Aditya Birla Sun Life AMC makes dull stock exchange debut

by 5paisa Research Team 11/10/2021

Aditya Birla Sun Life Asset Management Co Ltd made a lackluster debut on stock exchanges on Monday as its shares listed at its initial public offering price before inching lower.

Shares of the mutual fund house began trading on the BSE at Rs 712 apiece, the same as the issue price. The shares touched a high of Rs 721 and a low of Rs 700 apiece in the first few minutes of trade.

Analysts say a not-so-exciting response to the IPO and the fact that the issue was entirely an offer for sale could be among the reasons for the muted listing.

The tepid opening comes after Aditya Birla Sun Life AMC's IPO was subscribed 5.25 times, thanks mainly to qualified institutional buyers’ bidding for more than 10 times the portion reserved for them. The quota set aside for non-institutional investors was covered 4.4 times while retail investors’ portion was subscribed 3.24 times.

The mutual fund house is a subsidiary of publicly listed Aditya Birla Capital Ltd, the financial services holding company of the diversified Aditya Birla Group led by billionaire Kumar Mangalam Birla.

Aditya Birla Capital’s board had approved taking the unit public on April 14 this year. The MF house filed its draft red herring prospectus with the Securities and Exchange Board of India five days later.

The IPO had opened on September 29 and closed on October 1. This makes Aditya Birla AMC the fourth mutual fund house in India to go public. The IPO was a complete offer for sale by Aditya Birla Capital and its Canadian partner Sun Life. The total IPO size was Rs 2,768.25 crore.

Aditya Birla Capital owned 51% of the AMC while Sun Life held 49% before the IPO. Their respective stake has fallen to 50.01% and 36.49% after the IPO.

Aditya Birla Sun Life AMC’s valuation, AUM comparison

The company is India’s fourth-largest mutual fund house by assets. It joins three other mutual fund companies on the bourses—Nippon Life India MF (formerly Reliance Mutual Fund), HDFC MF, and UTI MF.

Nippon Life floated its IPO in October 2017, HDFC MF in July 2018 and UTI AMC last September. HDFC AMC is the largest with a market value of Rs 62,064 crore. Nippon Life AMC is valued at Rs 27,774 crore and UTI AMC at Rs 13,257 crore.

Aditya Birla AMC was targeting a valuation of Rs 20,500 crore at the upper end of its price band. However, it is currently valued a tad lower than this level.

Overall, India has almost three dozen mutual fund companies. The biggest MF is SBI Mutual Fund, with assets under management (AUM) of Rs 5.24 trillion at the end of June 2021. ICICI MF and HDFC MF are neck and neck, with an AUM of about Rs 4.3 trillion and Rs 4.2 trillion, respectively.

Aditya Birla AMC is ranked fourth and reported an AUM of Rs 2.75 trillion. In addition, it had also Rs 450 crore in assets under domestic fund of funds, according to the Association of Mutual Funds in India.

Nippon Life is ranked sixth with an AUM of Rs 2.4 trillion as of June 30 and Rs 1,737 crore under local fund of funds. Kotak Mahindra MF and Axis MF are the other large asset managers in India with AUM of Rs 2.46 trillion and Rs 2.1 trillion, respectively, excluding fund of funds. UTI MF had an AUM of Rs 1.87 trillion at the end of June.

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Radiant Cash Management submits DRHP for IPO. Check details here

by 5paisa Research Team 11/10/2021

Radiant Cash Management Services Ltd has filed its draft red herring prospectus with the capital markets regulator SEBI to launch its initial public offering, joining dozens of other companies planning to go public.

The IPO comprises a fresh issue of shares worth Rs 60 crore and an offer for sale of a little more than 3 crore shares by its promoter and private equity investor Ascent Capital.

The company’s founder Colonel David Devasahayam intends to sell up to 1.0125 crore shares while Ascent Capital plans to divest 2 crore shares, according to the DRHP.

Devasahayam and co-founder Renuka David together own a 62.79% stake in the company. Ascent Capital holds a 37.21% stake in Radiant Cash.

