Investment FAQs with Parimal Ade (Investment Satsang – 03)

Here are some questions asked by the viewers in the Investment Satsang dated 9^th & 16^th April 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 Your View about Tata Elxsi?

Parimal Ade:

• The last 1 year was phenomenal for this company.
• Good Earnings Growth. Last 12 months: Earning growth of 37%-38%.
• Profitability Growth of Last 3 Years, 5 Years, and 10 Years is between 10%-15%.
• ROE of the company has also remained between 25%-30%.
• Growth in Earning Visibility with development in Automobile Sector due to shifting towards EV.
• Very low debt company.
• Currently, it is a mid-cap company.

Q Rs/Dollar spike in last few days near to Rs. 75/-. What will be the impact on equity over 75?

Parimal Ade:

• The expectation of outflow in the market.
• The main difference will always be the difference between inflation and interest rates. And that much depreciation can be expected.
• For ex.: US is having inflation have a rate of 1% [GJ1] and India is having an inflation rate of 5%-6%, then the difference between the inflation may be the depreciation in the Indian Currency.
• The difference in Interest Rate in India and the US will always set the ground for depreciation in Indian Rupee per annum, for always.
• No major impact on the longer horizon.
• When Quantitative Easing Tapering (QE Tapering) will be done by US Government, then outflow from foreign institutional investors should be expected.

Q Your opinion on Eicher Motors (Long Term) and its future with the EV 2-Wheelers is also becoming a reality.

Parimal Ade:

• The future of Eicher Motors is not in line with other companies.
• Eicher Motors brands are aspirational brands. Ex. Royal Enfield.
• Due to the aspirational and millennial crowd, Eicher Motors have high growth potential.

Q Investing in Index Fund still makes sense? Alternatively, What time duration is reasonable enough to invest in an index fund?

Parimal Ade:

• Minimum Time Horizon should be 5+ years, if you are investing in Large Capf Index like Nifty50, Sensex, etc.
• If you are investing in Nifty Next 50, then the time horizon should be 7+ years.
• It makes sense to invest in Index Fund. Beginners should start with Index Fund only.

Q In such a low-interest rate regime with debt funds/FDs giving lower yields, where should conservative investor park their fund for the short term for 1-3 years.

Parimal Ade:

• Currently, there are no other choices or options available.
• As of now, don’t go for interest rates, but should look for secure kind of options.
• Or, one can park their money on banks offering high rate interest of 6%-7% such as IDFC First Bank, etc.

Q For Index Funds, What is better, lumpsum investment for 5-7 years or SIP?

Parimal Ade:

• At the current level, Lumpsum might not be the right selection.
• It will be better if you invest 30%-40% of your fund in a lump sum and the rest should be invested in a staggered manner.

Q Is it good to invest through Employee Stock Programme in my company since there is a discount?

Parimal Ade:

If you are positive about the company and knowing the growth potential of the company then there is no problem investing through ESOP.

Q I have started SIP amount of Rs. 5,000 each in Axis Bluechip Fund, Parag Parikh Flexi Cap Fund, and Mirae Asset Tax Saver Funds for the long-term. Are these good?

Parimal Ade:

• For Axis Blue Chip Fund: Should have a time horizon of 5+ years.
• Parag Parikh Flexi Cap Fund: Should have a time horizon of 7-10 years.
• Mirae Asset Tax Saver Fund: Having lock-in of 3 years, but is an aggressive fund and hence investor should have a time horizon of 7-10 years.

Q Nestle or Tata Consumer- Which one is better for the Long term?

Parimal Ade:

• Nestle can be a good counter for Conservative to Moderate Investor.
• Tata Consumer Ltd. Can be an Aggressive Investor’s choice. As of now, high growth visibility is there.

Q Can you please explain the concept of Averaging in the Stock Market? Is it good to average up in long term?

Parimal Ade:

• Averaging Up means the company is growing and investors are continuously acquiring that particular stock.
• From Investor’s viewpoint allocating funds in a staggered manner if the company’s earnings visibility is there then there should be no problem in averaging up.

Q Your thoughts on KPIT Technologies?

Parimal Ade:

• It is a good company.
• The focus of the company is totally on the automobile industry and in this sector KPIT technologies ju74, L&T Technologies and Tata Elxsi are looking good.
• Good Earning Visibility and Good Growth in Earning Visibility.

Q I have no exposure yet to paints. What do you think Indigo Paints in Value Investing?

Parimal Ade:

• Indigo Paints and Asian Paints are two goods counters on Paint Sectors.
• If you are aggressive or moderate investors, one can take a call on Asian Paints, but valuation is the concern here.
• There is a great consumption story in this sector.
• A staggering way of investing should be preferred.