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61

Mutual Funds in India / How to Find AUM of Direct Vs Regular Plan ?

« Last post by resh on October 28, 2020, 04:29:42 PM »

With a lobby of Mutual Fund Distributors & AMC working like a cabal, SEBI intervened to break the same by being strict on Foreign Trips, Stocks, Gift & Cheques Paid out to Mutual Fund Distributors. Along with SEBI diktat, Mutual Fund Online Platforms emerged offering Direct investment Plans.

Now What is the Percentage of Mutual Funds Invested Directly Vs Regular (Distributor) Mode ?
All the Following Data is Obtained from AMFI Website --> Check Under Scheme Details

All Data as of 30-Sep-2020
We are considering the Top 2 Funds in Each Category by SIZE OF AUM - Assets Under Management

MultiCap Fund
Kotak Standard Multicap Fund - Growth - 25%Direct and 75% through distributor
HDFC Equity Fund - Growth - 33% Direct and 67% through distributor
SBI Focused Equity Fund - Growth - 19% Direct and 81% through distributor

LargeCap Funds
SBI BLUE CHIP FUND - Growth - 24% Direct and 76% through distributor
HDFC Top 100 Fund - Growth - 20% Direct and 80% through distributor
Mirae Asset Large Cap - Growth - 32% Direct and 68% through distributor

MidCap Fund
HDFC MidCap Opportunities Fund -  18% Direct and 82% through distributor
DSP MidCap  Fund -  17% Direct and 83% through distributor

Large & MidCap Fund
Mirae Asset Emerging Bluechip - 28% Direct and 72% through distributor
Canara Robeco Emerging Equities - 19% Direct and 81% through distributor

Investing in Mutual Funds by Direct Plans mean a 1% Higher Rate of Return.

So the thing is Direct Plans are Picking up and here to Stay since all the Corporate Debt is now invested in Liquid Funds using Direct Plans.

62

Mutual Funds in India / What is SWING Investment in SIP ?

« Last post by resh on October 23, 2020, 09:42:44 AM »

Assumption: I'm assuming you all are familiar with the concept of SIP.

Let me briefly explain what Swing Strategy in Mutual Fund SIP is.

Swing involves adding more money or removing excess on monthly basis from your mutual fund as every month the target is fixed which is equal to SIP Amount * Nth Month.


For example you start a of Rs 1000 every month.

First Month you BUY 100 units at Rs 10. RS 10 * 100 Units = Rs 1000 [Target Met]

Next month target is Rs 2000. Present NAV is Rs 11.
Target Rs 2000 -  (Rs 11 * 100 Units ) = Rs 900
So you only Add Rs 900 during Second month and get 81.81 Units. Total Units = 100 + 81.81 = 181.81

Say 3rd Month NAV Drops to Rs 8.00
Target for 3rd Month is Rs 3000
Present Value of Investment is Rs 8 * 181.81 = Rs 1455.
Contribution during 3rd Month will be Rs 3000 - Rs 1455 = Rs 1545 [Instead of 1000, you will invest 1545 and get 193.12 Units]
Unit Balance at end of 3 Months = 181.81 + 193.12 = 374.93

This should go on continuing for 10 years. Sure way to beat Returns Generated by SIP. Questions and Comments Welcome.

63

Mutual Funds in India / DSP AMC - Top Fund Managers / Executives Salary / Pay

« Last post by resh on October 07, 2020, 03:53:24 PM »

Here are the Top Paid Executives of DSP Mutual Fund in India (Asset Management Company)

Salary / Remuneration excluding Stock Options for FY 2019-2020 (All Figures in INR Crores)

Vinit Sambre   Senior Vice President and Head - Equities   4.482
Kalpen Parekh   Executive Vice President and President   4.218
Gaurav Pant   Senior Vice President and Fund Manager   4.029
Rohit Singhania   Senior Vice President and Co Head - Equities   2.54
Gopal Agrawal   Senior Vice President and Head - Macro Strategy & Senior Fund Manager   2.459
Atul Bhole   Senior Vice President and Fund Manager   2.191
Ramamoorthy Rajagopal   Executive Vice President and Chief Operating Officer   1.941
Jay Kothari   Senior Vice President and Head - International Business & Product Strategist   1.833
Aditi Kothari Desai   Director and Head - Sales, Marketing & e - business   1.629
Saurabh Bhatia Senior Vice President and Head - Fixed Income   1.601
Gaurav Nagori   Senior Vice President and Chief Financial Officer & Head - Client Response, Operations & SVM   1.276
Anil Ghelani   Senior Vice President & Head - Products & Passive Investments   1.235
Harsh Kothari   Senior Vice President   1.215
Suketu Mehta   Senior Vice President - Investments   1.209
Ashish Bajaj   Senior Vice President & Chief Technology Officer   1.201
Pritesh Majmudar   Senior Vice President and Head - Legal & Compliance   1.122
Yamini Sood   Vice President and Head - Institutional Sales   1.041
Sanjiv Kumar   Senior Vice President and Head - Human Resources   1.02

