Benefits of auto investing at the start of each month

Benefits of auto investing at the start of each month

Investing is an excellent habit that assists us secure our future. Investors can be broadly divided into two categories: those who rely on the traditional method of investing the amount available with them at the end of each month, and then there are others who have it auto debited directly from the bank account at the start of each month.

However, experts conclude that the person who auto invests at the beginning of every month is a better saver than the one who invests from available corpus at the end of the month. Therefore, if a person wants to secure their financial status, auto investing is the way to go about it.

The top benefits of auto-investing are:

It requires you to categorize your expenditure

Saving or investing after you’ve met your monthly expenses is not advisable. This is because if you spend first and save later, you will be unable to direct a uniform amount towards this corpus. In any case, savings should be deducted from the income before expenses are met. Here, drawing up an expenditure chart at the start of every month would be practical. This would help strike off unwanted spending from the budget planning, and bring the necessary expenses on the critical list. Also, one should set aside 10% of the income for emergency expenses apart from the investment amount. Hence, it is prudent to draw up your expenses, including emergency funds, and then invest a fixed amount regularly at the start of the month.

Inculcates the habit of saving

Investing a set amount every month inculcates the habit of saving in an individual. Moreover, this also motivates one to look for ways to save from their expenditure budget. This is a triple advantage as one gets to set aside an investment amount, save emergency funds, as well look for ways to cut down on expenses. If there are any unnecessary expenses, the emergency amount comes into play. After a while, even that habit will stop.

Instills discipline

Even if a person manages to save regularly at the end of each month, there may arise a situation which would require him to use his investment amount, thus, breaking his habit. For example, an unforeseen emergency could occur that would require extra funds. Although the emergency would be a more important matter to attend, it would come in the way of that month’s savings. If the person had already extracted his savings, his habit would have been regular and unaffected. This would have ensured his financial planning. Therefore, auto investing at the start of each month instills discipline in the individual as he/she learns to manage from the funds they have set aside for expenses.

Reduces risk factor on investments

Investing in auto mode helps you ride market-related risks smoothly. When a person invests a lump sum amount in a single go, they run a risk of either an enormous loss or vice versa. As the outcome is highly unpredictable, this method is inadvisable. Regular investments through a Systematic Investment Plan (SIP), where a predefined amount is automatically deducted at a predefined time each month, provides you with the benefit of avoiding such risks. When investing in market-related investments, it is a smart practice to fund the amount regularly so that it remains safe from market fluctuation, is balanced out, and the investment grows profitably. In this manner, your wealth-building goals will be met quite effortlessly.

Thus, the advantages of auto investing at the beginning of each month outweigh the benefits of investing at the end of each month. Start an SIP model to grow your wealth and enjoy guilt-free spending of your hard-earned money.

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Apollo Micro Systems Ltd-IPO Note

Apollo Micro Systems Ltd-IPO Note
by Nikita Bhoota 01/09/2018

Issue Opens: January 10, 2018
Issue Closes: January 12, 2018
Face Value: Rs.10
Price Band: Rs.270-275
Issue Size: ~Rs.156 cr
Public Issue: 57.64 lakh shares (at upper price band)
Bid Lot: 50 Equity shares       
Issue Type: 100% Book Building

% shareholding Pre IPO Post IPO
Promoter 88.5 63.9
Public 11.5 36.1

Source: RHP

Company Background

Apollo Micro Systems (AMS) designs, manufactures and supplies electronic and electro-mechanical solutions. It caters to defence, space, transport and home land security for Ministry of Defence, Govt. controlled Public Sector Undertakings (PSUs) and private sector. It has participated in several indigenous missile programmes, underwater electronic warfare and underwater missiles amongst others. The defence system supplies are classified into On-Board Systems (on Weapon or Vehicle) and Ground support (associated or communicates with On-Board) equipment. AMS key products include defence avionic systems, defence naval systems, defence aerospace systems and satellite space systems.

