Investment FAQs with Parimal Ade (Investment Satsang- 05)

8 min read

Here are some questions asked by the viewers in the Investment Satsang dated 7th May and 14th May 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 View on Nifty PE ratio?
Parimal Ade:

• Initially, the PE ratio was calculated with standalone EPS now it is calculated on consolidated EPS.
• If we see the current PE ratio with new rules it is 30.23 and Nifty is at 14823 so now EPS(Earning Per Share) of Nifty comes to be Rs. 490.
• In the next 12 months to 18 months, the consolidated EPS of Nifty could be around Rs 700 to Rs 800.
• Nifty might reached 21000 to 24000 as per the concerned EPS & Current PE Ratio.

Q View on Tata Elexi at current levels?

Parimal Ade:
·        The opportunities are very high.
·        Premium valuation is also very high.
·        Results are also looking good. Automatisation is going to be the future.
·        This going to be again Rs 1 Lakh Cr. + TATA Group company. Looking at their overall business scenario, earning visibility, growth in earning things are looking interesting.
·        The companies that are trading in the premium levels. If there is any disappointment in any of the quarters then the corrections could be also steep.
·        The best way to acquire any stock will be in the stagger way approach.

Q View on SBI Card?
Parimal Ade:

• Very positive on this business.
• Under penetration is very high. There is no other listed player in this industry.
• Opportunity, Earning visibility, and growth are good.
• Good stock to invest in for the long term.

Q View on L and T Infotech?
Parimal Ade:

• Good Growth-oriented company.
• From a Valuation point of view, it is trading on the high premium value.
• The risk of disappointment in the quarter could be there. So the chances of getting corrected could also be there.
• It is good aggressive stock to invest in.

Q View on TataSteel?

Parimal Ade:
·        The steel industry is going into upcycling.
·        Due to pollution control norms in China Production could be subdued compared to earlier growth that was expected. So that could be the advantage of steel industries around the world.
·        So Indian industries are also flourishing.

Q View on GSPL for a long-term view?
Parimal Ade:

• It is a good story based on valuation and quantitative front.
• This company always comes on the top slot.
• Govt of India is focusing on having a market share of 6% to 15%.
• This being a dominant player the things are looking well.

Q View on Titan for the next 10 – 15 years?
Parimal Ade:

• It is a good stock.
• If there is a rational expectation of the return of around 10%-12% then the company won’t disappoint.
• If there is any correction then it will be a good opportunity to buy more shares.

Q Can India mart become Ali Baba because of the network effect?
Parimal Ade:

• There is a lot of competitors in the market for India Mart that as Ali Baba, Amazon, etc.
• There is a chance of a good secular growth story for India Mart.
• Recent corrections are offering a good acquisition thought process to a lot of investors.
• Valuations are still premium.
• An aggressive investor can look into such stock.

Q Bajaj Finserv at this level are too expensive?
Parimal Ade:

• It is at a premium value.
• Rerating is seen in Bajaj Finserv due to the insurance business that is general insurance and Life insurance business.
• In coming years the 2 listings could happen of these subsidiaries company Bajaj Life insurance and General Insurance.
• It will be expensive for a good amount of time.

Q If we take a growth plan in Mutual Fund, if the dividend is reinvested does the TDS get deducted by AMC? How can we claim it?
Parimal Ade:

• It is suggested to go for a growth plan only, no need to go for dividend reinvestment plans.
• If the TDS is deducted, it will be seen under 26 AS under your PAN card.
• Which can be claimed while returning the file.

Q How to buy SGB from the market? How to calculate the best price and tax liability on it? Taking mutual funds and stocks in the mother’s name can save the tax?
Parimal Ade:

• There could be tax savings if the investment is made in the mother’s name as this will be considered as a gift. And there will be no taxation on that gift.
• It is better to invest in SGBs initial offers instead of market offers.
• It is better to wait for new SGBs.

Q View on Shriram City FD?
Parimal Ade:

• For 5 year FD, the interest rate is 9.35%.
• The big banks are giving around 5% to 5.5% for the tenure of 5 years
• It could be a risky affair it completely depends upon the risk appetite the person can take.
• A higher rate of interest comes with higher risk.

Q What will happen if the broking house shuts what will happen to the invested amount. Is it advisable to diversify broking houses also?
Parimal Ade:

• If there is any kind of doubt about the broking house, It’s better to stick with a big broking house or a Bank-supported broking house.
• For eg. Kotak Securities, ICICI Direct, HDFC Securities, Axis Direct.
• These are backed by strong institutional firms.

Q View on Muthoot finance and Manapuram finance?
Parimal Ade:

• Both the companies are good.
• The gold finance company will have control on NPA as gold is hypothecated.
• Good earning visibility and growth opportunity.

