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Its not the End of the World

Brexit Slump
Post- Brexit Rally
FTSE 100

STOP

BREXIT

For Private Circulation Only

What a fortnight it has been. No corner of the financial markets remained untouched due to Britons vote to exit
European Union. Shrugging off Brexit concerns, the Sensex registered its biggest weekly gain since May and
rallied to an 8-month high closing, signaling that the market has weathered the Brexit storm. European markets
also bounced back on likely easing off the Brexit concerns. We are at a brink of a turn in global economy that can
have far reaching ramifications politically, economically and financially. With global cues already factoring the
massacre due to Brexit, We would give investors a word of caution.

Issue Theme
Pg. 1

1st July-2016 to 31st July-2016

Company Analysis
Pg. 11-14

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From The MDs Desk


The market has left behind the worries of brexit
Local issues are in focus
In last few days, performance of market was stunning and has left behind the worries emanating from the BREXIT. The local
investors and the international fraternity are of the view that the issues on back of BREXIT will be confined more to Europe
and Britain. So far as India is concerned, the investors think that the local issues including the earnings are more important.
The market is reflecting the same sentiment and has conquered a recent high. The market is expecting reasonably good
monsoon and the first quarter earnings. It is also expected that the first quarter earnings will be better than the general
expectations. The pace with which The Government is moving for reforms is also providing positive vibes in the general
economic atmosphere and amongst the international investors. The GST has overtaken almost all hurdles and is ready to be
passed in the monsoon session of parliament. 100% FDI approved in many sectors has generated lot of interest for India
amongst the big multinationals.
Look at the following chart indicating the research centers to be opened by the multinational companies in various countries
announced from April 2015 to December 2015.

Considering the above factors, if the monsoon progresses well, any dip in the market will be a buying opportunity.
Technically any rise above 8360 will take the market to 8500-8600.

Kamlesh Jhaveri ( MD )
Jhaveri Securities Ltd.

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Its not the End of the World

Issue Theme

Rajan's decision to leave the RBI will affect Indias growth story
A lot of foreign as well as Indian investors are disappointed with Rajan's departure. Certainly, rating agencies will look at this
space very carefully. However, a lot will depend on who is going to replace Rajan and if the person is perceived to be
independent and his decisions are not driven by political compulsions. The government's recent move in announcing FDI
policies is seen as continuity in the reform approach amidst Rajan's departure or as a move to balance the effects of
Governors exit!!
Seventh pay commission : Boost for the economy
Union cabinet has decided to clear the 7th central pay commission ahead of Monsoon, the 7th Pay Commission will set the
positive impact on the economy. This is a well expected positive move, this will help to achieve GDP growth target quicker.
With the implementation of the seventh pay commission, there will be a huge flow of the funds in the economy. Which will
increases the demand, especially for passenger cars, two-wheelers, consumer durable goods and homes/flats. Thus,
automobile sector, real estate and consumer durable are the primary beneficiary. Recommendations are positive for the
economy as they will boost consumption as well as savings through increase in bank deposits, pension and
provident funds. A rise in demand is likely to not only increase capacity utilization but may also help to revive the investment
cycle earlier than expected.
Stormy Monsoon session of parliament ahead
The cabinet committee on parliamentary affairs (CCPA) recommended parliament monsoon session from 18th July to 12th
August. The session is important for the National Democratic Alliance (NDA) government because it has sought help from
non-NDA parties to pass the GST bill, which is pending in the Rajya Sabha. The government wants to build consensus
among all political parties, especially the Congress, before moving forward with the bill.
A total of 45 bills are pending in the Rajya Sabha, while 11 bills are pending in the Lok Sabha. Among the key bills in the Lok
Sabha are the Consumer Protection Bill, 2015, the Benami Transactions (Prohibition) Amendment Bill, 2015, and the Lok
Pal and Lokayuktas and Other Related Laws (Amendment) Bill, 2014. Apart from the GST bill, some of the crucial bills
before the Rajya Sabha are the Whistle Blowers Protection (Amendment) Bill, 2015, the Compensatory Afforestation Fund
Bill, 2016, and the Prevention of Corruption (Amendment) Bill, 2013.
Post Brexit, how will global central banks react to the fresh uncertainties in the global financial markets?
The central banks across the globe will now ensure that their own banks remain solid and have sufficient capital in these
times. This means financing to the companies will get tightened which will not be good. Central banks around the world will
prepare themselves for any kind of eventuality. The reaction from the Bank of England (BoE) was that they made sure that
the banks have a strong balance sheet. This means there will be a cut in lending activities.
Brexits impact on India: when elephants fights, the grass suffers
Brexit is the term coined for Britains referendum to exit the European union. Britain has been more of a importer than
exporter. With a big economy and low resources it is dependent on Europe, China and India for its imports. Europe being a
free trade area has been providing the free access to markets for Britain until now.

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Its not the End of the World


However Indias macro fundamentals are strong with a) high GDP growth b) lowered fiscal deficit c) current account
surplus (lowered deficit at least) d) High Forex reserve of $363 bn e) political stability and f) moderated inflation.

India has positive trade surplus of $3.64 billion in terms of bilateral trade with Britain. The total trade stood at $14.02
billion in FY16, out of which $8.83 billion was in exports and $5.19 was in imports.
For the month of April 2016 the exports to Britain stood at 17.66%(USA 17.80%) of the total exports. In terms of imports,
India imports only 1.45% of its net imports from UK.
Looking at exports from India to UK, the major exports are textiles and clothing, followed by machinery
and auto ancillaries. Indias major exports in terms of Pharma are US, UK followed by Europe.

India's export to UK 2016- as % of total Export to UK


Textiles
& Clothing

Machinery &
Appliances

Jewellery

Auto
& ancillaries

Footwear
& gaiters

Pharma

Electric
appliances

Iron steel
& products

Leather
products

Others

24%

8%

6%

6%

5%

5%

5%

4%

3%

34%

India's Import to UK 2016- as % of total Import to UK


Jewellery

29%

Machinery & Iron steel


Appliances & products

14%

8%

Instruments

Aluminium
Articles

5%

4%

Bevarages & Aircraft &


Spirits
Accessories

4%

3%

Plastic &
Products

Auto

Others

3%

2%

28%

How does India benefit from Brexit ?


Brexit is unlikely to affect India adversely with good fundamentals. The new uncertainties may keep oil prices low and US
federal reserves next rate hike may postpone. A negative shock to global demand is normally a net positive for India, being
a commodity importer with relatively small export-to-GDP ratio compared to other emerging market economies. Hence,
continued positive terms of trade, which resulted in the much-needed economic and disinflationary impetus for one and half
years , could now benefit in cooling inflation that has recently resurfaced. Foreign portfolio investors may also remain
interested if domestic-foreign rate gaps remain unchanged.
Better-than-expected Q4FY16 earnings
India's top companies ended the FY16 with flat growth in profits. Profit margins of Indian companies (excluding banks and
commodity firms) are at the highest in the past 27 quarters. As the middle of FY16 was affected by sharp fall in commodity
prices and higher recognition of bad loans, the base effect would help to improve earnings in FY17. Economic growth is
starting to show signs of a recovery, which should help earnings further. A good monsoon, ongoing recovery in capex and
the push to consumption from the Pay Commission should add to earning growth.

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Issue Theme

UK has always acted as a gate pass for Indian companies to access the European companies, its more because of the
access to financial markets in London and ease of doing business with Europe, from UK.

Its not the End of the World

Issue Theme

Sector Impact
Sector

Impact
Tata motors profit comes from the subsidiary Jaguar land

Auto and auto components

Rover Plc., which sells about a third of its cars in UK and Europe
Motherson Sumi have major Automotive Clients in Europe and
derives more than half of its income from Europe

Information Technology

Metal

Tech Mahindra Ltd and HCL Technologies Ltd, which get about
30% of revenue from Europe.
Tata steel will be directly affected. The EU accounts for 57.5% of
its revenue in FY16.
Hindalco Industries has a direct and substantial exposure to the
EU via its subsidiary Novelis Inc, which makes value-added
aluminium products.

Oil

Lower crude oil prices are positive for Indian economy considering
its huge import requirements.
Lower crude oil price is obviously negative for oil producers such
as ONGC, Oil India Ltd and Cairn India Ltd.

Pharmaceuticals

Aurobindo Pharma, Glenmark Pharmaceuticals ,Wockhardt


and Divis Laboratories gets 28% of its sales from Europe.

Conclusion
What a fortnight it has been. No corner of the financial markets remained untouched due to Britons vote to exit European
Union. On the Asian front, Bank of Japan kept the policy steady. Same was observed with Feds strategy of continuing the
existing policy. Recently, World Bank cut its projections for the world economy as well. At home, Indian economy will bid
farewell to one of the best economist in September 2016.
Shrugging off Brexit concerns, the Sensex registered its biggest weekly gain since May and rallied to an 8-month high on
Friday buoyed by data that showed manufacturing activity gathered steam last month amid strong foreign capital inflows.
The Sensex rallied and settled at its highest closing since October 27, 2015, signaling that the market has weathered the
Brexit storm. European markets also bounced back on likely easing off the Brexit concerns.
We are at a brink of a turn in global economy that can have far reaching ramifications politically, economically and
financially. With global cues already factoring the massacre due to Brexit, We would give investors a word of caution. We
believe the markets will be choppy in the near term though the medium term outlook remain positive.

www.jhaveritrade.com

Financial Services
Financial services sector
India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial
banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The banking
regulator has allowed new entities such as payments banks to be created recently thereby adding to the types of entities
operating in the sector. However, the financial sector in India is predominantly a banking sector with commercial banks
accounting for more than 64 per cent of the total assets held by the financial system.

Microfinance sector in India


Microfinance is seen as an important tool for poverty alleviation and over the years. The microfinance movement was
initiated by NABARD in collaboration with Banks and Non-Government Organizations (NGOs) for unbanked population
known as Self Help Group (SHG) - bank linkage program in 1992.The RBI granted priority sector status to bank loans
advanced MFIs in 2000-01, following which, the microfinance sector witnessed rapid growth in the value of outstanding
loans. The growth was mainly driven by the MFIs due to large scale availability of funding in terms of both debt and equity.
Building on the momentum of FY14 and with a stable regulatory environment, the microfinance industry in India posted
strong growth in FY15 with an increase in new loan disbursements, Gross Loan Portfolio, clients, employees and branches.
During FY15, the Microfinance Institution (MFI) industry disbursed new loans of ` 54,591 crore, representing a 55%
increase over the previous year. This resulted in a 61% growth in the total Gross Loan Portfolio (GLP) to `40,138 crore.
During the same period, the number of clients increased by 29% to 3.1 crores as of March 31, 2015, while the number of
people employed by the industry grew by 20% to 80,097 and the number of branches rose by 8%. Average loan amount
disbursed per account is now `16,327.

