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DISCLAIMER

JainMatrix Investments based in Bangalore (JMI) is an independent equity research firm started by Punit Jain. Content in this website should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. Investors should consult their financial advisers if in doubt about whether the product is suitable for them. JainMatrix Investments has been an equity investment adviser commercially since Nov 2012, and is a SEBI certified and registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to him at punit.jain@jainmatrix.com

GREAT INVESTING WISDOM / 23 lessons I learned

23 lessons I learned on my path from $0 to $2M in 8 years / Mar 14, 2021

Here is an excellent tweet. Thanks Danny Baldus-Strauss @BackpackerFI. I’ve added my commentary.

Danny Baldus-StraussMy Thoughts
1. “Play long term games with long term people” @naval Anything that provides instant gratification is probably bad for you and your wealth. Anything that provides delayed gratification is likely good for you. There’s no such thing as “get rich quick” or “overnight success”  
Truly agree.
2. “Focus on the $10K+ questions, not the $5 ones.” @ramit Spend time focusing on the big decisions like asset allocation & building good credit rather than the $5 Starbucks decisions. Set an hourly rate for yourself. Outsource everything that’s under that rate to save time.  
Lets say you earn Rs 60,000/month. That’s 2,000/day or 250/hour. Outsource any work or task if it can be done for less than 150/hr.
3. Invest early and often. Time in the market > timing the market Consistency is the name of the game. Automate everything. Sometimes investing can be boring and that’s a good thing. Early on, investing more and often is far more important than yield or portfolio performance.  
In investing, smaller and earlier is better than later and more.
4. Learn to avoid lifestyle inflation. You really do need less than you think, trust me. Get out in nature, and you’ll see. Freedom + time are worth much more than nice cars and clothes. Keep your lifestyle flat even as you get promoted and make more. Invest the difference.  
5. You can get rich at your job, but you only get wealthy at home. 9-5s build necessary cash flow to consistently invest. But your employer isn’t responsible for your wealth building, you are. You are the director, try to do things every day that build your future.
 
6. Live in the present, while still building and planning for the future. The point of having $ is to not have to worry about having $. If you’re miserable while building wealth, you’ll be miserable when wealthy. If $ is all you think about, you’ll miss the present moment.  
Or Rupees
7. “You’ll never get wealthy renting out your time” @naval  9-5s can be great and necessary tools for building financial independence. But have an exit plan if you truly want freedom over your time and energy. For every 9-5, you have an entrepreneur to thank for your job.
9-5 is important to learn skills. To do things. But you are doing them for others. At some point, you should start doing things for yourself.
8. “Cut expenses in areas you don’t care about so that you can spend extravagantly in areas you do” @ramit You don’t need to live frugally your entire life to become wealthy. Cut out what doesn’t bring you immense joy and don’t feel guilty for splurging on things that do.
 
9. “Every action is a vote for the type of person you wish to become” @JamesClear  Your net worth is a lagging indicator of your financial habits of the past few years. Start now by “placing votes” every day for the financial future you desire. Habits compound just like your $.
 
10. “Money’s greatest intrinsic value is its ability to give you control over your time” @morganhousel Time and freedom is what you’re after. Nice things, looks, social validation … they all fade away. Time does too, but at least you can control it through financial freedom.
 
11. Generating income is more important than cutting expenses, but it’s a balance. Cutting expenses has a floor, you can only cut out so much. Generating income has no ceiling. Promotions, side gigs, investments, and business ownership have no limits, only you.
Stock market investing too has no ceiling. Rs 500 invested in 5 stocks can lose you Rs 500. They can also gain you Rs 10,000 (over a long time).
12. Mind, body, and business are connected. Wealth starts in the mind. Being broke is also a mindset and identity. Healing what’s in your mind, becoming aware of your limiting beliefs and toxic thoughts, & taking care of your body, spills over into business and wealth.
 
13. Be an optimist. Being a pessimist rarely lines your pockets. This doesn’t mean it’s ok to be reckless and ignore risk. But envision a better future and invest in it. The point of maximum fear is the point of maximum opportunity. “Be greedy when others are fearful”.
This is so important. Long back I used to be hopeless and negative. But positivity can be learned and practiced. I do it.
14. Invest in your greatest asset – You! I’ve invested tens of thousands in my own education, retreats, and men’s groups. The ROI has been incalculable. Don’t be cheap when it comes to your self-improvement. You are your only asset that is truly recession proof.
Always keep learning. Asking. Reading. And changing.
15. Money is made in the waiting. Sometimes good investing can be boring. Sometimes it’s more about the stomach than the brain. Sometime it’s more about inaction than action. Tune out the noise and play the long game.
 
