to look at the day-wise subscription details:

Date	QIB	NII	NII (> ₹10L)	NII (< ₹10L)	Retail	Total
Day 1Jan 13, 2025	0.13	10.89	10.58	11.52	12.61	5.33
Day 2Jan 14, 2025	0.84	37.44	39.38	33.57	29.65	16.06
Day 3Jan 15, 2025	110.38	147.69	167.68	107.7	75.1	114.14

Allotment Details

With bidding now closed, the focus shifts to allotment. Laxmi Dental is expected to finalise the basis of share allotment on Thursday, January 16, 2025. Here’s a step-by-step guide to checking the allotment status:

Laxmi Dental IPO Allotment Status on BSE

Visit BSE website on this link – BSE Allotment Status.
Select ‘Equity’ in the Issue Type.
Choose ‘Laxmi Dental Limited’ in the Issue Name dropdown menu.
Enter either Application No. or PAN.
Verify by ticking on ‘I am not robot’ and click on ‘Search’.

Your Laxmi Dental IPO allotment status will be displayed on the screen.

Laxmi Dental IPO Allotment Status on Link Intime

Visit IPO registrar website on this link – Link Intime Allotment Status.
Choose ‘Laxmi Dental Limited’ in the Select Company dropdown menu.
Select among PAN, App. No., DP ID, or Account No.
Enter the details as per the option selected.
Click on Search.

Your Laxmi Dental IPO allotment status will be displayed on the screen.

Alternatively, you can check allotment status on the BSE or NSE websites.

Key Dates	Event
January 16, 2025	Allotment Finalisation
January 20, 2025	IPO Listing on BSE & NSE

Source: Mint

Refunds and Credit of Shares

For those who do not receive an allotment, refunds will be initiated on the same day as the allotment finalization. Successful bidders will have their equity shares credited to their demat accounts promptly.

Grey Market Premium (GMP) Update

Laxmi Dental shares are already creating a buzz in the grey market. The current GMP stands at ₹127 per share, suggesting strong investor sentiment. Here’s what the numbers indicate:

Issue Price: ₹428 per share
GMP: ₹127 per share
Estimated Listing Price: ₹555 per share
Premium: 29%

This bullish trend signals optimism among unlisted market investors ahead of the official listing.
Source: Mint

Use of IPO Proceeds

According to the Red Herring Prospectus (RHP), the proceeds from the fresh issue will be allocated to:

Debt Repayment: Reducing financial liabilities.
Capital Expenditure: Supporting operational growth.
Subsidiary Investment: Funding Bizdent Devices Pvt Ltd.
General Corporate Expenses: Meeting miscellaneous costs.

Laxmi Dental, a fully integrated dental products company, offers a diverse portfolio ranging from tailor-made crowns and bridges to branded products such as aligner solutions and pediatric dental care items.

Steps to Prepare for the Listing Day

If you’ve been allotted shares, here’s what to keep in mind ahead of the listing on Monday, January 20, 2025:

Monitor Market Trends: Observe pre-listing trends to gauge potential price movements.
Set Realistic Expectations: While the GMP indicates a premium, market dynamics can fluctuate.
Track Listing Details: Shares will be listed on BSE and NSE simultaneously.

Conclusion

The Laxmi Dental IPO’s massive oversubscription reflects robust investor confidence in the company’s growth prospects and market position. With allotment and listing dates fast approaching, all eyes are on how the shares will perform in the public market. Stay informed and check your allotment status to be prepared for the next steps.

OTHER IPO RESOURCES
IPO | Current IPO | Upcoming IPO | Listed IPO

January 15, 2025

Investing

What is ROCE? A Comprehensive Guide

Return on Capital Employed (ROCE) is a crucial financial metric that helps investors evaluate a company’s profitability and capital efficiency. But what exactly does it mean, and why is it essential for investors and businesses?

Let’s explore ROCE, how it’s calculated, and why it plays a pivotal role in the stock market.

Understanding What is ROCE

ROCE shows how efficiently a company uses its capital to generate profits. A key performance ratio helps investors see how well a business turns its resources into earnings. Stock market investors value ROCE because it highlights a company’s profitability compared to its total capital investment.

When considering ROCE in stock market, it’s vital to understand that higher ROCE values typically indicate better financial health and operational efficiency. For companies operating in capital-intensive industries, such as manufacturing or infrastructure, ROCE becomes an important financial ratio to gauge their potential returns.

Formula for ROCE

The formula for calculating ROCE is straightforward:

ROCE = EBIT (Earnings Before Interest and Taxes) / Capital Employed

Here:

EBIT: Represents a company’s operating profit.
Capital Employed: The total capital invested in the business is the sum of equity and debt minus current liabilities.

For example, if a company has an EBIT of ₹100 crore and a capital employed of ₹500 crore, its ROCE would be:

ROCE = 100 / 500 = 20%

The company generates a 20% return on every rupee invested in its business.

Let’s understand ROCE calculations using another example.

Suppose Company A Ltd. has an EBIT of Rs 400 Crore in a financial year. On the other hand, Company B Ltd. has an EBIT of Rs 350 Crore in the same financial year.

Company A Ltd. might initially appear as a better investment due to its higher EBIT. However, it’s crucial to consider the capital employed to generate these earnings.

Company A Ltd.		Company B Ltd.
Capital Employed	Rs 1200 Crore	Capital Employed	Rs 900 Crore
EBIT	Rs 400 Crore	EBIT	Rs 350 Crore
ROCE	400 Crore / 1200 Crore = 0.3333 or 33.33%	ROCE	350 Crore / 900 Crore = 0.3889 or 38.89%

This calculation reveals that Company B Ltd., despite having a lower EBIT, demonstrates a higher ROCE. This indicates that it is more efficient in using its capital to generate profits.

Key Takeaway:

ROCE provides a more accurate measure of profitability by considering the capital invested. Simply comparing EBIT figures can be misleading, as it doesn’t account for the capital employed to generate those earnings.

Why is ROCE Important?

Investors and analysts value ROCE for several reasons:

Measuring Profitability

ROCE answers, “How effectively is a company using its capital to generate profits?” Unlike other ratios, such as the PE ratio or PB ratio, ROCE considers both equity and debt, making it a more holistic measure of profitability.

Comparison Across Industries

Understanding what is ROCE becomes even more significant when comparing companies within the same industry. A higher ROCE suggests that the company manages its resources better than its peers.

Indicator of Long-Term Performance

For businesses that require significant investment in assets, such as power plants or factories, ROCE offers insights into their ability to sustain long-term profitability.

ROCE vs. Other Important Financial Ratios

While ROCE is a valuable metric, it’s essential to use it alongside other ratios for a comprehensive analysis. Let’s compare ROCE with some other important financial ratios:

PE (Price-to-Earnings) Ratio

The PE Ratio focuses on the company’s market valuation relative to its earnings. While the PE ratio helps understand how the market values a company, it doesn’t provide insights into operational efficiency as ROCE does.

PB (Price-to-Book) Ratio

The PB Ratio compares a company’s market value to its book value. While the PB ratio helps evaluate whether a stock is undervalued or overvalued, ROCE dives deeper into how well the company utilizes its capital to generate returns.

ROCE vs ROE

Return on Equity (ROE) focuses on how effectively a company utilizes the capital shareholders invest to generate profits. It measures the net income earned by a company relative to its shareholder equity.

In contrast, Return on Capital Employed (ROCE) takes a broader perspective. It considers all sources of capital used to finance the business, including equity and debt. It measures a company’s profitability relative to the total capital employed.

How ROCE Impacts the Stock Market

When analyzing what is ROCE in stock market, it’s important to understand how this metric influences investment decisions. Companies with high ROCE are often seen as more attractive to investors because they indicate efficient use of capital and strong operational performance.

1. Stock Selection

Investors often include ROCE in their checklist of important financial ratios to identify companies with sustainable profitability. A consistent ROCE over time is a sign of a well-managed business.

2. Growth Potential

High ROCE suggests that a company can reinvest its profits effectively to generate further growth, which is a critical factor for long-term stock market success.

3. Valuation Metrics

ROCE complements other valuation metrics like the PE ratio and PB ratio. For instance, a company with a low PE ratio but a high ROCE might indicate undervaluation, making it an attractive investment opportunity.

Factors Influencing ROCE

Several factors can impact a company’s ROCE, including:

Industry Dynamics

Capital-intensive industries have lower ROCE than asset-light businesses like IT or services. Understanding what is ROCE requires taking industry benchmarks into account.

Debt Levels

Higher debt levels increase capital employed, potentially lowering ROCE. Companies that rely heavily on debt might show lower efficiency in utilizing their capital.

Operational Efficiency

Efficient cost management and higher profit margins contribute positively to ROCE. Companies with streamlined operations generally exhibit better ROCE.

ROCE: Advantages and Limitations

Advantages of ROCE:

Holistic Measure: ROCE considers equity and debt, making it a comprehensive metric for assessing a company’s ability to generate returns from its total capital employed. This balanced approach provides investors with a clearer picture of the overall efficiency of capital utilization.
Long-Term Indicator: Unlike short-term metrics, ROCE evaluates operational efficiency over a more extended period, revealing the sustained profitability of a company. It helps investors understand how effectively a company utilizes its resources for consistent returns.
Comparability: ROCE enables easy comparison of companies within the same industry. By standardizing the measurement of capital efficiency, it allows investors to identify which firms are outperforming their peers in utilizing capital to generate profits.

Limitations of ROCE:

Ignores Cash Reserves: ROCE does not account for idle cash or unused reserves, which can distort a company’s actual performance. High cash holdings, while a sign of liquidity, might reduce the metric’s reliability in reflecting actual operational efficiency.
Non-Applicability to Certain Sectors: ROCE may not be suitable for startups or industries with volatile earnings, such as tech or biotech. These businesses often reinvest heavily in growth rather than generating immediate returns, making ROCE less reflective of their potential.

How to Use ROCE Effectively

Combine with Stock Market Advisory

Consulting a stock market advisory can help you interpret ROCE alongside other important financial ratios, such as the PE and PB ratios, to make informed decisions.

Compare Over Time

Analyze a company’s ROCE trends over multiple years to assess consistency and growth.

Industry Benchmarking

Compare ROCE with industry peers to understand relative performance.

Final Thoughts on What is ROCE

By now, you should have a clear understanding of what is ROCE and its significance in evaluating a company’s financial health. This metric is not just another number; it’s a window into how efficiently a business utilizes its resources to generate profits. Whether you’re an investor analyzing stocks or a business owner looking to improve performance, ROCE is a tool you can’t ignore.

By combining ROCE with other metrics like the PB ratio and PE ratio and consulting reliable stock market advisory services, you can build a robust framework for making sound financial decisions.

FAQs on ROCE

What is ROCE?
ROCE (Return on Capital Employed) measures a company’s profitability relative to the capital invested. It shows how efficiently a company uses its money to generate profits.
How is ROCE calculated?
ROCE is calculated by dividing Earnings Before Interest and Tax (EBIT) by the total capital employed. Capital employed is the sum of a company’s equity and debt.
What does a high ROCE indicate?
A high ROCE suggests a company is generating strong profits with efficient use of its capital. It indicates strong financial performance and investment potential.
What does a low ROCE indicate?
A low ROCE may signal inefficient capital allocation, excessive debt, or weak profitability. It could indicate potential financial distress or poor investment opportunities.
How do investors use ROCE?
Investors use ROCE to compare the profitability of different companies within the same industry. It helps them identify companies with strong financial performance and assess investment risks.

January 14, 2025

Investing, News

Nifty Plunged to 7-Month Lows, Small-Caps Hit Hard. Know What Were the Triggers?

The Indian stock markets have recently experienced a significant shake-up, with the Nifty 50 index sinking to its lowest level in seven months and small-cap stocks taking a heavy hit. What are the key reasons behind this sharp downturn? And how have global and domestic factors combined to put immense pressure on broader markets? Let’s look into the details to understand the triggers behind this market turbulence.

Market Overview

On January 13, 2025, the Indian stock markets witnessed a sharp decline. The BSE Sensex dropped by 1,049 points, closing at 76,347.26, while the NSE Nifty 50 fell by 346 points, ending at 23,085.95. Both indices reached their lowest levels in seven months. The Nifty Smallcap 100 index tumbled 4%, settling at 16,912.90, marking its lowest level since mid-June. Mid- and small-cap indices have suffered disproportionately, with the Nifty Smallcap 100 plunging 10% over the past four sessions. From its December 2024 all-time high, the Smallcap 100 index has lost 15% in just 22 trading sessions.

Key Factors Behind the Decline

1. Global Economic Indicators

Global factors triggered the selloff, primarily stronger-than-expected US jobs data released last Friday. This dashed hopes of early rate cuts by the Federal Reserve, causing US bond yields and the dollar index to soar. As a result, emerging markets like India came under pressure. Adding to these woes, crude oil prices surged to 15-week highs due to fresh US sanctions on Russian oil, further fueling inflationary concerns.

2. Foreign Portfolio Investor (FPI) Outflows

Foreign investors have been net sellers in Indian equities, intensifying the negative sentiment. On January 13 alone, FPIs net sold Rs 4,900 crore, adding to the Rs 20,000 crore outflows in January 2025. Such sustained selling has placed significant downward pressure on the markets. Source: Mint

3. Depreciation of the Indian Rupee

The Indian rupee weakened to a record low of Rs 86.59 against the US dollar. A weaker currency often increases import costs and inflationary pressures, impacting corporate profitability and investor confidence. Meanwhile, India’s 10-year bond yield rose by 7 basis points to 6.85%, signaling increased borrowing costs.

4. Concerns Over Corporate Earnings

Recent quarterly updates from companies like Dabur India and Hero MotoCorp have been less than encouraging, raising fears of earnings moderation. Market participants are cautious about sectors with stretched valuations, amplifying the selloff in small—and mid-cap stocks.

5. Sectoral Weakness

The sell-off has been broad-based, but certain sectors have faced more significant challenges. Realty, metals, consumer durables, and media stocks were hit the hardest. However, some resilience was observed in IT, FMCG, and select pharma stocks, which managed to hold up relatively well despite the broader market turmoil.

6. Anticipation of the Union Budget

The upcoming Union Budget 2025-26 has introduced uncertainty as investors await clarity on policy changes that could impact various sectors and economic growth. This has contributed to a risk-averse sentiment in the markets.

Broader Market Stress

Mid- and small-cap indices have borne the brunt of the downturn. The Nifty Smallcap 100 index has declined by approximately 11.4% from its January high of 19,080 and is down 15% from its all-time high reached in December 2024. Analysts say this extreme pessimism reflects broader market concerns around stretched valuations and weak earnings expectations.
Source: Mint

Sectoral Performance

The market downturn has impacted sectors differently, revealing both vulnerabilities and areas of resilience:

Information Technology (IT): The IT sector demonstrated relative stability, with a decline of only 1.4%. This resilience is attributed to strong demand for digital transformation services and steady global IT spending despite broader economic concerns.
Pharma and FMCG: Select stocks in the pharmaceutical and FMCG sectors performed well due to their defensive nature. Due to their stable demand, these sectors often attract investor interest during periods of market uncertainty.
Realty: Realty stocks were among the worst-hit, reflecting concerns about rising interest rates and weakening demand. Developers face challenges from higher borrowing costs and inflationary pressures, which have affected buyer sentiment.
Metals: The metals sector faced a significant correction, driven by fears of slowing global demand and price volatility in key commodities.
Consumer Durables: High inflation and weakening consumer sentiment have weighed heavily on this sector, reducing investor confidence.
Media: Media stocks also faced significant pressure, with advertising revenues under strain due to broader economic concerns. Source: Money Control

Investor Sentiment

The convergence of domestic and global factors has heightened volatility and led to a risk-averse stance among investors. The anticipation of the Union Budget and global uncertainties has resulted in cautious trading, with many reducing exposure to equities, particularly in the small-cap segment.

Conclusion

The recent plunge in the Nifty to seven-month lows and significant declines in small-cap stocks stems from global and domestic factors. Key triggers include robust US economic data, foreign investor outflows, rupee depreciation, and concerns over corporate earnings. The surge in crude oil prices and anticipation of the Union Budget have added to the market’s challenges. As markets navigate these headwinds, all eyes remain on upcoming economic developments and policy announcements to guide the way forward.