The company plans to use Rs 20 crore out of the net proceeds from the fresh issue to meet its working capital requirements and Rs 23.92 crore for its capital expenditure. It will use the remaining amount for general corporate purposes.

Radiant’s IPO filing comes about two months after bigger peer CMS Info Systems Ltd, India’s largest cash management company, filed its own DRHP to float an IPO.

Radiant Cash Management’s business

Colonel Devasahayam founded the company in 2005. Radiant Cash is an integrated cash logistics company with a presence in the retail cash management segment of the cash management services industry in India. It says it is one of the largest players in the RCM segment in terms of network locations or touch points served as of July 2021.

It operates five business verticals—cash pick-up and delivery, network currency management, cash processing, cash vans /cash in transit, and other value-added services.

Its clients include some of the largest banks operating in India. These include HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, State Bank of India, and Yes Bank. It also provides services to foreign lenders Citibank, Deutsche Bank, Standard Chartered Bank, and HSBC.

The end users of its services include large e-commerce companies, retail chains, non-banking finance companies, insurance firms, ecommerce logistics players, railways and petroleum distribution outlets.

As of July 2021, it provided services across 12,150 pin codes across India covering all districts except the Lakshadweep islands, with about 42,420 touch points serving more than 4,700 locations.

Radiant Cash Management’s financials

The company reported revenue from operations of Rs 221.67 crore for the year ended March 2021, against Rs 248.28 crore for FY20 and Rs 220.9 crore for FY19. Its profit after tax for FY21 was Rs 32.43 crore, against Rs 36.5 crore for FY20 and Rs 25 crore the year before.

The cash pick-up and delivery vertical accounts for more than half its revenue. The total value of the currency passing through its RCM business amounted to Rs 912.22 billion for FY21, down from Rs 1,290.77 billion in FY20 and Rs 1,131.34 billion the year before.

While the company’s revenue and profit fell last year, it cited a report by Frost & Sullivan to say that in FY20 it had the highest EBITDA margin, Return on Capital Employed and Return on Equity among organised players in the cash management services segment in India.

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SIP Performance: PGIM India Midcap Opportunities Fund – Direct Plan.

SIP Performance: PGIM India Midcap Opportunities Fund – Direct Plan.
by 5paisa Research Team 11/10/2021

PGIM India Midcap Opportunities Fund is one of the highly-rated equity funds within the category of Mid-cap fund and has outperformed its benchmark since inception and 1, 3, and 5-year period.

Mutual funds offer an individual to invest with small amounts at regular intervals which is suitable for all individuals with different income levels. Through the option of Systematic Investment Plan (SIP), an investor can invest a sum of money of at least Rs 500 periodically, monthly or quarterly. There is no upper limit specified so you can invest as much as you want.

Every individual has a different type of risk capacity, while his risk appetite changes as an individual grow old. Individuals, who are at an early stage of earning, have a high-risk capacity as compared to mid-earning or pre-retirement and retirement stage investors. So, investors with high-risk capacity can invest the amount in equity-related schemes in their early stage and further, can shift some proportion to debt once they get decent returns from the equity markets.

Now let’s look at the SIP performance of PGIM India Midcap Opportunities Fund which is a mid-cap fund investing in the 101st-250th company in terms of full market capitalization. This fund is outperforming its benchmark in 1, 3, and 5-year periods and since inception its outperforming the benchmark i.e., NIFTY Midcap 100 TRI. All rating agencies such as CRISIL, Morningstar and Value Research have given a five-star rating to this fund. If you had invested just Rs 1,000 every month i.e., Rs 12,000 p.a. from October 1, 2018, till the present date i.e., October 8, 2021, then the worth of investment would have been Rs 80,069 as against the amount invested of Rs 37,000.

Now the question arises, what rate of return the above investment delivers? Let’s look at the same:
 

 

As we can see, in the above calculation if you had invested Rs 1,000 every month for three years, you would have received a 47.56% return. This return is better than a highly rated small-cap fund i.e., Kotak Small-cap fund which delivers 47.15% as of 8th October 2021 in the same time period for the same amount of investment.