16. Volatility is not the same as risk. It’s the price you pay to outperform. And it’s a mechanism that “transfers wealth from those who can’t handle it to those that can” @BrianFeroldi
 
17. “Focus on the future – not as in the next year, or even 3 years, but as in the next decade, or even two decades. Focus on the world-changing trends that will occur, irrespective of recessions, boom and busts, interest rates, even wars.” @OphirGottlieb
This is hard. Its uncertain. But so important.
18. “Only when the tide goes out do you discover who’s been swimming naked” @WarrenBuffett  It’s only after crashes and bubbles pop that people realize how over-leveraged they were. It’s only after one loses a lot of money that they realize how much needless risk they took.
It surely takes several cycles of boom and bust to really get this.
19. The way to create life changing returns is to hold onto your winners. You want to be in great companies in the first inning, out by the 7th. Pay up for quality and only invest in the very best businesses.
True about Long Term Investing.
20. Tune out the noise Financial media makes money on your fear. People on TV or on social media have very different backgrounds, risk tolerances, time horizons, and amounts invested than you. Take it all with a grain of salt and stick to YOUR plan and what works for YOU.
Note that People on TV or SM may have very different incentives than you. Why should they help you become wealthy? Are your objectives aligned?
21. Realize that stocks take the stairs up and the elevator down. Risk can come in a flash when you least expect it. So use the good times to plan for the bad times. Expect the best, but prepare for the worst.
 
22. “You do not rise to the level of your goals, you fall to the level of your systems” Goals help with process, but it’s your systems that allow you to make real progress. Set up your investing rules, create a non-negotiable morning routine, automate your finances.
 
23. “People who are right a lot of the time are people who often change their minds” @JeffBezos  Don’t get married to your stocks or portfolio. Embrace conflicting opinions to understand the other side. Humility is key. It’s ok to be wrong, but staying wrong is even worse.
Its true, of course. But I’m still grappling with this. This also means that whatever I know is always up for discussion, and can also become wrong sometime.

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

An Investments Discussion

Punit Jain was interviewed by a group of MBA students on aspects like – How JainMatrix Investments was started; the current investment outlook; what are the skills and competencies that one should posses – as an investor, and as an equity analyst; how to stay motivated; and about JainMatrix Investments.

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a Registered Investment Advisor (RIA). Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

Happy Holi – and we present the new, colourful Satellite Portfolio Mar 2021

We wish our readers a very safe and happy Holi !! 

On this occasion, we are proud to launch our refreshed – Satellite Model Portfolio.

JainMatrix Investments has had super success with Model Portfolios over the last 9 years. Our experience of researching over 100 firms in this period has thrown up a number of exciting opportunities.
Particularly in this post Covid economy, we see several exciting opportunities from beyond the CORE – LC or MSC model portfolios.



With this, we have relaunched the Satellite Model Portfolio. This has the following characteristics:It has 8 High Quality Investment Ideas with a 6-12 months minimum Investment Horizon.

This is an independent, Multi-Cap Portfolio with firms from different sectors.

This Opportunistic portfolio is chosen on the basis of deep fundamental research and High Conviction by the JainMatrix Research Analyst.

As Subscribers, you will receive the list of 8 stocks and introduction notes outlining them and providing the key reasons why we like them. We will also monitor and maintain this Portfolio and guide you on your Investment in it. 
In addition Subscribers will receive exclusive access to high quality investment reports, including

  1. Market Trends and event notes
  2. IPO/ FPO/ OFS/ NFO reports based on opportunities.
  3. Periodic updates on the Satellite Model Portfolio with any change in stocks if required.
  • The subscription will be initiated with a welcome call for introductions and Service detailing.  
  • Email and WhatsApp based queries can be addressed to JainMatrix Investments on the recommended stocks, portfolios and Investment Decisions
  • The Satellite Model Portfolio Service is a part of the Investment Service – Core Portfolio
  • Pricing can be checked on Pricing and Payment Options page. 

Our Investment Service (Core Portfolio) has fetched outstanding results over this period. (See Track Record).
Here’s to your Happy and profitable investing.

Regards,
Punit Jain 
JainMatrix Investments, Bangalore

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JM at punit.jain@jainmatrix.com.

The Indian Stock Markets’ 20 year Digital Transformation

Indian Stock Markets

It was about 20 years ago. I asked a relative about the stock markets. I got mixed stories.

On one hand 2-3 of their investments had done well and doubled in a few years.

On the other hand there were stories of (the Challenges)

  1. share values falling to almost zero, there were missing promoters or company locked in litigation
  2. difficult stock brokers. To know a good broker was rare. They were bullies, took your share and sold it and gave you money after a month; the transaction was opaque; you would be lucky if you only paid 4-5% commission on transactions.
  3. The stock market was famous for scams aplenty. The Harshad Mehta scam (1992), the Ketan Parekh Scam, the Satyam Scam, Saradha Scam and NSEL Scam, among other swirling stories of manipulation and operator driven shares naturally made outsiders wary. BSE had been in existence for a long time, and this was the nature of the market.
  4. A stock market transaction had a high degree of difficulty and uncertainty.