64

IPOs and Rights Issues / Re: UTI AMC - Review + Recommendation

« Last post by resh on September 29, 2020, 12:56:46 PM »

IDBI Capital Analyst Bunty Chawla Said,

At upper price band, IPO is priced at a P/E of 25.7x and P/AUM of 5.3% which is discount to its peers AMC (Nippon India P/E of 37.7x, P/AUM of 6.1% and HDFC AMC with P/E of 35.6x and P/AUM of 14.1%) based on FY20 due to lower return ratio (RoE at 10%). With focus on cost parameters and high dividend payouts (guided 50% vs 32.6% FY20) should result in improvement in RoE and thus valuation difference could decline. We recommend subscribing the issue.

Nirmal Bang Analyst Raghav Garg and Arjun Bagga said,

Even though we are positive on the industry prospects from a long-term perspective, we take cognizance of some of the near-to-medium term headwinds. At the upper price band of Rs554/share, the company is being valued at Rs70.2bn. At 25.4x FY20 EPS
(trailing), we think the IPO pricing is undemanding given the valuation HDFC AMC and Nippon AMC are currently commanding. We shall take a call on the stock rating at a later stage.

65

IPOs and Rights Issues / Re: UTI AMC - Review + Recommendation

« Last post by resh on September 29, 2020, 12:50:49 PM »

Choice Broking Analyst Rajesh Yadav said,

At the higher price band of Rs. 554 per share, UTI AMC is demanding a P/E valuation of 23.3x, which is at a discount to the peer average of 35.1x. Considering the above observations and positive macros of the domestic mutual fund industry, we assign a “Subscribe for Long Term” rating for the issue.

Anand Rathi Research Team Said,

Though the company has underperformed its larger industry peers in recent past, UTI Asset Management Company Limited’s IPO is priced relatively at a discount of about 30% at upper price band compared to its industry peers. Considering the future growth prospects for asset management industry and relative valuations we recommend Subscribe (Long Term) for the IPO.

Research Analyst Karan Desai of Asit C Mehta said,

The company is Well-positioned to capitalise on favorable industry dynamics, including the under-penetration of mutual fund products .At the upper price band of Rs.554/-, the stock trades at 25.7x its FY20 EPS of Rs.21.53/-. We recommend to subscribe the issue from a long-term prospective

66

Equity Investments, Fundamental Research and Sectors Review / Company wise breakdown of Stressed Debt

« Last post by resh on September 28, 2020, 09:22:50 AM »

Indian Company wise breakdown of Stressed Debt (Stressed Asset is the one where Loan Repayment is Not REGULAR)

I'd personally AVOID these companies including even declining job offer as unsure if they will be even able to pay salaries.

67

India Stocks and Shares / Post-Paid Customer Unwilling to Switch to Jio

« Last post by resh on September 27, 2020, 03:44:46 PM »

Reliance Jio focus to raise consumer market share continues after the company launched more aggressive postpaid wireless plans that were cheaper than incumbent offerings. This comes after the reduction in FTTH broadband tariffs late last month. While RIL’s prepaid offering has been one of the most value-for-money offerings, postpaid and broadband have been areas where customer acquisition has been slower than anticipated.

Jio's postpaid plan offers more value as its offering, with bundled OTT content even (at the lowest starting tariffs of Rs399/month), unlimited calling, along with higher data usage and additional benefits vs competition.

Jio's new tariff are at a 37% discount to Airtel's Rs499 plan. However, with the existing postpaid plan getting limited traction, we believe stickiness of postpaid and offers by competition to Jio's announcement still need to watched. India's postpaid ARPU as of Mar-20 was Rs244/month (~3x of pre-paid) with ~5% of the customer base on postpaid.

68

IPOs and Rights Issues / UTI AMC - Review + Recommendation

« Last post by resh on September 27, 2020, 03:36:07 PM »

UTI Asset Management Company -  AMC / Mutual Fund IPO Review and Recommendation

Nirmal Bang Analysts Raghav Garg and Arjun Bagga said

At the upper price band of Rs 554 / share, the company is being valued at Rs70.2bn. The issue size is Rs21.6bn, which is entirely an offer for sale (OFS). SBI, LIC, PNB, BoB and T. Rowe Price would be selling 39mn shares collectively. At 25.4x FY20 EPS (trailing), we think the IPO pricing is undemanding given the valuation HDFC AMC and Nippon AMC are currently commanding. From a more near-to-medium term perspective, we currently have a cautious view on the overall AMC sector. Even though we are positive on the industry prospects from a long-term perspective, we take cognizance of some of the near-to-medium term headwinds.

ICICI Direct Research Analyst, Kajal Gandhi Wrote

Post issue market capitalisation at the upper band will be Rs 7000 crore. At Rs 554, the stock is available at P/AAUM of ~5.3% Q1FY21 AAUM and at ~17.4x P/E at Q1FY21 PAT (annualised basis).

