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Are Small-Caps And Mid-Caps

Hurting Your Portfolio?
49
80
Cover Story
Recommendations
16 18 20 Regulars
Choice Scrip Low Priced Scrip Hot Chips
06 Editor’s Keyboard
26
10 Company Index
12 Market Watch
Analysis 22 Technicals
87 QueryBoard
IIFL Finance
90 Reviews
PLACED IN A PRIME POSITION 91 Kerbside
Special Reports Subscribers can access

the complete databank
Indulging in Options Trading............................................................................. 34 consisting of more than
Value Investing Verus Growth Investing: Who is Winning in 2022?......... 36 3500 companies on our
A Primer on Stock Indices................................................................................... 40 website www.DSIJ.in
Importance of Cash Flow Statements in Stock Picking................................ 42
Communication Feature sections
Importance of Asset Allocation......................................................................... 44 are advertorials provided by the
DSIJ Wealth Creation........................................................................................... 84 company & carried on “as is” basis.
4 DALAL STREET INVESTMENT JOURNAL I DEC 05 - 18, 2022 DSIJ.in

DSIJ.in DEC 05 - 18, 2022 I DALAL STREET INVESTMENT JOURNAL 5
1,000 and Counting
W
hat a joyous moment it is for us at DSIJ 1986
right now! So much so that even the
indices appear to be in a celebratory
mood. And what’s the reason? Well, this
is our 1,000th edition! A big number,
indeed! It has taken us an eventful 37
years to reach this milestone, which hardly any other magazine
can boast about. Our first magazine was published on January
11, 1986 and was in the form of a 12-page cyclostyled stapled
booklet. Immediately gaining recognition as an ‘Investor’s Bible’,
it climbed upwards, and upwards, to become the segment leader
and the highest-selling investment magazine in the country.
2022
Dalal Street Investment Journal (DSIJ), the iconic brand that it
has become, continues to guide investors at large through
different market and economic cycles not only in print form but
via all digital mediums whether it be mobile, web, app, et al.
Dalal Street Investment Journal has played a very important role
in creating wealth for investors by recommending wealth-
creating stocks, something you can know more about in our
special report titled ‘How DSIJ has been Creating Wealth for
Investors Since 1986’. This journey of nearly four decades
reflects our quality of service towards our readers.
I would therefore like to take this opportunity to thank all our readers and all the people who
were and are associated with us during this glorious journey. To give you an overview and also
to share how important this victorious march has been to us, there were many publications
from reputed houses covering the stock market that were started with much fanfare but are
now either non-existent or have a marginal presence. If we have survived the odds and grown
it is because of our research strength and our genuine interest in the wellbeing of investors that
has helped us publish original stock market content leading to unparalleled wealth-creating
opportunities year after year.
The best investment processes and adoption of new technology has further helped us to meet
the investors’ objectives as we now are able to serve lakhs of happy investors every year. The
buoyant equity market in India has been a great motivator for all of us. Recently, IMF
announced that ‘India is a bright spot on a dark global horizon’. We would proudly like to say
that DSIJ too is a bright spot, or rather a beacon that projects a guiding light for millions of
investors. To move on to matters of the investment world, FPIs are pouring in billions of
dollars into the Indian markets. For instance, in November we have so far received USD 4
billion from the FPIs. In tandem, SIP investments are happening at a record pace, indicating
strong demand from retail investors.
Further, the credit demand is increasing even as the interest rates increase – it can’t get any
better for the banking industry. Adding to this amazing chemistry is the political stability in

our country at a time when most countries in the developed and emerging world are facing
leadership crisis. All this has pushed global investors towards Indian equities. The Indian
corporate world has delivered so far and there is no doubt in the minds of Indian business
houses that India will continue to shine in the coming years. With both BSE Sensex and Nifty
at record highs, the end of the story for the Indian equity markets for CY 2022 has been
absolutely engrossing, thrilling and wealth-creating.
To move on, while all is well with the large-caps of the world, everyone is talking about the
underperformance of the broader markets. To have an insight on this anomaly we have taken
up this curious issue in our cover story wherein we have highlighted the underperformance of
the broader markets with a fresh perspective. We have discussed why the underperformance
in the equity markets is an opportunity for long-term investors. The story also highlights the
stocks that have fallen by a huge margin from their 52-week highs, creating some margin of
safety in them. All this and more has found its way into this special edition.
The power-packed edition of DSIJ that you have in your hands right now has 360-degree
content for both investors and traders alike. We have covered some trending topics like options
trading, value investing versus growth investing, bytes from industry leaders across various
sectors and inputs shared by some of the best investment minds in India. As far as the market
goes, we all have seen huge outperformance in the most ignored and unexpected stocks in
2022, including those of PSU banks, PSU railways and defence. There is a chance that your
portfolio may have underperformed in CY 2022 so far as the action was taking place in areas
you would not have been present in.
It can be frustrating to see underperformance in the portfolio, especially when the markets are
making lifetime highs and several popular names keep making fresh headlines almost every
day about the bullish price-volume action. The secret is to continue to do your equity research
and remain invested in quality names and add on to your high conviction stocks. Do not get
disturbed by the other stocks which could be outperforming your set of stocks temporarily. It
usually happens that we churn a portfolio just for the sake of outperformance in the near term
and then we pay a heavy price in the long term as we replace quality stocks with poor quality
momentum stocks.
That said, December looks to be promising for the Indian markets. The outperformance may
continue for awhile. Also, I have noticed that the pharmaceutical stocks haven’t done much
even as the markets are trading at all-time highs. Watch out for that sector in the near to
medium term. Several pharmaceutical stocks are available in the oversold zone. To sum up on
this special occasion and edition, I take immense pride to be at the helm of such a magazine
that has been every investor’s true friend across India. The market has evolved over the years
in many ways and so has your magazine, Dalal Street Investment Journal. We put our heart
and soul into this magazine to create content that is informative, precious and provides the
right path in the maze that the investment world is. The journey continues!
RAJESH V PADODE
Managing Director & Editor

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Vol. 38. No. 01 • DEC 05 - 18, 2022

Analysing a Sector
Founder Research Team I am a regular subscriber of the DSIJ magazine. I enjoyed reading your cover
Late V B Padode Shruti Dahiwal story in the latest issue. In recent years, I have been conducting thorough
Managing Director & Editor
Armaan Madhani research and due diligence on my own before investing in a stock. It helps me
Rohit Kale build conviction for the long-run. Can you elucidate on how to carry out in-
Rajesh V Padode Henil Shah depth analysis of any given sector?
Kaustubh Bhosale
Executive Editor - Ria
Yogesh Supekar Subscription & Customer Service
Utkarsh Sawale
Research Editors Editor Responds: We appreciate your kind words of encouragement. To answer
Marketing & Sales
Shashikant Singh
Farid Khan - VP your query, there are several high-quality resources easily available for sectoral
Karan Bhojwani research that a retail investor can tap into. These include annual reports, IPO
Delhi:
Copy Editors Shammo Teshwar - Sr. Manager
filings such as red herring prospectus (RHP) and initiating coverage reports of
Vardan Pandhare brokerage houses. Take heed of expected growth outlook along with trends in
Domain Experts
Huned Contractor products and technology at play in international and domestic markets. Make use
Hemant Rustagi of models such as Porter’s Five Forces and SWOT analysis to gain a better
Graphics Jayesh Dadia
Vipin Bendale understanding of the external factors influencing the sector as well as the
competitive environment and potential risks. Keep writing to us.
DSIJ Private Limited Recommendations

Company/Scheme Reco. Price (`) Column Page No
For Customer Service
Alstone Textiles (India) l Sell 284.05 Queryboard 87
020-66663803 OR  service@DSIJ.in
Apollo Tyres Ltd. l Buy 313.05 Technicals 24
Mumbai Office Bharti Airtel Ltd. l Buy 846.8 Queryboard 88

419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market
Mumbai - 400034 022-43476012/16/17 Chambal Fertilisers & Chem. l Hold 303.05 Reviews 90
Delhivery Ltd l Hold 331.75 Queryboard 88
Pune Office
Office No. 211, Vascon Platinum Square, Delta Corp Ltd. l Buy 232.00 Kerbside 91
Next to Hyatt Regency, Viman Nagar, Pune- 411014
020-66663-800 / 801 Dr. Reddy’s Laboratories l Hold 4418 Reviews 90
Gabriel India Ltd. l Buy 198.00 Kerbside 91
Hindustan Aeronautics Ltd l Hold 2730.9 Queryboard 87
To advertise, mail us on ads@dsij.in IIFL Finance l Buy 460.10 Analysis 26
Printer and Publisher: Nitin Sawant, Editor: Rajesh V Padode for DSIJ Pvt IRCTC l Buy 726.25 Choice Scrip 16
Ltd. on behalf of Achievements Merchandise Pvt Ltd. Printed at Printrade
Issues (I) Pvt. Ltd., EL-179, TTC Industrial Area, Electronic Zone, Near JK Tyre & Industries Ltd. l Buy 193.80 Kerbside 91
Mahape Telephone Exchange, Mahape, Navi Mumbai - 400710 and
published from 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Oil And Natural Gas Corp. l Buy 140.55 Queryboard 89
Market, Mumbai - 400034  All rights reserved.  While all efforts are
made to ensure that the information published is correct and up-to-date, Rail Vikas Nigam l Buy 80.15 Low Priced Scrip 18
Dalal Street Investment Journal holds no responsibility for any errors that
might occur. All material contained herein is based on fundamental and Rashtriya Chem. & Fertilizers l Buy 123.35 Kerbside 91
technical analysis and other in-house methods, which though reliable, are
not infallible. The information given in the magazine is of an advisory Redington Limited l Buy 183.65 Technicals 24
nature. Readers are advised to consult experts before taking any
investment decision and Dalal Street Journal holds no responsibility for Timken India Ltd. l Buy 3578.7 Queryboard 89
any losses that may arise due to investment decisions made on the basis of
information given within the magazine. No reproduction is permitted in Transformers And Rectifiers (I) l Buy 61.95 Hot Chips 20
whole or part without written consent from Dalal Street Journal  All
disputes are subject to the exclusive jurisdiction of competent courts and Triveni Engineering & Ind. l Buy 299.15 Hot Chips 20
forums in Mumbai only.  Dalal Street Investment Journal is a member of
INS/ABCs. BP - Book Profit • BPP - Book Partial Profits • BL - Book Loss

Market Watch
Economic recovery in the
banking industry is
Banks in the Limelight promoting asset quality
A
s a result of optimistic largest banks, are the first foreign lenders improvements and a
economic data, the Indian
headline indices BSE
to be approved to facilitate overseas trade
in rupee. Moreover, the Reserve Bank of
decline in non-performing
Sensex and Nifty 50 surged
1 per cent over the course
India (RBI) authorised HDFC Bank and
Canara Bank to establish a separate
assets while improved
of a fortnight. Broader indices lagged
behind the main indices, ending the
‘vostro account’ for rupee transactions
with Russia. The power sector, one of the
balance-sheets and
fortnight about 0.5 per cent higher. The
wholesale price-based inflation figure fell
gaining sectors in 2022, witnessed a
significant fall due to several sectoral
higher demand are
below a double-digit mark for the first
time in 19 months and is the lowest since
concerns. Adani Power was the
worst-performing stock, losing almost
driving up bank loan
March 2021. According to data issued by
the Ministry of Commerce and Industry,
10 per cent. growth
wholesale inflation declined to 8.39 per This caused the BSE Power index to
cent in October from 10.70 per cent in tumble 4.78 per cent over the fortnight. and Steel Authority of India. While DIIs
September, driven by a decline in With losses of roughly 2 per cent, BSE were the net buyers over the past two
commodity prices. Metals was also among the top losing weeks, FIIs have turned to being net
sectors as base metal prices slumped due sellers. The FII outflow was recorded at
After reaching a five-month high of 7.41 to worries about global demand. The two `1,131.26 crore whereas DII inflow was
per cent in September, retail inflation fell stocks that mostly caused the metal recorded at `4,056.44 crore in the past
to 6.77 per cent in October, primarily as index to fall were Hindalco Industries 15 days. DS
a result of falling food basket prices.

According to data issued by Ministry of
Statistics and Programme
Implementation, the Index of Industrial
Production (IIP) showed that India’s
industrial growth grew 3.1 per cent in
September. The Reserve Bank of India
said that for the week ending November
12, India’s foreign exchange reserves fell
by USD 1.08 billion to USD 529.99
billion.
Banking sector stocks experienced a

significant upswing, making BSE Bankex
the top-performing sector over the past
two weeks with gains of about 2 per cent. Performance Of Indices
Net Investment In Equity Markets (`/Cr)
The economic recovery in the banking 14th Nov. 25th Nov. Gain/Loss Date FIIs DIIs
industry is promoting asset quality Indices 2022 2022 (%) 25 Nov 22 369.08 -295.92
improvements and a decline in non- Power 4,824.31 4,593.48 -4.78
24 Nov 22 1,231.98 -235.66
performing assets (NPAs), while Realty 3,608.86 3,541.70 -1.86
23 Nov 22 -789.86 413.75
improved balance-sheets and higher Auto 29,902.45 29,741.81 -0.54
Oil & Gas 19,966.31 20,140.75 0.87 22 Nov 22 -697.83 636.39
demand are driving up bank loan Metal 20,443.68 20,046.31 -1.94 21 Nov 22 -1,593.83 1,262.91
growth. According to a report by Small-Cap 29,056.34 29,201.69 0.5 18 Nov 22 -751.2 890.45
CRISIL, bank credit is expected to grow Mid-Cap 25,478.90 25,595.63 0.46 17 Nov 22 618.37 449.22
by 15 per cent annually in the fiscal years Sensex 61,624.15 62,293.64 1.09
16 Nov 22 -386.06 1,437.40
2023 and 2024. Nifty 18,329.15 18,512.75 1.00
15 Nov 22 -221.32 -549.28
IT 29,949.02 30,382.86 1.45
FMCG 15,999.73 16,059.19 0.37 14 Nov 22 1,089.41 47.18
In other developments, Sberbank and Healthcare 23,787.93 23,668.71 -0.5 Total -1,131.26 4,056.44
VTB Bank, Russia’s largest and second- Bankex 48,058.29 49,016.99 1.99 *As of 25 Nov 2022

PARTNERS IN THE PROCESS
OF CREATING SPACES
Featherlite has curated a variety of products for startups that allow for splashes of
life in the office while not overtaking the space entirely
W
ITH the rapid evolution of the workplace While these breakout areas provide a wonderful
over the last two years, catalysed greatly by respite from the daily routine in an office, they cannot
the Covid-19 pandemic, companies have fully replace the traditional work set up. To balance
been forced to innovate or risk being left by the these needs, furniture manufacturers have had to come
wayside. Where once the workplace was a static up with innovative methods to utilise the space
environment, it has now become a dynamic hub of available. Our workstations are being made more agile
activity, a place for social interaction as much as work. to serve a variety of needs, often doubling as meeting
For the many startups that were formed during the tables and conference tables with simple, user-friendly
pandemic, this is likely the first office they have ever adjustments. By integrating technology and design, we
had, and represents an opportunity for them to build have forged products that facilitate an optimised use of
their brands persona in a way that up to now had been space. Products such as our Nomad, a movable screen
only a dream. and whiteboard, allows for meetings and
teleconferences to be held anywhere, without requiring
Breakout areas — A challenge that employers a dedicated space that can now be better utilised.
have faced has been drawing their talent back to the Integrated technology like hot desking systems allow
office. Having become accustomed to working in the for a more controllable and efficient workspace.
comfort of their own homes, whether it be on the sofa
or at a desk, employees have been hesitant to return to Work better — In the world of startups, the
the more formal settings of their offices. Innovative scenario differs only in terms of scale. While studies
leaders have seen this as an opportunity to not only show a significant growth in uptake of office spaces
revamp their workspaces, but the culture surrounding post Covid, they highlight the increased growth of the
them as well. Breakout areas have expanded from smaller office. Keeping this factor in mind, Featherlite
small corners to sprawling oases with a medley of has curated a variety of products for startups that
couches, high tables, and soft seating. New lines of allow for splashes of life in the office while not
products have been introduced to facilitate a more overtaking the space entirely.
socially balanced working environment, while still
maintaining the ethic that is necessary in an office.
The challenges faced by company leaders are vast,

from ensuring their vision is being followed to
retaining talent and creating a platform for sustainable
Products such as the Arena allow for large scale, ad hoc growth. Designing workspaces that keep these factors
meetings and cross collaboration as well as quiet, in mind is crucial. At Featherlite, we are excited to
comfortable moments of work, depending on the need become partners that help in the process of creating
of the moment. spaces that help you work better and live better.
Recommendations Equity
catering section accounts for 27 per cent
of IRCTC’s income. Packed drinking
water accounts for around 9 per cent of
IRCTC the company’s sales. IRCTC established
‘Rail Neer’ to provide its clients with
ON THE RIGHT TRACKS clean, bottled drinking water. In the rail

travel category, Rail Neer has established
itself as a powerful brand.
HERE IS WHY It has 15 state-of-the-art production

facilities scattered across India, with five
Bounce-back in travel industry more units set to open in FY23. IRCTC
Packaged water doing well simplifies travel by picking destinations
T
Guaranteed rise in earnings that attract tourists from all around the
world. It accounts for around 8 per cent
he Indian travel and tourism of the company’s overall revenue. In
industry has tremendous FY22, IRCTC’s income increased 142
growth opportunities with per cent year on year to `1,879 crore, up
increasing travels in the post- from `777 crore in FY21. The increase
pandemic scenario. As such, was mostly due to the economy
IRCTC has a huge role to play in making recovering speedily following the
the journeys safe and joyful for its pandemic-related blow. Its PAT rose
customers. IRCTC is the only firm 254.87 per cent year on year to `664
authorised by Indian Railways to provide crore, up from `187 crore in FY21.
Best of LAST ONE Year
online ticket buying. Along with this, it
Name of Reco Exit/CMP Absolute Annual
also provides catering service and Company Price Price (`) Gains Returns The large increase in PAT can be
packaged drinking water. It is a central (`) (%) (%) attributed to the fact that over 80 per cent
public sector enterprise in which the Trent 659.20 928.80 40.90 3471.63 of tickets are bought online with IRCTC
Government of India owns 67.4 per cent. Indus Towers 233.15 317.60 36.22 623.83 receiving a portion as convenience
In 2008, IRCTC was elevated to the KPIT Tech. 134.95 198.95 47.42 451.20 charge. IRCTC is currently focusing on
status of ‘Mini Ratna’. Internet ticketing, Avenue Supermarts 3342.40 4719.40 41.20 243.68 strengthening its technological
catering, travel and tourism and HCL Tech. 975.90 1357.65 39.12 93.19 infrastructure and developing a
packaged drinking water are the four technological backbone in order to serve
business segments of IRCTC. apps. It contributes 54 per cent of the more consumers and achieve more
company’s revenue with `38,178.32 crore successful reservations. Currently, the rate
As of March 31, 2022, the internet in ticket fee received in FY22. IRCTC of successful transactions on IRCTC
ticketing firm had 8.03 crore users and books around 11.44 lakh tickets online platforms is 32.98 per cent while
62.73 lakh daily user logins. The catering on an average. unsuccessful transactions are 67.02 per
industry has seen a 65.57 per cent cent. The company’s trailing 12-month
increase in licensing fees and 6.52 Its catering services include mobile sales are `2,890 crore, a 54 per cent
million meals ordered through its catering which is only available on six increase on a yearly basis. The ROE and
services. In terms of passengers travelled, trains (pantry cars), static catering which ROCE are 39.9 per cent and 51.30 per
the tourism segment reservations has 306 food plazas and fast food units cent, respectively, for the latest financial
increased to 525,981. The packaged along with hospitality business which has year. Given the predicted substantial rise
drinking water industry sold 19.86 crore 10 executive lounges and retiring rooms. in earnings and rising margins, as well
water bottles. Internet ticketing is It also offers e-catering, which supplied as the good future outlook, we
available via the website and the IRCTC over 21,730 meals as of May 31, 2022. The recommend BUY. DS
CMP
Monthly Stock Market Returns Shareholding Pattern (%) Last Five Quarters (`/Cr) (Consolidated)
(`)
as of June., 2022 Particulars Sept-22 Jun-22 Mar-22 Dec-21 Sep-21
Total Income 805.80 852.59 690.96 540.21 404.94
Promoters 67.40
Other Income 25.99 24.42 25.83 16.30 16.12
Public 32.60 Operating Profit 330.86 345.36 304.37 295.48 227.63
Interest 4.84 2.48 2.98 2.18 2.12
BSE Code: 542830 CMP: `726.25 Others --
FV: `2 BSE Volume: 1,88,180 Net Profit 226.03 245.52 213.78 208.81 158.57
Date: 28 Nov., 2022 Total 100 Equity 160 160 160 160 160

RAIL VIKAS NIGAM order book stands at `55,000 crore (USD
6.64 billion) which includes 66 projects
TOUCHING NEW HORIZONS

assigned by the Ministry of Railways and
13 projects acquired through bidding.
For FY 2022-23, Indian Railway’s capital
expenditure is projected at `245,800
crore, an increase of 14 per cent over the
HERE IS WHY revised estimates of FY 2021-22.
Strong order pipeline
This augurs augurs well for RVNL. The
Healthy cash generation company exhibits a favourable financial
I
Attractive valuation risk profile on account of its project
management capability, allowing the
n the post-pandemic period, company to scale up its operations to
Indian Railways has witnessed a ensure healthy cash generation. RVNL’s
huge revival in its operations due total operating income reported a CAGR
to normalisation in travel and of 27 per cent for the past five fiscals and
cargo movement. As such, the stood at `19,381.71 crore for the fiscal
PSUs attached to the railway sector are PRICED SCRIP year ended March 31, 2022. RVNL
gaining a lot. One such company in this operates through the mode of sub-
category is Rail Vikas Nigam Ltd. Best of LAST ONE Year
contracting and has a track record to
(RVNL). It was incorporated in 2003 by Name of Reco Exit/CMP Absolute Annual
subcontract the projects to marquee
the Government of India and is engaged Company Price Price (`) Gains Returns contractors. The top-line in Q2FY23
in the business of implementing various (`) (%) (%) grew YoY by 22 per cent and sequentially
AVT Natural Prod. 43.65 66.00 51.20 11071.27
types of railway infrastructure projects by 6 per cent to `4,909 crore. The net
assigned by the Ministry of Railways, Network 18 Media. 87.40 112.30 28.49 6300.66 profit in the quarter increased by 37 per
including doubling, gauge conversion, Welspun India . 92.80 132.85 43.16 5887.54 cent QoQ and 28 per cent on sequential
new lines, railway electrification, Indo Count Ind. 137.95 206.15 49.44 737.29 quarter basis to `381 crore.
construction and repair of major bridges, Fineotex Chemical 96.15 136.25 41.71 653.50
workshops, production units and sharing The liquidity position of RVNL is
of freight revenue with Indian Railways electrification of current un-electrified well-supported by strong cash
as per the concession agreement entered rail network and electrification on the generation from its own operations. It
into with the ministry. new rail network. generated `4,800 crore of cash from its
operations in FY22, posting a ten-fold
The company’s current ‘Mini Ratna’ An additional line of work is that the increase on a yearly basis. It includes
status will soon be upgraded by the company takes up projects to set up other income of `1,003 crore which may
government to ‘Navratna’. Under its new metro lines and suburban networks in not be repetitive. The debt-to-equity
lines segment, it includes augmenting the metropolitan cities. Some other ratio of the company was around 1x at
railway network by laying new railway operations undertaken by the company the end of H1FY23, which has improved
lines to achieve a seamless bi-modal include the construction of traffic sequentially. In FY22 the average return
transportation network while the facilities, railway safety works, other on equity was 19.7 per cent and average
doubling segment involves the provision electrification works, training works, return on capital employed was 16.8 per
of additional lines by way of doubling the surveys, construction of bridges cent. Currently the company is trading at
existing routes to enable the Indian including rail over bridges, etc. RVNL a PE of 12.4 times. Due to improving
Railways to ease out traffic constraints. had 121 commissioned railway projects margins, attractive valuations and future
The company is also engaged in the RT as on September 30, 2022 and the current outlook, we recommend BUY. DS
CMP
Monthly Stock Market Returns Last Five Quarters (`/Cr) (Consolidated)
Shareholding Pattern (%)
(`) Particulars Sep-22 June-22 Mar-22 Dec-21 Sep-21
BSE Code: 542649 CMP: `80.15 as of June, 2022
FV: `10 BSE Volume: 72,81,152 Total Income 4908.90 4640.75 6437.64 5049.14 4025.82
Date: 28 Nov., 2022 Promoters 78.20
Other Income 217.69 241.17 219.65 74.71 55.34
Public 21.80 Operating Profit 533.98 521.80 626.88 393.83 282.30
Interest 130.83 157.29 146.19 8.19 5.69
Others --
Net Profit 298.58 283.10 372.01 281.78 222.06
Total 100 Equity 2085 2085 2085 2085 2085

TRANSFORMERS AND RECTIFIERS (INDIA) LTD. CMP - `61.95
BSE CODE Volume Face Value Target Stoploss
T
532928 1,67,868 `2 `68-73 `57 (CLS)
ransformers and Rectifiers (India) Scrip’s Movement
Ltd. is a manufacturer of power,
furnace and rectifier transformers.
Recently, the company released a positive set
of consolidated numbers in Q2FY23
wherein the revenue from operations rose
15 per cent to `307.46 crore against the
previous quarter last year. EBITDA levels
stood at `35.99 crore, up 58 per cent from 2022
last year’s quarter. The net profit zoomed
121 per cent to `12.23 crore from the Last Seven Days’ Volume Table
corresponding quarter last year. The (No. of Shares)
company, in its recent filings, stated that it Days Volume
received two orders of transformers worth 21-Nov.,-2022 25,702
`145 crore from well-known Indian 22-Nov.,-2022 64,226
companies. With this order, the company’s 23-Nov.,-2022 37,822
order book as of October 31 stands at 24-Nov.,-2022 63,883
`1,476 crore. During the quarter, the 25-Nov.,-2022 43,982
company received an order inflow of 28-Nov.,-2022 1,67,868
`331 crore. The company has currently
The scrips in this participated in the bidding process of state TBCB tenders, etc. for more than
utilities, central utilities, EPCs, private, `9,000 crore. Hence, we recommend BUY.
column have been
recommended
with a 15-day investment TRIVENI ENGINEERING & INDUSTRIES LTD CMP - `299.15
horizon in mind and BSE CODE Volume Face Value Target Stoploss
carry high risk. Therefore, 532356 2,33,971 `2 `333-345 `270 (CLS)
investors are advised to
O
Scrip’s Movement ne of the largest integrated sugar
manufacturers in the country,
take into account their risk Triveni Engineering and Indus-
appetite before investing, tries (TEIL) also ranks among the leading
as fundamentals may companies in the engineering sector,
or may not back the which includes power transmission and
water and waste water treatment solutions.
recommendations. Taking into account the company’s
financial performance, on a consolidated
2022
basis it reported growth of 27.41 per cent
from `1,155.02 crore registered in
Last Seven Days’ Volume Table Q2FY22, recording total revenue of
(No. of Shares) `1,471.62 crore in Q2FY23. Comparing
the net profit for the second quarter of
Days Volume
FY23 to the same quarter last year, it
21-Nov.,-2022 84,755 skyrocketed 2,431.28 per cent from
22-Nov.,-2022 58,061
`54.51 crore to `1,379.80 crore. Promoters
23-Nov.,-2022 46,273
owned 68.26 per cent share in the
24-Nov.,-2022 75,657
company, of which Indian promoters
25-Nov.,-2022 1,06,373
controlled 52.82 per cent. The company’s
28-Nov.,-2022 2,33,971
shares have seen a significant rise over last
month and have room to soar even higher. Along with the significant promoter
ownership, the company’s positive aspects include dividend declaration, low PE and a
high RoE. Hence, we recommend BUY. DS
(Closing price as of Nov., 28, 2022)

NIFTY Index Chart Analysis
CELEBRATE, BUT WITH CAUTION!
T
he Nifty is at a new lifetime Roadmap for the Next 15 Days
high. With this, the Nifty Ideas Nifty Levels Action to be Initiated Probable Targets
ended its 13-month-long Resistance for the medium-term 18,780
Close above the level of 18,780 would be positive
19,034— 19,180
counter-trend. After six days for Nifty
of tight-range consolidation, Any slip below 18,258 on a closing basis would
Support for the medium-term 18,258 18,114
the breakout registered a strong volume result into resumption of down move.
on Thursday. On Friday, though, we saw a
retest of the breakout and thereafter a cent above the 50 DMA. Bank Nifty is at a new high, led by the
sharp bounce to mark a fresh all-time rally in PSU banks. Bank Nifty is losing
high on Monday. On a weekly chart, it As we expected last week, the index momentum and is near the weakening
had formed a sizeable bullish candle and tested the 61.8 per cent extension of the quadrant in the RRG charts. The PSU
with this we saw a higher high formation prior swing. Next, if it closes above the Bank index formed a bearish shooting
for the sixth week in a row. In level of 18,548 for two days, we can star candle on Friday, which may lead to
continuation of the trend, this sizeable expect it touch the levels of 18,780 consolidation from now.
bullish candle provides a clue for further followed by 19,034 and 19,180 in the
upside. Though it formed a hanging man short to medium term. The final pattern If this happens, the Nifty may face
candle on the daily chart on Friday, it target is placed at 19,660. On the resistance around 18,780. Despite the
may not be a worry point for now as it downside, if the index closes below fact that D-Street is in a celebration
was negated in the very next trading 18,258 (20 DMA), we may get the first mode, there are some concerns one
session. signs of weakness. The recent base low of should not ignore. The advance-decline
ratio is not so great in this phase. On
Monday, as the Nifty scaled to a fresh
all-time high, the index breadth was not
at its best. The RRG momentum is still
oscillating around the zone of 100. The
VIX is at the lowest level, which has an
inverse relationship. Generally, when
VIX reaches the lowest levels, the
benchmark index forms a top. This is one
of the reasons which make us cautious.
Before March 2020 we had seen the
sharpest fall in the VIX when it was
almost at the current level.
All the major declines in the market have

happened when the VIX has touched its
lowest levels, including the 2008
historical bear market. Since October
The Nifty is still above the breakout level, 18,114 is also a strong support. Only 2021 the foreign exchange reserves have
and there is no confirmed weakness in below this level can we expect a reversal been depleting. The rupee depreciation is
any of the timeframes. All the short, sign. The leading RSI indicator has at a record level. The DXY formed a base
medium and long moving averages are in broken out of a flag pattern and it given during last week with a positive
the uptrend. Last Monday, the index strong uptrend possibilities. divergence. Generally, December is the
registered a distribution day, and the month of NAV management and FIIs
bears failed to violate the key support. If the RSI closes above 69-70, the Nifty investment rejigs. Most of the market
From Tuesday onwards, the index made will test the level of 18,780 immediately. tops were formed in the month of
higher high candles and cleared the In the current structure, the RSI can test January. This means that though the
indecisive moves with a strong breakout. the 83-84 level. The daily MACD line is market is at a new high, caution is
It almost tested the 20 DMA and 21 EMA about to move above the signal line for a advisable. Till then, be with the trend. As
and bounced. Now the support has fresh bullish signal. The ADX is also near stated above, the 20 DMA and the recent
moved higher to the level of 18,258. a strong bullish zone. Bank Nifty and base low are the immediate supports for
Currently, the Nifty is trading 4.70 per PSU Bank indices are also stronger as the index.

STOCK RECOMMENDATIONS
REDINGTON LIMITED ............................ BUY ..................... CMP `183.65

BSE Code : 532805 Target 1 .... `207 | Target 2 ..... `258 | Stoploss....`162(CLS)
The company is engaged in new-age technologies like
artificial intelligence (AI), robotics, big data and analytics,
the Internet of Things (IoT) and 5G communications that
are opening new possibilities and opportunities. It has a
presence in 38 global markets and is the distributor of an
entire gamut of IT products, smart phones, solar
products, etc. It also provides services like cloud
management, logistics, BPM, BPO and 3D printing
services. With over 290 brand associations, it services
more than 43,000 channel partners. Technically, the stock
is trading at a new lifetime high. It has broken out of a
Stage 1, 70-week consolidation base. For the last two
weeks, volumes have been recorded above average. Its
relative strength line is at a new high and this shows outperformance as compared to the broader market. It is 22.74 per cent above
the 50 DMA and 30.72 per cent above the 200 DMA. All the short-term and long-term averages are in an uptrend. After breaking
out of the base, it is trading just 3 per cent above the pivot point, which is the ideal buying range for a stock. The 20-period RSI is in a
strong bullish zone. The weekly MACD shows strong bullish momentum. As the stock is at a new high, it has cleared all the
resistances. The Elder Impulse System has formed three consecutive weekly bullish bars. The RRG RS and momentum are above
100, and the stock is in the leading quadrant. The ADX (25.10) shows solid strength in the trend. It is also meeting Guppy’s multiple
moving averages trend setup. In short, the stock has broken out of a 70-week, Stage 1 base. A move above `180 is positive and it can
test `207 in the short term. Maintain stop loss at `162. The medium to long-term target is `258.
APOLLO TYRES LTD. .......................... BUY ......................... CMP `313.05

BSE Code : 500877 Target 1 ..... `341 | Target 2 .... `405 | Stoploss....`282 (CLS)
The company is a leading tyre manufacturer with a
presence in over 100 countries. It has seven
manufacturing locations in India and Europe and two
global research and development centres. The company
markets its products under its two global brands,
Apollo and Vredestein. It is ready to exploit
opportunities arising out of the electric vehicle (EV)
boom. The company is leveraging advanced
technologies like foam technology and sealants for EV
tyres. It is also working on improvements in rolling
resistance and noise reduction to support the
development of EV tyres. These new technology tyres
will be exported to Europe in December. The market
for these tyres may be huge in the next two-three years. The stock closed at a new all-time high and broke out of a 10-week cup
and handle pattern with higher volume. Before the pattern formation, it registered a one-year consolidation breakout. Its relative
strength line is at a new high. It is trading 38 per cent above the 200 DMA and 10.17 per cent above the 50 DMA. All the short-
term and long-term moving averages are in the uptrend. The ADX (28.81) shows strong trend strength. The 20-period RSI is in a
strong bullish zone. The Elder Impulse System has formed a strong bullish bar. The KST and the TSI indicators are also in the
bullish setup. In short, the stock has registered a strong bullish breakout. The stock is still in the ideal buying range after the
breakout. Accumulate this stock above `306. Maintain stop loss at `282. The short-term target is `341. The medium to long-term
target is at `405. DS
*LEGEND: n EMA - Exponential Moving Average. n MACD - Moving Average Convergence Divergence n RMI - Relative Momentum Index
n ROC - Rate of Change n RSI - Relative Strength Index (Closing price as of Nov., 28, 2022)
Disclaimer : Above recommendations are based on various technical parameters and any fundamental input has not been considered for the recommendations. Follow strict stop loss for the recommendation.

Analysis Equity
IIFL FINANCE
PLACED IN A PRIME POSITION
The company has a customer base of more than 8 million, out of which 2 million were added in
FY22. The company has a nationwide presence with a thriving network of more than 3,100
branches across more than 500 cities. Further, it has registered 27 per cent CAGR growth in AUM
I
over the last five years. All this makes it a good bet for investors.
IFL Finance is one of the leading non-banking The company has a customer base of more than 8 million, out
financial companies (NBFCs) in India. It offers of which 2 million were added in FY22. It has a nationwide
various products such as home loan, gold loan, presence with a thriving network of more than 3,100 branches
business loan, microfinance and construction loan. across more than 500 cities. Apart from this, the company has
The company focuses on both the frontiers i.e. also signed partnership agreements with various popular
physical expansion of branches and digital adoption financial technology players to support the digital transition
for better customer service and higher market movement in the industry. It had 30,000 employees as of FY22,
penetration. Their major focus is to provide services to that part who are well-trained as the company runs a regular programme
of society that is underserved by the financial services’ for training them. As on September 30, 2022, the company had
companies and to achieve this they are expanding their business assets under management (AUM) of `55,302 crore of which 36
in Tier II and III cities at an exponential pace. The company’s per cent was of home loan, 32 per cent gold loan, 14 per cent
branch network is equally diversified across the country. As of business loan, 12 per cent microfinance, 5 per cent construction
FY22, 87 per cent of the company’s branches were in Tier II and and 1 per cent from the capital markets. It has registered 27 per
III cities. cent CAGR growth in AUM over the last five years.

Analysis Equity
operating segments have delivered phenomenal growth on a
Sector Overview sequential basis. Its AUM saw a robust growth of 25 per cent
As compared to the global average of 54 per cent, India’s YoY to `55,302 crore, supported by growth in various segments.
urban population is only 35 per cent which is way below and Home loan AUM registered growth of 25 per cent, gold loan by
is expected to increase as Indians living in cities would be 31 per cent and microfinance by 49 per cent YoY, showing a
approximately 525 million by FY25 and 600 million by FY36 robust demand in all the segments.
and at the same time India’s real estate market is expected to
reach USD 1 trillion by FY30. This will increase the demand As of Q2FY23, gross non-performing assets (GNPA) stood at
for more homes, commercial spaces and better infrastructure. 2.4 per cent and net NPA at 1.2 per cent, placing the company
As NBFCs hold around 34 per cent share in housing loan, in a better position in the industry. For FY22, the company’s
opportunities are aplenty in this segment. In addition, the consolidated revenue stood at `7,006.27 crore whereas net
Pradhan Mantri Awas Yojana (PMAY) is also expected to profit was highest at `1,188.25 crore, up by staggering 56 per
boost the demand for housing loans. cent YoY. This growth was registered due to strong AUM and
increasing digital presence of the company across India. From a
Out of India’s total gold, 65 per cent is held by the rural liquidity perspective, the company had `9,399 crore, which is
population. This sector is currently dominated by the local sufficient enough to manage the short-term obligations. It has
lenders and only 23 per cent share remains with the NBFCs. reported healthy return on equity (ROE) of 20 per cent for
As the gold loan sector is rapidly undergoing changes from FY22 and return on assets (ROA) of 2.74 per cent, the highest
unorganised to organised, NBFCs are placed better to grab ever reported in the company’s history.
this opportunity. The gold NPA stood at 1 per cent and the
sector is expected to grow at a CAGR of 19.5 per cent till The NBFC industry’s average gross NPAs were around 6.5 per
FY25. There are more than 63 million MSMEs which employ cent and net NPAs around 2.3 per cent, whereas for the
more than 110 million people and to achieve India’s target of a company the gross NPAs stood at 3.2 per cent and net NPAs at
USD 5 trillion economy it is necessary that they grow. 1.8 per cent, thus placing it in a comfortable position. The
company’s net interest margin (NIM) was at 7 per cent as of
Given this positive domestic outlook, NBFCs can cater the FY22 whereas the borrowing cost declined by 0.4 per cent to 8.6
funding gap in this sector which is currently penetrated by the per cent during the same period. EBIT margin was at 71 per
local players. On the other hand, the microfinance sector plays cent and net profit margin was at 20 per cent. Segment-wise,
an important role for the economy’s progress and is expected the company is not dependent too much on a single segment,
to grow at a CAGR of 40 per cent through FY25. NBFCs with giving them protection from any cyclical change in that
share of 31 per cent are well-placed to grab the opportunity. In industry. Loan AUM grew by CAGR of 18 per cent for the past
short, rapid urbanisation is expected to boost the demand for five years compared to the industry’s CAGR of just 9.31 per
home loans, increasing formalisation in the gold sector is a cent.
prime opportunity for the NBFCs and to achieve the target of
an economy of USD 5 trillion, there will be a boost in demand This was driven by demand from ‘small ticket’ home loans,
for loans from the MSME sector. microfinance and the gold loan segment. Over the past five
years, the company’s home loan segment has registered robust
Financial Overview growth at CAGR of 27 per cent while gold loan, microfinance
IIFL Finance reported outstanding financials for the quarter and business loan grew at a CAGR of 41 per cent, 92 per cent
ended September 30, 2022. The company is expecting good and 5 per cent, respectively. The company’s portfolio is now
demand in upcoming years due to a positive domestic more focused towards retail loans in Tier II, III and IV cities.
outlook. Total income for the company in Q2FY23 stood at The company’s shareholding pattern as of September 30, 2022
`1,236 crore, up by 31 per cent YoY, whereas net profit stood was as follows: promoters own 24.89 per cent, FIIs own 25.57
at `397.1 crore, up by 36 per cent YoY. The company’s core per cent, DIIs own 3.41 per cent and others own 46.13 per cent.
Peer Comparison
Company Name Market Cap (` Cr) ROA (%) ROE (%) ROCE (%) Adjusted PE (x) EBIDTA Adjusted EPS (`)
Bajaj Finance Ltd. 404472.13 4.17 16.43 10.81 68.96 33.6 105.26
SBI Cards And Payment Services Ltd. 75037.47 5.29 23.15 11.65 49.71 30.53 17.14
Muthoot Finance Ltd. 42536.19 5.9 23.56 14.15 13.49 10.2 98.53
Shriram Transport Finance Company Ltd. 35162.15 1.92 11.4 9.94 11.34 9.57 100.1
IIFL Finance Ltd. 17067.64 3.31 18.14 12.54 14.51 8.06 19.64
Cholamandalam Financial Holdings Ltd. 10916.93 4.28 4.77 6.27 208.95 144.48 2.96
Indiabulls Housing Finance Ltd. 5892.6 0.88 4.52 9.03 10.62 7.98 14.86

Analysis Equity
(Source : Investor Presentation - Q2FY23, IIFL Finance)
Outlook
Increasing urbanisation rate, changes in the gold industry, The company’s management committee has vast experience in
requirement of loans for MSME development and BFSI which can help them to identify opportunities that are
microfinance sector growth are the supporting factors for the untapped by others. The NPAs of the company are lower as
NBFC industry. The company is well-positioned to cater to this compared to the industry average due to more exposure to
demand through its vast network of branches and digitalised retail loans. In FY22, the company generated net cash of
products. It has a diversified portfolio, making it less prone to `3,568 crore after all the payments of capital expansion,
impact from any changes in a particular industry. The loan financing costs, etc., making it more stable and aggressive for
portfolio of the company is well-balanced as 85 per cent of rapid expansion, if required. It is rapidly expanding its business
loans are secured and 15 per cent are unsecured. That apart, the to cater to customers who are underserved making it an
major focus of the company is on small ticket size loans and attractive player to grab opportunities in this flourishing sector.
retail loans and the result of this is that 94 per cent of their Hence, due to sectoral support, right business expansion, clear
portfolio comprises retail, which places it on the better side management strategy, lower cost of finance and strong
from an NPA perspective. fundamentals, we recommend BUY. DS

Communication Feature
Retail Participation in a US$ 5 Trillion Economy
I n a world dominated by greater power competition, we see
Indian economy gradually making a significant mark by its
growing prominence across shores. In an uncertain global
macroeconomic environment that is marred by escalating
geopolitical tensions, it is certain that Indian economy stands
apart. Various multilateral agencies like IMF and OECD have
also acknowledged its resilience while estimating its growth at
6.5%-6.8% placing it as one of the fastest growing economies of
2022. Indian economy is relatively better placed in terms of its
fundamentals in terms of growth-inflation outlook accompanied
with robust external vulnerability metrics healthier balance
sheet of banks and corporates. These, along with efforts by the
government to push forward a fiscal impulse through capital
expenditure and targeted distribution bodes well for the near-
and medium-term economic growth outlook.
With strong fundamentals in place, Indian economy is not only

on course to become US$5 trillion economy by 2026 (FY27) but
also holds the ability to surpass US$7.5 trillion mark by 2031
(FY32) owing to favourable demographics accompanied with
policy measures adopted in the field of digitization,
manufacturing, and renewables. These are likely to cater to a
population with a per capita income over US$2000, with
incremental consumption likely to be discretionary, making the
Indian economy an attractive long-term investment destination. As the Indian economy ascends ahead, capital markets are likely
The US-China trade war, followed by the COVID-19 pandemic to move in tandem and possess the potential to generate 10-12%
and more recently the China slowdown, have led to more and annual growth helping to reach a market capitalization of $10
more countries considering a ‘China-plus-one’ supply-chain trillion in the coming decade. Indian equities have been one of
diversification strategy. Multinational corporations are looking the best performing markets this year and last five years—a
at countries with stable governments and strong economic testament of investors’ belief in India’s strong fundamentals and
fundamentals, such as India, Vietnam, Indonesia, Malaysia, long-term growth story. The market capitalisation of NSE listed
Thailand, Philippines, and Bangladesh. With its significant companies has become 4x over the last 10 years.
competitive advantage in several industries such as textiles,
specialty chemicals and pharmaceuticals, conducive business
environment and incentivizing government policies such as the
PLI and tax cuts, India is ideally placed to leverage this
opportunity. This indeed is likely to further augment India’s
potential growth.
With the maturing Indian financial markets, the domestic retail

investors are taking a lead on the bandwagon. The last two years
have seen a significant growth in new investor registrations,
which has augmented net investments in the equity markets.
The last fiscal year saw an addition of record 34.6m new Demat
accounts by NSDL and CDSL combined, on top of 14.3m
registrations in the previous year. The total number of demat
accounts across the two depositories has crossed 100m.The
direct ownership of retail investors in the NSE listed universe
has also increased by 110bps to 9.5% as compared to the pre-
pandemic levels.

