Why we are obsessed with money

What a way to exist!

For most of us, practically the whole day all we are thinking is about money and more specifically how to have more money!

As if money was the only thing in life. Unfortunately for most of us, circumstances just do not permit any other thought!

We are running behind money most of the time which is almost akin to have become obsessed with money. Everything that we are doing in life is centred around money.

Unfortunately, this is because we need money for anything and everything that we do. There’s nothing wrong and what are you doing, however the problem is that over time, it becomes a compulsive habit to keep earning more.

That’s where the danger is. The problem is that there is a point where from we chase money as an addiction, we chase money because we like to do so. If we did not chase money we would not know what to chase now because we get out identity from money and the amount of money we have.

Another thing is that right from childhood we are always taught and our minds are conditioned that everything that we are doing is going to be for the sake of earning money.

There is no one who told you that money is just a means, and then there is something greater in life to achieve. Some examples are legacy; building something, charity; to giving something / helping someone, passion; pursuing something and living; simply to enjoy life and your money

We have got addicted to this and how!

There are three reasons for this:

First, we are what we do. It is the human behaviour. I know I should exercise and I don’t. I know I should eat healthy and I don’t. I know I should spend time with my kids and I don’t. I know that, yes, money isn’t going to make me happy and I still keep trying to make money.

We live by the laws of inertia, in a pattern which is hard to break. But we have to break it. For ourselves and for the sake of people and reasons for which we are chasing money.

Secondly, we need signals of progress. Money is a measure of how far you have progressed in life. The more the money you have the more you can make sure your progress. It’s simply the logic of evolution. People need validation of their success. Bigger house, bigger car, branded goods and list goes on.

Thirdly, it’s the easy way out. It’s only human to avoid difficult things. Important things are very difficult to measure.  Have I been a good father or husband? Have I groomed my child well?  Such things take years to measure and we still don’t have answers.

So, should we not be focused on creating money for ourselves?

I’m not saying that. Definitely create. Take care of yourself for sure!! Use it to the maximum to make yourself happy!!! You need a certain amount and beyond that is extra.

The definition of their certain amount is naturally different from one person to another. If that extra is going to happen easily, without stress and without your involvement, then its fine. Basically don’t kill yourself for that extra. Be Smart.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a certified financial planner, wealth manager and financial freedom coach.

How the RBI actually helps you

RBI

Most of us in Mumbai, see this huge structure called the Reserve Bank of India and wonder what it really does. It’s also a tourist attraction!! It has so many other offices and again one wonders why they need to have so many offices. I’m going to try and highlight a very interesting part of RBI’s work and how it helps us directly on a day-to-day basis.

The RBI does a review of the monetary policy of the country at frequent intervals during the year. So how does the monetary policy help us investors to take smart decisions?

Monetary policy is a tool by which the RBI decides to raise interest rates or reduce interest rates or keep them steady.

In our country, as we’re an oil importing nation, this decision is very closely linked to Oil. Oil to a large extent contributes to inflation. We all know what happens when inflation keeps rising. We in India unfortunately do not see too much of inflation falling and things becoming cheaper.

Oil is Not Well

So when oil prices rise i.e. we see a rise in crude oil prices almost instantly we can expect rising food prices. This is because there is going to be a rising cost pressure for manufacturing & services. This rise obviously gets passed onto the retail consumers.

When this happens RBI adopts a hawkish stance, tries to pull money out of the system by raising interest rates. Now when interest rates rise no one seems to be interested in borrowing. This immediately puts a brakes on money circulation.  Less money chasing goods decreases the demand for money. This way it controls inflation.

There is yet another tool that the RBI has and that is known as the CRR or the cash reserve ratio.  This ratio in simple words means the amount of cash that the bank must maintain with the RBI as the percentage of the total assets. So when this increases banks are forced to park more with the RBI and this is also a way to control inflation.

On the other hand when things look dull, when there is a recession of sorts, the RBI comes to the rescue and gets into action to kickstart growth in the country. It does this by lowering the interest rates. This we all will understand quite easily because we see a direct benefit of this happening. We see a fall of interest outgo in our EMI’s for the home loan that we are carrying. New loans become cheaper.

Individuals are motivated to go out and make purchases, whether it is for a washing machine or a piece of real estate. Businesses are motivated to go out and borrow to buy more machinery, to expand capacity, to hire more staff and manpower and basically do everything that will add to the growth of business.

Economic growth results as a result of all this. It is also during this time that stock market rises, we see a rally in stock prices and mutual fund NAV’s jumping higher and higher each day. There is prosperity all around.

Critical Role

As you can see that the central bank of the country has a very very important role to play.  If it makes a mistake, things can go really wrong.  Imagine like the USA or Japan if our interest rates were very low; everyone would run to borrow, they would borrow more than they require because it would be cheap and easy to borrow. And that is very individuals would run into what is known as the debt trap, because someday you’ll have to pay back.

Each day the central bank attempts to make sure that everything in our country remains stable and financially there’s nothing that goes wrong dramatically.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

The year of the bond, once again!

We are not talking of James Bond, we are talking of investment bonds.

We are in a situation where the fixed deposit rates are at a general low and there is a lot of discontent among depositors of fixed deposits.

Whenever we see a situation like this, one way or the other, the bond markets come to the rescue. It comes to the rescue of smart depositors, who are agile to move their money from fixed deposits to bond funds.

Let’s understand what is happening and why.

What Exactly is Happening in the Bond Markets?

It is likely that in this year, investors of bond funds will make handsome gains. Bond prices may rise and there may be capital gains. Investors of bond funds not only earn the rate of interest, but also earn capital gains. So that way, they make more than the return they would make on fixed deposits. The returns could be a high single digit or sometimes as high as double digits.