Emkay Securities analyst Jignesh Shial and Anand Dama said,

At a price band of Rs552-554, UTI AMC has priced its IPO at ~4.6% of total FY20 AUM (~26x P/FY20 earnings) with ~10% FY20 RoE. Peer comons are NAM India which is trading at ~7.4% of FY20 AUM (~37.3x P/FY20 earnings) and HDFC AMC which is trading at ~8.2% of FY20 AUM (~37.5x P/FY20 earnings). Considering relatively weaker return ratios and unfavorable AUM mix, UTI AMC is expected to be at a discount to its peers. Hence, the valuation discount by UTI AMC IPO is justified and remains attractive considering gradual improvement in cost parameters

Canara Bank Securities Research Team said,

UTI AMC IPO at higher price band is attractive as Market cap to AUM percentage stands at 5.26%, which is lowest among listed peers.
HDFC AMC’s and Nippon Life AMC’s Market Cap/AUM percentage stands at 12.57% and 8.54% respectively. In addition, UTI AMC’s PE stands at 25.73x FY20 as com-pared to HDFC AMC’s and Nippon Life AMC’s PE of 35.43x and 37.06x FY20 respectively. Hence, we rec-ommend to Subscribe UTI AMC IPO for listing as well as long term gains.

69

IPOs and Rights Issues / Re: CAMS IPO Reviews + Recommendations

« Last post by resh on September 21, 2020, 12:09:48 PM »

Sharad Avasthi of SPA Securities said,

At the IPO price of 1230 the price discounts FY20 EPS at ~35x while the p/b multiple stands at ~11x. While valuations seem to price all
that CAMS has achieved over the last decade in sync with the mutual fund industry, the advent of technology and increased speed of
technology absorption due to COVID may not be very beneficial for the company. Future outlook will largely depend on the increase in
AIF and insurance repository business improvement, which look very promising for the long term hence we advice investors to apply with a long term horizon.

Anand Rathi Analyst Anindita Chaudhury said

At upper price band of ₹1,230, the IPO is priced at 34.6 times FY20 EPS and 36.7 times FY21 EPS (annualized). While currently there is no listed player to compare, we believe the IPO is reasonably priced considering the latest numbers. We remain optimistic on growth prospects of CAMS, given its leadership position in the market, scalable technology with robust infrastructure, strategic growth initiatives, high entry barriers in the industry and gradual growth in AAUM in the coming periods. We recommend Subscribe to this IPO.

Geojit Analyst said,

At the upper price band of Rs.1,230, CAMS is available at a P/E of 34.6x and when we annualize Q1FY21 numbers we arrive at a P/E of 36.7x for FY21E on a post issue basis. Given that there is no listed peer to compare, and based on stable financial, we assign a subscribe rating on this IPO

70

IPOs and Rights Issues / CAMS IPO Reviews + Recommendations

« Last post by resh on September 19, 2020, 11:12:54 AM »

Computer Age Management Services - CAMS IPO is opening on Monday Sep-21st and closes on Sept-23rd.
Price Band ₹1,229 – ₹1,230 per share
Retail Portion: Not less than 6,322,435 Equity Shares - 35%
NOTE The issue is OFS by existing Shareholders and hence NO MONEY will flow into the COMPANY.

Here are the Research Reviews & Recommendations

Devesh Agarwal of IIFL Securities said,

CAMS is the dominant player in a two-player MF RTA industry, with 70% market share. It services 4 of the top-5 MFs in the country. Its revenue growth is directly linked to the AUM growth of its partner MFs and it is, hence, a proxy play on the MF industry. The opportunity landscape for the MF business in India is huge, given low penetration and financialisation of household (HH) savings, thus providing long-term visibility. The IPO valuation is at discount to the nearest comparables (AMCs, Depositories and Exchanges) and has scope to re-rate.

SMC has the following views,

Considering the valuation at upper price band of Rs.1230, EPS and P/E of FY2020 are Rs. 35.55 and 34.60 multiple respectively and at a lower price band of Rs. 1229, P/E multiple is 34.57; at upper price band of Rs.1230 , book value and P/B of FY2020 are Rs.110.65 and 11.12 multiple respectively and at a lower price band of Rs. 1229, P/B multiple is 11.11. No change in pre and post issue EPS and Book Value as the company is not making fresh issue of capital.

DealMoney Securities Ltd has the following recommendation,

CAMS is India's largest registrar and transfer agent of mutual funds with an aggregate market share of approximately 70% based on mutual fund AAUM managed by its clients and serviced by the company during July 2020. CAMS has  Leadership position, integrated business model and PAN India presence.  Based on FY20 consolidated numbers, the issue is priced at a P/E of 34.6x. at diluted EPS of FY20 Which is priced fairly therefore we recommend SUBSCRIBE over the issue for a long term perspective

JM Financial, HDFC Securities, Axis Securities, ICICI Direct have no recommendation for retail investors.