Entry of retail investors has been a stand-out feature of the Indian Several factors have driven the rise in retail participation in
equity markets since the beginning of the pandemic. Interest in Indian markets over the past few years, especially during the
participation (numbers), investment (net inflows) and activity pandemic. Cheap and reliable internet connectivity and access to
(turnover) have moved in line with the market, exhibiting traits affordable smartphones have added to the policy intervention of
well-known in behavioural finance (exuberance, buyer’s Aadhaar, allowing first-time access to markets feasible as never
remorse). With the market’s correction this year, investor before. Contrary to the past, it takes no time to open a trading
participation is getting back to being led by the steady investor, account, a demat account, and then link them to an existing bank
but numbers remain meaningfully higher than prepandemic account. Unlike in the past, investors no longer must call brokers,
levels, implying the new investors are here to stay. or even trade through a computer—their mobile phones are
sufficient. Such ease of access

has enabled investors from
diverse segments of the
population, from students to
housewives, to retired
individuals, in addition to
working professionals.
An oft-quoted maxim in the

markets is caveat emptor—or
“Let the buyer beware”. What it
means is in an era of electronic
trading and unprecedented
participation in the markets,
investors should also take the
right precautions. These include
basic steps like keeping the
mobile number and email ID
updated, observing safety rules
with internet trading and
dealing only with SEBI
registered trading firms, to more
nuanced measures like
understanding broker fees,
steering clear of assured return
schemes, and the reasons
behind a PoA. Investments in
stock markets is subject to
market risk, and past
performance is no guarantee of
future returns. An
understanding of these basic
tenets is essential for any
investor, in addition to
knowledge about the scrips or
strategies they employ.
The investment scene is India is

poised for long-term growth, on
the back of an economy that
would reach US$5trn (nominal)
GDP in a few years, where retail
participation is finally taking off,
and would have a key role to
play in market performance. A
disciplined approach to
investing would be the key to
reaping long-term
benefits of this growth.

Special Report
Indulging in Options Trading

What is a subtle options strategy as a move towards choosing the right short strike? The article
W
provides some insights
e have seen that nowadays a lot of time is about a subtle options strategy as a move towards choosing the
spent talking about how options trading has right short strike. What are the three utmost important aspects
made its mark in the domestic markets. The you need to be aware of in any kind of business or any kind of
popularity of options trading is such that a options strategy? These are:
lion share of contribution to the total daily n Reducing risk
turnover of the NSE is contributed by the options segment and n Maximising reward
the participation in this segment by retail traders has been on n Minimising the breakeven.
the rise at a rapid rate. Options are vastly misunderstood and
typically used improperly by inexperienced traders. Oftentimes, Bull Call Spread Strategy
new options traders attempt to make inherently greedy Let us first begin with an understanding of this particular
decisions by choosing ‘pie in the sky’ strategies rather than a strategy. The bull call spread by its very nature comprises two
methodical, steadfast approach. call options that create a range with a lower and higher strike
They want the chance of striking gold, which is basically the price. The bull call spread is ideal for traders with an outlook in
same as buying a lottery ticket. But in this article, we will talk which they expect the prices to rise only moderately. Though

You want to select a strike price that is the following:
n Considering that the spread generates superior profits
when the higher strike call adds to the gains through time
decay,the higher strike call option should be low enough
so that the premium, which you can capture when the
option expires or is worthless, impacts favourably upon
your net debit and therefore your risk and breakeven
points.
n Generally, you want to at least double your amount of

maximum risk for any spread trade that you do. Hence, it
would be prudent to look for spreads that offer more than
200 per cent of maximum return on maximum risk if the
stock moves up toward the upper strike price. In the above
illustration, you may note that the maximum reward
stands at 250 per cent of maximum risk.
this options trading strategy enables the trader to limit his So, from the above illustration we can clearly see that the bull
losses, at the same time it also caps his upside gains. Let’s see call spread is less risky in terms of lower risk and breakeven
how this strategy is constructed: points while at the same time it offers you a limited (still
n Step 1: Buy lower strike calls. attractive) potential reward. Now comes the most important
n Step 2: Sell same number of higher strike calls with the part of this strategy i.e. selecting the long call strike and
same expiration date. short call strike. Usually, one trades the bull call spread when
the underlying is expected to rise. The maximum profit
The lower strike calls will be more expensive than the higher occurs at the higher strike price and maximum loss occurs at
strike calls, so this strategy will be a net debit strategy i.e. there the lower strike price. The question is: which options do you
would be a fund outflow out of your trading account. Usually, select for the long side and the short side? Usually, one should
the bull call spread is a lower risk alternative to buying a naked select the lower strike price (for the option you are buying) to
call. Here is a hypothetical case which will help you to be near the money (NTM)—that is, close to the underlying
understand why this strategy is a lower risk alternative to asset price.
buying a naked call option.
On the other hand, the short side i.e. higher strike call of the
n Situation 1 (Long Call): bull call spread involves you selling the higher strike call option
Let’s say you have a bullish view on a Stock named ABC and against the one you just bought.
you bought the December series 70 strike call at `13.
n Situation 2 (Bull Call Spread): The Time Factor
Your view on the underlying is similar but you opt for a bull While initiating a bull call spread strategy, time decay is
call spread in the same stock. So, you buy the December detrimental to your position here and so you will be at the
series 70 strike call at `13 and alternatively you sell the safest level when you treat the bull call spread over more
December series 100 strike call at `5 (the net cash outflow of days to expiration. Remember, as an option buyer you want to
this strategy stands at `8). Hence, this is also known as a have as much time as possible to be right. Traders buy
debit bull spread. options hoping the option’s value will increase during the
option’s lifetime or sell options and hope that the value will
The respective risk profiles of the first and second situation are decrease.
as follows:
Situation 1 Situation 2 Conclusion
Particulars If you are a trader who doesn’t mind low-risk trades, the bull
(Long Call) (Bull Call Spread)
You Pay (Net Debit) 13 8 call spread is a perfect option you can consider. Because, if you
Max Risk 13 8 initiate a naked long call option (ATM) and you get the
Max Reward Unlimited 22 direction wrong, your position will be decimated quickly. With
Breakeven Point 83 78 a bull call spread, the effect will be slower, which can give you
(Strike Price + Premium Paid) (Lower Strike Price + Net Debit) the opportunity to exit the trade before more serious damage
Max Risk on Net Debit 100.00% 100.00% is done. DS

Special Report
Value investment has the potential to perform better over the long run. However, there is a theory in
favour of growth investing too. Bhavya Rathod provides insights into both the strategies and their
performance in 2022 thus far
“P
rice is what you pay for, value is what you them. Value investment has the potential to perform better over
get”. This well-known comment from the the long run. A lengthier time might easily extend to intervals
legendary investor Warren Buffet captures of more than five years.
the essence of the value investing philosophy
and provides the key to how Buffet amassed However, if Warren Buffet is the icon for value investors, Peter
his wealth. Warren buffet being the icon of “value investors” has Lynch occupies a similar position for growth investors.
built a stupendous amount of wealth by practising disciplined “Whenever you invest in any company, you are looking for its
value investing over years. Value investors believe that you are market capitalisation to rise. This can’t happen unless buyers
more likely to find undervaluation of assets in place and tend to are paying higher prices for the shares, making your investment
invest in mature firms with substantial existing assets, albeit more valuable.” This thesis by Peter Lynch completely stands on
underperforming ones. the opposite side of what value investing believes in. Growth
investors are animated with the belief that growth too can be
Value is very difficult to find in inflated markets and can only under-priced in some companies, and that the payoff to seeking
be seen when the markets have been sharply corrected. Bull out these bargains in growth is sufficient to justify the costs.
market conditions make value investing look pointless. The
value investing strategy will prepare investors for market Peter Lynch’s reputation was made during his stewardship of
corrections because undervalued stocks do not experience Fidelity Magellan, a small high-growth fund that he took over

in 1977 and made into the largest equity mutual fund in the Speaking of the global markets, many of the indices took
world over the next decade. The reason for its growth was its significant losses and have produced negative YTD results with
performance. An investment of USD 10,000 in the Magellan the Dow Jones losing 7.76 per cent of its value while the other
fund would have grown 20-fold over the next 10 years. Many indexes such as the S & P 500 value index losing 6.01 per cent
services define a growth investor as one who buys stocks that and the S & P 500 growth index losing 26.33 per cent. The
trade at high multiples of earnings. Though this may be a markets have been extremely erratic this year. The geopolitical
convenient way to categorize investors, it is not an accurate one. crises, jarring swings in the price of commodities, large swings
In fact, it leaves us with a misleading picture of growth in the price of crude oil, and rate hikes by the Federal Reserve
investors as being uninterested in the value of what they are and banks have all contributed to the volatility to some extent.
buying. Despite all of this, the Indian stock market has provided relief
to all investors worldwide, with the Sensex returning 3.4 per
While this may be true for some growth investors, does anyone cent on a year-to-date basis.
really believe that Peter Lynch cares less about value than
Warren Buffett does? Warren buffet despite being allergic to When it comes to market trends in India this year, we have seen
tech companies for the longest time has APPLE as his biggest significant outperformance from value stocks when compared
investment. History shows that growth stocks, in general, have to the BSE Sensex, with PSU banks leading the way to produce
the potential to perform better when interest rates are falling notable returns and Nifty PSU Bank producing a staggering
and company earnings are rising. However, they may also be 53.98 per cent year-to-date. On a YTD basis, some of the
the first ones to punish when the economy is cooling. Value notable PSU banks in the value segment (TTM PE < 10)
stocks, on the other hand, may do well early in an economic have produced extraordinary returns, including Karur Vysya
recovery but are typically more likely to lag in a sustained bull Bank Ltd. and The Karnataka Bank Ltd., giving 124.42 per cent
market. and 124.37 per cent, respectively, whilst Bank of Baroda and
Indian Bank have given 98.66 per cent and 96.63 per cent,
Performance of Value Stocks versus Growth Stocks in 2022 respectively.
Note: For discussion purposes, we have assumed value stocks
to have a TTM PE of less than 10 and growth stocks to have a Another sector in the value segment which caught the eyes of
TTM PE of more than 100. investors and gave massive returns was the paper sector. West
Top Performing Value Stocks YTD (TTM PE<10)

Company Name Sector Market Cap (` Crore)* YTD Returns (%)* TTM PE
Hemang Resources Ltd. Trading 65.93 1516.50 2.39
Katare Spinning Mills Ltd. Textile 83.68 595.73 5.56
Last Mile Enterprises Ltd. Infrastructure 112.88 538.89 5.16
Narayani Steels Ltd. Iron & Steel 82.64 514.67 1.06
Swadeshi Polytex Ltd. Miscellaneous 138.84 479.80 3.24
Sunil Industries Ltd. Textile 33.22 462.99 6.88
Golechha Global Finance Ltd. Finance 25.85 417.05 8.06
Ovobel Foods Ltd. FMCG 140.24 345.17 7.14
Lords Chloro Alkali Ltd. Chemicals 632.37 299.36 9.76
Hazoor Multi Projects Ltd. Realty 103.38 285.07 5.89
Top Performing Growth Stocks YTD (TTM PE>100)

Company Name Sector Market Cap (` Crore)* YTD Returns (%)* TTM PE
S&T Corporation Ltd. Realty 250.51 1705.05 190.07
Gensol Engineering Ltd. Infrastructure 1772.17 1238.58 159.80
RMC Switchgears Ltd. Capital Goods 172.71 1116.74 299.33
CWD Ltd. Electricals 773.20 855.80 249.34
GTV Engineering Ltd. Capital Goods 105.40 683.74 104.15
Atam Valves Ltd. Capital Goods 174.04 658.62 119.90
Shanti Educational Initiatives Ltd. Education & Training 1133.44 639.50 369.10
NIBE Ltd. Textile 368.09 591.39 146.59
Variman Global Enterprises Ltd. Realty 429.74 585.59 281.25
Gallops Enterprises Ltd. Finance 15.03 557.89 200.46
*Data as on November 18, 2022

Special Report
Coast Paper Mills Ltd., Sangal Papers Ltd., Tamil Nadu currently trading at a PE of greater than 100 (this is with the
Newsprint and Papers Ltd. and JK Paper Ltd. are one of the few assumption of growth stocks as stocks with a PE greater than
names which skyrocketed and gave 100 per cent plus returns 100). We discover that out of 318 growth stocks, at least 87 of
with West Coast Paper Mills topping the list with 149.57 per them outperformed the BSE Sensex by a significant margin
cent returns on a YTD basis. exhibiting that 27 per cent of growth stocks were able to
surpass the BSE Sensex. Thus, what we observe from this data
Speaking about the growth segment (TTM PE > 100), the is that the probability of value stocks outperforming the BSE
Adani Group stocks such as Adani Enterprises Ltd., Adani Sensex was higher than the growth stocks outperforming the
Total Gas Ltd., Adani Transmission Ltd. and Adani Green BSE Sensex in 2022.
Energy Ltd. showed massive momentum with Adani
Enterprises providing the largest return of all four at 135.28 per When comparing the long-term performance of the two
cent. On a year-to-date basis, the hospitality sector's equities approaches, neither the growth nor the value strategy shines
also showed strong growth due to increased bookings and out as a definite winner in terms of wealth creation. According
consumer expenditure on both food and travel. to the aforementioned data, growth companies do, on average,
outperform value stocks by a slight margin when the economy
We at DSIJ back-tested all the 5,934 stocks listed on BSE. Based is doing well. Value stocks, on the other hand, are the ones that
on YTD returns and TTM PE, we found that out of all value actually shine and provide comfort to investors amid the harsh
stocks with TTM PE of less than 10, as many as 281 companies winds when the economy is in a slump.
outperformed BSE Sensex while out of high growth stocks with
TTM PE of more than 100, up to 87 companies outperformed Your portfolio may perform best if it has exposure to both
the BSE Sensex. As per the data, out of the 806 value stocks, growth and value stocks. The inherent relationship between the
close to 281 managed to beat the BSE Sensex (assuming that two tactics was correctly noted by Warren Buffett. In his
value stocks are defined as those that trade with a PE of less renowned 1992 Berkshire Hathaway letter to shareholders,
than 10). That is a respectable 35 per cent of value stocks that Buffett stated, “In our view, these two techniques are connected
have so far outperformed the BSE Sensex in 2022. at the hip: growth is always a component of the calculation of
value, constituting a variable whose relevance might range
At the same time, we note that at least 318 growth stocks are from small to tremendous." DS

Special Report
A Primer
on Stock
Indices
The words Sensex and Nifty are the most commonly heard stock market terms. Every investor
encounters these terminologies frequently while taking heed of stock market discussions among
friends and relatives. Sensex and Nifty are two popular indices that indicate the overall performance
A
of Indian stock markets. Armaan Madhani furnishes a detailed understanding of the nuances of
stock indices, its types, significance and application
stock index is a statistical measure that should the selection and weighting of securities be re-examined.
exhibits the changes in the trends of the
stock market in general. Indices are used The target market may be defined very broadly (e.g. stocks in
to represent the performance of the India) or narrowly (e.g. small-cap stocks in India). It may also
broader security market, or a particular be defined by geographic region or by economic sector (e.g.
segment of it. An index is created by cyclical stocks). The underlying stocks in the index could be all
clubbing together stocks based on a the stocks in that market or just a representative sample. The
pre-defined criterion which depends on selection process may be determined by an objective rule or
the characteristics of a specific index. The value of the index is subjectively. Also, in order to keep the index comparable across
calculated using the values of the underlying stocks that make time, maintenance is done in which various corporate actions
up the index. Consequently, any changes in the prices of these like stock splits, mergers, bonuses and right issues are taken
stocks will impact the overall value of the index. Therefore, let’s into consideration. The process is known as index maintenance
say that if a majority of the stocks in the index were to witness and revision.
an increase in their prices, the value of the index will go up as a
whole and vice-versa. One should keep in mind that each underlying stock in an
index has a different price and the price change in one
Index Construction and Management particular stock would not be proportionately equal to the
Indices are constructed by using various methods. A good index other stocks. Ergo, the value of the index cannot be determined
is a trade-off between diversification and liquidity. The process as a simple sum of the prices of all the stocks which are part of
starts by identifying stocks to include in the index. These are the index. Here is when the importance of assigning weightage
chosen based on certain qualitative and quantitative parameters, to each underlying stock in an index comes into play. The
laid down by the index construction managers or entity. weight represents the extent of the impact that the stock’s price
However, index providing entities must make several critical change has on the value of the index.
decisions such as what is the target market the index is intended
to measure, which stocks from the target market should be The different weighting schemes used in index construction are
included, how often should the index be rebalanced and when as follows:

n Price-Weighted — It is simply an arithmetic average of makes it easier to understand which sector is gaining traction
the prices of the stocks included in the index. and finding favour among investors. It helps in identifying well-
n Equal-Weighted — Herein equal weight is assigned to timed investment opportunities from the mushrooming sector.
each stock in the index.
n Market Capitalisation-Weighted — Weights are based Frontline Indian and Global Indices
on the market capitalisation of each index stock (current Sensex — Sensex is the most popular index under the
stock price multiplied by the number of shares Bombay Stock Exchange’s umbrella. Established in 1875, BSE is
outstanding) as a proportion of the total market Asia’s oldest stock exchange. A blend of two terms, sensitive
capitalisation of all the stocks in the index. It is also and index, Sensex constitutes 30 of the largest and most actively
known as value-weighted index. traded stocks on the BSE from 12 different sectors. BSE Sensex
n Float-Adjusted Market Capitalisation-Weighted was first published on January 1, 1986 and is often regarded as
— Weights are based on the proportionate value of each the pulse of the stock markets in India. Sensex is calculated
company’s shares that are available to investors (i.e. free using the free float market capitalisation methodology. This
float) to the total market value of the shares of index method takes into account the proportion of shares that can be
stocks that are available to investors. readily traded. Ratio and proportion is used on the base index
of 100 to arrive at the value of Sensex. The formula is as follows:
Index Rebalancing Sensex = Total free float market capitalisation | Base market
Index rebalancing refers to adjusting the weights of securities in capitalisation x Base index value.
a portfolio to their target weights after price changes have
affected the weights. For index calculations, rebalancing to Nifty — Nifty is the index of the National Stock Exchange
target weights on the index stocks is done on a periodic basis, (NSE), another popular stock exchange in India. It represents
which is usually quarterly. Index reconstitution refers to the weighted average of 50 of the largest Indian companies
periodically adding and removing stocks that make up an listed on the National Stock Exchange. It was introduced in
index. Stocks are removed if they no longer meet the index 1996 and is maintained by India Index Services and Products
criteria and are replaced by other stocks that do. Indices are Limited (IISL) which is a joint venture of the National Stock
reconstituted to reflect corporate events such as bankruptcy, Exchange and CRISIL. It is computed using the free float
merging or delisting of index firms and are subjective. It should market capitalisation-weighted method wherein the level of the
be noted that additions and deletions from indices also require index reflects the total market value of all the stocks in the
that the weights on the returns of other index stocks be index relative to the base period, November 3, 1995.
adjusted to conform to the desired weighting scheme.
The formula for calculation of Nifty is as follows: Nifty =
Significance of Indices Current market value | Base market capital x Base index value.
Frontline stock market indices act as a barometer of a country’s Note: The base index value, in this case, is 1,000. The following
financial infrastructure. They reflect the ups and downs in an table summarises some of the noteworthy characteristics and
economy on a macro level. Indices are useful for assessing the year-to-date (YTD) performance of various global indices.
general direction in which the equity market seems to be Notice from the table that most security market indices are
heading as well as gauging the current trends. An index is a key market capitalisation-weighted and often adjusted for the float
indicator of investor confidence and sentiment. An index can (securities actually available for purchase). The number of
be used to evaluate the performance of a particular mutual securities in many of these indices can vary.
fund or PMS. Since portfolio performance depends to a large YTD Performance of Popular Global Equity Indices
degree on its chosen style, the benchmark index should be
Index Economy No of Stocks Weighting Method YTD Returns (%)*
consistent with the manager’s investment approach and style to
Sensex India 30 Free-Float Market Cap 3.78
assess the manager’s skill accurately. The index stocks should be
those that the manager will actually choose from. Nifty 50 India 50 Free-Float Market Cap 3.51
FTSE 100 England 100 Free-Float Market Cap -1.17
For example, performance of a FMCG thematic fund should be Nikkei 225 Japan 225 Price -4.05
compared against an FMCG sectoral index and not a broad Dow Jones Ind US 30 Price -7.89
market index because portfolio stocks will be selected from CAC 40 France 40 Market Cap -8.02
among FMCG stocks. Stock indices act as model portfolios for DAX Germany 40 Free-Float Market Cap -9.99
index funds. Investors who wish to invest passively can invest S&P 500 US 500 Market Cap -17.65
in an index fund, which tracks a particular index to replicate Kospi South Korea 928 Market Cap -19.52
the returns delivered by that specific index. There are index Hang Seng Hong Long 73 Free-Float Market Cap -25.14
mutual funds and index exchange-traded funds, as well as Nasdaq 100 US 100 Modified Cap -29.99
private portfolios that are structured to match the return of an *Data as on November 22, 2022
index. Price action in the underlying stocks of sectoral indices

Special Report
Importance of Cash Flow Statements

in Stock Picking
With this article, we can perceive cash flow statements as one the most important statements for stock
picking as we get a valuable measure of strength, profitability and the long-term future outlook of a
company. Bhavya Rathod sheds light on how investors can gain a clear picture of how much cash a
company generates and gain a solid understanding of the company’s financial well-being.
“R
evenue is vanity, profit is sanity, but cash is statement, for example, reflects revenues when they are earned
king”. This common consensus was used rather than when they are collected. In contrast, the cash flow
by former Volvo CEO Pehr Gyllenhammar statement reflects cash receipts when they are collected rather
in 1988 while discussing the global stock than when the revenue was earned. A reconciliation of
market crash of 1987. During that time, reported income and cash flows from operating activities
companies with ample cash reserves weathered the markets provides useful information about when, whether and how a
better than those who had poor cash management. When company generates cash from its operations.
evaluating stocks, we can employ a number of relevant metrics.
However, one of the most effective measures is also one of the Although income is an important indicator of a company’s
most frequently overlooked. Cash flow statement is an excellent performance, cash flow is also critical. As an extreme example, a
indicator of a company’s financial health. Since it is the ultimate hypothetical company that makes all sales on account, regardless
measure of how the business is doing, cash flow statement is an of whether it will ever collect its accounts receivable, would
important indicator for investors when determining whether report healthy sales and possibly significant income on its
the company is making or losing money. income statement but with no cash inflow, the company would
not survive. The cash flow statement also provides a
The cash flow statement summarises a company’s cash receipts reconciliation of the balance-sheet’s beginning and ending cash.
and cash payments over an accounting period. The cash-based There are three statements that make up the cash flow statement.
information provided by the cash flow statement contrasts with
the income statement’s accrual-based information. The income The first is the cash flow from operating activities (CFO) which

represents cash flows related to the operating activities of the negative investing cash flows. This is so that businesses can fund
business. Second is the cash flow from investing activities (CFI) their investments by raising more loans or equity financing.
which represents cash flows related to the investing activities of However, over the long run, a company’s core operations should
the business. These represent the company’s purchases and generate enough income to pay for its strategic expenditures and
sales of assets. And the third is the cash flow from financing fulfil its debts to shareholders and lenders.
activities (CFF) which concentrates on a company’s cash
inflows and cash outflows as a result of borrowing and repaying In other words, over the long term, investing and financing
money. These statements allow us to determine whether the outflows should be about equivalent to operating cash flows. This
company generates enough cash from operating activities to is a crucial test of a business’s financial stability. Consistently low
cover the new investments it is making. or negative operating cash flows and positive investing cash flows
indicate that the business is selling assets to support its
They also indicate if the company must issue additional debt to operations. These can indicate a failing business that’s even close
finance them. Further, they allow us to determine whether the to filing for bankruptcy. Even when operating cash flows are
company pays its dividends to its shareholders using cash from sluggish, firms will occasionally sell off assets to keep dividend
operations, the sale of assets or the issuance of additional debt. amounts the same. Since investors view a dividend drop as an
As a result, it tells us whether the company has enough cash to indication of weak financial health, they prefer not to reduce
support itself over the long term through its operating dividends.
activities, independent of the need to sell assets or pay off debt.
We can assess the company’s liquidity, solvency and financial In this case, the company will have low or negative operating
flexibility with the use of information regarding the sources cash flows, positive investing cash flows and negative financing
and uses of cash. In short, the cash flow of a company indicates cash flows. Look at the items the business is selling. It is okay to
its health – whether it has the potential to carry on with its sell assets that are not core to the business and are an
business in the long term. unnecessary financial burden. However, if the corporation is
selling important assets, you should be worried. Low or negative
Cash Flow and Company Quality operating cash flows and consistent positive financing cash flows
A cash flow statement is an important financial reporting point to an inefficient capital allocation by the organisation. This
document because it tells the reader how much cash the is an indication of poor management and ineffective operations.
company generates in a given time period. When cash inflows The table provides examples of companies with great operating
exceed cash outflows, it indicates good financial health. This is cash flow:
CFO Market Cap 1 Month YTD 1 Year 5 Years
Company Name Sector
(In crore) (In crore) Return (%) Return (%) Rreturn (%) Return (%)
Reliance Industries Ltd. 110654.00 1735003.84 Crude Oil 3.41 6.65 7.47 173.89
Oil & Natural Gas Corporation Ltd. 78000.038 170022.47 Crude Oil 1.73 -5.52 -7.87 -25.52
Bharti Airtel Ltd. 55016.60 504521.81 Telecom 5.59 22.56 11.54 89.61
Tata Steel Ltd. 44380.99 128528.81 Iron & Steel 3.90 -8.02 -11.83 55.17
NTPC Ltd. 41788.23 161934.32 Power 0.06 32.54 25.09 11.33
Coal India Ltd. 41087.51 141188.10 Mining -4.72 47.52 46.67 -15.43
Tata Consultancy Services Ltd. 39949.00 1212701.10 IT 4.82 -13.20 -4.31 147.08
referred to as positive cash flow. It is important to note that this Conclusion

statement excludes any income in the form of future receivables Thus, with this article, we can perceive cash flow statements as
as well as any expenses owed by the company. Operating cash one the most important statements for stock picking as we get a
flows are the foundation of a company’s cash flow statement valuable measure of strength, profitability and the long-term
because they originate from the company’s main line of activity. future outlook of a company. By studying cash flow statements,
Businesses that continuously generate large operating cash an investor can gain a clear picture of how much cash a company
flows are strong and self-sufficient. Businesses must continually generates and gain a solid understanding of the financial
invest in prospects for strategic growth. well-being of the company. There are several methods used to
analyse a company’s cash flow, including the debt service
In addition, they must pay back their debt and distribute coverage ratio, free cash flow and unlevered cash flow.
dividends to shareholders. As a result, their cash flows for
investing and financing are often negative. Negative investing However, the cash flow does not necessarily show all the
cash flows show that the business is growing or upgrading its company’s expenses. That’s because not all expenses the company
outdated assets. Examine whether these investments can lead accrues are paid right away. Although the company may incur
to future revenue development by trying to determine their liabilities, any payments toward these liabilities are not recorded
purpose. Positive financing cash flows frequently follow as a cash outflow until the transaction occurs. DS

Special Report
Importance of Asset Allocation

Risk profile and financial goals are some of the major aspects that would help you to define your asset
allocation. This article defines the path towards the right kind of asset allocation to be able to create a
profitable portfolio
T
he year 2022 has thrown up several surprises. The This would make an investor think: what should I do differently
impact of all the developments in the year on the so that I am not caught unaware like this. To be fair, there will
overall economy and hence personal finances of always be an element of risk associated with investments. What,
many people has been critical. Take, for instance, however, can be done is that the risk can be managed
the stock market, which has been a tumultuous intelligently. Most people are confused when it comes to
roller-coaster ride. In January 2022, the benchmark Nifty 50 deciding where to invest their savings. Some of them put their
was at an all-time high. By mid-June, the Nifty had witnessed money into equities in expectation of higher returns without
sharp corrections of more than 10 per cent twice from its peak. giving a thought to the risks involved, while the risk-averse
The impact was severe, especially on those who needed to people simply opt to invest in fixed income instruments to
liquidate their investments for financial goals scheduled during derive stable returns. Some may prefer to buy gold and keep it
the year. In fact, many investors were caught in a trap, confused for posterity as a family heirloom.
about whether to hold on to their stocks and wait for the tide to
turn or make a quick exit before the losses could pile up Since these people do not have a proper asset allocation plan in
further. place, they tend to invest in a haphazard manner. As a result,

they may be taking undue risks investing a large chunk of their the value of your holdings can affect your retirement lifestyle,
savings in equities, or they may be compromising on the or even make it impossible to retire according to your plans.
returns by parking a bulk portion of their savings in fixed There are also factors like inflation to be taken into account
deposits, or they may be missing out on short-term returns by since your investment corpus may be negatively affected by any
investing in gold or real estate. More importantly, they may not rise in the cost of living.
be able to achieve their financial goals if they keep investing
haphazardly. Investments should not be for the mere sake of The Rebalancing Act
parking your surplus funds. They should be backed by an As different assets behave differently, they would have
intelligent approach so as to make your money work for you different returns in each period. Therefore, your original asset
and generate wealth. This is where the concept of asset allocation would change at the end of a period. Assume, for
allocation comes into the picture. instance, you have invested `50,000 in equity and `50,000 in
debt. This means you have 50:50 asset allocation. Let’s
Understanding Asset Allocation further assume that in the next year, equity gave 10 per cent
The most fundamental decision that you will ever take about returns and debt gave negative 2 per cent returns. Then the
your investment and portfolio is the allocation of your funds value of your equity would be `55,000 and that of debt would
into different asset classes to contain the risk involved by be `49,000. The value of your portfolio is now `1.04 lakhs.
investing in a single asset. Asset allocation lowers risk by This will bring your asset allocation to around 53:47 as against
dividing your investments among different asset classes that are 50:50.
most probably not correlated to each other. Every asset class
has its own characteristics and different asset classes behave Therefore, to restore it back, you need to rebalance. This means
differently in different market conditions. For example, the you would need to sell one asset and buy another to maintain
returns on the equity shares of a company wou ld depend upon the asset allocation ratio. In our example, to restore asset
the growth in profits and the scalability of the business. allocation of 50:50, you would need to sell `3,000 from equity
and buy `3,000 worth of debt. This is how rebalancing works.
This translates into the possibility of a higher long-term return Rebalancing your portfolio helps you to further control the risk
if the company is managed well and the performance is good. by ensuring that your portfolio is not dependent on the success
On the other hand, returns from fixed income securities such or failure of one asset class. Without rebalancing you might be
as fixed income bonds of a company would depend on the exposed to too much risk to a particular asset, which might
ability of the company to generate enough cash to pay interest work when in a bull phase but will spell disaster when the
even if the company is not growing. This translates into steady markets enter a bear phase.
periodic return with limited possibility for capital appreciation.
This difference in characteristics of different assets makes asset Asset Allocation Strategies
allocation work in a perfect way. Further, to decide the Here are some important strategies that you could keep in
appropriate proportion in which you need to invest in those mind:
asset classes, you need to first assess your risk appetite. 1. Strategic Asset Allocation — Strategic asset
allocation works with an aim to construct ‘efficient’ portfolios.
The reason behind the same is that every asset class has its own Efficient portfolios are the ones that maintain an optimal mix
risk and every investor has a different risk appetite. Say, for between different asset classes such as stocks, bonds and cash
instance, if you are someone who cannot stomach losses greater with a focus on maximising returns for a particular level of risk.
than 15-25 per cent, then you are a conservative investor. The strategic asset allocation approach involves holding on to
Hence, you should be investing majorly in debt and gold than original allocation over long periods, generally spanning a
in equity. Other key factors that need to be taken into account decade or more. After establishing long-term strategic
for optimal asset allocation include return expectations, allocation targets, investors will need to periodically rebalance
income level, age and financial goals. Also, asset allocation portfolio weightings back to those target allocations.
works better if it is periodically rebalanced. Further, with
regards to an asset allocation strategy, we need to remember To keep investors inclined towards the right direction for the
that typically the younger you are, the more risk you can afford long term, appropriate asset allocation plays an important role.
to take. Strategic asset allocation underlines a framework for an
investor’s portfolio by appropriately aligning their asset mix
As you get older and closer to retirement, you will probably be with long-term investment goals and objectives. Strategic asset
less interested in the growth of your portfolio and more allocation can be challenging in volatile market environments
interested in capital preservation or the conservation of wealth, as rebalancing allocations back to strategic targets may lead to
thereby protecting the value of your portfolio from any buying stocks in periods of market stress and economic
declines. Preserving your portfolio as you reach your desired uncertainty. As such, while using the approach of strategic asset
retirement age becomes more important since a large decline in allocation, it is also important to be aware of the various turns

Special Report
in economy and stay alert to the ups and downs of the stock The most fundamental decision of
market.
investing is the allocation of your
2. Tactical Asset Allocation — Tactical asset allocation assets: How much should you own in
establishes a baseline mix of assets that are suitable for an stocks? How much should you own in
investor’s risk tolerance and investment objectives. Instead of
merely deciding on an asset mix and following the same, the
bonds? How much should you own in
portfolio weightings will be adjusted actively based on short- cash reserve?
term or medium-term expectations for economic conditions,
valuations, market cycles, etc. This approach holds the potential Jack Bogle, Legendary American
to amplify returns, lower portfolio risk and increase investor and founder of The Vanguard Group
diversification which counts as important benefits of the same.
These tactical allocation changes or shifts are taken into account
and implemented to generate superior risk-adjusted returns in
comparison to the otherwise strategic asset allocation approach.
can be stressful and challenging for many investors. Also, with
Here is an example to explain the theory. An investor decides to optimal asset allocation, you can meet your liquidity demands
reduce his allocation to domestic stocks to below normal or as and when the need arises to meet your emergency
strategic allocation levels and increase weightage to requirements. Wise investors often allocate to various asset
international equities on the back of favourable short-term or classes at the same time, including equity, debt funds, gold, real
medium-term view of international stocks. This constitutes estate, and so on. For instance, while investment in real estate is
tactical asset allocation based on future market views. The a long-term proposal because it does not offer immediate
tactical asset allocation process is named as a success if the liquidity, gold as an asset class can be sold if there is an urgent
tactical investment decisions achieve the goals of generating requirement for cash. The same is the case with equity.
superior risk-adjusted returns compared to a strategic asset
allocation approach in reality. Designing Personal Asset Allocation
To begin with, asset allocation and a goal-based investment
Asset Allocation and Rebalancing process go a long way in creating the groundwork for long-term
The reason why asset allocation is important is because not all investment success. This approach allows you to focus on
the assets will outperform or underperform at the same time. capital safety while investing for the short term as well as on
Each asset class will react to an economic development in its safety and growth for the medium term while staying ahead of
own way. In effect, the presence of various asset classes in a inflation and investing for the long term. Once asset allocation
portfolio will ensure that the adverse development in a single sets the framework, the key is to choose the right investment
asset class will not weigh down heavily on the portfolio. Easy to options and follow the right strategy to benefit from the chosen
say, but in practice, this could be a little challenging to asset classes. It’s difficult to recommend specific portfolios as
implement. The reason is that most retail investors could find it one size does not fit all. Every individual will have different
difficult to either execute decisions on rebalancing their goals, timeframes, risk tolerances and personal financial
investments, or would hesitate due to either fear or greed. situations.
For instance, an investor would have been sceptical about Nonetheless, we will try to generalise it and design an asset
reducing allocation in equity in January 2022 in anticipation of allocation plan based on financial goals. First, different financial
the market scaling further new highs. In fact, most investors goals should primarily be identified based on the timeframe.
end up buying more in such situations. On the other hand, an Your time horizon plays a key role in determining your asset
investor would have been quite pessimistic in March 2022 and allocation, which in turn determines the attendant risks and
June 2022 when the markets were in a freefall. In this case, probable returns over a defined time horizon. Hence, once a
many investors would have even sold off their existing time horizon is assigned to a goal, you must remain committed
investments, even with a loss, due to panic. What they should to it irrespective of how the market behaves and continue your
have done is quite the opposite. This is why asset allocation is investment process uninterruptedly. This approach not only
easy to understand but is difficult to execute. helps in reducing the impact of volatility on your portfolio but
also hastens the recovery process by bringing your average cost
With the right asset allocation in place it is no longer necessary down.
to time the markets. The cycles of different assets are always in a
mode of transition. As a result, keeping track of varying asset Once you have categorised your financial goals in terms of
classes and timing the entry and exit of the various asset classes different time periods, the next step is to divide them into needs

allocation. Ultimately, it is important to first chart your financial
needs and wants and then map an investment path that will
provide the funds as and when you require them. And as
mentioned earlier, keep rebalancing the portfolio at regular
The difference between success and intervals.
failure is not which stock you buy or Conclusion
which piece of real estate you buy, it's There are various studies that favour asset allocation and periodic
asset allocation rebalancing of your portfolio. In 2003, The Vanguard Group did
a study using a 40-year database of 420 balanced mutual funds. It
found that 77 per cent of the variability of a fund’s return was
Tony Robbins, American Author determined by the strategic asset allocation policy. Market timing
and stock selection played relatively minor roles. Asset allocation
basically helps in reducing risk through diversification across
various asset classes. Historically, the returns of stocks, bonds and
gold have not moved in the same direction. In fact, market
conditions can lead to one asset outperforming in a given period
and wants. There are some goals that you cannot avoid such as and causing another to underperform. Therefore, at a portfolio
retirement, child’s education, medical care, child’s wedding and level it results into less volatility for investors as movements in
others, while there are some financial goals such as them offset each other.
international vacation or upgrading your mobile phone every Historical Return Correlation
year which are avoidable and can be postponed. For instance,
there is now a new trend of purchasing a second home, which Equity Debt Gold
is often called a weekend retreat. This, however, is not an Equity 1
important goal. The following table is a rough guide to your Debt -0.25 1
asset allocation based on your financial goals and their Gold -0.05 -0.09 1
criticality. Date used for asset classes: Equity – Nifty 50, Debt: Nifty 10 year Benchmark G Sec, Gold:
Needs Wants Gold Spot Rate INR/10Grams
Time Horizon Source: Bloomberg
Equity Debt Equity Debt
Near-term goals (less than three years away) 0 100 0 100
The table above shows the return correlation between different
Short-term goals (between 3-5 years away) 0 100 20-30 70-80 asset classes over 20 years from April 1998 to March 2021. We
Medium-term goals (between 5-10 years away) 40-50 50-60 50-60 40-50 all know the importance of a balanced diet. We have spent our
Long-term goals (between 10-15 years away) 60-70 30-40 80-90 10-20 entire childhood with elders who have told us to have more
Very long-term goals (more than 15 years away). 70-80 20-30 90-100 0-10 greens and seasonal vegetables. Eating healthy food promotes
All figures shown in % our physical and mental health. Similarly, we must also focus on
having a balanced investment approach. And asset allocation
You should also understand that as and when goals move can help us ensure that we have a balanced investment
towards their horizon, asset allocation should also change portfolio. The goal is to balance risk against reward—i.e. to get
accordingly. For example, when you are 30 years old and saving reasonable returns without taking unreasonable risks. As can be
for your retirement, you can invest up to 80 per cent in equity. seen from historical studies and analysis, asset allocation and
As you become older and reach the age of 55, your asset rebalancing is one of the most effective investment strategies
allocation should now match with short-term goals and 100 when compared with investment in individual assets.
per cent of your asset should go towards debt. Besides, within
the broader asset class of equity and debt there are sub-asset Risk profile and financial goals are some of the major aspects
classes. For example, within equity you have large-cap, mid-cap that would help you to define your asset allocation. Also, this
and small-cap stocks. For a conservative investor, equity strategy would be more suitable for retail investors who have
allocation should be made towards large-cap stocks. lack of knowledge and time to manage their own portfolio. In
A moderate or aggressive investor can invest a large chunk of addition, this strategy would be for those having financial goals
his equity allocation in mid-cap and small-cap stocks only if to achieve. However, for those with only wealth creation goal in
the goal is beyond 10 years. In case of debt funds, investors place, he or she should consider a dynamic asset allocation
should try to match the duration of the bond fund with the strategy. With a dynamic asset allocation strategy, one would
financial goal. For example, if your goal is three years away you require to adjust asset allocation depending upon the market
can chose a debt fund that has Macaulay duration of three situation. All in all, we can say that asset allocation with
years. What we have discussed above is only one of the many rebalancing strategy does give you better investment experience
approaches one can take to arrive at appropriate asset with comparatively less risk. DS