January 14, 2025

Fundamental Analysis of Stocks, Investing

Return on Equity (ROE) Calculation and What It Means

Introduction:

A company’s financial performance shows how well it uses its assets, earns money, and runs its business. Simply put, it reveals how healthy and financially stable it is. But how do we analyze that? Some important financial ratios and metrics help assess if a business meets industry standards or falls short in profiting. One metric stock market advisory company and investors often rely on is the ROE. What is it, and why is it essential when analyzing companies? Let’s find out.

What Is The Concept Of ROE?

ROE is a primary part of the answer to the question, “What is fundamental analysis?” The return on equity (ROE) ratio measures how well a company generates profits from its shareholders’ investments. Simply, it shows how much profit is earned for every rupee of equity. For instance, an ROE of 1 means that every rupee of equity generates 1 rupee of net income. This is a crucial metric for potential investors, highlighting how efficiently a company uses its money to earn profits.

ROE also reflects how effectively the management utilizes equity financing to run operations and grow the business. Unlike other return-on-investment ratios, ROE focuses on profitability from the investor’s perspective. It calculates the earnings generated based on the shareholders’ investment, not the company’s investment in assets or other areas.

Investors prefer a higher ROE as it shows the company is making the most of its funds. However, ROE should be evaluated within the same industry since industries have varying investment requirements and income levels. Comparing ROE across different industries may thus lead to inaccurate insights.

How Is ROE Different From ROCE and ROA?

Though all three are profitability ratios, the three differ in the following manner-

Aspect	ROA (Return on Assets)	ROE (Return on Equity)	ROCE (Return on Capital Employed)
Focus	Profitability from total assets	Profitability from shareholders’ equity	Profitability from combined capital (debt + equity)
Formula	Net Income / Average Total Assets	Net Income / Average Shareholders’ Equity	EBIT / (Total Assets – Current Liabilities)
Indicates	How effectively do assets generate earnings	How well shareholder investments generate profits	How efficiently capital is used to generate operating profits
Preferred-Value	Higher indicates better asset utilization	Higher indicates greater equity financing efficiency	Higher indicates optimal use of both debt and equity
Usage	Evaluates management’s ability to convert assets into profit	Evaluates profitability from shareholder investments	Evaluates operational efficiency with available capital
Considerations	Independent of capital structure; useful for asset-heavy industries	Impacted by financial leverage, higher equity lowers ROE	Reflects holistic profitability, blending debt and equity
Ideal Application	Comparing asset-heavy companies or assessing operational efficiency	Assessing return for equity investors	Evaluating businesses with significant debt and equity mix

How To Calculate ROE?

The ROE formula used to calculate the return on equity is

ROE = (Net Income / Shareholders’ Equity) x 100

Here,

Net income is a company’s profit after subtracting all expenses, taxes, and interest. It shows the company’s overall financial performance.
Shareholders’ equity is the company’s net worth, the difference between total assets and total liabilities. It represents what shareholders own in the company after debts are paid.

For instance, assume that company A has a net income of Rs.50,00,000 and the shareholder’s equity comes to Rs.2,00,00,000. In that case, the ROE would be

ROE = (5000000/20000000) x 100 = 25%

25% ROE means the company generated Rs.0.25 or 25 paise profit against every Re.1 of the shareholder’s equity.

The ROE can also be calculated using these three different variations of the basic formula-

To find the return on common equity (ROCE), subtract preferred dividends from net income and divide by common equity. The formula is:

ROCE = (Net Income – Preferred Dividends) / Common Equity

For instance, say a company has a net income of Rs.10 lakh, preferred dividends of Rs.2 lakh, and common equity of Rs.50 lakh. The ROCE for this variation will be

ROCE = (1000000 – 200000) / 5000000 = 0.16 or 16%

Another way is to divide net income by the average shareholder equity. To calculate average shareholder equity, add the equity at the start of a period to the equity at the end and divide by two.

So, if a company has a net income of Rs.8 lakh, and the shareholder equity at the start of the year is Rs.40 lakh, and at the end of the year is Rs.60 lakh, the ROCE will be

ROCE = Net Income / Average Shareholders’ Equity = 800000/5000000 = 0.16 or 16%.

You can also track changes in ROE over a specific period. Start by using the shareholders’ equity at the beginning of the period as the denominator to calculate the starting ROE. Then, use the shareholders’ equity at the end of the period to find the ending ROE. For instance, A company starts the year with equity of Rs.30 lakh and ends the year with Rs.40 lakh.

Net income for the first half is Rs.6 lakh. So, starting ROE = 6,00,000 / 30,00,000 = 0.20 or 20%.

Net income for the second half is Rs.4 lakh. Then the ending ROE = 4,00,000 / 40,00,000 = 0.10 or 10%.

The drop in ROE from 20% to 10% shows declining profitability over the year. Comparing these figures shows how profitability has changed during the period.

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Further Breaking Down The ROE With DuPont Formula:

In addition, you can use the DuPont formula to break down the ROE components further and analyze them in detail. ROE shows how efficiently a company uses shareholders’ capital, calculated by dividing net income by shareholders’ equity.

The DuPont analysis takes this a notch higher, highlighting which financial activities most impact ROE. This information helps compare the efficiency of similar companies and helps managers spot strengths or areas for improvement.

The DuPont formula is-

ROE = (net income / sales) x (sales / total assets) x (total assets / shareholder’s equity)

In this, the ROE is divided into three ratios that denote the different aspects of ROE-

Net Profit Margin (net income/sales): Measures operational efficiency as net income generated per rupee of sales.
Total Asset Turnover (sales/total assets): This shows how well assets are used to generate sales.
Equity Multiplier (total assets/shareholder’s equity): Evaluate the financial leverage used by the company.

How To Interpret ROE?

Compare ROE with Industry Averages

Look at a company’s ROE compared to its industry average. A higher ROE suggests that the company efficiently uses shareholders’ equity to generate profits. Take TCS’s ROE, for instance. The company reported an impressive ROE of 51.04% in FY2024, far exceeding the IT industry’s average of 18%. This highlights TCS’s strong profitability and efficient capital use compared to its peers. On the other hand, a lower ROE could mean the company struggles to stay competitive.

Analyze ROE Trends Over Time

Check how a company’s ROE has changed over the years. A steady rise in ROE is usually a positive sign, showing consistent profit growth for shareholders. But, if ROE fluctuates or declines, it might signal issues that need deeper investigation.

The Ideal ROE

There is no one-size-fits-all number. The ideal ROE depends on the industry and the company’s specific situation. An ROE of 15% or higher is often considered healthy. Comparing it with peers clarifies the assessment.

ROE offers a reliable snapshot of a company’s financial performance, but context matters. A stable ROE suggests that the company effectively uses equity to generate profits. Still, external factors like market dynamics and economic conditions can impact ROE. So, always evaluate ROE alongside other financial ratios and indicators for a clearer picture.

Bottomline:

Think of ROE as a tool to spot industry leaders. A high ROE often indicates strong profit potential. But don’t rely on it alone—constantly evaluate all aspects of a company before investing. ROE, which can be easily calculated using a financial calculator, is one of many metrics used to assess a company’s performance, growth potential, and financial stability. Growth prospects are crucial in judging profitability, so it is important to scrutinize them. The return on equity ratio and other financial ratios can help gauge a company’s potential. Make sure to use them wisely when making investment

FAQ

What does a negative ROE indicate?
A negative ROE signals problems with debt, asset retention, or both within the organization.
What does a company with a high ROE signify?
Companies with high ROE generate significant profit relative to shareholders’ equity, efficiently using investors’ money. They excel in retaining earnings, reinvesting them as working capital, and reducing reliance on debt. High-ROE companies often outperform competitors due to advanced technology, efficient operations, or strong branding, helping them generate more earnings than peers.
How is ROI different from ROE?
ROI measures the overall return on your investment, giving a broader financial perspective. ROE, however, zooms in on the returns shareholders earn based on their equity in a company.

January 14, 2025

Fundamental Analysis of Stocks, Investing

Price to Earnings Ratio | Types, Formula and Limitations

Introduction:

When you buy a piece of gold jewelry, you know the current price and pay according to the same ongoing rate. Even with other purchases, we check whether it is worth buying at that MRP and at what cost. For all such purchases, we know the actual value of the commodity, which is why we readily pay the asked price.

A tool called the PE ratio, one of the important financial ratios, lets us make a similar evaluation when buying shares or stocks. What is it? How does it work? How do you analyze stocks using the P/E ratio? Let’s understand.

What is the P/E Ratio?

The Price-to-Earnings (P/E) Ratio compares a company’s stock price to its earnings per share (EPS). It helps investors understand a company’s value and market expectations. Simply, it shows how much you need to pay for each unit of the company’s current or future earnings.

The P/E is helpful because it compares stocks with different prices and earnings levels. It is often called an earnings multiple and has three types. Let’s look at all three with an example.

Say Company ABC’s current stock price is Rs.120, projected earnings for next year are Rs.12 per share, past one-year earnings are Rs.10 per share, and inflation-adjusted average earnings over the last 10 years are Rs.8 per share.

Forward P/E Ratio

This ratio looks at a company’s expected future performance. It compares the current stock price to projected future earnings, as estimated in earnings guidance. As per the example, the forward P/E ratio for Company ABC will be

Forward P/E = Current Stock Price ÷ Projected Earnings = 120/12 = 10

This says that the investors are paying Rs.10 for every rupee of projected future earnings. While it gives a glimpse into potential growth, these estimates can sometimes be inaccurate.

Trailing P/E Ratio

The trailing P/E focuses on the past. It calculates the ratio using earnings data from the last 12 months. So, continuing the example, the trailing P/E for Company ABC will be

Trailing P/E = Current Stock Price/ Earnings of the Last 12 Months = 12

This says that investors are paying Rs.12 for every rupee of past earnings. While it reflects balanced actual performance, it may not always reflect the company’s future earnings potential.

The Shiller P/E Ratio

Also known as the cyclically adjusted price-earnings ratio, this method uses a company’s average earnings over a set period. The Shiller P/E calculates the current stock price divided by the company’s inflation-adjusted average earnings over the last ten years. So, for Company ABC,

Shiller P/E = Current Stock Price ÷ Inflation-Adjusted Average Earnings = 120/8 = 15

This means the investors pay Rs.15 for every rupee of long-term, inflation-adjusted earnings. It says the stock price is higher than long-term earnings, possibly due to market optimism or economic cycles.

Apart from these, another classification of the P/E ratio divides it as

Absolute P/E Ratio

The absolute P/E ratio is the traditional method of calculating the Price-to-Earnings ratio. This method divides a company’s current stock price by its past or future earnings.

Relative P/E Ratio

The relative P/E ratio takes things a step further. It compares a company’s absolute P/E ratio with a benchmark or past P/E ratio. Investors use it to gauge a company’s performance over time or against industry standards.

Let’s take HCL Technologies as an example. As of 2nd January 2024, the sector P/E stands at 37.87, while the company’s P/E is 31.23. The relative P/E ratio of 82.47% indicates that the company’s P/E is lower than the benchmark sectoral ratio. If the company’s P/E had been higher than the sector’s, say 40.13, the relative P/E would have been 105.97%, suggesting the company has outperformed the sector.

Generally, a relative P/E ratio below 100% implies that the company’s P/E is lower than the benchmark, potentially indicating the stock is undervalued. Conversely, a relative P/E ratio above 100% suggests that the company has outperformed the benchmark, which may indicate the stock is overvalued or performing exceptionally well relative to its peers.

This comparison helps you understand whether a stock is undervalued or overvalued compared to its peers or historical performance.

How To Calculate The P/E Ratio?

The formula used for computing the P/E ratio is-

P/E = Current Market Price of a Share / Earnings per Share

Suppose a company’s P/E ratio is 37 times. This means that buyers are ready to pay Rs.37 for every rupee of profit earned by the share. The usual scale for measuring the P/E ratio is centered at 1.

Accordingly, a P/E ratio of 1 means the market values the company at its intrinsic value. A ratio above 1 suggests overvaluation, where the stock is priced higher than its earnings potential. In contrast, a ratio below 1 indicates undervaluation, meaning the stock is priced lower than its intrinsic value.

However, the P/E ratio must be compared against the industry ratio as a benchmark. For example, company A’s P/E ratio is 56, and company B’s is 21. The industry P/E is, say, 33. In this case, the P/E is much higher than the standard measure scale, which is 1. However, as per the industry standard, company B is said to have a lower P/E ratio and is thus undervalued compared to its peers.

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How To Do Stock Analysis Using P/E Ratio?

High PE Ratio

A high PE ratio often signals investors expect the company’s earnings to grow. When stocks show strong growth potential, their PE ratios tend to rise. Investors are willing to pay a premium for these stocks, anticipating higher returns.

However, a high PE ratio can also mean the stock is overvalued. If it exceeds the PE ratios of similar companies or its historical average, it might reflect excessive optimism. While this could indicate strong growth prospects, it might also suggest inflated valuations. A rising PE ratio is sometimes driven by declining overall earnings and positive market sentiment.

Low PE Ratio

A low PE ratio might suggest that the stock is undervalued. This happens when the company’s earnings grow, but the stock price doesn’t rise proportionally. Such situations attract value investors, who see an opportunity to buy stocks with strong fundamentals at a discount, betting on future price increases.

Conversely, a low PE ratio might signal declining company earnings. Investors could interpret this as a warning sign, leading to skepticism about the stock’s growth prospects. A modest PE doesn’t always mean a bargain—it might reflect real concerns about the company’s performance.

So, what is a good P/E ratio? It depends on factors like the industry, market conditions, and a company’s growth prospects. Comparing it with industry averages and competitors helps assess it better. The PE ratio can also be paired with other financial metrics for investment strategies.

Bottomline:

P/E is one of the fundamental parameters of stock analysis. It’s handy for comparing companies in the same industry, like comparing one telecom firm to another, and is easy to compute using financial calculators. The P/E ratio gives insights into market sentiment and potential investment opportunities. However, it’s not a standalone tool. It doesn’t factor in future growth, debt, or industry-specific details, so always pair it with other financial metrics for a clearer picture.

Which tools to pair it with? You can approach a registered stock advisory company to help frame an investment strategy using the right mix of parameters.

FAQ

What is the accuracy of the P/E ratio?
The PE ratio doesn’t directly tell you to buy or sell but helps gauge whether a stock or market is pricey or cheap. Take the Indian market, for example. The 12-month trailing PE for the Nifty is around 21.6 times, which is 6% higher than its 15-year average of 20.3. This premium makes some long-term foreign investors hesitant to invest in new funds.
What does a negative P/E signify?
A negative PE ratio means the company faces losses or has negative earnings. Even well-established companies experience this at times. It can happen for various reasons, like environmental factors beyond the company’s control.
How does the P/E ratio determine market sentiment?
The PE ratio often reflects market sentiment. During bull markets, investor optimism drives stock prices up, leading to higher PE ratios. In contrast, bear markets bring lower PE ratios as pessimism pulls stock prices down.

January 13, 2025

Fundamental Analysis of Stocks, Investing

8 Fundamental Indicators for Stocks in 2025

Introduction:

As we enter 2025, many investors are either beginning their journey into the stock market or revisiting their portfolios for rebalancing. Whether you’re just starting or fine-tuning your investments, having a strong base of common investment jargon and a solid analysis template is key to making informed decisions.

To help you evaluate companies or securities and build a strong portfolio, here are 8 fundamental indicators you can incorporate into your investment strategy in 2025.

Price-to-equity Ratio:

The price-to-equity ratio, or the P/E ratio, is one of the primary fundamental analysis indicators that many investment advisory firms and retail investors widely use. The P/E ratio evaluates whether a stock is overvalued or undervalued. It shows how much investors are willing to pay for each rupee of earnings. The formula to calculate it is:

P/E Ratio = Current Market Price per Share / Earnings per Share (EPS)

For example, if a company’s EPS is Rs.10, and its current market price is Rs.200, the P/E ratio is 20 (200/10). This means investors are ready to pay Rs.20 for every Re.1 the company earns as profit.

The P/E ratio is ideally measured on a scale starting at zero. That means a P/E of 0 indicates fair value, below 0 suggests undervaluation, and above 0 indicates overvaluation. However, in practice, it’s compared to the industry P/E or peers for better insight.