Following table depicts the performance of the fund over its benchmark:

  

Top 5 holdings of PGIM India Midcap Opportunities Fund:

Company   

Assets%  

Mphasis  

4.02  

Ashok Leyland  

3.28  

Voltas  

3.13  

Max Financial Services  

3.11  

JB Chemicals & Pharma  

2.93  

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Nifty 50 crosses the psychological level of 18000 mark.

Nifty 50 crosses the psychological level of 18000 mark.
by 5paisa Research Team 11/10/2021

Nifty 50, India’s frontline equity index touched the psychological level of 18,000. Read on to find companies that moved fastest since the low of March 23, 2020.

Nifty today crossed the mark of 18,000 for the first time. Despite the prediction by many analysts and economists that we may see a correction in the equity market, Nifty touched a new high of 18000 in today’s trade.

It was inconceivable for anyone a year back that indices will have such a vertical rise. Since, the low of March 23, 2020, Nifty is up by 136%. Nifty was at 7634 on March 23, 2020, and is now trading at the 18000 mark. Out of 50 constituents of Nifty 50, 27 companies have gained more than 136% and there are 23 companies that have gained less than 136%.

Top 10 Gainers among Nifty 50 since the low of March 23, 2020:

Company  

LTP (Oct 11, 2021)  

Price on (Mar, 23,2020)  

Gain  

TATAMOTORS  

412.7  

66.2  

523%  

HINDALCO  

483.55  

87.9  

450%  

TATASTEEL  

1,310.40  

272  

382%  

JSWSTEEL  

673.6  

144.4  

366%  

WIPRO  

652.4  

170.15  

283%  

BAJAJFINSV  

17,667.70  

4621.05  

282%  

GRASIM  

1,623.75  

433.25  

275%  

TATACONSUM  

817.9  

226.5  

261%  

ADANIPORTS  

739.25  

207.8  

256%  

INDUSINDBK  

1,177.00  

336.45  

250%  

The table shows the gain made by share prices of companies since the lows of March 23, 2020. The top gainer is Tata Motors, whose price saw a surge of 523%. From the lows of Rs 66.2, it is now trading at Rs 412.7. What looks common from the table is that metal companies have gained the most. In the top five gainers, three are from the metal pack. All of them are up by more than 3.5 times. The best performer is Hindalco, whose share price is up by 450%. In terms of house, it looks that Tata Group has gained the most.

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Nifty50 hits 18,000 for first time. Here are seven highlights to know

by 5paisa Research Team 11/10/2021

The Indian economy may still be emerging from the jolt that it was dealt by the lockdowns in the wake of the coronavirus pandemic, but the stock markets seem to be in the sixth gear. 

Just as the country gets into the festival season, with Dussehra, Diwali, Christmas and the New Year around the corner, benchmark stock indices have hit new highs. 

The National Stock Exchange’s Nifty 50 index hit the 18,000-mark for the first time on Monday. The BSE Sensex, too, scaled a new record high and touched 60,442.53 in intra-day trade.

Here are seven key highlights of the day:

1) The surge was led by heavyweight Reliance Industries Ltd as well as banking stocks.

2) RIL gained 1% after it said it has acquired Norwegian renewable energy company REC Solar Holdings for $771 million and also a 40% stake in local solar company Sterling and Wilson Solar.

3) The indexes hit new peaks despite weakness in the IT pack, after India’s most valuable IT company Tata Consultancy Services (TCS) reported disappointing numbers. TCS was down 6%, taking the IT index down more than 4%. 

4) Apart from TCS, the top losers include Wipro, HCL Technologies, Tech Mahindra, Bharti Airtel and Shree Cement.

5) The Nifty auto index was up 2.5% on expectations of a demand uptick in the coming festive season. Tata Motors, which owns the UK’s Jaguar Land Rover, was the top gainer, rising 8.5% after it said that JLR’s orders were at record levels. The stock has risen 23% this month, on top of a 16% rise in September.

6) Apart from Tata Motors, other top gainers were Coal India, NTPC, Power Grid, Maruti Suzuki, Kotak Mahindra Bank, ONGC, Eicher Motors and Bajaj Finserv. 

7) The rupee remained weak, falling 17 paisa against the US dollar to go down to Rs 75.16 to the greenback.