Tax Column
don’t file my return of income. However, I own one residential premise which I
for the financial year 2021-22, on my have given on a monthly rent of
interest and dividend income, some TDS `200,000. During the current financial
was deducted amounting to `15,000. Can year 2022-23 the tenant has not been
you tell me how to get a refund? paying rent nor vacating the premises. I
If you want refund of tax deducted at have already filed an eviction suit in the
source of your interest and dividend court. What would be the tax implications
income, then you have to file return of on accrued rent?
income for the financial year 2021-22
relevant to assessment year 2022-23 and Under the provision of the Income Tax
claim refund. Under Section 239 of the Act, actual rent receivable from the
Income Tax Act, a refund can be claimed tenant is to be considered as gross annual
Jayesh Dadia by an assessee only by furnishing return
in accordance with the provision of
rent which is subject to tax after getting
certain deduction. The actual rent means
Chartered Accountant Section 139 of the Income Tax Act. Since the rent for which the property is let out
you are an individual, kindly file your IT during the year. Therefore, `2,400,000 is
return before December 31, 2022 and an actual rent which has to be offered to
I am holding shares of a private limited claim refund. If you fail to do so, you tax irrespective of whether you have
company with an investment value of may lose claim of refund forever. received it or not. However, in my
`1 crore. The company is now under opinion, you can claim unrealised rent as
liquidation. It has `4 crore in the bank I am running a sole proprietary business deduction from the actual rent while
account which is accumulated over a where I own three office premises. I computing income from house property.
However, you need to prove certain
period of years out of the profit of the regularly claim depreciation on it as the conditions such as the tenant is bona fide
company. I was told by the liquidator that same is used for the purpose of business. and that steps have been taken to compel
on distribution, they will deduct 10 per Now I am planning to sell two premises the tenant to vacate the property and the
cent withholding tax. Can you clarify for a substantial consideration. I want to tenant is not related to you. If you satisfy
whether the action of the liquidator is know what would be the Income Tax that the rent is unrealised and that you
implication on sale. have taken all the legal steps to recover it,
correct and what would be the tax the unrealised rent would not be taxed.
implication in my hand? The office premises which you propose to
The action of the liquidator seems to be sell are depreciable assets and therefore My partnership firm could not file Income
correct. On liquidation, if any amount is any surplus arising on the sale of office
distributed to the shareholder out of the premises would be taxed as short-term Tax returns for assessment years 2020-21
accumulated profit of that company, then capital gain irrespective of the fact that and 2021-22 and also did not get the tax
such an amount distributed would be you have been holding the premises for audit report. Can I file the return now?
considered as dividend in the hands of the last so many years. Under Section 50 What are the options available and what
the shareholders. Under Section 2(22)(c) of the Income Tax Act, all depreciable are the consequences?
of the Income Tax Act, distribution of assets are subject to short-term capital
amount out of accumulated profit is gain. However, if you buy any new Yes, you can file the updated Income Tax
considered as dividend. Therefore, once business asset within the same financial return online on the Income Tax portal.
the amount is in the nature of dividend year, then the cost of the new asset can be However, you can file the return only if
and since dividend is taxable, the set off against the sale consideration of there is an income. Loss return cannot be
liquidator is bound to deduct tax at your existing premises. If the cost of the filed. You have to pay additional taxes
source under the provision of the new asset is more than the sale price, and late fee, interest, etc. as provided in
Income Tax Act. Further, dividend is then there will be no capital gain at all. Section 139(8A) of the Income Tax Act.
taxable in your hand and therefore you However, you will not be entitled for any However, the tax audit report was
have to disclose the income in your tax depreciation on the new asset as the cost supposed to be filed before the due date
return and tax liability has to be worked has already been set off. In case no new of filing the return for these two years.
out as per the rate of tax applicable to asset is purchased, then short-term Since there is already a delay, you are
individuals, which could be at 30 per capital gain can be set off against the liable to pay penalty under Section 271B
cent or more applicable surcharge current year’s business loss or of the Income Tax Act. However, the
unabsorbed depreciation of earlier years. penalty can be dropped if you prove that
I am an individual. In view of my total Short-term capital gain would be subject there was a reasonable cause in not
income being below the taxable limit, I to tax at 30 per cent plus applicable submitting the return as well as the tax
surcharge. audit report before the due date. DSDS

D E M O C R A T I Z I N G W E A L T H C R E A T I O N
P R E S E N T
Section Sponsor
Special Feature On
Plastic Industry
Special Feature
Plastic Gets Into A
Profitable Position
Despite the various campaigns about banning plastic
from daily use, its consumption has grown steadily
and now more than ever due to the greater
insistence on hygiene in the food and beverages
sector. Mandar Wagh explains how the plastic
industry in India is poised for posting an impressive
T
growth curve.
he Indian plastic industry is one of the most supply chain bottlenecks. India’s exports of plastics, which had
significant contributors to the country’s largely been fluctuating between USD 8 billion and USD 10
economy. The first thermoplastics (polystyrene) billion for the previous few years, rose significantly to USD 13
were created in 1957, and the history goes back billion in FY22, registering a healthy year-on-year growth of
to 1947 when phenolics were first produced in over 30 per cent.
India. Over 4 million people are employed by
India’s plastic industry, which has expanded significantly since If we break down exports by category, plastic raw materials
its inception and is now a major player in the manufacture of were the most popular exports and made up 30 per cent of all
plastics worldwide. The industry employs more than 2,000 exports in 2021-2022. The second-largest category, totalling 15
exporters, has more than 20,000 processing units, and is per cent of exports, was plastic films and sheets. United States,
widespread throughout the country. China, the United Arab Emirates, Germany, Italy and the
United Kingdom are the key markets for India’s exports of
As a part of the chemicals industry, it produces the polymer plastic and associated goods. Up to 10 plastic parks have been
materials known as plastics and provides services related to approved in the country by The Department of Chemicals and
plastics that are crucial to a number of sectors. These include Petrochemicals. Among these, six plastic parks have received
packaging, building and construction, electronics, aircraft and final approval.
transportation. Floor coverings, fishnets, furniture, medical
equipment, packaging supplies, plastic films, pipes and other Plastic and Equity Markets
raw materials are among the numerous plastic products The year 2022 sparked off the Russia-Ukraine war along with
manufactured. In fact, such is the widespread use of plastic in an increase in inflation, a slowing economy and weaker
all spheres that several campaigns calling for its ban have not economic data, thus raising concerns about a possible
led to any significant changes. recession. Major economies across the globe have started
posting stronger economic data than before as a result of
Market Size and Exports aggressive actions taken by all central banks worldwide. Despite
In 2021, the size of the global plastic market was estimated at outpacing the global markets, the Indian domestic indices have
USD 440 billion. According to projections, the market may only gained nearly 4-5 per cent this year. Whereas most
grow from USD 457 billion in 2022 to USD 643 billion in 2029. industry majors are struggling to gain positive momentum,
India’s consumption of plastic has surged 23-fold to almost 21 several overlooked stocks have amazed investors with their
million tonnes over the past three decades. The Indian plastics excellent returns despite all the challenges.
industry experienced a significant volume rebound over FY22
primarily as a result of a persistent demand growth. Currently, When it comes to the best-performing plastic products stocks,
India is the third-largest consumer of plastics after China and Innocorp Ltd. led the way and astounded investors with
the United States, using about 6 per cent of the world’s total phenomenal gains of over 90 per cent in just one month. When
quantity. looking at the market capitalisation of the stocks, the majority
of micro-cap stocks performed exceptionally well. Innocorp
In the next 4-5 years, the Indian government aims to increase Ltd., in addition to manufacturing plastic products, also
economic activity in the plastic industry from its current level provides infrastructure services for the power transmission and
of USD 37.8 billion to USD 125 billion. The country’s plastic distribution industry. Investors are drawn to this stock as it is
exports in FY22 prospered, expanding strongly despite the affordable, has a low PE and a very impressive ROE. The shares

of Kaiser Corporation have skyrocketed over 1,858 per cent, Top Performing Plastic Stocks in past 1 Month
making it one of the year’s top multi-baggers across all sectors. Latest Market Cap One Month Returns
Kaiser Corporation is in the business of printing labels, articles Company Name (` crore) (%)
of stationery, magazines and cartons. Reliance Industries is the Innocorp Ltd 6.77 93.64
top producer of polymers in India with the multinational GM Polyplast 193.89 85.02
corporation responsible for about half of the country’s Anka India 9.37 57.79
polyolefins manufacturing capacity. The largest production Polycon International 7.19 36.58
capacity for several polymers, such as polypropylene and Gujarat Petrosynthese 27.34 27.22
polyethylene terephthalate, is held by Reliance Industries. National Plastic Technologies 57.59 24.92
Supreme Industries, Astral, VIP Industries, Prince Pipes, Aadi Industries 5.05 21.69
Finolex Industries, Jai Corp and Nilkamal Ltd. are some of Sonal Adhesives 71.91 18.89
India’s leading plastic product manufacturers. Raj Packaging Industries 21.98 17.75
Dhabriya Polywood 140.77 16.74
Impact of the Pandemic *Data as on November 24, 2022
The corona virus pandemic unleashed havoc on the entire value
chain system at all points and scales. The availability of raw Top Performing Plastic Stocks in 2022
materials and price inflation became major issues. Lockdowns
resulted in cost overruns, significant delays and major business Latest Market Cap YTD Returns
Company Name (` crore) (%)
disruptions due to a lack of timely execution. The demand for
plastic from the building, construction and automobile Kaiser Corporation 300.99 1858.90
industries fell drastically. While the plastics industry was in a Sonal Adhesives 71.91 1110.71
crisis, the medical industry rescued it by providing enormous GM Polyplast 193.89 500.21
opportunities. Clara Industries 29.52 153.19
Shish Industries 163.42 108.40
The workers in the plastic industry were fully occupied by the Duropack Ltd 48.79 106.12
demand for PPE kits that included masks, goggles, gloves, Raj Packaging Industries 21.98 69.66
gowns and other essentials. Companies in the plastic and
Stanpacks (India) 6.16 50.97
chemical industries reported unprecedentedly large orders and
revenues. The pandemic has significantly increased consumer Vinyoflex Ltd 19.87 46.50
demand for plastic food and beverage containers. Improved Dhabriya Polywood 140.77 42.76
hygiene awareness and a rise in the buying of disposable goods *Data as on November 24, 2022
designed to lower the risk of viral infections have revived the
industry. consumer goods industries are using polymers more frequently
as a result of their great durability and resistance to physical
Potential Threats stress. Plastic manufacturing businesses have developed
As public awareness over the environmental harm that tremendously and are anticipated to grow in the next few years.
polymers cause has grown, more strict government laws and The industry’s major players are optimistic about the demand
policies have been implemented. Straws, ear buds, plastic sticks situation and anticipate that pipe realisations and volumes will
and other items with limited utility but a tendency to be left grow rapidly in the upcoming quarters thanks to rising prices
lying around were among the single-use plastic goods that the brought on by higher PVC costs, a favourable product mix and
Indian government urged the population to get rid of. distribution expansion.
Polyethylene Terephthalate (PET), high-density Polyethylene (2
HDPE) and Polypropylene are three forms of plastic that are To improve the country’s output of plastic manufacturing and
regarded safer than others. In order to survive and prevent to create employment, numerous plastic parks are being
business disruption, companies may engage in the production established in stages across the country. Meanwhile, the six
of these types of products. Many businesses and governments approved plastic parks are in Madhya Pradesh (2), Assam (1),
have started using more environmental friendly and non- Tamil Nadu (1), Odisha (1) and Jharkhand (1). Funds of up to
plastic alternatives to avoid the harmful impact on 50 per cent of the project costs, or a maximum cost of `40 crore
environment. If businesses do not adapt to this transformation, per project, are available under the plastic park schemes. In
it could have an impact on market growth in the future. order to advance the country’s petrochemical technology and
promote a research environment essential to the industry, the
Outlook government has also initiated a programme for establishing
Plastic is embedded in our lives and is used in everything from Centres of Excellence. This will assist in promoting and creating
furniture to water bottles. There is no sector in the country that new applications for plastics and polymers in the country.
does not use plastic, and this is why the Indian plastic market is Given such initiatives and the promising future of the sector,
enjoying healthy capitalisation. The sports, fashion, textile and keep a close eye on the industry and its stocks. DS

Expert Speak
Why This is
India’s Decade
Ridham Desai, Managing Director, Morgan
Stanley India presents his opinion about
what the new India holds in terms of
W
changes in the country’s economy
e first wrote about ‘The Next private domestic investment.

India’ in 2014 in a series of 2. Digital Differentiation — India is pursuing a distinct
reports that looked at the trends model for the digitalization of its economy, supported by
and policies shaping the future a public utility called IndiaStack. IndiaStack, which
of the economy. As that future operates at population scale, is a transaction-led,
is largely here, we now turn our low-cost, high-volume, small-ticket size system with
attention to ‘The New India’ to embedded lending. It will take India from a ‘prepaid’
mark the next phase of growth. economy to a ‘postpaid’ one. The digital revolution has
Critically, India has a number of advantages that we believe will already changed the way India handles documents,
last through the end of this decade. In fact, it is perhaps the invests and makes payments, and it is also set to alter the
only major economy poised to benefit from four global way India lends, spends and insures.
megatrends: demographics, digitalization, decarbonisation and 3. Energy Transition —While the first two drivers are
deglobalisation. And two of those trends – demographics and unique to India, the world has seen energy transitions
deglobalisation – will act as headwinds in most other before. The difference for India is that both its energy
economies. consumption and energy sources are changing
simultaneously in a disruptive fashion. Another
All told, we estimate that India will drive a fifth of global difference is that India’s energy needs are still growing,
growth through the end of this decade on its way to becoming and therefore legacy capacity using fossil fuels will not be
the world’s third-largest economy. The three pillars of this destroyed as it transitions to a higher share of renewables.
growth are:
1. Offshoring — The pandemic only enhanced India’s India’s per-capita energy consumption is likely to rise 60 per
attractiveness as the office to the world. But new cent, as per our estimates, to about 1,450 watts per day in the
developments such as the trends outlined in Morgan coming decade, with two-thirds of the incremental supply
Stanley’s multipolar world thesis, along with government coming from renewable sources. We believe this will positively
incentives to boost investments and corporate profits, are impact India’s terms of trade and entail about three-quarters of
allowing India to gain traction as a factory to the world as a trillion dollars in energy capex. It will also eventually reduce
well. Investment in services and manufacturing will come headline inflation volatility as the imported energy share of
from foreign direct investment and a large increase in GDP declines, lower fertiliser subsidies, improve living

conditions and create new demand for solutions such as electric number of households earning in excess of USD 35,000 per
vehicles, cold storage chains and green hydrogen-powered year is likely to rise fivefold in the coming decade to over 25
trucks and buses. million.
Supporting these factors are: Industry Implications

n Morgan Stanley’s multipolar world thesis and India’s rise n Financial Services — Industry growth will be driven by a
in the global economy. lending boom, improved insurance pricing, greater
n India’s commitment to the Paris Accord. penetration and sophisticated tech infrastructure.
n Major investments in terms of both dollars and n Consumer Discretionary — This includes automobiles,
institutional infrastructure to leverage India’s biometric automotive parts and healthcare services. There will be
identity system, Aadhaar. gains from rising disposable income, market
n Government policies targeted at lifting the share of profits reorganisation and technology.
in GDP, with a concomitant positive effect on investment. n Industrials, Domestic Materials and Real Estate
— Capex boom driven by defence indigenization, energy,
Economic Implications infrastructure, the internet, materials (especially cement)
By 2031, we expect the gross domestic product (GDP) to cross and, mostly importantly, manufacturing.
USD 7.5 trillion, more than double the current level, a n Exporters — Rising exports from the diversification of
discretionary consumption boom, an 11 per cent annual supply chains away from Europe and China and
compounding of stock market capitalisation to USD 10 trillion increased offshoring of services to India.
and credit to GDP rising from 57 per cent to 100 per cent.We
believe consumer discretionary spending will gain share in total Where Could We Go Wrong?
consumption as per-capita GDP has crossed the important Risks that could derail or slow our thesis include a prolonged
USD 2,000 mark. India’s income pyramid offers unique breadth global recession or sluggish growth, adverse geopolitical
of consumption, in our view, with the top end spending like the developments, domestic politics and policy errors, shortages of
richest in the world and the bottom end still relatively poor. The skilled labour and steep rises in energy and commodity prices. DS

Expert Speak
Understanding The Option Chain
Option chain is a very popular tool for data analysis among derivatives traders. It is available on the
NSE website and there are other software too offering this feature, writes Prashant Shah,
O
Co-founder & CEO Definedge Securities
ption chain is basically a data table. When you ATM strike price are the upper area strike prices in call and put
select the symbol and expiry of any instrument, options while the strike prices below the ATM strike price
you get the data of all the strike prices of that indicate lower area of call and put sections. The upper part of
instrument. The option chain captures the call option data shows in-the-money (ITM) strike price call
information such as the premium, open interest, options and the lower part shows out-of-the-money (OTM)
volume and implied volatility of each strike price of that price call options. The
instrument. It is presented in a very structured way, and it can upper part of the put
help assess the strength of the trend and the important support option data shows
or resistance level of the instrument. Let’s understand how to OTM strike price put
read it. options and the lower
part shows the ITM
Structure strike price put options.
There are two parts in the option chain table. The left part The image alongside
captures the data of call options and on the right is the data of will offer better clarity
put options. Further, there are two parts of each of these. The and idea about the data
strike price near the current price of the instrument is known as presented in the
at-the-money (ATM) strike price. The strike prices above the options chain.
Featured below is the option chain table from the Opstra software:
The middle green line captures the ATM strike price data. The middle column is a strike price column. Observe other columns in
the image shown below.

Similarly, when the price is at or near the resistance level, you
can create a bearish position by selling future or buying put
option or selling call option. Typically, there will be a high open
interest in OTM calls and OTM puts that gives you a range of
market on the higher side as well as on the lower side.
Observing the shift in the strike prices and change in open
interest will give you an idea about the market trend.
Breakout
Prashant Shah Support and resistance or deriving levels based on option chain
analysis works like a charm in sideways or narrow range
Co-founder & CEO markets. But strong trends need a different treatment. When
Definedge Securities there is a significant call option open interest addition at any
strike price and if the price crosses it, a significant upside move
may be expected. Because there were many call writers at that
LTP is the last traded price. OI is the open interest. We can also strike, they are likely to run for cover, which could fuel a rally.
see the change in open interest as well. There are also columns Similarly, when the price drops below a level where significant
capturing information about the volume and implied volatility. puts were written, it indicates the possibility of a further slide.
Open interest, volume and price are the most important
conditions in the option chain. When price, volume and open Trend Strength
interest increase, it is considered a bullish sign. When price falls There is another observation that you can focus on. We have
with increase in volume and open interest, it is considered a open interest data of call and put options of the same strike
bearish sign. In this article, we will discuss the price and open price. For any strike price, when open interest of put is more
interest columns for an analytical perspective. than the open interest of call option, it indicates a bullish sign.
In other words, puts written are more than the calls written at
First, look at the open interest numbers and the change. High that strike price. Similarly, if the open interest of call option is
open interest would indicate increased activity in that call or more than the open interest of put option, it is a bearish sign.
put option strike price. Option chain is always analysed from a When open interest of put option increases but the open
seller’s perspective. The selling option needs more margins and interest of call option does not change much for that strike
hence it is assumed that the smart money writes options and price, it shows that more puts are being written but new calls are
retail traders buy option. The market is expected to move in the not being written. Hence, it is a bullish sign.
direction of smart money positions. Though I don’t completely
agree that more money means smart money, it’s a discussion Bears are writing options and bulls are just watching. However,
best left for some other day. Let us understand what if open interest of the calls starts reducing for that price, it
information we get from the option chain table. becomes very bullish because more puts are being written and
calls writers are exiting. In the same way, if the open interest of
Support-Resistance call option increases but the open interest of put option does
We write or sell call option when the view is neutral to bearish. not change much, it is a bearish sign. However, if the open
We write or sell put options when the view or market outlook is interest of put options starts reducing at that strike price, it
neutral to bullish. So, when the open interest increases in any becomes very bearish. As mentioned earlier, OTM options
call option strike price, that is a sign that more calls of that generally would have higher open interest because they are
strike price are written. Hence, that level is expected to act as comparatively safe to write or sell. They are far from the current
resistance. When open interest increases in put option strike price and writers can take advantage of the theta decay by
price it implies that more put options of that strike price are writing them. ATM options have highest intrinsic value.
written and hence the level is expected to act as a support level. Generally, we will see high open interest at ATM or near the
When you notice a sudden spike in open interest in any strike strike price when the market trend is range-bound.
price, then that level assumes a lot of importance. Thus, one
useful feature of option chain is to get an idea of the important When put option open interest increases at multiple strike
price levels that can act as support or resistance for the prices in ATM and OTM options and call option open interest
instrument. of ATM and OTM strike prices starts decreasing, it is a sign of a
strong market trend. As the open interest data can change
If you know technical analysis, you can corroborate the data quickly, it is important to keep track of it while using the option
from the options chain with the charts’ analysis. If the charts chain table. Using technical analysis along with option chain
also confirm and there is evidence of demand or supply at that analysis is a nice combination to try. High implied volatility
level, then those levels become extremely important. When the indicates that the option premium is expensive. In the
market approaches the support level, you can create bullish upcoming write-ups, we will discuss how to read and interpret
position by buying future or call option or selling put option. implied volatility in the option chain. DS

Expert Speak
Milan Vaishnav
Technical Analyst and Founder of Gemstone Equity Research,
Equity Research Asia and Chart Wizard FZE
Outperform The Benchmark

Using Relative Strength
A very simple and humble tool called relative strength indicators goes a long way in making your
portfolio highly resilient in turbulent times and strongly outperforms in times of rising markets, says
Milan Vaishnav, Technical Analyst and Founder of Gemstone Equity Research, Equity Research Asia
and Chart Wizard FZE
A
s an investor, have you ever wondered why the stock with the index, one stock with another stock, etc.
stock that you purchased with an anticipation of
delivering higher returns resulted into a failed This indicator is used to determine which sector or stock is
breakout? Have you ever experienced a situation doing better during a broader market decline or if they are
where the stock that you have been invested in for showing weakness when the markets in general are moving
a long period has not gained in line with the markets or a stock higher. The calculation of the RS line is simple. One can simply
that you are holding has lost significant value while the markets measure relative strength as follows: Relative Strength = Base
have just consolidated? If the answer to the above question is in Security divided by Comparative Security. For example, if one is
the affirmative, then perhaps you have missed out on looking at faced with a choice of whether to invest in Stock A or Stock B,
one of the simplest tools in technical analysis, namely, relative one can use this concept of measuring RS to decide which of the
strength. two stocks is doing better.
The concept of relative strength (RS) is pretty much simple: this

is one of the staple tools from the toolbox of technical analysts.
People often confuse it with Relative Strength Index (RSI),
which is completely different altogether. Also known as the
‘price relative indicator’ or ‘relative strength comparative’, it is
commonly referred to as ‘relative strength line’ or just RS line.
The primary and basic use of this indicator is to compare two
securities or assets with each other and one can use it to
compare the performance of one index with another index, one

We would just divide the price of Stock A by Stock B and if the instruments against each other remains the primary use of the
like is rising, it would mean that Stock A enjoys a strong relative RS indicator. However, investors can also use it for trend
strength and it should be bought instead of Stock B. Let us identification and analysis. They can subject the RS line regular
understand this with an example. If we are made to decide method of trend analysis by identifying the direction of the
based on just the price chart of two stocks, A and B, it would be move, spotting resistance and support, and also identifying the
difficult to choose between the two stocks when it comes to broader trend by applying a moving average of their choice to
buying just one of them. So, to help ourselves decide which the RS line.
stock to invest in, we will use the RS tool to compare the relative
strength of these two stocks by comparing them to each other.
To do this, we will just divide the price of Stock A by the price of
Stock B. We get the following chart.
In the chart shown above, the trend identification and analysis

of the relative strength line help us to understand the periods of
relative outperformance and underperformance of the stock
against the broader Nifty 500 index. It shows how between 2016
and 2020 the stock relatively outperformed the Nifty 500 index.
The RS line that we get after dividing the price of Stock A by It underperformed from 2020 until recently against the
Stock B is rising and therefore we would prefer to buy Stock A benchmark. Now, the RS line is seen reversing its direction and
and not Stock B. What we saw here is a theoretical example. trajectory and has crossed above the 50-week MA and this
However, let us apply and understand this concept with a would indicate a likely beginning of a phase of relative
practical example. If a global investor is faced with a choice of outperformance of the stock.
investing in either Indian or US equities, he would definitely
choose India over the US. This decision in hindsight becomes a Conclusion
lot easier as we all know that the Indian Nifty 50 has shown The majority of the time, this staple tool of technical analysis is
outright relative outperformance against the US S and P 500 often overlooked by investors. While making an investment
index. However, the application of the RS indicator would have decision in any stock, we fail to check if the stock is just doing
made this task even simpler. well individually or if it is also performing better than the
broader markets. Investing in a stock with a rising relative
strength line with help you stay invested in a relatively
outperforming stock. Finding a stock whose relative strength
line is changing its direction from down to up and confirming a
trend change will give an early indication of the initiation of a
period of relative outperformance of the stock against the broad
markets.
We all stay in a connected world. When there is a general

weakness in the global equity markets, we have a similar
weakness in the domestic equity markets as well. However, the
major benefit of applying and regularly using relative strength
analysis in day-to-day investment decisions is that it helps
investors stay invested in much stronger stocks. Stocks that have
The RS line of Nifty against S and P 500 shows how it changed a strong and rising relative strength advance more and do better
its direction at the end of 2020, crossed above the 50-week MA, than the broad markets when the markets are rising. More
and has stayed in the upward rising trajectory. The beginning of importantly, in declining markets, stocks having rising relative
the change of direction of the RS line gave us a signal well in strength will show a lot of resilience to the weakness in the
advance that the period of outperformance of the Indian broad markets. Analysing relative strength must be made a
markets over the US markets has started. Comparing two habit. DS

Interview
Rajeev Gupta
CFO, L&T Technology Services Limited
“Our Deal Pipeline Continues to

Remain Robust”
Excerpts from an interview with Rajeev Gupta, CFO, L&T Technology Services Ltd.
LTTS reported a 24.1 per cent YoY growth in its witnessing robust customer demand for digital manufacturing
rupee revenue to `1,995 crore in Q2FY23. The services with multiple programs being initiated around
company’s net profit rose 22.8 per cent YoY to Industry 4.0 and digital twins, enabling us to deliver quick ROI
`282.4 crore. What factors have contributed the to our industrial products and plant engineering customers. In
most to help you outperform? sustainability, there are several early conversations around clean
Our robust growth trajectory is being driven by a combination energy and carbon footprint reduction, and we are building
of factors across key geographies. We have achieved a USD 1 solutions to capture the next global wave of enhanced
billion annualised revenue run-rate in Q2FY23 on constant spendings.
currency basis due to continuing healthy deal bookings,
especially in Europe, with some of the world’s largest OEMs. How does LTTS plan to leverage the strong deal
Building on its multi-industry momentum, LTTS has won a wins witnessed during H1FY23? According to you,
USD 60 million plus deal in the transportation segment, which niche segments are gaining traction and will
marking the third consecutive quarter of wins in the USD 50 to be key growth drivers in the coming quarters?
100 million TCV range. We already have visibility of higher Our deal pipeline continues to remain robust, and we are in the
deal wins this fiscal and remain confident that our customers middle of several advanced stage discussions with global
will continue to repose their trust in India’s largest pure-play customers across key geographies. LTTS’ Europe deal wins are
ER&D services’ company. expected to double this fiscal, and our differentiated offerings
will help us stay ahead of the competitors in the space. Our
The early focus on ‘big bets’ – EACV, 5G, AI and digital innovation-led engineering and technology offerings make us
products, digital manufacturing, medical technology and remain cautiously optimistic in the medium term. We have
sustainability – is helping us reap the dividends of continuing improved our guidance basis better revenue visibility from deal
investments undertaken over the last fiscal. We are especially wins in the past few quarters, and hence upgraded our constant

currency annual dollar revenue guidance from the earlier set For Q2FY23, LTTS saw a record in deals booked in
14.5-16.5 per cent to 15.5-16.5 per cent. Europe. Do you expect this momentum to
continue? Do you have a geography-wise revenue
LTTS is also undertaking deep investments across its six big mix target in the long-run?
bets, helping develop state-of-the-art infrastructure across its Europe accounted for about 16 per cent of our Q2FY23 revenue
global locations. We have recently inaugurated new centres in mix, registering an over 8 per cent growth YoY. Our
Poland (Krakow), France (Toulouse), Canada (Toronto), and recent centre launches in Toulouse and Krakow are a testament
have expanded our footprint in the US (Peoria) with the launch of our belief in this momentum, which I am sure will continue
of two new centres to cater to customers in the digital to expand over the coming years. Current indications suggest
manufacturing and electrification and prototyping domains. that the deal bookings for the Europe geography are set to
This growing combination of talent with the best-in-class double this fiscal, with several new engagements in the
technology and engineering will play a decisive role in driving pipeline. Our onsite-offshore revenue mix is at about 45-55 per
the momentum witnessed in H1FY23. cent respectively. With a close eye on the worldwide
macroeconomic trends, we feel that this would continue to stay
What is your segment-wise revenue mix and how in the range.
do you expect it to evolve over the next 2-3 years?
As of Q2FY23, our transportation vertical accounted for 34.5 What is your earnings outlook for H2FY23?
per cent of the revenue mix. This was followed by telecom and With three successive quarters of deal wins in the USD 50-100
hi-tech at 19.4 per cent, industrial products at 18.9 per cent, million TCV, we have continued to redefine the ER&D success
plant engineering at 16.3 per cent and medical devices at 10.9 story among all India-based global ER&D companies active in
per cent. Backed by reliable demand patterns from Europe and the domain. Our operating margins of over 18 per cent are
the US, we are witnessing growth across all these segments with setting new benchmarks, and our constant currency USD
transportation and plant engineering registering 25.2 per cent revenue growth guidance has been revised upwards to
and 20.8 per cent YoY growth, respectively. Visibility into a 15.5-16.5 per cent. Even as global macroeconomic uncertainties
robust deal pipeline and the various advanced stage customer pose a cause of concern in some segments, we are witnessing
discussions have helped us revise our constant currency USD customer investments continuing across our six big bet areas.
revenue growth guidance, while maintaining an industry- Due to its innovation led engineering and technology offerings,
leading 18 per cent plus operating margin. I remain reasonably LTTS remains confident in meeting the aspirations of all
confident that our growth pattern will be broad-based across stakeholders and delivering profitable, inclusive and sustainable
our verticals and will be representative of the evolving global growth. DS
demand patterns.

Interview
V Vaidyanathan
Managing Director and CEO, IDFC First Bank.
“We Have The Opportunity To Build A

Successful Bank Only Once In a Lifetime”
As a bank, we are putting a lot of effort into building a high-quality culture of customer-friendly
relations, asserts V Vaidyanathan, Managing Director and CEO, IDFC First Bank.
IDFC First Bank reported a whopping 266 per cent take our eyes off the ball. We have set up monitoring systems
YoY growth in profitability to `556 crore in where we track all parameters closely, product by product,
Q2FY23. Can you highlight the factors responsible segment by segment, city by city, and so on. It is more
for your stellar outperformance? important to track the input indicators that lead to NPA, SMA
The core business model of the Bank is quite strong and is or NPA as an output. What I mean is that we track the
delivering good quality risk-adjusted returns. What is driving percentage of customers who are already credit-tested before
the profitability is a strong growth in core income. We call this we onboard them.
pre-provisioning operating profit and it is a direct indicator of
core efficiency. The operating leverage is now playing out Today, about 90 per cent of the customers whom we are taking
strongly, and growth in expenses is much lower than growth on our books are already compared to 83 per cent three years
and income. Last year FY 22, our loan book grew only 13 per ago, so we are moving to better quality strategically. Next, we
cent, and our operating profit grew by 44 per cent. This year FY check what percentage of customers by the value returned on
23 too, we have guided our core pre-provisioning operating their cheques paid on the presentation for insufficient funds to
profit, PPOP, to grow by over 50 per cent, even though the loan check the quality of incremental bookings, this has come down
book is expected to grow by only 25 per cent year on year. from 10 per cent to 5.5 per cent over the last three years. All
these input parameters are more important as they give comfort
Thus, every year our increase in operating profit is outpacing the about the credit quality in the future.
growth of the loan book. Further, the credit cost and provisions
are also quite low. Together this has resulted in strong growth in So, will the retail NPA will sustain at these levels in
profit after tax. Now our profit after tax at `550 crore a quarter the future?
has become quite healthy. The more important thing is asset As I said the monitoring of input parameters is more important.
quality and we are very watchful on that front. For over 10 years our gross and net NPA are at levels of 2 per cent
and 1 per cent, and this was through demonetization, GST
Your asset quality has improved, and you have implementation, ILFS problems and so on. The historical
reported net NPA of retail is only 0.7 per cent as numbers are there in the investor presentation. The key thing to
per your presentation. The retail Gross NPA is 2 per note is not just NPA but credit costs, and for us, it is quite low for a
cent, is this sustainable? long time. Incrementally we have migrated to the best quality
See, on credit quality, we should always be watchful and never customer profile in every segment we are operating in as

explained earlier. Our credit costs are quite low at 1.1 per cent, we The bank’s board has recently approved the capital
have guided for 1.5 per cent we are doing better than guidance. raise plan for an amount aggregating up to
We are quite diversified in our portfolio. Our Pre NPA stage of `4,000 crore for the next one year. Could you
SMA is also quite low, which is an indicator for future NPA. elucidate on the same and the current state of your
capital adequacy?
What about the corporate loans side? The Bank is well capitalized with a capital adequacy ratio of
Here, the only portfolio where we have a high NPA is 15.35 per cent and does not need any immediate equity capital.
infrastructure. This is historical. We have accounted for most, However, as a prudent bank, we should always be well-
only one account of about `750 crore is leading to the most of capitalized. Our incremental business is very profitable on a
the NPA here. We expect that toll road account to sort out risk-adjusted basis so incremental capital is utilized very well
sooner or later, as it has cash flows from road tolls and post and will lift the overall return on equity of the bank as we
covid, cash flow has normalized. Once that is sorted, the Gross deploy the capital. So we plan to raise capital within the next
NPA at the Bank level itself, not just retail will come down to one year to support our growth and expansion plans.
below 0.7 per cent. Infra will become insignificant or irrelevant
in the next 2 years. With healthy trends in growth momentum
expected to persist, what is your earnings
On the corporate side, all legacy large ticket loans have already outlook for the next few quarters? Do you expect
been dealt with. Incrementally, after the merger in December retail loan growth to outpace corporate loan
2018, the Bank has sanctioned around `18,000 crore of new growth?
wholesale loans across more than 270 new clients and the asset We are confident about continuing our profitability growth in
quality on this book has been pristine. the future quarters. At the beginning of the financial year, we
set a target of reaching double-digit ROE by the fourth quarter
How do you expect your segment-wise revenue of FY 23, which we achieved in the 2nd quarter itself. Our
mix and CASA ratio to evolve over the next 2-3 outlook for earning is quite strong. More than ROE itself, our
years? trajectory of ROE is strong.
Our revenue is gathering more momentum, not just from
lending like retail and commercial assets business like home Presently, what are your top three strategic
loans, car loans, etc, but also from wholesale banking objectives?
businesses like a term loan, working capital facilities etc. The One is to continue steady CASA and Retail Deposit Growth.
retail and commercial asset segment including the rural We plan to fund incremental loan growth through incremental
businesses is diversified across more than 20 products and deposits. Second, to pay off about Rs 22000 crore of legacy
product variants. The Bank is not dependent on the trading borrowings which are at 8.8 per cent. Two, continuously focus
gains from treasury activities for its core profitability growth. on asset quality, and bring down Gross and net NPA to below 2
Even if the trading gain is zero, the bank will do well in profits, per cent and 1 per cent at the bank level, by better asset quality
that’s a big progress for the bank. composition. Third, continuous improvement of the
Profitability Ratio in a sustainable way.
The Bank has created a strong franchise of retail deposits
supported by customer-friendly products and processes, a In your annual report, you mentioned ethical
growing branch network and attractive product propositions. banking is one of the key foundation pillars of the
This has helped in growing the CASA deposits strongly and bank can you explain it?
steadily and the CASA ratio is around 50 per cent which is We see that we have an opportunity to build a bank only once
quite healthy. We feel we can maintain this. in a lifetime. So, we are putting a lot of effort into building a
high-quality culture of customer friendly. It is not just a slogan,
Beyond lending, in FY22 the IDFC First bank has we actually want to demonstrate our employee-specific actions.
also considerably scaled up several other new So, all the products we have launched in the bank are highly
businesses such as digital cash management customer friendly.
solutions, FASTag, toll acquiring business, credit
cards and wealth management. What is your vision We have removed 25 complicated fees to make ourselves more
for these businesses over the long term? friendly. We try and be innovative, and more convenient, and
There is a lot of scope here, we have just started here. The Bank we train our employees for high customer service culture. If we
has launched most of these businesses in the last 2-3 years and make a mistake, we try to understand the root cause and fix it
has been scaling them up with highly customer-friendly permanently, and advise our employees to be honest and
products. The Bank is very bullish on growing each one of them apologise and fix it permanently. Culture is built bit by bit
with a continuous focus on innovation and service. With scale, through demonstrative action, and we are working seriously on
these businesses are likely to enhance the overall profitability of it from the foundation stage. You visit any branch and meet our
the Bank. employees informally, you’ll see the point. DS

Expert Speak
R Venkataraman
Chairman, IIFL Securities Limited
Current Trends and Future Outlook

of Indian and Global Markets
G
lobal markets have been through a rather testing Amidst this chaos that had overtaken global markets, there
period in 2022. The year began with the Russia- were several global headwinds. For instance, the geopolitical
Ukraine war taking a turn for the worse followed by situation remained grim, Chinese growth was the missing
the sanctions on Russia. The global shortage of oil and link, central banks were tightening and inflation was not
minerals caused by the sanctions on Russia triggered a surge in reacting in a hurry. There were persistent warnings from
global inflation. In response, central banks ranging from the US academicians and economists about a likely recession in the
Fed to the Bank of England, ECB, and India’s RBI went on a US, UK, and the EU. Despite these headwinds, the Indian
tightening spree. Interest rates were hiked sharply to curb markets have given more than 5 per cent returns over the last
inflation. year and are close to the yearly highs. Is that an indication
of the shape of things to come? Can that be construed as a
Here is a quick look at how the major indices in the world stack signal of strength?
up compared to their yearly highs and lows.
Equity Index Current Value 52-week High 52-week Low Yearly Returns Five interesting trends visible in India
Dow Jones 33,546 36,953 28,661 -6.48% Before we venture to answer whether the portents are good for
NASDAQ 11,677 16,765 10,441 -29.16% Indian markets, let us look at 5 interesting trends.
FTSE 100 (UK) 7,387 7,687 6,708 +1.80% n India's inflation is reacting to rate hikes. CPI inflation
CAC 40 (France) 6,637 7,385 5,628 -7.07% may have fallen just over 100 bps but WPI inflation has
DAX (Germany) 14,425 16,290 11,863 -11.08% fallen over 800 bps from the recent peak. Normally, WPI
Nikkei (Japan) 27,900 29,806 24,682 -6.21%
is the lead indicator for CPI inflation.
n Despite having hiked the rates by only 190 bps, the RBI
Hang Seng (HK) 17,993 25,414 14,597 -28.17%
NSE Nifty 18,305 18,442 15,183 +5.10%
can claim that the real interest rates in India are higher
NSE Sensex 61,663 62,053 50,921 +5.47%
than in the US. Indian 10-year bonds have 7.2 per cent
yields with 6.7 per cent inflation. US bonds have a 3.80
Data Source: Bloomberg
per cent yield with 7.7 per cent consumer inflation.
n FPI flows have made a comeback. After FPIs took out
What are the quick inferences we can draw from the above USD 34 billion between October 2021 and June 2022,
table? Firstly, the damage is deep and sustained only in the they infused USD 6.4 billion in August. FPIs were neutral
NASDAQ and the Hang Seng. That is not too hard to fathom. in September and October but in November have infused
The NASDAQ is an index of technology and new-age over USD 2.5 billion.
companies and these have seen big value erosion amidst fears of n At a time when financial services companies are
a global slowdown. Also, the strong dollar has worked against struggling globally, in Q2FY23, BFSI companies
them, which explains why the NASDAQ is over 29 per cent accounted for a whopping 42 per cent of the total net
lower than last year. The other big fall is in Hang Seng, which is profits of India Inc. BFSI profits surged 38 per cent YoY in
a proxy for Chinese markets. The 28 per cent fall in this index is the second quarter.
due to the problems in China in terms of slower growth, n Even the most strident critics of the Indian story admit
coupled with COVID lockdowns. Indian economy would grow by around 7 per cent in 2022.

That is a full 400 bps higher than China and leaves India as Journey to a USD 5 trillion economy and beyond
the only rapidly growing large economy in the world. A recent report by Morgan Stanley highlighted that India
would scale a GDP level of USD 5 trillion by the year 2027 and
As inflation eases, the dollar index will ease too touch USD 8 trillion by the year 2032. That is still a long way off
What could lead to the easing of inflation? The very factors that and we need to be rightfully cautious about very long-term
led to high inflation will now result in inflation tapering. In the projections. However, what we cannot dispute is that the
last two years, the spike in inflation was driven primarily by two journey from the current GDP of USD 3.4 trillion to USD 5
factors. Firstly, in the aftermath of COVID-19, production trillion, is just waiting to happen. This should have happened
failed to keep pace with demand growth. This resulted in supply earlier but was delayed due to COVID. If India has to overtake
shortages and a severe supply chain crisis. Microchips were a Germany and Japan in the next 10 years, what could be the big
classic example. The situation was worsened by Chinese drivers?
aggression in COVID control as China continues to be a key
link in global supply chains. 3 Ps of the future – Policy, Production, and
Positioning
The second trigger for inflation had been too much liquidity
sloshing around. It had resulted in higher wages and as we have Investors often wonder; if India has to achieve these lofty goals
seen in the US labour data, the wages are just not coming down and the Indian markets have to create multibaggers, what will
as the demand for workers is far more than the supply. Hence, be the drivers?
despite tighter rates, there is still slack in the economy pushing n We must look at the Indian policy approach at 2 levels.
up inflation. Now both are changing and they are changing for Firstly, India has redeemed itself in front of the world by
the better. Hence inflation is more likely to come down. As handling the COVID crisis admirably, despite lacking the
inflation comes down, especially in the US, the singular resources of better-endowed Western friends.
outcome will be the tapering of the Dollar Index. Policymaking also refers to the willingness that the
government has shown to listen to new ideas and be
The Bloomberg Dollar Index (DXY) is an index of dollar value supportive of business.
against a basket of hard currencies. That index had recently shot n The second P refers to production or the gradual shift in
up to a 22-year high of above 110 levels. From there it started the Indian economy from being a service-driven
retracing. A good way to assess this factor is to look at how the economy to a production-driven economy. What India
Dollar Index has interacted with the Nifty over five years. achieved in two-wheelers, it is now trying to replicate in
What the above chart shows is that while the relationship other sectors, helped largely by supportive policies like
the government’s production-linked incentives (PLI) and
Make in India.
n Finally, positioning is about how India sees her role. For a
start, the big trend in the next few years could be India
taking a big chunk of the manufacturing burden of the
world. It has just started in electronics, cars, defence, and
microchips and could spread to many more areas. India
sees itself as the manufacturing centre of choice as global
manufacturers are looking to diversify their outsourcing
basket.
What does this mean for wealth creation?