Over three years, this will become practically tax free or the tax would be a very small amount. So, basically, I am thinking that a rally will happen in the bond market. There are three main reasons for this — reduction in government borrowing (which is favourable), recovery of trading losses (which is favourable) and no change in monetary policy (which is neutral).

A word of caution, however, that such bond market investments are also subject to bond-market volatility and should be considered ideally with the help of a financial expert.

Before proceeding further, let us, therefore, quickly explain a bond, bond fund and bond market. We need to do this because few people understand the bond markets and even fewer invest in the bond markets.

Bond is nothing, but a commercial transaction where the borrower is issuing a bond to the lender and the lender will earn a certain rate of interest. When interest rates fall, everyone becomes interested in owning that bond.

As a result, the demand for the bond increases, the price of the bond increases and the bondholder makes capital gains.

A bond fund is a fund where ordinary investors pool in their money and a fund manager buys them a portfolio of bonds.

Moving onto the Reasons For a Rally in Bond Funds…

Now, the fundamental reason for a rally is reduction in interest rates as it stimulates economy and growth.

Firstly, the government is a massive borrower of funds. So a reduction in government borrowing reduces the demand for money in the economy. As a result, prices of bonds rise and this contributes to capital gains for bond holders.

Secondly, the Reserve Bank of India (RBI) recently announced that the commercial banks and RBI, which are the largest lenders to the government, will have another year to offset losses they have incurred on account of buying government bonds in the past. This action will lead to a rise in the price of bonds and this contributes to capital gains for bond holders.

Lastly, on one side due to the rise in oil prices, there is more inflation and thus more money is needed for circulation in the economy. On the other side, many government bonds are maturing, which will provide money supply. So, it is likely that we see a neutralising effect and thus RBI will take no action. This inaction here will support capital gains as explained above. Hence, this year might be a year of good gains for the bond investors.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Five new financial goals for you this summer

I am going to try and explain to you why the summer holidays of April and May are great months to get a lot of things started, financially speaking.

This time period in a way resets the financial clock. You also have the option to hit the reset button on everything you have done so far; financially speaking of course and hope to do better things better than you did last year.

Let’s look at some of the new and unusual things to do in April.

  • Make a learning budget

Learn something about money or anything you like. The best way to make money is to learn something about money. Just like if you wanted to learn cooking you will get into the cooking class. If you wanted to learn swimming you would enrol in the swimming class. If you find learning about money is too daunting task than learn something which is close at to your heart or related to your work. If you learn something new, there’s a possibility that you will use your new ideas to generate new income and in turn that will generate new wealth for you.  So make a budget, enrol somewhere and spend that budget. How about a % of your annual income? Spend it for sure!

  • Plan a unique holiday 

When you’re by yourself and without your mobile phone you will have the opportunity to think! When you have time to think, suddenly good ideas will come to your mind.  You may think this is silly but you can be sure that you will be amazed if your drivers experiment just once. So it might be a good idea to go for a holiday just by yourself. If you find that too intimidating, join a group of strangers. You can combine that with the adventures experience if you like.  Be extra careful if you’re going with your special buddies. Do this only if they are going to be in a position to help you discuss your idea and make it bigger. They must play the role of complimenting your thoughts. So make a schedule to do this holiday and obviously make a budget to make it happen. Think & create new ways of making wealth.

  • Make a prediction and make it happen

Be brave. Let’s aim to grow and multiply net worth by 50% by the time you come to the end of this financial year. This is not a joke and it is easier than you can imagine.  I’m speaking about NETWORTH and I’m not talking about return on investment. If your networth is Rs. 100 today, all I’m saying is that let’s aim to make this a 150 by the end of this year. This networth comprises of all your savings till date. This can be achieved by simply saving aggressively every month for the next twelve months. Just put this into a recurring deposit or liquid fund so you don’t spend it.  We just have to prove to ourselves that this is possible. Where and how we will invest this money will think about that later.

  • Eliminate a negative belief 

I want to give you an exercise here. Write down all your negative beliefs you have about money and wealth. Most people are not able to achieve the desired level of wealth because they think about wealth negatively. So even if you are earning a good amount of income you will never see yourself becoming wealthy. Examples are money causes problems, money causes a fight, managing money is complicated etc. Then for each negative thought, you have written down the positives i.e. the opposite for a few months. Soon negatively biased feelings will evaporate.

  • Make a new investment; something you have not done before

Again here you do not have to be a financial expert. The idea is to learn something new. There are hundreds of investment options. Our objective here is to learn something new. Talk to your advisor and seek his or her guidance. Just a word of caution here; don’t do anything which is speculative or is something that you just can’t understand. Do what do find easy you understand and do that then.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Seeking financial freedom? The time is NOW!

John Lewis famously remarked, “If not now, then when? If not us, then who?” This is so appropriate in the current financial world that we live in.

That statement will leave to rest every other argument that is conservative and against the idea of wealth creation. We are often faced with the situation where there is no option but to create wealth. Read on to know why!

Interest rates are painfully low. For all those diehard fans of guaranteed investment returns, there’s hardly any place to go to. Thinking of fixed deposits? Feeling happy with 7%? And fully taxable? That period is over. Period.

That doctrine of investing into pure fixed deposits and similar instruments is unfortunately standing challenged. There is no option but to sprinkle it with a combination of a little something that will add to the returns earned from fixed income type of securities. In fact this category of investors are in a way, best placed in terms of the current tax laws.

They can earn about 9-10% with minimal or near zero tax over about five years and more. Starting to generate rate of return above the inflation level of 7% is starting to create wealth. So there it is; there is no option but to move in the direction of creating wealth.

For more evolved investors, who invest in equities and who and still sitting on the sidelines tend to run out of patience every now and then. They are sometimes waiting for the right time, sometimes waiting for correction, sometimes waiting for valuation and sometimes waiting for just nothing. Sometimes, just too busy to take action!