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What is NAV in Mutual Fund? | 5paisa Research

by 5paisa Research Team 11/10/2021

Many factors must be understood before you put your hard-earned money into any investment plan whether you're new to it, or mutual funds in general when starting with a specific financial objective.

If you want to achieve your financial goals, you need to be proficient in financial planning. When investors have a clear financial objective in mind, it makes it easier to select an investment strategy that will help them move closer to that goal.

There are many mutual fund schemes that are differentiated by specific characteristics, for people who are unaware of mutual funds as an investment product.

An investment pool administered by asset management firms collects money from participants who have a similar investment goal and invests it throughout the Indian economy, and this is what exactly mutual funds do.

Mutual funds are expected to have a diverse portfolio since they invest in a variety of money market products, such as debt, G-Sec, and corporate bonds. As a result, mutual funds may help to balance risk.

Why? Because it's very unlikely that all sectors would collapse at once, which means the danger of suffering total losses is much decreased if just one sector goes down.

After making a direct stock market investment, one gets company shares and becomes a shareholder. Unitholders possess shares in mutual funds and are thus referred to as investors.

A fund's net asset value (NAV) and the amount of money each investor has put in to determine the number of units allotted to them (NAV), but there’s a lot that you need to know about what NAV in mutual funds is. Let’s begin right away.

What Exactly is NAV?

An entity’s NAV is its net asset value, which is calculated as the difference between its total assets and its total liabilities. The NAV represents the price per share or unit of a mutual fund or an ETF at a certain point in time.

Investing funds' net asset value (NAV) is calculated by stock market prices for its shares or units (invested or redeemed). Investors often utilize the mutual fund, ETF, or index net asset value (NAV) to find new investment opportunities.

Using the net asset value (NAV), an investor may assess their own assets. You'll need an investing account if you want to put money into any of the previously listed assets.

Key Takeaways for NAV

  • An entity’s or fund's net asset value (NAV) is equal to the total assets less the organization's liabilities.
  • The net asset value (NAV) of a mutual fund, ETF, or closed-end fund is often used to calculate the per-share value.
  • The net asset value (NAV) of a mutual fund is calculated each trading day using the portfolio's closing market prices. NAV may be compared to the book value of a business to see how close it comes.
  • A fund's shares might also be traded at a price other than its NAV.

How is NAV calculated?

The market price divided by the number of shares or units in circulation gives a mutual fund's net asset value The net asset value is what you get when you buy mutual fund units from an AMC/fund house and then sell them back to the AMC/fund house for a specific amount of money. The NAV is calculated by subtracting the current fund liabilities from the total market value and dividing by the number of outstanding shares.

The following is the formula for calculating NAV: 

NAV = (Assets - Liabilities) / Total number of outstanding shares

Net asset value (NAV) varies minute by minute depending on the market performance of the plan during market hours, making it difficult to assess. The net asset value of the mutual fund is calculated based on the closing market price on each market working day.

The Difference between NAV & Equity Shares

During market hours, the price of a company's stock changes almost every second. But for holders of mutual funds, the opposite is true as the investors do not exchange their units in real-time. Instead, at the end of the day, mutual funds get their NAV based on the market performance of the scheme's assets and liabilities.

Now that you know what mutual fund NAV is and how it's calculated, you are surely a better investor today than you were yesterday. However, while selecting a mutual fund for your investment, you must also consider a number of other factors.

These include looking at the fund's historical performance, seeing whether it's outperforming its peers, and seeing if it's outperforming its benchmark.

Do your homework and seek a plan that has the same investment goal as yours before investing. As a novice investor, it's best to get the advice of an experienced financial adviser about the various mutual fund plans provided by various fund companies.

So, how Relevant is NAV for Investors?

If you just look at a mutual fund's NAV, you're missing out on important information. NAV does not represent the fund's future prospects. In fact, the sole data point that NAV delivers is the price at which mutual fund units may be purchased or redeemed is all that it is you need to keep in mind about NAV.

When investing in a mutual fund scheme, you may not give much thought to the fund's NAV (net asset value). However, all your investment choices should be based on your risk appetite and time horizon as well as your investment objectives.