Let us look at some basic numbers. If the Indian economy has
to transition from a USD 3.4 trillion economy to a USD 5
trillion economy in 5 years, we are talking of market cap
accretion of around USD 2 trillion or higher in five years. That
is just a passive opportunity. The production shifts and the
consumption impact of the GDP accretion will also have a
between the Nifty index and the Dollar index has been largely multiplier effect.
inverse, the more important point is how they behave around
the turning points. Normally a sharp fall in the dollar index is The moral of the story is that fundamentally, Indian markets are
accompanied by a spike in the Nifty and a sharp spike in the sitting on a cusp of a multi-trillion-dollar opportunity. At a
Dollar index is followed by a fall in the Nifty. The relationship is momentum level, inflation, interest rates, and the dollar index
most prominent at the turning points. With the dollar index are all favouring the Nifty to move upwards. Whatever the
having retraced from its peak and inflation likely to come down index levels, the wealth impact is going to be humongous in the
further, it can be a force multiplier for the Nifty. next five years. DS

Interview
Kishor Patil
CEO and Managing Director, KPIT Technologies Limited
“We Have Grown in Terms of

Our Software Capabilities”
Given the company’s strong domain expertise in software defined vehicles and a wide geographical
reach, KPIT Technologies is geared up to create new milestones, says CEO and Managing Director
Kishor Patil in this exclusive interview
KPIT Technologies has clocked decent revenue and what period these deals are won, whether for 3-4 years or even
profit growths in Q2FY23. The organic growth if they are for a few months or smaller deals, we have to take a
outlook for FY23 has grown from 18 per cent and view accordingly. As I mentioned, our outlook has increased
21 per cent to 23 per cent. What are the key based on current and future engagements, and these are all
drivers in improving the organic growth outlook? projects that we have started working on. And typically, when
Well, it is a combination of a few things. First, we are focusing we report a deal, most likely we either have started or will start
on our T25 clients where we see that spending on software- the work in the week or in the quarter immediately.
defined vehicles is continuing, if not accelerating. The second is
the number of deals that we have won so far and even that has a Currently, one of the major factors that are
healthy pipeline with a couple of mega engagements set to close affecting the companies in the IT sector is the
soon. And that is also helping us to really get better visibility weakening of the rupee against the dollar. The
and where we will be. Lastly, it is the business we have already attrition rates are also very volatile. So, what is
added and the rest which we will have soon. Therefore, taking your outlook regarding these two issues over the
into account all these factors, we have raised our FY23 growth second half of FY22-23?
outlook. The weakening of the rupee certainly hurts us, but a dynamic is
taking hold and that is the weakening of the euro. Compared to
For the recent quarter, KPIT Technologies recorded aggressive many other companies, we also have a very strong Europe
deal wins of USD 142 million. So how would you expect these presence. So, it’s not like that the US is huge for us. We do have a
deal wins to contribute to the company’s future growth? balanced revenue mix of approximately 40:40:20 where the
There are 2-3 reasons how it will affect our growth. One is about contribution of Europe and America is 40 per cent, respectively,
the nature of the deal. Some work or wins we do are based on and 20 per cent in the rest of Asia. Thus, in practice, it is hurting
certain projects. Then we are also working closely with our us even more because the euro is not doing well. In the
customers on programs and even at the platform level. So, the meantime, we are adopting a strategy where we are looking at
overall quality of the program is increasing. The second is over the currency for the next two quarters to be in balance between

the euro and the dollar. We are hopeful that things will get customer needs in a timely manner. We were also specifically
better soon. looking for French-speaking talent because we have some
business in France that can now be overlooked. So, it’s going to
With regards to attrition rates, what do you complement us in many ways. The third benefit is beyond Key
expect? 25 we will be able to work with a new generation of OEMs that
I think we feel much better about the attrition aspect as our work closely with Technica and this will create an opportunity
attrition has been going down for the last 3-4 months and we to work with disruptors as well. All this will provide synergy to
expect it to go down even further. We can’t say exactly how much grow and scale up the business.
for the near future because we don’t have clarity on what that
future might look like, but I think we expect it to continue KPIT Technologies has reported consistent growth
downwards over the next quarter and beyond. We have already over the last nine quarters in terms of revenue and
begun a downward trend in attrition and comparatively we are profits. Moving on, can you highlight the key
better positioned than most companies. And two and a half years milestones you have achieved over these nine
ago, before this craziness started, our attrition was in the single quarters? How has the journey been with such
digits. I don’t know whether we will get there or not. But we have high growth?
come so far without much damage at about 17-18 per cent. The first thing we have to see is that we are doing lesser things,
but we are doing better. And with this change in our position
You have talked about the revenue mix. Based on we were very clear that these are the T25 customers that we
geography-wise revenue mix, have you set a want to work with and will only focus on. So, the main
target for revenue that you would like to achieve milestone is that there are a number of USD 50 million
over the next 3-5 years? customers that we are approaching and the whole idea is to
Yes, we want to have a more balanced mix across geographies, help them scale up. If we are able to take our relationship from
and if you were to look at Europe, it is growing for us. USD 50 million to USD 200 million, it gives us a better market.
Considering that we have made some acquisitions there, Over the past three years, KPIT Technologies’ position as a
Europe will remain a bit dominant for the time being but we leader in the industry has changed drastically. We have grown
expect the US and Asia to grow faster and pick up the pace. We in terms of our software capabilities, especially in software
are expecting Asia to reach 25-30 per cent in the next 2-3 years, defined vehicles (SDV) and emerging technologies more than
but again we have to see how the market conditions hold. anyone else. This is very well understood by our customers and
Europe and America will definitely have higher numbers for has been appreciated.
the next 2-3 years.
Our capability to scale has led to strategic partnerships with
Could you elaborate about the recent acquisition our clients where we are not only working on certain projects
of Technica Group by KPIT Technologies? And can and programs but are now working at a platform level and even
you also elucidate the synergistic benefits you architecture level. Our engagements have actually increased
expect to accrue from these acquisitions? which gives us better visibility in terms of size and longer-term
Technica is a very high-quality company and very specialised. I deals. In some cases, we have even observed that very valuable
would just like to point out that because of its legal structure it or important customers within known brands become the
is seen as four companies but in reality it is one. Since Technica single source for many of these technologies, thereby
is headquartered in Munich, it has development centres in increasing our deal size because of this. Even in my latest
Spain, Tunisia and the US. Therefore, they have these structures investor update, I mentioned about mega deals being in the
mainly outside Germany, but otherwise, it is one company in pipeline. The other part is that we have got scale. We have
practice. The advantage we see with Technica is that our two located our centres globally and strategically to map each
major customers are also their core clients. First, they are customer and serve them accordingly.
working in departments where we are not present and that
works as a complementary factor. But what is more important So we are growing not only in America, Europe, Asia and the
is that they bring in specific skills, high-level architecture skills main market but also in Latin America with a centre in Brazil,
and high-level systems skills across domains. Even though the Middle East with a centre in Egypt and even in India with a
KPIT Technologies has extensive domain expertise and new development in Kochi. Hence, we have broadened our
superior integration scale, this acquisition will be a complete talent base and we can get talent and scale at a reasonable cost
solution for all our clients. by staying in time zones to better serve our clients. This makes
it risk-free for the customers and also an opportunity for us to
That is because we will now be able to provide the tools with acquire high-level skills. Before I conclude, I would also like to
the combined offering that we believe will help us truly grow. add that the work we are doing in software-defined vehicles is
Secondly, KPIT Technologies was looking for near shore basically going to dominate the automotive industry over the
centres in Europe and therefore from the development centre next 5-7 years. Therefore, there will be plenty of opportunities
strategy, this acquisition will help us attract talent and meet to grow and flourish. DS

Interview
the sequence of virtual recruitment, virtual on-boarding
followed by virtual work. People create bonds at work.
Working with and amongst people only help strengthen these.
An analysis of our attrition over the last year showed that
attrition was highest amongst those who went through this
‘virtual’ cycle. We have over the years built and continue to
Venkatraman Narayanan build Happiest Minds as a ‘great place to work’.
Managing Director and CFO,
People must experience this to bond and associate with the
Happiest Minds Technologies Ltd.
company, work, culture and related aspects. We are currently
engaged in a process of bringing people back to work and this I
“We Will Need to Add to believe is a step in the right direction to engage and retain people.
Attrition is also a function of the market demand for qualified,
Our Capabilities Through experienced IT professionals by tapping into their growth
Inorganic Means”
aspirations. While we hire very good and qualified professionals,
we are addressing their growth aspirations through training,
re-skilling, allocation of challenging projects, job rotation, etc.
The company has achieved EBITDA margins of more
than 25 per cent for the tenth successive quarter. Which Can you elaborate regarding the use of `1,400
is the key strength that the company possesses in crore capital the company has proposed to raise
achieving such strong margin numbers? for funding its inorganic growth aspirations?
One of the key pillars of the company’s vision is ‘growth with We have taken an enabling resolution from the shareholders of
profitability’. If you consider the metric of ‘growth + profitability’ the company to raise additional capital of ‘up to’ `1,400 crore.
as a measure, I am happy to state that we lead on this one in The final amount, timing of raise and the mode of raise will be
comparison to almost all competitors. While talking about decided by the Board of Directors with appropriate approvals.
margins it’s important to first start with our guidance which has As you may be aware, we have articulated a ten-year vision for
been EBIDTA between 22-24 per cent on a sustainable basis. the company i.e. to reach a billion dollars in revenues by 2031.
The actual margins have been higher, and we have continued to While we have displayed strong organic growth over the years
pleasantly surprise on this front. Margins in the IT business is and have that as a key differentiator, we do realise that in
function of multiple variables and the inter-relationship between reaching the above-mentioned goal we will need to add to our
this has only become a lot complex over the years. capabilities through inorganic means, essentially buy versus
build.
Some of the key variables being billing rates, utilisation of
resources, revenue split by onsite and offshore, geography, vertical, The corporate development team is consistently looking at
foreign currency, contract structures, people cost, overheads, possibilities around this and while we do have cash on the
interest and the like. Work from home during the pandemic tested books, we will need additional capital to fund such overtures.
the outcome on some of these costs or variables, as for example, We have set out our aspirations for inorganic growth quite
the need for travel, onsite presence, etc. Benefits on this count did clearly and we are looking for assets which will add newer
help improve margins for a couple of quarters and did help our technology capabilities and become profitable. Good
EBIDTA to go over 27 per cent in a couple of quarters. However, customers, vertical focus and focus on the US and Europe as
now with work slowly returning to normal and happening from customer geographies are add-ons that would definitely work
office we are seeing some of these benefits retract. in favour.
As such, we are now moving towards the above-mentioned Since FY20, the company has been seeing an
sustainable margin levels. Coming to our margin levels attractive rise in free cash flow (FCF) conversion at
themselves, yes, we have been able to post a good profile thanks a CAGR of 60.6 per cent. Which is the main factor
primarily to the nature of work we do – 100 per cent digital and contributing towards the same?
the rates customers are willing to pay for outcomes. Repeat The company has been following an asset-light model in
business, growth within existing customers and scale help pursuit of its business growth. Essentially, a substantial part of
manage overheads and pursuit costs. It is all this and a our EBIDTA falls into our balance-sheet as free cash. We have
favourable exchange rate scenario which has helped us post also been very effectively using working capital facilities offered
better-than-expected margins over the past quarters. by banks to address our growing needs around the same. We
have also not hesitated to fund any long-term asset acquisition,
Can you brief us regarding the strategies you are like the facility that we recently purchased, using longer
planning to adopt for keeping a check on the attrition maturity or term borrowings. In essence, we have been focused
numbers and ensuring that they trend downwards? on capital and cash allocation with metrics like return on
I believe that employee retention levels have been affected by capital employed on a continuous basis. DS

Communication Feature
Attractive - Ajooni Biotech Ltd's `29.01 crores
Rights Issue opens for subscription on 7 Dec
Rights Issue priced at `6 per share
Rights Issue opens on December 7 and closes on December 15
focus is to leverage
Highlights:- capabilities, to develop
n Funds raised through the issue will be used to meet working cost effective solutions
capital requirements of the company’s business activities, fund to improve animal
company’s expansion plans and general corporate purposes productivity and
n The rights entitlement ratio for the proposed rights issue is accomplish its vision of
29:30; 29 rights equity shares of face value of `2 each for ‘To be a world class
every 30 equity shares of `2 each held by the equity Animal Health Care
shareholders Company’. Proceeds of
n Company had fixed November 25 as the record date for the the issue will further
purpose of determining the equity shareholders entitled to strengthen company's
receive the rights entitlement in the rights issue balance sheet and help
n Company launched it’s IPO on NSE Emerge platform in Dec fund its expansion plans and strategic growth initiatives."
2017 & migrated to the main board of NSE in May 2022
n Company has achieved strong CAGR of 23% in Sales and 37% Company’s Board of the directors on October 17, 2022 approved the
in Net Profit and 65% in EBITDA during the last 3 years with issuance of equity shares by way of a rights issue to eligible equity
an improving return ratios. shareholders for an amount not exceeding `30 crore. Post the rights
n For FY22, company reported sales of `74.04 crore – rise 46% issue, total outstanding shares of the company should increase to
Y-o-Y, EBITDA rise 87% Y-o-Y to `3.08 crore and Net Profit 9,83,88,223 equity shares from 5,00,27,910 equity shares prior to the
rise 183% Y-o-Y to `1.05 crore rights issue.
n Ajooni Biotech Ltd became the first Indian Animal Feed
Established in the year 2010, Ajooni Biotech Ltd has emerged as one
manufacturing company to get ZED certification from
of the leading animal healthcare solutions companies dedicated to
Ministry of Micro, Small & Medium Enterprises, Govt of
improving the productivity of Dairy farmers and sustainably increase
India in November 2022 livestock yields. Company offers a wide range of products including
Ajooni Biotech Ltd - One of the leading companies in the animal Quality Cattle feed, Cattle feed Chips, Camel Feed, Cotton Oil Cake,
healthcare solutions and animal feed supplements is schedule to open Mustard Oil Cake and wide range of Feed supplements to cover the
its `29.01 crore rights issue on December 7, 2022. The funds raised entire life-cycle of an animal. Company has two state-of-the-art
through the issue will be utilised to meet the working capital manufacturing facilities with a cumulative Animal feed production
requirements to fund company's expansion plans, entering new capacity of 60,000 MTPA and liquid supplements capacity of 30 lakh
geographies and for general corporate purposes. Right issue of the Litres per annum. Company is currently working with more than
company are offered at a price of `6 per share. Rights Issue closes on 10,000 farmer families in seven states of Northern India and plans to
December 15, 2022. grow nationally. Ajooni is also ISO and GMP certified company,
manufacturing ISI mark Cattle Feed.
The Company will issue 4,83,60,313 fully paid-up Equity Shares of In November 2022, Ajooni Biotech Ltd became the first Indian
face value of `2 each for cash at a price of `6 per Equity Share Animal Feed manufacturing company to get ZED certification (Zero
(including a premium of `4 per Equity Share) aggregating to `29.01 Effect Zero Defect) from Ministry of Micro, Small & Medium
crore. The Rights entitlement ratio for the proposed issue is fixed at Enterprises, Govt of India.
29:30 (29 equity shares of face value of `2 each for every 30 equity
shares of `2 each held by the equity shareholders on the record date – For FY 22, Company reported sales of `74 crore – growth of 46% as
November 25). Last date for On-market Renunciation of Rights against sales of `50.8 crore in FY21, EBITDA grew 88% to `3.08 crore
Entitlements is December 9, 2022. in FY22, Net Profit registered 183% rise during FY22 to `1.05 crore.
Company has achieved strong CAGR of 23% in Sales and 37% in Net
Commenting on the development, Mr. Jasjot Profit and 65% in EBITDA during the last 3 years with an improving
Singh, Chairman and Managing Director, return ratios. Promoter Group holding in the company is 67.35% as
Ajooni Biotech Ltd said, "Company has taken on 30 Sep 2022.
important strategic initiatives in the recent past
with a focus to expand production capacities, Company came up with it’s IPO on NSE Emerge platform in
launching new products, adding more channel December 2017 & migrated to the main board of NSE in May 2022.
partners and working with more farmers. Our
long-term focus continues to be investing in
growth through new product launch,
expanding footprints. We have a dedicated

Interview
that came down ~43 per cent year on year to about `52,400 crore
in October 2022 as against `92,700 crore a year back.
The only notable exception to overall moderation impact was

derivatives ADTO rising 93 per cent during the same period
from about `143 lakh crore in October 2022 as against about
`74 lakh crore in October 2021, although rising quarter on
quarter at a slower pace now than CY21. While the current rate
of new client addition, market turnover, addition in number of
active clients, etc. may be lower from peaks, they are still
Vijay Chandok substantially higher than the pre-pandemic levels. Just to give
you a sense, a total of about 4 lakh accounts were getting opened
Managing Director and CEO, monthly during the pre-pandemic period by the industry which
ICICI Securities Limited in the latest quarter amounted to 20 lakhs per month.
“We Expect 2023 We believe that this trend has been driven by some of the
structural factors including emergence of a younger generation
to be a Constructive of customers who are digitally savvy, growth in digitisation that

the country has witnessed, growing preference of financial
instruments for savings and growing affluence, which will hold
Year for Equities” the industry in good stead going forward. In such an
environment, our approach of broad-basing our business,
focussing on market share metrics, granularisation of our
Given the current rate of new client addition, revenue streams by adding newer products and services,
improving the customer experience layer by scaling our
market turnover, addition in number of active technology and digital offerings, and pivoting the organisation as
clients, and other factors, ICICI Securities a leading wealth-technology platform has played out well.
Limited is positive about the emerging
Today, broking revenue is about a third of our overall revenue, as
scenario in the investment sector, says its
against two-thirds a few years back and newer offerings like
Managing Director and CEO, Vijay Chandok wealth products, mutual funds, and insurance and loan products
have begun to show scale. Our digital platform is a complete
How has the year 2022 been for your company and wealth-technology platform, offering full suite of investments,
for the brokerage industry? insurance and loan products – catering to wide spectrum of
The year 2022 began against the backdrop of a strong CY21, customer profile across their lifecycle needs. As on September
which saw record participation from investors, growth in market 30, ICICI Securities saw its total client base expand cross 84
activities and indices reaching all-time highs. However, towards lakhs with 4.6 lakhs added during the July-September 2022
the end of CY21, sentiment had begun to turn bearish with quarter. Total client assets on the platform was `5.78 lakh crore
Federal Reserve hiking rates which resulted in the beginning of of which `3.1 lakh crore belonged to our 70,000+ private wealth
FIIs pulling out money. As we entered CY22, we had headwinds customers comprising high net worth and ultra high net worth
in the form of geopolitical tensions like the Russia–Ukraine war, individuals and family offices.
soaring commodity inflation and continued tightening of money
supply by central banks across major economies which resulted Amid the transforming landscape and our strategic focus on
in the picking up of pace of withdrawal of FII money from the capitalising the business opportunity, we have remained firmly
Indian markets. focused on upholding our ESG commitment through the year.
During the fiscal, we augmented our investments in our people
As we speak, retail participation has also seen moderation from and our CSR programmes to promote the welfare of the
historical highs on the back of an uncertain market outlook as communities around us amid the pandemic crisis. Our efforts to
evidenced by slowing down of new client addition with average enhance our focus on transparency and ethics also continued to
of ~35 lakhs per month in Q3FY22 as against ~20 lakhs per boost stakeholder confidence and ensure protection of their
month in Q2FY23. In addition, there has been month on month interests. The new set of investors who is now looking at equities
weakening trend in NSE active clients, i.e. those who have traded and mutual funds with interest needs to be assured that their
at least once in the last 12 months on the NSE with 3.6 crore in investments would be protected. Building this trust is very crucial.
October 2022 as against 3.7 crore in September 2022, indicating
a downside of 2 per cent month on month, although continuing What are your growth challenges and what is the
to remain higher than 2.8 crore in October 2021 as well as outlook for the broking industry?
declines recorded in cash equity ADTO (average daily turnover) We are in a growing and yet extremely competitive industry. As

explained earlier, while the growth rate has come off in the last including our expansive breadth of capabilities across customer
couple of months, it is still higher than the pre-pandemic highs. and product segments, our trusted brand, our culture of
Prolonged weakness in market typically results in slowing pace continuous innovation and our investments in people and
of customer acquisition. Hence, the overall health of the technology. As we look forward, we are endeavouring to enhance
economy and vibrancy in the stock markets are crucial for our the scale of our business and our top three priorities are to focus
sector’s growth. In a growing market like India, failure to address on specific levers to help us do that. First, the journey of
the growth levers adequately can hamper growth. There exist broad-basing our business by continuously diversifying the
opportunities across customer segments like millennials, Gen Z, revenue streams will be carried forward with more product
working professionals, retirees, nouveau riche, and geographies. categories being introduced in an open architecture format.
The opportunity to straddle across these customer categories
with customised offerings is immense. Our endeavour is to scale up our wealth-technology business
and also to create a financial marketplace of products and
There is a big need to serve each segment uniquely through solutions to help meet the entire financial requirements of our
specific products and services. Not having the capability to offer large pool of customers across their lifecycle journey. Our second
each uniquely can hamper one’s growth aspirations. Our priority is to grow and retain our technology edge. Towards this
constant endeavour is to digitise and make available our we are investing in technology capabilities, both in the front and
products and services at scale across customer segments. In backend, in the areas of machine learning, big data, analytics,
other words, we are tested on how well we can execute on cyber security, regulatory technology, etc. Our third priority is
innovation by marrying research, analytics and digital access for people. We are continuously working to attract and retain the
a safe and user-friendly trading and investing environment. A talent by providing a conducive and professionally challenging
key growth challenge is to constantly evolve to provide a safe and yet satisfying work environment.
conducive environment. Towards this we are investing a lot of
resources in providing easily, freely and always accessible What steps have you taken to expand your market share?
investor education content and making our research available to In order to expand our market share, we have undertaken a
our customers in a democratic way. couple of steps. As the first step, we have enhanced the scale of
customer acquisition. This in turn has been done through a
What are the emerging trends in the broking industry? series of initiatives like enabling complete digital on-boarding of
There is hyper competition in the sector, leading to consolidation new customers, going open architecture by allowing any bank
of business amongst the biggest players. The top 10 players in customer to be our customer as against only ICICI Bank till a
volume terms have been consistently increasing their market share couple of years back and expanding our partner network wide
at the cost of those below over the last several years. There is a and deep. In the second step, due to our enhanced offering across
convergence in price with most players offering near equal rates, product and service lines, we are engaging with customers more
the key differentiator being the experience and value-added and across their lifecycle needs.
service one is able to provide. Another trend playing out is that the
digital players have been able to garner scale and navigate the Through analytics and using big data and statistical models, we
market landscape better. With the regulatory landscape becoming are able to predict with reasonable accuracy what product or
tighter and in favour of retail investors, those without adequate solutions a particular customer may be interested in, based on
investments in technology for enhancing scale of business and his or her risk profile, age, and past behaviour on our platform.
also for managing the risks and controls will need to rethink their This is increasing our wallet share and overall customer lifetime
business models and will find the going tough. value. As a third step, we are introducing more and more
products features and tools in our digital properties like website
The customer base is growing rapidly across segments with about and apps, making them absolutely best-in-class. This increases
15 million Indians entering economic activity every year and also customer stickiness and attracts new customers through
a large number of Indians superannuating. Similarly, with referrals. Recently we launched our AI-backed super app which
economic growth, there is a rise in the number of wealthy Indians. offers never-seen-before capabilities.
There is an increased need to service all these classes of investors
at scale and with differentiated products, solutions and offerings. This app is for all sections of customers whether for equity,
The successful players will be those who have a wide width of trading, mutual funds, fixed income, commodity, global
offerings and are able to effectively cater comprehensively to the investing, etc. For specific customer segments, we are launching
needs of diverse customer segments from young Indians to the a series of tools which will aid them in their investment or
emerging affluent to the wealthy. The key here is to be able to offer trading journey. On our journey to become a digital financial
wealth-technology solutions at a fast pace. supermall, we have expanded options for our customers when
they are looking for insurance solutions across life, general and
What are your top three strategic priorities right now? automobile by including more brands for them to choose from.
We have been able to transform our business model from being Also, besides offering a variety of loan products like personal,
predominantly an e-broker to a large wealth-technology home, LAS, etc., we are also giving our customers various lenders
franchise. We have been able to achieve this on our strengths to choose from. DS

Interview
Manish Gupta, Chairman and Managing Director

Shreyaan Gupta
Gujarat Ambuja Exports Limited
“Committed to Being a Key Ingredient

Supplier to the World”
What is your outlook on the global starch and food What is your segment-wise and geography-wise
processing industry? Can you explain the key revenue mix and how do you expect it to evolve
growth drivers and opportunities for the next 3-5 over the coming 3 years? What segments do you
years? expect to deliver high growth?
The global starch and food processing industry has seen Overall during the quarter, domestic sales contributed 72 per
tremendous growth in the past decade and we feel there is a lot cent and exports contributed 28 per cent as compared to 80 per
of potential for India to be a global supplier of key food cent of domestic and 20 per cent of export during the corre-
ingredients. The food processing industry has been historically sponding quarter.
driven by technological upgrades and we see an increasing level
of cost-efficient and eco-friendly manufacturing techniques We anticipate stable growth in the export market of starch and
that will help it to be a more sustainable business in the years to its derivatives in the Middle-eastern, African and South-East
come. GAEL is committed to being a key ingredient supplier to Asian countries.
the world and will focus on a more diversified product portfolio
along with increasing its current capacities. What are your ongoing as well as future capex
plans? Tell us about the efforts being made to
Could you throw some colour on your Q2FY23 further diversify your product offerings.
financial performance, and what is your earnings Our ongoing capex projects comprise a 1200 TPD Greenfield
outlook for the next few quarters? Maize Processing Unit in Malda, West Bengal and Sitarganj,
The previous quarter saw a marginal decrease in the revenues Uttarkhand. We also have 2 Sorbitol Facilities coming up in our
for the company due to a global halt in the demand for food existing units which will make GAEL the market leader of the
products and increased volatility of edible oil prices. The product. The future capex plans include 3 ethanol plants along
increasing raw material and fuel prices made an extraordinary with adding specialised bio-chemicals to the product mix. We
impact on the manufacturing costs which subsequently led to are constantly looking for newer products to diversify our offer-
higher final product prices. However, the current quarter seems ings and continuous R&D is happening in this space.
to have a much more stable demand and reduced input costs.
The company will be commissioning its 5th state-of-the-art What are your top 3 strategic priorities?
Starch Plant in December and hopes to cater to a more 1) Develop efficient and integrated manufacturing facilities.
diversified market in Eastern India. The earnings outlook 2) Diversify into new products.
remains to be stable for the next few quarters. 3) Cater to a global consumer segment. DS

Interview
Can you shed some light on your efforts to augment
investment in your mobile platform, artificial
intelligence, machine learning capabilities and other
new technologies?
We are a mobile-first company and even today 75–80 per cent
of our trades happen on our mobile app. Even after 12 million
Prakarsh Gagdani downloads, a 4.3 rating, and being recognised as one of the
CEO, 5paisa.com industry’s best discount brokers, we continue to invest in
enhancing the capabilities of our mobile trading platform. We
“The Discount Broking Industry are always trying to improve, expand and perfect our
technology, and we continue to invest adequately in money,
Will Consolidate But Still Grow” technology and people into making our mobile platform better.
What is your outlook on the Indian discount brokerage
industry? Can you highlight the changing behaviour of Coming to artificial intelligence (AI) and machine learning
retail investors post-pandemic in 2022? (ML), we feel these are niche fields. We think that data analytics
Since the beginning of the pandemic, there has been a dramatic and machine learning will be the next step in making
shift in the outlook for the Indian capital market. The number investment advice and solutions more specific and tailored to
of demat accounts in the country has more than doubled in the each person. And although we have begun investing in AI and
past two and a half years. In August 2022, the number of demat ML, it is still in its nascent stage, and we will monitor how it
accounts in the country surpassed 100 million for the first time. evolves over time.
In August, almost 2.2 million new accounts were opened, the
highest number in four months, bringing the total to 100.5 With volatile market sentiments, how have you been
million. Thus, the stock market or capital market is now a managing your customer acquisition cost (CAC)? How
household term that is no longer limited to India’s metropolitan do you see it playing out in the upcoming quarters?
areas but has penetrated into the deep hinterlands of India. This is a very good question. From the very start, we have worked
The pandemic was an influx point for the brokerage industry. We towards reducing our per unit customer acquisition costs. This
have experienced more growth in the last two years than we did has been the case for several quarters. I am delighted to share that
in the previous two decades. Having said that, there are changes in the most recent quarter, Q2, we reached our lowest acquisition
that are happening in the brokerage industry: a) the euphoria cost of approximately 574. This is on the back of focusing on
surrounding the growth of demat accounts will eventually reach organic and referral growth and decreasing reliance on high-cost
a plateau, b) as a result of the extensive penetration of digital and low-value paid channels. Our primary objective has always
brokers, the industry will undergo consolidation, c) capital to been to expand our brand organically through positive word-of-
run a business or operational expenditures. Overall, I feel that mouth from our existing clients. A good customer would always
the discount broking industry will consolidate but still grow. suggest us to their friends and relatives, despite market volatility.
This is why our CAC is decreasing.
What is your segment-wise revenue mix and how do
you expect it to evolve over the next three years? How do you plan to leverage the burgeoning ecosystem
Our derivatives segment contributes 60–65 per cent while the by broadening your product portfolio? Also, what is
cash segment contributes 35–40 per cent. However, the primary your strategy for penetrating the untapped markets
reason for the cash segment’s lower share is the current market specifically in Tier II, Tier III and beyond cities?
situation. Going forward, as the markets consolidate and begin Even today, over 70-75 per cent of the customers of 5 paisa are
their upward trajectory, we anticipate a rise in cash segment from Tier II and III cities and beyond. We began by introducing
revenue. We anticipate that the revenue mix over the next two them to capital markets and giving them a taste of equity
to three years will roughly be 60 per cent in the derivatives investments – both through direct equity such as stocks and
market and 40 per cent in the cash segment. indirect equity such as mutual funds. The same customer
would subsequently need more financial products and that is
In FY22, 5 paisa saw 102 per cent YoY growth in going to be our strategy in terms of penetrating deeper into
customers. How long do you expect this high-growth getting more wallet share of these customers through products
momentum to sustain? Could the industry take a like insurance, loans, bonds, FDs, PPF, etc.
breather before the next leg of growth gets under way?
As previously said, the frenzy around demat accounts is waning Currently, what are your top three strategic priorities?
and after hitting a high of around 3.5 million in October 2021 I would say they are: n To grow our customer base with
the industry currently stands in the range of 1 million to 1.5 emphasis on quality rather than quantity. n Increase in RPU
million new demat accounts a month. As an organisation, our (revenue per customer) by up-sell and cross-sell. n Improve our
focus will not be on the number of customers we acquire but trading platform by adding value in terms of constantly
rather on getting quality customers. We are looking for people improving user experience, products offerings, features and
who are genuinely interested in investing in the stock market, building a trading community and other opportunities for our
as opposed to merely acquiring customers for the sake of it. customers.

Interview
improve significantly on a sequential basis, including that in the
September 2022 quarter and so the loan loss provisioning was also
lower. All this contributed to higher PAT. It must however be
remembered that the September performance also has had the
advantage of being a ‘normal’ quarter unlike the previous year which
was affected by the second wave of the pandemic.
Could you throw light on your plans to further

expand your branch network in the northern
Y S Chakravarti region? How do you expect your geography-wise
revenue mix to evolve over the next 2-3 years?
Managing Director and CEO SCUF now has a reasonable presence in North India with
Shriram City Union Finance Limited approximately 13 per cent of its current network being present
in that geography. Further, the northern states now contribute
“We Have Grown in more to certain products such as two-wheeler loans than any
other geographical grouping. That said, we are in the process of
Terms of Our Software rolling out other loan products in the northern region and have
already introduced gold loans and MSME loans.
Capabilities” The impending merger with Shriram Transport Finance Co.

Ltd., which will then lead to the constitution of Shriram
With its focus on digitalisation and expanding Finance Ltd., will augment our network in the north. The
its geographical spread along with a merger in product mix over the next 2-3 years will then probably evolve as
more diverse in North and Central India than it is currently
the pipeline, Shriram City Union Finance is in a while the South and West India will continue to lead in certain
sweet spot, says Managing Director and CEO products such as MSME loans for some more time. We are still
Y S Chakravarti relatively new to East India and will probably consolidate our
two-wheeler presence there in the initial phase.
What is your outlook on the Indian NBFC sector? Can you highlight how you are leveraging new
With economic activity picking up pace, what are technologies and making the best of the wave of
the emerging trends and opportunities you are digital adoption?
witnessing in the post-pandemic world? We have made steady progress in our digital initiatives. We
Rising credit growth places non-banking financial companies were early movers in adopting technology to make our
(NBFCs) in a good position. In addition, NBFCs have managed two-wheeler loan journey smoother, especially in the areas of
their asset quality very well in recent times despite the headwinds customer verification, payments and receipting, We have since
posed by the pandemic. The rising demand for credit is across added contactless two-wheeler loans to the product mix. We
segments, and is seen to be particularly strong in retail and then introduced digital personal loans and are now working on
MSME which are areas of specific strength for NBFCs. In processes that would help us disseminate gold loans remotely.
addition, there is encouraging demand in hitherto under- In addition to this, we have a dedicated team that is working on
penetrated asset classes such as credit cards. Thus, overall, creating a digital suite of loan products that would mirror our
NBFCs are in a position to capitalise on catering to the country’s existing offline offerings. We should be able to introduce some
credit requirements. Of course, NBFCs will have to contend with of these products by the middle of FY24. On the liabilities side,
a rising interest rate environment, but most strong non-banks we already have a healthy contribution to our retail fixed
have the means to absorb some portion of higher interest rates so deposits from our online FD programme.
as to not let the situation affect the demand for credit.
At the moment, what are your top three strategic
SCUF reported a 23 per cent rise in its consolidated priorities?
net profit at `383 crore for Q2FY23. What factors People, first and up front. We have, over the years, had the good
are responsible for your strong financial fortune of retaining critical human resources, and we hope that
performance? this trend will continue because we possess among the best
Shriram City Union Finance (SCUF) registered its highest-ever customer-facing teams in the industry. The second priority
quarterly disbursements of `8,020 crore in Q2FY23 due to the rising would be to expand our product footprint over a larger portion
demand for small business finance, two-wheeler loans and loans of the country, thereby adding to our profitability metrics as
against gold which contributed to the strong profitability. SCUF has well as enhancing employee productivity. Lastly, we would
consistently been clocking new highs in its disbursements over the work intensely towards reducing our cost both in terms of cost
last four quarters. Apart from this, asset quality continued to of funds and investment in technology. DS

Interview
`47crore in Q2FY22. This performance is an account of high reali-
sations from most of our products. In H1FY23, we commissioned
India’s first Epichlorohydrin plant, India’s largest CPVC resin plant
and additional Caustic Soda capacity. We expect volume pick-up
from these new projects from Q4FY23 onwards. Hence, we will
have volume growth and value growth for the year as a whole. FY
2024 will be a year where we expect all our plants to run at their
optimum capacity utilisation and this will drive growth for FY
2024. In the coming times, we will continue to add downstream
Maulik Patel chemistries where Chlorine, Hydrogen and other chemicals will
be used as raw material, bringing growth beyond FY 2024 and
CMD, Meghmani Finechem Ltd. strengthening our fully integrated complex.
“Our Focus is to Can you shed some light on your current geogra-
phy-wise revenue mix? Do you have a target
Enter into Downstream diversified mix you plan to achieve over the next
three years?
Chemistries”
As on September 30, 2022, around 6 per cent of our revenue
came from exports and the balance from the domestic market.
We at MFL select products to cater to India’s demand. We believe
What is your outlook on the global and Indian Chlor- that by considering India’s population and demand for quality
Alkali industry? What are the key demand drivers products, we will have good scope for growth within India itself.
and emerging opportunities you are focusing on? Also, China Plus One and Europe Plus One will add further
The demand for Caustic Soda has been steady both in the opportunities for exports. Our new product, Epichlorohydrin,
global and Indian markets as it goes into various industries. In has good demand in the global market. We have therefore
the current looming slowdown, there has been a marginal started exporting it and expect that exports should be around 10
impact on the demand globally and in India. However, since per cent of our total revenue by the end of FY23. Meanwhile,
Caustic Soda is utilised in various industries such as textile, diversification has always been a core part of our strategy.
paper and pulp, chemicals, alumina, agrochemicals, pharma-
ceuticals, and other sectors, we believe there will not be a Our significant diversification is in the industries we cater to by
substantial fall in its demand. Once the slowdown phase is over being present in various products. Today, we cater to more than 15
and governments globally start spending on infrastructure to industries and so we are not highly dependent on any single
boost the economy, it will be back to normal or even on a customer or industry. As of FY22, around 25 per cent of our revenue
higher side. In the case of India, demand for Caustic Soda has came from the derivatives segment but once we reach optimum
remained in line with GDP growth. capacity utilisation of new products that we commissioned in
H1FY23 (Epichlorohydrin and CPVC Resin), more than 40 per cent
Considering the various initiatives taken by the government of the revenue will be coming from the derivatives and specialty
to boost the manufacturing sector, we expect the demand for chemical segment and then onwards that percentage will move in an
Caustic Soda to increase much faster. Also, as there is a supply upward direction. So we are diversifying at that level also.
issue in Europe and USA for Caustic Soda, it has opened doors
for India to export this product. In the last two years, India has Presently, what are the company’s top three
become a net exporter of Caustic Soda. Thus, for India in the strategic priorities?
long term, we believe the domestic demand for Caustic Soda These are:
will be robust, and export opportunities will be an added n Identifying and entering into high-value products that
benefit. So we are optimistic about this segment. Our focus is to will consume Chlorine, Hydrogen and other chemicals as
enter into downstream chemistries where we can strengthen raw materials and strengthen our fully integrated
our fully integrated complex and increase the pie of the complex. Our target is that in the next 3–4 years, around
derivatives and specialty chemical segment as a percentage of 85 per cent of the Chlorine would be consumed in-house.
our total revenue to diversify our business model further. n To strengthen our research and development team and
focus on research that will translate into identifying
Meghmani Finechem Limited (MFL) posted an almost specialty chemical molecules launched for the first time in
two-fold jump in its consolidated net profit at `91.56 India with high ROCE and brief payback period. Ulti-
crore for the second quarter of 2022-23 on robust mately, we would like to increase the percentage of revenue
income. Can you elucidate the factors that helped you from the derivatives and specialty chemical segment.
perform in line with your commitment to growth? n To strengthen knowledge capital through selective
Our revenue in Q2FY23 has been the highest ever so far. PAT recruitment across senior management and the depart-
increased by 95 per cent to `92 crore in Q2FY23 compared to ments to take the company to the next level.