Let’s take an example of Company ABC in the FMCG sector. If its P/E is 27.33 while the industry P/E is 36.25, it’s considered undervalued. However, if ABC’s P/E rises to 37 or 40, it will be overvalued compared to the industry standard. Thus, the P/E ratio gives a basic idea of valuation, but it is insufficient to give the buying or selling signals for a particular stock or security.

To use the P/E ratio’s capacity to the fullest, compare companies in the same industry and combine it with other parameters to get a complete picture of the investment avenue.

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Projected Earnings Growth:

Another fundamental indicator is the PEG ratio, which takes the P/E ratio one step toward precision. The P/E ratio helps determine if a stock is cheap or expensive. It’s the relationship between the current share price and one year’s earnings per share. The PEG ratio takes it further by comparing the P/E ratio with the company’s earnings growth rate.

Imagine a company with a P/E ratio of 10. Its current earnings per share is Rs.10, expected to rise to Rs.12. This gives an expected earnings growth rate of 20% [(2/10)*100]. Using these numbers, the PEG ratio would be

PEG = EPS / EPS Growth rate = 10/20 = 0.5

A PEG ratio below 1 usually signals that a stock is undervalued, encouraging traders to buy. On the other hand, a PEG ratio above 1 suggests the stock might be overvalued, generally leading traders to sell. Here, a PEG of 0.5 means that the company’s shares are trading at a price lower than what its expected growth justifies.

Return on Equity:

ROE shows how efficiently a company generates profit from shareholders’ equity. A high ROE indicates efficient use of capital, while a falling ROE could mean weaker management or higher financial leverage. The formula used to calculate ROE is-

ROE = (Net Income / Shareholders’ Equity) × 100

For example, if a company earns a net income of, say, Rs.15,00,000 and has shareholders’ equity of Rs.60,00,000, its ROE would be

ROE = (15,00,000 / 60,00,000) × 100 = 25%.

This means the company generates 25 paise in profit for every rupee of equity.

What qualifies as a good ROE depends on the following factors:

Capital intensity: Sectors like utilities and manufacturing need large assets and equity to operate, leading to lower ROEs. In contrast, tech companies often require less capital, resulting in higher ROEs.
Profit margins: Tech and pharma firms with higher profit margins tend to have better ROEs. For instance, Infosys, a leading Indian IT company, has an ROE of around 31.8%, while NTPC, operating in the capital-intensive utility sector, has a much lower ROE of 13.5%.
Debt: Companies with high leverage may show inflated ROEs, which come with increased risk.
Growth stage: High-growth companies reinvest earnings, often leading to lower ROEs than mature firms.

So, when comparing ROE, it is important to ensure the companies are similar and operate in the same industry.

Debt-to-Equity Ratio:

The debt-to-equity ratio, another important fundamental indicator, shows the relationship between a company’s borrowed funds and shareholder capital. It shows how a company finances its assets and assesses its financial leverage. This ratio indicates how much shareholder equity can cover creditor obligations if the company faces financial trouble. It is calculated as

Debt to Equity = Total Debt / Shareholder’s Equity

Let’s say Company XYZ has borrowings of Rs.5,000 crore and shareholder equity of Rs.20,000 crore. Using the formula:

Debt to Equity Ratio = 5,000/20,000 = 0.25.

This means the company has Rs.0.25 in debt for every Re.1 of shareholder equity.

The debt-to-equity (D/E) ratio is typically compared to industry averages, competitor ratios, or a company’s historical ratios. A high ratio might indicate the company relies heavily on debt, which could affect its profitability and ability to pay dividends. It also signals higher financial risk if profits decline. Creditors often use this ratio to assess loan approval, as a high ratio may hint at potential bankruptcy.

In contrast, a low ratio shows the company depends more on equity financing, reducing the debt burden. A ratio of 1.0 to 2.0 is usually seen as healthy, but the ideal range varies across industries.

Earnings Per Share:

One of the primary parameters that comes up when answering ‘What is fundamental analysis indicator?’ is the EPS. It shows how much profit a company makes for each share of its stock. The following formula calculates EPS-

EPS = Net Profit / Number of Outstanding Shares

For example, consider ABC Ltd., which reported a net profit of Rs.8,00,000 for FY23 and has 80,000 outstanding shares of common stock. So,

EPS = Rs.8,00,000 / 80,000 = Rs.10

An EPS of 10 means the company earns Rs. 10 in profit for each outstanding share of stock. So, for every share you own, the company made Rs. 10 in profit during that period.

A single EPS number means little on its own. It becomes meaningful when compared to companies in the same industry or the company’s share price (P/E ratio). A higher EPS indicates better profitability between two companies with the same number of shares. EPS is often used alongside the share price to decide if a stock is “cheap” (low P/E ratio) or “expensive” (high P/E ratio).

Dividend Yield Ratio:

The Dividend Yield Ratio (DYR) shows how much dividend you earn per share for the company’s share price. It’s calculated using this formula:

DYR = Total dividend paid per year / Price per share

For example, if a company’s share costs Rs.200 and the dividend is Rs.5, the Dividend Yield Ratio is 2.5%. This means that for every Rs.100 invested in a company’s shares, you would earn Rs. 2.5 annually as a dividend. Different industries and companies will have varying yields.

A comparatively high dividend yield means the company pays investors a larger share of its profits. This might appeal to value investors, but it could also suggest the company isn’t reinvesting enough or its stock price has dropped. On the other hand, a comparatively low yield could indicate the company is reinvesting profits, facing losses, or has high debt. It may also prioritize growth over immediate returns.

Price-to-book Ratio:

The Price-to-Book (P/B) ratio compares a company’s market valuation to its book value. It helps you judge if a stock is undervalued, overvalued, or fairly valued. The formula to compute the P/B ratio is

P/B Ratio = Market Price Per Share / Book Value Per Share

So, say a stock trades at Rs.120 per share, and its book value per share is Rs.40; the P/B Ratio will be 3 (120/40). This means the stock is priced at thrice its book value.

As per the theory measures, a P/B ratio below 1 indicates the stock is undervalued, while a higher ratio suggests overvaluation or expectations of future growth. However, the ideal ratio varies by industry, so comparing a company’s P/B ratio with its industry standard is crucial for accurate evaluation. Always consider the business sector or industry as the general level of PB ratio in one may differ from another.

Revenue Growth Rate:

Revenue growth is a company’s income increase over time, measured quarterly or annually. It highlights market share and competitiveness. Consistent growth often points to a healthy, expanding business. However, you must analyze revenue and profit margins to understand financial health better.

Ideal or preferable growth rates differ by industry and company stage. Startups may see high percentage growth due to smaller revenue bases, while mature companies often have stable but moderate growth. These firms focus more on retaining customers and improving operations, as they’ve already captured a significant part of their market.

Bottomline:

Fundamental analysis remains a powerful tool for understanding a company’s financial health, especially when combined with a reliable stock screener. These indicators provide valuable insights, but evaluating them within the context of industry trends, economic conditions, and the company’s strategy is crucial.

A well-rounded approach, blending fundamental analysis with other methods, will equip you to make informed decisions and confidently navigate the dynamic stock markets of 2025.

FAQ

What is free cash flow?
Free cash flow is the cash a company earns from operations after covering capital expenses. This fundamental analysis indicator shows how well the company can invest in growth, pay dividends, or reduce debt.
What does ROCE indicate?
Return on Capital Employed helps you understand a company’s profitability and how efficiently it uses capital. It shows the profit generated for every rupee of capital employed, giving a clear picture of long-term performance.
What does a P/S ratio indicate?
The P/S ratio shows how much investors are paying for every rupee of a company’s sales. A low ratio might mean the stock is undervalued, while a high one could point to overvaluation.

January 13, 2025

IPO, News

Laxmi Dental & 4 SME IPOs Seek ₹943 cr: Objectives, GMP, and Key Details To Know

Get ready for an action-packed week in the IPO market! This week brings a mix of opportunities, with one mainboard IPO, Laxmi Dental, seeking ₹698.06 Cr , and four SME IPOs – Kabra Jewels Ltd, Rikhav Securities Ltd, Landmark Immigration Ltd, and EMA Partners Ltd – scheduled to hit the market.

This wave of IPOs offers investors a chance to explore a diverse range of sectors and get in on the ground floor of promising Indian businesses.

Before diving into the specifics, let’s break down these companies’ objectives, financial health, Grey Market Premium (GMP), and other key details. Here’s a closer look at what each of these IPOs has to offer!

Laxmi Dental Limited

Laxmi Dental’s IPO aims to raise ₹698.06 crores through a book-built issue. This includes a fresh issue of 0.32 crore shares worth ₹138.00 crores and an offer for sale of 1.31 crore shares aggregating to ₹560.06 crores.

Offer Price	₹407 to ₹428 per share
Face Value	₹10 per share
Opening Date	13 January 2024
Closing Date	15 January 2024
Total Issue Size (in Shares)	1,63,09,766
Total Issue Size (in ₹)	₹698.06 Cr
Issue Type	Book Built Issue IPO
Lot Size	33 Shares
Listing at	BSE, NSE

Source: SEBI

The minimum application size is 33 shares, requiring a retail investment of ₹14,124. For small NII (sNII), the minimum is 15 lots (495 shares), amounting to ₹2,11,860, and for big NII (bNII), it is 71 lots (2,343 shares), requiring ₹10,02,804. The allotment is set for January 16, 2025, with listing on BSE and NSE scheduled for January 20, 2025.

GMP (Grey Market Premium)

The latest GMP for Laxmi Dental IPO is ₹161 (as of January 13, 2025). With a price band of ₹428, the estimated listing price is ₹589, reflecting a potential gain of 37.38% per share.

Objectives of the IPO

Repayment/prepayment of certain outstanding borrowings by the company.
Investment in subsidiaries for repayment/prepayment of borrowings.
Capital expenditure for new machinery acquisition.
Investment in Bizdent Devices Private Limited for machinery purchase.
General corporate purposes.

Company Overview

Incorporated in 2004, Laxmi Dental Limited is an integrated dental products company. It’s product offerings include custom crowns, bridges, clear aligners, thermoforming sheets, and pediatric dental products. Operating under the brand Taglus, the company’s thermoforming sheets and 3D printing resins are industry benchmarks.

Laxmi Dental has six manufacturing facilities and five supporting locations in major cities. With a network spanning over 22,000 clinics across 320 cities in India and exports to more than 90 countries, the company holds a significant presence in domestic and global markets.

Financials

In FY24, Laxmi Dental’s assets grew by 40%, from ₹96.54 crores to ₹134.52 crores. Revenue increased from ₹163.84 crores to ₹195.26 crores. The company’s net worth and profit after tax (PAT) showed strong growth during this period. However, borrowings also increased, indicating rising liabilities.

Laxmi Dental & 4 SME IPOs Seek ₹943 cr: Objectives, GMP, and Key Details To Know 34 — **Source:** **SEBI**

SWOT Analysis of Laxmi Dental Limited

STRENGTHS	WEAKNESSES
An integrated business model ensures efficiency and control over production and distribution. A strong network of over 22,000 clinics and dentists. Significant presence in international markets, exporting to 90+ countries.	Rising borrowings could affect financial stability. Dependence on a limited number of manufacturing facilities.
OPPORTUNITIES	THREATS
Growing demand for dental products globally. Potential for innovation in clear aligner technology. Expansion into emerging markets.	Intense competition in the dental industry. Regulatory changes in domestic and international markets. Currency fluctuations may impact export revenue.

SME IPOs launching this week

Kabra Jewels Limited

Kabra Jewels IPO aims to raise ₹40.00 crores through a book-built issue of 31.25 lakh fresh shares. The minimum application size is 1,000 shares, requiring a retail investment of ₹1,28,000.

Offer Price	₹121 to ₹128 per share
Face Value	₹10 per share
Opening Date	15 January 2024
Closing Date	17 January 2024
Total Issue Size (in Shares)	31,25,000
Total Issue Size (in ₹)	₹40 Cr
Issue Type	Book Built Issue IPO
Lot Size	1000 Shares
Listing at	NSE, SME

Source: SEBI

For High Net-worth Individuals (HNIs), the minimum investment is 2 lots (2,000 shares) amounting to ₹2,56,000. The allotment will be finalized on January 20, 2025, and the shares are expected to list on the NSE SME platform on January 22, 2025.

GMP (Grey Market Premium)

The last reported GMP for Kabra Jewels IPO is ₹0 (January 13, 2025), suggesting no premium or discount over the price band of ₹128. The estimated listing price is ₹128, with no anticipated gain or loss percentage per share at this stage.

Objectives of the IPO

Repayment or partial repayment of certain borrowings availed by the company.
To meet working capital requirements.
General corporate purposes.

Company Overview

Incorporated in 2010, Kabra Jewels Limited is a retail jewelry company offering a wide range of gold, diamond, and silver ornaments. The company’s product portfolio spans wedding jewelry—its highest-selling category—and daily-wear ornaments. Kabra Jewels operates six showrooms in Ahmedabad under various brands, including KK Jewels Bridal, KK Jewels Diamond, and KK Jewels Gold. It also has three offices and one exhibition center, reinforcing its presence in the local market.

Financials

Kabra Jewels has shown consistent financial growth. Revenue as of November 2024 was ₹12,548.47 crore, up from ₹11,212.54 crore in FY22. Profit After Tax (PAT) for the latest period stood at ₹880.89 crore, almost double the ₹440.58 crore reported in FY23. The steady increase in revenue and PAT highlights the company’s growing market position and operational efficiency. Source: SEBI

SWOT Analysis of Kabra Jewels Limited

STRENGTHS	WEAKNESSES
Diverse product portfolio catering to various customer needs. Strong presence in Ahmedabad with multiple specialized showrooms. Consistent revenue and profitability growth.	Limited geographical footprint confined to Ahmedabad. Dependence on the wedding segment as a primary revenue driver.
OPPORTUNITIES	THREATS
Expansion into new cities or regions to broaden market presence. Growing demand for affordable and daily-wear jewelry. Potential to leverage e-commerce for wider reach.	Established and unorganized jewelry retailers pose stiff competition. Fluctuations in gold and diamond prices impacting margins. Economic slowdowns or changes in consumer spending patterns.

Rikhav Securities Limited

Rikhav Securities IPO aims to raise ₹88.82 crores through a book-built issue comprising a fresh issue of 83.28 lakh shares aggregating ₹71.62 crores and an offer for sale of 20.00 lakh shares aggregating ₹17.20 crores.

Offer Price	₹82 to ₹86 per share
Face Value	₹5 per share
Opening Date	15 January 2024
Closing Date	17 January 2024
Total Issue Size (in Shares)	1,03,28,000
Total Issue Size (in ₹)	₹71.62 Cr
Issue Type	Book Built Issue IPO
Lot Size	1600 Shares
Listing at	NSE, SME

Source: Rikhav

The minimum lot size for this IPO is 1,600 shares, requiring a retail investment of ₹1,37,600. For High Net-worth Individuals (HNIs), the minimum investment is 2 lots (3,200 shares) amounting to ₹2,75,200. The allotment is scheduled to be finalized on January 20, 2025, with a tentative listing date on the BSE SME platform set for January 22, 2025.

GMP (Grey Market Premium)

The last reported GMP for Rikhav Securities IPO is ₹0 (as of January 13, 2025). With the price band set at ₹86, the estimated listing price is ₹86, indicating no expected gain or loss per share based on current market trends.

Objectives of the IPO

Funding the incremental working capital requirements.
Financing capital expenditures for IT software, computers, and laptops.
General corporate purposes.

Company Overview

Incorporated in 1995, Rikhav Securities Limited provides various financial services, including brokerage, investing, and banking solutions. Registered with SEBI as a stockbroker, the company is a BSE, NSE, and MCX member. Rikhav Securities offers equity broking, intra-day trading, futures, options, and services in derivative and commodity segments. The company acts as a Self-Clearing Member for trade settlements and provides IPO participation and demat account services. It also offers mutual fund advisory services catering to diverse client investment needs.