Trend in Microfinance Institutions


Gross Loan Portfolio ( Rs. Bn )
500
450
400
350
300
250
200
150
100
50
0

472

329
206

235
205

138

244

71

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

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Sector Update

services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-

Financial Services

Sector Update

As per the RBI, the subdivisions in MFIs include:


Agriculture (direct and indirect finance): Direct finance to agriculture include short, medium and long-term loans, given
for agriculture and allied activities. These loans are advanced either directly to individual farmers, self-help groups (SHGs)
or joint liability groups (JLGs) of individual farmers or indirectly to industry players, for taking up agriculture/allied activities.
Small-scale industries (direct and indirect finance): Direct finance to small-scale industries (SSI) includes all loans
given to SSI units, engaged in manufacturing, processing and preservation of goods and whose investment in plant and
machinery (original cost), excluding land and building, does not exceed amounts specified by the RBI. Indirect finance shall
include finance lent to any person, providing inputs to or marketing the output of artisans, village and cottage industries,
handlooms and to co-operatives of producers in this sector.
Small business/service enterprises: These include small businesses, retail trade, professional and self-employed
persons, small road and water transport operators and other service enterprises, as per the definition given in Section I and
other enterprises, engaged in providing or rendering services and whose investment in equipment does not exceed the
amount specified by RBI.
Micro credit: This constitutes credit and other financial services and products of very small amounts, upto `50,000 per
borrower, extended to the poor populace living in rural, semi-urban and urban areas, either directly or through a group
mechanism, intended to enhance their living standards. This is the sub-segment under which NBFC-MFIs currently receive
priority sector lending.
Education loans: Education loans include loans and advances granted to individuals, only for educational purposes, up to
`1 million for studies in India and `2 million for studies abroad. This would not include institutional grants.

NBFCs Gaining Market Share in Microfinance Sector over Banks


Banks have a strong presence in the microfinance industry directly as well as indirectly. While MFIs focus on the JLG model
while lending to borrowers, banks have a dominant presence in the SHG model through their self help group bank linkage
programme (SHG-BLP). The total credit outstanding under SHGBLP as of March 2014 is ` 429 billion. While there was a
rapid growth in outstanding loans under the SHGBLP, there have been concerns regarding the quality of such assets. It is
estimated that the NPAs of SHG loans by banks have reached an alarming level of close to 7% of the outstanding loans as of
March 2014.
Bank - Self Help Groups
Loan outstanding (Rs. billion)
Average loan outstanding as per SHG
NPA

Bank SHGs v/s MFIs - Key Trends


2011-12
363
84000
6.00%

2012-13
394
86455
7.00%

2013-14
429
102273
6.80%

Microfinance Institutions
Loan outstanding (Rs. billion)
Average loan outstanding as per SHG
NPA

2011-12
205
7500
1.00%

2012-13
244
8112
0.40%

2013-14
329
10079
0.20%

51

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Financial Services
MFI Industry vis--vis Banking Industry in India
NBFC-MFIs provide financial services pre-dominantly to low-income borrowers, with small loan amounts and for short
schedules which are more frequent than those normally stipulated by commercial banks. While NBFCs lend and make
investments and hence their activities are akin to those of banks, as opposed to commercial banks, (a) NBFCs cannot
accept deposits; (b) NBFCs do not form part of the payment and settlement system and cannot issue Cheque drawn on
itself; and (c) the deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation is not available to
depositors of NBFCs.

Share of NBFCs vis-a-vis Banks


NBFCs

120%

Banks

100%
80%

38%

36%

43%

49%

53%

56%

62%

57%

51%

47%

44%

2012-13

2013-14

2014-15

2015-16P

2016-17P

60%
40%

64%

20%
0%

2011-12

Key success factors


Diversified portfolio helps MFIs mitigate risks, makes securitization viable
The fixed operating costs are relatively higher, considering the value of the loan amount, scale of operations is a crucial
factor for MFIs. First of all, a large, well-diversified portfolio enables players to mitigate risks associated with a concentrated
portfolio. Apart from this, having a wider scale of operations helps players cut down on operating expenses, as a percentage
of outstanding loans. Additionally, securitization becomes a viable option, providing an alternate funding route to MFIs,
apart from bank credit.
Technology to be a major enabler for MFIs to monitor portfolios and maintain asset quality
Apart from the cost benefits arising from automated documentation processes, having a robust back-end technological set
up enables players to effectively monitor their loan portfolio. Technology is also likely to play a major role in preventing
internal accounting lapses and facilitate a better monitoring mechanism for collections. Further, credit bureaus such as
Equifax and Highmark are engaged in collecting data from several MFIs and building a comprehensive database that
captures the credit history of borrowers. Receiving regular updates on borrowers' credit profiles from such bureaus will help
MFIs maintain stronger asset quality.

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Sector Update

tenures. The financial services are provided on an unsecured basis, mainly for income-generating activities with repayment

Financial Services
Managing local stakeholders - key determinant of MFIs' success

Sector Update

Considering the sensitive nature of operations, MFIs must ensure that their activities do not antagonise local leaders and
government authorities. Apart from adherence to legal and regulatory guidelines, maintaining amicable relations with key
stakeholders in the respective geographies will be a key determinant of MFIs' success.

Operating efficiency to determine profitability of players


With the imposition of the margin cap, most MFIs will have to focus on rationalizing operational expenses to boost their
bottom line. Players have made efforts in this regard by increasing the number of borrowers per loan officer, consolidating
branches in the same vicinity and by automating certain loan documentation processes. Growth in the loan volumes will
also reduce MFIs' fixed costs. Growth in loan portfolio has improved the economies of scale for MFIs.

Outlook for MFI Sector in India


Industry Expected to grow at 28-30 % CAGR over next 2 years
The RBI guidelines have been instrumental in restoring confidence in lenders and investors, improving the inflow of both
equity and debt to the sector. Further, in the Union Budget of fiscal 2016, the government announced that it would set up the
Micro Units Development and Refinance Agency (MUDRA). This will be a major driver for the MFI industry. MUDRA will
serve as a regulator for MFIs and provide them refinancing services. It will have a corpus of `200 billion and will be
financing co-operative banks, MFIs, regional rural banks, etc. The funding cost is expected to be cheaper than bank
funding. This will be a big boost for the MFI industry as it will bring uniformity in regulations and provide much-needed
funding support as currently MFIs are heavily dependent on banks for funding.
Top 5 states account for biggest chunk of
overall MFI loan portfolio
States
2012-13
2013-14
2014-15
12%
WB
12%
12%
TN
11%
12%
12%
Karnataka
8%
8%
9%
Maharashtra
7%
8%
8%
UP
5%
6%
7%
4%
5%
6%
Bihar
4%
5%
6%
MP
46%
46%
39%
Others

MFI client base diversified across states


States
WB
TN
Karnataka
Maharashtra
UP
Bihar
MP
Others

2012-13
22%
20%
13%
12%
9%
8%
8%
9%

2013-14
20%
20%
13%
12%
9%
9%
9%
9%

2014-15
15%
16%
10%
10%
8%
7%
7%
27%

RONW(%)
13.55
0.22
13.67

EBIDTA(%) CFO(` in Cr.)


67.15
-1634.78
57.93
57.15
64.17
-1507.97

Preferred Stocks
Company
SKS Microfinance
Equitas Holdings
Ujjivan Fin. Ser.

FV
10
10
10

CMP* P/E (x) P/BV (x) D/E ratio (x)


752.50 31.68
6.94
3.46
181.20 56.99
3.21
0.00
412.45 27.52
3.51
4.30

ROCE (%)
13.60
0.40
13.11

CMP* as on 08/07/2016

71

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Real Estate Sector


Real estate sector overview
The real estate sector is one of the most globally recognized sectors. In India, real estate is the second largest employer
- housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate
environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry
ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.
The Indian real estate market is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 per
cent to the country's Gross Domestic Product (GDP). In the period FY08-20, the market size of the sector is expected to
increase at a Compound Annual Growth Rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are
also growing significantly, providing the much-needed infrastructure for India's growing needs.

Economic growth is boosting real estate demand


The Indian economy experienced robust growth in the past decade and is expected to be one of the fastest growing
economies in the coming years.
Demand for the commercial property is being driven by the countrys economic growth.
Indias real GDP grew by 5.6 % in 2014 and would rise to 6.4 % in 2015 compared with emerging economies average of
4.9 % and 5.3% respectively. Indias real GDP is estimated to be 6.8% in 2019.
China, one of the worlds largest economy , grew by 7.4% in FY14 and will decline by 7.28% in Fy15.

FDI in construction
development sector as a %
of Indias total FDI

Foreign Tourists arriving in India


( million )
17
15.3
15
13
11
7.0 7.4 7.8
9
5.8 6.3 6.6
5.1 5.3
5.2
4.4
7
3.9
5
3
1
05 06 07 08 09 10 11 12 13 14 15 16
20 20 20 20 20 20 20 20 20 20 20 20

13.00%
11.00%
9.00% 7.43%
7.00%
5.00%
3.00%
1.00%
FY11

11.42% 10.71%
9.40%
6.53%

FY12

FY13

FY14

FY15

Emerging SEZ as an extension of real estate business


100 % FDI permitted in real estate projects within Special economic zone (SEZ)
100 % FDI permitted for developing townships within SEZ with residential areas, markets, playgrounds, clubs,
recreation centres etc.
In July 2014, exports from SEZ accounted for 26.1 % of total exports.

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Sector Update

after agriculture and is slated to grow at 30 per cent over the next decade. The real estate sector comprises four sub sectors

Real Estate Sector

Sector Update

Industry players including realtors and property analysts are rooting for the creation of Special residential zones along
the lines of SEZs.
Minimum land requirement has been brought down from 1000 hectares for multi product SEZ and sector specific SEZ
to 50hectares.

