Investment FAQs with Parimal Ade (Investment Satsang- 15)

5 min read

Here are some questions asked by the viewers in the Investment Satsang dated 31st July 2021. These questions can provide you insights on some grounds. Please read these questions for knowledge purposes only and make any investment decisions only based on your research or the advice of your financial advisor.

Q What is the concept of value unlocking?
Parimal Ade:

• There are 2 types of results the companies declare:
o Standalone Result :
The result of the company‘s business which started initially in the particular sector is known as a Standalone result.
o Consolidated Result :
The results of the subsidiaries companies along with the result of the main business are called consolidated results.
• What is value unlocking?
o For example, we will be taking HDFC Ltd.
o There are a lot of subsidiaries of HDFC Ltd that are HDFC Bank, HDFC Life Insurance, HDFC AMC, HDFC Ergo, etc.
o When the IPO of HDFC Banks, HDFC AMC, etc. came. To know about the valuation of the business it is required to list these businesses.
o For eg In a way it is felt HDFC Bank is having Rs 5 lakh Cr. market capitalization until it is listed. When it got listed the value of it became Rs 8 lakh Cr.
o So this is called value unlocking, which means the value is locked until it is having any value realization. So when this company gets listed then value unlocking happens.

Q Long term view on LIC Housing Finance, the stock has fallen almost 15% in the past 2-3 weeks, any cause of concern?
Parimal Ade:

• There is no cause of concern.
• The pressure is built up for NPAs on overall banking, housing finance, NBFCs.
• Looking at the parentage of the company there should not be a problem.
• If there is any requirement of the capital then the parent company will mobilize it.
• LIC knows that this business is going to grow like anything.

Q Is it good to buy Nazara technologies, Zomato, and MTR Tech in sip mode for the horizon of 10 years?
Parimal Ade:

• All three companies are aggressive growth businesses.
• For Nazara technologies it is required to understand the business. Also, need to look into the capital investment.
• These companies possess the capability of giving lifetime earnings/returns if any blockbuster thing happens.
• But there are some risks also if these will not happen. Hence this stock will be best suitable for Aggressive Investors.
• MTR Tech is a long-term story.
• Premium valuation has been created for MTR tech.
• Compared to Nazara Tech and Zomato the MTR Tech will be less aggressive

Q View on Adani Port?
Parimal Ade:

• Compared to all other Adani stocks this is stock is having good earning visibility and growth.
• After getting the name in the parliament about Adani group there is a negative impact on FIIs and DIIs.
• To support those prices there need to be additional interest coming in from institutional investors.
• If there are any ups and downs by the institutional investors then there could be consolidation in the stock.
• One needs to be cautious about this stock.

Q View on investment only in mutual funds or stock?
Parimal Ade:

• It depends on the risk profile and understanding of investments.
• If there is a good understanding of the businesses it is better to invest in the stocks.
• There is a problem if you are investing by just looking at the returns.
• While investing in stocks it all about how is the business, how is the earning visibility, how is the growth in that particular stock.
• If the investment is in mutual funds need to see consistency, If it is in the top 25% quartile scheme is very important

Q View on Sanofi results?
Parimal Ade:

• Sanofi is an MNC company.
• So there is consistency in this company, particularly in these stocks.
• There could be a premium allocation.
• In between there are phases like pandemic there could be pressure from the investors.
• Higher single-digit or lower double-digit is what one should expect from these companies

Q View on CDSL after the results?
Parimal Ade:

• As the earning potential is increasing in per capita income and awareness about investments are also increasing and as the number of saving accounts is increasing in the same manner the Demat account is also increasing. So it will be good for this industry.
• Pricing capability is also sustaining compared to CAMS.
• Too much discounting.
• A staggering way of allocation should be good.

Q View on Petronet?
Parimal Ade:

• Good view on Petronet from earning potential and growth potential.
• There is the threat of Electric Vehicles.
• It is still felt good portion will be allocated to this type of energy.

Q IRCTC Split might happen, How does Stock split help in long term, also if the split happens to say 1/5 will the new valuation of IRCTC be fair?
Parimal Ade:

• There won’t be any effect on the valuation.
• It is just a marketing tactic.
• It is not supported about the split
• Not in favor of these splits.

Q Long-term view on Clean Science?
Parimal Ade:

• The next 5 years are going to be glorious for Pharma Industry.
• The discounting the investors are doing in these companies that are a little scary.
• The market mood is positive.
• After 5 years how the stock will behave is unknown.

Q View on averaging the price?
Parimal Ade:

• Whenever you are planning to take the allocation in that industry need to check the earning visibility and growth visibility.
• If the stock is on 52 weeks high then it is better to invest in a staggered way of allocation. Here averaging up or down is not important.
• It depends on how the market will behave when the prices go up and down.
• If it is bothering, it is better to allocate funds in a staggered way and believe in that particular business.

Q Difference between Gross NPA and Net NPA?
Parimal Ade:

• The bank business is liability and asset i.e., Taking deposits and giving the loan.
• So the money given if has not been returned then the bank has to make provisioning out of its Operating Profit earned.
• If the bank makes more provisioning then the Gross NPA will come down. The remaining amount will be net NPAs.
• So it is always good to see a Provision Coverage Ratio also.
• The trend should always be down of Net NPA and gross NPA.

Q What is the NSE EMERGE Platform if anyone gets IPO from this platform then what are the consequences?
Parimal Ade:

• Volume is the biggest concern.
• As there are no big players available.
• As there is no major buying and selling in this.
• An opportunity is created to raise the money.
• If the opportunity is not there if you want to sell the stock.

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