We credit the Telecom reforms to Mr. Sam Pitroda erstwhile adviser to the Prime Minister of India Shri Rajiv Gandhi. During the UPA 1.0 headed by Dr Manmohan Singh, the Economist PM invited Infosys Co-founder Mr. Nandan Nilekani to Lead and Architect the Unique Identity Project – Aadhar. On the basis of UIDAI, Indian Financial ecosystem has witnessed massive disruptive transformations. The first wave of disruption in financial services was led by digital payment startups, followed by digital lending, wealth management, and Insurance technology startups. As we enter the second wave of disruption in FinTech 2.0, it is led by Neobanks ( Digital Only, over-the-top banks without actual RBI Banking License leveraging on the license of a Traditional Bank) that aim to redefine customer-centric consumer and (more…)
Protection is the most profitable part of business. Life insurers will benefit from monetisation of opportunity in life-protection with rising awareness in post Covid, favourable demographics and reasonable costs. Penetration of protection is low at 10% of addressable population with scope for market to double in five years (+23% CAGR over three years).
Insurance stocks have fared well in the current environment due to their relative defensive nature as compared to banks/NBFCs. Recent growth trends are encouraging, significantly better than initial expectations. However, ability of insurance companies to deliver yoy stable/increase in VNB (Value of New Business) remains a crucial monitorable. Traction in protection business will provide tailwinds to all players. While capital market inflows / ULIPs will likely remain weak, ability of insurance companies to underwrite/scale up traditional business assumes importance. Better product-mix (higher protection & non-par savings share) should (more…)
HDFC Asset Management Company – HDFC AMC has a strong brand pull (benefitting from parentage), relatively higher proportion of equity assets and continued delivery on fund performance make it one of the best plays to capitalize on the financial savings opportunity in the country.
MF AUM is just c.12% of GDP (vs global average of 62%). Long term AUM growth rates have been healthy (18% CAGR over last 19 years) and we see them sustaining in the future. Importantly, share of individual investors in the AUM has been inching up and the uptick in “sticky retail flows’ should shield the industry from cyclical whipsaws in the market. HDFCAMC is one of (more…)
Foreign Institutional Investors have been net sellers in the last two months offloading stocks worth about Rs 24,000 Cr [Aug & Sep] Source: NSDL. Domestic Investors have aggressively bought stocks to ward off free fall in the markets. To us it is a sure sign indication of downward revision of Earnings for FY 2018 from Rs 1626 to Rs 1601 and further down to Rs 1550 as we start getting the September quarter results.
Valuation of Indian Markets:
Instead of the BSE 500, we are now taking into (more…)
We already put out on Twitter that we are booking profits. As against the historical average multiple of 14.7x, the Nifty currently trades at 17.8x i.e, 20% premium. Over the last 10 years, the market has traded above this multiple for only 3% of
Earnings growth trend also does not appear to be particularly attractive with earnings revisions still happening on the downside. Hence valuation (more…)
Indian small & midcap stocks have witnessed a sharp rally since the lows of Aug 2013 and have outperformed large caps significantly over this period. A large part of this relative outperformance is explained by the price multiple rerating seen over this period. While the price multiple rerating does explain a large part of equity returns in the short run, it is the underlying business performance and earnings growth that should drive performance in the long run.
In fact it’s quite interesting to note that for small stocks, the multiple (more…)