Expert Speak
valuation multiples. This can counterbalance the deceleration
in earnings growth. Overall, we do not expect significant
downside to the equity market even from a 6 to 9 months
perspective.
Looking at the current economic scenario, I believe that the

current investment outlook should be strategic as opposed to
product-driven.
Pradeep Gupta While investing, especially in the small-cap and the micro-cap
Co-founder & Vice Chairman space, investors need to look at the fundamentals of the company,
Anand Rathi Group liquidity need, credentials of the promoter group of the company
and how stable the same is, any adverse news concerning the
Investing in micro-caps and company, the period for which investors are looking to invest in
and the sectors that the companies are operating in. You should
small-caps successfully also look at the valuation and the key ratios that help determine
how healthy a company’s balance sheet is.
Small-caps and micro-caps offer high growth potential, but
Small-caps offer high growth potential but are also extremely
investors need to look at the company’s fundamentals,
volatile in nature.
promoters’ credentials, sectoral outlook, company’s valuation
and its key ratios before investing, says Pradeep Gupta, Stocks work wonderfully when picked from the bottom of a bear
Co-founder & Vice Chairman, Anand Rathi Group market and this is mostly true for small-cap companies because
W
this segment takes the brunt of the bear hit and when they
ith regards to equity market, there are three bounce back, they show higher momentum from a low base.
major factors that drive it – fundamentals, both
macro and corporate, liquidity flow towards the However, at an investment level, one should assess the
equity market and equity valuations. In terms of investment objective and the risk associated with the
fundamentals and valuations, India is better placed than most of investment vehicle and the investors own risk taking abilities.
the major economies. The domestic flow into the equity market Would you be okay to witness humungous volatile periods?
is also supportive of a buoyant market. However, the global risks That is the answer which investors must answer before
and the consequent foreign portfolio outflow from Indian equity allocating their funds in small-cap and micro-cap stocks. While
market has been the main reason why Indian equities continue small-caps and micro-caps should form a part of investor’s
to remain in the volatile zone in the short term. portfolio, it should be managed well and should not have
overexposure in the same.
The US Dow Jones index was up by 14% in October, while the
gain in tech-heavy NASDAQ was down 2.1%. NIFTY 50 was An asset allocation strategy with a well-diversified portfolio is
up 5.4% for the month, thereby turning positive for YTD the key to managing risk and ensuring low deviation from the
CY22. The broader markets ended marginally positive with expected outcome. Everyone’s risk taking capabilities differs
S&P BSE Midcap and S&P BSE 250 Smallcap being up 2.0% and there are various ways to measure your risk tolerance.
and 1.8%, respectively. The rally was seen across sectors, led by Investors must understand the overall risk associated with the
the rate sensitive sectors like Banks, PSUs and Autos. Almost asset allocation strategy.
all sectoral indices closed higher than the previous month. FIIs
turned net buyers in the last 15 days of the month. Strong As a major part of global risk gets priced in equity markets, in
domestic inflows continued with domestic institutions buying the absence of fresh shocks or negative news, the market is
stocks worth ~USD 1.1 bn in the month of October. likely to go into a consolidation mode and eventually this can
lead to a market rally if investors’ risk appetite returns. While
The growth rate of corporate earnings is slowing down India has corrected and faced outflow of foreign portfolio
substantially. This trend is likely to continue. Having said that, investments along with the global markets, as the situation gets
there has been substantial downward revision of earnings stabilized globally, the attractive fundamentals and valuations
growth expectations by the analysts. Due to this, modest upside would attract capital into India. In view of this, we are not
earnings surprise over the next 12 months cannot be ruled out. surprised that in the recent past the foreign portfolio investor
At the same time, there has been a significant downward rating sentiments seem to be turning positive towards India.
of valuation multiples over the last one year. A major reason for
this could be sharp increase in discounting rates. It is expected When we are investing for the long term, short term volatility
that the policy rates would stabilise in the first half of 2023. will always prevail but, at the end of the day, the fundamentals
With this expectation, there can be modest re-rating of matter. DS

Interview
Virender Jeet
CEO, Newgen Software Technologies Limited
“We Look Forward to Accelerating

Growth Significantly”
With organisations looking for a hyper-automation strategy to streamline their disjointed
processes and accelerate the digital journey by integrating various technologies, Newgen
Software Technologies is likely to post a strong growth curve, says CEO Virender Jeet
What is your outlook on the global content factors are responsible for your stellar
services platform market? What are the emerging outperformance?
trends you are witnessing in the business process Our subscription revenues, annuity revenue streams and
management (BPM) and hyper-automation revenue from the sale of products and licenses are all doing
markets in the post-pandemic world? well. Artificial intelligence and data science have strengthened
From e-mails and policy documents to contracts, content is at our NewgenONE cloud-based platform and our strategic
the core of every enterprise. This content is not limited to papers, partnership with strong SI integrators is pushing our revenue
pictures and scanned images. Content comes in a variety of graph upwards.
formats, ranging in length and complexity, including paper
documents, digital documents, audio and video files, e-mails, What is your vision for NewgenONE over the next
instant messages, etc. Business leaders need a platform with 2-3 years? What are the opportunities you are
complete intelligent tools and technologies necessary to manage focusing on?
the end-to-end lifecycle of content. They look for an effective We have enhanced NewgenONE with a cloud-native, multi-
content services platform that helps them establish a digital persona artificial intelligence and data science platform. Our
workplace where content is easily accessible anytime, anywhere. platform is further enriched with intelligent document
classification and extraction, integrated process, robotic process
The pandemic has taught organisations that digital in silos is automation and easy application deployment capabilities. Last
not enough. Today, organisations are looking for a hyper- year, many markets were not open due to the pandemic-related
automation strategy to streamline their disjointed processes restrictions. This year the situation is certainly better and we
and accelerate their digital journey by integrating technologies look forward to accelerating growth significantly. We want to
like robotic process automation, artificial intelligence and increase our momentum in mature markets, including the US,
machine learning with existing capabilities. NewgenONE, a Australia and Europe. We aim to go back to our historical
low code-based digital transformation platform, is well- growth rates of 20 per cent in the medium term.
positioned to help organisations ace their hyper-automation
goals. In brief, an organisation can simplify complex, content- At the moment, what are your top three strategic
driven business needs with one comprehensive low code digital priorities?
transformation platform. We have always given importance to our products, employee
training and strengthening our partner ecosystem for
Newgen Software Technologies’ consolidated expanding footprints in newer and bigger markets. We have
revenue from operations for Q1FY23 witnessed started FY23 with new vigour and new branding, driven by our
strong YoY growth of 18 per cent, reaching `188 rich and differentiated platform, lasting relationships with
crore as compared to `160 crore in Q1FY22. What customers, strong team and a robust demand environment. DS

Interview
Fredun Medhora
Managing Director and CFO, Fredun Pharmaceuticals Limited
“We are Focused on Creating

Long-Term Wealth”
In this interview, Fredun Medhora, Managing Director and CFO, Fredun Pharmaceuticals Ltd.,
elaborates about the company’s product mix, market share and growth strategy
What is your outlook on the global and domestic out almost 6-7 years ago and we are just following it. Both
pet care, nutraceuticals and cosmeceuticals growth and de-growth will be seen with peaks and valleys but
industries? where we are headed matters more than what we are doing now.
The global markets are dynamic and growing. Pet care is further
divided into subcategories and those are further growing. Could you elucidate on the products you have
Nutraceuticals and cosmeceuticals are growing rapidly in India launched during H1FY23 as well as new product
and across the world. Care has to be taken in extrapolating the launches in the pipeline for H2FY23 and FY24?
growth targets for these categories as new products are being We have almost 100+ products in the veterinary category along
added constantly and the trajectories are fluid in nature. with about 23 products in the nutraceuticals segment and over
60 products in the cosmeceuticals segment. This is along with
Can you elucidate your ongoing transformation the planned growth of the core pharmaceutical exports.
from a B2B to B2C player?
We are slowly evolving our company from a generic What is your segment-wise revenue mix and how
manufacturer of pharmaceutical products to a player with niche do you expect it to evolve over the next 2-3 years?
products in OTC categories. This is not an immediate What segments do you expect to deliver high
transformation but a well thought of plan which we initiated as growth?
early as 2011. Our product developments, understanding the Unlike other companies we do not have an ethos of focusing on
markets and creating a list of products which would match the high-growth products or high-margin products. We are focused
requirements in our categories in the next decade have been our more on sustainability and creating long-term wealth not only
priorities. The fruits of our efforts will be seen in mid-decade. for our team members but also our channel partners, our
All the three categories, namely, B2B, B2BC and B2C will grow. associates and our investors. Pet care and its categories and
nutraceuticals and its product range are our future drivers along
Can you throw some light on your Q1FY23 results? with niche pharmaceuticals where we are first movers in many
Which factors have contributed the most to help markets. These three spokes will drive our wheel ahead.
you outperform?
There are no specific factors that have contributed to our What is your earnings’ outlook for H2FY23?
outperformance. Our growth is part of a long-term plan laid We expect a comfortable 11-15 per cent growth. DS

Interview
Mukeshkumar Navnitray Bhatt

Promoter and Executive Director,
Jay Jalaram Technologies Limited
“We are The Most Trusted Retail

Chain of Gujarat”
Having recently been listed on NSE Emerge, Jay Jalaram Technologies Limited is quite
enthused about its future growth plans, reveals Promoter and Executive Director
Mukeshkumar Navnitray Bhatt
How has been your experience of SME listing and business through a variety of models to create win-win
how has it helped you? situations for the company as well as our franchise partners.
We are thankful to NSE Emerge for providing us this SME The increasing use of internet and mobile usage is our biggest
platform for launching our SME IPO. The SME IPO has been growth trigger.
oversubscribed by 12.23 times, which was much higher than
our expectations. With this we have made our presence across What are your top three strategic priorities?
the world. Our company got listed on NSE Emerge on Our top three strategic priorities are:
September 8, 2022 and in its wake an increasing number of n Find out areas of improvement in the existing business
investors from the securities market are reaching out to us by for further growth in order to remain competitive in the
dealing in our shares. From the date of listing of our shares, market.
investors are getting good returns and that speaks volumes n Explore a new customer base to be able to expand our
about our performance. business.
n Retain and engage a qualified and experienced team to
What are your internal growth targets in terms of take the company to higher levels in terms of revenue,
revenue and profits? profitability, governance, market share, etc.
We are setting our growth targets on a quarter-to-quarter basis
taking into consideration our retail stores that are in operation What are your business activities?
or will become operational in Gujarat and Uttar Pradesh. KORE Mobile, owned by Jay Jalaram Technologies Private
Limited, is primarily engaged in the business of retailing
What are your growth triggers? electronic goods and accessories. It was incorporated in 2012
We have on board well-experienced and knowledgeable and majorly operates in Gujarat. Till April 31, 2022, the total
directors, senior management personnel and a strong sales and store count was 82, out of which 10 were retail-owned and 65
marketing team and this has helped us in our journey of were franchise based, as the company is following the franchise
growth. We are the most trusted retail chain of Gujarat and our model for expansion. Our company is also engaged in electric
retail stores offer discounts, incentives, schemes, etc. from time bike retailing and its accessories under the brand name
to time to increase revenue and profitability. We operate our “Revolt” and has two stores as of now. DS

Interview
Nilesh Jobanputra
Managing Director, Jayant Infratech Limited
“Our Growth Lies in The Expansion

of Indian Railways”
With the present government’s focus on improving infrastructure, the railway sector is ready to
embark on an ambitious expansion plan. This will be of advantage for Jayant Infratech, as stated by
the company’s Managing Director, Nilesh Jobanputra
What is your outlook on the railway sector in injected in the veins of our company a heavy dose of
India? adrenaline. It is this aspect of listing which is contributing to
I would say that the outlook is very bright. Indian Railways has propelling the growth of the company.
the largest network in the world but unfortunately 60 per cent
of it is old and outdated. The average speed of trains today is 20 What are your growth triggers and what is your
km per hour. New lines have been added but it has resulted in vision and mission statement?
voltage drop. These factors, fortunately, indicate revamp of the We strive towards satisfying our customers and all the more
existing infrastructure. delighting our shareholders. Wealth generation is definitely a
motto but simultaneously reducing carbon footprint by
How does Jayant Infratech stand to benefit from energising motion through cleaner forms of energy has always
the capital expansion happening in the railways been our mission. Currently we are focused on energising
sector? rolling motion, especially railways. But we are exploring
Our gain lies in the fact that the Ministry of Railways has possibilities of energising highways too with clean forms of
decided to implement various improvements as mentioned energy.
hereunder. All these factors will demand huge investments
and we are aiming for a fair share of the pie. In short, our What are your expansion plans and what are the
growth lies in the expansion of Indian Railways. risks facing your business?
n Average speed to be improved from 20 km per hour to As of now we are focussed only on the electrification aspect of
110 km per hour. the Indian Railways. In time to come we are planning to
n Loading capacity for goods train, which is currently venture into the signalling and engineering verticals of the
1,400 MT, is to be increased to 3,000 MT. railways either through the joint venture route or mergers. As
n Additional electrical infrastructure of 2 x 25 KV in the far as the risk factor is concerned, our business is directly
form of feeder line to compensate the voltage drop. dependent on the policies of the central government. The
present government is very much focused on the improvement
How has the listing on the SME platform helped of infrastructure and that has been a boon to companies like
Jayant Infratech grow? ours. A new ruling entity may or may not be congenial to
Obviously it has infused the much required capital to grow but growth. DS
more than that the very enthusiasm of our shareholders has

Interview
Sidhavelayutham Mohanamoorthy
Founder & CEO, Alice Blue
How a Brokerage Firm Made Rapid

Strides in the World of Trading
Here's the fascinating growth story of Alice Blue
Overview — The equity culture in India is growing with small Technology — Alice Blue relies on superior technology to
retail investors entering the market in a big way. The temptation provide an excellent customer experience. Technology
to participate in India’s growth story and get a piece of the action improvement is a continuous process and Alice Blue believes in
is making retailers not only purchase stocks in cash but also staying ahead of the learning curve where technology is concerned.
trade in the derivatives segment. Trading in the stock market
involves commission to the broker and transaction taxes. The Marketing Strategy — In the initial phase, Alice Blue
brokerage commission is generally calculated as a percentage of depended on community outreach, telemarketing and word-of-
the total trade value. mouth advertising to reach out to the target audience. Later on,
they used the internet to their advantage and used digital marketing
Disruptors Rewrite Rules — Industry disruptors like to enhance brand visibility and raise awareness about their
Alice Blue have turned this rule on its head. They charge a very offerings. They set up a website and drove organic traffic to it using
low flat fee per trade or per month with no brokerage on equity
a multi-pronged approach of social media, influencer marketing,
deliveries. This is a great benefit to small traders
conferences, webinars, offline partner visits, public relations, paid
No Conflict of Interest — Most brokerage houses offer promotions and establishment of branch offices to build a country-
trading advice to clients and pay their relationship managers wide presence. Today they have 17 branches across 16 cities.
based on business generated. This can create a dangerous
situation where the investor’s risk may not be protected. Alice The goal behind the marketing strategy was simple. It was
Blue does not offer any trading tips or advisory services which focused on building client trust by offering an authentic platform
can create a conflict of interest. Not only does this bring down at flat brokerage rates. The aim was to concentrate on new
operational costs; but it also avoids unnecessary clashes of account openings by using client referral and partner referral
interest that can be detrimental to clients. schemes. Several applications were launched like ANT Web,
ANT Mobi 2.0, Trade School and more. With the availability of
The Shift of Retail Traders to the Online Model — new-age technologies, these applications added cutting-edge
The traditional broker model involved calling the broker to features like API integrations, third-party applications and more
place a trade. Then came the online model where banks to make them more appealing and user-friendly.
offered online trading accounts that could be used on desktops/
laptops. Over the last few years, smartphone apps have ruled the How the Juggernaut Rolls — It is amazing how far Alice
roost. Now traders can place their trades with a tap of their finger Blue has come since its inception in 2006. In the first year, its
on their cellphones. The entire process is simple and user- client base was 1000. In 2022, the client base stands at a
friendly and 100 per cent online trading platforms like Alice whopping 4 lakh plus. In 2006-07, the revenue was `1 crore
Blue have become popular because of their ease of use and while in 2021-22 it stands at a staggering `79.2 crore. The
simplicity. company registered consecutive growth over the period.
One-Stop Solution — Alice Blue offers a platform to trade Future Plans — Alice Blue has ambitious plans for the
equities, futures, options, currencies, commodities, mutual funds
and IPOs. This gives traders and investors sufficient choice and future. They hope to add 10 million derivative traders by 2025.
flexibility in a single account where they can manage all their They wish to educate the retail trader base about the investment
investments. In the future, it expects to move to other segments and trading opportunities available with an aim to get people to
as well to offer clients more diversification. move away from traditional saving modes like FDs and Post
Office savings schemes. Their aim is to have the best online
Referrals — Since its inception in 2006, Alice Blue has trading platform that delivers impeccable customer service. They
focused on offering a simple online trading platform at the have ideas of expanding their offerings to cover other investment
lowest cost to retail traders and investors. Over the years it has avenues so that clients can manage all investments under one
grown due to excellent client and partner referrals. It also roof. The goal remains to become India’s most preferred trading
generates business revenue from its partners. platform that has the client’s best interests in mind. DS

Cover Story
Are Small-Caps And Mid-Caps
Hurting Your Portfolio?
With the BSE Sensex and
Nifty hitting all-time highs
along with Bank Nifty,
broader market investors
have suddenly realised
that their portfolios may
have underperformed.
Yogesh Supekar focuses
on the reasons behind the
underperformance of the
broader markets and
explains what steps
investors should take in
the current market
situation
T
he key benchmark indices are at an all-time recessionary environment. However, the reason why the
high and this is a pleasant surprise for markets are rallying is that majority of the participants believe
many of us. Given the various challenges that interest rates have peaked and that the rate hikes will not
the markets have faced in CY22 after the continue for too long.
pandemic-related recovery, it was almost
unthinkable to expect BSE Sensex to With this monster of recession looming large in the
touch an all-time high in November 2022. background, there is a high probability of interest rate cooling
The Ukraine-Russia war situation and the down in the near future. Now that is something that should
rapid rate increase owing to record inflation were a perfect excite investors. The recent recovery in the markets though has
recipe for market correction. Both these issues are yet a catch. Only a handful number of stocks have come out of the
unresolved and still we have market recovery on our hands. woods and pushed the key benchmark indices to all-time highs.
This again emphasises the fact that the equity markets are The required enthusiasm is missing in the broader market as is
forward looking. shared in the large-cap stocks. It is not that the small-caps are
entirely missing out on the rally but the breadth is missing as,
What the scenario is telling us is that the war in Ukraine may say, in CY 2021.
not impact the markets as there is no surprise element left and
at the same time even though the markets are expecting a We find that at least 161 small-cap stocks that are constituents
recession there is a good chance that this phase of downturn of the BSE Small-Cap index made a fresh 52-week high in
will be much milder than previously feared. As the finance November this year. However, the year 2022 has not been that
minister of UK stated, the country may already be in the throes rewarding for the broader market investors. Says Abhay Raut, a
of recession and the markets seem to have discounted the long-term investor: “I realised that my portfolio is up by 7-8 per

cent in CY 2022. When I read the headlines that the key led to unrealistic expectations from the small-caps and now
benchmark indices are at all-time highs, I was wondering why that the small-caps have corrected, investors are waking up to a
my portfolio was underperforming the markets. The BSE reality check.
Sensex is up by nearly 9 per cent on YTD basis. I realised then
that I have primarily invested in small-cap stocks, and that The Divergence Phenomenon
explains the underperformance.” Since January this year we have seen BSE Small-Cap index dip
by 22 per cent versus BSE Sensex that slipped by 16 per cent in
“The BSE Small-Cap index is up by 6 per cent on YTD basis. It June. However, since the recent bottom in June, the BSE Sensex
means there is marginal underperformance in the small-cap is up by 22 per cent while BSE Small-Cap index is up by 21 per
stocks. I also observed that my investments in the small-cap- cent. This year we saw the broader index gauge slip more than
oriented mutual funds have also not done as well this year the key benchmark index and at the same time the broader
compared to the funds that invest primarily in the large-caps. gauge recovered less than the BSE Sensex. It is not the first time
For instance, Kotak Small-Cap Fund is down by nearly 3 per that we are witnessing a divergence in performance or
cent in the past one year while at the same time Kotak Equity underperformance in the broader markets. The BSE Small-Cap
Opportunities Fund is up by 9 per cent. The performance is index in CY 2018 was down by 24 per cent while the BSE
divergent for small-caps and large-caps. It is really confusing at Sensex was up by 4.6 per cent.
times,” he adds.
In fact, in two years i.e. 2018 and 2019 we saw BSE Sensex climb
“The question is whether I should continue to maintain my by 19 per cent and BSE Small-Cap index slip by 26 per cent. The
position of high allocation to small-caps or should I trim my conviction in small-cap investing during that phase was at the
position and shift to large-caps?” he wonders. Indeed, there has lowest levels possible amongst investors. However, after 2019 the
been some divergent movement in the broader markets and the small-cap stocks bounced back with a vengeance. According to
large-caps. Large-caps have clearly outperformed the small- Darshan Patil, an investment advisor, “The underperformance in
caps in 2022 after small-caps’ huge outperformance in 2021. small-caps and mid-caps is just a temporary phase. I can see that
The BSE Small-Cap index is up by 207 per cent since the March several small-caps and mid-caps are forming a base to bounce
2020 lows while the BSE Sensex is up by 125 per cent in a back. The more time they spend forming the base, better will be
similar period. The record rally in small-caps since March 2022 the quality of the bounce.”
The below table highlights some of the most popular small cap stocks that are beaten down and have underperformed heavily. It is
always a good strategy to buy stocks with higher margin of safety. Margin of safety can be higher in quality business however the
stock prices are down owing to some negative development.
Beaten down small cap stocks
Latest Market Cap LTP 52-Wk High 52-Wk High All Time High All Time High Diff 52 week
Company Name YTD Returns (%)
(` Cr) (`) Date Price Date Price high (%)
Brightcom Group Ltd. 7367.6 -66.02 36.50 24-Dec-21 122.88 24-Dec-21 122.88 70
Everest Kanto Cylinder Ltd. 1067.66 -60.33 95.15 11-Jan-22 291.15 03-Jan-08 385.35 67
Himatsingka Seide Ltd. 928.45 -62.66 94.30 10-Jan-22 283.45 09-Jan-18 444.35 67
Tata Teleservices (Maharashtra) Ltd. 19324.46 -52.23 98.85 11-Jan-22 291.05 11-Jan-22 291.05 66
Tanla Platforms Ltd. 9940.42 -61.23 732.10 17-Jan-22 2094.4 17-Jan-22 2094.4 65
Dhampur Sugar Mills Ltd. 1470.15 -27.88 221.45 06-Apr-22 584 06-Apr-22 584 62
Dishman Carbogen Amcis Ltd. 1550.58 -51.04 98.90 03-Dec-21 258.6 25-Jan-18 396.55 62
Lux Industries Ltd. 5088.58 -54.05 1692.15 25-Nov-21 4407 17-Nov-21 4641.5 62
Nahar Spinning Mills Ltd. 966.73 -46.01 268.05 08-Feb-22 692 31-Mar-92 1000 61
Zensar Technologies Ltd. 4932.58 -58.25 217.90 03-Jan-22 538.75 16-Sep-21 587 60
Sportking India Ltd. 859.42 -54.71 646.80 17-Jan-22 1598 07-Oct-21 2046.95 60
Indiabulls Real Estate Ltd. 4300.9 -49.6 79.40 13-Dec-21 183.5 08-Jan-08 847.8 57
Indiabulls Housing Finance Ltd. 5831.29 -43.28 123.65 16-Dec-21 282.6 29-Jan-18 1439.4 56
Kellton Tech Solutions Ltd. 578.97 -4.99 60.00 21-Jan-22 134.95 21-Jan-22 134.95 56
Sequent Scientific Ltd. 2276.08 -43.29 91.25 17-Jan-22 204.45 29-Jun-21 336.4 55
Nazara Technologies Ltd. 3976.08 -47.37 603.55 21-Jan-22 1338.83 11-Oct-21 1677.2 55
Shilpa Medicare Ltd. 2367.96 -49.12 272.80 04-Jan-22 605 21-Dec-16 786.75 55
Intellect Design Arena Ltd. 6033.74 -39.99 445.40 07-Apr-22 986 07-Apr-22 986 55
EKI Energy Services Ltd. 3913.89 -42.67 1423.10 24-Jan-22 3149.99 24-Jan-22 3149.99 55
Data as on Nov 25, 2022

Cover Story
Naveen Kulkarni
Chief Investment Officer, Axis Securities PMS
“We Advise Investors to

Follow a Thematic Approach”
Why is there a divergence in performance in large- Will the broader market outperform in the coming year?
caps, small-caps and mid-caps? The Indian economy stands in a sweet spot of growth and
In 2022, the Indian market outperformed other global and remains the land of stability against the backdrop of a volatile
emerging markets by a notable margin, thanks to the country’s global economy. We believe the relative outperformance of the
robust economic outlook despite multiple headwinds such as Indian market will likely sustain in 2023 as well and would be
volatile macroeconomic developments, faster regime changes led by favourable macroeconomic factors and better-than-
and volatile FII flows. On an YTD basis, our benchmark index historical fundamentals of Indian corporates. While inflation
is up by 5 per cent. Meanwhile, the S and P 500 and emerging continues to be a major challenge in the developed world,
market index are down by a whopping 16 per cent and 22 per inflation in the domestic economy seems to be manageable.
cent for the same period. The mid-cap index is up by 2 per cent Good monsoons, higher reservoir levels, cool-off in commodity
and the small-cap index is down by just 5 per cent for the same prices and a healthy labour market indicate that the domestic
period. The leadership of the benchmark indices keeps economy would accommodate the prevailing inflation
changing in different market cycles. smoothly. The majority of the high-frequency indicators are
trending upwards and the uptick from the pre-pandemic levels
The year 2021 was the best performing year for the equity is visible, indicating the resilience of the Indian economy.
market in which mid-cap and small-cap indices were the
biggest gainers, rallying by 46 per cent and 59 per cent, While the country’s macro set-up is positive, the fundamentals
respectively. The year 2022 is translating into a roller-coaster for Indian corporates have also become better. Profitability
ride in the equity market across the world. The market has across the board has improved significantly. The cumulative
witnessed significant volatility led by liquidity reversal, policy and rolling net profit of the NSE 500 universe for the last four
tightening, the Russia-Ukraine geopolitical crisis and rising quarters till Q1FY23 touched an all-time high of `10 lakh crore,
inflation. While these developments inflicted notable changes and loss-making sectors too have turned positive and
in the market regimes, especially with higher commodity prices contributed notably to the net profitability. Moreover, after a
of base metals and crude oil over the first half of the year, a muted performance for several years, the ROE for the broader
trend reversal was seen in the second half of CY22 with the market is improving as well. The quality of assets of private as
majority of commodity prices cooling off. well as PSU banks has improved significantly compared to the
levels seen a couple of years back. Thus, in light of these positive
This was primarily due to policy tightening and the expectation attributes, we firmly believe that the outperformance of Indian
of a slowdown in global growth. Last year the market equities seems highly sustainable in the upcoming years.
experienced quicker rotation in investment style and sector
preference, and the value theme dominated the first half of How can one build a market-beating portfolio using
CY22, exhibiting a rising inflationary period. In the second small-caps and mid-caps?
half, the market saw a pickup in the growth theme, which was We advise investors to follow a thematic approach to build a
led by a cooling off in commodity prices, robust domestic portfolio of diversified sectors with a good combination of
demand and reasonable valuation after market correction. This defensive and economy-linked cyclical stocks where the earnings’
quicker rotation in the investment style and sector preferences visibility is very high. Further, the stock selection will be based on
has led to divergence in performance. However, all the three superior return ratios to manage the risk. We also advise our
indices have moved in tandem on an YTD basis. investors to follow a disciplined approach to periodical review.
“Usually, we have seen that small-caps tend to bounce swiftly consolidation is taking place reasonably well. Patient investors
after consolidation. Nifty may consolidate near all-time highs can hold on to their small-cap holding with a medium to
and there is chance that small-caps will start to outperform. long-term view for outperformance,” he adds.
When small-caps rally, they tend to recover faster and hence
investors should not worry much about the underperformance Consolidation in Place
of the small-caps. Several popular names and low-priced shares It is interesting indeed to observe the consolidation happening in
such as BCG, Subex and Trident are forming a strong base and several small-caps and mid-caps even as the large-caps hog the

The way we would look at it is primarily bottom up but at the same time, there are
sectors that are only represented by smallcaps and where there are some pretty exciting
opportunities. These would include sugar, paper and textiles. Sectors where there is clear
transformation is happening in terms of the way businesses are conducted are the
biggest examples that one can give in terms of what impact smallcaps can have if they
have conviction.
Anthony Heredia
MD & CEO, Mahindra Manulife
limelight. However, it can be extremely difficult for investors to as an alternative to China, we may see some fireworks in the
tolerate underperformance even if it is temporary. Says Makarand coming months in the broader markets.
Dharma, an equity investor with not more than a couple of years Further, the manufacturing sector in India is booming as we
of experience: “I have 10-12 stocks in my portfolio and all are speak. Several small-cap and mid-cap companies in the
trading in the negative zone while the large-caps are touching manufacturing sector can be looked at with bullishness. The
all-time highs. I listened to my friend’s suggestion who said that Indian government has set a target to increase the share of
small-caps always deliver better returns and hence I parked by manufacturing from 16 per cent of GDP to 25 per cent of GDP.
money into small-caps. Now that large-caps are outperforming, I This will translate into huge opportunities for the listed
am really confused on portfolio stance.” companies in the manufacturing sector. Increasingly so, there is
consensus amongst global investors that investments in
“I don’t think I am mentally strong or matured enough to face infrastructure development have increased India’s
underperformance in my portfolio even if it is temporary. competitiveness. The bullishness in equity markets is expected
Investing in small-cap stocks is not easy as I thought. I want to to persist in spite of rich valuations because the profitability of
see some green in my portfolio and I hope I see it in the early corporate India is improving, and the leverage is at a multi-
part of 2023,” he adds. There is no doubt that small-caps are decade low of barely 1.2x debt to EBITDA.
volatile and when they underperform it can be painful for the
portfolio returns. The drawdown can be huge for small-caps There is huge scope for capacity expansion as capacity
and the volatility can be unnerving most of the times, at least utilisation is closer to historical highs. At this moment with
for the beginners. Says Gunavant Vaid, a high net worth cleaner balance-sheets for PSUs, the lending activity can be
individual (HNI) investor who prefers small-caps and micro- expected to increase. High frequency indicators like GST
caps for market outperformance: “Investors have moved from collection, peak power demand, recovery in air travel, sales of
risky (volatile) stocks to less risky stocks i.e. from small-caps apparel, commercial vehicles and housing as well as capital
and micro-caps to large-caps. It is a temporary phase. Investors expansion announcements paint a bullish picture on the macro
should always take a view of more than five years while front. Given the underperformance of the broader markets and
investing in the equity markets. This is even more important the overall positive outlook on the Indian equity markets, it is
when investing in micro-caps and small-caps.” only a matter of time before the small-caps and mid-caps of the
world catch up in the coming month or so.
Conclusion
Liquidity is the key for small-caps and mid-caps to outperform. One of the best ways to identify trending small-caps is to study
As the interest rates increased, the liquidity took a hit and those stocks that are trading at or close to 52-week highs. Small-
investors parked their funds in so-called safe havens – large- cap stocks from such sectors as railway, defence and
caps. Now that the market is expecting a peaking of interest manufacturing can be looked at positively. For high-risk
rates in the US, we can expect some revival in small-caps and investors, the allocation for broader market stocks can be as
mid-caps as the liquidity conditions can improve drastically. high as 50 per cent with 50 per cent comprising large-cap
Even though some of the investors fear that the markets usually stocks. For active portfolio investors this is the best time to
correct in December, data suggests otherwise. In the past 20 tactically shift focus from large-caps and allocate more monies
years we have seen on an average that December has been the to the broader markets. Partial profit booking in large-caps and
best month for equity markets in India. With India specific fresh buying in quality beaten-down small-caps can generate
triggers in place and world starting to look at India confidently alpha for investors. DS

DSIJ Wealth Creation
Since 1986
How DSIJ has been Creating Wealth

for Investors since 1986
DSIJ’s unwavering commitment to provide unbiased advice and recommendations
S
has helped investors grow their wealth.
ometime in December 2007, the legendary investor towards the index fund. The returns over the 10-year period for
Warren Buffet bet a million dollars against a hedge the five hedge funds of funds ranged from a mere 0.3 per cent to
fund manager arguing that a fund holding the same 6.5 per cent annually and the basket only returned an average of
stocks comprising the S&P 500 index (index fund) 2.2 per cent. Compare this with the compounded annual return
could beat the combined performance of a group of of 7.1 per cent given by the index fund during the same period.
hedge funds over the following ten years. In a letter
sent to shareholders of Berkshire Hathaway in 2018, Buffet Most of you might be wondering why we are narrating this
revealed the result. He placed the bet with Protégé Partners, story after four years. The reason is that in our special edition,
which picked five hedge “funds of funds” that aimed to we also thought of doing a similar analysis of our
outperform the broad market, as represented by a simple S&P recommendations given ten years back in the year 2012. This
500 index mutual fund. Those five funds of funds together will give us and our readers an idea of our performance.
owned stakes in more than 200 hedge funds, providing a broad We present to you the results of our performance. Our portfolio
sample of money managers with different investment strategies. recommended in the year 2012 has generated a whopping
The final result of the bet, according to Buffett, was heavily tilted return of 22.67 per cent annually, whereas Sensex during the

same period has generated a CAGR of 13.0 per cent. So, every corporate longevity with regards to listed companies or
`1 lakh invested in our portfolio would have grown to `8.41 companies that are part of any stock indices. Since 2012, Nifty 50
lakh by the end of November 2022. A similar amount invested has seen 72 per cent of its constituent companies changing. Only
in Sensex would have increased to `3.00 lakh. 14 companies out of the original 50 companies that comprised
Nifty 50 in 2012 are part of the current Nifty 50. It speaks a lot
about our emphasis on selecting stocks of companies having
clean and strong managements with higher bandwidth.
Well-Diversified Portfolio — Our portfolio clearly indicates that

we have tried to abide by the adage, ‘Do not put all your eggs in
one basket’. All our recommendations are from different sectors
serving different parts of the economy. This has helped us to
provide smoother and consistent returns to our reader-investors.
The annualized volatility of the DSIJ portfolio was 15.7 per cent,
compared to 17.1 per cent of the Sensex during the same period.
Optimum Weightage — Though the difference between the

weightage assigned to different stocks comprising the portfolio
appears to be negligible, the little difference has however made a
huge difference in the final outcome. If we had given equal
Following is the portfolio we gave in our Anniversary Issue weightage to all the stocks in the above portfolio, it would have
lowered the return by 300 per cent over the last ten years.
of 2012. (Vol 27 issue no 8) Therefore we, as a research media house, not only recommend
`26 Lakh Portfolio for 26th Anniversary the right stocks, but we also give appropriate weightages to the
Adjusted stocks to help our readers generate higher alpha.
Weight Return
Companies Reco. Qty CMP (`)
(%) (%) Going Beyond Portfolio — But it is not just the portfolio we
Price (`) *
have excelled in. We have been unearthing hidden gems through
Cummins India 375.02 12 659 1349.15 260 our out-of-the-box thinking. A case in point is Info Edge India
GIC Housing Finance 65.30 10 2954 151.05 131 that we had recommended in our cover story entitled ‘Concept
HDFC Bank 233.59 12 612 1613.55 591 Stocks’ dated July 6, 2008. It was recommended at `238.329
IGL 64.71 10 708 418.50 547 (adjusted for corporate action). In the last 14 years, it has given
annualized return in double digits. Even more recently in the
Infosys 274.67 12 110 1592.90 480
year 2014, we recommended Avanti Feeds, one of the best wealth
Kansai Nerolac 82.98 10 286 435.50 425 creating companies in recent years. Since our recommendation,
Marico 68.48 12 1950 486.85 611 the share price of Avanti Feeds has appreciated by a whopping
Page Industries 2373.54 12 119 46146.15 1844 37.6 per cent CAGR. So, `1 lakh invested in this company in the
Swaraj Engines 320.92 10 640 1572.25 390 year 2014 would have become `24.33 lakh today! Before
recommending this scrip, we met the company’s reticent
Sensex 17316 61663 256
management team after several attempts to understand the
* Reco Prices as on 20 March, 2022 ** CMP as on 18 November, 2022 business, its worth and its potential.
We can clearly see that the returns generated by individual All these years, we have remained ever vigilant about any
recommendations are far superior to the returns generated by corporate event that may throw up opportunities for our
the benchmark Sensex. Only one company (GIC Housing reader-investors. We were probably the first media house that
Finance) has underperformed, while all other stocks have given interviewed CP Gurnani, CEO, Mahindra Satyam, to understand
returns higher than the Sensex. These outstanding returns speak if the marriage between Tech Mahindra and Mahindra Satyam is
a lot about DSIJ’s research capabilities and its ability to provide going to create synergies and help investors. We did our own
profitable recommendations to its readers. analysis and recommended buy, when the share price of Tech
Mahindra was trading around `250.
There are a few aspects of research process adopted by DSIJ
which explains the high level of performance. Throughout our eventful journey since inception, we have taken
Better Corporate Governance — Out of nine companies we pride in claiming that we remain the most honest and unbiased
had recommended in our portfolio, not a single company has investment magazine in the country as our recommendations are
gone through any major corporate governance issue over the always made keeping the interests of our readers uppermost in
last ten years. The importance of this can be understood against our mind. Hence, we have never been, nor will ever be, afraid of
the background of a clear long-term trend of declining calling a spade a spade.

DSIJ Wealth Creation
It is with this conviction we came out with a detailed analysis
on ITC during 2011 and explained why one should stay away
TESTIMONIALS
from the company. It was argued that ITC was still a cigarette Being a stock market trainer and trader, I
company which draws major revenue from its cigarette have followed DSIJ for many years. I
business, despite diversifying its business into other FMCG recommend DSIJ to my students also
products. For many years thereafter, ITC grossly because I feel they do extensive research on
underperformed the market and has gained momentum only
Indian companies and they explain that to
in the last couple of years.
the readers in the simplest of language
We have dared to swim against the tide many times in our - Suman Kuma Datta
illustrious history with a fair degree of success. Among many
companies we analysed between 2009 and 2010, we had also DSIJ magazine has helped me a lot in
analysed two companies that were then the darling of the understanding the movement of the stock
investors. First, we did a deep dive on Suzlon Energy. The market and the economy. I have clarified my
article’s headline ‘Gone With The Wind’ proved to be bang on analysis with the recommendations and
the target! Suzlon was one of the largest wind energy analysis from DSIJ, and received great
companies in the world with presence in various geographies insights
and was trading around `150 after falling almost 60 per cent - Anindya Ghoshal
from its top. Again, in our November 7, 2010 issue, we analyzed
SKS Microfinance, which later on changed its name and has
been now merged with IndusInd Bank. It was one of the biggest
microfinance companies at that time, but we advised our
readers to exit the counter, which was then trading at four-digit similar percentage between the high of October 2021 and the
price. Thereafter, the share price of the company tumbled down low of June 2022.
to double digits.
After this prediction, every market participant, including
What has helped us to produce such track record is DSIJ’s institutions and investors, started taking us seriously and the
single-minded focus on helping the common man to create magazine became a vibrant and popular brand. It rose in
wealth from the capital market. When DSIJ started in 1986, circulation to become the first among the business magazines
there was very little understanding of the equity market among to cross ABC certified circulation of 1,00,000!
retail investors. It was only in metros that there was a little bit of
awareness about the equity market and how it can help create Proof Of The Pudding!
wealth for the common people. What was more obvious was In the last 37 years of our journey, we have seen many ups and
the dearth of information available to the investors about the downs in the market and we too had our roller-coaster rides
equity market even if someone knew that the capital market along with them. There were some infamous scams that
can help create wealth. Dalal Street Investment Journal tried to triggered major market falls which drove away investors out of
fill this gap by providing all the information needed by the the market and put a question mark on our own survival.
investors. We fully understood that small investors were Nevertheless, we survived the odds and managed to grow
putting their hard-earned money into the markets and we need under the most adverse conditions. This was due to the fact
to put even more efforts to maintain their trust and live up to that we have striven to give investors timely advice on their
their expectations. As times changed, we did not rest on our investments as and when they needed it. Even during the
past laurels and introduced new products to keep pace with the recent Covid-19 pandemic, when most of the publications had
evolving market and meet the changing needs of the investors. virtually shut shop, we kept printing our magazine, barring a
few issues, and continued to serve our subscribers with
Market Prediction profitable recommendations.
Our initial success did not come from stock
recommendations—it came from accurately predicting the When we made our modest beginning in year 1986, the market
direction of the market! Our first issue on January 11, 1986, cap of listed companies was `28,000 crore. Now, it stands
which was a weekly publication rolled out from a photocopy around `2,83,70,057 crore, which is a growth of almost 1,000
machine and staple-bound, had 1,200 subscribers. The issue times since our inception. This shows the stupendous growth
that brought us into the reckoning among the fraternity of of the Indian equity market. It will not be an exaggeration to
investors was the February 23, 1986 issue which predicted a say that DSIJ has played a role in the exponential growth of the
market crash! This bold prediction was against street equity market in India. In fact, DSIJ has played a key role in
expectations prevailing during that time. In the next one fostering and shaping the equity culture in India. With your
month, Sensex dropped from 632.9 to 525.02, a drop of 17 per trust and love, we will continue to do so for many years
cent. Just to give you a perspective of this fall, Nifty 50 fell by to come. DS

QueryBoard
Investment Horizon
Query-Specific
HINDUSTAN AERONAUTICS LTD ALSTONE TEXTILES (INDIA) LTD

I own Alstone Textiles shares with an average
I have made an investment in Hindustan Aeronautics purchase price of `152. Should I keep the stock for
at about `2,500 per share. Is it better to hold or sell? higher returns?
- Avinash Thorat - Nitin Singh
HOLD SELL
BSE/NSE Code 541154 / HAL BSE Code 539277 / ALSTONE
Face Value `10 Face Value `10
CMP `2730.90 CMP `284.05
52-Week High `2,775.00 / Low `1,181.25 52-Week High `347.75 / Low `15.00
Your Current -- Your Current --
Profit/(Loss) Profit/(Loss)
H A
industan Aeronautics Ltd (HAL) is a state-owned lstone Textiles (India) was originally incorporated in
aerospace and defence company that manufactures, 1985 as Shalini Holdings. Initially, the company was
repairs and maintains aircraft and helicopters. In terms established with its main focus on textiles including
of the company’s quarterly results, on a consolidated basis it cotton, woollen, art silk, natural silk, readymade garments,
revealed a reduction of 7.34 per cent from `5,552.14 crore hosiery, synthetic fibre and fabric and mixed fabrics. On a
recorded in Q2FY22, generating total revenue of `5,144.79 crore standalone basis, Alstone Textiles reported a net profit of
in Q2FY23. The net profit during the second quarter of FY23, `8.27 crore in Q2FY23 compared with net loss of `6 lakhs in
however, climbed 44.45 per cent from `843.83 crore to Q2FY22. Net sales stood at `1.92 crore in Q2FY23. The
`1,218.94 crore as compared to the same quarter the previous company reported other income of `8 crore in this quarter. The
year. When comparing its yearly performance, the company’s company has been in the headlines for hitting upper circuits on
net profit surged 56.76 per cent from `3,240.74 crore to a regular basis. Recently, the Board of Directors of this small-
`5,080.11 crore. Also, net sales rose by 7.59 per cent to cap company approved and declared bonus shares in a 9:1 ratio
`24,620.02 crore as against `22,882.32 crore during the previous and stock split in a 1:10 ratio. This means it has approved nine
year ended on March 2021. The company has declared an bonus shares for each share held by the shareholder on the
interim dividend of `20 per share with a face value of `10 each. record date of bonus shares and its existing one share would be
A low PE, high RoE and backing from the state government in subdivided into 10 shares. The company board has fixed the
the form of a sizeable ownership stake in the company are just a record date for the issuance of bonus shares and stock
few of the company’s strengths. Since your investment its shares subdivision as December 3, 2022. The stock has delivered over
have gained nearly 9 per cent, assuming that each share is worth 1,700 per cent return to its shareholders on year-to-date basis.
`2,500. On account of the company’s great long-term growth However, the stock seems overvalued now. Looking at your
prospects and the Indian defence industry’s potential for buying average price and because your investment has almost
expansion, we recommend HOLD. doubled, we recommend you to SELL.
Readers are requested to send only one query at a time so that more readers get a chance. For complaints regarding non-receipt of
dividend, bonus, rights and other matters, investors may write to www.investor.sebi.gov.in
Company Name: DEMOCRATIZING WEALTH CREATION
Vol. No. 38
31 No.
No.20
01
Query:
Send in your queries:
DSIJ
DSIJ
Pvt.
Pvt.
Ltd.
C-305,no3rd211,
Office Floor, TradePlatinum
Vascon Center,
Name: North Main Road, Near Axis Bank,
Square, Next to Hyatt Regency,
Opp. Lane No. 6,Pune-
Vimannagar, Koregaon
411014Park,
Address:
Pune - 411001
Email:editorial@DSIJ.in
E-mail: Email:editorial@DSIJ.in

QueryBoard
BHARTI AIRTEL LTD. DELHIVERY LTD
I want to add Bharti Airtel to my portfolio after
observing the company’s recent developments. Should I sell my holding in Delhivery Limited since
Should I buy now? the stock is constantly falling? What is your stance?
— Darshan Lodha - V P Patel
BUY HOLD
BSE/NSE Code 532454 / BHARTIARTL BSE/NSE Code 543529 / DELHIVERY
CMP `846.80 CMP `331.75
52-Week High `877.10/ Low `629.05 52-Week High `708.45 / Low `317.00
B I
eing the most trusted provider of ICT services globally, ncorporated in 2011, Delhivery Ltd. is an Indian logistics
Bharti Airtel is a leading telecommunication company. and supply-chain company that offers a broad variety of
As per subscribers, it is one of the top three mobile logistics services, including express parcel and heavy cargo
service providers in the world and has a global network that delivery, freight services, warehousing, supply chain solutions,
spans the US, Europe, Africa, the Middle East, Asia Pacific and cross-border express delivery and supply chain software. The
India. Taking into account the company’s financial company also provides value-added services such as
performance, on a consolidated basis it reported growth of e-commerce return services, payment collecting and
21.89 per cent from `28,326.40 crore registered in Q2FY22, processing, installation and assembly services and fraud
recording total revenue of `34,526.80 crore in Q2FY23. It has detection. Since its inception, it has successfully fulfilled over 1
reported strong EBITDA growth of 27.39 per cent. Comparing billion orders across India. In order to service more than 18,000
the net profit for the second quarter of FY23 to the same pin codes, the company has established a nationwide network
quarter last year, it soared 87.39 per cent from `1,399.30 crore with a presence in every state.
to `2,622.20 crore.
The organisation is able to deliver 24 hours a day, seven days a
Considering the company’s yearly performance, its net profit week and 365 days a year thanks to 21 automated sort centres, 96
soared to `5,882 crore as against loss of `12,271 crore during gateways, 93 fulfilment centres, 2,948 direct delivery centres and
the previous year. Also, net sales rose by 15.83 per cent to a team of over 58,000 individuals. The company’s full-year
`116,546.90 crore as against `100,615.80 crore during the financials reveal that its net loss climbed to `1,007 crore in FY22
previous year ended on March 2021. The company recently from `415 crore in FY21 whereas revenue surged by 88.74 per
announced the deployment of its cutting-edge Airtel 5G Plus cent to `6,882 crore. Taking into account the company’s
service at the Lal Bahadur Shastri International Airport quarterly performance, on a consolidated basis it reported
(Varanasi) and Dr. Babasaheb Ambedkar International Airport growth of 19.92 per cent from `1,497.76 crore registered in
(Nagpur). Airtel 5G Plus is also available at the new airport Q2FY22, recording total revenue of `1,796.10 crore in Q2FY23.
terminals of Bengaluru and Pune. It has also launched 5G
services in Guwahati. When comparing the net earnings for the second quarter of
FY23 to the same quarter last year, the loss was reduced from
Customers will be able to access Airtel 5G Plus services in `635.04 crore to `262.28 crore. Despite the fact that shares of
phases as the business builds up its network and completes the Delhivery have dropped more than 35 per cent due to worries
roll out. Recently, Airtel conducted a market-testing price hike about the sustainability of revenue growth and profitability, the
in the states of Haryana and Odisha. Tariff hikes and 5G rollout stock has witnessed a surge in volume with a favourable bias in
are among the company’s strategic moves. The shares of Bharti recent sessions. The pandemic caused a disruption in the
Airtel have experienced a significant upswing and are currently business. However, after battling this crisis the company is now
trading close to their 52-week high with additional room for able to properly conduct its operations and is attempting to
growth in the near term. Given the bright future prospects in recover all losses with each passing quarter. As a result, with an
the telecommunication sector brought on by 5G and the optimistic future for the logistics sector and the company’s
company’s line-up opportunities, we recommend BUY. position within it, as well as its potential for a recovery, we
recommend HOLD.