Objective of the Offer

The offer consists of Fresh Issue of 5.8mn shares (aggregating up to ~Rs156cr) at the upper end of the price band. A discount of Rs.12 is offered for eligible employees (20,000 shares reservation) and retail investors. The proceeds will be used for working capital (WC) requirements (~`119cr) and general corporate purposes (~Rs.37cr).


Standalone `cr. FY14 FY15 FY16 FY17 1HFY18
Revenue 73 108 159 211 109
EBITDA Margin % 13.9 16.7 15.9 19.2 17.7
Adj. PAT 5 7 10 18 7
EPS (`)* 2.6 3.6 4.8 8.5 3.4
P/E* 107.1 76.7 57.1 32.2 --
P/BV* 20.8 16.4 12.7 9 --
EV/EBITDA* 59.6 34.6 25.2 16 --
RONW (%)* 24.8 23.9 25.1 32.8 --

Source: Company, 5 Paisa Research; *EPS & Ratios at higher end of the price band, on post IPO shares

Key Investment Rationale

The company’s participation in several defence, ships and space programmes and proven track record of order execution have given it a competitive edge. The company enjoys strong brand equity on account of its longstanding presence and continuous improvement and adoption of technologies. The company has been able to do so via continuous investments in product research and development. We believe that its association with Ministry of Defence and other Govt. PSU programmes should enable it to garner larger repeat orders.

In BTP business, the customer provides work instructions, assembly drawings, etc., which is used in building its parts along with the specification of component’s functional requirements. Apollo has established BTP business vertical with existing infrastructure and skills sets. This vertical has helped in generating incremental revenue and profits with low working capital cycle. Thus, the company expects BTP to be a strong revenue driver in the defence electronics space.

 Key Risk

The company has significant dependence on various PSUs and Government entities for projects. Change in Government’s stance on defence policies could adversely affect its financials.


At the upper price band, the company commands PE multiple of 32.2x on FY17E EPS (post dilution). This is, in-line with other defence sector companies i.e. – BEL and Astra Microwave. Considering the high traction expected in the defense sector for AMS, we recommend SUBSCRIBE on the issue.

Research Disclaimer

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The Art of Trading

The Art of Trading

Trading in the share market can be complicated and unpredictable. You must have heard people talk about making and losing money in the share market.

Trading in the share market requires fundamental knowledge of all the factors that influence the demand and supply in the market. Given below are some trading tips that can help you cut your losses by investing in a more efficient way.

  1. Stop loss
  2. Stop loss is a trading tool that allows you to cut your losses while trading in the market. When you put a stop loss at a certain price of your stock, it is automatically sold when the price falls below the stop loss price level. For example, if you have bought shares of a company at Rs100 and you have put a stop loss order at Rs90. If the price falls to Rs90, your shares will be sold automatically, thereby reducing your loss to just Rs10.

  3. Background research
  4. You must thoroughly research the company in which you want to invest in order to make a successful investment decision. Background research involves checking the balance sheet, income statement, cash flow statement, short-term and long-term earnings, and the company's past performance. It will allow you to determine the future growth potential of the company and whether you will be able to get a regular dividend if you choose to invest your money in the company.

  5. Regularly monitoring investments
  6. One of the best trading tips to be successful in the share market is to monitor your investments on a regular basis. Regular monitoring of investments helps you sell your shares immediately if you think they are going to fall below a particular price. Apart from this, you can also earn huge amount of profits by selling your shares at the time when they are at their highest price.

  7. Patience
  8. Investors lose out on great opportunities when they sell their stocks too early. If the price goes slightly higher, they sell the stocks and book whatever profits they get even when they could have made so much more had they waited a little longer. You must be patient and wait for the perfect time before making an investment decision. You should sell your stocks only after analyzing the market trend. If you are sure that the market will not rise any higher, then only you should go ahead with your decision to sell.

  9. Don't follow the herd

One of the most gruesome mistakes you can commit in the share market is to invest just because everyone else is investing. You have to understand that your financial position is in no way similar to any other person. What they might think is a perfect investment for them can turn out to be the worst investment for you. You should make your own decisions after carefully analyzing your financial condition and determining what you stand to gain and lose.