Share of SEZ exports in Total


exports of India

Indias Foreign Exchange Earnings


from Tourism ( USD Billion )
21
16.6

19.7

10.7

11.8

90%

88%

10%

12%

FY08

FY09

SEZ

74%

72%

75%

71%

74%

26%

28%

25%

29%

26%

FY10

FY11

FY12
F

FY13

FY14

100%

14.2

16
11

17.7 18.4

Others

120%

80%

11.4

60%

8.6
6.8

40%

20%

0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

Government initiatives are helping the real estate sector to grow


Indias Prime Minister Mr. Narendra Modi approved the launch of Housing for All by 2022. Under the Sardar Patel Urban
Housing Mission, 30 million houses will be built in India by 2022, mostly for the economically weaker sections and lowincome groups, through public-private-partnership (PPP) and interest subsidy.
The Government of India has relaxed the norms to allow Foreign Direct Investment (FDI) in the construction development
sector. This move should boost affordable housing projects and smart cities across the country.
The Securities and Exchange Board of India (SEBI) has notified final regulations that will govern real estate investment
trusts (REITs) and infrastructure investment trusts (InvITs). This move will enable easier access to funds for cash-strapped
developers and create a new investment avenue for institutions and high net worth individuals, and eventually ordinary
investors.
Outlook
RERA will be one of the major steps towards the recovery of the Indian real estate market and will improve the confidence of
both consumers and institutional investors, both domestic and foreign. However, industry players feel the Act should not
become another hurdle for development, which will then raise property prices in the long term.
Preferred Stocks
Company
Ashiana Housing
Sobha Ltd.
Oberoi Realty

FV
2
10
10

CMP* P/E (x) P/BV (x) D/E ratio (x)


171.25 35.29
3.35
0.06
326.20 17.90
1.32
0.73
289.90 23.09
1.85
0.11

ROCE (%)
9.38
13.61
9.65

RONW(%)
9.49
10.33
7.02

EBIDTA(%) CFO(` in Cr.)


35.42
-3.97
25.78
-216.41
57.58
-971.23
*CMP as on 08/07/2016

91

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Capital First
Company Basics

CMP : ` 603

532938

ROI : 13%

Investment Rationale

CAPF
B

TGT : ` 682

Company Overview

91.25

Capital First (CAPF) is the retail financing NBFC formed in 2012 as a result of a

4571.90

management buyout of an existing NBFC. Post Mr. Vaidyanathan taking reigns in FY11
and revamping the business model, the wholesale lending entity was catapulted to grow
into a strong retail NBFC. CAPF lays greater thrust on retail, SME and wholesale

Financial Basics
10.00
17.00
29.47
2.90
1.3423
8.38

FV (`)
EPS (`) (TTM)
P/E (x) (TTM)
P/BV (x) (TTM)
BETA
RONW (%)

segments; within retail CAPF offers LAP, two-wheelers and consumer durable loans.
Catering to the underserved traditional market, CAPF has carved its own niche in the
MSME and two-wheelers segment and is poised to replicate success on the lines of
Bajaj Finance in the consumer finance market.

Industry drivers
Total viable & addressable debt demand in MSME sector is Rs. 26 trillion out of which
immediately addressable is Rs. 9.9 trillion. Organized retail will facilitate higher demand
especially for high-end products.

Share Holding Pattern


Holder's Name

% Holding

Foreign

8.37

Institutions

9.91

Promoters

65.20

Govt. Holding

1.43

Public & Others

15.09

Non Promoter
Corp. Hold.

0.00

The market for white goods & Television has been Growing. Moreover, rural demand
pick-up should be a big driver for the MSME and two-wheeler segments of CAPF.

Competitive advantage
Higher level of customer service, impeccable management and corporate governance,
CAPF offers comprehensive product suite suiting customers financial needs.
Financing needs of customers are met through contemporary scoring solutions and
sophisticated technology.
CAPF is structured with inherent checks and balances for effective risk management.

Valuations
CAPITAL FIRST is trading at `
603. We recommend Accumulate
with target price of ` 682 , valuing
stock 31xFY18E EPS of `22.The
stock currently trades at 30x of
FY16E, 27.93xof FY17E and 22.98x
of FY18E.

The sales, credit, operations and collections stand as separate verticals with
independent reporting lines for checks and balances in the system.
Rigorous credit underwriting process aids better asset quality management.
Best-in-class asset quality despite the tough macros.

Investment Horizon : 12 to 15 Months

11

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Company Analysis

BSE ID
NSE Symbol
Group
EQUITY (` in Cr.)
MKT.CAP(` in Cr.)

Accumulate

Capital First
CFL emerging as a specialized player in financing MSMEs

Company Analysis

CFL emerging as a specialized player in financing MSMEs by offering different products for their various financing needs.
Capital First has a comprehensive product suite to meet the multiple financial needs of its customers. Till date, the
Company has financed more than 1.4 million customers, including more than 6,00,000 MSMEs. The
provides

Company

finance to its customers with the help of contemporary scoring solutions and sophisticated technology. The

Company, through its extensive reach, provides essential debt capital to MSMEs in a quick, affordable and convenient
manner.

Loan Ticket size


from CFL

Customer Profile

` 1.0 Mn - ` 20.0 Mn

To small and medium entrepreneurs financing based on customized cash flow


analysis and references from the SMEs customers, vendors, suppliers

` 100k - ` 1.0 Mn

To Small Entrepreneurs/partnership firms in need of immediate funds, for


say, purchase of additional inventory for an unexpected large order.

` 15k - ` 100k

To Micro business owners and consumers for purchase of office PC, office
furniture, Tablets, Two-Wheeler, etc

Diversified loan mix translating into robust AUMs


According to the needs of the customers, CAPF has carved its own niche in the under-presented traditional market through
its extensive reach. With greater focus on MSME, two wheelers and customer finance segment CAPF caters to the underserved market characterized.
The loan book of the company is of high quality and the gross NPA of the company stood at 0.69% and the Net NPA was low
at 0.17% as of FY15. consequent to the growth of the company in retail lines of businesses. The NPA of the company has
continuously stayed low over a five-year period because of the diversified nature of lending, strong appraisal systems,
strong evaluation of cash flows at the time of lending and automated collection systems.

Strong AUM growth with the shift towards retail assets


CFL has been able to manage fairly higher growth in its balance sheet on the back of a focused strategy, strong processes,
superior underwriting skills, strong promoter and the ability to raise funds on time. AUM posting a CAGR of more than 44%
over FY11-FY15 without any material impact on asset quality is commendable. The management clearly sees higher value
in retail lending and has worked hard to tilt its portfolio towards retail lending. Retail AUM posted a 90% CAGR over FY11FY15, whereas corporate loan book in absolute terms was flattish over the past four years. In line with managements
guidance, we expect AUM CAGR of 25% over FY15-FY18E. In the long run, the company aims to have AUM amounting to `
250bn - ` 300bn by FY19E.

12
1

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Capital First
NIM on the rise
NIM (calculated) rose from 4.2% in FY14 to 5.6% in FY15 and it improved further to 6.5% in 1HFY16. Such a sharp
durable and two-wheeler loans posted 142% and 146% CAGR, respectively, over the past three years. Both these
segments have a fixed interest rate and stand to benefit in a downward interest rate scenario. Given the sustained focus on
consumer durable and two-wheeler financing, we believe NIM will continue to remain benign.

Change in borrowing mix to aid NIM


CFL has strategised to move away from bank borrowing and diversify its borrowing profile more towards low- cost nonconvertible debentures or NCDs / commercial papers or CPs. It has a long-term credit rating of AA+ for bank facilities, NCDs
and subordinated debt, which recognises its comfortable capitalisation level, strong business model, comfortable asset
quality parameters, healthy liquidity position, experienced management team, strong promoters and reputed
institutional shareholders. It has a short-term credit rating of A1+, which is the highest available rating. Such a strong rating
enables the company to borrow funds at competitive interest rates. Also, its paper is the only Warburg Pincus debt
instrument available in the market. As the benefits from capital dilution begin to wane, the continuous shuffling in borrowing
mix will help the company to keep its cost of funding at a lower level.

With spending on technology largely complete, operational leverage to kick in


To prepare itself for the take-off in growth, the company spent ~Rs1bn in building contemporary scoring solutions and on
sophisticated technology. It has put in place robust internal risk-management systems and processes and supportive
technology. Growth in operating expenses of 81% in FY12 and 59% in FY13 moderated to -4% in FY14 and 3% in FY15.
Cost-to-income ratio improved from 78% in FY13 to 59% in FY15. Similarly cost-to-asset ratio improved from 4.0% in FY13
to 3.7% in FY15. We expect cost ratios to improve further as the company gains scale and reaps the benefits of significant
investments made in building up its retail franchise. The management is targeting cost-to-income ratio of 45% in FY19E by
improving efficiencies from existing branches and employees. CFL currently operates in 222 locations with 1,249
employees.
Cost to Income Ratio (%)
100.00
78.00

80.00

74.00

60.00
49.70
40.00

58.80 52.30 50.40


48.10

20.00
0.00
FY12 FY13 FY14 FY15 FY16 FY17E FY18E

Cost to AUM
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00

13

3.7

2.70

FY12

3.8
3.7

2.80

FY14

3.9

3.7

3.5

3.10

FY13

Cost to Assets

2.90

FY15

3.00

FY16

2.90

2.80

FY17E FY18E

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Sector Update

improvement is primarily attributable to the swift shift in its loan portfolio towards the retail segment. High yield consumer

Capital First

Company Analysis

Key Financials
Consolidated Key Financials

(`

in Cr )

FY 12
740.15
0.00
3.60
743.74

FY 13
810.11
6.99
23.84
840.94

FY 14
1059.91
7.50
3.11
1070.52

FY 15
1424.42
15.04
7.11
1446.57

FY 16
1882.24
5.82
1.02
1889.08

397.70
86.84
0.00
79.60
564.14
179.60
22.53
5.49
592.16
151.59
151.59
45.76
105.83

483.42
139.36
23.17
73.11
719.06
121.88
41.66
7.00
767.72
73.22
73.22
10.11
63.11

646.82
132.03
36.81
87.42
903.08
167.44
101.98
6.43
1011.49
59.03
59.03
6.40
52.63

787.81
135.83
136.04
105.17
1164.85
281.72
105.45
9.96
1280.26
166.32
166.32
52.04
114.28

897.25
176.81
165.43
151.01
1390.50
498.58
236.48
9.96
1636.94
252.15
252.15
85.96
166.19

Share Capital
Reserves & Surplus
Loan Funds
Other Liabilities
Total Liabilities

FY 12
64.5
745.96
3872.6
108.41
4791.4

FY 13
70.41
871.53
5545.9
115.78
6603.7

FY 14
82.02
1052.8
7035.7
134.05
8305.4

FY 15
90.98
1448.3
5910.2
131.71
7581.2

FY 16
91.24
1568.36
8646.65
170.16
10476.6

Fixed Assets
Investments
Current Assets, Loans & Advances
Current Liabilities & Provisions
Net Current Assets
Deferred Tax Assets
Other Assets
Total Assets

26.77
324.95
2399.8
862.02
1537.8
6.8
2895.2
4791.4

29.66
114.85
3165.2
940.7
2224.5
7.71
4226.9
6603.7

27.56
426.71
4360.2
1702
2658.2
16.72
5176.2
8305.4

19.09
208.75
3502.1
2764.4
737.74
42.47
6573.1
7581.2

29.24
254.16
5407.99
3555.89
1852.1
54.36
8286.71
10476.6

Operating Income
Other Operating Income
Other Income
Total Income
Operating Expenditure
Interest
Employee Expenses
Selling & Administrative Expenses
Other Expenses
Total Operating Expenditure
Operating Profit Before Prov. & Cont.
Provisions & Write Offs
Depreciation
Total Expenditure
PBT
PBT
Tax
Reported Profit After Tax

Key Ratios
Key Financials

14
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Fundamental Stock Update


Jamna Auto Industry

FV (`)
EPS (`)
Book Value (`)
P/E (x)
P/BV (x)
52 Week High (`)
52 Week Low (`)
Equity ( ` in Cr.)
MKT.CAP(` in Cr.)