Financials

Rikhav Securities has demonstrated robust financial performance. As of September 30, 2024, the company’s total assets stood at ₹33,791.49 crore, a significant rise from ₹18,070.69 crore in FY22. Revenue reached ₹9,615.83 crore, up from ₹4,298.31 crore in FY22, while Profit After Tax (PAT) grew to ₹5,037.32 crore, nearly tripling from ₹1,762.47 crore during the same period, reflecting strong profitability and operational growth. Source: Rikhav

SWOT Analysis of Rikhav Securities Limited

STRENGTHS	WEAKNESSES
Established presence in the financial services sector with SEBI registration. Diversified service offerings, including brokerage, IPO participation, and mutual fund advisory. Strong financial growth in recent years.	Heavy reliance on market conditions for revenue generation.Limited brand visibility compared to larger players in the financial sector..
OPPORTUNITIES	THREATS
Expanding into underserved geographical areas. Increasing demand for investment services among retail investors. Leveraging technology to streamline operations and enhance customer experience.	Strong competition from both established and emerging financial service providers. Regulatory shifts influencing operations and profitability. Market fluctuations affecting revenue generation and client acquisition.

Landmark Immigration Consultants Limited

Landmark Immigration Consultants Limited is launching an IPO with a total size of ₹40.32 crores, comprising 56.00 lakh shares. The issue is entirely a fresh issue with no offer for sale. The minimum lot size for retail investors is 1,600 shares, which translates to an investment of ₹1,15,200.

Offer Price	₹70 to ₹72 per share
Face Value	₹10 per share
Opening Date	16 January 2024
Closing Date	20 January 2024
Total Issue Size (in Shares)	56,00,000
Total Issue Size (in ₹)	₹40.32 Cr
Issue Type	Book Built Issue IPO
Lot Size	1600 Shares
Listing at	NSE, SME

Source: BSE

High Net-worth Individuals (HNIs) will need to apply for at least 2 lots, or 3,200 shares, amounting to ₹2,30,400. The IPO’s allotment process will be finalized on January 21, 2025, and it will be listed on the BSE SME on January 23, 2025.

Objectives of the IPO

The company plans to use the net proceeds from the IPO for the following purposes:

Capital expenditure for establishing new branches.
Advertisement expenses to increase brand awareness and visibility.
Acquisitions to drive inorganic growth.
General corporate purposes.

Company Overview

Founded in 2010, Landmark Immigration Consultants Limited specializes in Global Consultancy Services, particularly in global education and immigration consultancy. The company offers services for students seeking to study abroad and provides immigration consultancy for visas, tourism, business, and permanent residency, particularly in Canada.

Landmark operates through 9 fully equipped branches and partners with over 30 Canadian institutions. In addition, the company has entered into franchise agreements at locations in Jammu, Jind, and Karnal.

Financials

Landmark Immigration has shown strong financial growth over the past few years. As of March 31, 2024, the company reported assets of ₹4,431.51 lakhs, a rise from ₹3,625.3 lakhs in 2023 and ₹3,611.51 lakhs in 2022. Revenue surged to ₹3,707.03 lakhs in 2024, up from ₹2,162.62 lakhs in 2023 and ₹1,931.54 lakhs in 2022. Profit After Tax (PAT) also showed a significant increase, reaching ₹1,111.83 lakhs in 2024, compared to ₹443.48 lakhs in 2023 and ₹393.53 lakhs in 2022, reflecting strong financial growth.
Source: BSE

SWOT Analysis of Landmark Immigration Consultants Limited

STRENGTHS	WEAKNESSES
Well-established brand in global education and immigration consultancy. A wide network with 9 branches and 30+ Canadian institution partnerships. Strong financial performance with consistent growth in revenue and profit.	Dependence on the Canadian immigration market could limit diversification. High reliance on physical branches, which may restrict scalability.
OPPORTUNITIES	THREATS
Expansion into new markets with the opening of new branches. Growth potential from inorganic initiatives through acquisitions. Increasing demand for education and immigration services globally.	High competition from local and global consultancy firms. Potential regulatory changes that may influence operations and profitability. The market volatility could affect client acquisition and revenue generation.

EMA Partners Limited

EMA Partners India Limited is launching an IPO with a total issue size of ₹76.01 crores. The issue consists of a fresh issue of 53.34 lakh shares, amounting to ₹66.14 crores, and an offer for sale of 7.96 lakh shares, aggregating ₹9.87 crores.

Offer Price	₹117 to ₹124 per share
Face Value	₹5 per share
Opening Date	17 January 2024
Closing Date	21 January 2024
Total Issue Size (in Shares)	61,30,000
Total Issue Size (in ₹)	₹76.01 Cr
Issue Type	Book Built Issue IPO
Lot Size	1000 Shares
Listing at	NSE, SME

Source: Indorient

Retail investors must invest a minimum of ₹1,24,000 for a lot size of 1,000 shares. The minimum investment for high-net-worth individuals (HNIs) is ₹2,48,000 for 2 lots or 2,000 shares. The IPO allotment will be finalized on January 22, 2025, and the shares are expected to list on the NSE SME on January 24, 2025.

Objectives of the IPO

The company intends to use the funds raised from the IPO for the following purposes:

Strengthening the leadership team for both the company and its subsidiaries.
Upgrading the existing IT infrastructure for both the company and its subsidiaries.
Repaying or pre-paying borrowings taken for the purchase of office premises.
General corporate purposes and potential inorganic acquisitions.

Company Overview

EMA Partners India Limited, established in 2003, is an executive search firm specializing in leadership hiring solutions. The company provides global recruitment services, focusing on C-suite and board-level hiring across various industries. EMA Partners India is headquartered in Mumbai, with a growing international presence in Singapore, Dubai, and James Douglas (Dubai). The company offers two key services: Executive Search and Leadership Advisory. Additionally, MyRCloud, an AI-driven platform, enhances hiring efficiency for entry and middle management positions.

Financials

The company’s financial performance demonstrates fluctuations over the past few periods. For the period ending July 31, 2024, revenue stood at ₹2,632.9 lakh, a decline from ₹6,883.45 lakh in March 2024 but higher than ₹5,106.16 lakh in March 2023 and ₹5,786.52 lakh in March 2022. Profit After Tax (PAT) for July 2024 was ₹437.22 lahks, significantly lower than ₹1,427.3 lahks in March 2024 but up from ₹307.07 lahks in March 2023 and ₹1,127.06 lahks in March 2022. Source: Indorient

SWOT Analysis of EMA Partners India Limited

STRENGTHS	WEAKNESSES
Strong brand reputation in executive search and leadership advisory. Expanding global presence with offices in key international markets. Advanced AI platform, MyRCloud, streamlining recruitment processes.	Dependence on a few key markets for global revenue.Limited diversification in service offerings beyond executive search and leadership advisory.
OPPORTUNITIES	THREATS
Potential for expansion into untapped international markets. Growth prospects in mid-to-senior level recruitment through the James Douglas brand. Further enhancement of AI-powered recruitment tools to improve efficiency.	Fierce competition from other global executive search firms. Economic challenges that could reduce demand for recruitment services. Regulatory changes that could influence the recruitment industry.

OTHER IPO RESOURCES
IPO | Current IPO | Upcoming IPO | Listed IPO

January 13, 2025

Investing

A Balanced Look at Benefits Of PMS and Risks in India

Portfolio Management Services (PMS) in India have grown rapidly, with Assets Under Management (AUM) rising from ₹15.40 lakh crore in January 2019 to ₹32.22 lakh crore by January 2024. With PMS assets projected to exceed ₹100 lakh crore by 2030, investors are increasingly considering this customized wealth management option.

Unlike traditional investment tools, PMS builds customized portfolios to align with investors’ financial goals, risk tolerance, and market opportunities.

But is PMS the right fit for you? Let’s explore the benefits of PMS alongside its potential drawbacks.

Read More: Portfolio Management Services: A Beginner's Guide

Benefits of PMS (Portfolio Managed Services)

Professional Expertise at Your Service

Professional management is the cornerstone of PMS. Seasoned portfolio managers bring years of experience and market knowledge to curate portfolios that align with clients’ financial goals. Their expertise ensures that investments are guided by data-driven strategies and deep market insights.

Tailored Investment Strategies

Unlike mutual funds that adopt a one-size-fits-all approach, PMS offers customized solutions. The portfolio is designed based on your unique risk tolerance, investment horizon, and objectives. This personalization maximizes the potential for growth while aligning with your comfort level.

Transparency and Control

One significant benefit of PMS is its transparency. Investors receive detailed reports on portfolio performance, holdings, and transactions. Additionally, direct ownership of securities provides greater control, unlike mutual funds, in which you own fund units.

Active Portfolio Management

Markets are dynamic, and PMS ensures your portfolio stays ahead of the curve. Portfolio managers actively monitor and rebalance investments to adapt to market fluctuations, ensuring opportunities are seized and risks mitigated.

Diversification for Risk Management

Diversification is key to minimizing investment risks. PMS ensures your portfolio is spread across various asset classes, sectors, and industries, reducing the impact of poor performance in any area.

Potential for Higher Returns

PMS’s personalized and actively managed nature often translates into potential higher returns. PMS seeks to outperform traditional investment avenues like fixed deposits or mutual funds by focusing on growth-oriented opportunities and market trends.

Access to Exclusive Investment Opportunities

PMS opens doors to unique, high-growth potential opportunities. These may include niche stocks, emerging sectors, or strategies unavailable in conventional investment platforms, giving investors a competitive edge.

Dedicated Support and Relationship Management

When you choose PMS, you’re not just getting investment management; you’re gaining a partner in your financial journey. Dedicated relationship managers offer personalized guidance, address queries, and ensure a seamless investment experience.

Regulatory Assurance

PMS in India operates under the strict guidelines of the Securities and Exchange Board of India (SEBI). This regulatory framework ensures transparency, accountability, and investor protection, making it a reliable option.

Understanding the Drawbacks of Portfolio Management Services (PMS)

While there are several benefits of PMS, it has drawbacks too. Like any financial product, it has limitations that prospective investors should carefully consider before considering investing in any PMS.

High Investment Threshold

One of the most significant barriers to entry in PMS is the high minimum investment requirement. In India, SEBI mandates a minimum investment of ₹50 lakh for PMS accounts. This makes it inaccessible for retail investors or those with smaller investable surpluses. For many, this threshold can feel restrictive and excludes them from benefiting from PMS’s personalized approach.

Higher Costs and Fees

The premium nature of PMS often comes with substantial management fees and other charges. Typically, PMS providers charge:

Management Fees: A fixed percentage of assets under management (AUM) or performance-based fees.
Transaction Costs: Charges for buying and selling securities.
Custodian Fees: For safekeeping and management of assets.

These costs can significantly impact returns, especially if the portfolio underperforms or if market conditions are unfavorable.

Lack of Liquidity

PMS investments are generally less liquid compared to mutual funds. Exiting a PMS portfolio can be cumbersome, as the process may involve selling individual securities. This can lead to delays, particularly during market downturns when liquidity dries. Investors needing immediate access to funds might find this lack of liquidity a disadvantage.

Market-Dependent Returns

While PMS often promises higher returns, it is not immune to market risks. The performance of a PMS portfolio depends heavily on market conditions and the skills of the portfolio manager. Even a well-managed PMS can incur losses in bearish or volatile markets, leaving investors disappointed.

Risk of Manager Bias

In PMS, the success of your portfolio often hinges on the skills and judgment of the portfolio manager. However, there’s always a risk of manager bias or overconfidence, which can result in suboptimal investment decisions. If the manager’s strategy fails, it can adversely impact the portfolio’s performance.

Is PMS Right for You?

The decision to opt for PMS depends on your financial profile, goals, and risk appetite. If you are an HNI looking for personalized strategies and higher returns, PMS could be a valuable choice. However, consider the associated costs, risks, and liquidity constraints before committing.

The benefits of PMS make it a compelling option for HNIs seeking tailored financial solutions. However, its limitations are vital, too.

FAQs

What is the minimum investment required for PMS?
As per SEBI, PMS typically requires a minimum investment of ₹50 lakh, making it suitable primarily for high-net-worth individuals.
How is PMS different from mutual funds?
While mutual funds offer pooled investments with standardized structures, PMS provides customized portfolios tailored to individual goals. Investors also retain direct ownership of assets in PMS.
Are PMS returns guaranteed?
No, PMS returns are not guaranteed. Although managed by professionals, PMS portfolios are subject to market risks and volatility.

January 12, 2025

Investing

5 Essential Money Tips for First-Time Home Buyers: Plan Smart and Buy Confidently

Buying your first house is an exciting milestone, but it’s also a financial challenge that requires careful planning. As a first-time home buyer, understanding the right money tips for first-time home buyers can make all the difference between a smooth journey and a stressful experience. From setting a budget to exploring financing options, following these tips will help you make informed decisions, save money, and achieve your homeownership goals.

This guide dives deep into the financial rules every first-time home buyer should know, ensuring you are prepared to make one of the most significant investments of your life.

Understand the Price-to-Income Ratio

The price-to-income ratio is a critical rule when it comes to purchasing your first home. This ratio simply means that the cost of the house should be no more than 5 times your household’s annual income. For example, if your household income is ₹10 lakh a year, then the cost of your home should ideally be no more than ₹50 lakh.

While this rule may sound simple, it can be quite challenging to follow, especially in metropolitan cities in India where property prices have skyrocketed in recent years. In cities like Mumbai, Delhi, and Bangalore, the cost of real estate is often much higher than this ideal ratio. This is where considering satellite towns or Tier 2 cities could be a more practical solution. Cities like Pune, Chandigarh, or Coimbatore offer more affordable property options while still providing the amenities and infrastructure that make them attractive places to live.

By sticking to the 5x rule, you ensure that your home loan and its repayment does not overwhelm your finances, leaving you with enough resources for other needs such as saving for retirement, emergencies, or your children’s education.

Save for a Higher Down Payment

When applying for a home loan, most banks will ask you to contribute a down payment of around 20-25% of the home’s value. However, it is essential to go beyond the minimum and save more. Ideally, you should aim to pay 35% of the total cost of the house as your down payment.

Why does this matter? A larger down payment helps reduce your loan burden and monthly EMI. By putting down a substantial amount upfront, you can reduce the total loan amount, which results in lower interest payments over the life of the loan. This can save you a significant amount of money in the long term.

Furthermore, a larger down payment shows lenders that you are financially responsible and capable of managing debt, which can help you secure better interest rates. It is essential to start saving early and make this extra financial effort for your long-term benefit.

Savings: At Least 50% of the House’s Cost

Owning a home comes with additional expenses that go beyond just the home loan EMI. Maintenance costs, property taxes, utilities, and home insurance can add up quickly. To ensure you can handle these expenses without straining your finances, aim to have at least 50% of the house’s cost saved up.

Here’s how this breaks down:

35% of the house price should go toward your down payment.
The remaining 15% should be kept aside as liquid savings to cover unforeseen financial needs, such as medical emergencies, job loss, or urgent repairs.

Having a robust savings cushion ensures that you can manage your finances smoothly without dipping into your home loan or going into debt when unexpected expenses arise. This buffer also gives you peace of mind as you navigate the initial stages of homeownership.

Monthly EMI: Keep It Below 35% of Your Income

Another important financial rule is ensuring that your home loan EMI does not exceed 35% of your in-hand monthly income. The EMI is a significant monthly financial commitment, and if it consumes too much of your income, you may find it challenging to maintain a comfortable lifestyle.

For example, if your take-home income is ₹1 lakh per month, your monthly EMI should not exceed ₹35,000. Exceeding this threshold could cause financial strain, leaving little room for other expenses such as groceries, education, insurance, and savings. A manageable EMI allows you to comfortably cover other living expenses while still checking your loan obligations.

In cases where property prices are high, such as in metros, it may make sense to adjust your expectations and look for smaller homes or properties in areas with lower real estate costs.

Medical Insurance: Protect Your Family with Adequate Coverage

Finally, as a first-time homebuyer, it is essential to secure a floating medical insurance policy with a coverage of at least ₹25 lakh. While this may seem like a significant expense, the protection it offers to you and your family is invaluable. Medical emergencies can be financially draining, and having sufficient insurance coverage ensures that you’re not forced to dip into your savings or take on high-interest debt during difficult times.

A robust medical insurance plan covers hospitalisation, surgeries, and other medical expenses for your entire family. This is particularly important when you are taking on a long-term financial commitment like a home loan, as any major health emergencies can disrupt your financial plans.