If you are passionate enough about investing in the share market, you should consider following these trading tips as it will help you to build wealth without losing much money. 

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Impact of Union Budget 2018-19 on markets and Stocks

Impact of Union Budget 2018-19 on markets and Stocks
by Nikita Bhoota 02/09/2018

Finance Minister, Arun Jaitley tabled Union Budget 2018-19 today. Following are the key announcements made at macro as well as sectoral levels.

Macro Key Highlights

  • Government has crossed the divestment target of Rs72,500cr set last year and is expected to reach Rs1lakh crore in FY2017-18. The divestment target set for Union Budget 2018-19 is Rs80,000cr. However, the target set for divestment is below market expectations of Rs1-1.1 lakh crore.

  • FM has revised fiscal deficit target for FY2018-19 to 3.3% of the GDP against the earlier target of 3% after government missed the fiscal deficit target for FY2017-18. Prior budget estimate of fiscal deficit was 3.2% of GDP, the revised estimate at present is 3.5% of the GDP for FY2017-18.

  • Corporate Tax rate reduced from 30% to 25% for companies with turnover less than Rs2.5bn in FY2016-17. It is positive for companies like IEX and CDSL.

Sector Based Announcements and its impact

  1. MSP for all unannounced kharif crops will be 1.5x of their production cost, similar to majority of rabi crops, resulting in improved rural farm income. This will be in favor of agri input stocks like UPL, Rallis etc.

  2. Government proposes to set two new funds – a) Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries and b) Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirements of animal husbandry sector.  Government has allocated Rs10,000cr towards these new funds. This will benefit companies like Avanti Feeds, Godrej Agrovet, Apex Foods.

  3. Under the Aayushman Bharat program, a total of 1.5 lakh centers will be set up to provide health facilities close to home. Rs1,200cr has been committed in this budget for this program. FM also announced National Health Protection Scheme to cover 10 crore poor and vulnerable families. Under this scheme, Rs5lakh will be provided for medical reimbursement per family per year. This will be largest government-funded healthcare scheme in the world. Further, allocation towards Pradhan Mantri Fasal Bima Yojana has been increased to Rs13,000cr vs Rs9,000cr last year. These steps will be advantageous for insurance companies like New India Assurance, ICICI Lombard etc. Additionally, it will be positive for hospital sector (stocks) such as Shalby Ltd, Apollo Hospitals.

  4. Customs duty on truck and bus radial tyres raised from 10% to 15%. The move aims at protecting and encouraging domestic manufacturing. This will be beneficial for Indian tyre companies.

  5. Bank Recapitalization has been launched with bonds of Rs80,000cr being issued this year. This recapitalization will pave way for the public sector banks to lend additional credit of Rs5lakh crore. This will benefit public sector banks. Further, to provide impetus to banks, government has increased the allowable provision for NPA from 7.5% to 8.5%. This will reduce tax liability of banks. This is a positive for both public as well as private sector banks.

  6. Under Prime Minister Awas Scheme, more than 1 crore houses will be constructed exclusively in rural areas. In urban areas, the assistance has been sanctioned to construct 37 lakh houses. This will be favorable for stock like HUDCO.

  7. Infrastructure spending has been increased from Rs4.9lakh crore (revised estimates) in FY2017-18 to Rs5.97lakh crore in FY2018-19. The government has also announced plans to spend Rs2.04lakh crore under "Smart City Mission". This spending will be positive for stocks like Larsen & Toubro, Dilip Buildcon, Sadbhav Engineering, Godrej Properties and NCC.

  8. Gold Monetization Scheme will be revamped to enable people to open a hassle free gold deposit account. It looks attractive for stocks like Muthoot Finance and Manappuram Finance.

  9. Import duty on footwear has been raised to 20% from 10%. It looks positive for stocks like Bata and Relaxo.

  10. Government proposes to increase airport capacity by more than 5 times to handle a billion trips per year.  Further, regional connectivity scheme ‘UDAN’ (Ude Desh ka Aam Nagrik) will connect 56 unserved airports and 31 unserved helipads across the country. This proposal is beneficial for aviation stocks like SpiceJet and InterGlobe Aviation. There are 124 airports under Airport Authority of India whose capacities will be expanded. This looks positive for stocks like GMR infra and GVK Power.