10.00
17.63
231.23
35.39
2.70
745.00
425.00
69.93
4363.63

Accumulate

New Developments
Jamna Auto sets up plant at Rs 100 cr to serve export markets
The company has set up a new plant in Hosur to serve the export markets and
multinational companies such as Daimler and Volvo. The plant is expected to be ready
for commercial operation from June; however, trial production will start in April.
Q4 FY16 results better than expected
On standalone basis, the company ends FY16 numbers on positive note as total
revenue grew 12% YoY to `1072 Cr. Lower fuel cost ( down by -22.%) and stable RM
cost ( up by only +4.4%) fuels EBITDA growth of by 75% ( higher than our expectation
) to 151 Cr YoY. Higher depreciation cost (+50% YoY ) on commissioning of new plant

Share Holding Pattern

has offset by higher other income and lower interest outgo which helps to maintain

Foreign

1.47

Institutions

24.00

Non Prom.

1.61

Valuations :
The company is trading at `168. We recommended by with target price of 181,valuing

Promoters

66.99

stocks 20x FY18E EPS of `9.07. The stock currently trades at 17.60x of FY16E ,

Public & Others

5.93

16.12x of FY17E and 14.66 of FY18E

Havells India
Financial Basics
FV (`)
EPS (`)
Book Value (`)
P/E (x)
P/BV (x)
52 Week High (`)
52 Week Low (`)
Equity ( ` in Cr.)
MKT.CAP(` in Cr.)

10.00
80.94
693.84
40.41
4.71
3454.90
2531.00
274.43
89769.25

Share Holding Pattern


Foreign

18.43

Institutions

7.56

Non Prom.

62.77

Promoters

11.18

Public & Others

0.06

profitability. Reported PAT up by 145% YoY to 72.32

Target: ` 395

CMP: ` 356

Buy

New Development
Good growth in lighting and fixtures business led by LED
The net sales grew by 9% to ` 1475.44 crore. Growth is visible across all segments, in
line with revenue growth of Q3. Drop in commodity prices offset higher volume growth
particularly in cable business.
OPM inclined by 157 bps to 14.9% due to decline in other expenses. As a result, the
operating profit grew by 22% to `14.9 crore.
The tax expenses inclined by 15% to ` 56.68 Cr. The effective tax rate decreased from
28.86% to 13.39%. The net profit inclined by 201% to `366.49 Cr.
Valuation
Havells to record revenue, EBITDA CAGR of ~17%, ~21% for FY16-18E, respectively
supported by a revival in industrial product demand. We upgrade the stock to BUY
recommendation with a revised target price of ` 395 (value company at 30x FY18E
earnings).

15

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Sector Update

Financial Basics

Target: ` 181

CMP: ` 168

Fundamental Stock Update

Stock Update

Allcargo Logistics
Financial Basics
FV (`)
EPS (`)
Book Value (`)
P/E (x)
P/BV (x)
52 Week High (`)
52 Week Low (`)
Equity ( ` in Cr.)
MKT.CAP(` in Cr.)

10.00
17.63
231.23
35.39
2.70
745.00
425.00
69.93
4363.63

Share Holding Pattern

Target: ` 243

CMP: ` 180

Accumulate

New Developments
P&E business continues to grow
P&E segments EBIT increased 99% sequentially to ` 18.70 Cr. led by EBIT margin
improvement to 5.2% in 4QFY16 (v/s 1.8% in 3QFY16 impacted by ship
maintenance). Crane utilization continues to be above 90%.
Allcargos stake in newly formed Avvashya CCI Logistics (ACCI) stands at 61%. In
ACCI, AGLL merged its contract logistics and Indian freight forwarding business and
acquired 44% stake for `1.3b. Total value of the transaction is ` 190 Cr.
MTO volumes up 8% YoY in tough operating environment
AGLLs MTO volumes grew 8% YoY to 112,593 TEUs in 4QFY16 led by China, N.
America, SE Asia and India. Realizations improved 12% QoQ and EBIT margin

Foreign

1.47

increased to 5.2% despite tough environment (vs 4.9% in 9MFY16 and 4% in FY15)

Institutions

24.00

led by operational efficiencies.

Non Prom.

1.61

Promoters

66.99

Valuations
We estimate EBITDA/PAT CAGR of 16%/26% through FY16-18E We value Allcargo

Public & Others

5.93

Logistics at 14x FY18E EPS, and arrive at a target price of ` 243.

VRL Logistics
Financial Basics
FV (`)
EPS (`)
Book Value (`)
P/E (x)
P/BV (x)
52 Week High (`)
52 Week Low (`)
Equity ( ` in Cr.)
MKT.CAP(` in Cr.)

10.00
80.94
693.84
40.41
4.71
3454.90
2531.00
274.43
89769.25

Share Holding Pattern


Foreign

18.43

Institutions

7.56

Non Prom.

62.77

Promoters

11.18

Public & Others

0.06

Target: ` 457

CMP: ` 314

Buy

New Development
Weak Q4 results, Promoters plan regional airline
VRL Logistics, largest pan-India surface logistics and parcel delivery service provider,
reported standalone net profit of `13.21 crore for the quarter ended March 31, 2016,
registering decline of 31.8% yoy and 46.59% qoq. The companys revenue stood at
` 415.63 crore, up 4.59% yoy but down 3.62% qoq.
VRL Logistics core operating profit stood at `267.72 Cr. recording decline of 2.44%
yoy.
VRL Logistics promoters Dr. Vijay Sankeshwar, chairman and managing director and
Mr. Anand Sankeshwar, managing director have expressed their intent to a possible
commencement of a regional airline in the days to come, by promoting a separate
company in their individual capacity.
View
No regional airline has been successful in India and the time taken for setting up
infrastructure like ground handling, personnel, professional management etc is
different from the goods/ passenger road transportation business.

16
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Fundamental Stock Update

FV (`)
EPS (`)
Book Value (`)
P/E (x)
P/BV (x)
52 Week High (`)
52 Week Low (`)
Equity ( ` in Cr.)
MKT.CAP(` in Cr.)

10.00
17.63
231.23
35.39
2.70
745.00
425.00
69.93
4363.63

Share Holding Pattern

Accumulate

New Developments - Q4 NII growth slows


Bank has posted 6% increase in NII at ` 5404.51 Cr. for the quarter ended March
2016. Interest income increased 6% to ` 13481.93 crore, while interest expenses rose
5% to ` 8077.42 Cr.
Expense ratio improves
Operating expenses of the bank rose 10% to ` 3405.94 crore, as employee expenses
moved up 6% to ` 1382.05 crore, while other operating expenses increased 12% to `
2023.89 crore in Q4FY2016. Expense ratio of the bank improved sharply to 32.4% in
Q4FY2016 from 36.23% in Q4FY2015.
Provisions zooms
Provisions and contingencies zoomed more than four times to ` 6926.21 crore in
Q4FY2016 from ` 1344.73 crore in Q4FY2015. The provisions included the

Foreign

1.47

contingency and related reserve of ` 3600 crore. With the surge in provisions, the

Institutions

24.00

bank has recorded sharp 96% dip in the profit before tax to ` 181.29 crore

Non Prom.

1.61

Promoters

66.99

two years. At current levels, the downside remains limited. We remain Neutral on the

Public & Others

5.93

stock.

Century Plyboards Ltd.


Financial Basics
FV (`)
EPS (`)
Book Value (`)
P/E (x)
P/BV (x)
52 Week High (`)
52 Week Low (`)
Equity ( ` in Cr.)
MKT.CAP(` in Cr.)

10.00
80.94
693.84
40.41
4.71
3454.90
2531.00
274.43
89769.25

Share Holding Pattern


Foreign

18.43

Institutions

7.56

Non Prom.

62.77

Promoters

11.18

Public & Others

0.06

Valuation : The outlook for ICICI Banks earnings remains challenging over the next

Target: ` 236

CMP: ` 207

Buy

New Development
Challenging year behind, Mgmt. is confident of 15% average growth
The company continues to focus on economy segment products like Sainik where it
intends to gain market share from unorganized players and will continue to invest in
brand building of Sainik. Implementation of GST can be a big boost to the company
which can lead to reduction in price gap between organized and unorganized player
thus aiding growth for the company.
Speed up MDF plant commissioning
Particle board plant is ready to be commissioned as only electricity connection is
awaited and will start contributing from current year. The company has informed that in
view of high demand for MDF, it is likely to expedite commissioning of the plant by Jan
2017.
Valuation
We have valued the stock on the basis of P/E of 25x of FY18E EPS and recommend a
BUY with a target price of ` 236/- (~39% upside)

17

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Sector Update

Financial Basics

Target: ` 360

CMP: ` 241

ICICI Bank Ltd.

Open

FUNDAMENTAL

Calls

Stock Update

Company

Current
Reco

Open Fundamental Calls


52 Week

Absolute Return (%)

CMP*( ` )
High (`)

Low (`)

3M

6M

12M

Face
Value
(`)

Market
P/BV
Cap
(` in Cr) (x)

P/E
(x)

Dividend Yield
%

Automobile
Ashok Leyland

Hold

102

113

69

-1%

14% 47%

29113

8.34 30.27

0.93

M&M

Hold

1367

1442

1091

11%

7%

5%

84894

3.28 29.64

0.84

Maruti Suzuki

Hold

4157

4790

3193

13% -10%

6%

125587

4.53 26.73

0.84

Banks
Buy

238

321

181

1%

-8% -22%

138355

1.49 11.45

2.10

Bank of Baroda

Hold

150

216

109

2%

-6%

5%

34539

0.79

9.16

0.00

City Union Bank

Hold

108

112

78

19%

18%

7%

6487

2.13 14.60

1.11

DCB Bank

Hold

98

151

68

26%

25% -25%

10

2785

1.60 14.31

0.00

ICICI Bank

Capital Goods
Havells India

Hold

368

378

235

23% 21% 29%

22995

12.64 65.95

1.63

TD Power Sys.