TIMKEN INDIA LTD. OIL AND NATURAL GAS CORPORATION LTD
I am looking to add shares of ONGC Limited for the
Is now a good time to buy Timken India stock? long term. Would the investment be worthwhile?
— Aman Lahoti - Divya B
BUY BUY
BSE/NSE Code 522113 / TIMKEN BSE/NSE Code 500312 / ONGC
CMP `3578.70 CMP `140.55
52-Week High `3,760.80 / Low `1,714.80 52-Week High `194.60 / Low `119.80
T O
imken India is engaged in the manufacturing, NGC Limited is the largest crude oil and natural gas
distribution and sale of anti-friction bearings, company in India with a market capitalisation of
components, accessories and mechanical power `175,307 crore, contributing around 70 per cent to
transmission products for a wide customer base across different Indian domestic production. ONGC has an in-house capability
sectors. It also provides maintenance contracts, refurbishment in all aspects of the exploration and production business and
services and industrial services. The company has one primary has discovered seven of the eight hydrocarbon-producing
segment such as bearings and allied goods and services for the basins of India. With a structured and holistic approach to the
automotive sector and the railway industry. It has a revenue energy business, it is well-poised to play a progressively
breakup of 75 per cent from domestic sales and 25 per cent important role as India’s energy anchor, with an increasing
from export. The company clocked revenue from operations at thrust on sustainability and social responsibility.
`695.4 crore in the September 2022 quarter, which is 25 per
cent higher than the corresponding quarter last year. Promoters held 58.89 per cent stake in the company as of
September 30, 2022 while FIIs owned 9.97 per cent and DIIs
It reported a more than 23 per cent rise in the net profit of 18.52 per cent. The company earned a net profit of `12,826
`97.6 crore on a YoY basis. Recently, the company announced crore during Q2FY23 as against `18,348 crore during Q2FY22,
that it would be setting up a new facility at Bharuch in Gujarat a decrease of `5,522 crore i.e. 30.1 per cent. The profit after tax
to manufacture spherical roller bearings and cylindrical roller for H1FY23 has increased by `5,350 crore which is 23.6 per
bearings and components thereof which will enhance the cent from profit after tax of `22,682 crore in H1FY22 to
manufacturing capacity of the company. This new facility will `28,032 crore in H1FY23. The increase in net profit during
incur a cost of `600 crore which will be funded by internal H1FY23 is on account of higher sales revenue, mainly due to
accruals. The company at present does not manufacture these higher crude oil, natural gas and VAT price realisations and
special bearings in India as they are imported from Timken’s higher other income in the form of interest and dividend
group companies across the world and sold in India. income.
The company believes that these bearings have the prospect of a The sales revenue for Q2FY23 and H1FY23 has increased by
good market in and outside India. Timken India has a strong `13,908 crore (57.3 per cent) and by `33,092 crore (70.1 per
balance-sheet coupled with decent growth prospects led by cent) as against the corresponding quarter and H1 of the
strong growth in railways, wind and exports. Its business mix previous year. ONGC is now investing `5,900 crore in 20 major
outperforms its peers due to low competition arising from a projects, including production of oil and gas reserves found in
high share of exports and railways, the lowest threat of electric deep sea block KG DWN 98|2 (KG D5) and the
vehicle disruption due to the absence of two-wheelers and fourth phase redevelopment of mainstay Mumbai High fields.
passenger vehicles and a dominant share in their niche This year, ONGC will reverse years of decline in production
segment. The stock has shown some positive traction as it and gradually raise output, thereafter after raising billions of
surged 84.57 per cent in the last six months. Hence, we dollars to produce from the new discoveries. Hence, we
recommend BUY. recommend BUY.
(Closing price as of Nov 25, 2022)

Reviews
In this edition, we have reviewed Chambal Fertilisers & Chemicals and Dr. Reddy’s Laboratories. We suggest our
reader-investors to HOLD Chambal Fertilisers and Chemicals and Dr. Reddy’s Laboratories.
cost for the company. The demand-
CHAMBAL FERTILISERS & HOLD Change
CMP - `303.05 supply gap in India will be bridged by the
CHEMICALS 21.90 Per Cent
new urea facilities that go into operation
BSE CODE Reco. Price Face Value in the upcoming years. A large portion of
500085 `388.40 `10
W
the imported urea would be replaced by
e had recommended Chambal 29.28 per cent compared to the operating the additional supply from the new
Fertilisers and Chemicals in profit of `754.17 crore posted for facilities of other companies.
Volume 37, Issue No. 03 dated Q2FY22. The company’s net profit went
Jan 03 to 16, 2022 under the ‘Analysis’ down to `240.16 crore in Q2FY23 Chambal Fertilisers and Chemicals has
segment. The recommended price for the compared to the net profit of `425.38 an opportunity to grow owing to the
stock was `388.40. We had recommended crore earned in Q2FY22. On the annual healthy market demand for its products,
the stock on the basis of expansion in new front, net sales for FY22 increased by significant market revenue generation
geography, strong market network and 26.34 per cent to `16,068.83 crore from and prompt subsidy release by the
good returns on capital employed. The `12,719.01 crore reported for FY21. government. The company has taken a
company caters to the need of the farmers decision to diversify its business by
and is a major fertiliser manufacturer in It recorded operating profit of establishing a facility for the production
India. Its three hi-tech nitrogenous `2,330.19 crore for FY22, declining by of technical ammonium nitrate, which
fertiliser (urea) plants have an installed 7.19 per cent against operating profit of will not only improve its top-line and
annual production capacity of about 3.4 `2,510.82 crore posted for FY21. The net bottom-line but also diversify the risks
million MT of urea, contributing to a profit declined by 24.03 per cent to and returns in the company’s operations.
major chunk of urea consumed in leading `1,259.68 crore in FY22 as compared to The expansion in new geographies and
agriculture states in India. `1,658.14 crore recorded in FY21. Amid sustained focus on existing marketing
a rising raw material cost scenario territory shall enable it to achieve
Looking at the quarterly performance on coupled with delay in subsidy receipts sustainable growth in non-urea
a consolidated basis, the net sales for from the government, there has been a fertilisers, crop protection chemicals and
Q2FY23 increased by 91.73 per cent to need for higher working capital specialty plant nutrients. Hence, we
`8,586.75 crore, thus contracting by requirement and an increase in interest recommend HOLD.
Change
DR. REDDY’S LABORATORIES HOLD 5.86 Per Cent
CMP - `4418.00 drug in the coming quarters, with a few
more launches in H2FY23. In Europe,
BSE CODE Reco. Price Face Value
sales grew 1.5 per cent YoY and 1.4 per
500124 `4693.25 `5
W
cent QoQ. The sales from North America
e had recommended Dr. `6,163.20 crore as compared to grew 48.1 per cent YoY and 57.2 per cent
Reddy’s Laboratories in `5,516.70 crore reported in the last QoQ owing to the launch and scale-up of
Volume 37, Issue No. 03 dated quarter. The operating profit also saw a new products and favourable movement
Jan 03 to 16, 2022 under the ‘Cover Story’ rise of 23.92 per cent and was recorded at of forex rates.
segment. The recommended price for the `1,939.70 crore in Q2FY23 as against
stock was `4,693.25. We had recommend- `1,565.30 crore in Q2FY22. The quarterly The company has been progressing well in
ed the stock on the basis of long-term net profit for Q2FY23 stood at `1,100.20 its journey of building a portfolio of
sustainability, inorganic growth opportu- crore, up 12.29 per cent, from Q2FY22 complex and differentiated products along
nities and strong cashflow. Dr. Reddy’s net profit of `971.10 crore. On a YoY basis with biosimilar and NCE pipelines. It
Laboratories is engaged in pharmaceutical the net sales increased by 11.37 per cent to expects a capex of `1,500 crores for FY23
services and active ingredients, global `20,514.40 crore in FY22 from of which a majority will be dedicated to
generics and proprietary products. A `18,420.20 crore in FY21. The operating building capacities for biosimilars and
variety of goods and services are provided profit likewise jumped to `4,252.10 crore injectables. The company reported strong
by the company, including active in FY22 from `4,161.30 crore in FY21. performance on the back of new launches
pharmaceutical ingredients (APIs), The net profit on the other hand reported during the quarter. Its guidance is for the
custom pharmaceutical services (CPS), a marginal gain in FY22 and stood at launch of nearly 25 products for the year,
generic drugs, biosimilar drugs and `2,112.20 crore as compared to net profit which will lead to resilient growth in US’
unique formulations. of `1,903.60 crore reported in FY21. The sales. The company is actively looking for
company recently launched seven new new investment avenues to trigger growth
Analysing the performance of the products in the region with one ANDA across all its business segments. Hence, we
company during the recent quarter, the filed. The company is expected to see a recommend HOLD. DS
net sales for Q2FY23 was recorded at healthy contribution from the ‘Revlimid’

Kerbside
The recommendations provided in this column are taken from various market
sources such as brokers, analysts, dealers and investment strategists, etc. These
recommendations may not be backed by strong fundamentals. Therefore we advise
readers to use their own discretion before investing in these recommendation
TOTAL CONTROL
JK Tyre and Industries Ltd, one
JK TYRE & INDUSTRIES LTD. of India’s foremost tyre
BSE Code: 530007 manufacturers is also amongst
CMP: `193.80 the top 25 manufacturers in the
world. The company has been at
the forefront of driving innovation and excellence in the tyre
industry through its strong R&D department. The fund houses
remain largely positive over this company on account of
strong demand for the automobile sector and tyre maker's
expansion plans. On the technical chart, the stock has
registered a strong price volume breakout from its
consolidation pattern. It is all geared up, and you must hop on
to this stock to ride its momentum!
GAMING YOUR WAY PICKING UP PACE

DELTA CORP LTD. Rashtriya Chemicals and
BSE Code: 532848 Delta Corp Limited is RASHTRIYA CHEMICALS & Fertilizers Limited
CMP: `232.00 engaged in the FERTILIZERS LTD. (RCFL) is a 'Miniratna'
business of BSE Code: 524230 Government of India
operating casinos CMP: `123.35 Enterprise, that works
and online gaming platforms in India. The in the manufacturing
company has evolved into other diversified and sale of fertilizers and chemicals which includes
segments like entertainment, hospitality and Urea, Complex Fertilizers, Bio-fertilizers, Micro-
real estate. It has reported magnificent nutrients, and a wide range of Industrial Chemicals.
quarterly earnings this season as revenue According to recent reports, the GoI is expected to
soared 261 per cent YoY to `270 crore, while reduce its stake via OFS in times to come. The
net profit jumped 402 per cent to Rupee divestment news has created fresh buying interest
Foradian68 crore in September 2022. With in the stock, which is quite evident from the spurt in
the upcoming festive season, the company is
expected to see robust demand across its volumes. The stock has registered a breakout from
businesses. With strong buying activity its triangle pattern with massive volume and is
emerging in the stock, the game of green showing a strong uptrend. Thus, swing traders have
candles is not expected to stop any time a good opportunity to gain quick bucks!
soon!
HIGH GROWTH PROSPECT

Gabriel India is one of the leading companies engaged
GABRIEL INDIA LTD. in the manufacturing and sales of ride control
BSE Code: 505714 products across all automotive customer segments
CMP: `198 and acts as a key supplier of parts for passenger cars
and OEMs. The company has seen profitability ratios
improving in the past two years, while the debt/equity lies at nearly zero.
The performance ratios have also seen a good jump this results season as it
posted strong double-digit growth in revenue and net profits. Technically, the
stock has registered a breakout from its 57-week cup and handle pattern
with massive volume, which is considered strongly bullish over the medium-
long term. Strong growth prospects and recent order wins make this stock an
ideal candidate to be included in your portfolio kitty! DS

MF Page - 01
facebook.com/DSIJin twitter.com/DSIJ
Vol. 38. No. 01 • DEC 05 - 18, 2022 www.dsij.in/apps.aspx

enquiry@dsij.in linkedin.com/in/DalalStreetInvestmentJournal
A Bullish 2022 for MF Investors! Interesting Story
M
utual fund investors could not have asked for a Your cover story on direct equity vs mutual funds was quite
better 2022, after a solid performance in 2021 by interesting. I am 58 years old now and do have investments in
most of the fund managers, especially those direct stocks as well as mutual funds. So, should increase my
managing equity. Greater returns have been allocation to stocks or mutual funds. - Vidyut Sharma
delivered to those choosing the SIP route to equity markets. In
case you are wondering which category of mutual funds has Editor Responds : You seem to be approaching your
given the best returns and want to then prepare a strategy for retirement and if we assume your employment ends when you
CY2023, our cover story in this special 1000th issue is going to turn 60, you should consider investing more in mutual funds.
be your saviour. Rarely do we compare performance across And if you are a super aggressive investor and have the
categories and hence we are usually not aware of the missed sufficient cash flow available during retirement, then you can
opportunities. Do share your feedback on our cover story consider increasing your allocation to stocks.
which I believe will be a delightful read.
In our special story, we have discussed the history of mutual
funds in India. The story will help you understand the journey
of the mutual fund industry through the years. In our other
interesting special stories, we have focused on Large Cap Equity
Mutual Fund schemes. Often, we ignore large-cap investing in
pursuit of greater returns. Time and again large-cap mutual Cover Story MF Page
02
funds have proven their worth with outperformance. In fact,
some of the best-performing large-cap funds have delivered Mutual Fund Wealth Creators
close to 18 per cent returns on an annualised basis in the past
three to five years.
As we end 2022 on a high with SIP inflows matching the
Financial Planning MF Page
19
market moods, for CY23 one can expect the flows to be steady.
21
With positive buying both from the FIIs and the DIIs expected
in CY23, retail participation can be expected to increase as well.
Equity mutual fund investors should keep a close eye on
Special Report MF Page
low-volatility funds as the volatility is expected to increase as History of Mutual Funds in India
we head into unchartered territory. After all, it is the risk-
adjusted returns that we are looking at and not absolute returns!
Special Report MF Page
33
Are You Ready to Invest in
Yogesh Supekar
Executive Editor Large-Cap Funds?
Interviews
106 104 103 102 101

Chandresh Nigam Sunil Subramaniam Anoop Bhaskar Krishna Sanghavi Srinivas Rao Ravuri
MD & CEO, Axis AMC MD & CEO, Sundaram MF Head (Equity), IDFC AMC CIO (Equity), Mahindra Manulife MF CIO (Equity), PGIM India MF

Cover story
MF page - 02
Mutual Fund
Wealth Creators
Mutual funds are one of the most effective instruments for building wealth over time. Indeed, for people with
little or no expertise of financial markets, mutual funds are a godsend. Furthermore, you don’t have to be
affluent to become wealthy. The mutual fund SIP path is the finest approach to begin your wealth creation
journey. With all of these advantages, it is critical to understand which funds to invest in. On the occasion of
T
the 1,000th issue of DSIJ, Henil Shah identifies some top wealth-creating mutual funds across categories
rade and commerce enable us to build wealth guidance for purchasing mutual funds.
by investing our money with folks who are also
building wealth. By purchasing stocks in So, without further ado, let us begin. In terms of assets under
various companies, we may become investors management (AUM), the industry grew 3.92 per cent year-to-
in the businesses of entrepreneurs. The date (YTD), while registering a remarkable compounded
shareholders gain when entrepreneurs and annual growth rate (CAGR) of 17.8 per cent. This contains all
management operate their companies major and sub-categories as specified by the Securities and
effectively and successfully. Mutual funds are an excellent Exchange Board of India (SEBI). The graph below depicts the
strategy to accumulate money in this aspect. But how can we increase of AUM over the previous decade.
determine which stocks to buy and when to acquire them? This
is when seeking expert assistance comes into play. They also use
a huge corpus to investigate more opportunities at the same time.
We all require proteins, vitamins, carbohydrates, and so on,

much like a balanced diet. Eating only one kind causes
nutritional insufficiency. Similarly, with a diversified mutual
fund portfolio, you are exposed to several aspects of the
economy while still being safeguarded from any potential
downside. On the occasion of the 1,000th issue of DSIJ, we will
go deeply into understanding the performance of the mutual
fund industry as a whole, as well as identify top wealth-creating
mutual funds across all asset classes, including equity, debt and
hybrid. Furthermore, this narrative might be used as a practical

Cover story
MF page - 04
AUM Change in Last Four Quarters past four quarters due to its outstanding performance. This
Sep-21 Sep-22 Change Change (%) equates to a 237.91 per cent gain in AUM. Navi Mutual Fund,
SBI Mutual Fund 575116 543864 -31252 -5.43 PGIM India Mutual Fund and PPFAS Mutual Fund followed.
These asset managers did reasonably well. Every investor
ICICI Prudential Mutual Fund 461293 485145 23851 5.17
desires to build wealth for a secure future. However, few
HDFC Mutual Fund 441843 424164 -17679 -4
succeed owing to a lack of skill and sufficient knowledge.
Nippon India Mutual Fund 267213 287016 19803 7.41 Although there are other paths to long-term wealth
Aditya Birla Sun Life Mutual Fund 299382 281938 -17444 -5.83 accumulation, the mutual fund route is the most practical and
Kotak Mutual Fund 270547 276333 5786 2.14 effective. Our genuine efforts in the following paragraphs will
Axis Mutual Fund 238575 248962 10387 4.35 be to assist you comprehend mutual funds in more depth.
UTI Mutual Fund 208938 206277 -2661 -1.27
IDFC Mutual Fund 126571 120042 -6529 -5.16 Understanding Mutual Funds
Simply explained, a mutual fund is a group of investors that
DSP Mutual Fund 107241 111158 3917 3.65
pool their money. This pooled money is given to a fund
Mirae Asset Mutual Fund 91802 109513 17711 19.29
manager to manage and grow in a methodical manner. This
Tata Mutual Fund 76962 91262 14300 18.58 pooled money is subsequently invested by the fund manager in
Edelweiss Mutual Fund 69189 84041 14851 21.46 either stocks, bonds, money market instruments or a
L&T Mutual Fund 78274 71703 -6571 -8.39 combination of all of these, depending on the kind of mutual
Franklin Templeton Mutual Fund 65223 62480 -2744 -4.21 fund. The whole pooled sum is split into units. When you
Canara Robeco Mutual Fund 39312 55106 15794 40.18 purchase a mutual fund for a given amount, you are assigned
Sundaram Mutual Fund 37533 42351 4819 12.84 units of mutual funds equal to the amount divided by the price.
The net asset value (NAV) is the price of a unit. As the price of
Invesco India Mutual Fund 42936 42208 -728 -1.69
the underlying investment assets (stocks or bonds or both) rises
Motilal Oswal Mutual Fund 33544 33135 -409 -1.22
over time, so will the NAV of your mutual fund unit. You make
PPFAS Mutual Fund 16648 28403 11755 70.61 money when you sell at a higher NAV.
Baroda BNP Paribas Mutual Fund 19864 22894 3030 15.25
PGIM India Mutual Fund 11184 19324 8140 72.77 Types of Mutual Funds in India
LIC Mutual Fund 18040 16694 -1346 -7.46 One of the key aspects of the Securities and Exchange Board of
HSBC Mutual Fund 11476 13613 2138 18.63 India’s (SEBI) circular on mutual fund rationalisation is that
Quant Mutual Fund 3301 11154 7853 237.91 various mutual fund schemes must be clearly differentiated in
terms of investment strategy and asset allocation. The schemes
Union Mutual Fund 7302 9390 2088 28.59
are grouped roughly into the following categories:
Mahindra Manulife Mutual Fund 6697 9150 2454 36.64
n Equity Schemes
NJ Mutual Fund - 4920 - - n Debt Schemes
IIFL Mutual Fund 3128 4691 1562 49.94 n Hybrid Schemes
IDBI Mutual Fund 4384 3714 -670 -15.28 n Solution-Oriented Schemes
Bank of India Mutual Fund 2494 3051 557 22.35 n Other Schemes.
JM Mutual Fund 2087 3028 942 45.12
ITI Mutual Fund 1983 2922 939 47.33 Furthermore, these broad groups have been further subdivided.
Quantum Mutual Fund 2012 1845 -167 -8.3
Reasons to Invest in Mutual Funds
Navi Mutual Fund 758 1736 978 129.08 Investing in a mutual fund has several advantages. Some of the
Trust Mutual Fund 1033 966 -67 -6.48 most notable are listed below.
WhiteOak Capital Mutual Fund 46 662 616 1343.83 n Better Long-Term Returns — No other asset class has
Samco Mutual Fund - 647 - - given superior long-term returns than equities. Equity is
Indiabulls Mutual Fund 655 524 -130 -19.91 the finest asset class for accumulating wealth. If you want
Taurus Mutual Fund 539 518 -22 -4.04 to invest for the long term, stocks are your best choice.
Shriram Mutual Fund 217 254 36 16.68
And what better way to invest in stocks than through a
professional fund manager?
Source: Morningstar
n Fits all Financial Needs — The beauty of mutual funds is
The table above depicts the change in the AUM of asset that there is a mutual fund for every financial need and
management companies (AMCs) over the last four quarters. financial goal. Looking to save for retirement, purchasing
The most startling discovery is that the highest performers were a house in 10 years, going on a trip in six months, or
those who did not belong to the top 15 club, based on AUM. In paying for your child’s education? All of them are covered
fact, Quant Mutual Fund was able to acquire `7,853 crore in the by mutual funds.

Cover story
MF page - 06
Equity mutual funds are the perfect result, it is advised to begin investing at
least five to seven years in advance.
Again, good mutual fund investment can
solution for people who want to own stocks help you get through the early parental
without doing their own research. expenditures.
— Peter Lynch Planning for Children: Being a

parent is difficult. You must face the
expenditures of your child’s education
n Highly Liquid —Another essential feature of mutual and marriage in short succession when
funds is their strong liquidity. You may sell your units they are in their twenties. This is another
whenever you want and receive your money back. costly endeavour. You should start
Liquidity is critical. Consider the real estate market. What planning for these two critical milestones
if you are unable to sell your property investment when as soon as you become a parent. It is
you want funds? Mutual funds are not in this category. advised to plan for these two financially
demanding milestones at least 15-20
n Unmatched Ease and Simplicity — Investing in mutual years in advance.
funds is really straightforward. It’s also 100 per cent
paperless if you do it using an online platform. Most of us Planning for Retirement:
lack the necessary competence to participate in the equity Retirement is a time to relax. But first,
markets. Mutual funds provide us with a solution by you must place yourself in a financial
harnessing the knowledge of a fund manager. You are not situation that allows you to relax. The
required to actively manage your money. first step is to avoid being a financial
burden on your children and to support
Setting Targets with Mutual Funds yourself in your later years. Mutual funds
Mutual funds can benefit you no matter what stage of life you are your best choice for meeting your
are in or what your investing goals are. retirement objectives. All of these cues
and intricacies have been thoroughly
Working Individual — When you discussed in our previous editions.
begin working, you may set foot on an
investment path to build financial Post-Retirement: When you retire,
discipline. You are accountable for your investments do not come to an end.
controlling your spending as a working If you retire with a corpus, you should
individual. And if you lack discipline in arrange your post-retirement life
controlling your expenditures, you are accordingly. Keeping that corpus in your
more likely to spend your money on savings account would only ensure that
items you don’t need. As a result, it is it does not last as long as you do! Again,
strongly advised that you begin planning mutual funds can assist you in
for life’s milestones as soon as you begin generating a consistent income during
earning. your post-retirement years.
Married Individual: Going from Best Performing Mutual Funds across

one to two means taking on more
financial responsibility. People then start Categories
to plan for the extra expenses that could This section will showcase the top performing mutual funds in
occur along the road. A new house, a car each category. This list is the result of a thorough assessment of
and more holidays become visible in the funds considering both returns and risk. For screening, only
horizon. Mutual funds can assist you in open-ended actively managed equity, debt and hybrid funds
setting different goals for each of your were considered. We have taken into account both short-term
‘big ticket’ purchases. and long-term trailing returns. Apart from returns we have also
considered funds’ risk parameters. We evaluated these funds’
New Parent: The next financially standard deviation and beta to understand risk. Furthermore,
debilitating milestone is becoming a we put these funds through a risk-adjusted returns test, as
parent. From hospital costs to diapers to determined by the Sharpe and Sortino ratios. However, it is to
school fees, you will need a lot of money be noted that it is in no way any recommendation. Investors are
to get through this long period. As a advised to apply their own discretion before investing.

MF page - 07
ICICI Prudential Banking & PSU Debt Fund - Direct Plan

Category : Debt : Banking & PSU | Benchmark Index : CRISIL Banking and PSU Debt Index
Fund Manager : Rahul Goswami, Chandni Gupta
NAV (`) as on Nov. 23, 2022 : ............... 27.82

Expense Ratio as on Oct. 31, 2022 : ............... 0.35
AUM (` Cr) as on Oct. 31, 2022 : ............... 7,553
Top 3 Sectors
Sectors % To Net Assets
AAA 58.58
G-Sec 29.65
AA 8.07
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
GOI FRB 22-Sep-2033 21.25
Small Industries Development Bank Of India
8.01
Sr III 07.25% (31-Jul-25)
GOI - 30-Oct-2034 7.67
Kotak Mahindra Bank Ltd. (25-Nov-22) 5.60
ICICI Bank Ltd. SR-DMR18 9.15% 5.35
ICICI Prudential Corporate Bond Fund - Direct Plan

Category : Debt : Corporate Bond | Benchmark Index : CRISIL Corporate Bond Index
Fund Manager : Rahul Goswami, Anuj Tagra, Chandni Gupta
NAV (`) as on Nov. 23, 2022 : ............... 25.42

AUM (` Cr) as on Oct. 31, 2022 : ............... 14,985
Top 3 Sectors
AAA 65.80
G-Sec 29.01
Cash 5.19
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
GOI FRB 22-Sep-2033 17.77
Reliance Industries Ltd. SR PPD-N BR
9.00
(21-Sep-23)
04.04% GOI - 04-Oct-2028 5.27
GOI - 30-Oct-2034 4.74
Housing Development Finance Corporation
4.67
Ltd. -SR-Z-006 (28-Oct-24)

Cover story
MF page - 08
ICICI Prudential Credit Risk Fund - Direct Plan

Category : Debt : Credit Risk | Benchmark Index : CRISIL Short Term Credit Risk Fund
Fund Manager : Manish Banthia, Akhil Kakkar
NAV (`) as on Nov. 23, 2022 : ............... 28.05

AUM (` Cr) as on Oct. 31, 2022 : ............... 7,838
Top 3 Sectors
AA 53.64
AAA 14.73
A 11.57
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
Prestige Estate Projects Ltd. SR-TR-2 10.50%
3.20
(10-Aug-23)
Nayara Energy Ltd. 08.75% (13-Aug-24) 3.08
Aditya Birla Fashion And Retail Ltd. SR-6
2.85
(11-Nov-22)
06.54% GOI 17-Jan-2032 2.82
National Bank For Agriculture & Rural
Development Sr- SR 21 I 5.00% (11-Mar- 2.53
2024)
ICICI Prudential All Seasons Bond Fund - Direct Plan

Category : Debt : Dynamic Bond | Benchmark Index : NIFTY Composite Bond Index
Fund Manager : Manish Banthia, Anuj Tagra
NAV (`) as on Nov. 23, 2022 : ............... 32.00

AUM (` Cr) as on Oct. 31, 2022 : ............... 5,938
Top 3 Sectors
G-Sec 46.04
AA 31.78
AAA 11.11
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
GOI FRB 22-Sep-2033 13.03
04.04% GOI - 04-Oct-2028 8.10
GOI - 30-Oct-2034 7.61
06.54% GOI 17-Jan-2032 7.20
07.38% GOI - 20-Jun-2027 7.03

MF page - 09
SBI Magnum Gilt Fund - Direct Plan

Category : Debt : Gilt | Benchmark Index : Nifty All Duration G-Sec Index
Fund Manager : Dinesh Ahuja
NAV (`) as on Nov. 23, 2022 : ............... 56.31

AUM (` Cr) as on Oct. 31, 2022 : ............... 3,853
Top 3 Sectors
G-Sec 85.62
Cash 14.38
-- --
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
07.26% GOI - 22-Aug-2032 19.21
182 Days Treasury Bill - 01-Dec-2022 10.97
91 Days Treasury Bill - 08-Dec-2022 10.60
364 Days Treasury Bill - 17-Nov-2022 10.35
91 Days Treasury Bill - 05-Jan-2023 6.42
Axis Liquid Fund - Direct Plan

Category : Debt : Liquid | Benchmark Index : Nifty Liquid Fund Index
Fund Manager : Devang Shah, Aditya Pagaria
NAV (`) as on Nov. 23, 2022 : ............... 2,441.85

AUM (` Cr) as on Oct. 31, 2022 : ............... 27,253
Top 3 Sectors
AAA 62.72
Cash 23.15
G-Sec 14.12
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
National Bank For Agriculture & Rural
3.65
Development -82D (30-Nov-22)
Small Industries Development Bank Of India
2.92
-88D (02-Dec-22)
Union Bank Of India (02-Jan-23) 2.90

Cover story
MF page - 10
ICICI Prudential Long Term Bond Fund - Direct Plan

Category : Debt : Long Duration | Benchmark Index : NIFTY Long Duration Debt Index
Fund Manager : Manish Banthia, Anuj Tagra
NAV (`) as on Nov. 23, 2022 : ............... 78.76

AUM (` Cr) as on Oct. 31, 2022 : ............... 583
Top 3 Sectors
G-Sec 86.69
AA 8.89
Cash 4.30
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
07.54% GOI 23-May-2036 65.74
06.54% GOI 17-Jan-2032 20.64
The Great Eastern Shipping Company Ltd.
8.89
08.24% (10-Nov-26)
07.67% Tamil Nadu UDAY BOND - 22-Mar-
0.31
2023
Indian Railway Finance Corpn Ltd 8.75%
0.11
(29-Nov-26)
Aditya Birla Sun Life Medium Term Plan - Direct Plan

Category : Debt : Medium Duration | Benchmark Index : CRISIL Medium Term Debt Index
Fund Manager : Sunaina da Cunha, Mohit Sharma
NAV (`) as on Nov. 23, 2022 : ............... 33.40

AUM (` Cr) as on Oct. 31, 2022 : ............... 1,613
Top 3 Sectors
AA 35.08
AAA 33.54
G-Sec 17.60
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
06.54% GOI 17-Jan-2032 10.76
Shriram City Union Finance Ltd. SR-XIII
6.26
09.25%(28-May-24)
Axis Bank Ltd. (16-Jun-23) 4.45
Mahindra Rural Housing Finance Ltd. SR
3.10
DD2021U (17-Jun-24)
Canara Bank (03-Jan-23) 3.06

MF page - 11
ICICI Prudential Short Term Fund - Direct Plan

Category : Debt : Short Duration | Benchmark Index : Nifty Short Duration Debt Index
Fund Manager : Manish Banthia, Nikhil Kabra
NAV (`) as on Nov. 23, 2022 : ............... 53.05

AUM (` Cr) as on Oct. 31, 2022 : ............... 14,606
Top 3 Sectors
AAA 39.94
G-Sec 38.28
AA 17.24
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
GOI FRB 22-Sep-2033 11.60
07.38% GOI - 20-Jun-2027 10.28
GOI - 30-Oct-2034 6.45
04.04% GOI - 04-Oct-2028 4.90
Pipeline Infrastructure (India) Ltd. 08.9508%
2.87
(22-Mar-24)
Aditya Birla Sun Life Savings Fund - Direct Plan

Category : Debt : Ultra Short Duration | Benchmark Index : NIFTY Ultra Short Duration Debt Index
Fund Manager : Sunaina da Cunha, Kaustubh Gupta, Monika Gandhi
NAV (`) as on Nov. 23, 2022 : ............... 458.80

AUM (` Cr) as on Oct. 31, 2022 : ............... 14,075
Top 3 Sectors
AAA 70.28
AA 14.23
G-Sec 13.84
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
Housing Development Finance Corporation
4.26
Ltd. -SR-Z-006 (28-Oct-24)
Tata Steel Ltd. -132D (29-Dec-22) 2.81
IndusInd Bank Ltd. (10-Feb-23) 2.44
Bharti Enterprises Ltd. -230D (14-Dec-22) 2.22
Axis Bank Ltd. (16-Jan-23) 2.10

Cover story
MF page - 12
HDFC Flexi Cap Fund - Direct Plan

Category : Equity : Flexi Cap | Benchmark Index : NIFTY 500 - TRI
Fund Manager : Roshi Jain
NAV (`) as on Nov. 23, 2022 : ............... 1,242.87

AUM (` Cr) as on Oct. 31, 2022 : ............... 31,686
Top 3 Sectors
Financials 35.55
Energy 15.26
Technology 11.71
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
ICICI Bank Ltd. 8.89
State Bank Of India 6.52
Infosys Ltd. 5.82
HDFC Bank Ltd. 5.34
NTPC Ltd. 4.64
ICICI Prudential US Bluechip Equity Fund - Direct Plan

Category : Equity : International | Benchmark Index : S&P 500
Fund Manager : Sharmila D?mello, Rohan Maru
NAV (`) as on Nov. 23, 2022 : ............... 48.83

AUM (` Cr) as on Oct. 31, 2022 : ............... 2,370
Top 3 Sectors
Financials 21.75
Services 19.83
Capital Goods 17.25
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
Wells Fargo & Company 3.34
Biogen 3.04
MercadoLibre 2.99
Microsoft 2.83
3M 2.80

MF page - 13
Tata Large & Mid Cap Fund - Direct Plan

Category : Equity : Large & Mid Cap | Benchmark Index : NIFTY LargeMidcap 250 - TRI
Fund Manager : Chandraprakash Padiyar, Meeta Shetty
NAV (`) as on Nov. 23, 2022 : ............... 398.59

AUM (` Cr) as on Oct. 31, 2022 : ............... 3,504
Top 3 Sectors
Financials 28.77
Automobile 11.14
FMCG 8.98
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
Reliance Industries Ltd. 5.46
HDFC Bank Ltd. 4.70
Varun Beverages Ltd. 4.62
HDFC Top 100 Fund - Direct Plan

Category : Equity : Large Cap | Benchmark Index : NIFTY 100 - TRI
Fund Manager : Rahul Baijal
NAV (`) as on Nov. 23, 2022 : ............... 804.00

AUM (` Cr) as on Oct. 31, 2022 : ............... 22,709
Top 3 Sectors
Financials 37.78
Energy 17.28
Technology 10.95
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
HDFC Bank Ltd. 8.07
Infosys Ltd. 6.17
HDFC Ltd. 5.15

Cover story
MF page - 14
HDFC Mid-Cap Opportunities Fund - Direct Plan

Category : Equity : Mid Cap | Benchmark Index : Nifty Midcap 150 - TRI
Fund Manager : Chirag Setalvad
NAV (`) as on Nov. 23, 2022 : ............... 109.72

AUM (` Cr) as on Oct. 31, 2022 : ............... 35,120
Top 3 Sectors
Financials 20.69
Automobile 15.05
Travel 9.53
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
The Indian Hotels Company Ltd. 5.39
Max Healthcare Institute Ltd. 4.38
Bharat Electronics Ltd. 4.18
Hindustan Aeronautics Ltd. 3.88
Cholamandalam Investment and Finance
3.68
Company Ltd.
ICICI Prudential Infrastructure Fund - Direct Plan

Category : Equity : Sectoral | Benchmark Index : S&P BSE India Infrastructure Index - TRI
Fund Manager : Ihab Dalwai
NAV (`) as on Nov. 23, 2022 : ............... 104.84

AUM (` Cr) as on Oct. 31, 2022 : ............... 2,152
Top 3 Sectors
Financials 24.67
Energy 22.82
Infrastructure 19.06
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
NTPC Ltd. 9.41
Larsen & Toubro Ltd. 8.93
Bharti Airtel Ltd. 6.96
Oil & Natural Gas Corporation Ltd. 5.54
HDFC Bank Ltd. 5.08

MF page - 15
Nippon India Small Cap Fund - Direct Plan

Category : Equity : Small Cap | Benchmark Index : Nifty Smallcap 250 - TRI
Fund Manager : Samir Rachh
NAV (`) as on Nov. 23, 2022 : ............... 101.84

AUM (` Cr) as on Oct. 31, 2022 : ............... 22,844
Top 3 Sectors
Financials 14.64
Capital Goods 13.61
Chemicals 9.74
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
Tube Investments of India Ltd. 3.92
Poonawalla Fincorp Ltd. 1.81
HDFC Bank Ltd. 1.77
KPIT Technologies Ltd. 1.75
Tejas Networks Ltd. 1.73
HDFC Taxsaver Fund - Direct Plan

Category : Equity : Tax Saving (ELSS) | Benchmark Index : NIFTY 500 - TRI
Fund Manager : Roshi Jain
NAV (`) as on Nov. 23, 2022 : ............... 878.55

AUM (` Cr) as on Oct. 31, 2022 : ............... 10,066
Top 3 Sectors
Financials 37.10
Technology 10.82
Automobile 10.34
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
HDFC Bank Ltd. 8.92
Hindustan Aeronautics Ltd. 5.23

Cover story
MF page - 16
ICICI Prudential Exports and Services Fund - Direct Plan

Category : Equity : Thematic | Benchmark Index : S&P BSE 500 - TRI
Fund Manager : Sankaran Naren, Vaibhav Dusad
NAV (`) as on Nov. 23, 2022 : ............... 105.86

AUM (` Cr) as on Oct. 31, 2022 : ............... 1,070
Top 3 Sectors
Financials 34.57
Technology 16.91
Healthcare 13.70
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
HCL Technologies Ltd. 9.54
Sun Pharmaceutical Industries Ltd. 8.17
Infosys Ltd. 6.40
SBI Contra Fund - Direct Plan

Category : Equity : Value / Contra | Benchmark Index : S&P BSE 500 - TRI
Fund Manager : Dinesh Balachandran
NAV (`) as on Nov. 23, 2022 : ............... 243.37

AUM (` Cr) as on Oct. 31, 2022 : ............... 6,694
Top 3 Sectors
Financials 20.93
Energy 7.79
Technology 6.87
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
HDFC Bank Ltd. 3.23
Infosys Ltd. 3.11
Tube Investments of India Ltd. 2.81

MF page - 17
HDFC Balanced Advantage Fund - Direct Plan

Category : Hybrid : Dynamic Asset Allocation | Benchmark Index : NIFTY 50 Hybrid Composite Debt 50:50 Index
Fund Manager : Anil Bamboli, Gopal Agrawal, Srinivasan Ramamurthy, Arun Agarwal
NAV (`) as on Nov. 23, 2022 : ............... 343.36

AUM (` Cr) as on Oct. 31, 2022 : ............... 49,709
Top 3 Sectors
Financials 26.55
G-Sec 15.89
Energy 15.02
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
Tri-Party Repo (TREPS) 5.78
Coal India Ltd. 4.87
HDFC Bank Ltd. 4.82
Quant Absolute Fund - Direct Plan

Category : Hybrid : Equity Oriented | Benchmark Index : CRISIL Hybrid 25+75 - Aggressive Index
Fund Manager : Vasav Sahgal, Sanjeev Sharma, Ankit A Pande
NAV (`) as on Nov. 23, 2022 : ............... 328.56

AUM (` Cr) as on Oct. 31, 2022 : ............... 762
Top 3 Sectors
FMCG 15.55
Financials 15.49
Energy 11.99
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
ITC Ltd. 9.39
Ambuja Cements Ltd. 7.74
Adani Ports and Special Economic Zone Ltd. 7.68
05.74% GOI - 15-Nov-2026 6.34

Cover story
MF page - 18
ICICI Prudential Multi Asset Fund - Direct Plan

Category : Hybrid : Multi Asset Allocation | Benchmark Index : NIFTY 200 - TRI
Fund Manager : Sankaran Naren, Anuj Tagra, Ihab Dalwai, Sri Sharma, Gaurav Chikane
NAV (`) as on Nov. 23, 2022 : ............... 510.15