Budget takeaways for Individuals

  • Women contribution to EPF reduced to 8% for first 3 years of employment against existing rate of 12% or 10% with no change in employer’s contribution. This will promote women participation in the labor force and will increase their take home payment.

  • Standard deduction of Rs40,000 in place of present exemption for transport allowance and reimbursement of miscellaneous medical expenses. It will benefit 2.5 crore salaried employees and pensioners.

  • Secondary and Higher Education Cess of 3% will be replaced by a Health and Education Cess of 4%.

  • FD and post office interest rate will be exempted till Rs50,000 from existing Rs10,000 for senior citizens. This will give a big relief to most of the senior citizens, as they derive most of their income from bank FDs and post office schemes. Additionally, the limit of deduction for health insurance premium is being increased from Rs30,000 to Rs50,000 for senior citizens.

  • Custom duty on mobile phones raised to 20% vs 15%. Thus, mobile phones are likely to be more expensive.

  • The government has imposed tax on Long Term Capital Gains (LTCG) on sale of securities on gains exceeding Rs1lakh at the rate of 10%, without indexation benefit. However, all gains up to January 31, 2018 will be grandfathered. Previously, income from capital gains held for more than 1 year were tax free. Going forward investors will have to pay LTCG of 10% on income from capital gains above Rs1lakh, thus impacting the returns of investors. This is a negative for stocks market investors and will increase the cost of equity.

  • Government has proposed to implement Dividend Distribution Tax (DDT) of 10% on Equity Mutual Funds. Earlier, dividend received from equity mutual funds were tax free. Thus, the implementation of DDT will reduce the dividend income and in-hand return of the investors.

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Should I take loan from a lender, bank or NBFC?

Should I take loan from a lender, bank or NBFC?

A loan comes handy when you need immediate funds for your needs whether they are personal, business. A loan allows you to buy things like your home, vehicle and so on. But sometimes it is this very simplicity that makes it complicated. Something similar happened to Amit. Amit was a software engineer working in a corporate for last 3 years. After much thought, he finally made a decision to move from a rented apartment to his own home. However, since he didn’t have much savings, he decided to take a home loan. But two weeks passed, he was still not able to book his dream home.

Taking a home loan wasn’t a problem for Amit. He had the required eligibility and he was also okay with the equated monthly instalments (EMIs). What delayed the process was choosing the right lender for his loan. It was his first big loan and Amit didn’t want to risk with any random lender out there. He thus did his research and this is what he found out.

Amit figured out that he could either borrow from a bank or a Non-Banking Financial Companies (NBFCs). Though both do the same task of lending, here are some parameters on which Banks and NBFCs can be compared:

Interest Rates:

Banks: It has floating interests linked to MCLR (Marginal Cost-based Lending Rate). These are determined using RBI’s mandate lending rates depending upon Macroeconomic factors. They are often found lower than those of NBFCs.

NBFCs: The rate of interest is according to RPLR (Retail Prime Lending Rate). They are sometimes higher than those of Banks. But these days, NBFCs are coming up with competitive rates of interest so as to attract more borrowers.

Credit Score Requirements:

Banks: Banks easily approve loans for people with a high CIBIL score (credit score). While for people with lower credit scores, it is difficult to get a loan approval.

NBFCs: Although NBFCs easily approve loans for the people with a high CIBIL score (credit score), they also approve loans for people with low credit score but on a high-interest rate.

Loan Approval process:

Banks: The process for a loan approval is quite stringent in case of banks. The loan approval process involves many verifications and sometimes it all ends up into a rejection if the pre-requisites are not met.

NBFCs: The loan approval process in NBFCs is easier and faster than that of the bank. Often people who are denied a loan at bank end up taking it from NBFCs.


Banks: Some of the banks give the facility of overdraft to their borrowers wherein they can repay the loan prior to the due date by paying large sums.  