I totally understand not wanting to lose hard-earned money. But if the money does not move it will stagnate. That’s the problem with money.

Hit the Ground Running

Inaction and inactivity kills it. Makes it costly to hold. Makes us lose opportunities, sometimes small and sometimes significant. I know of many people including my dad, who just kept investing into equities and holding forever. No doubt they were hugely (big HUGELY) better off then the people in the same time zone. I think they could have done far better with some smart lessons on asset allocation. This is because if they compare the growth rate of their holding over a period of 20 or maybe 30 years the compounded rate of return earned is often not impressive.

It is just marginally better or a few percentage points above the fixed deposit rate. Hence the need for asset allocation, which simply put is not to have all eggs in one basket at any given point in time. These sections of investors anyways create wealth, and, asset allocation is the tool that ensures that the process of wealth creation continues uninterrupted. So again there it is; even for this section there is not option but to start enhancing their wealth creation activities, else returns will continue to remain forever mediocre.

Then there are skeptics and there is nothing much for skeptics of everything, except that they need a serious dose of financial education. Perhaps what if needed is a proof of concept and for that, which better country to live in other than India where financial transparency in investments is so high that I sometimes feel, it comes from another planet.

 Your Money Needs Action

Today, there is a whole lot of variety to choose from and we have never been more spoilt for choice. But the most important thing in all this is to understand that your money needs action. It needs activity and for that the time is now!

And furthermore, if you asked me this question 10 years ago; I would have said that, the Time is NOW. If you ask this question 10 years hence, I will still say the Time is NOW. Any time is the right time to start the process of creating wealth. All that is important is that you take your first step; then continue it all the way with zeal and determination… till you have the level of wealth that you desire. And if you accumulate more than you need, still do it and share it with the world.

If you want your financial freedom; then the Time is NOW!

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager and Financial Freedom Coach.

Young Turks: Here’s the success story of venture fund Aspada

Venture fund Aspada was co-founded by Kartik Srivatsa and Thomas Hyland in 2012 and has made 17 investments so far across Fin-tech, agriculture, health and edu-tech startups.

Young Turks takes a look at their investment thesis, their differentiated VC model and meet three of their portfolio companies – Capital Float that underwrites unsecured loans to startups and SMEs; Dunzo, a hyper local concierge and delivery player that is also Google’s first direct startup investment in India; WayCool, a Chennai-based agriculture-tech startup.