AUM (` Cr) as on Oct. 31, 2022 : ............... 14,875
Top 3 Sectors
Financials 21.72
Cash 20.92
Energy 16.70
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
Tri-Party Repo (TREPS) 19.77
NTPC Ltd. 8.35
Oil & Natural Gas Corporation Ltd. 4.96
HDFC Children’s Gift Fund - Direct Plan

Category : Hybrid : Solution Oriented | Benchmark Index : NIFTY 50 Hybrid Composite Debt 65:35 Index
Fund Manager : Anil Bamboli, Chirag Setalvad
NAV (`) as on Nov. 23, 2022 : ............... 215.66

AUM (` Cr) as on Oct. 31, 2022 : ............... 5,968
Top 3 Sectors
G-Sec 23.06
Financials 21.78
Technology 8.85
As on Oct. 31, 2022
Top 5 Holdings
Company % of Assets
04.26%ÿGOIÿ- 17-May-2023 5.87
07.10% GOI - 18-Apr-2029 5.36
HDFC Bank Ltd. 4.96

Financial Planning
MF Page - 19
Tejas Bharat Kumar Shah How SIP Aids in Achieving Financial Goals
1) No Need to Time the Market — SIP aids in
Mutual Fund Distributor avoiding the most common pitfall faced by investors:
timing the market. By investing through SIP, an investor
ensures that he/she is investing during the bull, bear and
sideways market phases and is not waiting out for a
particular market phase to begin or get over. As a result,
the outcome of staying invested over a complete market
cycle tends to be phenomenal.
2) Benefit from Rupee Cost Averaging — The

basic idea behind SIP is that you invest a particular sum
of money at regular intervals, irrespective of the invested
mutual fund’s net asset value (NAV). NAV is the price of
one unit of a mutual fund. As the NAV goes up, your
investment value increases and hence the number of
units allotted by the fund house goes down. Likewise, if
the NAV goes down, your investment value decreases
and you receive more units. So, if you are staying invested
through a bear market cycle, you will have the benefit of
accumulating units at a cheaper cost and as the market
How SIP Helps in recovers you stand to make substantial gains. Hence, it is
important to stay invested over the long term. The rupee
cost averaging feature of SIP helps achieve financial goals
Achieving Financial
with lesser risk of market volatility and lower cost of
investment.
3) Get the Power of Compounding — The SIP
Goals route allows investors to harness the power of

compounding over a long period. Compounding is the
W
process of generating returns on your money and the
hen it comes to investing, today almost every returns themselves. So, it is advisable to start investing
other person opts for a systematic investment early and stay invested for the long term to enjoy the
plan (SIP). This is largely because over the past benefits of compounding. However, the effects of
decade investors have realised that SIP is the compounding will not be visible in the portfolio in the
simplest way to create wealth and achieve financial goals in a short run.
seamless manner. SIP is a method to invest in mutual funds
systematically and take exposure to various asset classes like 4) Easy on the Pocket — Another significant advantage
equity, debt, gold, etc. By setting up SIP, a pre-defined amount of SIP is the low minimum investment amount one can
gets automatically debited from the investor’s bank account and start with. You can start investing with just `500 per
credited to the investment account. Here, the investor has the month. In order to make it accessible for the wider
flexibility to choose a convenient date and SIP contribution masses, today there are schemes which allow an investor
frequency which can be daily, weekly, monthly, or quarterly. to start an SIP with as low as `100. So, there's no need to
wait until you have saved up a significant sum of money
The amount will be automatically debited from your bank before investing in mutual funds through SIP.
account under the Electronic Clearing System (ECS) mandate
on the selected SIP date. Financial goals typically can be While `100 or `500 may look insignificant, over a long period
segregated as short, medium and long-term goals. For each of your money will compound and holds the potential to surprise
the goals on the basis one’s risk appetite an investor can choose you positively. Moreover, you also have the flexibility to
between equity mutual funds, debt funds and hybrid funds. increase the SIP amount as and when your cash flow improves.
Hybrid funds are those which can invest across different asset To conclude, while SIP no doubt is a game-changer when it
classes. Even though equity investments tend to be volatile in comes to achieving long-term goals, the most critical factor is
the short term, over long term the experience tends to be good. the discipline in investing, which SIP provides. And in case if
Hence, use equities to meet your medium to long-term goals. you have lump sum money and wish to invest in equities, it is
For short-term goals, it is advisable to use debt mutual funds or better to divide the amount into smaller chunks and invest
conservative hybrid mutual funds. through SIPs. DS
The writer is Mutual Fund Distributor n Email : tejdhavalins@gmail.com n Website : www.tejdhavalfinserve.com

MF Select
MF page - 20
Kotak Small Cap Fund - Direct Plan

Equity: Small-Cap 18.83%
Scheme Category * Expected Return In Next One Year
* Based on our proprietary algorithm.
8614 187.67 0.59% NIFTY Smallcap 250 TRI

Expense Ratio (%)
AUM (`Cr): Oct. 31, 2022 NAV (`) Nov. 28, 2022 Oct. 31, 2022. Benchmark
For units in excess of 10% of the investment,1% will be Pankaj Tibrewal

charged for redemption within 365 days
Exit Load Fund Manager
TOP 10 Holdings
Reason for recommendation COMPANY NAME % TO NET ASSETS
The performance of the broader equity indices has been Carborundum Universal 4.11
anything but good year-till-date. Since the start of this year they Century Plyboards (India) 3.90
have underperformed the frontline equity indices such as Nifty Ratnamani Metals & Tubes 3.45
and Sensex. From a long-term investment perspective, price Galaxy Surfactants 3.35
decline and underperformance gives an opportunity of Sheela Foam 3.11
investing in small-cap mutual funds. Thus, investors can use Blue Star 2.84
this opportunity for their long-term investment objectives. In Garware Technical Fibres 2.76
this space, we believe Kotak Small-Cap Fund fits the best. The Cyient 2.59
fund follows the philosophy of growth at a reasonable price. Supreme 2.50
Their focus is on investing in quality businesses run by good Solar Industries India 2.45
management.
With an asset size of Rs 8,614 crore, this fund invests in 75
The fund looks for those companies generating higher return stocks with around 67 per cent in small-cap stocks, 23 per cent
on capital and offering sustainable growth with a higher market in mid-cap stocks and 4 per cent in large-cap stocks. This fund
potential and available at reasonable valuations. This approach is quite diversified as only 31 per cent is contributed by its top
has helped the fund to perform better than its benchmark and 10 holdings while the top three sectors contribute 40 per cent.
category in the short-term as well as long-term periods. The Some of its top holdings include Carborundum Universal,
fund’s median rolling return of one year has been 18.8 per cent Century Plyboards (India), Ratnamani Metals and Tubes, etc.
compared to 12.8 per cent for the category average median. On the sectoral front, this fund is overweight on materials,
Even for three years the fund’s median rolling return is 19.7 per consumer discretionary, chemicals and metals. It carries higher
cent compared to 12.9 per cent for the category average median. risk and hence is suitable for aggressive investors. DS
Monthly Returns
The NAV graph is for the period of trailing one year.

D E M O C R A T I Z I N G W E A L T H C R E A T I O N
P R E S E N T
Section Sponsor
History of
Mutual Funds
in India
Special Report
MF Page - 22
History of When UTI was founded many years ago, the intention was not
Mutual Funds
only to introduce the concept of mutual funds in India, but also
to establish a corpus for nation-building. As a result, the
government included many Income Tax concessions in the UTI
in India
schemes to entice small Indian investors. Unsurprisingly, UTI’s
investable capital grew from `600 crore in 1984 to `6,700 crore
in 1988. Clearly, the moment had arrived for the Indian mutual
industry to progress.
Mutual funds’ popularity has grown as a Entry of Public Sector (1987 – 1993)
The mutual fund industry had developed its own character by
result of the greater returns they have the end of 1988. Since 1987, various public sector banks had
recently provided. However, it is been urging the government to establish their own mutual fund
divisions. The State Bank of India established the first non-UTI
fascinating to learn how it all began. The asset management fund in November 1987. Other AMCs were
swiftly established by institutions such as Canara Bank, Indian
article takes you on a fascinating tour Bank, Life Insurance Corporation, General Insurance
M
Corporation and Punjab National Bank.
through the world of mutual funds in India
This liberalisation of the mutual fund industry had the
utual funds are becoming anticipated consequences. In 1993, the total corpus of all AMCs
increasingly popular among reached a stunning `44,000 crore. According to experts, the
regular investors. This was not the second phase not only extended the sector’s base but also
situation even a decade ago. encouraged individuals to invest a greater proportion of their
However, demonetisation and the resources in mutual funds. The mutual fund industry in India
pandemic might be viewed as was clearly positioned for further expansion.
catalysts for increased interest
among retail investors. However, it Entry of Private Sector (1993 – 2003)
would be intriguing to learn how it all began and how the The Indian government recognised the need for economic
mutual fund industry evolved through time. In this article, we liberalisation between 1991 and 2003. Financial sector changes
will walk you through the mutual funds’ journey in India. were urgently required. India required private sector
Mutual funds have a long history, dating back to 1963. The first cooperation to rebuild the economy. With this in mind, the
mutual fund institution was the Unit Trust of India (UTI). government also opened up the mutual fund sector to private
companies. Foreign players embraced the initiative and poured
It is a collaborative endeavour of the Reserve Bank of India into the Indian market in large numbers. During this time, 11
(RBI) and the Government of India. The goal of UTI was to let private players formed asset management funds in conjunction
small, inexperienced investors to invest in larger companies’ with overseas’ businesses.
shares and other financial instruments. UTI had a monopoly in
the nation at the time. For many years, the 1964 Unit Scheme Some of the most prominent AMCs in the private sector are:
was the first mutual fund product accessible. The history of n ICICI Prudential AMC: This company is a collaboration
mutual funds in India is divided into five separate stages, which between ICICI Bank of India and Prudential Plc of the
we will cover in the following paragraphs. United Kingdom. As of September 2022, it manages an
average corpus of `4.85 lakh crore and has a portfolio of
Phase of Inception (1964 – 1987) more than 120 plans.
The establishment of the UTI signified the beginning of the first n HDFC Mutual Fund: This company was founded in the
phase. Despite the fact that it was a partnership between the 1990s and manages over 70 distinct types of funds.
RBI and the Indian government, the latter was quickly detached n Kotak Mahindra Mutual Fund: As of September 2022,
from the day-to-day activities of the Unit Trust of India. The this AMC’s average asset base was more than `2.76 lakh
company was the lone operator in the Indian mutual fund crore. It is a collaborative venture between Kotak
industry at the time. The Unit Linked Insurance Plan, or ULIP, Financial Services and the Mahindra Group.
was introduced by UTI in 1971. From that year till 1986, UTI
launched various plans and was instrumental in popularising SEBI Interventions, Growth and AMFI
the concept of mutual funds in India. As the mutual fund industry expanded further in the 1990s,

MF Page - 23
AMCs and the government

decided it was time for some
regulation and oversight.
Investors needed to be
safeguarded, and a level
playing field needed to be
established. A few years before,
the Indian industry had
suffered greatly as a result of
bank frauds and there was a
genuine risk that investors
might lose their money once
more. As a result, the
government enacted the
Securities and Exchange Board
of India (SEBI) Regulation Act
in 1996 which established a set
of fair and transparent
standards for all players. The
Indian government stated in
1999 that all mutual fund
profits would be tax-free. The
decision was made to stimulate
future expansion in the mutual
fund sector. In the meanwhile,
the mutual fund industry
recognised the value of
self-regulation. As a result, the
Association of Mutual Funds
in India (AMFI) was formed.
Investor education is one of the
organisation’s objectives.
Phase of Consolidation
(February 2003 – April
2014)
Following the revocation of the
original UTI Act of 1963, the
Unit Trust of India was
separated into two
independent organisations in
February 2003. The UTI
Mutual Fund (which is subject
to SEBI regulations for mutual
funds) and the Specified
Undertaking of the Unit Trust
of India (SUUTI) were the two
independent companies.
Following the dissolution of
the erstwhile UTI and the
occurrence of several mergers
among various private sector
firms, the mutual fund
industry entered a phase of
consolidation.

Special Report
MF Page - 24
4
Since May 2014, the Indian mutual fund
1 sector has seen a consistent influx of

funds and an increase in AUM as well as
the overall number of investor accounts.
3 The entire mutual fund sector grew
On May 31, 2014, the mutual fund
from `7.68 lakh crore to `39.5 lakh
industry’s AUM surpassed `10 lakh crore
2
crore between October 2012 and
for the first time. By August 2017, the
The mutual fund sector nearly October 2022.
AUM had doubled and had surpassed
doubled in size between October `20 lakh crore for the first time. Finally,
2017 and October 2022, a five-year
5
by November 2020, the AUM would have
period. surpassed `30 lakh crore.
From June 2017 to September

2022, the number of investor
folios increased from 5.82 crore to
13.81 crore.
6
Mutual fund distributors have also played
an important role in popularising SIP
schemes. The total number of SIP accounts
surpassed 1 crore in April 2016. The
overall number of SIP accounts as of
October 2022 was 5.93 crore.
Following the global economic recession of 2009, financial growth in both total AUM and total number of investor
markets throughout the world were at an all-time low, and the accounts.
Indian market was no exception. The majority of investors who
parked their money during the market’s peak experienced Currently, all asset management companies in India handle
significant losses. This seriously undermined investors’ trust in assets of around `39.5 lakh crore. Though this figure appears
mutual fund products. Over the next two years, the Indian appealing, we still have a long way to go before we can compete
mutual fund sector tried to recover from these setbacks and with the West. It is believed that Indians save between `20-30
reinvent itself. With SEBI removing the entry load and the lakh crore every year. The Indian mutual fund business has
long-term effects of the global economic crisis, the situation enormous potential if Indians began to invest a larger portion
became much more difficult. This picture is supported by the of their wealth in mutual funds. According to experts, Indians
slow increase in the aggregate AUM of the Indian mutual fund have begun to move a portion of their wealth from physical
industry. assets such as gold and land to financial instruments such as
equities, bonds, ETFs, etc. However, the AMFI and the
Steady Development and Growth government must do more to encourage Indians to participate
Recognising the paucity of mutual fund penetration in India, in mutual funds.
particularly in Tier II and Tier III towns, SEBI introduced a
slew of progressive steps in September 2012. The goal of these Conclusion
initiatives was to increase transparency and security in the The Indian mutual fund sector began in 1963 with the
interests of stakeholders. This was SEBI’s initiative to establishment of the Unit Trust of India. This industry has
‘reenergise’ the Indian MF industry and increase the total developed over time from a UTI-dominated one to one with
mutual fund penetration in India. The initiatives eventually equal involvement from the public and private sectors. In
paid off by reversing the downward trend caused by the global comparison to worldwide standards, the Indian mutual fund
financial crisis. After the new administration took control at the industry is still rather modest. This sector has the potential to
centre, the situation improved significantly. Since May 2014, develop exponentially with more support from the AMFI and
the Indian mutual fund sector has seen sustained inflows and the government.

Interview MF Page - 25
funds. Depending on the type of investors a combination of entry

points can be an ideal choice. Investors have chosen MF SIPs as an
ideal solution for periodic deployments of funds to equity markets.
What is the biggest challenge in beating the markets consistently?

I believe Indian investors are still relatively inexperienced when it
Chandresh Nigam comes to time spent in the market. The recent correction and the
subsequent recovery have caught investors off guard. Investors by
MD & CEO, Axis AMC and far have been mature enough to listen to the views of financial
planners’ advisors and MF providers on how to approach investing.
The FinTech space notably has furthered this cause, reaching out to
Brand Campaign For Mutual Funds Has those previously untouched by our industry.
We conduct an annual study comparing fund returns and investor

Struck A Chord With Crores of Investors returns. The crux of this study is to highlight how investors lose out
in the long term by taking investment decisions based on myopic and
What is your outlook on the global markets for CY23 and will the often emotional factors. Patience and truly long-term investment
horizons can bridge the gap between the two returns enhancing the
Indian market outperform its international peers? overall experience and happiness quotient of investors.
The year 2022 in hindsight can be seen as the year of market
contemplation. Indian markets are likely to end the year almost flat What are the future drivers for the mutual fund industry?
(±5 per cent) barring a possible December move on either end. Evolution is natural, especially in a dynamic industry like asset
Globally markets have reassessed a plethora of global risks. We management. Mutual funds have seen a significant increase in
believe the year ahead will act as a litmus test of India’s resilience. investor mindshare. I do not foresee this growth reducing any time
Corporate India’s balance sheet is stronger than it has ever been over soon. Active funds have stood the test of time with funds capturing
the past decade as much of the deleveraging cycle has played out. significant growth opportunities over the last 20 years. The industry
Green shoots in terms of capex and follow-through of earnings have as a whole has built a very strong track record and will continue to do
buoyed Indian equity markets to all-time highs. so in the times to come.
For rates, we anticipate, markets have already begun pricing in peak The fixed-income market has also seen a natural acceptance as more
levels of policy rates. Policymakers have focused their attention on and more mature investors have started investing the fixed income
combating widespread inflation. With recessionary fears, political products to leverage asset allocation in favour of stable investment
upheaval is likely to force central bankers to re-evaluate this stance portfolios. As the fixed-income market deepens, nuanced investment
and balance policy back in favour of growth. Asset allocation models strategies for income generation can see prospective demand from
have been impacted over the last 18 months as both equity and fixed investors. We are already witnessing an acceptance of these in the
income world over has been on the downturn. As that correlation private credit markets.
potentially normalizes in 2023, opportunities are likely to re-emerge.
Volatility has been a lesson for new-age investors post the pandemic, Global markets have also been a new frontier that has been well
and 2023 is likely to be no different. received. There, specifically thematic strategies that are not available
in India could be untapped opportunities. Also, rising interest rates
In your view, what is the reason equity SIP investments have hit in the developed markets have made fixed income a compelling
record highs recently? opportunity. Overseas investments have hit a regulatory hurdle
The Indian consumer is famous for its brand association of products temporarily but can be a great opportunity for investors to take
across every industry an acronym that defines the product category. targeted exposure.
In the investing world, SIP is our acronym. The brand campaign for
mutual funds has struck a chord with crores of investors who Finally, the recently opened commodities market in India is a new
associate mutual fund investments with SIP. The hassle-free nature of investment avenue. With SEBI giving MFs permission to participate
the solution and the ease with which it is integrated into the financial in ETCDs (Exchange traded commodity derivatives) MF’s can now
payments network makes this a popular medium for investors. This look at a whole new asset class. This will most likely lead to a
number we anticipate will keep growing and could become the completely new range of products and solutions over the next few
dominant medium for asset gathering in years to come. years. Globally there are a plethora of strategies both on the multi-
asset front and standalone commodity-based strategies that have
Can you throw some light on the best way to participate in the found acceptance by investors
equity markets?
Equity markets have gradually become more and more democratised I am confident, mutual fund AUMs will rise manifold as compared
as technology improves the way our market's ecosphere functions. to today’s AUMs. As regulations allow for funds to increase their
For this, we must credit the regulators and market intermediaries for depth of offerings both in terms of asset classes and investment
building a robust yet scalable digital market setup. Today, investors strategies. Regulations thus far have struck the perfect balance
from the remotest parts of India can access the equity markets between opening up investment avenues while safeguarding investor
through direct equity solutions offered by brokers or via financial interests. Hopefully, this trend continues for the next 20 years
solutions like insurance providers, portfolio managers and mutual and more. DS

Sunil Subramaniam
Managing Director and CEO, Sundaram Mutual
“Investors Should Look At

Allocation From A Goal-Oriented
Perspective”
Excerpts from an interview with Sundaram Mutual Fund
And typically, I don’t expect this to get resolved before February

Now that we are at an all-time high, what is your outlook on or March. Due to the need for heating during winter in the
both the global markets and the Indian equity markets? western countries, the demand for oil will increase.
I think the recession is inching closer because of which I think
the interest rate hikes may have been begun to achieve their And that is why the US has announced a price cap since it is
purpose. That is why the market is rallying because the trying to economically win the war against Russia. However,
participants don’t expect a peak to be followed by another 50-75 this may not hurt Russia since it is already selling at a discount.
basis hike. The expectation is for a pause and rate cuts to boost Another important point is that Europe seems to be still
growth by the end of the year. In the global markets, there are divided in terms of whether to follow the price cap or not. This
two factors in play. One is that the liquidity tap is unlikely to get has led to uncertainty. In India, the focus will now shift to the
closed during a recessionary phase. The markets always Union Budget. As such, the markets will lack any clear direc-
discount the future. The forthcoming data in the next few tion. I do not expect any liquidity drop. Also, the correction will
weeks will reveal whether it is going to be a hard or soft not be deep. The domestic inflows are good and the SIPs
recession. In case of the latter, there will be a bounce-back continue to be fairly robust. Therefore, this could be a consoli-
effect. dation phase. A good budget will lead to all-time highs and if it
is a populist budget due to elections next year, the markets may
A hard recession may last for at least 4-6 quarters, which means take a pause.
the revival phase will begin by the end of 2024. I believe all this
bad news is factored into the markets. The global markets have How can one invest when the market is at record highs and
also probably seen a bottom unless there is a sectoral level
surprise. That is why the US’ earnings are important. The US how best to take advantage of mutual funds?
follows a calendar and the companies will start reporting their While it is assumed that the market is at its all-time high and so
earnings in January. From an Indian perspective, the recession the earnings are also at a high, the PE ratio is not at an all-time
may lead to a crack in the oil prices and will depend on the the high. It is still around the long-term average of the country,
ability of OPEC to cut supply to keep the prices from falling. which is 18-19 per cent. If the markets are at an all-time high,

MF Page - 27
the PE should have been at about 25 per cent and at that stage What exactly is long term? How much is long term in your
discounting should be expected in terms of future growth in view? Is it one year or three years?
profits. Today, the market is only factoring in normal growth
and profits. The valuations are still hovering around the Short-term, from an equity market perspective, is 1-3 years,
average. What you should focus on is that from an investor’s medium-term is 3-5 years and long-term is 5-10 years
perspective you don’t really get a sense of the valuations. and more. The logic behind is simple; it is the extent to which
the capital market can assure you capital protection. If you
Investors should look at allocation from a goal-oriented say five years and you take the large-cap indices, for about 98
perspective. The further you are away from your goal in time or per cent of the time they would have provided capital protec-
value terms, the more you should put into equity. If you are tion.
closer to your goals, the asset allocation must shift towards
debt. Also, importance should be given to risk profile. Today, In your view, will the Indian markets continue to outperform
the domestic story is that of middle-caps but flexi-caps must be
an investor’s primary allocation in equities. With FII money global markets?
coming and supporting large-caps, investors could pay The simple answer is yes, the Indian markets will continue to
attention to large-caps too but only if they are ready to face outperform the global markets because the Indian economy is
volatility. largely decoupled from the world economy. The reason is that
our export share is only 1.9 per cent. So, in case of a recession in
For those investors looking for decent growth, I would world economy, exports of emerging countries will get
recommend the hybrid category of dynamic asset allocation, impacted but the effect on Indian markets will be minimal.
which is balanced advantage funds, equity savings funds, etc. Secondly, the Indian government has used expansionary
For the slightly conservative investors, short-term liquid funds fiscal deficit very well in capital expenditure and given the
and ultra-short term funds are the place to be in a rising interest economy sustaining growth, which is not dependent on
rate scenario. My bias is also towards the equity savings fund international sources. With problems faced by China and the
which, however, carries only 30-50 per cent equity. It is more of Indian government’s beneficial measures such as the PLI
arbitrage and debt. Over the past 5-10 years, equity savings scheme, Indian economy is turning recession-proof. Equally
funds have delivered high single-digit returns and if you important is the fact that FIIs invest in India because we
combine that with equity taxation it actually gives you a better import 83 per cent of our oil during a recession when oil
return than a debt fund. prices crash.

Which sectors according to you are well-placed for 2023?

Sectors where profitability was impacted by a sharp spurt in
commodity such as power and fuel prices should benefit if the
current trend of commodity prices softening sustains going
forward. As a result, profitability could be impacted during
2023 in the case of consumer staples, durables, automobiles and
cement. In addition, corporate-focused banks should sustain
the improvement in profits due to lower provisioning – as
corporate profitability will recover and level of leverage is at a
Anoop Bhaskar low point as compared to CY 17-18 levels.
Head (Equity)
IDFC Asset Management
In your view, how has the Q2FY23 earnings season fared?
Company Limited What is your outlook on earnings for the next few quarters?
Earnings for Q2FY23 were muted on expected lines. The sharp
jump in commodity and power and fuel prices caused by
Corporate-Focused Banks Should supply dislocation due to the Russia-Ukraine war would have
impacted margins during the quarter. BSE 200 was at an
Sustain Improvement In Profits aggregate level, sales increased by 28 per cent, EBIDTA fell by 8
per cent and PAT by 10 per cent for the quarter. However,
excluding OMCs and metals, sales were up 25 per cent with
With high levels of inflation expected to persist in the near EBIDTA growth of 11 per cent while PAT grew by 21 per cent.
The star performer has been banks, especially PSU banks.
future along with more potential rate hikes, what is your
outlook on the Indian equity markets in the short to medium IDFC Sterling Value Fund has proved to be a star performer in
term? the last one year. What has led to such an outperformance
After a strong move from April 2020 till December 2021, over its peers as well as its benchmark? Kindly throw some
during CY 22, Nifty has largely been range-bound, up 2.5 per light on the fund’s investment philosophy.
cent. In comparison, several global markets, led by the US, have
dropped by almost 20.3 per cent. China is down 14.4 per cent In fact, IDFC Sterling Value has been an outperformer from
and MSCI EM down 27.8 per cent (in local currency). Overlay April 2020 onwards. Its outperformance can be traced to its
this with the currency market and India’s performance focus on cyclical sectors such as automobiles, logistics, IT
underlines its exceptional nature. The rupee has depreciated by services and PSU banks. The fund is positioned as a value fund
a shade under 10 per cent as compared to yen depreciating by focusing on sectors and companies which are cyclical in terms
19 per cent. The UK pound was down 11 per cent and even the of their profitability growth. These sectors had been punished
euro was down 9 per cent. The next layer would be valuations. for erratic earnings during CY18 and CY19 while the same
While on an absolute level valuations at 19x (two-year forward) strategy has delivered outperformance since April 2020. The
are not flashing red, on a relative basis the Indian valuations are fund, currently, is balancing between companies and sectors
trading at a record premium of 51 per cent to the MSCI EM where profitability is expected to register a strong rebound –
index. cement, PSU banks and automobiles – with sectors and stocks
where profit growth would be steady, such as corporate-focused
Finally, China has embarked on a policy of economic control private sector banks. Such a strategy, we hope, should reduce
rather than economic growth. Being the largest component in volatility of performance in time to come.
MSCI EM, a continuous underperformance makes India’s
steady performance even sharper on a relative basis. Hence, any Over the span of your career thus far, what have been your
outlook for India would need to incorporate the above variables
while forecasting short to medium term. With commodity key learnings from equity markets?
prices softening, the pressure on margins and profitability Earnings over valuations – that is an important factor in the
registered across a host of sectors has seen sharp downgrades in equity markets. While valuation is an important and critical
earnings. For stocks to register a reasonable positive return, factor, one should balance this with earnings’ growth trajectory.
earnings growth should return to a cycle of upgrades, as was The market is willing to pay premium to consistent earnings’
witnessed from September 2020 till December 2021. We growth because investors should not overlook this aspect. As an
believe that from the March 2023 quarter such a cycle of investor, a portfolio spread across equity funds which target
upgrades may return. Hence, we remain positive on the market consistent profit generators and funds which focus on cyclical
for 2-3 years outlook. sectors would give them a truly balanced portfolio. DS

visible in the next quarter. Broadly, the domestic economy-

oriented companies had a good earnings’ season as against the
global-oriented companies. Yes, rupee depreciation can cause
some companies to lose and some companies to gain.
What are the pertinent risks facing equity markets in H2FY23?

Krishna Sanghavi We can classify these risks into two categories: economic and
investment environment on one hand and investor behaviour
CIO (Equity) on the other. From the perspective of economic and investment
Mahindra Manulife Mutual Fund environment, the risks clearly are more global such as
escalation in geopolitical conflicts, higher inflation attracting
Capital Expansion is Likely sharper rate hikes by the US Federal Reserve and fears of global
recession. We expect H2FY23 to broadly witness a peak on the
monetary policy tightening front. The fears about global
to be Simulated recession are inter-linked to higher interest rates given that
monetary policy tightening is aimed at reducing demand and
thereby inflation. Meanwhile, geopolitics remains unpredictable
What is your outlook on the equity markets in the short to and hence we will need to evaluate on a post-facto basis.
medium-term? Do you expect the markets to consolidate
from here onwards? From an investor behaviour perspective, asset allocation shift is
something to be watch out for. We have moved to a higher
The equity markets almost always offer a choice to evaluate interest rate scenario where returns from debt investment
outlook on a short to medium-term or medium to long-term (adjusted for volatility) could now be attractive for some set of
basis. The long-term picture connects fundamentals such as investors, and hence flows towards equities as an asset class may
economy and corporate earnings while the short-term links see some moderation. Another risk on the investor front is that
liquidity and sentiments. When we look at the long-term we we are coming out of an environment where many new
need to be aware of the past – wealth creation in the Indian investors have entered the equity markets and were fortunate to
markets when the country’s economy moved from 14th rank make quick money. This has led to higher risk appetite with
globally in 2006 to 7th rank in 2021. Looking forward, multiple preference for derivatives (essentially leverage) among retail
agencies have estimated India to move to the third-largest investors to enhance returns. This could be a risk as the markets
economy in this decade. We believe the Production Linked have moved away from that easy money-making environment
Incentive (PLI) scheme and the insistence on self-reliance are and leveraged investors could face challenges.
likely to stimulate capital expansion.
Which three investment trends would you bet on for the long
These will also create jobs and drive consumption growth going
ahead. So, the longer term outlook is that as economy grows, term? Also, which sectors seem attractive at current valuations?
corporate earnings rise and equity markets respect and value When the economy grows, the gains flow across sectors, but with
earnings. On the other hand, there are some headwinds in the some lag. Linkages within the economy play out across various
short term as market participants have some concerns over sectors. An item of expense for a sector becomes income for
implications of monetary policy tightening on global economy another sector. So, on a long-term basis, we are positive on every
and market valuations. India’s GDP has 20 per cent exports and sector. From a fund management perspective, an eye on
any issues on the global front may impact growth. Let’s not valuations helps. Valuations have proven to be a good equaliser
forget the silver lining: Indian economy is likely to grow at 3-3.5 in the equity markets as the prices discount growth expectations.
per cent higher than global growth. A big theme in Indian economy and markets is likely to be the
PLI-led export growth and | or import substitution,
How has the Q2FY23 earnings’ season fared? Will margin demography-led consumption and financial services.
pressures persist for select sectors due to rupee depreciation
Over the span of your career thus far, what has been your key
and high inflation?
Q2FY23 earnings on the whole have been good with both learning from the equity markets?
winners and losers. Sector-wise, financials – mainly banks – led Perhaps the key learning is that markets keep on forcing one to
the pack with earnings beating consensus estimates and seeing learn new things. Economic policies change, technologies
earnings’ upgrade. Global commodity prices have been coming change, new narratives such as ESG and ETF get created
off and that impacted the earnings of commodity-producing leading to new set of beneficiaries, etc. Markets surprise us on
companies, but helped the consumers of commodities. both sides, up and down. Maintaining a respect for valuations
Automotive and consumer sectors have started seeing some helps in the medium to long term and helps avoid short-term
benefit of commodity price fall, the full impact of which will be euphoria. DS

competent advisor reduces financial anxiety and gives one a

sense of financial freedom by navigating the chaos of
information and options around us.
What do you make of the current equity market scenario? What

are the pertinent risks facing domestic equity markets in H2FY23?
India has performed reasonably well in the near past and has
Srinivas Rao Ravuri outperformed other countries. Valuations though are not cheap,
but neither are they high, as India has seen healthy earnings
CIO, PGIM India Mutual Fund growth as well. While risks such as geopolitical uncertainties,
commodity price volatility, supply chain uncertainties, high
 inflation and ensuing high interest rates persist, thankfully most
Investors Should Focus on Having of the above are global or transient in nature and are not
necessarily inward looking. Nonetheless, risks are a part and
Age Appropriate Asset Allocation parcel of equity investing and we acknowledge the same and
attempt to mitigate them through diversification.
Which three major emerging investment themes do you expect to
dominate over the next decade? What changes have you made in your equity funds in view of the
India itself is an emerging investment theme from a global rising interest rates and volatility over the last few months?
perspective. India is currently the 5th largest economy, globally, At PGIM India MF, each fund manager is encouraged to take
and 3rd in terms of Purchasing Power Parity (PPP). India's independent calls according to the mandate of the fund and his/
importance and relevance in the global arena and particularly in her views. This is particularly done to avoid duplication of
emerging markets has risen and we expect this trend to continue. portfolios and overinvestment in any sector/stock by us. Hence,
Given that India offers a stable political regime, a strong there is no one answer to this question. However, in general we
consumption driven story and a positive policy environment, we have been positive on financials (improving asset quality
reckon investment in India to be an increasing theme over the improving credit growth) and industrials (domestic manufacturing
next decade. Second theme is the emergence of India's push) and underweight on FMCG, energy and utilities.
manufacturing prowess. Given the volatile geopolitical situation,
raw material uncertainty and the need for diversifying sourcing, Ideal investment option for first timers, proper asset allocation,
China Plus One strategy should see increased prevalence. ELSS funds seems to turn the tide of returns year after year. How
should one go about it?
Our GDP contribution is highly skewed towards services, and For first timers, it would be prudent to invest in relatively lower
the next leg of growth should come from manufacturing aided volatility, diversified products with a view to invest for the long
by schemes such as Production Linked Incentive (PLI) and term. Given the above filters, diversified/flexicap, ELSS and
domestic manufacturing push. Third theme would be on the large cap funds fit the bill. ELSS category benefits from an
consumption side riding on the back of increasing per capita automatic lock in of 3 years, which we believe is the bare
income. As more and more of India’s population moves upward minimum investment horizon (if not more) to see returns of
economically, consumption quantity and quality both see an equities over other asset classes. Depending upon age and other
uptick. This trend also flows down to allied sectors such as commitments, investors should allocate money to mid and
financials, digitalisation which aide the above as well as see small cap funds or balanced/hybrid funds as per their risk
growth themselves. appetite/age and individual requirements of the investor.
How should retail investors navigate the current market volatility Over the span of your career thus far, what have been your key
with mutual funds? learnings from equity markets?
For any investor and retail investors in particular, time in Over the years, one of the key learnings is, not be carried away by
market is much more important than timing the market. SIPs euphoria. It can be in any stock, sector or markets in general.
are the perfect method to smoothen out short term volatility Markets tend to swing between periods of extreme optimism and
and investors should continue investing through SIPs. Markets pessimism. Keeping expectations normalised and practical, helps
may be volatile in the short term, however, in the long term to benefit from these extremes. A second somewhat related
volatility is much lower. Assuming investors are investing for learning is to seek growth but not at any price. Growth at
the long haul, best way for retail investors to navigate any reasonable prices balances the risk reward equation largely and
volatility is to not look at portfolios on a daily basis and leave helps in generating long term alpha. Lastly, avoid risks such as
the investing to professional fund managers. Investors should over-leverage, lack of cash flow generating ability of an investment
focus on having age appropriate asset allocation which should and questionable corporate governance. Watching out for these
help in accumulating goal based corpuses as well as address risks, helps avoid making big mistakes in a portfolio which are
long term needs such as retirement. Having a trusted and equally important as finding winners in the portfolio. DS

Real Estate Market Watch
MF Page - 31
steadily – they account for between 30-40 per cent of the current
market, and their numbers are increasing. Corporate India
across diverse sectors such as telecom, automobiles, consumer
goods, textiles, steel, pharmaceuticals and engineering are
spearheading the transformation of Indian real estate. Raymond
Group, Dabur, TVS and Kirloskar are some of the new entrants
Anuj Puri in the Indian real estate space.
Chairman, Thus, a regulated and efficient real estate sector offers immense
ANAROCK Group possibilities to be unlocked in a country growing economically.
Corporate and other large developers today are better equipped
Corporate Developers: to manage the business efficiently and profitably. They have
successfully launched and executed several residential and
Indian Realty in Safe Hands commercial projects. Their ability to invest on advisory to
identify the right opportunity, product and timing appears to be
L
crucial in the success of their business. Given their strong
iberalisation of the economy in the last decade of the background and capabilities, it is easier for them to raise capital
20th century opened numerous business opportunities. and liquidate their products owing to a healthy record of
India immediately emerged as a major marketplace for execution and deliveries. Buyers today are more demanding, and
multinationals keen to reap the dividends of a diverse they prefer to purchase from or invest in projects by these
demography, domestic consumption, and an educated working developers.
populace suitable for serving offshore clients. To ‘accommodate’
this growth story, real estate emerged as a prime business According to the latest ANAROCK consumer sentiment survey,
opportunity to fulfil the burgeoning space requirements of this the demand for branded developers continues to rise. The ratio
rising economy. In the 1980s and 1990s, real estate develop- for branded versus non-branded developers currently stands at
ments were largely limited to state or central government 69:31 post-pandemic against 52:48 in the pre-pandemic period.
agencies. It was only in 2001 – the beginning of the 21st century These include listed players or developers who have been
– that India began seeing private participation in real estate. operating for a decade and more, or even newly formed entities
of large conglomerates and those with sizeable areas under
The field of opportunity was ripe for harvesting. Availability of development either locally or pan-India. Corporate developers
large land parcels, improving infrastructure and rising demand are thus gaining acceptance and buyers are prepared to be
for commercial and residential assets fuelled growth. Large associated with such players. Their portfolio and the horizon will
development firms arrived, but so did any number of self-pro- continue to expand and penetrate Tier II cities as well. Home
claimed private sector players who have limited or no experience buyers today have realised that paying a premium in lieu of
in managing the various aspects of real estate business. This discounts and low prices will pay off in the long run.
caused challenges aplenty. The smaller, unorganised players
seriously lacked the skills required to execute and complete Diversified Real Estate Offerings
projects. There was a marked dearth of real technical know-how, Many corporate developers were predominantly focused on
financial discipline and the ability to gauge demand. developing high-end residential assets earlier. Today, they have
diversified their offerings in order to address a wider spectrum
Inevitably, this led to a demand-supply mismatch as well as of demand. While high-end products continue to be developed
escalating stress and severe project delays. Buyers’ confidence by them, there is significant increase in affordable and mid
was understandably shaken. Clearly needed structural reforms segment projects. Real estate developers such as Tata Housing,
and policy changes arrived only from 2016 onwards. In quick Godrej Properties, Kolte Patil Developers and Puravankara
succession, DeMo, GST, RERA and key Insolvency and Limited have already forayed into these budget categories.
Bankruptcy Code amendments were deployed. They aimed to Additionally, they have widened their horizons into markets
enable and streamline structured growth of the real estate sector. beyond major cities and ventured into Tier II cities.
The ease (or lack of it) with which developers began to abide by
them was an important indicator of future viability. Unsurpris- Going forward, the Indian residential real estate space is likely to
ingly, corporate or organised developers emerged as the most be ruled by the corporate players as they are better prepared to
transparent and capable. adhere to changing market dynamics and regulations. Other
developers will also be seeking their association to leverage their
Driven by Changes brand value to market the projects and use their execution
The changes that followed the reforms continue to drive the capabilities to ensure completion. The future of the Indian
formalisation of the sector. So does the ongoing liquidity crunch, residential real estate segment is likely to be structured and
which has very clearly separated viable from non-viable players. developed on the pillars of trust, transparency and efficiency,
Fortunately, the market share of corporate developers is rising ushered in by the corporate players.

Special Report
MF Page - 32
Are You Ready to Invest in

Large-Cap Funds?
To give your investments the right balance, large-cap funds can be a good choice to integrate into every
portfolio. The fund presents options to diversify by parking funds in blue-chip companies, hence achieving
stable growth. Vardan Pandhare provides the analysis if you are looking to bet on large-cap funds
H
aving witnessed the roller-coaster ride of the stock Investments in large-cap funds are appropriate for people looking
markets post-2020, are you finally ready to step to diversify their portfolios with well-known market players. If
inside the trading ring? And as direct equity one area falls short of your expectations, the other will
investing demands a lot of expertise and time, you immediately make up for it. In comparison to small and medium-
want to start with mutual funds. But with so many sized businesses, these funds generate lower revenues since they
options available, especially in the large-cap category, how should are less risky and volatile. It is a fantastic investment avenue for
one begin? Well, we have that sorted out for you. new investors who are only now becoming familiar with the
market. When investing in large-cap funds, the following aspects
Defining Large-Cap Funds must be kept in mind:
You must be familiar with Reliance, TCS, Infosys and other n Expense Ratio — Large-cap funds, like all mutual funds,
well-known corporations. These are the names that belong under have an expense ratio for effective fund management. Your
the large-cap category and have big market capitalisation. larger take-home pay will therefore benefit from a lower
Large-cap mutual funds typically invest in these well-known expense ratio.
players with a track record of success and a solid reputation in the n Risk and Reward — All equity mutual funds are affected by
market. Long-term dividend payments are expected from the market’s position. Your assets vary along with the
large-cap funds. As a result, regular compounding of your money market. However, a large-cap scheme’s NAV is more
should therefore be substantially secured. Due to the scale of the consistent than small-cap and mid-cap schemes. This
large-cap companies and the extended investment horizon, these indicates that stability is a benefit of investing in large-cap
funds also offer a lower risk profile than small-cap or mid-cap funds, but the returns are often lower than those of
funds. small-cap and mid-cap funds. As a result, if you want
steadier returns with less risk, large-cap funds can be a
Target Investors for Large-Cap Funds better choice for you.
Investors who use their equity assets prudently and who choose n Investment Period — For those looking to invest for the
stability over returns that are very volatile or fluctuate frequently medium to long term, large-cap funds are excellent. To
should use large-cap funds. Investors must keep in mind, though, evaluate the prospective return of the offer, investors in
that even the finest large-cap funds occasionally fall short of the these funds must have held their positions for at least three
anticipated market return when compared to medium-cap or to five years.
small-cap companies. Market capitalisation is not a problem for n Realisation of Investment Objectives — Make sure the
large-cap funds. These funds might also think about reorienting objectives of your fund align with your personal objectives.
their investments to take up a sizable portion of their investment To learn more about fund performance, you should be
portfolio in order to provide their investment profile with the aware of the fund manager’s background and management
much-desired continuity that investors seek. philosophy.