Buy

230

340

195

7%

-29% -27%

10

763

1.54 50.90

1.34

Inox Wind

Buy

233

472

211

-14% -36% -46%

10

5173

3.72 14.34

0.00

Carborundum Uni.

Buy

213

230

155

23% 17% 31%

4010

3.39 28.08

0.70

Thermax

Hold

807

1148

690

4%

-14% -15%

9609

4.48 48.61

0.74

9%

10

4527

2.80 36.72

0.62

20% 20%

10

92145

4.38 40.30

0.28

Cement
J K Cements

Hold

647

745

425

4%

UltraTech Cem.

Hold

3358

3455

2579

4%

0%

Finance
Dewan Hsg. Fin.

Buy

204

268

140

10% -12% -4%

10

5948

1.13

7.94

3.93

Repco Home Fin

Hold

760

794

551

29% 17% 23%

10

4755

4.98 31.69

0.24

PTC India Fin

Buy

38

52

30

4%

0%

10

2136

1.23

5.46

3.15

16% -13%

139317

3.41 31.50

1.22

-15%

Infrastructure
Larsen & Toubro

Buy

1495

1888

1016

Adani Ports

Buy

203

375

169

-17% -22% -33%

42092

3.18 14.68

0.54

Ashoka Buildcon

Buy

140

221

111

-24% -31% -20%

2624

1.41 25.35

1.07

22%

Logistics
Gateway Distr.

Hold

314

378

206

19%

-1% -13%

10

3414

3.63 31.15

2.24

Allcargo Logist.

Hold

167

218

128

6%

-6%

5%

4210

2.21 15.90

1.20

VRL Logistics

Buy

305

479

252

-20% -25% -4%

10

2782

5.42 27.20

1.64

18
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Open

FUNDAMENTAL

Calls

Open Fundamental Calls


Company

Current
Reco

52 Week

Absolute Return (%)

CMP*( ` )
Low (`)

3M

6M

12M

Market
P/BV
Cap
(` in Cr) (x)

P/E
(x)

Dividend Yield
%

Pharmaceuticals
Torrent Pharma.

Buy

1329

1718

1189

-1% -10% 0%

22496

9.03

14.16

2.64

Sun Pharma.Inds.

Hold

736

966

704

-12% -2% -13%

177209

6.92

40.26

0.14

Granules India

Buy

138

164

78

14% -12% 62%

3002

4.69

25.29

0.47

-1% 29%

1835

5.45

28.66

0.00

-23% -38% -25%

1684

1.31

16.33

0.90

Realty
Ahluwalia Contr.
J Kumar Infra

Buy

274

320

200

Hold

223

449

213

5%

Textiles
Garware-Wall Rop

Buy

363

437

195

8%

-9% 83%

10

793

2.55

18.91

0.91

SRF

Buy

1262

1499

1018

3%

1%

18%

10

7246

3.20

19.35

0.79

AYM Syntex

Buy

101

163

86

2%

-35% NA

10

398

2.05

8.33

0.00

Ambika Cotton

Buy

829

1149

706

1%

10

488

1.46

10.97

1.81

7.69

39.36

2.79

3% -13%

Miscellaneous
CARE

Hold

1004

1498

883

11% -21% -31%

10

2952

Century Ply.

Buy

201

219

136

20% 19% -1%

4471

11.53 32.09

0.50

Hitech Plast

Hold

152

221

81

-10% -20% 80%

10

262

2.06

24.66

0.52

Radico Khaitan

Hold

88

131

79

-11% -24% 8%

1172

1.31

15.24

0.91

Jamna Auto Inds.

Buy

169

175

89

26% 32% 64%

1345

6.84

22.84

1.63

Bharat Forge

Buy

756

1293

705

-14% -11% -33%

17607

5.11

25.31

0.99

Omkar Spl.Chem.

Hold

164

250

143

0%

-29% 5%

10

338

2.00

10.56

0.91

Sadbhav Engg.

Buy

288

370

197

7%

-15% 5%

4945

2.75

32.97

0.24

Eveready Inds.

Hold

258

375

192

5%

-13% -15%

1873

3.00

38.58

0.78

Inox Leisure

Buy

225

276

170

15% -10% 32%

10

2173

3.68

26.51

0.00

Prabhat Dairy

Buy

102

169

71

-7% -32% NA

10

993

1.55

42.55

0.39

Infinite Comp

Hold

201

268

141

-6%

-8% 26%

10

777

0.98

7.69

0.00

Liberty Shoes

Buy

187

283

125

26%

-7% -19%

10

318

2.18

18.74

0.00

T.V. Today Netw.

Hold

287

350

178

-3%

-8% 57%

1715

3.81

21.63

0.61

Mold-Tek Pack.

Buy

166

175

81

17% 19% 82%

460

3.56

19.07

1.96

Torrent Power

Buy

178

253

137

-28%

27%

10

8548

1.30

8.75

2.54

HPCL

Hold

932

991

635

22% 12% 27%

10

31545

2.32

24.14

3.71

Skipper

Buy

141

220

117

1%

-15% -11%

1442

3.82

15.15

1.00

1%

(*CMP as on 21/06/2016)

19

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Open Fundamental Calls

High (`)

Face
Value
(`)

JSL Top Mutual Fund Picks

Mutual Fund Picks

Scheme Name

DHFL Pramerica Diversified Equity Fund


DSP BR Opportunities Fund

NAV*
NAV*
1 Year
Launch
(Div)
(growth)
(%)
Date
Top Equity Diversified Funds
4-Mar-15

3 Year
(%)

5 Year
(%)

Since Inc

10.23

10.23

-0.68

NA

NA

1.72

7.18

22.43

13.09

18.74

16-May-00

25.28

160.12

Kotak 50

5-Feb-03

34.09

180.31

3.00

18.64

11.72

22.38

Kotak Select Focus

11-Sep-09

20.00

24.74

6.24

25.15

16.02

14.21

Mirae Asset India Opportunities Fund

4-Apr-08

17.57

34.29

4.10

24.39

15.24

16.10

Mirae Asset Prudence Fund

29-Jul-15

10.53

10.53

NA

NA

NA

5.28

DSP BR Balanced Fund

27-May-99

23.57

115.36

5.26

19.45

11.47

15.36

8-Oct-95

74.61

175.88

3.11

21.92

15.76

16.54

10-Feb-95

140.65

605.60

7.58

21.28

13.90

21.13

7-Feb-11

17.94

20.65

6.32

22.67

15.27

14.35

Top Balanced Funds

Tata Balanced Fund


Birla Sun Life Balanced'95 Fund
L&T India Prudence Fund

Mid Cap Funds


DHFL Pramerica Midcap Opportunities Fund 02-Dec-13

13.32

15.47

-1.84

NA

NA

18.36

Kotak Emerging Equity Scheme

30-Mar-07

21.27

29.22

11.15

36.21

21.07

12.26

Mirae Asset Emerging Bluechip Fund

9-Jul-10

24.19

34.04

11.80

38.76

23.93

22.68

Religare Invesco Mid & Smallcap Fund

17-Mar-08

33.60

37.06

3.43

30.82

19.85

17.09

33.82

103.50

0.17

31.51

18.97

11.19

Tata Midcap Growth Fund

1-Jul-94

Top Saving Funds


Tata India Tax Savings Fund - Div

31-Mar-96

65.24

13.04

10.18

24.37

15.54

20.03

IDFC Tax Advantage

26-Dec-08

14.36

39.82

-2.96

23.24

15.04

20.16

Motilal Oswal Most Focused Long Term Fund 21-Jan-15

11.85

11.85

5.99

NA

NA

12.37

Religare Invesco Tax Plan

29-Dec-06

18.69

36.84

2.05

24.50

15.15

14.68

Axis Long Term Equity Fund

29-Dec-09

20.65

31.58

1.71

28.14

19.59

19.29

Conservative Funds
Franklin India Dynamic Pe Ratio Fund

31-Oct-03

37.90

66.00

5.88

13.46

10.05

16.04

ICICI Prudential Dynamic Plan

31-Oct-02

21.78

193.79

4.97

21.11

12.23

24.18

Principal Smart Equity Fund

16-Dec-10

15.25

17.33

3.71

17.38

11.66

10.41

-0.14

16.76

11.94

9.49

1.07

NA

NA

5.28

Religare Invesco Dynamic Equity Fund

04-Oct-07

18.12

22.12

IDFC Dynamic Equity Fund

10-Oct-14

10.63

10.93

Dynamic Bond Funds


Launch Date

NAV
(Growth)

YTM (%)

3 Months (%)

6 Months (%)

1 year (%)

Axis Dynamic Bond Fund

27-Apr-11

15.61

8.00

8.36

10.01

8.93

IDFC Dynamic Bond Fund

1-Dec-08

18.26

7.53

8.76

8.44

8.20

ICICI Pru Dynamic Bond Fund

12-Jun-09

17.37

8.27

9.61

11.75

10.54

Reliance Dynamic Bond Fund

15-Nov-04

20.62

7.84

9.7

10.26

9.18

*NAV as on 04/07/2016

20
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Selected Macro Economic Indicators


Total Foreign Exchange Reserves (US $ Billion)
366
364

363.12
361.99

361.02

06-May-16

13-May-16

360.25

360

363.46

360.19

363.23

360.09

359.75 359.91

358
356

355.94 355.54

354

353.4

352
350

350.36

348
346

346.78

344
342
340
338
26-Feb-16 4-Mar-16 11-Mar-16 18-Mar-16 25-Mar-16 1-Apr-16

29-Apr-16

20-May-16

27-May-16 03-Jun-16

10-June-16

Import & Export (in US $ Million)

45000
40000

8-Apr-16 15-Apr-16 22-Apr-16

35794
35704

32690

35794

33068

35000

32209

30937

33961
29796

28714

30000

27790

25414

27280

20569

22719

20739

21075

22297

20014

21408

21720

21272

23143

21274

15000

22263

20000

21998

25000

10000
Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16

12
10
8

6.26

6
4

9.81

Index of Industrial Production (%)


4.24

4.34

3.01

3.84

1.99

2.51

0.05

-2
-3.2

-4
Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

21

Nov-15

-0.84

-1.34 -1.53
Dec-15 Jan-16

Feb-16

Mar-16

Feb-16

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Macro Economic Indicators

361.6

362

Selected Macro Economic Indicators


Consumer Price Index (%)
Macro Economic Indicators

6.72

7
6

6.10

5.79

6.32

5.74

6.32

5.14

4.37

5.86
5.91

5.76

5.53 5.51

4.35

3
2

Wholesale Price Index (%)

0.79
0.34

0
-0.9
-1

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Apr-15

May-15

Jun-15

-0.91

-0.85

-0.73

-2
-1.99

-2.13

-2.2

-2.43

-3
-4

-3.79

-3.81

-5

-4.54

-4.85

-6
Apr-15

May-15

Jun-15

Aug-15

Jul-15

Sep-15

Nov-15

Oct-15

FII (in Billion)

Dec-15

Jan-16 Feb-16 Mar-16 Apr-16

May-16

DII (in Billion)

250

211

200
150

120

100

123

103
67

53

50

85

63

84

105

71
23

36

0
-50

-14

-33

-65

-100

-28
-122

-150
-200

Jun-15

Jul-15

-169
Aug-15

Sep-15

-23

-55

-23

-71

Oct-15

Nov-15

Dec-15

22
1

Jan-16

-157
Feb-16

Mar-16

Apr-16

May-16

June-16

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Inflation
What is Inflation ?
Inflation is a general and sustained increase in overall price level of goods and services. The inflation rate is a key parameter

What is Consumer Price Index (CPI)??