Why These Financial Rules Matter

Following these financial guidelines ensures that your home purchase remains a long-term investment, rather than a financial burden. First-time homebuyers are often so focused on getting their foot in the door of the real estate market that they overlook the importance of maintaining a balanced financial situation. These rules help you avoid falling into debt, allow for better financial planning, and ensure that you can weather unexpected financial challenges.

By adhering to these principles, you are setting yourself up for a stable, financially secure future in your new home.

Conclusion

Purchasing a home is a detailed and often lengthy journey that requires significant time, effort, and resources. However, the rewards make it all worthwhile. The secret to success is having a clear understanding of your financial situation, setting achievable budget goals, and consulting with a financial planner when necessary. By following these financial planning tips for homebuyers, you’ll be on track to turn your dream of owning a home into a reality.

FAQ

Can I buy a home without following these financial rules?
While it’s possible, following these rules ensures that you can manage the financial burden of homeownership without overextending yourself. Skipping these steps can result in financial stress down the road.
What if I can’t afford the 35% down payment?
If you cannot afford a 35% down payment, consider looking at more affordable properties, increasing your savings over time, or exploring government schemes that offer lower down payments.
Why is medical insurance so important for homebuyers?
Medical insurance protects you and your family from unexpected health-related expenses, ensuring that you don’t have to use your home’s equity or savings to cover medical costs.
How do I know if my home loan EMI is within 35% of my income?
To calculate your EMI, consider using an online EMI calculator. If your monthly EMI is more than 35% of your take-home salary, you may want to reconsider the loan amount or tenure.

January 11, 2025

Investing

The Importance of Portfolio Reviews: Why Is It Needed?

Reviewing your portfolio is an essential practice in the constantly shifting landscape of investing. Similar to a captain who routinely assesses the ship’s direction, you need to evaluate your portfolio regularly to ensure you are progressing steadily towards your financial objectives.

A portfolio review is an essential practice for every investor, regardless of experience level. By regularly conducting a review of your portfolio, you ensure that your investment strategy remains aligned with your financial goals. Whether you are considering an online portfolio review or asking an expert to “review my portfolio,” understanding the importance of this process can significantly impact your financial health and growth. This article delves into why a portfolio review is crucial and how it helps optimise your investments.

Why Portfolio Review Matters

A portfolio review is not just a routine check; it’s a strategic evaluation of your investments. It allows you to ensure that your portfolio’s asset allocation aligns with your financial goals and risk tolerance. For instance, market conditions change, and so does your personal financial situation. A review helps in adapting your portfolio to these changes, avoiding potential risks, and seizing new opportunities.

Consider an investor who initially allocated a significant portion of their funds to high-risk equities. Over time, their financial goals might shift towards more stable, income-generating investments. Without a regular portfolio review, this misalignment can lead to underperformance or unnecessary risk.

The Role of Online Portfolio Reviews

With the advent of technology, online portfolio reviews have become increasingly popular. These reviews offer a convenient way for investors to assess their portfolios from anywhere, at any time. Online tools often provide detailed analytics, performance reports, and even suggestions for rebalancing. This digital approach not only saves time but also ensures that you have real-time data to make informed decisions.

For example, platforms like Robo-advisors use algorithms to analyse your investment portfolio and recommend adjustments based on your current financial goals and market conditions. This automated process can be particularly beneficial for novice investors who might find traditional portfolio reviews daunting.

When to Say “Review My Portfolio”

Timing is critical in investment management. Knowing when to review your portfolio can make a substantial difference. Ideally, you should conduct a portfolio review at least once a year or whenever there are significant changes in the market or your personal life.

For instance, major life events such as marriage, the birth of a child, or approaching retirement are pivotal moments that warrant a thorough review of your investments. Additionally, significant market events, such as a recession or a boom in a particular sector, also call for an immediate review to mitigate risks or capitalize on growth opportunities.

The Vital Role of Portfolio Review

Reasons why regularly reviewing your investment portfolio is crucial:

Adapting to Market Dynamics: Financial markets are inherently unpredictable, with conditions shifting due to factors like geopolitical tensions, economic reports, or unexpected global events. Regular portfolio reviews help you navigate these changes, ensuring your investments are aligned with current market realities.

Managing Risk Effectively: Effective portfolio management involves continual assessment and management of risk. As your personal circumstances, financial objectives, or the broader market environment evolve, your risk tolerance may also shift.

Ensuring Alignment with Financial Objectives: Financial goals are fluid and can change with life’s milestones—career shifts, family growth, or economic shifts. A portfolio review ensures your investment strategy stays in sync with your current financial aspirations.

Evaluating Performance: Monitoring your investment performance is essential for gauging their success in achieving your financial targets. This ongoing evaluation helps you identify underperforming assets, enabling you to make necessary adjustments to optimize returns.

Maintaining Behavioural Discipline: Investors are often influenced by emotional responses to market movements, leading to impulsive decisions deviating from a well-structured investment plan.

Periodic portfolio reviews instill a disciplined approach, helping you focus on your long-term goals despite short-term market volatility. This structured process minimizes the impact of emotional decision-making and promotes a rational investment strategy.

Considering Estate Planning: Life changes such as marriages, births, or the passing of loved ones can necessitate adjustments to your investment portfolio to reflect new estate planning needs. Regular reviews ensure that your portfolio aligns with your family dynamics and estate planning goals, safeguarding your legacy for future generations.

Steps to Conduct a Portfolio Review

Evaluate Current Holdings: List all your investments and assess their performance. Look for assets that are underperforming or no longer align with your goals.

Check Asset Allocation: Ensure your portfolio is diversified across different asset classes. Proper diversification helps spread risk and enhances potential returns.

Assess Risk Tolerance: Your risk tolerance may change over time due to age, financial situation, or market conditions. Adjust your portfolio to match your current risk appetite.

Rebalance Portfolio: Based on your findings, rebalance your portfolio by selling off some assets and investing in others. This process helps maintain your desired asset allocation.

Set Future Review Dates: Regular reviews are crucial. Set reminders to review your portfolio periodically, such as quarterly or annually.

In conclusion, a portfolio review is an indispensable tool for any investor. It helps ensure your investments are aligned with your financial goals, manage risks, evaluate performance, and capitalize on new opportunities. You can optimize your investment strategy and secure your financial future by conducting regular portfolio reviews, especially through an online portfolio review. Whether you aim to review my portfolio or seek professional assistance, staying proactive is the key to successful investing.

FAQ

How often should I conduct a portfolio review?
It is recommended to review your portfolio at least once a year. However, if there are significant changes in your financial situation or market conditions, more frequent reviews may be beneficial.
What tools can I use for an online portfolio review?
There are several online tools and platforms available, such as Robo-advisors, investment apps, and financial planning software, which provide comprehensive portfolio analysis and recommendations.
Can a portfolio review help in reducing investment costs?
Yes, a portfolio review can help identify high-cost investments and suggest lower-cost alternatives. This can include shifting from actively managed funds to index funds or ETFs, thereby reducing overall expenses and improving net returns.

January 11, 2025

Investing

Understanding EPS: A Key Metric for Stock Investors

When it comes to investing in stocks, knowledge is key. The more you understand about a company’s financial performance, the better decisions you can make about where to put your money. One of the most important things to know is the company’s Earnings Per Share (EPS).

EPS gives you a quick look at how profitable a company is, which is helpful when trying to determine if a company is a good investment. In this guide, we’ll explain what EPS is all about, how to calculate it, and why it matters so much for your investment portfolio.

What is EPS?

Simply put, EPS tells you how much profit a company makes for each share of its stock. Think of it like this: if a company has a birthday cake (its profits), EPS shows you how big of a slice each shareholder gets. A bigger slice (higher EPS) usually means the company is doing well and making more money, which investors like to see.

How to Calculate EPS

Calculating EPS might seem complicated at first, but the basic formula is pretty easy:

EPS = (Net Income – Preferred Dividends) / Weighted Average Number of Common Shares Outstanding

Let’s understand what each part of this formula means:

Net Income: The company’s total profit after paying all its bills and expenses, like salaries, rent, and the cost of making its products.
Preferred Dividends: Some companies have special types of stock called “preferred stock.” These stockholders get paid dividends first, subtracting their dividends from the total profit before calculating EPS for regular shareholders.
Weighted Average Number of Common Shares Outstanding: This considers any changes in the company’s number of shares over time. Companies sometimes issue more shares or buy back some of their existing shares, so this part of the formula ensures the EPS calculation is accurate.

Why EPS Matters?

EPS is a really important tool for investors. Here’s why:

Checking Profitability: A higher EPS usually means a company is making more money, which is a good sign for investors. It suggests that the company efficiently manages its expenses and generates strong profits.
Comparing Companies: EPS helps you compare how profitable different companies are within the same industry. This can help you find the companies doing the best relative to their competitors. For example, if two companies make smartphones, you can use EPS to see which is more profitable.
Tracking Performance: By looking at EPS over time, you can see if a company’s profits are growing or shrinking. This helps you understand if the company is on the right track. If a company’s EPS consistently increases, it could signify a healthy and growing business.

ALSO READ:

Fundamental Analysis

EPS in Finance: Understanding the Bigger Picture

While a higher EPS is generally favorable, it’s important to consider it in context. Financial experts often analyze EPS Finance metrics to gain deeper insights into a company’s financial performance.

Industry Comparisons: It’s helpful to compare a company’s EPS to the average EPS of other companies in the same industry. This shows how the company is doing compared to its competitors. For instance, a tech company might have a higher EPS than a retail company, but that doesn’t necessarily mean it’s a better investment.
Future Growth: Even if a company has a lower EPS now, it might be a good investment if expected to grow. A new company might have a low EPS initially, but if it has a promising product or service, its EPS could increase significantly over time.
Economic Factors: A recession can affect a company’s EPS, even if the company is generally doing well. During tough economic times, people might buy less, which could lead to lower profits for companies.

Using EPS for Smart Investing

EPS is often used with other financial measures to make informed investment decisions. A few of the common measures combined with EPS are.

Price-to-Earnings (P/E) Ratio: EPS alone tells you how much profit a company generates per share, but the P/E ratio places it in context with the stock price. The P/E ratio shows how much investors are willing to pay for each rupee of a company’s earnings. A high P/E ratio usually makes investors optimistic about the company’s future. You can use a financial calculator to calculate these ratios easily.
ROE (Return on Equity): EPS tells you about profitability, but ROE tells you how efficiently a company uses shareholders’ equity to generate that profit. A high ROE relative to EPS suggests the company efficiently leverages its capital to drive earnings.
Price-to-Sales (P/S) Ratio: EPS focuses on profitability, but what if a company isn’t profitable yet? The P/S ratio can tell you how the company is valued relative to its sales, even if it doesn’t have positive earnings. The P/S ratio compares a company’s market cap to its revenue, offering another perspective on valuation. The P/S ratio might offer a clearer view of potential value in cases where EPS is negative or low.

Different Types of EPS

There are different ways to look at EPS:

Trailing EPS: Trailing EPS reflects a company’s earnings over the past 12 months, providing investors with a clear historical perspective of its profitability. By analyzing this figure, you can gauge the company’s recent performance. It’s a valuable metric for understanding trends and comparing past performance to other companies within the same industry.
Forward EPS: Forward EPS: Forward EPS predicts a company’s future earnings, giving an idea of its growth potential. It helps assess companies planning expansions or new projects. While not certain, forward EPS helps investors estimate how well a company might perform and make smarter decisions about its prospects.

Conclusion

EPS is a crucial metric for anyone investing in stocks, providing insights into a company’s profitability and growth potential. However, it’s essential to consider other considerations when making investment decisions.

A well-rounded approach enables you to make informed choices and build a strong investment portfolio. If you need assistance with your stock investments, a stock investment advisor can offer expert guidance to help you achieve your financial goals.

FAQ

What’s the difference between basic EPS and diluted EPS?
Basic EPS is calculated using the current number of shares, while diluted EPS considers the potential impact of stock options that could increase the number of shares in the future. Diluted EPS gives a more cautious view of a company’s earnings.
Where can I find information about a company’s EPS?
Investors can usually find EPS information in a company’s financial reports, especially the income statement and balance sheet. These reports are often found on the company’s investor relations website or through financial data providers. For help understanding the terms used in these reports, check out the glossary of common investment jargons.
Is EPS the only thing I should look at when investing in stocks?
No, EPS is just one factor to consider. Investors should also look at things like revenue growth, debt levels (check out the quick ratio for more information), the quality of the company’s management, industry trends, and how much the company pays in dividends.

January 10, 2025

Investing

Understanding Overdiversification: Are You Diluting Your Returns?

Introduction:

Overdiversification is a common pitfall many investors fall into, often leading to diluted returns and a lack of focus in their investment strategy. While diversification is essential for risk management, too much can negate potential gains.

This article delves into the nuances of over-diversification, helping you strike the right balance for your portfolio. We will explore practical steps to avoid over diversifying and illustrate how optimal diversification can enhance investment outcomes.

Understanding Over diversification

Diversification is a well-known strategy in the investment world aimed at spreading risk across various assets to mitigate potential losses. However, over diversification occurs when an investor holds too many different assets, leading to diminished returns and increased complexity in portfolio management. This often results in a situation where no single investment contributes meaningfully to the overall performance, reducing the potential for substantial gains.

Why Do Investors Overdiversify?

Fear of Risk: Investors often over-diversify to avoid risk, believing that more assets equal less risk. While diversification reduces risk to a point, overdiversification dilutes the impact of high-performing investments.

Lack of Knowledge: Some investors lack the knowledge to identify high-potential investments, so they spread their funds thinly across numerous assets.

Advice Overload: The abundance of financial advice can lead investors to overcomplicate their portfolios, adding unnecessary assets based on trends or opinions.

Signs of Overdiversification

Excessive Number of Holdings: Investors with excessive stocks or funds often find it challenging to manage and monitor each holding effectively. For instance, holding 50 or more stocks across various sectors may not significantly reduce risk compared to a well-selected portfolio of 15-20 stocks.

Heightened Complexity: Handling a portfolio with excessive investments can rapidly become daunting. Monitoring performance, regularly rebalancing, and keeping track of numerous assets adds complexity to investment management. Moreover, frequent transactions may increase fees, making the process more labor-intensive and expensive.

Low Correlation and Redundancy: Diversifying across multiple sectors or asset classes with low correlation can be beneficial. However, investing in too many similar assets, like multiple mutual funds with overlapping strategies, can lead to redundancy, offering no additional risk reduction.

Diminished Returns: Overdiversification can lead to a scenario where the portfolio mirrors the market average, thus underperforming compared to a more focused strategy that targets higher growth opportunities.

Suboptimal Capital Allocation: Over-diversification often locks a portion of your capital in assets that either underperform or remain stagnant. As a result, your portfolio may not be operating at its highest potential, preventing you from maximizing the returns on your investments.

The Optimal Diversification Strategy

To avoid overdiversification, investors should focus on creating a well-balanced portfolio that includes diverse asset classes but remains manageable.

Core-Satellite Approach: This strategy involves building a core portfolio with broad, low-cost index funds or ETFs that provide market exposure, complemented by satellite investments in specific sectors or high-growth opportunities. For example, an investor might allocate 70% of their portfolio to core holdings and 30% to satellite investments.
Regular Portfolio Review: Regularly reviewing and rebalancing your portfolio ensures it remains aligned with your investment goals and risk tolerance. This process helps identify and eliminate redundant holdings, thereby streamlining the portfolio.
Focus on Quality Over Quantity: Rather than holding numerous investments, focus on high-quality assets with strong growth potential that align with your investment strategy. For instance, selecting 10-15 well-researched stocks can offer better returns than a diluted portfolio of 50 stocks.