In Pictures: Tribute to Kobe Bryant, basketball legend

FILE - In this Feb. 26, 2010, file photo, Los Angeles Lakers' Kobe Bryant sits on the bench during player introductions before playing against the Philadelphia 76ers in an NBA basketball game in Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Jeff Lewis, File)
FILE - In this Feb. 26, 2010, file photo, Los Angeles Lakers' Kobe Bryant sits on the bench during player introductions before playing against the Philadelphia 76ers in an NBA basketball game in Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Jeff Lewis, File)
In this file photo, Los Angeles Lakers’ Kobe Bryant sits on the bench during player introductions before playing against the Philadelphia 76ers in an NBA basketball game in Los Angeles. (AP Photo/Jeff Lewis, File)
FILE - In this June 7, 2009, file photo, Los Angeles Lakers guard Kobe Bryant (24) points to a player behind him after making a basket in the closing seconds against the Orlando Magic in Game 2 of the NBA basketball finals, in Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Mark J. Terrill, File)
Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Mark J. Terrill, File)
FILE - In this Feb. 23, 2006, file photo, Los Angeles Lakers' Kobe Bryant, top, goes up for a shot between the Boston Celtics' Paul Pierce, left, and Al Jefferson during the first half of an NBA basketball game in Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Branimir Kvartuc, File)
In this file photo Los Angeles Lakers’ Kobe Bryant, top, goes up for a shot between the Boston Celtics’ Paul Pierce, left, and Al Jefferson during the first half of an NBA basketball game in Los Angeles. The retired Los Angeles Lakers star, who died Sunday in a helicopter crash at age 41, was proudest of his five championship rings, the most recent in 2010. (AP Photo/Branimir Kvartuc, File)
FILE - In this May 19, 2009, file photo, Los Angeles Lakers guard Kobe Bryant defends Denver Nuggets guard Chauncey Billups during the second half of Game 1 of the NBA basketball Western Conference finals, in Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Mark J. Terrill, File)
Only four NBA players who weren’t on the Boston Celtics’ 1960s dynasty teams have won more titles than Bryant. (AP Photo/Mark J. Terrill, File)
FILE - In this July 12, 1996, file photo Kobe Bryant, 17, jokes with the media as he holds his Los Angeles Lakers jersey during a news conference at the Great Western Forum in Inglewood, Calif. Bryant, a five-time NBA champion and a two-time Olympic gold medalist, died in a helicopter crash in California on Sunday, Jan. 26, 2020. (AP Photo/Susan Sterner, File)
In this July 12, 1996, file photo Kobe Bryant, 17, jokes with the media as he holds his Los Angeles Lakers jersey during a news conference. (AP Photo/Susan Sterner, File)
FILE - In this April 15, 2003, file photo, Los Angeles Lakers Shaquille O'Neal, left, and Kobe Bryant share a laugh on the bench while their teammate take on the Denver Nuggets during the fourth quarter at Staples Center in Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Kevork Djansezian, File)
In this file photo, Los Angeles Lakers Shaquille O’Neal, left, and Kobe Bryant share a laugh on the bench while their teammates take on the Denver Nuggets during the fourth quarter at Staples Center in Los Angeles.  (AP Photo/Kevork Djansezian, File)
FILE - In this April 10, 2011, file photo, Los Angeles Lakers guard Kobe Bryant dunks during the first half of an NBA basketball game against the Oklahoma City Thunder, in Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Mark J. Terrill, File)
His career was remarkable for its longevity and because he played all 20 seasons with the Lakers — the most ever for one team. Bryant was the fifth player to last two full decades. (AP Photo/Mark J. Terrill, File)
FILE - In this July 22, 2009, file photo, NBA superstar Kobe Bryant of the 2009 NBA Champion Los Angeles Lakers walks past fans as he enters a Nike store in Singapore. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Joseph Nair, File)
In this file photo, NBA superstar Kobe Bryant of the 2009 NBA Champion Los Angeles Lakers walks past fans as he enters a Nike store in Singapore. (AP Photo/Joseph Nair, File)
Los Angeles Lakers centre Shaquille O’Neal (34) puts his arms around teammates, Elden Campbell (41) and Kobe Bryant (8) as Eddie Jones (6) and Derek Harper walk in front. (AP Photo/ Victoria Arocho, File)
Bryant scored 33,643 career points, third-most in league history, and averaged 25.0 points per game, including a 60-point performance in his final game on April 13, 2016. (AP Photo/Rick Bowmer)
FILE - In this June 17, 2010, file photo, Los Angeles Lakers guard Derek Fisher, center, holds the Larry O'Brien Trophy as Kobe Bryant, right, holds the MVP trophy as they celebrate after beating the Boston Celtics, 83-79, in Game 7 of the NBA basketball finals in Los Angeles. At second left is Lakers' Sasha Vujacic. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Mark J. Terrill)
Los Angeles Lakers guard Derek Fisher, centre, holds the Larry O’Brien Trophy as Kobe Bryant, right, holds the MVP trophy as they celebrate after beating the Boston Celtics, 83-79, in Game 7 of the NBA basketball finals in Los Angeles. (AP Photo/Mark J. Terrill)
His 81-point game in on January 22, 2006, against the Toronto Raptors was the second-highest scoring performance in the NBA and arguably the most dazzling single-game offensive performance in hoops history. (AP Photo/Mark J. Terrill, File)
He was an 18-time All-Star, a two-time Olympic gold medalist and the 2008 NBA MVP. (AP Photo/Richard Vogel, File)
FILE - In this April 13, 2016, file photo, Los Angeles Lakers' Kobe Bryant poses for pictures with his wife Vanessa, left, and daughters Natalia, second from right, and Gianna as they stand on the court after an NBA basketball game against the Utah Jazz, in Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020.(AP Photo/Mark J. Terrill)
Kobe Bryant poses for pictures with his wife Vanessa, left, and daughters Natalia, second from right, and Gianna as they stand on the court after an NBA basketball game against the Utah Jazz, in Los Angeles.(AP Photo/Mark J. Terrill)
FILE - In this June 21, 2010, file photo, holding the NBA championship trophy, Los Angeles Lakers' Kobe Bryant flashes the victory sign during a parade in downtown Los Angeles. Bryant, the 18-time NBA All-Star who won five championships and became one of the greatest basketball players of his generation during a 20-year career with the Los Angeles Lakers, died in a helicopter crash Sunday, Jan. 26, 2020. (AP Photo/Richard Vogel, File)
Bryant’s post-playing career in the entertainment industry began auspiciously when he won an Oscar for “Dear Basketball,” an animated short film based on the letter he wrote announcing his retirement. (AP Photo/Richard Vogel, File)

Despite rising 57% in the last 1 year, Motilal Oswal downgraded this stock; here’s why

stocks

Despite rising 57 percent in the last one year, brokerage firm Motilal Oswal (MOSL) has downgraded Siemens to ‘neutral’ post its acquisition of C&S Electric. As per the brokerage, C&S Electric acquisition not the best use of cash and asked investors to await a better entry point in the stock.

Siemens has announced the acquisition of 99.22 percent stake in C&S Electric for Rs 2,100 crore. C&S Electric is engaged in the business of low-voltage/medium voltage switchgear, busbars, diesel gen-sets, solar and EPC. The scope of the acquisition comprises low voltage switchgear and panels, low/medium voltage power busbars as well as protection and metering devices, MOSL noted in a recent report.

Siemens’ acquisition of C&S Electric is a reaction to the fear of losing market share in the switchgear business, especially after Schneider’s acquisition of L&T’s portfolio, the brokerage report stated.

“Our channel checks suggest that C&S Electric’s products sell at 7-8 percent discount to Tier-1 brands and lack the scope of automation currently. As the C&S Electric brand migrates to Siemens over the next 5 years, there might be scope to increase its brand perception,” the report added.

MOSL also believes that even though the deal value might be cheaper than the trading multiples of Siemens India, such comparison may not be the right way to look at the transaction.

“Siemens acquisition of C&S Electric looks expensive on EV/EBITDA and P/E basis or at best may be similar, assuming that the acquired product portfolio has a better margin profile than the current financials of C&S. However, L&T’s brand, distribution network, and business scale far exceeds that of C&S Electric, and thus, we find the deal to be expensive,” explained the firm.

Meanwhile, as per Phillip Capital, this acquisition takes Siemens further away from the traditional and now structurally challenged utility facing Power & Gas business, additionally, exposing C&S to its global franchise enhances opportunities in the Infrastructure and Industrial segments.

Though, it further noted that it awaits clarity on the roadmap for this business since most of the benefits would accrue with a lag while the upfront payout seems high. The brokerage also has a ‘neutral’ rating on the stock.