The CPI measures price change from the perspective of the retail buyer. It is the real index for the common people. It reflects
the actual inflation that is borne by the individual. CPI is designed to measure changes over time in the level of retail prices
of selected goods and services on which consumers of a defined group spend their incomes.

What is Wholesale Price Index (CPI)??


This index is the most widely used inflation indicator in India. This is published by the Office of Economic Adviser, Ministry of
Commerce and Industry. WPI captures price movements in a most comprehensive way. It is widely used by Government,
banks, industry and business circles. Important monetary and fiscal policy changes are linked to WPI movements.

What measures can be taken to address inflation?


Both government and central bank (Reserve Bank) try to tackle inflation with their policies which are known as Fiscal and
Monetary Policies respectively. Fiscal policies correspond to tax related measures taken by government to control inflation
(money supply). RBI through its various monetary policies limit the money supply by altering rates like CRR, Repo, Reverse
Repo etc. Administrative measures taken by government like strengthening of Public Distribution System also plays a
crucial role in curbing inflation.

Is inflation always bad for the economy?


Though a high rate of inflation is not good for the economy, a mild inflation, say under 3%, may turn, at times, useful for the
economy. Inflation can occur because of high demand too. High demand on scarce resources will automatically increase
prices. This is called demand pull inflation. But demand for a commodity is a good sign from the industry perspective.
Industries now will try to produce more commodities to reap the benefit of high prices and demand. More production will
trigger GDP growth.

What is role of RBI during Inflationary time?


The steps generally taken by the RBI to tackle inflation include a rise in repo rates (the rates at which banks borrow from
the RBI), a rise in Cash Reserve Ratio and a reduction in rate of interest on cash deposited by banks with RBI. The
signals are intended to spur banks to raise lending rates and to reduce the amount of credit disbursed. The RBI's
measures are expected to take out a substantial sum from the banks. In effect, while the economy is booming and the
credit needs grow, the central bank is tightening the availability of credit.
The RBI also buys dollars from banks and exporters, partly to prevent the dollars from flooding the market and
depressing the dollar indirectly raising the rupee. In other words, the central bank's interactions have a desirable
objective to keep the rupee devalued which will make India's exports more competitive, but they increase liquidity.

23

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JSL Classroom

basis which central government proposes its monetary and fiscal policy from time to time.

Ideal Portfolio ( Diversified Equity )


Objective of Ideal Portfolio :

Ideal Portfolio

The objective of this portfolio is to generate long term capital appreciation by investing in concentrated portfolio of large cap
and growth oriented mid cap companies. This will help to generate meaningful wealth for Investors from Equity Market.
Stock Selection Methodology : Based on various fundamental parameters and valuation check along with certain themes
like Cyclical, Bottom Up, Sector specific, Policy Initiative / push , Evergreen.
Key Risks : Macro economic / political condition and systematic risk, corporate performance risk
Stock

Weights
Weights

Sector

Suggestions

Price**

CMP*

Target

Potential Upside

Maruti Suzuki

Automobile

7%

Accumulate

4639

4158

5200

25%

KEC International

Capital Goods

5%

Accumulate

157

137

180

31%

Bharat Forge

Casting and Forgins

8%

Accumulate

888

756

1200

59%

Ultratech Cement

Cement

7%

Buy

2824

3352

3400

1%

8%

Buy

236

204

368

81%

Dewan Housing Finance Housing Finance


Sun Pharma

Pharma

7%

Accumulate

815

736

1041

41%

Inox Wind

Power

8%

Buy

360

233

488

109%

Torrent Power

Power

8%

Buy

181

177

280

58%

State Bank of India

PSU Bank

7%

Accumulate

228

214

325

52%

Axis Bank

Public Bank

7%

Accumulate

450

517

620

20%

VRL Logistics

Logistics

5%

Buy

432

305

457

50%

Torrent Pharma

Pharma

8%

Buy

1479

1331

1840

38%

Ashoka Buidcon

Infrastructure

5%

Buy

200

140

205

46%

Ahluwali Contracts

Infrastructure
Consumer
Non-Durable

5%

Buy

282

275

368

34%

5%

Accumulate

300

258

287

11%

Everday Industries

Comparative Portfolio Returns


Particulars

Return Since Inception

Particulars

Return Since Inception

Ideal Portfolio Return


(Diversified Equity)

-9.98%

Sensex

2.50%

Value Buy (100%)

-15.43%

Nifty

3.23%

CNX Small Cap

-1.73%

CNX Mid Cap

-0.55%

Notes : *CMP as on 21/06/2016., Price ** on recommendation and as on 01/01/2016 , Return since inception indicates
from 1st Jan -2016

Investment Horizon : 9-12 Months

24
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Ideal Portfolio ( Small Cap )


Objective
The aim is to generate long term capital appreciation from a portfolio that is not part of the leading stocks by market
a smaller base.

Stock Selection Methodology


Based on various valuation parameters and finding out early stage companies based on sound business model and
available at cheap valuation
Key Risks
Small-cap stocks are not tracked closely by market/ equity analysts and that is why the real value of good small-cap stocks
can remain undiscovered for long. This makes investing in them risky. The risk associated with large cap funds also
associated with small cap ( see last page). Small companies are relatively weak in terms of governance, dividend policies
and professionalism of the board. This makes them risky.
Stock

Sector

Weights

Suggestions

CMP*

Target

Potential Upside

AYM Syntex

Textile

10%

Accumulate

103

223

117%

Good Year

Tyre

10%

Accumulate

521

868

67%

KPR Mills

Textile

10%

Accumulate

952

1120

18%

KRBL

Food Processing

10%

Accumulate

303

360

19%

Garwale Wall Ropes

Textile

10%

Accumulate

363

550

51%

Smartlink Network

IT- Hardware

10%

Accumulate

98

156

59%

MPS

Printing

10%

Accumulate

720

1150

60%

MT Educare

Education

10%

Accumulate

169

220

30%

Shaily Engineering Plastics

Capital Goods

10%

Accumulate

562

890

58%

Ambika Cotton Mills Ltd.

Textile

10%

Accumulate

828

1149

39%

Small Cap Portfolio Allocation

Diversified Equity Portfolio Allocation


Power

16%

Pharmaceuticals

15%

Banks

14%

Infrastructure

10%

Casting and Forgings

Textile

30%

Computer - Hardware

10%

Education

10%

8%

Food Processing

10%

Housing Finance

8%

Pharmaceuticals

10%

Automobile

7%

Printing and Stationery

10%

Cement

7%

Capital Goods

5%

Retail

10%

Consumer Non-Durable

5%

Tyre

10%

Logistics

5%

Investment Horizon : 18 - 24 Months

Notes : *CMP as on 21/06/2016.

25

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Ideal Portfolio

capitalization. The aim is to include and invests in companies that have immense growth potential as they are operating on

Monthly Technical Picks

Monthly Technical Picks - Equity


ABAN OFFSHORE LIMITED

TATA COMMUNICATIONS LIMITED

We have detected a "Double Bottom" chart pattern formed on Aban


Offshore Limited. The price seems to have reached a bottom after
failing to break a support level and ultimately rising higher in a sign of
reversal for a new uptrend. The Double Bottom pattern forms during a
downtrend as the price reaches distinct low levels. Finally the price
breaks upward above the highest high as marked in chart and high
volume confirming the bullish signal.

We have detected a "Rounding Bottom Pattern which is Bullish chart


pattern formed on Tata Communications Limited. The share price of
Tata Communications has registered a breakout above the
rounding Bottom pattern signaling an end
of the secondary
corrective phase representing a rounding formation, which is a
bullish reversal pattern. The breakout above the neckline (470)
signals resumption of the uptrend and The Directional moving index
has given positive crossover and ADX has started rising on weekly
charts. We advise the stock to buy on every dip for a strong up move
from current levels.

BUY BTWN 225-230 TGT 245-260 SL 210

BUY BTWN 480-485 TGT 520-540 SL 465

INDIABULLS REAL ESTATE LIMITED

MAJESCO LIMITED

We have detected a Evening Doji Star Candlestick Pattern which is a


bearish chart pattern formed on Indiabulls Real Estate Limited. It is a
reversal candlestick pattern which is bearish in nature and appears at
the end of an uptrend. The first candle is bullish in nature, the second is
indecisive in nature and third candle is bearish in nature. Stock is in
primary downtrend with negative directional moving index (DI
crossover) with ADX above 20 levels. Stock should find supply
volumes on every rise. We suggest selling the stock on any rise.

We have detected a " Head and Shoulders which is bearish chart


pattern formed on Majesco Limited. A Head and Shoulders reversal
pattern forms after an uptrend, and its completion marks a trend
reversal. The pattern contains three successive peaks with the middle
peak (head) being the highest and the two outside peaks (shoulders)
being low and roughly equal. The reaction lows of each peak can be
connected to form neckline (542). And stock also trades below 21
DMA on Daily Chart to suggest that stock is weak and every rise
should be used to Positional selling the stock.