Diversification vs. Overdiversification

Aspect	Diversification	Overdiversification
Number of Assets	Balanced	Excessive
Risk Mitigation	Effective	Diminishing returns
Portfolio Management	Manageable	Complex and cumbersome
Cost Implications	Reasonable	High

Diversifying Across Various Asset Classes

To mitigate risk and optimize returns, investors and portfolio managers often spread their investments across multiple asset classes. This strategic allocation involves determining the appropriate proportion of the portfolio for each category. Key asset classes include:

Equities: Investments in shares of publicly traded companies.
Fixed-Income Securities: Such as government or corporate bonds, which provide regular interest payments.
Real Estate: Investments in land, buildings, and natural resources, including water and mineral rights.
ETFs (Exchange-Traded Funds): These funds track indices, commodities, or sectors and are traded on stock exchanges.
Commodities: Physical goods such as metals, energy resources, and agricultural products essential for production.
Cash and Equivalents: Liquid investments like treasury bills, certificates of deposit (CDs), and other short-term, low-risk financial instruments.

Striking the Right Balance Between Diversification and Overdiversification

Over-diversification occurs when an investor spreads their investments too thin across numerous stocks or mutual funds, resulting in diminishing returns outweighing risk reduction benefits. On the other hand, optimal diversification involves striking the right balance—creating a sufficiently diverse portfolio to mitigate risk while still being concentrated enough to harness the potential for significant returns.

Let’s explore this concept with an example:

Consider Investor A, who holds 500 different stocks in their portfolio. While this significantly reduces risk, the sheer number of stocks may also limit the number of high-performing ones, leaving A with a portfolio that delivers modest returns. Eventually, Investor A might find themselves in a situation where their portfolio yields neither significant profits nor losses.

When it comes to mutual funds, a fund that invests in more than 100 companies might not be the best example of optimal diversification. In such cases, it becomes harder for the fund manager to outperform the market, as focusing on too many investments dilutes the chances of achieving higher returns. While having a new fund in your portfolio can be beneficial, too many funds can reduce the overall potential for gain. A highly diversified portfolio might offer safety, but it often limits an investor’s ability to achieve remarkable returns.

In conclusion, overdiversification can undermine financial goals by diluting returns and complicating portfolio management. By understanding the signs of over diversification of a portfolio and implementing targeted strategies, investors can achieve a well-balanced portfolio that maximizes returns while minimizing risk. Focus on quality over quantity, regularly review your holdings, and adjust your plan to maintain optimal diversification.

FAQ

What is overdiversification, and why is it problematic?
Overdiversification refers to holding too many assets in a portfolio, which can dilute returns and complicate management. It becomes problematic as it spreads investments too thin, reducing the impact of high-performing assets and increasing costs and complexity.
How can I identify if my portfolio is overdiversified?
Signs of overdiversification include holding an excessive number of stocks or funds, having duplicative investments within the same sector, and facing difficulties in tracking and managing your portfolio effectively.
What steps can I take to avoid overdiversification?
To avoid overdiversification, set clear investment goals, focus on high-quality assets, limit sector exposure, regularly monitor and rebalance your portfolio, and consider using low-cost index funds to achieve broad market exposure without excessive complexity.

January 10, 2025

Investing, News

Funding Revival in Indian Startups: Small Investments Propel 14% YoY Growth

Traditionally, angel investors were a small group of high-net-worth individuals who backed startups with substantial capital. Today, however, the definition of an angel investor is broadening.

A new wave of professionals, entrepreneurs, and even middle-income individuals is venturing into startup investments, often contributing smaller amounts. Platforms like the Indian Angel Network (IAN) and syndicates on AngelList have made it easier for these micro-investors to participate in funding rounds.

This democratization of startup investments has opened doors for those without access to such opportunities before. With investment thresholds as low as ₹50,000 to ₹1,00,000, more individuals are stepping into the role of angel investors, fueling the growth of early-stage startups. Source: Livemint

Indian Startups Gear Up for a Hiring Revival

Indian startups are gearing up for recruitment in FY25 as the funding environment improves following a prolonged slowdown. Staffing firms project a 20-30% rise in hiring, driven by a 14% YoY increase in funding, which reached US$ 10.9 billion in FY24. Investments fell from US$ 36 billion in FY21 to US$ 24.7 billion in FY22 and to US$ 9.6 billion in FY23. Source: IBEF

AD 4nXe5NSgk 8XadxqJQxViRowH00WZkrax2i3HZAzwPaeWP dCeqCv4pAnJkKrcJMjIrjRnwXQVNLG7cwqCNv1jX3DgWZRio8b LkA4kyZr10zWiD0gOBXvhAIn98x0JPxCyaSxR5sEw?key=lVhz7ZL55HKdY0 — Source: IBEF

Layoffs declined significantly by 46% year over year, from 16,398 in 2023 to 8,895 in FY24, reflecting a shift toward growth and expansion. Key sectors such as retail, e-commerce, fintech, FMCG, automotive, travel, and hospitality are expected to lead the hiring wave. At the same time, industries like BFSI, telecom, healthcare, pharma, and energy may see subdued activity, especially in the first quarter of FY25.

The Role of Platforms in Driving the Trend

Platforms like IAN, LetsVenture, and AngelList lead this shift, making startup investments more accessible. They provide a structured approach for new investors, including due diligence, co-investment opportunities, and legal support. These platforms enable small investors to pool their resources and collectively invest in promising startups, reducing individual risks while amplifying impact. Source: Livemint

Moreover, technology has played a crucial role in connecting startups with potential investors. Online platforms and virtual pitch sessions have made it easier for investors from different geographies to evaluate opportunities and participate in funding rounds.

Emergence of New Angel Investors

Writing cheques as low as ₹50,000 was previously limited to the friends and family of founders at the idea stage. Now, such lower ticket sizes are becoming common among Younger professionals, Business owners from smaller towns, and New entrants in the startup ecosystem.

Shift in Angel Investment Trends
Micro-Investments by New-Age Investors	New-age investors are making micro-investments starting as low as ₹50,000. This trend highlights a shift toward smaller bets in angel investments.
Typical Angel Investor Cheque Sizes	Most angel investor cheques now range between ₹3 lakh to ₹8 lakh. These amounts surpass the smaller deals often made by wealthier investors and prominent startup founders.
Larger Cheques from Select Investors	A smaller group of investors, such as second-generation family office individuals, writes larger cheques of ₹35-50 lakh. However, deals of this size are relatively fewer compared to lower ticket sizes.
Preferred Cheque Size for Risk Management	Most investors opt for investments in the range of ₹5-7 lakh to balance risk at the early stage.
Average Ticket Sizes Across Platforms	The average ticket size across angel funds typically does not exceed ₹9 lakh:

Source: Livemint

Why the Startup Scene Appeals to Angel Investors

1. High Growth Potential: Startups are often associated with high-risk, high-reward investments. Many angel investors are drawn to the possibility of exponential returns, as seen in success stories like Swiggy and Zomato.

2. Passion for Innovation: For many, the appeal lies in supporting disruptive ideas and technologies potentially transforming industries.

3. Networking and Learning: Angel investing also offers opportunities for networking with entrepreneurs, learning about emerging industries, and staying ahead of market trends.

How Startups Benefit from Micro-Investments

The influx of micro-investors brings several advantages for startups:

Diverse Capital Sources: Startups no longer need to rely solely on large investors. Multiple small investments can provide the required capital while spreading the risk.
Broader Support Network: Each investor brings unique expertise, network, and perspectives, which can be invaluable for a startup’s growth.
Validation and Visibility: A wide base of angel investors can act as a vote of confidence, attracting more interest from institutional investors.

Sectors Gaining Traction

While the startup ecosystem is diverse, some sectors are seeing heightened interest from angel investors:

Fintech: With digital payments and financial inclusion gaining momentum, fintech startups remain a top choice.
Healthtech: The pandemic has accelerated the adoption of digital healthcare solutions, making this a lucrative sector.
E-commerce and Food Delivery: Companies like Swiggy and Zomato have demonstrated the potential of this space, inspiring new ventures and attracting investors.
Edtech: As education continues to go digital, edtech startups draw significant attention from small investors.

Challenges for New Angel Investors

Despite the opportunities, entering the world of startup investments comes with its challenges:

High Risk: Startups are inherently risky, with many failing to deliver returns. New investors need to be prepared for potential losses.
Lack of Expertise: Evaluating startups requires industry knowledge, market trends, and financial metrics, which can be daunting for newcomers.
Illiquid Investments: Startup investments are not easily liquidated, and it may take years for an investor to see returns.

To mitigate these challenges, new angel investors are advised to:

Diversify their investments across multiple startups.
Start with smaller amounts to gain experience.
Leverage the expertise of seasoned investors through syndicates and networks.

The Impact on the Startup Ecosystem

The surge in small investments creates a more vibrant and inclusive startup ecosystem. Startups find it easier to secure seed funding, which is critical for turning ideas into viable businesses. This trend also encourages entrepreneurship in smaller cities and towns, where access to capital was previously limited.

Additionally, the involvement of diverse investors brings fresh perspectives and localized insights, helping startups better address market needs. This trend’s ripple effect extends to job creation, innovation, and economic growth.

Government Initiatives Supporting Angel Investments

Government policies and initiatives have also contributed to fostering angel investments. Programs like Startup India and tax incentives for angel investors have made the ecosystem more attractive. Simplified compliance procedures and startup funding support have further boosted small investors’ confidence.

The Road Ahead

As the startup ecosystem evolves, the role of big and small angel investors will continue to grow. The next wave of angel investing may likely to see increased participation from women investors, professionals in niche industries, and international investors looking at Indian startups as a gateway to emerging markets.

The emphasis will also shift towards sustainable and impact-driven startups as more investors prioritize social and environmental returns alongside financial gains.

The entry of a new wave of angel investors into the startup scene is reshaping the investment landscape. Small investments empower startups, democratize wealth creation, and foster innovation.

This new wave of angel investors is pivotal in driving India’s startup revolution by supporting visionary ideas and entrepreneurial talent. As the ecosystem matures, the collaboration between startups and micro-investors can create a more dynamic and inclusive economy.

FAQs

What is the key takeaway of this funding revival?
Indian startups are experiencing a resurgence in funding, with small investments driving a 14% year-over-year growth. This indicates a shift towards sustainable, long-term growth strategies.
Why are small investments crucial?
Small investments provide crucial early-stage support for startups, enabling them to validate their business models, build prototypes, and attract larger funding rounds. They foster a healthy ecosystem for innovation and entrepreneurship.
How does this revival impact the Indian startup ecosystem?
This funding revival boosts investor confidence and attracts more capital to the Indian market. It creates a more robust and resilient startup ecosystem, leading to job creation, economic growth, and technological advancements.
What are the challenges faced by startups despite this revival?
Challenges include navigating economic uncertainty, securing long-term funding, and building a sustainable competitive advantage. Startups must focus on building strong fundamentals and demonstrating clear value propositions.

January 9, 2025

IPO, News

Standard Glass Lining IPO Oversubscribed 183.18 Times: How to Check Allotment Status

The Standard Glass Lining IPO has caught investors’ attention with an oversubscription of 183.18 times. This means there was a huge demand for the shares, way more than what was available. Today, the basis of allotment will be finalized, which is crucial in determining which applicants will receive shares and in what quantity.

If you’ve applied for the IPO, you’re probably wondering whether you got an allotment. Don’t worry—it’s easy to check! We’ll walk you through how to check your allotment status and provide you with all the details about the IPO so you know exactly what’s happening.

Overview of Standard Glass Lining IPO

Standard Glass Lining Technology IPO was open for bidding from January 6 to January 8, 2025. The shares were priced in a range of ₹133-₹140 per share, with a minimum lot size of 107 shares. The company raised ₹410.05 crore through this public offering, which included ₹210 crore from a fresh issue and ₹200.05 crore through an offer-for-sale (OFS).

By the end of the subscription period, the IPO had received bids for 3,81,56,56,808 shares against an offer of 2,08,29,567 shares, leading to an oversubscription of 183.18 times.

Subscription Details

The IPO witnessed overwhelming demand across all investor categories:

Investor Category	Subscription (times)	Shares Offered	Shares Bid For	Total Amount (₹ Cr.)
Anchor Investors	1	87,86,809	87,86,809	123.02
Qualified Institutions (QIBs)	327.76	58,57,875	1,91,99,91,629	26,879.88
Non-Institutional Buyers (NIIs)	275.21	43,93,405	1,20,91,09,951	16,927.54
Retail Investors (RIIs)	65.71	1,02,51,278	67,36,54,452	9,431.16

Source: Chittorgarh

The highest demand came from Qualified Institutional Buyers (QIBs), followed by Non-Institutional Investors (NIIs) and Retail Individual Investors (RIIs).

Day-Wise Subscription Details

Here’s a breakdown of how the subscription grew during the three days of bidding:

Date	QIB	NII	NII (> ₹10L)	NII (< ₹10L)	Retail	Total
Day 1: Jan 6	1.8	26.21	23.81	31	15.08	13.67
Day 2: Jan 7	4.63	80.38	78.51	84.14	33.97	35.54
Day 3: Jan 8	327.76	275.21	302.21	221.21	65.71	185.48

Source: Chittorgarh

The sharp increase in demand on Day 3 highlights the interest from institutional and non-institutional investors, driving the oversubscription.

Grey Market Premium (GMP)

Standard Glass Lining’s shares are trading at a grey market premium of ₹91 over the upper price band of ₹140, indicating a potential listing price of ₹231. This suggests a return of 65%, though it’s essential to remember that grey market trends are speculative and unregulated.

Listing Date

The shares are scheduled to list on the BSE and NSE on January 13, 2025. While GMP trends are optimistic, actual listing performance will depend on broader market sentiment.

Checking the Allotment Status

If you participated in this IPO, here’s how you can check your allotment status:

Method 1: Via BSE Website

Visit the BSE Allotment Status Page.
Select “Equity” under the issue type.
Choose “Standard Glass Lining Technology Limited” from the issue name dropdown.
Enter your application number and PAN card details.
Verify by clicking “I am not a Robot.”
Click the search button to view your allotment status.

Method 2: Via KFin Technologies Portal

Visit the KFin IPO Status Page.
Select “Standard Glass Lining Technology Limited” from the dropdown menu (available if the allotment is finalized).
Choose one of the three identification modes: Application number, Demat Account number, or PAN ID.
Select your application type (ASBA or non-ASBA).
Enter the relevant details and solve the captcha.
Click submit to check your allotment.

About Standard Glass Lining Technology

Established in 2012, Standard Glass Lining Technology Limited is a premier manufacturer of specialized engineering equipment for India’s pharmaceutical and chemical industries. The company delivers turnkey solutions with in-house production capabilities, including design, manufacturing, assembly, and operational support.

Product Portfolio:

The company’s offerings cater to diverse industrial needs:

Reaction Systems for controlled chemical processes.
Storage, Separation, and Drying Systems for material handling and purification.
Plant Engineering and Services for complete operational efficiency.

The company uses glass-lined steel, stainless steel, and nickel alloys to ensure its products meet the highest quality and performance standards.

Clientele

Standard Glass Lining serves an impressive client base, including Aurobindo Pharma, Natco Pharma, Laurus Labs, Deccan Fine Chemicals, and CCL Food and Beverages.

Infrastructure

With eight advanced manufacturing units in Hyderabad and sales offices in Vadodara, Mumbai, Ankleshwar, and Visakhapatnam, the company ensures nationwide reach. It also has sales representatives across key cities like Chennai, New Delhi, and Bengaluru.

Financials of Standard Glass Lining Technology

Between the financial years ending March 31, 2023, and March 31, 2024, Standard Glass Lining Technology Limited demonstrated solid financial performance, with a notable 10% increase in revenue. During the same period, the company’s profit after tax (PAT) also significantly improved, rising by 12%. These figures highlight the company’s ability to sustain growth and profitability in a competitive market environment.

OTHER IPO RESOURCES
IPO | Current IPO | Upcoming IPO | Listed IPO

With a record-breaking oversubscription, the Standard Glass Lining IPO has been a significant event in the market. Investors are now eagerly awaiting the allotment results and subsequent listing performance. Following the above steps, you can quickly check if you’ve secured an allotment.

January 7, 2025

Investing, News

Markets Crash, but Gift Nifty Hints at Better Days Ahead

On Monday, Indian equity benchmarks recorded their steepest single-day decline in three months, leaving investors on edge and sparking widespread concerns about market stability. The Sensex slipped by 1,258 points, or 1.6%, to close at 77,965, while the Nifty fell by 389 points to settle at 23,616. This sharp drop wiped out nearly Rs 11 trillion in market capitalization, bringing the total valuation of BSE-listed firms down to Rs 438 trillion.