In FY19, C&S Electric clocked revenue of Rs 1,240 crore with EBITDA at Rs 120 crore. EBITDA margin stood at 9.5 percent and the adjusted PAT was reported at Rs 52.7 crore.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions

This largecap auto stock could rise 12 percent in the next nine months

BSE Sensex stocks trader

Axis Securities has chosen Ashok Leyland as its ‘Pick of the Week’ with a target price of Rs 97 per share in the next six to nine months. The revised target price has an upside of 12 percent from Friday’s closing price of 86.5 per share. At 10.22 am, Ashok Leyland shares quoted at 86.80 per share on BSE, up 0.35 percent.

“We reiterate a Buy on Ashok Leyland with a TP of Rs 97,” analysts at Axis Securities wrote in a report on Monday. The brokerage expects Ashok Leyland’s recent rally to continue on the back of arrest in commercial vehicle industry decline.

Ashok Leyland share price has given a little over four percent return to investors in the last one year amid a wider auto slowdown, underperforming BSE Sensex by almost 11 percent. But, the four percent return too has come largely on the back of a smart over 20 percent recovery in the stock in the last 6 months.

In the last three years, Ashok Leyland shares have fallen over seven percent, under-performing Sensex by over 40 percent. The 10-year-return on Ashok Leyland is almost 250 percent.

“Ashok Leyland (AL) has seen a good rally post seeing its lows of sub-60 levels on back of arrest in CV industry decline and AL seeing 3 months of meaningful sequential growth in volumes. We expect this momentum to continue with pre-BS6 buying coming in to play in the next two months driving further sequential growth and then slow ramp up of production of BSVI vehicles,” the report said.

A healthier balance-sheet and improved working capital will further help the heavy vehicles manufacturer when demand picks up.

“AL during this lean year has focused on cutting all the flab in their costs and
has managed to save Rs 230 crore in H1FY20 and plans to save up to Rs 500 crore in FY20. While this has not reflected in EBITDA margin improvement this year due to negative operating leverage, it will certainly show up when
demand picks up and capacity utilisation becomes better,” Axis Securities said in its report.

Ashok Leyland covers about 50 percent of the entire LCV segment opportunity and has around 22 percent share in the market. The company will further improve its market share and exports with more product offerings in the pipeline, it said.

Most importantly, the government’s scrappage policy which likely will be launched in July this year will ramp up demand for Ashok Leyland as nearly 10 million vehicles will be under the radar for scrapping for FY20 and 25 million by FY25.

Other brokerages too are largely positive with Nirmal Bang setting a target price of Rs 92 per share on Ashok Leyland.

“Ashok Leyland has saved costs of nearly Rs 2,000-2,300 million in H1FY20 and expects to save costs totaling to Rs 5,000 million for the current year. Green shoots like good monsoon, stable freight rate, improved financing, government measures to revive the economy & potential pre-buy before BSVI transition could drive the volume in Q4FY20,” it said in a research note in late December.

Motilal Oswal also said that the company is on “a very strong footing and focused on adding new revenue/profit pools.”

It also raised the weight of Ashok Leyland among its auto picks as Motilal Oswal believes the worst is over for the CV industry, although volumes will remain volatile due to the upcoming BSVI transition.

Also, catch all the latest market action and updates with CNBCTV18.com’s blog.

Mergers in the time of slowdown: Why the PSU bank marriage could have waited

Bank of Baroda

India’s financial sector is in the midst of a consolidation phase where the government is merging public sector banks with one another. If financial results of past three quarters are anything to go by, the mergers couldn’t have come at a worst time.

Earlier this year, Dena Bank and Vijaya Bank merged with Bank of Baroda (BoB). Since then, BoB has lost 39 basis points in market share of overall deposits and nearly nine basis points in loan advances. In financial year 2020, deposits for the entire banking sector rose 3.5 percent while loans grew by 1.8 percent. However, for BoB, deposits fell 2.1 percent while loan book expanded by a mere half a percent.

The falling economic growth has put additional stress on the banking sector. India’s Gross Domestic Growth (GDP) growth has slowed down from 6.6 percent in the third quarter of last fiscal to 4.5 percent in the same quarter of current financial year. This stress on the economy has naturally weighed on BoB as well. The bank’s net interest income (NII) continues to decline as slippages rise. Since merged numbers were reported, BoB has reported slippages worth Rs 32,746 crore while it has written-off non-performing assets (NPAs) worth Rs 20,998 crore.

Since the merger, the bank has reported an accumulated net loss of Rs 8,836 crore, decline in deposits by Rs 18,997 crore, gross NPAs have risen from 10.02 percent to 10.45 percent while advances grew by Rs 3,081 crore.

In the coming months, four more banks are set to merge. These are: OBC and United Bank of India into Punjab National Bank (PNB), Syndicate Bank into Canara Bank, Andhra and Corporation Bank to be merged into Union Bank of India and lastly, Allahabad Bank to be merged into Indian Bank.

The economy is staring at a slowdown, Reserve Bank of India (RBI) is indicating asset quality woes aren’t over yet and banks are hesitant to lend. Clearly, the consolidation of public sector banks in India, although much needed, couldn’t have been more ill-time.

 

Dr Reddy’s posts loss of Rs 569.7 crore in Q3FY20 on impairment of generic Nuvaring drug

Dr Reddy's L

Dr Reddy’s Laboratories on Monday posted a loss of Rs 569.7 crore in the third quarter of fiscal 2020 due to impairment of non-current assets including generic Nuvaring drug.

The company had reported a net profit of Rs 485.2 crore in the year-ago quarter and Rs 1,092.5 crore in the July-September quarter.

Total revenue during the quarter grew 13.86 percent to Rs 4,383.8 crore from Rs 3,850 crore YoY.

The company’s global generics business in Q3FY20 grew 15 percent to Rs 3,592.7 crore, YoY, driven by Europe business (up 52 percent), North America business (up 8 percent), India (up 13 percent) and Emerging Markets (up 19 percent).