NBFCs: The facility of overdraft is not available for the borrowers of NBFCs.

Paperwork Involved:

Banks: Lot of stringent paperwork is required when you take loans from banks. People might not have enough time to engage in such a lengthy process.

NBFCs: Paperwork involved while taking loans from the NBFCs is much less as compared to that of Banks. This feature makes it preferable among the borrowers.


Both Banks and NBFCs have their own set of pros and cons which Amit thoroughly analyzed. Although Banks are preferred by people who have a high credit score and who are prepared for a stringent approval process and paperwork. Banks are favored because of a comparatively lower interest rate and overdraft facility, but in other cases, NBFCs are always a better option. Amit finally made an informed decision and it is time you made one too.

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5 stocks to buy post Union Budget 2018

5 stocks to buy post Union Budget 2018
by Nikita Bhoota 02/09/2018
Untitled Document

The last full Union Budget 2018 of the Modi Government declared on February 1 have disappointed a few classes, leaving investors to reconsider their investment decisions. The Government has imposed Long Term Capital Gain Tax (LTCG) tax on equity gains above Rs1lakh at the rate of 10%, without indexation benefit. In addition, the government has proposed to implement Dividend Distribution Tax (DDT) of 10% on Equity Mutual Funds. These announcements in the budget was not at par with the market expectations. This adversely impacted the index performance. However, the declaration of LTCG and DDT is likely to be a short term negative for D-Street.

Post correction phase, the attention will be back on earnings outcome. Further, the budget largely focused on development of infrastructure, healthcare and rural economy. Stocks from agri, auto ancillary, healthcare and infrastructure are likely to be next big triggers. Based on the fundamentals, unique product portfolio and management outlook, following are the stocks that offer a promising return.

Godrej Agrovet

Godrej Agrovet (GAL) is a diversified agri-business company having presence in segments like animal feed (~53% revenue contribution in FY17), vegetable oil (~10%), crop protection (~16%) and dairy products (~21%). It enjoys advantage over its peers through established brand image. We expect revenue CAGR of 14% over FY17-20E backed by increase in market share of organized sector in animal feed and vegetable oil segment. Besides GAL focus on export market for expanding its crop protection segment by launch of new generic chemicals backed by Astec Life Sciences (~57% stake) will also aid revenues. Improving consumption of dairy and rising share of organized market in dairy business also augurs well for the company. We see EBITDA margin to expand by ~157bps over FY17-20E backed by utilization level of ~47% (FY17) which provides operating leverage. We expect PAT CAGR of 20% over FY17-20E. We see an upside of 30% from CMP of Rs563 over a period of 1 year.


Net Sales (Rs Cr)

OPM (%)

Net Profit (Rs Cr)

EPS (Rs)

PE (x)

























Source: 5paisa Research

Tejas Network

Tejas Networks Ltd (TNL) is the second largest company in the Indian optical equipment market. It sells products to internet service providers and telecom, defence companies and Government entities. TNL would be a beneficiary of increased data traffic for telecom operators, thus requiring continuous optical capex in a bid to remain competitive in an increasing competition environment. It also stands to benefit from being the only Indian optical network equipment company. Government’s capex under initiatives like BharatNet Project should aid its revenues as project SPV, Bharat Broadband Network Ltd, is a key contributor to TNL’s revenues. Allocated spends of Rs 10,000cr on the project in this Budget would also support revenue growth. TNL has advantages vs. global companies owing to low cost manufacturing. Higher revenue growth and resultant operating leverage should aid EBITDA margins. Overall, we estimate revenue CAGR of 19.8%, EBITDA margin expanding by ~411bps and PAT growing at 33.5% CAGR over FY17-20E. We estimate an upside of 32% from CMP of Rs368 over a period of 1 year.