The crash was driven by a mix of global and domestic factors, but yet, even as markets reeled from the losses, Gift Nifty pointed to a glimmer of hope. Early trends from Gift Nifty suggest positive signs for the Indian market’s recovery, offering investors a reason to stay optimistic despite the recent turmoil.

Gift Nifty Signals a Glimmer of Hope

Despite Monday’s steep market crash, the Gift Nifty provided a silver lining for investors, signaling potential recovery in the near term. Early trends showed the Nifty futures trading at a premium of nearly 55 points over the Gift Nifty, suggesting a positive opening for the Indian indices.

The optimism wasn’t limited to domestic cues alone. Global markets, particularly Japan’s Nikkei 225, posted a significant rally, surging 2.40% or over 900 points to close at 40,264.50. This robust performance from international indices could help lift investor sentiment and stabilize domestic markets.

While challenges remain, these early signs from Gift Nifty and global markets point toward the possibility of a rebound, offering some much-needed hope to anxious investors. Source: Mint

What Happened in the Market

The overall impact of these factors culminated in the biggest single-day fall for the Sensex and Nifty since October 3.

AD 4nXf00y9zs XU9tVtzdPkh7iWmY n3J9Gy8Pyl4txrbF59BYFl0HizmhTjA8C5SvhTXzmJHLyxUUKQ4Cs — **Source:** **NSE**

As measured by the India VIX, market volatility rose 15.6% to 15.7, marking its highest level since November 22, 2024. The broader indices also faced sharp declines:

The Nifty Midcap 100 dropped 2.7%, its steepest fall since December 20.
The Nifty Smallcap 100 declined by 3.2%, its worst drop since October 22.

Market breadth was weak, with 3,530 stocks declining and only 611 advancing on the BSE. These numbers underline the widespread negative sentiment that gripped the markets. Source: Economic Times

Sector-Wide Declines

Monday’s market crash saw significant declines across multiple sectors. Metals, PSU banks, real estate, oil and gas, and financials were among the worst hit. For instance:

Union Bank of India shares fell 8%. Companies like IREDA, Adani Energy Solutions, Bank of Baroda, HPCL, SJVN, IRFC, YES Bank, and RVNL ended 5-7% lower.

Even major contributors to the Sensex’s decline, such as ITC and Reliance Industries, witnessed steep drops. ITC’s shares fell by 2.75%, reflecting adjustments for the demerger of its hotels division. These sector-wide declines highlight the broad-based nature of the market crash.

Here are the four primary reasons behind this crash:

Fear of the HMPV Virus Hitting the Economy

Detecting the Human Metapneumovirus (HMPV) cases in Karnataka and Gujarat has sparked fears of another pandemic-like situation. While the government has assured there is no need to panic, investors remain cautious.

According to the Indian Council of Medical Research (ICMR), these cases were identified during routine surveillance. Reports suggest that similar cases are rising in countries like Malaysia and China, with unconfirmed reports of a state of emergency in China.

Several states, including Maharashtra and Karnataka, have issued precautionary guidelines to curb the spread. The uncertainty surrounding the virus’s potential economic fallout has unsettled the markets, echoing memories of the impact of the COVID-19 pandemic.

Continued FII Selling

Foreign Institutional Investors (FIIs) have been consistently pulling out funds, which has significantly impacted the market. On Monday alone, FPIs net sold equities worth
Rs 2,575 crore. Over the month, their total equity sales have reached Rs 7,160 crore, and in January, over Rs 4,500 crore was withdrawn.

This trend of FII selling has been ongoing since late September, driven by lackluster corporate earnings and weakening demand. Elevated valuations in Indian markets, coupled with more attractive investment opportunities in markets like the US, have also contributed to this selloff.

Until India’s macro and micro growth rates show substantial improvement, FII flows are unlikely to pick up, and market movement may remain subdued.

HDFC Bank’s Decline

HDFC Bank, the stock with the highest weightage in the Nifty 50, reported a concerning quarterly update. According to provisional numbers, the bank’s deposits grew by 15.8% year-on-year, while loans grew by a mere 3%. Its corporate loan portfolio declined by 10.3% YoY, while retail loans increased by 10% and commercial and rural banking loans by 11.5%.

These figures raised concerns about the bank’s growth prospects, leading to a 2.2% decline in its stock, which hit an intra-day low of Rs 1,710.60. This drop in HDFC Bank’s performance had a cascading effect on market sentiment, given its significant influence on the indices.

Muted Earnings Expectations

Market expectations for corporate earnings have been subdued, adding to investor concerns. Following a sluggish Q2 performance, analysts predict that Q3 and Q4 will also show muted growth. Many experts believe that the earnings pain will persist for several quarters, with overall FY26 earnings expected to remain moderate compared to the previous fiscal year.

This subdued outlook has discouraged investors, further exacerbating the market downturn. Weak earnings expectations impact market confidence, leading to a broader selloff across various sectors. Source: Economic Times

Final Thoughts

The recent stock market crash highlights the impact of global and local factors, including fears of the HMPV virus, ongoing FII selling, and low earnings expectations. Understanding these causes can help investors stay informed and better prepared for future market movements.

January 6, 2025

Investor Portfolios

The Importance of Portfolio Reviews: Why Is It Needed?

Introduction:

Also Read: President of India’s Portfolio

Why Portfolio Review Matters

The Role of Online Portfolio Reviews

When to Say “Review My Portfolio”

The Vital Role of Portfolio Review

Reasons why regularly reviewing your investment portfolio is crucial:

Adapting to Market Dynamics: Financial markets are inherently unpredictable, with conditions shifting due to factors like geopolitical tensions, economic reports, or unexpected global events. Regular portfolio reviews help you navigate these changes, ensuring your investments are aligned with current market realities.

Managing Risk Effectively: Effective portfolio management involves continual assessment and management of risk. As your personal circumstances, financial objectives, or the broader market environment evolve, your tolerance for risk may also shift.

Ensuring Alignment with Financial Objectives: Financial goals are fluid and can change with life’s milestones—be it career shifts, family growth, or economic shifts. A portfolio review ensures that your investment strategy stays in sync with your current financial aspirations.

Evaluating Performance: Monitoring your investment performance is essential for gauging their success in achieving your financial targets. This ongoing evaluation helps you identify underperforming assets, enabling you to make necessary adjustments to optimize returns.

Maintaining Behavioural Discipline: Investors are often influenced by emotional responses to market movements, which can lead to impulsive decisions that deviate from a well-structured investment plan.

Periodic portfolio reviews instill a disciplined approach, helping you remain focused on your long-term goals despite short-term market volatility. This structured process minimises the impact of emotional decision-making and promotes a rational investment strategy.

Considering Estate Planning: Life changes such as marriages, births, or the passing of loved ones can necessitate adjustments to your investment portfolio to reflect new estate planning needs. Regular reviews ensure that your portfolio aligns with your current family dynamics and estate planning goals, safeguarding your legacy for future generations.

Steps to Conduct a Portfolio Review

Evaluate Current Holdings: Start by listing all your investments and assessing their performance. Look for assets that are underperforming or no longer align with your goals.

Check Asset Allocation: Ensure that your portfolio is diversified across different asset classes. Proper diversification helps spread risk and enhances potential returns.

Assess Risk Tolerance: Your risk tolerance may change over time due to age, financial situation, or market conditions. Adjust your portfolio to match your current risk appetite.

Rebalance Portfolio: Based on your findings, rebalance your portfolio by selling off some assets and investing in others. This process helps maintain your desired asset allocation.

Set Future Review Dates: Regular reviews are crucial. Set reminders to review your portfolio periodically, such as quarterly or annually.

In conclusion, a portfolio review is an indispensable tool for any investor. It helps ensure your investments are aligned with your financial goals, manage risks, evaluate performance, and capitalise on new opportunities. By conducting regular portfolio reviews, especially through an online portfolio review, you can optimise your investment strategy and secure your financial future. Whether you aim to review my portfolio or seek professional assistance, staying proactive is the key to successful investing.

FAQ

How often should I conduct a portfolio review?
It is recommended to review your portfolio at least once a year. However, if there are significant changes in your financial situation or market conditions, more frequent reviews may be beneficial.
What tools can I use for an online portfolio review?
There are several online tools and platforms available, such as Robo-advisors, investment apps, and financial planning software, which provide comprehensive portfolio analysis and recommendations.
Can a portfolio review help in reducing investment costs?
Yes, a portfolio review can help identify high-cost investments and suggest lower-cost alternatives. This can include shifting from actively managed funds to index funds or ETFs, thereby reducing overall expenses and improving net returns.

January 6, 2025

IPO, News

Upcoming IPOs in January: Key Details to Watch for 7 Public Issues and 6 Listings

The primary market has been a busy street in 2024, with nearly 300 IPOs raising around Rs.1.8 lakh crore collectively. The trend continues in 2025, with projections for the primary market reaching a value of Rs.2 lakh crore. The estimates this year is kickstarting with the 7 upcoming IPOs in January, of which 6 are opening this week. Let’s take a detailed look at each of these IPOs.

Standard Glass Lining Technology IPO:

Standard Glass Lining Technology Ltd. is one of the top five manufacturers of engineering equipment for chemical and pharmaceutical companies in India. It offers complete solutions, from design and manufacturing to assembly, installation, and commissioning. The company, however, gets 81.79% of its revenue from the pharmaceutical sector clients.

The company is raising the IPO for the following purposes-

Funding capital expenditure for machinery and equipment purchases.
Repaying part or all of its outstanding borrowings, including those of its wholly owned subsidiary, S2 Engineering Industry Private Limited.
Investing in S2 Engineering for its capital expenditure needs, including machinery and equipment.
Supporting inorganic growth through strategic investments or acquisitions.
Meeting general corporate purposes.

IPO Details:

Offer Price	Rs.133-140 per share
Face Value	Rs.10 per share
Opening Date	6th Jan 2025
Closing Date	8th Jan 2025
Total Issue Size (in Shares)	2,92,89,367 shares
Total Issue Size (in Rs.)	Rs.410.05 crore
Issue Type	Book Built Issue IPO
Lot Size	107 shares
To be listed on	NSE and BSE

(Source: Prospectus)

Standard Glass Lining has already raised Rs.123 crore on 3rd January 2025 from the anchor investors and will tentatively be listed on 13th January 2025. The IPO includes a fresh issue of Rs.1.5 crore shares (Rs.210 crore) and an offer for sale of 1.43 crore shares (Rs.200.05 crore).

Grey Market Premium of Standard Glass Lining Technology IPO

The ‘grey market premium’ shows how much investors are willing to pay above the issue price. For the Standard Glass Lining IPO, the GMP today is +97, meaning the shares are trading at an Rs.97 premium in the grey market. Based on the upper end of the IPO price band and the current grey market premium, the expected listing price for Standard Glass Lining shares is Rs.237 each, which is 69.29% higher than the IPO price of Rs.140.

Quadrant Future Tek IPO:

Quadrant is a research-driven company focused on creating advanced Train Control and Signalling Systems for Indian Railways, ensuring top safety and reliability for passengers. They also have a Specialty cable manufacturing facility with an Electron Beam Irradiation Centre. As part of the KAVACH initiative, the company is working on a train collision avoidance system and an electronic interlocking system aimed at boosting safety and capacity on the railways. The company plans to raise funds through IPO for:

Meeting long-term working capital needs
Developing the Electronic Interlocking System
Repaying or reducing its outstanding working capital term loan
General corporate purposes

IPO Details:

Offer Price	Rs.275-290 per share
Face Value	Rs.10 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	1,00,00,000 shares
Total Issue Size (in Rs.)	Rs.290 crore
Issue Type	Book Built Issue IPO
Lot Size	50 shares
To be listed on	NSE and BSE

Quadrant Future Tek IPO is entirely a fresh issue of 1 crore shares. It will tentatively be listed on 14th January 2025. The minimum investment for retail investors is Rs.14,500. For sNII (Small Non-Institutional Investor), the minimum lot size is 14 lots, which is 700 shares, and costs Rs.2,03,000. For bNII (Big Non-Institutional Investor), the minimum lot size is 69 lots or 3,450 shares, and the investment comes to Rs.10,00,500.

Grey Market Premium of Standard Glass Lining Technology IPO

Quadrant Future Tek shares were trading at a premium of Rs.180 in the unlisted market earlier on 6th January 2025. With the IPO price band set at Rs.290, the expected listing price is Rs.470. This could give investors an estimated listing gain of around 62.07%.

Capital Infra Trust Invit IPO:

Capital Infra Trust, established in September 2023, is an infrastructure investment trust (InvIT) sponsored by Gawar Construction Limited. The InvIT is set up to make investments and carry out activities as permitted under SEBI InvIT Regulations. Gawar Construction specializes in building road and highway projects across 19 states in India for government bodies like NHAI, MoRTH, MMRDA, and CPWD.

As of December 2024, the company’s portfolio includes 26 road projects under hybrid annuity mode (HAM) with NHAI. This includes 11 completed projects, 5 acquired from Sadbhav Infrastructure Project Limited, and 15 ongoing projects. The company is raising funds through an IPO, which will be used to:

Provide loans to Project SPVs to repay or prepay external borrowings, including interest and penalties.
Provide loans to Project SPVs to repay unsecured loans from the Sponsor.

IPO Details:

Offer Price	Rs.99-100 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	15,78,00,000 shares
Total Issue Size (in Rs.)	Rs.1578 crore
Issue Type	Book Built Issue IPO
Lot Size	150 shares
To be listed on	NSE and BSE

Source: Prospectus

The IPO will be a combination of a fresh issue of 10.77 crore shares (Rs.1077 crore) and an offer for the sale of 5.01 crore shares (Rs.501 crore). The shares will tentatively be listed on 14th January 2025 under the management of HDFC Bank Limited and SBI Capital Market Limited. To invest, retail investors need a minimum of Rs.15,000. For sNII, the minimum lot size is 14 lots (2,100 shares), totaling Rs.2,10,000, and for bNII, it is 67 lots (10,050 shares), which comes to Rs.10,05,000.

Grey Market Premium of Capital Infra Trust Invit IPO:

The company’s shares are currently trading at no premium in the grey market, meaning there’s no price advantage over the IPO listing price. Since trading started on 1st January 2025, the GMP has stayed the same.

Indobell Insulation IPO:

Indobell Insulation Limited, founded in May 1972, manufactures insulation products like nodulated and granulated wool (mineral and ceramic fiber nodules) and prefabricated thermal insulation jackets. The company also offers services, including consultancy, engineering, fabrication, material supply, installation, supervision, and project management. It serves industries like power plants, railways, aeronautics, and navigation. The product range includes Ceramic Fiber Nodules and Mineral Fiber Nodules. The funds raised will be used for:

Purchasing additional plant and machinery to boost capital expenditure
Meeting working capital needs
General corporate purposes

IPO Details:

Offer Price	Rs.46 per share
Face Value	Rs.10 per share
Opening Date	6th Jan 2025
Closing Date	8th Jan 2025
Total Issue Size (in Shares)	22,05,000 shares
Total Issue Size (in Rs.)	Rs.10.14 crores
Issue Type	Fixed Price Issue IPO
Lot Size	3000 shares
To be listed on	BSE SME

Source: Prospectus

The IPO is entirely a fresh issue and is tentatively set to be listed by 13th January. The minimum investment amount for a retail investor is Rs.138000, and for the HNI is Rs.276000 (2 lots).

Grey Market Premium Indobell Insulation IPO

Indobell Insulations IPO GMP (grey market premium) was Rs.0 per share earlier on 6th January, as per InvestorGain. This points to a possible flat listing for Indobell Insulations IPO.

B. R. Goyal IPO:

B.R.Goyal Infrastructure Limited, founded in 2005, focuses on infrastructure projects like roads, highways, bridges, and buildings. The company has built a strong integrated EPC and construction business backed by a design and engineering team along with an RMC unit in Indore that has a capacity of 1.80 Lakh cubic meters per year. The company plans to use the net proceeds from the IPO for:

Capital expenditure requirements
Working capital needs
Inorganic growth through acquisitions and other strategic initiatives
General corporate purposes

IPO Details:

Offer Price	Rs.128-135 per share
Face Value	Rs.10 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	63,12,000 shares
Total Issue Size (in Rs.)	Rs.10.14 crores
Issue Type	Book Built Issue IPO
Lot Size	1000 shares
To be listed on	BSE SME

Source: Prospectus

The IPO is a fresh issue of 63.12 lakh shares, which will tentatively be listed on 14th January 2025. The minimum investment required for retail investors is Rs.135000, and for the HNI, it is Rs.270000 (2 lots).