MF Page - 33
n Examine Past Performance — Analysing a large-cap fund’s

historical performance is crucial before investing. Choose a
fund whose numbers have remained steady through all the Let’s analyse the top three performers:
market cycles and situations. 1. Canara Robeco Blue Chip Equity Fund — One of the best
n Knowledge of Fund Management — To maximise return schemes in the large-cap category, the Canara Robeco
yield, experienced fund managers are essential. Your fund Blue-Chip Equity Fund has given 18 per cent returns in the
manager can advise you to move money from one place to past three years and almost the same returns on a five-year
another when the market seems promising or even raise basis. The fund belongs to the equity category of Canara
your investments at a specific moment in a specific industry. Robeco Mutual Funds. To invest in Canara Robeco
Fund managers have specialised knowledge in the area. Blue-Chip Equity Fund via lump sum you require `5,000
They can help you invest more in safe investments that and via SIP it is `1,000.
produce higher returns by using their knowledge,
experience and skill in the business. 2. Nippon India Large Cap Fund — One of the most stable
n Identify the Exit Load — This is the direct expense borne schemes of the past few years, Nippon India Large-Cap
by investors. The most important factor in saving is exit Fund has given 17-18 per cent returns in the past three
load, which is a component of NAV. Higher returns are years and has managed the same in the last five years. The
obtained with low exit loads. scheme belongs to the equity category of Nippon India
Top five Large-Cap Mutual Funds of 2022 Mutual Funds. As an investor, the minimum amount you
require to invest in Nippon India Large-Cap Fund via lump
Returns (%) sum is `100 and it’s the same via SIP.
Scheme Name
3 Years (p.a) 5 Years (p.a)
Canara Robeco Bluechip Equity Fund 18.00% 17.82% 3. ICICI Prudential Blue Chip Fund — With a good
Nippon India Large Cap Fund 18.00% 18.10% amalgamation of companies to spread your investments, the
ICICI Prudential Bluechip Fund 17.00% 17.33% fund has given 17 per cent returns in the past three years
UTI Mastershare Fund 17.00% 16.03% and went a notch higher in five years. The fund belongs to
Kotak Bluechip Fund 17.00% 16.09%
the equity category of ICICI Prudential Mutual Funds. You
can start your investment journey with a minimum lump
Returns as of October 20, 2022
sum amount of `100 and via SIP of `100.
Difference Between Large, Mid and Small-Cap Funds
Large-Cap Funds Mid-Cap Funds Small-Cap Funds
As large-cap organisations are well-established, they Small-cap firms are highly volatile given the constant
Volatility Mid-cap companies are moderately volatile.
are less volatile. stock price fluctuations
Due to their less volatility, large-cap funds offer steady
When compared to large-cap funds, mid-cap Given the high risk, small-cap funds offer excellent ROI at
Gains returns. In 2021, large-cap funds yielded 18-46 per
funds offer better returns. times – better than mid-cap and large-cap funds.
cent in one year.
Large-cap funds have a lesser growth potential since They have the highest growth potential as the companies
Mid-Cap funds possess decent growth
Growth the companies already have a strong market are still in the growing stage, but they also come with
potential.
reputation. higher risk.
When compared to mid-cap and small-cap funds, large- Compared to large-cap and mid-cap funds, these funds
Risk Factor Carry more risk than large-cap funds.
caps are considerably less risky. have the highest risk profile.
As large-cap funds enjoy high market capitalisation,
These funds often have less liquidity due to their their
Liquidity they provide superior liquidity than small-cap and Mid-cap funds are slightly liquid.
negligible market presence.
mid-cap funds.
Conclusion
In a nutshell, large-cap funds have been depicted as an ideal investment option for new participants or for those who take less risk. But
one major disadvantage of such funds is that the growth potential of invested stocks might be limited. Plus, the returns yielded also
happen to be lesser than those that one gets from small-cap and mid-cap funds. Triumph in large-cap funds relies on the scope of your
investment and the period. If you aim to have stable returns out of equity investments, you should invest in large-cap mutual funds.
These funds are a good choice for investors who want compatible returns that do not change too much over time. Although the funds
are not unsusceptible to market downturns, they fare better than the other two categories. In addition, large-cap funds can help you
diversify your portfolio. But, to make out of these funds, you will need to analyse your short-term financial goals as well as your
long-term needs. So, to enter the investment ring, always check the expense ratio and the funds’ past performance and only then bet
on the large-cap funds.

MF QueryBoard MF Page - 34
Can you suggest a good mutual fund to invest in the speciality chemical sector?
- Gowtham Thakur
O
ne thing that all of India’s top-performing stock Chemicals producers in the nation are increasing capex
funds have in common is that they have invested in expenditures in order to develop high-value products and
businesses that produce the chemicals used in increase their market share internationally. Small-cap stocks are
everything from lip balms to crop-booster an asset class that has handily outperformed the benchmark
fertilisers. These wagers have paid off as a result of an increase index, and four of the top five funds in India this year are ones
in the demand for speciality chemicals around the world in that specialise in them. The S&P BSE Small-Cap index has
sectors like cosmetics and automotive as well as a recovery from surged almost one per cent in a period of one year versus nearly
the epidemic. In response to geopolitical worries, firms 2 per cent fall for the S&P BSE Sensex index. Chemicals stocks
throughout the world have been forced to diversify their supply make up at least 14 per cent of the portfolio for three mutual
chains away from the China, which has benefitted producers funds that have delivered the biggest returns.
as well.
YTD Chemical Sector
Fund Name Chemical Sector Pics
Performance Allocation
Nippon India Deepak Nitrite Ltd.
42.00% 14.90%
Small Cap Fund Navin Fluorine International Ltd.
Kotak Small Cap Laxmi Organic Industries Ltd
40.50% 14.20%
Fund Atul Ltd
L&T Emerging Deepak Nitrite Ltd.
39.10% 15.80%
Sector Fund Alkyl Amines Chemicals Ltd.
Allocation date as of May 31
Is it worth investing in the following funds? What about sectors? Or can you suggest better alternatives?
n ICICI Prudential Blue Chip Growth Equity Large-Cap n Mirae Asset Emerging Blue Chip Growth Equity Large-Cap and Mid-Cap
n Nippon India Multi-Cap Growth Equity Multi-Cap n Parag Parikh Flexi-Cap Growth Equity.
- Tejas Bakori
M
ajority of your investments seem to be large-cap- looking to add more investments to this fund, then you
biased. Again, this depends on the investment would be disappointed. So, if you wish to invest more,
amounts in the respective funds in question. Canara Robeco Emerging Equities Fund is another good
However, let us first answer the question on option.
sector funds. These can prove to be a double-edged sword as 3. Nippon India Multi-Cap Fund — Multi-cap funds are a
they work in cycles. Hence, investing in them either requires unique proposition as they come with a minimum
fairly long-term horizon or the ability to manage them exposure of 25 per cent each in mid-cap and small-cap
tactically. To know more about which sector funds to bet on, segment. That said, on a risk front they prove to be riskier
you can check our upcoming issue wherein we would be than others in this list. This is very clear with the fund’s
dealing in more detail on this topic. higher standard deviation and beta figures which are
higher than the benchmark was well as category average.
Let us now look at the investments in question one by one. 4. Parag Parikh Flexi-Cap Fund — The very advantage of
1. ICICI Prudential Blue Chip Fund — This is a pure investing in this fund was it had a good blend on
large-cap fund that invests majority of its assets in Nifty domestic and international equity securities. Its
100 stocks. This is one of those few funds that actually performance started deteriorating after the cap on
beats its benchmark. It does makes sense to hold this investment in foreign securities was reached which
fund. compelled them to invest money predominantly into
2. Mirae Asset Emerging Blue Chip Fund — This is one domestic markets. This resulted in lower overall
of the best offerings from Mirae Asset Mutual Fund. allocation to international securities. However, its
This fund became a favourite in the post-pandemic portfolio still holds good quality stocks. Also, its investing
rally. In fact, it was so popular that it restricted accepting style is tilted more towards value. Looking at the current
more investments due to bloated assets under scenario where there is rerating of valuations going on,
management. This fund is still better. However, if you are gradually accumulating the units of funds following value
style stand to benefit in the long run.

Expert Speak
MF Page - 35
Factors That Can

Derail Your Portfolio
Hemant Rustagi
Chief Executive Officer, Wiseinvest Pvt Ltd.
T
o be a successful investor, you must demonstrate performance in a rising market can take you beyond your
patience, perseverance and commitment through risk-taking capacity, a conservative portfolio can bring
your defined time horizon. That’s because you will your real rate of return down. The right way to build a
have to face a number of challenges from the time you portfolio is to follow asset allocation and invest in funds
start investing and when you achieve your investment goal. The that have long-term consistent performance track record.
level of investment success you can achieve will depend upon
consistency in your investment process and decision-making 4) Thinking that booking loss is a bad thing — If it is proved
during these challenging times. Here are some of the factors that there are non-performing funds in the portfolio after
that can derail your investment portfolio, if not tackled well. giving them sufficient time to perform, don’t hesitate to
make changes. Remember, booking losses is not a bad
1) Lack of diversification and | or over-diversification thing as long as it allows you to reinvest in better
— While diversification is the key to curb volatility in the performing funds.
portfolio, lack of diversification and | or over-
diversification in the portfolio can expose you to higher 5) Disregarding your time commitment — Remaining
risk. While a concentrated portfolio has the potential to committed to your time horizon can help you manage
generate higher returns, the losses could be higher too. losses. Over time, equity portfolio can deliver positive
Therefore, if it’s a conscious decision to either build a real rate of return. Therefore, once a time horizon is
concentrated portfolio or invest in a focused fund, decided, stay committed to it to benefit from the true
short-term losses should be ignored. Similarly, over- potential of equities and enhance the chances of
diversification in the portfolio allows non-performing achieving your long-term goals.
investment options to remain in the portfolio and that
can make a dent in your portfolio return. Therefore, it is 6) Ignoring opportunity losses — Opportunity loss is the
important to avoid over-diversification and monitor the value or potential gains that you miss out by choosing a
progress of the portfolio regularly to weed out non- specific type of asset class, investment option or strategy.
performers from the portfolio. Remember, frequent instances of opportunity losses can
make a significant impact on what you get to accumulate
2) Too much aggression in portfolio selection — Investing in over time. Therefore, monitor your portfolio regularly
aggressive categories like sector and thematic funds can and be aware of opportunities that can help you improve
result in much higher volatility in the portfolio. While it your portfolio returns. Of course, making frequent
is true that aggressive funds have the potential to deliver changes can become counter-productive.
higher returns during certain market phases, there is no
guarantee that it will happen. In fact, if the timing is not 7) Strategy to invest conservatively to avoid losses can
right, the volatility can be detrimental to your investment backfire — There can be a temptation to invest in less
process. risky investments like bonds, FDs, small saving schemes
to avoid losses in the portfolio. However, ignoring the
3) Relying on short-term performance — Relying on risk of inflation and staying away from market-linked
short-term performance for fund selection can either products can result in a heavy loss in terms of negative
make your portfolio very aggressive or very conservative real return. Therefore, including equity and equity-
based on what’s working out at that point of time. While related funds should be a priority for long-term
higher allocation to equity based on short-term investments. DS

MF Data Bank
MF Page - 36
With Ranking
T
he following table lists top-ranked equity funds based on Key To Databank
DSIJ's proprietary research methodology. We have Category Rank: Category wise ranking as on November 25, 2022
evaluated each funds underlying portfolio of stocks and Scheme Name: This is the name of the mutual fund scheme
ranked them based on their expected portfolio returns. In a similar NAV (`): Net asset value per unit of a mutual fund on a specific date
way we calculated the risk of a fund based on its constituents. This AUM (`Crore): This is the total market value of financial assets held by the mutual
fund scheme on a specific date.
helps us to ‘rank’ and assign ‘risk’ to newly launched funds also.
Weightage: Large-Cap: This is a percentage of total assets held by a fund in the
We continuously evaluate equity funds based on the changed large-cap stocks as defined by AMFI for the current period.
ratings of their underlying stocks and the change in their prices. Mid-Cap: This is a percentage of total assets held by a fund in mid-cap stocks as
Therefore, this list is quite dynamic and reflects the best possible defined by AMFI for the current period.
return potential of the funds for the next one year. Small-Cap: This is a percentage of total assets held by a fund in small-cap stocks as
You can use this ranking to create your own mutual fund defined by AMFI for the current period.
portfolio. Depending on your risk profile, return expectations and Total No of Companies: This is a total number of securities held by a mutual fund
overall asset allocation, you can add the best performing fund scheme at the end of a specific month.
category to your portfolio. For clarity and to include more funds, Expenses Ratio: This is the latest expense ratio disclosed by the mutual fund scheme
we have not included ‘Direct’ and ‘close-ended’ funds. You can visit Return_1Years: This is the past one-year return given by the scheme.
Expected 1-yr return: This is based on our analysis of the portfolio of mutual fund
our website (www.dsij.in/mutual-fund) to check the entire list
scheme and their expected growth in the next one year, assuming the underlying
along with equity-oriented hybrid and close-ended funds. remains the same.
This ranking can also be used for reviewing different holdings Current Rank: Rank as on November 25, 2022
in your fund portfolio. Hence, a consistently laggard performer of a Previous Rank of November 10, 2022 is shown under bracket ()
category can be looked at as 'Switch' or 'Exit' advice. Risk : Risk as on November 25, 2022
Expense Return
Category Expected DSIJ Current
Weightage (%)
NAV AUM
No of
Scheme Name Companies Ratio (%) 1 (%)
Year 1 yr return Rank Risk
Rank (`) (` Cr)
Large Cap Mid Cap Small Cap (%) (25 Nov., 22)
Equity - Large Cap
1 Aditya BSL Frontline Equity Gr 354.33 22,276.50 89.15 8.75 2.10 74 1.75 3.09 15.76 108 (92) Moderate
2 Mirae Asset Large Cap Reg Gr 81.63 34,406.75 85.50 11.73 2.77 59 1.58 3.59 15.38 128 (90) Moderate
3 DSP Top 100 Equity Reg Gr 296.60 2,778.66 85.97 13.12 0.91 32 2.07 1.87 15.13 143 (245) Moderately Low
4 Kotak Bluechip Reg Gr 389.37 5,255.83 82.64 15.29 2.07 59 1.93 2.99 15.06 151 (125) Moderate
5 LIC MF Large Cap Gr 40.88 696.27 100.00 0.00 0.00 42 2.47 -1.37 14.49 194 (159) Moderately High
6 Franklin India Bluechip Gr 700.57 6,541.78 95.38 4.62 0.00 38 1.88 -2.41 14.41 201 (42) Moderately Low
7 JM Large Cap Gr 103.75 50.44 86.50 13.50 0.00 28 2.50 4.14 14.06 231 (242) Moderately Low
8 PGIM India Large Cap Gr 250.26 416.16 86.54 10.29 3.17 32 2.51 1.40 13.83 247 (178) Moderately Low
9 IDBI India Top 100 Equity Gr 41.61 633.59 84.38 12.67 2.95 59 2.45 5.35 13.77 250 (201) Moderately High
10 Edelweiss Large Cap Gr 56.81 375.23 87.51 12.49 0.00 65 2.56 3.48 13.56 265 (279) Moderate
11 Canara Robeco Bluechip Equity Reg Gr 42.81 8,547.68 90.88 9.12 0.00 46 1.86 2.84 13.45 273 (274) Moderately Low
Equity - Large & Mid Cap
1 LIC MF Large & Mid Cap Reg Gr 24.43 1,982.46 41.66 39.96 18.38 69 2.34 -0.20 20.24 16 (22) Moderate
2 DSP Equity Opportunities Fund Reg Gr 365.75 7,267.94 56.13 35.89 7.99 66 1.88 2.31 19.81 20 (17) Moderate
3 Franklin India Eq Advantage Gr 120.96 2,707.58 58.09 36.28 1.47 53 2.09 -4.70 17.96 46 (12) Moderate
4 HSBC Large & Mid Cap Equity Reg Gr 15.77 509.86 56.23 39.10 4.67 52 2.45 -0.77 17.83 50 (58) Moderate
5 Edelweiss Large & Mid Gr 55.02 1,635.82 55.84 37.35 6.82 68 2.20 3.90 17.58 53 (69) Moderate
6 Mirae Asset Emerging Bluechip Gr 97.85 23,690.65 55.64 35.39 8.97 70 1.72 -0.54 17.51 54 (43) Moderately High
7 Navi Large & Mid Cap Reg Gr 25.38 251.11 51.49 36.83 9.64 53 2.31 2.55 17.25 58 (41) Moderately High
8 Motilal Oswal Large & Midcap Reg Gr 17.04 1,378.19 46.86 36.95 16.19 35 2.39 0.95 16.67 73 (104) High
9 Union Large & Midcap Reg Gr 16.88 408.87 54.42 41.80 3.78 67 2.52 -2.93 16.18 86 (95) Moderate
10 Canara Robeco Emerging Eqs Reg Gr 165.86 15,580.76 60.92 35.79 3.30 54 1.82 1.54 16.15 88 (163) Moderate
Others - Index Funds
1 Aditya BSL Nifty SmCp 50 Idx Reg Gr 10.42 41.52 0.00 2.21 97.79 48 1.01 -19.66 18.88 28 (13) Moderately High
2 Motilal Oswal Nifty Midcap 150 Idx RegGr 20.47 634.93 2.20 93.80 3.30 150 1.02 -0.27 16.75 68 (141) Moderately High
3 Aditya BSL Nifty MdCp 150 Idx Reg Gr 12.97 78.00 2.20 93.80 3.29 150 1.02 -0.20 16.74 70 (140) Moderately High
4 Nippon India Nifty Midcap 150 Idx Reg Gr 13.33 466.04 2.21 93.78 3.30 149 0.80 -0.28 16.72 71 (143) Moderately High
() There are some blanks in the previous ranking column. This is because these funds were not in our last ranking
** These funds are yet to complete one year
Assets managed by the Indian mutual fund industry has increased from `38.22 lakh crore in October 2021 to
`39.53 lakh crore in October 2022. That represents 3.44 per cent increase in assets over October 2021.

MF Page -37
Expense Return
Category Weightage (%) Expected DSIJ Current
NAV AUM No of
Rank (`) (` Cr)
5 Nippon India Nifty 50 Value 20 I Reg Gr 12.73 170.37 100.00 0.00 0.00 20 0.80 3.91 15.30 133 (52) Low
6 ICICI Pru Nifty SmCp 250 Idx Reg Gr 9.56 62.80 0.00 1.87 97.98 247 1.00 -3.05 14.92 159 (216) Moderately High
7 Nippon India Nifty Smallcap 250 I Reg Gr 18.37 367.41 0.00 1.87 97.99 247 1.04 -3.37 14.91 160 (221) Moderately High
8 Motilal Oswal Nifty Smcp 250 Idx Reg Gr 20.39 308.62 0.00 1.87 97.98 247 1.03 -3.29 14.90 161 (235) Moderately High
9 Aditya BSL Nifty 50 EW Index Reg Gr 11.58 136.93 100.00 0.00 0.00 50 1.02 4.67 14.19 220 (213) High
10 HDFC NIFTY50 Equal Weight Index Reg Gr 11.33 520.65 100.00 0.00 0.00 50 1.25 4.28 14.18 222 (214) High
11 DSP Nifty 50 Equal Weight Index Gr 16.43 455.54 100.00 0.00 0.00 50 0.86 5.20 14.17 223 (215) High
12 Sundaram Nifty 100 Equal Wgt Gr 111.40 56.81 92.89 7.11 0.00 100 0.95 0.22 13.84 245 (318) High
13 UTI Nifty200 Momentum 30 Index Reg Gr 13.34 2,084.46 82.42 17.58 0.00 30 0.91 -5.38 13.65 257 (415) Moderate
14 Edelweiss MSCI India D&W HC 45 Reg Gr 12.34 151.28 63.40 29.80 6.80 25 1.05 -1.61 13.52 269 (172) Moderate
15 Motilal Oswal Nifty 500 Reg Gr 17.24 368.05 77.87 14.63 7.31 498 1.05 1.78 12.83 314 (298) Moderately High
16 LIC MF S & P BSE Sensex Index Gr 114.43 56.92 100.00 0.00 0.00 30 1.08 4.97 12.47 347 (260) Moderately High
17 ICICI Pru S&P BSE Sensex Index Gr 19.50 674.27 100.00 0.00 0.00 30 0.29 4.32 12.46 349 (264) Moderately High
Equity - Sectoral/Thematic
1 Edelweiss Recently Listed IPO Reg Gr 16.87 1,004.51 11.56 21.85 66.59 45 2.25 -20.06 23.00 2 (49) Moderately High
2 ICICI Pru Technology Gr 137.44 9,181.78 88.60 3.38 7.74 41 2.10 -15.89 21.20 8 (2) Moderately Low
3 SBI Technology Opportunities Reg Gr 141.66 2,726.86 91.72 2.76 5.52 13 2.09 -9.50 20.25 15 (4) Low
4 Franklin India Technology Gr 291.25 681.58 86.54 3.01 10.44 17 2.36 -19.44 19.52 24 (5) Moderate
5 IDBI Healthcare Reg Gr 17.02 60.55 62.43 24.43 13.14 24 2.48 -8.79 18.89 27 (27) Moderate
6 Quantum India ESG Equity Reg Gr 16.71 129.20 65.69 27.83 6.48 46 1.73 -3.80 18.77 31 (33) Moderately Low
7 Tata Digital India Reg Gr 32.37 6,371.41 88.12 5.96 5.92 25 2.01 -15.17 18.75 33 (1) Moderately Low
8 Aditya BSL Digital India Gr 119.36 3,249.45 75.06 11.44 13.50 29 2.09 -12.83 18.65 34 (3) Moderately Low
9 HSBC Infrastructure Equity Gr 27.64 119.71 45.13 32.38 22.50 30 2.56 7.25 18.58 36 (56) Moderately High
10 UTI Transportation & Logistics Reg Gr 151.55 2,020.73 69.16 19.91 9.66 33 2.06 11.67 18.48 38 (93) Moderate
11 LIC MF Infrastructure Gr 23.95 91.67 22.68 17.91 59.41 33 2.61 7.29 18.34 39 (16) Moderate
12 Tata Ethical Reg Gr 279.29 1,463.48 54.86 36.56 8.57 54 2.23 0.13 17.40 56 (25) Moderate
13 Kotak Infra & Econ Reform Reg Gr 37.38 666.33 29.94 45.09 24.97 42 2.46 13.59 17.21 59 (110) Moderately High
14 Kotak Pioneer Reg Gr 17.28 1,655.50 50.04 36.58 12.72 48 2.01 -10.64 17.04 62 (114) Moderately High
15 IDFC Infrastructure Gr 24.82 643.86 34.17 28.05 37.78 33 2.44 2.45 17.03 63 (44) High
16 ICICI Pru Manufacturing Gr 18.16 639.59 64.35 21.98 9.15 43 2.54 5.57 16.97 64 (38) Moderate
17 Taurus Ethical Gr 86.37 87.35 47.94 28.29 23.77 44 2.45 0.27 16.66 74 (64) Moderate
18 Invesco India ESG Equity Reg Gr 12.05 711.47 68.68 15.77 15.54 38 2.34 -9.28 16.54 77 (28) Moderate
19 Mirae Asset Healthcare Reg Gr 21.64 1,746.76 57.65 23.29 19.07 28 2.08 -5.58 16.26 84 (62) Moderate
20 ICICI Pru Pharma Healthcare Diag Gr 19.23 2,598.34 47.81 29.39 22.80 29 2.09 -3.45 16.12 90 (97) Moderate
21 ICICI Pru Bharat Consumption Reg Cum 15.90 1,868.08 52.99 24.82 16.97 43 2.19 6.48 16.07 93 (239) Moderately Low
22 UTI India Consumer Reg Gr 39.73 472.80 72.53 20.87 6.60 35 2.65 -2.26 15.97 96 (324) Moderate
23 Sundaram Services Reg Gr 21.78 2,360.76 64.40 15.98 19.62 41 2.02 -0.32 15.91 98 (50) Moderate
24 ICICI Pru ESG Reg Gr 13.53 1,368.86 60.47 17.97 20.62 45 2.17 -2.37 15.89 100 (78) Moderate
25 Mirae Asset Great Consumer Reg Gr 59.40 2,045.97 64.84 17.91 16.31 37 2.06 5.76 15.77 107 (340) Moderately Low
26 DSP Quant Reg Gr 16.09 1,369.73 83.50 16.50 0.00 45 1.27 -6.99 15.75 110 (65) High
27 Aditya BSL Manufacturing Eq Reg Gr 19.52 673.34 51.14 25.75 23.11 42 2.50 -1.46 15.62 116 (176) High
28 DSP Nat Res & New Engy Reg Gr 55.75 672.53 59.51 34.83 5.67 18 2.37 5.11 15.54 121 (84) High
29 UTI Infrastructure Reg Gr 84.75 1,535.03 61.96 24.35 13.26 41 2.26 7.45 15.49 124 (170) Moderate
30 Aditya BSL Special Opports Reg Gr 15.45 663.74 65.75 26.16 6.98 53 2.53 -3.48 15.40 127 (134) High
31 Canara Robeco Infrastructure Reg Gr 84.02 248.50 53.10 27.96 18.95 32 2.55 11.87 15.33 131 (128) High
32 Tata Quant Reg Gr 10.50 43.28 42.97 57.03 0.00 30 2.47 -1.32 15.22 138 (316) Moderate
33 DSP India T.I.G.E.R. Reg Gr 161.11 1,727.74 33.80 31.16 35.04 60 2.23 10.90 15.12 145 (138) Moderate
34 ICICI Pru MNC Reg Gr 19.39 1,349.17 51.23 29.14 16.92 55 2.31 2.48 14.87 165 (175) Moderate
35 Aditya BSL Pharma & Hlthcare Reg Gr 17.32 488.90 56.47 20.63 22.90 28 2.52 -7.56 14.84 170 (113) Moderate
36 Nippon India Banking & Fin Srvs Gr 402.13 3,821.47 69.08 13.05 17.87 28 1.98 11.63 14.82 173 (124) Moderately Low
37 Sundaram Consumption Gr 63.41 1,250.68 66.47 22.16 10.67 38 2.25 6.92 14.53 192 (255) Moderate
Equity - Focused
1 Mirae Asset Focused Reg Gr 18.83 8,885.09 70.59 22.91 6.50 29 1.79 -6.44 20.34 12 (7) Moderate
2 DSP Focus Reg Gr 33.55 1,961.37 59.81 35.46 4.73 28 2.15 -2.21 18.64 35 (59) Moderately High
3 UTI Focused Eq Reg Gr 10.30 2,800.20 70.03 27.89 2.08 30 1.83 -1.33 17.13 60 (29) Moderate
The proportionate share of equity-oriented schemes is now 51.6 per cent of the industry assets
in October 2022, up from 47.8 per cent in October 2021.

MF Data Bank
MF Page - 38
Expense Return
NAV AUM No of
Rank (`) (` Cr)
4 Aditya BSL Focused Eq Gr 93.65 5,925.56 92.50 7.50 0.00 29 1.91 0.80 15.88 102 (61) Moderately Low
5 JM Focused Growth Option 12.32 44.72 71.87 20.69 3.30 24 2.45 3.73 15.63 115 (266) Moderately High
6 IIFL Focused Equity Reg Gr 31.13 3,407.95 74.15 11.49 14.36 30 1.93 2.12 15.43 125 (75) Moderately Low
7 ICICI Pru Focused Equity Gr 52.91 3,866.10 87.43 6.03 3.96 30 1.95 6.89 15.04 153 (154) Moderately Low
8 Kotak Focused Equity Reg Gr 16.85 2,549.41 70.16 26.35 3.49 30 2.03 1.68 14.77 178 (132) Moderate
9 Canara Robeco Focused Equity Reg Gr 12.72 1,751.89 74.84 19.66 5.50 29 2.12 3.24 14.23 215 (321) Moderate
Equity - Mid Cap
1 DSP Midcap Reg Gr 86.92 14,273.52 11.59 71.91 16.50 53 1.78 -5.36 23.33 1 (6) Moderately High
2 Taurus Discovery Gr 76.36 77.64 3.07 67.35 29.58 38 2.56 3.02 22.15 3 (8) Moderate
3 Sundaram Mid Cap Gr 742.78 7,472.63 21.91 68.46 9.63 64 1.84 3.19 21.97 4 (9) High
4 Motilal Oswal Midcap 30 Reg Gr 51.12 3,580.23 12.86 76.36 9.69 26 2.00 13.86 21.55 6 (11) Moderately High
5 UTI Mid Cap Reg Gr 191.39 7,348.15 11.70 70.58 17.73 73 1.78 0.47 21.23 7 (23) High
6 Mirae Asset Midcap Reg Gr 21.63 8,681.46 14.78 67.78 17.45 56 1.80 2.32 20.56 9 (26) Moderate
7 HSBC Mid Cap Reg Gr 9.32 1,100.29 10.17 73.55 16.29 48 2.24 -6.13 20.53 10 (40) Moderate
8 Axis Midcap Gr 67.79 19,708.09 20.46 76.72 2.82 64 1.76 -3.67 20.46 11 (32) Moderately High
9 Aditya BSL Mid Cap Gr 457.57 3,583.28 15.70 68.04 14.06 69 2.07 -3.23 20.05 18 (30) Moderately High
Equity - Small Cap
1 DSP Small Cap Reg Gr 112.82 9,082.34 0.00 18.36 81.48 70 1.86 3.90 21.90 5 (10) High
2 Union Small Cap Reg Gr 30.09 1,404.44 0.00 22.75 76.14 60 2.32 3.97 19.36 25 (88) High
3 Kotak Small Cap Reg Gr 163.71 8,614.01 3.24 23.30 72.92 74 1.89 -3.38 18.83 30 (66) Moderately High
4 Edelweiss Small Cap Reg Gr 25.57 1,382.10 1.95 30.43 67.62 75 2.14 5.07 18.76 32 (35) Moderately High
5 IDBI Small Cap Fund Reg Gr 18.69 156.22 2.41 24.73 72.86 52 2.52 7.75 18.57 37 (63) Moderately High
6 L&T Emerging Businesses Reg Gr 47.18 8,406.20 0.00 27.55 72.45 84 1.85 6.57 18.23 41 (51) Moderately High
7 HSBC Small Cap Equity Gr 81.35 298.43 1.72 23.97 74.31 47 2.50 -7.58 18.12 44 (96) Moderately High
8 Canara Robeco Small Cap Reg Gr 24.99 4,063.25 6.81 23.38 69.81 71 2.06 10.39 17.93 47 (24) High
9 UTI Small Cap Reg Gr 15.59 2,385.74 0.00 16.23 83.50 77 2.27 1.46 17.69 51 (74) Moderately High
Hybrid - Aggressive
1 DSP Equity & Bond Fund Reg Gr 232.49 7,650.98 62.62 27.70 9.68 52 1.83 -1.98 20.26 14 (15) High
2 Mirae Asset Hybrid Equity Reg Gr 22.73 7,150.59 76.45 10.94 12.28 66 1.78 2.53 16.49 78 (77) Moderate
3 LIC MF Equity Hybrid Gr 137.89 427.49 80.98 12.66 6.36 45 2.50 -0.90 16.11 91 (72) Moderate
4 Franklin India Eq Hybrid Gr 185.98 1,405.44 77.01 8.67 14.32 42 2.21 5.06 15.96 97 (79) Moderate
5 Aditya BSL Equity Hybrid '95 Gr 1,057.94 7,828.12 66.56 24.71 6.20 66 1.86 -1.66 15.65 113 (76) Moderate
6 HSBC Equity Hybrid Fund Reg Gr 15.67 479.93 79.55 12.55 7.90 39 2.47 -1.26 15.53 122 (118) Moderately Low
7 Navi Equity Hybrid Reg Gr 14.65 87.69 71.99 15.29 9.43 36 2.33 2.70 15.18 140 (89) Moderate
8 Bank of India Mid & Small Cp Eq&DbtRegGr 23.10 385.52 0.00 62.69 36.30 44 2.59 -0.26 14.86 167 (270) High
9 Invesco India Equity & Bond Reg Gr 14.70 400.09 62.49 36.69 0.81 52 2.44 0.59 14.85 168 (150) Moderate
10 PGIM India Hyb Eq Gr Opt 93.71 227.89 76.77 17.83 5.39 34 2.35 -5.07 14.81 176 (161) Moderate
11 Kotak Equity Hybrid Reg Gr 41.98 3,067.33 62.75 24.02 13.23 60 2.00 5.29 14.31 207 (331) Moderate
Equity - Multi Cap
1 Sundaram Multi Cap Gr 243.35 1,898.96 46.69 27.72 25.58 59 2.14 1.81 16.80 66 (183) Moderately High
2 ICICI Pru Multicap Gr 468.03 7,026.94 46.18 26.52 26.18 93 1.94 4.01 16.02 95 (103) Moderate
3 Aditya BSL Multi-Cap Reg Gr 12.33 3,837.36 46.27 25.20 28.53 77 2.08 -2.60 15.89 101 (120) Moderate
4 Invesco India Multicap Gr 79.80 2,321.37 44.20 28.57 25.96 62 2.03 -1.23 14.44 198 (194) Moderate
Equity - Flexi Cap
1 DSP Flexi Cap Fund Reg Gr 64.63 8,030.87 63.08 28.08 8.84 52 1.85 -3.69 20.30 13 (14) High
2 IDBI Flexi Cap Fd Rglr Gr 35.99 384.47 74.97 19.00 6.03 48 2.49 3.10 16.70 72 (94) Moderately Low
3 SBI Flexicap Reg Gr 77.48 16,495.49 67.13 17.97 14.90 54 1.80 1.07 16.30 83 (320) Moderately Low
4 ICICI Pru Flexicap Reg Gr 11.63 11,911.40 75.67 15.54 8.06 54 1.75 7.51 16.13 89 (174) Moderate
5 HSBC Flexi Cap Gr 129.92 419.48 70.24 14.67 15.09 51 2.50 -2.57 16.03 94 (111) Moderate
6 Shriram Flexi Cap Reg Gr 15.15 65.61 76.50 13.68 9.82 41 2.55 2.21 15.66 112 (162) Moderately High
7 IDFC Flexi Cap Gr 139.99 5,903.79 74.06 18.36 7.58 42 1.94 1.93 15.41 126 (189) Moderately High
8 LIC MF Flexi Cap Gr 66.62 418.37 52.17 21.90 25.93 67 2.55 -1.34 15.36 129 (122) Moderate
9 PGIM India Flexi Cap Reg Gr 25.95 8,030.87 64.34 18.76 16.90 46 1.94 -3.43 15.27 134 (182) Moderate
10 Taurus Flexi Cap Gr 153.59 254.95 52.93 20.29 26.16 46 2.64 3.20 15.23 137 (191) Moderate
Equity - Value/Contra
1 UTI Value Opportunities Reg Gr 105.24 7,062.92 70.57 16.43 13.00 55 1.82 3.26 17.42 55 (46) Moderately High
The proportionate share of debt-oriented schemes is 19.5 per cent of industry assets in October 2022,
down from 26.1 per cent in October 2021.

MF Page -39
Expense Return
NAV AUM No of
Rank (`) (` Cr)
2 SBI Contra Reg Gr 228.38 6,694.22 42.23 25.37 30.09 73 1.84 14.89 16.64 75 (133) Moderate
3 IDFC Sterling Value Reg Gr 92.65 5,097.86 42.42 34.71 22.87 56 1.97 7.48 16.39 80 (108) Moderate
4 IDBI Long Term Value Gr 16.72 100.65 68.69 26.00 5.31 48 2.56 5.29 15.80 105 (60) Moderate
5 Invesco India Contra Gr 81.74 9,668.67 77.05 13.75 9.19 61 1.80 4.56 15.08 148 (112) Moderate
6 Quantum L/T Equity Value Reg Gr 79.67 884.76 84.52 10.06 5.42 27 1.79 3.07 14.99 155 (73) Moderately High
7 Tata Equity P/E Reg Gr 213.45 5,356.63 70.71 17.61 11.68 35 1.94 6.65 14.96 157 (164) Moderate
Equity - ELSS
1 DSP Tax Saver Reg Gr 84.76 10,427.58 71.41 18.88 9.71 58 1.75 4.46 17.91 48 (39) Moderate
2 UTI Long Term Equity Reg Gr 145.17 3,011.23 65.97 19.38 14.66 55 1.91 -2.99 17.28 57 (81) Moderate
3 Motilal Oswal L/T Equity Reg Gr 27.36 2,274.05 56.63 31.57 11.80 32 2.04 1.70 16.94 65 (107) High
4 Mirae Asset Tax Saver Reg Gr 31.85 13,546.14 74.07 17.59 8.34 70 1.72 1.63 16.08 92 (70) Moderately High
5 Navi ELSS Tax Saver Fund Reg Gr 20.62 60.10 66.38 19.64 13.98 41 2.34 -1.21 15.84 103 (147) Moderate
6 ICICI Pru Long Term Eq Gr 618.15 10,404.52 75.61 10.06 13.27 48 1.92 2.75 15.83 104 (137) Moderately Low
7 Taurus Tax Shield Gr 119.75 63.44 74.04 4.00 21.97 26 2.44 6.95 15.62 117 (180) Moderately Low
8 Parag Parikh Tax Saver Reg Gr 20.46 848.19 78.93 7.09 13.98 27 2.23 10.70 15.61 118 (267) Moderately Low
9 Sundaram Diversified Equity Gr 155.94 1,814.87 66.24 28.27 5.49 54 2.12 5.27 15.24 136 (206) High
10 HSBC Tax Saver Equity Gr 57.41 194.73 73.24 13.52 13.24 38 2.49 1.95 15.21 139 (109) Moderate
11 Canara Robeco Equity Taxsaver Reg Gr 120.14 4,407.33 72.10 24.88 3.02 57 2.00 2.82 15.15 142 (185) Moderate
12 Indiabulls Tax Savings Gr 13.81 41.29 90.25 4.58 5.16 33 2.25 2.53 15.11 146 (127) Low
13 Quantum Tax Saving Reg Gr 79.38 112.95 84.55 10.16 5.29 27 1.79 3.74 14.88 164 (80) Moderately High
Hybrid - Equity Savings
1 SBI Equity Savings Reg Gr 17.65 2,429.90 56.41 22.97 20.62 83 1.18 1.84 17.05 61 (85) Moderately High
2 Mirae Asset Equity Savings Reg Gr 15.16 587.83 73.45 17.51 8.80 99 1.41 3.81 15.69 111 (151) Moderately High
3 IDFC Equity Savings Reg Gr 25.43 106.14 88.48 10.49 1.03 45 1.37 2.96 15.34 130 (121) Moderately Low
4 L&T Equity Savings Gr 23.45 180.47 62.09 23.33 14.59 53 1.58 2.46 15.03 154 (101) Moderate
5 Baroda BNP P Equity Svngs Reg Gr 12.80 193.82 90.00 8.70 1.30 45 2.51 3.58 14.90 162 (199) Moderately High
6 Sundaram Equity Svgs Gr 52.53 406.85 68.55 19.01 8.31 58 2.36 3.90 13.90 241 (136) Moderately High
7 HDFC Equity Savings Gr 50.74 2,639.76 84.79 6.40 5.90 69 2.11 5.80 13.85 244 (273) Moderately High
8 Franklin India Eq Savings Reg Gr 13.26 157.07 87.75 4.72 7.54 48 2.12 3.22 13.15 290 (371) Moderate
Hybrid - Dynamic Asset Allocation
1 DSP Dynamic Asset Alloc Reg Gr 19.96 4,433.31 67.97 26.21 5.82 130 1.89 0.37 18.18 42 (19) High
2 ITI Balanced Advantage Reg Gr 10.62 561.92 98.39 1.61 0.00 57 2.30 -2.54 15.12 144 (131) High
3 PGIM India Balanced Advantage Reg Gr 11.63 1,522.90 76.38 15.56 8.06 33 2.10 2.01 14.86 166 (157) High
4 Shriram Balanced Advantage Reg Gr 13.46 51.74 85.07 8.81 6.13 38 2.60 3.23 14.82 174 (246) Moderately High
5 Kotak Balanced Advantage Fund Reg Gr 14.90 14,553.48 78.52 16.84 4.64 92 1.69 3.14 14.29 210 (205) Moderate
6 Edelweiss Balanced Adv Gr 37.17 8,927.25 82.33 12.73 4.50 80 1.77 3.40 14.08 227 (231) High
7 LIC MF Balanced Advantage Reg Gr 10.44 1,189.29 100.00 0.00 0.00 36 2.14 4.51 13.82 248 () Moderate
8 Aditya BSL Balanced Advantage Gr 75.88 6,843.43 85.16 9.09 5.26 110 1.81 3.62 13.72 253 (165) Moderate

Solution Oriented
1 SBI Magnum Child's Benefit Reg Gr 78.21 89.06 19.79 19.01 54.31 21 1.21 2.95 20.08 17 (18) Moderate
2 Axis Retirement Savings Cnsrv Reg Gr 12.25 90.90 88.06 11.94 0.00 16 2.08 -3.33 18.13 43 (37) Moderately Low
3 Franklin India Pension Plan Gr 166.42 453.60 77.70 8.71 13.59 41 2.28 3.70 15.90 99 (68) Moderate
4 SBI Magnum Children's Bnf - IP Reg Gr 23.84 643.69 33.13 9.66 57.21 22 2.39 3.75 15.57 119 (167) Moderate
5 SBI Ret Benefit - Cnsrv Hyb Pln Reg Gr 11.88 200.67 54.44 26.42 19.14 36 1.68 3.97 14.80 177 (179) Moderately Low
6 SBI Ret Benefit - Cnsrv Pln Reg Gr 11.27 150.63 55.17 26.28 18.56 36 1.39 4.22 14.69 183 (181) Moderately Low
7 ICICI Pru Ret Hybrid Cnsrv Plan Reg Gr 12.97 64.42 66.18 16.94 14.88 27 2.13 1.35 14.59 186 (98) Moderately High
8 Aditya BSL Ret Fd 50s Reg Gr 11.63 28.01 73.61 18.07 8.33 31 1.97 1.14 14.49 193 (149) Moderately Low
9 SBI Ret Benefit - Agrsv Pln Reg Gr 14.04 1,058.15 56.48 26.78 16.73 36 2.22 6.43 14.48 195 (160) Moderately Low
10 SBI Ret Benefit - Agrsv Hyb Pln Reg Gr 13.43 789.77 53.40 27.14 19.46 37 2.37 5.54 14.30 209 (208) Moderately Low
Equity - Dividend Yield
1 Templeton India Equity Inc Gr 86.02 1,307.91 73.11 16.32 10.57 28 2.27 5.43 16.78 67 (83) Moderately Low
2 HDFC Dividend Yield Reg Gr 15.19 3,101.41 70.35 14.04 15.61 71 2.09 6.35 16.22 85 (54) Moderate
3 Sundaram Div Yield Gr 89.17 344.48 75.47 15.97 8.56 48 2.72 3.57 15.63 114 (48) High
Global - Other
1 Aditya BSL Intl Equity B Gr 26.75 95.00 91.70 8.30 0.00 30 2.55 -1.73 16.34 82 (67) Moderately Low
All the NAV figures are for date November 25, 2022. Trailing returns are also calculated for the same date. AUM, weightage of a stocks,
number of companies and expense ratio are for the period ending October 2022.

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www.dsij.in/apps.aspx Vol. 38. No. 01 • DEC 05 - 18, 2022

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Vol. 38. No. 01 • DEC 05 - 18, 2022

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