Pharmaceutical services and active ingredients (PSAI) segment increased 16 percent YoY during the quarter while revenue from proprietary products & others declined 18 percent YoY to Rs 100.5 crore.

The company took a total impairment charge of Rs 1,320 crore in the quarter ended December 2019, of which Rs 1,113.7 crore was towards impairment of gNuvaring and the balance of Rs 206.3 crore was towards other product related intangibles.

Dr Reddy’s Labs said in December 2019, there has been a generic launch and an authorized generic launch for the product Nuvaring, which has led to a considerable erosion in the value of this product, and accordingly, it has taken an impairment charge of Rs 1,113.7 crore.

“The current quarter performance has been good across all our businesses and we achieved strong EBITDA margins. The profits were impacted due to trigger based impairment charge taken on a few products including gNuvaring. We continue to focus on execution and have made significant progress on quality systems and operational efficiencies,” said GV Prasad, co-chairman and MD, Dr Reddy’s Laboratories.

In Q3FY20, the company’s EBITDA increased by 24.1 percent to Rs 1,073.7 crore from Rs 865.2 crore while EBITDA margin rose 200 bps to 24.5 percent YoY.

The operating performance beat CNBC-TV18 poll estimates of Rs 914 crore and 21.9 percent for the quarter respectively.

At 1:25 pm, the stock surged 4.91 percent to Rs 3,176.60 on the BSE. The stock touched a 52-week high of Rs 3,179.35 intraday.

Afternoon Session: Markets trade below day’s low, Nifty near 12,200; metals drag

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Indian benchmark indices traded below the day’s low on Monday afternoon on weak global cues as fears about the economic impact of China’s spreading virus outbreak triggered risk-aversion trade.

At 12:30 pm, the Sensex was trading at 41,450.87, down 162.32 points or 0.39 percent and the Nifty was trading at 12,201.15, down 47.10 points or 0.38 percent.

The Nifty Metal index was the worst performer of the day falling over 2 percent followed by Nifty PSU Bank declining 1.25 percent. Nifty IT, Nifty Financial Services and Nifty FMCG also fell 0.3 percent each.

Nifty Pharma, Nifty Realty and Nifty Auto indices were trading in green.

JSW Steel, Tata Steel, Hindalco Industries, Vedanta, and HDFC Bank were the top losers among Nifty50 constituents, while Dr Reddy’s Laboratories, Mahindra & Mahindra, ICICI Bank, UltraTech Cement, and Maruti Suzuki were the top gainers.

JSW Steel shares fell 5 percent in the early trade on Monday after the company reported poor December quarter results. The scrip touched intraday low of Rs 258.35 after falling 5 percent against the previous close of Rs 271.95 on the BSE.

JSW Steel’s Q3FY20 net profit fell 88 percent to Rs 187 crore as compared to Rs 1,603 crore in the same quarter a year earlier. Total revenue from operations dropped by 10.67 percent to Rs 18,182 crore from Rs 20,355 crore year-on-year.

Deepak Fertilizers and Petrochemicals share price jumped over 10 percent intraday on Monday over rumours of government considering import duty cut on raw material for fertilizer companies in the forthcoming budget.

On the global markets front, shares tumbled as investors grew increasingly anxious about the economic impact of China’s spreading virus outbreak, with demand spiking for safe-haven assets such as the Japanese yen and US treasury notes.

Catch all the latest updates from the stock market here.

In Pictures: Catch all the action from Grammys

Billie Eilish, left, and Finneas O'Connell pose in the press room with the awards for best album, best engineered album and best pop vocal album for "We All Fall Asleep, Where Do We Go?," best song and record for "Bad Guy," best new artist and best producer, non-classical at the 62nd annual Grammy Awards at the Staples Center on Sunday, Jan. 26, 2020, in Los Angeles. (AP Photo/Chris Pizzello)
Billie Eilish poses in the press room with the awards for best album and best pop vocal album for "We All Fall Asleep, Where Do We Go?", best song and record for "Bad Guy" and best new artist at the 62nd annual Grammy Awards at the Staples Center on Sunday, Jan. 26, 2020, in Los Angeles. (AP Photo/Chris Pizzello)
Billie Eilish poses in the press room with the awards for best album and best pop vocal album for “We All Fall Asleep, Where Do We Go?”, best song and record for “Bad Guy” and best new artist at the 62nd annual Grammy Awards at the Staples Center in Los Angeles. (AP Photo/Chris Pizzello)
Billie Eilish, left, and Finneas O'Connell pose in the press room with the awards for best album, best engineered album and best pop vocal album for "We All Fall Asleep, Where Do We Go?," best song and record for "Bad Guy," best new artist and best producer, non-classical at the 62nd annual Grammy Awards at the Staples Center on Sunday, Jan. 26, 2020, in Los Angeles. (AP Photo/Chris Pizzello)
Billie Eilish, left, and Finneas O’Connell pose in the press room with the awards for best album, best-engineered album and best pop vocal album for “We All Fall Asleep, Where Do We Go?,” best song and record for “Bad Guy,” best new artist and best producer, non-classical at the 62nd annual Grammy Awards. (AP Photo/Chris Pizzello)
Lauren London, from left, Margaret Boutte, and Samantha Smith accept the award for best rap performance for "Racks in the Middle" on behalf of Nipsey Hussle at the 62nd annual Grammy Awards on Sunday, Jan. 26, 2020, in Los Angeles. (Photo by Matt Sayles/Invision/AP)
Lauren London, from left, Margaret Boutte, and Samantha Smith accept the award for best rap performance for “Racks in the Middle” on behalf of Nipsey Hussle. (Photo by Matt Sayles/Invision/AP)
Rosalia accepts the award for best Latin rock, urban, or alternative album for "El Mal Querer" at the 62nd annual Grammy Awards on Sunday, Jan. 26, 2020, in Los Angeles. (Photo by Matt Sayles/Invision/AP)
Rosalia accepts the award for best Latin rock, urban, or alternative album for “El Mal Querer.” (Photo by Matt Sayles/Invision/AP)
Tyler, The Creator accepts the award for best rap album for "Igor" at the 62nd annual Grammy Awards on Sunday, Jan. 26, 2020, in Los Angeles. (Photo by Matt Sayles/Invision/AP)
Tyler, The Creator accepts the award for best rap album for “Igor.” (Photo by Matt Sayles/Invision/AP)
Joseph Simmons holds a jersey of the late Kobe Bryant at the 62nd annual Grammy Awards on Sunday, Jan. 26, 2020, in Los Angeles. (Photo by Matt Sayles/Invision/AP)
Joseph Simmons holds a jersey of the late Kobe Bryant at the 62nd annual Grammy Awards. (Photo by Matt Sayles/Invision/AP)
YG, from left, John Legend, Kirk Franklin, DJ Khaled and Meek Mill point to a screen showing Nipsey Hussle and Kobe Bryant during a tribute at the 62nd annual Grammy Awards on Sunday, Jan. 26, 2020, in Los Angeles. (Photo by Matt Sayles/Invision/AP)
YG, from left, John Legend, Kirk Franklin, DJ Khaled and Meek Mill point to a screen showing Nipsey Hussle and Kobe Bryant during a tribute. (Photo by Matt Sayles/Invision/AP)
DJ Khaled poses in the press room with the award for best rap/sung performance for "Higher" at the 62nd annual Grammy Awards at the Staples Center on Sunday, Jan. 26, 2020, in Los Angeles. (AP Photo/Chris Pizzello)
DJ Khaled poses in the press room with the award for best rap/sung performance for “Higher.” (AP Photo/Chris Pizzello)