Grey Market Premium of B. R. Goyal IPO:

GMP, or grey market premium, gives an idea of how the IPO might perform on its debut. It reflects demand in the unofficial market before the shares are listed. The B.R. Goyal IPO GMP is Rs.21 as of 4th January 2025. With an issue price of Rs.135, the estimated listing price could be around Rs.156.

Delta Autocorp IPO:

Delta Autocorp Limited, founded in 2016, manufactures and sells electric two-wheelers (2W) and three-wheelers (3W) under the “Deltic” brand. It focuses on creating affordable, durable EVs for tier-2 and tier-3 towns. The company is shifting to Lithium Ferro Phosphate (LFP) batteries to improve cost efficiency and safety.

With a network of 300+ dealers across 25 states and Union Territories, Delta Autocorp emphasizes B2B transactions. The company is raising funds through IPO for the following purposes:

A new electric three-wheeler fabrication and painting plant
New product development
Working capital requirements
General corporate purposes
Offer-related expenses

IPO Details:

Offer Price	Rs.123-130 per share
Face Value	Rs.10 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	42,00,000 shares
Total Issue Size (in Rs.)	Rs.54.60 crores
Issue Type	Book Built Issue IPO
Lot Size	1000 shares
To be listed on	NSE SME

Source: Prospectus

The IPO includes a fresh issue of Rs.50.54 crore, that is, 38.88 lakh shares, and an offer for sale of Rs.4.06 crore (3.12 lakh shares). The minimum investment required for the retail investors in this IPO is Rs.130000, and for the HNI, it is Rs.260000.

Grey Market Premium of Delta Autocorp IPO:

The GMP for Delta Autocorp IPO as of 1st January was Rs.21, which increased to Rs.47 on 3rd January 2025. This suggests a possible listing price of Rs.177 per share against an approximate premium of 36.2%. However, as of 6th January 2025, the GMP increased to Rs.70, further pushing the listing price to a higher estimate.

Avax Apparels And Ornaments IPO

Avax Apparels and Ornaments Ltd, established in 2005, operates in two sectors: wholesale fabric trading and online silver jewelry retail. It sells knitted fabrics and offers a variety of silver ornaments like rings, bangles, payals, kadas, and more through its online platform, delivering across major cities in India. The company plans to raise funds through IPO and utilize the issue proceeds for:

Meeting its working capital requirements.
Funding general corporate purposes.

IPO Details:

Offer Price	Rs.70 per share
Face Value	Rs.10 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	2,74,000 shares
Total Issue Size (in Rs.)	Rs.1.92 crores
Issue Type	Fixed Price Issue IPO
Lot Size	2000 shares
To be listed on	BSE SME

Source: Prospectus

The IPO is a fresh issue of 2.74 lakh shares and will be listed on the BSE SME platform on 14th January 2025. For retail investors, the minimum investment is 1 lot, that is, Rs.140000, and for the HNIs, the requirement is Rs.280000. SKI Capital Services Limited is entirely managing the IPO.

Grey Market Premium of Avax Apparels And Ornaments IPO

As of 6th January 2025, the GMP for the Avax Apparels And Ornaments IPO is Rs.21, consistent since 4th January. As per the GMP, the assessment coincides with an estimated listing price of Rs.70.

Bottomline:

January has just started with the mentioned 7 listings. The following week, many new listings are expected, including the Indo Farm Equipment IPO, whose shares were subscribed 229.68 times, along with five other listings on the SME platform. So, if you are planning to invest in any of the IPOs, carefully go through the market factors and the company fundamentals before shortlisting the stocks for your portfolio.

OTHER IPO RESOURCES
IPO | Current IPO | Upcoming IPO | Listed IPO

January 6, 2025

Upcoming IPOs to Watch Out for in January 2025

Introduction:

The Indian IPO market stood out as one of the highest-performing markets globally in 2024. The IPO boom raised Rs.1.67 lakh crore ($19.5 billion) through 268 mainboards and 178 SME IPOs. This IPO boom will likely continue in 2025 when companies have already lined up for their market debut in January.

This blog will briefly examine the upcoming IPOs in India in 2025 and understand what the IPO market may look like ahead.

IPO Industry in 2024:

2024 was a standout year for IPOs, especially for SMEs. The BSE small-cap index jumped 30% in the past year and 27% year-to-date, while the mid-cap index grew 28% and 24% over the same periods. This growth was driven by strong market conditions, regulatory reforms, and a thriving economy.

Hyundai Motor India’s Rs.27,870 crore IPO was the highlight of the year, marking the largest IPO in Indian history. Swiggy followed with a Rs.11,327 crore issue, and NTPC Green Energy’s Rs.10,000 crore offering became the biggest fresh equity issue ever. Looking ahead, 2025 promises to keep the momentum going. With an IPO pipeline projected to exceed Rs.2.5 lakh crore, excitement is building yet again in the primary market.

Upcoming IPO 2025:

Upcoming IPOs are initial public offerings of companies that have filed the DRHP (Draft Red Herring Prospectus) with SEBI and are expected to launch in 2025. Staying updated on current new IPOs and tracking developments of such upcoming IPOs will help you understand market sentiment and sector performance.

The upcoming IPO list is as follows-

Company Name	Open Date	Close Date	Issue Price	Issue Size	Status
Leo Dryfruits & Spices Trading Limited	1st Jan	3rd Jan	Rs.51-52	Rs.25.12 crore	IPO Closed
Parmeshwar Metal Limited	2nd Jan	6th Jan	Rs.57-61	Rs.24.74 crore	Open IPO
Davin Sons Retail Limited	2nd Jan	6th Jan	Rs.55	Rs.4.61 crore	Open IPO
Fabtech Technologies Cleanrooms Limited	3rd Jan	7th Jan	Rs.80-85	Rs.27.74 crore	Open IPO
Indobell Insulations Limited	6th Jan	8th Jan	Rs.46	Rs.5.33 crore	Open IPO
Standard Glass Lining Technology Limited	6th Jan	8th Jan	Rs.133-140	Rs.410.05 crore	Open IPO
Avax Apparels and Ornaments Limited	7th Jan	9th Jan	Rs.70	Rs.1.01 crore	Upcoming
Capital Infra Trust	7th Jan	9th Jan	Rs.99-100	Rs.1,578 crore	Upcoming
B. R. Goyal Infrastructure Limited	7th Jan	9th Jan	Rs.128-135	Rs.85.21 crore	Upcoming
Quadrant Future Tek Limited	7th Jan	9th Jan	Rs.275-290	Rs.290 crore	Upcoming
Delta Autocorp Limited	7th Jan	9th Jan	Rs.123-130	Rs.54.60 crore	Upcoming

Source: MoneyControl

Overview Of Complete IPO List (Upcoming):

Avax Apparels and Ornaments Limited IPO:

Offer Price	Rs.70 per share
Face Value	Rs.10 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	2,74,000 shares
Total Issue Size (in Rs.)	Rs.1.92 crore
Issue Type	Fixed Price Issue IPO
Lot Size	2000 shares
To be listed on	BSE SME

Source: Prospectus

Avax Apparels And Ornaments Limited, founded in June 2005, operates in two key areas: wholesale trading and online retail of silver ornaments. The company wholesales knitted fabric and sells silver jewelry, including rings, anklets, kada, plate sets, glass, bangles, bowls, chains, and more. It caters to major cities across India.

As of the quarter ending September 2024, it recorded a revenue of Rs.15 crore and a net worth of Rs.4.05 crore. With a PAT margin of 6.26% and ROCE of 61.68% for FY2024, Avax is performing well.

The company is set for an IPO launch on 7th January 2025. The net proceeds of the IPO will be used to meet the company’s working capital needs and for general corporate purposes. It plans to list its fresh issue of 2.74 lakh shares on the BSE SME by 14th January 2025.

Capital Infra Trust IPO:

Offer Price	Rs.99-100 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	15,78,00,000 shares
Total Issue Size (in Rs.)	Rs.1578 crore
Issue Type	Book Built Issue IPO
Lot Size	150 shares
To be listed on	NSE and BSE

Source: DRHP

Capital Infra Trust, established in September 2023, is an infrastructure investment trust (InvIT) sponsored by Gawar Construction Limited. This InvIT focuses on infrastructure investments as per the SEBI InvIT Regulations. Gawar Construction specializes in road and highway projects across 19 states in India, working with government bodies like NHAI, MoRTH, MMRDA, and CPWD.

The company is planning an IPO that will be open for subscription from 7th January 2025 to 9th January 2025. The funds raised will be used for:

Providing loans to Project SPVs for repayment or pre-payment of external borrowings, including any interest and prepayment penalties.
Offering loans to Project SPVs to repay unsecured loans from the Sponsor.

The company aims to list on the BSE and NSE by 14th January 2025. The InvIT IPO will include a fresh issue of 10.77 crore shares, totalling Rs.1,077.00 crores, and an offer for sale of 5.01 crore shares, totalling Rs.501.00 crores.

B. R. Goyal Infrastructure Limited IPO:

Offer Price	Rs.128-135 per share
Face Value	Rs.10 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	63,12,000 shares
Total Issue Size (in Rs.)	Rs.10.14 crores
Issue Type	Book Built Issue IPO
Lot Size	1000 shares
To be listed on	BSE SME

Source: DRHP

B.R.Goyal Infrastructure Limited, established in 2005, focuses on building infrastructure projects like roads, highways, bridges, and buildings. The company has built a strong EPC and construction business, supported by a design and engineering team and an RMC unit in Indore, with a capacity of 1.80 lakh cubic meters per year. In 2005, it also ventured into wind energy with a 1.25 MW wind turbine in Jaisalmer, Rajasthan.

As of July 2024, the company reported a revenue of Rs.156.86 crore, a PAT of Rs.1.94 crore, and a net worth of Rs.128.63 crore. B.R.Goyal Infrastructure plans to raise funds through an IPO, opening for subscription on 7th January 2025. The funds will be used for:

Capital expenditure
Working capital requirements
Inorganic growth through strategic initiatives and acquisitions
General corporate purposes

The 63.12 lakh fresh issue of shares will be listed on the BSE SME on 14th January 2025.

Quadrant Future Tek Limited IPO:

Offer Price	Rs.275-290 per share
Face Value	Rs.10 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	1,00,00,000 shares
Total Issue Size (in Rs.)	Rs.290 crore
Issue Type	Book Built Issue IPO
Lot Size	50 shares
To be listed on	NSE and BSE

Quadrant Future Tek Limited supplies cables to the defense sector and railroad rolling equipment. Its plant can also produce solar and electric vehicle cables. Founded in September 2015, the company is developing next-generation Train Control and Signaling Systems for Indian Railways’ KAVACH project to improve passenger safety and reliability.

For the quarter ending September 2024, Quadrant earned a revenue of Rs.65.14 crore but faced a loss of Rs.12.11 crore. Despite this, its net worth remains stable at Rs.34.18 crore. The company is raising Rs.290 crore through a book-built IPO, which will be used for:

Long-term working capital requirements
Capital expenditure for developing the Electronic Interlocking System
Repayment of outstanding working capital loans
General corporate purposes

The IPO, which offers a fresh issue of 1 crore shares, is scheduled to be listed on the NSE and BSE on 14th January 2025.

Delta Autocorp Limited IPO:

Offer Price	Rs.123-130 per share
Face Value	Rs.10 per share
Opening Date	7th Jan 2025
Closing Date	9th Jan 2025
Total Issue Size (in Shares)	42,00,000 shares
Total Issue Size (in Rs.)	Rs.54.60 crores
Issue Type	Book Built Issue IPO
Lot Size	1000 shares
To be listed on	NSE SME

Source: DRHP

Delta Autocorp Limited manufactures and sells two- and three-wheeler electric vehicles using top-notch components from trusted OEMs. The company designs these vehicles using specific engineering and manufacturing processes. It also supplies vehicle-compatible components. For the period ending October 2024, Delta Autocorp achieved total revenues of Rs 45.17 crore and a net profit of Rs 4.80 crore. Its net worth stands at Rs 22.70 crore.

Now, the company is raising Rs 54.60 crore through a book-built IPO. The proceeds will be used to set up an electric three-wheeler fabrication plant, invest in new product development, cover working capital needs, and serve general corporate purposes.

The Delta Autocorp IPO consists of a fresh issue of 38.88 lakh shares (Rs 50.54 crore) and an offer for sale of 3.12 lakh shares (Rs 4.06 crore). The shares will be listed on the NSE SME platform on 14th January 2025

Apart from the mentioned companies, other IPOs yet to be scheduled include

Navi Technologies IPO
Survival Technologies IPO
Reliance Jio IPO
PharEasy IPO
Snapdeal IPO

Bottomline:

Investing in an IPO can offer a range of benefits, such as the potential for significant returns and the opportunity to participate in a company’s growth journey. However, it’s essential to approach IPO investments with caution. Thorough research is crucial, and understanding the company’s fundamentals, market position, and growth potential is key.

Additionally, seeking advice from a registered share market advisor can help make more informed decisions and minimize risks. By taking the time to analyze and assess the offering carefully, investors can ensure a smarter and more rewarding IPO investment experience.

FAQs on Upcoming IPOs in Jan 2025

What happens when an IPO is oversubscribed?
If the number of shares demanded exceeds the number of shares offered to the public in the IPO, the company may choose to distribute the available shares on a pro-rata basis.
Who are anchor investors?
Anchor investors are key institutional or high-net-worth individuals who invest in an IPO before it opens to the public, helping to build confidence and attract other investors.
How much does an HNI invest?
An HNI (High Net-Worth Individual) invests between Rs.2 lakh and Rs.5 lakh in an IPO. Non-institutional investors (NIIs) invest over Rs.2 lakh but are not required to be SEBI-registered, unlike Qualified Institutional Investors (QIIs).

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Investing

Let’s dive into what these new nominee rules mean for investors and their families.

The Need for Revamping Nominee Rules

Key Features of SEBI’s New Guidelines

Concerns Raised by Experts

Issues with Redemption Safeguards

Ambiguity in the Rules

What Is Needed

Benefits for Families of the Incapacitated

Faster Access to Assets

Minimized Disputes

Empowering Investors

What Investors Should Know

Ensuring Nominee Awareness

Regular Updates Are Crucial

Potential for Overlooking Legal Heirs

How Financial Institutions Are Adapting

Case Study: A Family’s Journey with the New Rules

Encouraging Financial Literacy

Making the Most of the New Rules

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FAQs

Can nominees manage accounts for incapacitated investors?

How do these rules simplify matters for families?

What if the incapacitated investor cannot make decisions?

How can families ensure smooth access to funds?

What is Goal-Based Investing?

How Goal-Based Investing Helps in Wealth Creation?

Steps to Implement Goal-Based Investing

How to Invest Your Monthly Surplus Savings?

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FAQ

How does goal-based investing differ from traditional investing?

Can goal-based investing be applied to all types of investors?

What are the key factors to consider when setting financial goals?

Laxmi Dental IPO Subscription Details

Allotment Details

Laxmi Dental IPO Allotment Status on BSE

Laxmi Dental IPO Allotment Status on Link Intime

Refunds and Credit of Shares

Grey Market Premium (GMP) Update

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How ROCE Impacts the Stock Market

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ROCE: Advantages and Limitations

Advantages of ROCE:

Limitations of ROCE:

How to Use ROCE Effectively

Final Thoughts on What is ROCE

FAQs on ROCE

What is ROCE?

How is ROCE calculated?

What does a high ROCE indicate?

What does a low ROCE indicate?

How do investors use ROCE?

Market Overview

Key Factors Behind the Decline

1. Global Economic Indicators

2. Foreign Portfolio Investor (FPI) Outflows

3. Depreciation of the Indian Rupee

4. Concerns Over Corporate Earnings

5. Sectoral Weakness

6. Anticipation of the Union Budget

Broader Market Stress

Sectoral Performance

Investor Sentiment

Conclusion