Knowledge Faqs with Gaurav Jain (Knowledge Yagya- 03)

• As the market was all-time low during covid 1st wave then, no one knew the market will go up seeing today’s prices.
• So In the short term, how much the market will fall could not be told by anyone.
• The correction in the market can happen for several other reasons.
• A major dip in the market can only happen if there is any major problem that is not known to anyone.
• That’s why it is said that it is good to invest in the long term rather than the short term.
• So it is also said that the investment should be in a staggered manner so that if the market falls then it is a good opportunity to buy then or else it is better to invest regularly.

• Both are different companies.
• PI is a very export-oriented company and it is more into crop protection.
• Coromandel is more towards fertilizers and also entering into crop protection and have started exporting from the last 3-4 years.
• PI growth-wise is looking better. But looking at the rural story Coromandel is having a domestic rural story.
• PI does clinical trials related to pesticides. Also, they have a lot of tie-ups with other companies. They outsource R&D and manufacturing. It has a good growth story related to export-related things.

• Wockhardt is an Indian domestic pharma company.
• AstraZeneca is an MNC company in India doing well.
• Whichever is domestic Indian pharma companies, Dr. Reddy, CIPLA, etc are focusing more on export business. Due to export, only these companies are having grown in the last 12-15 years.
• Abbott India Limited and Astrazeneca have limited performance domestically,
• But in MNC Pharma companies the problem is Pharma products are not allowed to be launched in India. Also, There are a lot of processes in MNC pharma to launch it in India.
• So the products are of these MNCs are of good quality.
• Domestic Pharma Company may witness good growth in the case of acquisition and a decent export share as well.

• Revenue Growth is very important. If there is no revenue growth then there could not be profitable growth.
• In some cases of chemical pharma companies, the revenue growth is not that good but the profit growth is more.
• Hence people are getting more excited as the PE ratio has improved. As PE ratios are on profits not on revenue.
• But we need to understand if the revenue is not increasing how can the profits going to get increase.
• Hence Profit growth and revenue growth both are important.
• Revenue growth is more important in long term, profit growth is about growth and efficiency.
• So we need to understand what the management is focusing well on profit generation or revenue generation.

• Solar is having very good scope, major problems are there and they are also trying to figure it out.
• Big Companies like Tata Power are more focusing on solar power.
• Looking last 5 years the company has focused more on solar as they were initially focusing on wind energy, Now they have converted to solar.
• Solar technology is improving tremendously.
• The price has been reduced. It has become competitive concerning coal and thermal power.
• This is a very interesting sector. But need to choose a good company.
• Don’t invest in the stocks looking at the trend. Need to have a good thought process before investing.

• The power grid is a PSU so the issue is the growth prospects are limited as the decision is not centralized by the government but is distributed.
• Due to distributed decisions, it becomes a time-consuming process.
• In Tata power, there are a lot of positives about the company because of solar focus and electric vehicles as well but there is also risk associated with it. As it is a very capital-intensive business.
• IEX is only having the risk right now is about the regulations.
• IEX is the largest power exchange in India and is having more than 95% market share.
• As the government does not want only 1 power exchange they don’t want a monopoly and it is a private company.

• Need to make the asset allocation appropriately.
• Sometimes it is felt that this stock could be a large-cap.
• We need to see our asset allocation and also check how much the company is stringent.
• Mostly in this situation, it is better not to be stringent for small and midcap allocation.
• Some stocks are floating between midcap to large-cap.
• So, in this case, we should not be stringent as the markets are changing daily so such kinds of changes are bound to happen.
• So there needs to be flexibility, better to take a company-specific call.

• There are no generic answers for this.
• There are some thumb rules which can be used(it varies from person to person concerning age, horizon, current portfolio, and goals. etc).
• The small and mid-cap allocation should not be more than 40% to 50% allocation.
• The gold allocation should not be more than 10% to 15% of the total portfolio size.
• For international funds, it again depends on geographical conditions but it should not be more than 10% to 15%.

• Currently, Tata Motors looks interesting more than M&M
• As M&M is looking more diversified.
• In comparison with these two companies, Tata Motors is for high-growth investors.
• 80% of the revenue comes from Jaguar and LandRover. For conservative growth investors, M&M should be good.