Budget 2020: Relief in STT and LTCG rates expected, says Nirali Shah of SAMCO Securities

Nirali Shah, Samco

Markets are expecting a reduction in personal tax rates and to an extent on capital gains as well, Nirali Shah, senior research analyst at SAMCO Securities, told CNBC-TV18.com in an interview. She added that relief in the security transaction tax (STT) and long-term capital gains tax (LTCG) rates are also likely. Edited Excerpts:

How would you characterise the current environment: markets at an all-time high, economic indicators at a record low?

The current macro divergence between the economic indicators and markets isn’t a new phenomenon and our country has experienced it in the past. This time, it started with demonetisation which sucked the liquidity out of the system and just when that wasn’t enough, there was the goods and services tax (GST) surprise. Both these revolutionary regimes have attempted to formalise the economy which began the onset of a slowdown. The liquidity crises added to the existing grumpiness among the smaller corporates struggling to make ends meet.

Even though these reforms kick-started the slowdown, these will prove to be extremely beneficial over the long-term. It might be that certain portions on D-Street are expecting a revival soon by continuously pumping money into largecaps or it might be because of the need for safer quality avenues that investors are still considering large caps, despite they being at extremely high valuations. This will soon change and the rally will shift to mid and smaller caps. This is the way markets will unfold going ahead and so will the economy.

With the budget in view, do you think if the fiscal is compromised this time? How will that affect the markets?

The fiscal deficit has very high chances of not meeting the target of 3.3 percent of GDP as proposed in the July budget. In fact, there are expectations of the fiscal deficit exceeding 4 percent this time. Since the expected miss in fiscal deficit is known to all, markets may have already factored it in. But a very high variation from the expected will surely bring out a knee-jerk reaction by the bourses as in a way liquidity will flow to the government coffers through borrowings.

What is the market expecting from this year’s budget? Which sectors may see some relief in the budget?

Markets are expecting a reduction in personal tax rates and to an extent on capital gains as well. An infrastructure push in addition to the recently announced injection of cash will also aid in bringing about some relief to the struggling economy. Moreover, due to the extended monsoons, farmers’ woes will also have to be looked at. Sectors that will benefit the most would be infrastructure, fertilizers, agriculture, metals, and real estate.

What are your views on STT and LTCG? Do you think the government will tamper with this budget?

There are high expectations that the government will bring about some relief in the STT and LTCG rates. However, they will keep in mind their fiscal deficit target, which is already way above the proposed mark, before tampering with these rates. Therefore, an exorbitant shift from the current rates is unlikely.

Are measures by the government and RBI enough to curb the slowdown? Where do you think the government needs to take further action?

The government and the RBI [Reserve Bank of India] have provided a number of injections to kickstart the economy. Any further expenditure by them will hamper the fiscal deficit target, hence further infusions will be done with a lot more cautiousness. Infrastructure, agriculture, power, and telecom are some sectors where the government should certainly focus.

Midcaps have been outperforming the benchmarks consistently in 2020 after a poor 2019 and 2018? Is this the trend 2020 will see?

2020 will definitely mark a renewed rally for the midcaps which have been experiencing troubled times for the past two years.

What are your top stock and sector picks for the budget?

Metals and infrastructure would be strong bets to play for the budget. Hindustan Zinc is a good dividend play, Solar Industries is another gem which will benefit from the recent coal reforms. In the consumption space, Colgate and Dabur are sound companies that will revive with the pick-up in the economy.

Do you think FY20 will see an earnings recovery or will we have to wait for FY21 to see that?

FY20 will definitely see earnings recovery in certain pockets such as cement, metals and sugar. However, sectors such as auto will start showing positive earnings largely from FY21.

For a new investor, what kind of portfolio will you recommend?

A risk-taking investor can allocate a higher portion — almost 60 percent — to quality mid and smallcaps and 30-35 percent in largecaps. The remaining amount can be invested in gold.