SELL BTWN 94-91 TGT 82-76 SL 100

SELL BTWN 530-525 TGT 480-460 SL 545

26
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Monthly Technical Picks - Index

Monthly Technical Picks

Nifty
The index opened at 8179, made a high of 8308, made a low of 7927 and closed the month at 8287. Last month, we had
clearly mentioned that Nifty is in Uptrend above 8243 but it should face stiff resistance at 8400-8430 zone where supply is
expected to come and if Nifty manages to close above this zone on weekly closing basis, then only fresh buying can be
witnessed. Golden crossover was observed in Spot Nifty in Daily chart at 8220, So Nifty is likely to head towards 8600 levels.
The crucial support is at 8243-7972 levels which are 61.80% and 50.00% retracement of fall from high of 9119 in Mar 2015 to
low of 6825 in Feb 2016. If Nifty manages to close above this zone and support level of 8243, then Nifty will be heading
towards 8600 levels. Nifty is in uptrend and has strong support at 7980 levels. Stochastic indicator is suggesting positive
momentum to continue. We advise buy on dips strategy in large caps and Midcaps with positional stop loss of 7980.

Bank Nifty
The index opened at 17670, made high of 18051, made a low of 16946 and closed the month at 17935. Last month we had
said that Banknifty should face stiff resistance at 17600-17700 zones where supply is expected to come and 21 day moving
average is also placed at this level. If Banknifty manages to close above this zone on weekly closing basis, then only it might
head towards 18200-18300 levels. Banknifty made high of 18051 level in June. Banknifty is in strong uptrend and buy on
dips is recommended with positional stop loss of 17600. The crucial resistance remains at 18250 levels But Stochastics
indicator is suggesting positive momentum to continue. If Banknifty manages to close above 18250 for 2 consecutive days,
then the next target remains 18600 levels.

28
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Monthly Technical Picks - Commodity

Energy
Crude oil prices ended with small gains on weekly basis after a bullish run on strong buying following Britain's vote in favor of
leaving the European Union. However gains were perished on Friday as the market's focus returned to oversupply as
production from Nigeria and Canada revived, and OPEC output reached a record high in June. A rising contango indicates
that the market is getting ready to absorb returning supply from Nigeria and Canada. Militant attacks in Nigeria had brought
production to the lowest in 30 years but no new attacks have been carried out since June 16, allowing production to slowly
ramp up. In Canada, oil sands output was also gradually increasing after wildfires had curtailed production. As of
Wednesday, around 400,000 barrels per day of production were still affected in the Fort McMurray area. Adding to
oversupply concerns, a survey showed OPEC production rose to a record high in June. Stronger supply from major Middle
East producers, except Iraq, underlined their focus on maintaining market share. The global oil market should see supply
and demand in balance by 2017 though it will remain structurally well-supplied for the next couple of years, U.S. Energy
Secretary Ernest Moniz said. Speaking to reporters after meeting with Saudi Arabia's Energy Minister Khalid al-Falih at the
G20 energy meeting in Beijing, Moniz said the two men agreed that despite short-term production impacts, oil supply still
exceeds demand. Naturalgas prices ended with around 10 percent gains last week as traders bet that warmer weather will
help to ease a glut of supplies in the U.S. The Energy Information Administration said total working gas in underground
storage rose 37 billion cubic feet to 3.14 trillion cubic feetabove the five-year historical average. Storage levels may be
near record levels for this time in the injection season, but the rate of storage injections have been well below average, the
American Gas Association said in a report. A year ago, the EIA reported a build of 73 Bcf and the five-year average climb is
78 billion, according to S&P Global Platts. Even now, production is high enough that some expect stockpiles by November to
set a record high for the start of the winter. But production has fallen slightly from its record pace in February and investors
have bet hard that the market will rebalance within the next year. Weather forecasts widely predict higherthan- average
temperatures throughout this summer, driving demand for gas-fired power to run air. Updated weather forecasting models
suggested that temperatures may be hotter than normal throughout most of the contiguous U.S. from July 8 through July 12.
Natural gas prices are up nearly 45% since late May as expectations have grown that hot summer weather will lead to heavy
demand.
Recommendation
BUY CRUDE OIL @ 3240 SL 3100 TGT 3380-3500. BUY NATURAL GAS @ 192 SL 184 TGT 202-210

29

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Monthly Technical Picks

Bullion
Last week, bullion prices gained supported by a weaker dollar and prospects for further monetary policy easing in the wake
of Britain's vote to leave the European Union. Concerns over the trajectory of global growth, dovish comments from the U.S.
Federal Reserve Chair Janet Yellen and retail demand had supported gold ahead of last week's Brexit vote. Silver gained to
22 months high as continued uncertainty following the Brexit vote and concerns over a slowdown in China lent support to the
safe-haven. Concerns about the global economy have made chances of a U.S. rate rise in coming months less likely, but
much will depend on U.S. economic data and markets will be watching non-farm payrolls due on July 8 in particular for clues.
Safe-haven demand for the metal spurred most of the gains as investors rushed to protect them against the uncertainty in
the lead up to Britain's shock vote to exit the European Union, dubbed 'Brexit.' Concerns over the trajectory of global growth,
dovish comments from the U.S. Federal Reserve Chair Janet Yellen and retail demand had supported gold ahead of last
week's Brexit vote. Concerns about the global economy have made chances of a U.S. rate rise in coming months less likely,
analysts say, but much will depend on U.S. economic data and markets will be watching non-farm payrolls due on July 8 in
particular for clues. Gold demand in Asia remained sluggish this week as higher prices continued to deter physical traders
from making fresh purchases, with discounts in India widening to a record high. Bullion registered its biggest monthly gain
since February in June, on the back of safe-haven buying spurred by political and economic concerns following Britain's
vote to leave the European Union last week. Gold demand in Asia remained sluggish this week as higher prices continued to
deter physical traders from making fresh purchases, with discounts in India widening to a record high. Bullion registered its
biggest monthly gain since February in June, on the back of safe-haven buying spurred by political and economic concerns
following Britain's vote to leave the European Union last week. Physical gold demand in top consumer China remained
subdued as consumers preferred to stay on the sidelines with bullion turning dearer after Brexit. Bullion prices in China were
seen at a discount of $1-$2 per ounce to the global spot benchmark, which has been rallying for five weeks. Prices were at a
premium of $1 last week. Meanwhile, in India, the world's second largest consumer, dealers were offering a discount of up to
$47 an ounce as consumers shied away from making new purchases. Discounts rose to a record high of $57 an ounce on
Monday, compared with $30 to $55 Last week.
Recommendation
BUY GOLD @ 31200 SL 30800 TGT 31800-32200. BUY SILVER @ 46500 SL 44000 TGT 48500-50000

Balanced Funds
SIPs in Top 6 Best ELSS Mutual Funds

Mutual Fund

But before we get deep into todays topic, let us first recap the key benefits of Investing in Equity Linked Savings Scheme
(ELSS).

Tax Saving along with regular investment


The main reason, apart from a habit of investing small amount every month, the retail Indian investors have realised that
timing the equity market is not only difficult but impossible and thus investing a small amount systematically makes sense in
ELSS as it also helps save taxes Under Section 80C of Income Tax Act 1961. For the current FY, you can claim a total
deduction of upto Rs. 150,000 on your ELSS investment along with your Life Insurance premium, NSC investment & other
tax saving schemes.

Superior returns
ELSS provides you an opportunity to grow your money by investing in equities through professional fund managers and thus
get superior returns from other tax saving avenues like Public Provident Fund, NSC or Fixed Deposits.

Tax Efficiency
Long term capital gains and dividends are tax free for equity oriented mutual funds and so for ELSS.

Wealth Creation
By investing in ELSS you get market linked returns which are far superior to conventional tax saving schemes or ULIPs. We
did a study in September 2014 and found that an annual Rs. 50,000 deposit in PPF account started in 2002 will have a
corpus of Rs. 11.40 Lacs as on September 1, 2014 against a cumulative investment of Rs. 6.50 Lacs. Whereas the same
amount if invested in a popular ELSS fund, it would have fetched you a corpus of Rs. 37.5 Lacs! The difference between the
two is Rs. 26.10 Lacs.
For our topic of today, we have selected Top 6 ELSS Schemes based on their 10 year SIP returns. However, by no means, it
is a comprehensive list of all the ELSS funds that gave good returns in the last 10 years. This is just an illustration to show
how long term ELSS SIPs have created wealth for the investors compared to popular tax saving options like Public
Provident Fund, NSC and Tax saving bank fixed deposits etc.
Each of the ELSS funds in our selection has given SIP returns ranging from 12.38 15-54% annualized. The monthly
installment amount has been taken as Rs 3,000. Assuming that the SIP start date was 10 years back in June 2006,
therefore, the investor would have invested Rs 3.60 Lakhs through 120 SIP installments of Rs 3,000 each.
As you can see from the chart below even the lowest return generating scheme has given far superior return than PPF!
Please note that had you invested a fixed amount of Rs 36,000 per year since 2006 in PPF at an interest rate of 8.70%, your
PPF corpus value would have been Rs 5.86 Lacs against your total investment of Rs 3.60 Lacs. Compared to ELSS, taking

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Balanced Funds
the same period and same amount (invested through Monthly SIP), your PPF corpus would be lower by Rs 2.17 Lacs and

Franklin India Taxshield


The Franklin India Taxshield was launched in April 1999 and is one of the oldest ELSS Schemes in India. This fund from
Franklin Templeton Investments has an AUM base of nearly Rs 2,064 Crores (As on April 30, 2016). The fund has been
ranked No. 2 by CRISIL in its recent mutual fund ranking for the quarter ending Mar 31, 2016. It is a 4 Star rated fund by Value
research.
If you had started a monthly SIP of Rs 3000 in Franklin India Taxshield in June 2006, you would have accumulated a corpus
of nearly Rs 1.94 Lakhs by March 2010 and Rs 3.56 Lakhs by March 2013. The final corpus (at the end of 10 years) would
have been Rs 8.03 Lakhs with an investment of only Rs 3.60 Lakhs.
Over the 10 year period the compounded annual returns on your SIP investment in this fund would be around 15.54%.

Reliance Tax Saver (ELSS) Fund


The Reliance Tax Saver (ELSS) Fund was launched in September 2005 and is one of biggest schemes in terms of AUM.
This fund from Reliance Mutual Fund has an AUM base of nearly Rs 4,841 Crores (As on April 30, 2016). The fund has been
ranked No. 3 by CRISIL in its recent mutual fund ranking for the quarter ending Mar 31, 2016. It is a 4 Star rated fund by Value
research.
If you had started a monthly SIP of Rs 3000 in Reliance Tax Saver (ELSS) Fund in June 2006, you would have accumulated
a corpus of nearly Rs 1.89 Lakhs by March 2010 and Rs 3.28 Lakhs by March 2013. The final corpus (at the end of 10 years)
would have been Rs 7.96 Lakhs with an investment of only Rs 3.60 Lakhs.
Over the 10 year period the compounded annual returns on your SIP investment in this fund would be around 15.38%.