Net Sales (Rs Cr)

OPM (%)

Net Profit (Rs Cr)

EPS (Rs)

PE (x)

























Source: 5paisa Research

JK Tyre & Industries

JKTIL is leading Indian Truck and Bus Radial (TBR) and LCV tyres manufacturer with 31% market share and capacity of 32mn tyres/annum (tpa). It derives 56% revenue from replacement segment, 34% from OEMs (standalone plus Cavendish) and 10% from exports (Tornel, Mexico, capacity 7.9mn tpa). After reporting operating losses in H1FY18, JKTIL is expected to perform better in H2FY18 due to stable rubber prices and cost control initiatives. Rubber (RSS-4) prices peaked at Rs150/kg in March 2017 and have stabilized in the range of Rs130-135. We expect company to post positive EBITDA in FY18, however, rising crude prices are a concern.  The budget announcement of raising customs duty on TBR from 10% to 15% will make imports costlier, boosting volumes for JKTIL. Imposition of anti-dumping duty on Chinese TBR tyres, Government’s thrust on infrastructure and better consumer financing will result in strong CV sales, propelling JKTIL’s volumes. Hence, we expect revenue growth of 12% yoy in FY19E vs. 6% in FY18. After spending Rs3,700cr on capex (past 3 years), only maintenance capex of Rs100cr/year would be incurred over next 2-3 years. This will reduce D/E ratio from 3x in FY17 to 1.6x in FY20E. We see an upside of 40% from CMP of Rs167 over a period of 1 year.


Net Sales (Rs Cr)

OPM (%)

Net Profit (Rs Cr) (before EO)

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PE (x)

























Source: 5paisa Research

Larsen & Toubro (L&T)

L&T is India’s largest engineering and construction company with no real peers when compared to its breadth and depth of offerings. The company’s business mix spans a large spectrum—from complex engineering, procurement and construction (EPC) contracts in the hydrocarbon, process, metals and cement sectors to development of infrastructure projects in sectors like ports, roads, metro rail and airports. Infrastructure formed 65%, Hydrocarbon 15%, Heavy engineering 7%, Power electrical & Auto 7% and Others 6% as of Q2FY18. L&T is well placed to benefit from the uptick in the investment cycle. Capital expenditure is expected to pick-up in India led by resolution of bad debt, pick-up in capacity utilization and recovery in demand. L&T’s order book as of 2QFY18 stood at Rs2,575bn. The order inflow is likely to increase from H2FY18 led by recovery in economy.  We estimate revenue CAGR of 12% over FY17-20E. We believe that L&T’s focus on improving profitability will lead to PAT CAGR of 15% over FY17-20E.  We project an upside of 15% from CMP of Rs1,354 over a period of 1 year.


Net Sales (Rs Cr)

OPM (%)

Net Profit (Rs Cr)

EPS (Rs)

PE (x)

























Source:5paisa Research

Apollo Hospital

Apollo is one of the leading private sector healthcare services provider. Apollo has two businesses i.e. hospitals and pharmacies. As of September 30, 2017, it had 70 hospitals with total bed capacity of 9,957 and 2,742 pharmacies. In Q2FY18, hospital business contributed 55% of its business, while pharmacies contributed 45%. The outlook on Apollo’s business is positive owing to its favorable demographics, rising insurance penetration, strong brand and pan-India presence. We estimate CAGR of 13% and 28% in revenue and PAT over FY17-20E. Company has improved ARPOB/day (average revenue per operating bed) from Rs21,724 in FY13 to Rs32,474 in H1FY18. The pharmacy business too has seen improvement in EBITDA margins from 2.7% in FY13 to 4.3% in H1FY18. Company is expected to reap benefits of the capacity expansion that it completed over FY14-16. Company has expanded its capacity by 30% (addition of ~2,500 beds) over FY14-17. Its 11 new hospitals are yet to breakeven, while existing hospitals have a ROCE of 19.3% and they continue to show higher efficiency. The faster breakeven at the Navi Mumbai hospital is positive for the company. We expect ~190bps EBITDA margin expansion during the forecast period. We forecast an upside of 17% from CMP of Rs1125 over a period of 1 year.


Net Sales (Rs Cr)

OPM (%)

Net Profit (Rs Cr)

EPS (Rs)

PE (x)