Family affair: Billie Eilish, Finneas win big at Grammys

Billie Eilish, left, and Finneas O'Connell pose in the press room with the awards for best album, best engineered album and best pop vocal album for "We All Fall Asleep, Where Do We Go?," best song and record for "Bad Guy," best new artist and best producer, non-classical at the 62nd annual Grammy Awards at the Staples Center on Sunday, Jan. 26, 2020, in Los Angeles. (AP Photo/Chris Pizzello)

The edgy, avant-pop album that siblings Billie Eilish and Finneas created in a small bedroom made a big splash at the 2020 Grammy Awards, winning 11 honors for the musical family.

“When We All Fall Asleep, Where Do We Go?” — created in the musicians’ Los Angeles home — helped Eilish win the top four honors, including album, song and record of the year, along with best new artist. The 18-year-old is the youngest artist to achieve the feat and the first to do so since Christopher Cross did in 1981.

Finneas — who co-wrote, produced and engineered the album, walked away as Sunday’s top winner with six. Eilish won five honors.

“We didn’t write a speech for this because we didn’t make this album to win a Grammy. We didn’t think it would win anything ever. We wrote an album about depression and suicidal thoughts and climate change and being the bad guy — whatever that means — and we stand up here confused and grateful,” Finneas said onstage.

Together, they also won best pop vocal album, while Finneas’ individual honors included producer of the year (non-classical) and best engineered album (non-classical).

“This is my first Grammys. I never thought this would happen in my whole life,” Eilish said. “I genuinely wanna say I am so grateful and I only wanna say that I am so grateful.”

“This is to all the kids who are making music in the bedroom today — you’re going to get one of these,” Finneas added.

The bedroom where they created magic was brought to life when they hit the stage and performed “When the Party’s Over,” which featured Finneas on keys and Eilish singing in a soft, pitch perfect tone.

Los Angeles, where the show was held, had a central theme at the show Sunday: hometown heroes Nipsey Hussle and Kobe Bryant, a global icon, were honored and celebrated at the show.

The Grammys kicked off with a performance in honor of Bryant, who died hours before the awards along with his daughter and seven others. And later in the show Hussle’s collaborators and friends, including DJ Khaled, John Legend, Meek Mill, Kirk Franklin, Roddy Ricch and YG, gave an all-star tribute to the man who died last year.

Hussle also posthumously won his first pair of Grammys on Sunday.

Filmmaker Ava DuVernay introduced the performance, which featured band players, background dancers and Legend wearing traditional Ethiopian and Eritrean clothing in honor of Hussle’s African roots. Mill performed a new song called “Letter to Nipsey” while others joined together for “Higher,” which won best rap/sung performance.

“This is for Nipsey Hussle. This is for hip-hop,” said DJ Khaled, who collaborated on the song with Legend and Hussle, whose family stood onstage.

“We all love him. We all miss him. It’s terrible that we had to lose him so early,” Legend said. “We’ve seen some tragedy today and last year … let’s hold each other tight.”

The show — which took place at the Staples Center, Bryant’s old stomping ground — began with a touching, emotional and a cappella performance of “It’s So Hard to Say Goodbye to Yesterday” by host Alicia Keys and Boyz II Men.

“Los Angeles, America and the world-wide world lost a hero,” Keys said, adding that the audience was “heartbroken in the house that Kobe Bryant built.”

“Right now Kobe and his daughter Gianna … are in our spirits, they’re in our hearts, they’re in prayers, they’re in this building,” she said. “Take a moment and hold them inside of you and share our strength and our support with their families.”

Before the show officially honored Bryant, Lizzo performed the songs “Truth Hurts” and “Cuz I Love You,” saying at the top of the show: “Tonight is for Kobe.”

Lizzo won three honors, including best pop solo performance for “Truth Hurts” and two R&B awards.

“Hold on one second,” she said, catching her breath. “Thank you to the academy. This is really (expletive) sick.”

Lizzo was among the mix of newcomers and well-known acts who reached their goals of winning their first-ever Grammy Awards on Sunday, which also included Tanya Tucker, J. Cole, DJ Khaled, Eilish, Lil Nas X, Billy Ray Cyrus, Michelle Obama, Sara Bareilles, Rosalía, 21 Savage and Tyler, the Creator.

“To my mother, you did a great job raising this guy,” Tyler, who won best rap album, said to his mom, who was onstage and crying by side.

More crying took place Sunday.

Demi Lovato, who has mostly taken a break from the public since focusing on her recovery after reportedly overdosing in July 2018, gave a stirring, vocally top-notch performance that earned her a standing ovation. She was so emotional that she had to restart the song as a teardrop ran down her cheek.

Camila Cabello’s performance of “First Man” — a song dedicated to her father — also induced tears. Cabello walked off the stage to her dad’s seat to finish singing the song in front of him, while he teared up. Audience members were emotional, too, including Gwen Stefani.

Ariana Grande had a lengthy performance — probably to make up for the drama that surrounded her axed performance last year. Run DMC joined forces with Aerosmith to rock the Grammys stage, while Usher, Sheila E. and FKA twigs paid tribute to Prince.

Lil Nas X brought the story of “Old Town Road” to life by performing alongside the artists who helped the song stay at No. 1 for 19 weeks through various remixes, including BTS, Mason Ramsey, Diplo and the track’s main co-star, Billy Ray Cyrus.

Veteran rapper Nas then joined Lil Nas X for a new song, shouting out Bryant at the end: “Kobe, we love you.”

A dark cloud loomed over ceremony since the Recording Academy announced it had put its recently hired CEO, Deborah Dugan, on administrative leave for misconduct. Dugan and her lawyers fired back at the academy, claiming that the awards show is rigged.

But no mention of Dugan was directly made during the three-plus-hour show.