Q If a subsidiary of Bajaj Finserv like Bajaj Allianz gets listed then what will be the effect on Bajaj Finserv?
Parimal Ade:

• The effect could be good.
• The discounting in which the stock is trading doesn’t know the exact valuation as per the market.
• If it gets listed then it will be a better thing that will have a value unlocking and there could be a good upside as well depending upon the valuation they get listed.

Q View on Happiest Mind in the long term?
Parimal Ade:

• Discounting on this stock is too much.
• The company is having a focus on digital business.
• It is not that the business done by Happiest Minds cannot be done by other IT Companies.
• Looking at digital business with a margin of 24% to 25% it is not that great, but a decent one.

Q Why are you not in the favour of inflation is constant currency supply risky for the economy, people save every month’s deflation will start and people will start losing their jobs?
Parimal Ade:

• Inflation is good till when it is in a good range as given by the Reserve Bank of India.
• If it is in that inflation then it’s good inflation, if it goes above-recommended inflation then it is Hyperinflation which will kill the economy by increased interest rates.
• Indian inflation is good with 4% to 5%. The US inflation rate is good from 1% to 2%. If it increases more than this it will take bad shape. If it is balanced then it is good.
• There should be inflation, if there is no inflation then there is no growth.

Q View on IEX?
Parimal Ade:

• This stock should be invested in a staggered way. As the stock is trading on premium value investing a lump sum would be risky.
• The recent correction is not the healthy corrections this doesn’t mean there could be more correction.
• Company is good, earning visibility is good, growth is looking good, valuation is a concern then it is better to invest in a staggered way of approach.

Q View on correction on Kotak?
Parimal Ade:

• The was a good amount of rally seen in this stock.
• It is good to see consolidation happening at such counters.
• Banks are going to be under pressure for the next one or two quarters because of the current lockdown which might impact overall NPAs. Hence the market can be nervous.
• In this pandemic, the strong banks will become the strongest bank in the coming years.

Q View on Pharma correcting more?
Parimal Ade:

• Due to pandemics, there could be a soft corner and defensiveness will be seen in companies.
• Already a lot of discounting has happened in this sector.
• Once things get normalized then there are chances of corrections to come.

Q View realistic profit booking for the retail investor if we have more stock ideas than money to invest?
Parimal Ade:

• When you are investing in the stock, if there is any problem related to business, earning visibility, earning growth then only it is advisable to exit from that company.
• If the stock has increased and it comes down it still better to keep it invested.
• It is the market dynamics of demand and supply which is deciding these things.
• The focus should be more on Financial Planning, Goal Planning, Net worth growth YoY, are the financial goal are achieving or not. After covering all this if the surplus amount is remaining then you can opt for new ideas in the stock market.
• Growing your net worth YoY by 15% by adding surplus income then it will be good. If it is growing more than that then it is a good sign.

Q View on investment in gold for 10 to 15 years while SGB are for 8 years only?
Parimal Ade:

• For investing in Gold, SGB is a good solution for the long term.
• There is an extra 2.5% interest, the capital gain will be tax-free.
• If the gold investment is for asset allocation then one part should be SGB allocation and another part should be in Gold ETF or Gold Mutual Funds.

Q View on investment in the Metal and Commodity sector for medium-term?
Parimal Ade:

• The sector seems to be good for some time.
• This sector has already reached its peak it is good to be watchful.
• It is always better to invest in the metal industry if you know it very well.

Q View on Mirae Asset FAANG?
Parimal Ade:

• It completely depends upon demand and supply.
• It can go up or down in short term.
• It’s not matured kind of product yet.
• One should be ready for volatility
• There could be surprises coming at this counter.
• When the volumes get stabilized then the values will behave rationally.

Q Health care ETF for long-term activity?
Parimal Ade:

·        To take allocation in the sectoral fund then only the aggressive investor can go for it.
·        After this pandemic, the Health care sector is going to be good.
·        The cascading impact will be there for some time.

Q How will be the sugar industry?
Parimal Ade:

• The sugar industry is very cyclic.
• Apart from sugar, it’s an ethanol play as well.
• That is the reason why the market has discounted its price rapidly.
• Therefore there could be chances of consolidation.
• The cyclical pattern will return on this counter.
• A lot of things need to be proven yet for ethanol.
• There is a risk element in this.

Q View on IDFC First Bank?
Parimal Ade:

• Need to believe in Mr. ‎V. Vaidyanathan on the focus on retail banking.
• In this quarter the people are getting scared about getting NPA in the retail segment.
• They will handle retail NPAs very well.
• The main problem is legacy loans, infrastructure loans which he is trying to bring it up to zero currently it is about Rs 1000 Cr.
• There could be some challenging quarters. But the bank is on right track to achieve the target in 2024-25 for the merger that was done in the year 2018.
• Internally the targets are higher this news is a positive sign for shareholders.

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