ICICI Prudential Long Term Equity Fund (Tax Saving)


The ICICI Prudential Long Term Equity Fund (Tax Saving) was launched in August 1999 and is one of oldest ELSS schemes
in India. This fund from Indias No. 1 AMC, ICICI Prudential Mutual Fund has an AUM base of nearly Rs 3,025 Crores (As on
April 30, 2016). The fund has been ranked No. 3 by CRISIL in its recent mutual fund ranking for the quarter ending Mar 31,
2016. It also has a 3 Star rating by Value research.
If you had started a monthly SIP of Rs 3000 in ICICI Prudential Long Term Equity Fund (Tax Saving) in June 2006, you would
have accumulated a corpus of nearly Rs 2.03 Lakhs by March 2010 and Rs 3.46 Lakhs by March 2013. The final corpus (at
the end of 10 years) would have been Rs 7.68 Lakhs with an investment of only Rs 3.60 Lakhs.
Over the 10 year period the compounded annual returns on your SIP investment in this fund would be around 14.71%.

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Mutual Fund

Rs 0.93 Lacs respectively against ELSS returns of Franklin India Taxshied and HDFC Long Term Advantage Fund!

Balanced Funds

Mutual Fund

L&T Tax Advantage Fund


The L&T Tax Advantage Fund was launched in February 2006. This fund from L&T Mutual Fund has an AUM base of nearly
Rs 1,505 Crores (As on April 30, 2016). The fund has been ranked No. 3 by CRISIL in its recent mutual fund ranking for the
quarter ending Mar 31, 2016. It also has a 3 Star rating by Value research.
If you had started a monthly SIP of Rs 3000 in L&T Tax Advantage Fund in June 2006, you would have accumulated a corpus
of nearly Rs 1.97 Lakhs by March 2010 and Rs 3.42 Lakhs by March 2013. The final corpus (at the end of 10 years) would
have been Rs 7.09 Lakhs with an investment of only Rs 3.60 Lakhs.
Over the 10 year period the compounded annual returns on your SIP investment in this fund would be around 13.18%.

BNP Paribas Long Term Equity Fund


Launched in January 2006, the BNP Paribas Long Term Equity Fund has a relatively lower AUM of Rs 446 Crores. But the
Fund is rated high Value research has given it a 5 Star Rating whereas CRISIL has given it Rank 3 in its recent mutual fund
ranking for the quarter ending Mar 31, 2016.
If you had started a monthly SIP of Rs 3000 in BNP Paribas Long Term Equity Fund in June 2006, you would have
accumulated a corpus of nearly Rs 1.54 Lakhs by March 2010 and Rs 3.06 Lakhs by March 2013. The final corpus (at the
end of 10 years) would have been Rs 7.09 Lakhs with an investment of only Rs 3.60 Lakhs.
Over the 10 year period the compounded annual returns on your SIP investment in this fund would be around 13.01%.

HDFC Long Term Advantage Fund


Launched in January 2001, the HDFC Long Term Advantage Fund has an AUM of Rs 1,108 Crores and has a track record of
15 years. This popular fund from Indias No. 2 AMC, HDFC Mutual Fund has got a Value research 3 Star Rating whereas
CRISIL has given it Rank 4 in its recent mutual fund ranking for the quarter ending Mar 31, 2016.
If you had started a monthly SIP of Rs 3000 in HDFC Long Term Advantage Fund in June 2006, you would have
accumulated a corpus of nearly Rs 1.86 Lakhs by March 2010 and Rs 3.40 Lakhs by March 2013. The final corpus (at the
end of 10 years) would have been Rs 6.79 Lakhs with an investment of only Rs 3.60 Lakhs.
Over the 10 year period, the compounded annual returns on your SIP investment in this fund would be around 12.38%.

Conclusion
In this article, we have seen how SIPs in Equity Linked Saving Schemes have created wealth for the investors over the long
term. We have found that ELSS SIPs are most suitable to those investors who invest in tax saving schemes Under Section
80C. ELSS should be the preferred choice for them for the reason we discussed at the beginning of the post. ELSS has the
least number of lock-in years compared to PPF, NSC etc. but if you invest in these through SIP mode and hold for long term,
you benefit from the power of compounding and rupee cost averaging while enjoying the tax free superior returns that the
equity investing provides.
Another point, the best time to start is when you join your first job and your employer asks you to save for your taxes. Start the
SIP earlier in your career; continue as long as you can while reviewing the performance atleast once every year and you are
good to go for your long term wealth creation goals.

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Date
Fri Jul 1

Mon Jul 4
Tue Jul 5
Wed Jul 6

Thu Jul 7

Fri Jul 8

Sun Jul 10
Mon Jul 11
Tue Jul 12

Wed Jul 13

Thu Jul 14
Fri Jul 15

Time in IST Currency


6:30am
CNY
CNY
7:15am
CNY
12:45pm
EUR
7:30pm
USD
12:30pm
EUR
7:15am
CNY
7:30pm
USD
USD
12:00am
USD
11:30am
EUR
12:30pm
EUR
6:00pm
USD
7:30pm
USD
11:30pm
USD
5:00pm
EUR
5:45pm
USD
6:00pm
USD
8:00pm
USD
8:30pm
USD
11:30am
EUR
12:15pm
EUR
EUR
6:00pm
USD
USD
USD
7:00am
CNY
CNY
1:30pm
EUR
7:30pm
USD
USD
11:30am
EUR
3:30pm
USD
7:05pm
USD
7:30pm
USD
USD
10:31pm
USD
12:15pm
EUR
2:30pm
EUR
6:00pm
USD
8:00pm
USD
6:00pm
USD
USD
USD
7:30am
CNY
CNY
CNY
CNY
2:30pm
EUR
6:00pm
USD
USD
USD
USD
USD
6:45pm
USD
USD
7:30pm
USD

Country/Event
Manufacturing PMI
Non-Manufacturing PMI
Caixin Manufacturing PMI
Spanish Manufacturing PMI
ISM Manufacturing PMI
Spanish Unemployment Change
Caixin Services PMI
Factory Orders m/m
IBD/TIPP Economic Optimism
FOMC Member Dudley Speaks
German Factory Orders m/m
ECB President Draghi Speaks
Trade Balance
ISM Non-Manufacturing PMI
FOMC Meeting Minutes
ECB Monetary Policy Meeting Accounts
ADP Non-Farm Employment Change
Unemployment Claims
Natural Gas Storage
Crude Oil Inventories
German Trade Balance
French Gov Budget Balance
French Industrial Production m/m
Average Hourly Earnings m/m
Non-Farm Employment Change
Unemployment Rate
CPI y/y
PPI y/y
Italian Industrial Production m/m
FOMC Member George Speaks
Labor Market Conditions Index m/m
German Final CPI m/m
NFIB Small Business Index
FOMC Member Bullard Speaks
JOLTS Job Openings
Wholesale Inventories m/m
10-y Bond Auction
French Final CPI m/m
Industrial Production m/m
Import Prices m/m
Crude Oil Inventories
PPI m/m
Unemployment Claims
Core PPI m/m
GDP q/y
Industrial Production y/y
Fixed Asset Investment ytd/y
NBS Press Conference
Final CPI y/y
CPI m/m
Core CPI m/m
Core Retail Sales m/m
Retail Sales m/m
Empire State Manufacturing Index
Capacity Utilization Rate
Industrial Production m/m
Prelim UoM Consumer Sentiment

Date
Mon Jul 18
Tue Jul 19

Wed Jul 20

Thu Jul 21

Fri Jul 22
Mon Jul 25
Tue Jul 26

Wed Jul 27

Thu Jul 28

Fri Jul 29

Time in IST Currency


7:30pm
USD
1:30am
USD
2:30pm
EUR
EUR
6:00pm
USD
USD
1:30pm
EUR
2:30pm
EUR
6:30pm
CNY
8:00pm
USD
12:30pm
EUR
EUR
EUR
1:00pm
EUR
EUR
1:30pm
EUR
EUR
5:15pm
EUR
6:00pm
EUR
USD
USD
7:30pm
EUR
1:30pm
EUR
6:30pm
EUR
6:00pm
USD
USD
6:30pm
USD
7:30pm
USD
USD
USD
11:30am
EUR
1:30pm
EUR
EUR
2:30pm
EUR
7:30pm
USD
8:00pm
USD
11:30pm
USD
USD
All Day
EUR
12:15pm
EUR
1:25pm
EUR
1:30pm
EUR
6:00pm
USD
11:30am
EUR
12:15pm
EUR
12:30pm
EUR
EUR
2:30pm
EUR
EUR
EUR
6:00pm
USD
USD
USD
7:15pm
USD
7:30pm
USD

Country/Event
NAHB Housing Market Index
TIC Long-Term Purchases
German ZEW Economic Sentiment
ZEW Economic Sentiment
Building Permits
Housing Starts
Current Account
Italian Retail Sales m/m
CB Leading Index m/m
Crude Oil Inventories
French Flash Manufacturing PMI
French Flash Services PMI
Spanish Unemployment Rate
German Flash Manufacturing PMI
German Flash Services PMI
Flash Manufacturing PMI
Flash Services PMI
Minimum Bid Rate
ECB Press Conference
Philly Fed Manufacturing Index
Unemployment Claims
Consumer Confidence
German Ifo Business Climate
Belgian NBB Business Climate
Core Durable Goods Orders m/m
Durable
S&P/CS Composite-20 HPI y/y
CB Consumer Confidence
New Home Sales
Richmond Manufacturing Index
GfK German Consumer Climate
M3 Money Supply y/y
Private Loans y/y
Italian Prelim CPI m/m
Pending Home Sales m/m
Crude Oil Inventories
FOMC Statement
Federal Funds Rate
German Prelim CPI m/m
French Prelim CPI m/m
German Unemployment Change
Italian Monthly Unemployment Rate
Unemployment Claims
German Retail Sales m/m
French Consumer Spending m/m
Spanish Flash CPI y/y
Spanish Flash GDP q/q
CPI Flash Estimate y/y
Core CPI Flash Estimate y/y
Prelim Flash GDP q/q
Advance GDP q/q
Advance GDP Price Index q/q
Employment Cost Index q/q
Chicago PMI
Revised UoM Consumer Sentiment

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