But it had piqued my interest. So a few years later when a new private bank offered me a website based stock broking account as an add on to the savings account, I went ahead and opened it.

Over the next few years, we saw a number of Equity Market Changes:

  1. The NSE came into existence with a digital trading offering
  2. Equity Shares began getting dematerialized. Once they were in Demat form, trading could be on the digital platform, quickly and cheaply
  3. SEBI as regulator began controlling and monitoring the sector’s progress
  4. A number of stock brokers came into existence, and with competition, broking commissions became reasonable.
  5. BSE and NSE had good digital backbones, so trading moved online
  6. The Mutual Fund industry took off, offering a simple entry level product for new investors
  7. Soon enough, the Equity Advisory, PMS and even AIF industries and products became available.

The digital transformation has dramatically changed Stock Market access, monitoring and information flow.

With these Equity Market industry changes, the nature of services available to the customer changed. The above Challenges were addressed:

  1. Share prices are still volatile. Some firms do fail/ go bankrupt. However, it does not happen in an information vacuum. We can track companies better today. Conversely, excellent companies do see good share price appreciation.
  2. Stock broking accounts can be opened easily. Transactions are easy, robust and transparent. Commissions are lower and competitive. Stock brokers are now much better, customer friendly and professional.
  3. Our Securities system has improved. The digital transformation has dramatically changed access, monitoring and information flow. Every scam perhaps made the system stronger eventually, as the loopholes found were blocked, (and hopefully that problem should not happen again). Of course there is no guarantee that there will not be another scam, but the stock market is a much safer place now.
  4. A stock market transaction is easily done now on websites, accessible from your PC, laptop, by phone call and even using mobile apps.

So a lot of people from my generation were afraid of the stock markets. The stories they heard from their friends and relatives were scary. Some people lost a lot of money and swore to never touch the sector again. However my message to them is:

Today the Indian Stock Markets are a very good Wealth option to all.

Its not too late. Take the plunge, and explore the stock markets for your wealth protection and appreciation.

To substantiate this, I present a simple 20 year graph of the SENSEX index

In this graph, one can see the performance of a Fixed Deposit (at 8% interest) versus the Sensex, in both absolute value and in the form of multiples.

Real Estate

The traditional Indian Wealth option has been Real Estate. People bought Land, apartments and commercial property, and waited for it to appreciate. Or developed it, and very often reaped excellent returns. For many years it appreciated very well.

Then came a couple of changes in the real estate sector:

  1. GST was brought in to track and tax real estate transactions
  2. RERA Act was brought in to make builders professional, accountable and transparent. It has been changing the way they work. Customers may finally have some protection or recourse now from builder slippages. However several builders could not change and adapt to the new rules, and may have scaled down or even closed.
  3. Several initiatives against black money have made real estate transactions more ‘white’ than they have ever been in the past.
  4. Today even after some correction, we can see that a buy v/s rent decision, for a city apartment, is still unbalanced. The EMI for an apartment purchase (with loan) is much higher than the rental cost for a similar property. In most mature markets abroad, the EMI and Rent are close or in some balance with each other.
  5. All this has resulted in a Time and Price correction in the real estate sector across categories. We can see that today this is still playing out. As a result:

Real Estate is no longer the default Wealth option it once was. Do try other options.

In 2020, 55% of adults in the United States invested in the stock market. Today in India, this is just 2%.

This is not going to change overnight for India, but as awareness builds, individuals must try and nibble at stock markets and educate themselves on its potential.

I have managed to do OK with my website based stock broking account. I became a full time investment professional in 2012. My firm JainMatrix Investments offers an equity advisory service to help invest in the stock markets. See our SERVICE DETAILS section.

Do revert to me if you have any questions on above article.

Regards,

Punit Jain

Founder, JainMatrix Investments

Glossary: I often use standard terms or shortforms so here is some explanation:

  • PMS – Portfolio management service
  • AIF – Alternative Investment Fund
  • EMI – Equated Monthly Installments, as in repayment for a loan
  • GST – Goods and Services Tax
  • RERA Act – link

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

India’s Hot Sectors – Ports, Hotels, and IT Services

4th Mar 2021

At JainMatrix Investments, we want to think positive, and get back on Track, so here is what we’re reading:

  1. Hot Sectors – a) Ports – $82b being invested in ports (M’Control)
  2. Budget 2021 lays foundation for $5 trillion economy – M’Control – 04th Feb
  3. India pivots to top ESG nation through Budget – ET – 04th Feb
  4. Towards $5 T: What is holding India back? – FinExpress – 07th Jan
  5. India should follow agri – led industrial growth model – BT – 07th Jan
  6. NBFC sector rebounded in six months of FY21, says RBI – LiveMint – 29th Dec
  7. Power sector limping back to normal – ET – 29th Dec
  8. Digital is the way forward in a post-Covid world – LiveMint – 16th Dec
  9. Disinvestment will now gain momentum – ET – 16th Dec
  10. India may grow at 11% in 2022, says N Chandra – M’Control – 13th Dec
  11. Six early trends in financial sector – M’control – 09th Dec
  12. View: How tech makes it possible to solve corruption – ET – 09th Dec
  13. Indian economy back on track in Q2 – FinExpress – 20th Nov
  14. India’s health spend low, needs to be made priority – BS – 20th Nov
  15. GST collections at 8-month high – IndianExpress – 05th Nov
  16. Economy to reach pre-Covid growth by fiscal-end – BS – 05th Nov
  17. COVID in India on recovery – BS – 05th Nov
  18. India reopens its doors, restores most visas – ToI – 22nd Oct 
  19. E-tailing to become USD 200-bn by 2025: Report – ETNow – 22nd Oct 
  20. FM’s consumption boost to turbocharge e-comm – BS – 13th Oct 
  21. Low finance rates leading to increased home sales – ET – 13th Oct 
  22. Gig economy to lead 80% of blue-collar jobs – BS – 13th Oct 
  23. How robust is India’s recovery? – IndianExpress – 5th Oct 
  24. Covid may have peaked in September – ToI – 5th Oct 
  25. Digital payments: Pandemic does what demon couldn’t – ET – 01st Oct
  26. Healthcare Reforms – National Med. Commission started – (ET) – 25th Sept 
  27. Export show signs of a revival – (LiveMint) – 25th Sept 
  28. Economic recovery sustains momentum through first week of Sept – (ET) – 10th Sept 
  29. Rice, sugar push up Q1 farm exports by 23% – (ET) – 10th Sept 
  30. IPL set to kick-start consumption cycle – (LiveMint) – 30th July 
  31. Unlock 4: Metros to start, no lockdowns outside containment zones – (LiveMint) 30July 
  32. Mfg. policies of govt to help firms shift base to India: ICEA – (BS) – 26th Aug 
  33. RBI at end of rate cut cycle, govt must play role for revival: Economists – (BS) – 26th Aug 
  34. Railway earnings, Power generation: weekly indicators about economy – (BS) 18th Aug 
  35. Import embargo plan for 101 defense items to boost indigenisation(FE) 18th Aug 
  36. Must improve ease of business to be a mfg. hub: Industry captains– (ET) – 07th Aug 
  37. Here’s what Indians have been spending on during the pandemic – (ET) – 07th Aug 
  38. Redesign, rethink whole economy for success in post-Covid world – (ToI) – 05th Aug 
  39. Joblessness at pre-covid level as India unlocks more – (LiveMint) – 05th Aug
  40. Expect V-shaped recovery over next few months: Ridham Desai – (ET) – 30th July    
  41. A major change is shift in format: Panel on education – (ET) – 30th July 
  42. Hiring optimism grows as demand gathers pace – (LiveMint) – 20th July 
  43. IT may see surge in offshoring biz – (LiveMint) – 20th July
  44. The current wave of rail reforms is actually “historic” – (ET) – 17th July 
  45. Mapping India’s Post-Covid Capex Recovery – (BQ) – 17th July 
  46. View: Never a better time than now to build for India – (ET) – 13th July 
  47. India at the cusp of a huge explosion of demand: Panasonic CEO – (ET) – 13th July
  48. Record surge in sales of vacuum cleaners, dishwashers, DIY products – (ET) – 07th July 
  49. Labour shortage, factories go the extra mile to woo migrant workers – (ET) – 07th July 
  50. PMI, GST mop-up point to a pickup in economic activity – (LiveMint) – 02nd July 
  51. India Inc’s big bet on Bharat saving the day – (LiveMint) – 02nd July
  52. Green shoots in Bharat lead country’s economic revival – (LiveMint) – 30th June 
  53. Opinion | The onus is on us to conquer fear – (LiveMint) – 30th June 
  54. Not two years, 200 projects finished during lockdown: Railways – (ToI) – 29th June 
  55. Bankers in India are more productive working from home – (LiveMint) – 29th June 
  56. Global equity markets are likely to continue their up move – (BizStd) – 27th June
  57. Migration is reversing: Trains from UP, Bihar run full – (ToI) – 27th June 
  58. Indicators of economic recovery in India – (EcoTimes) – 24th June
  59. Get India fully back to business, says India Inc – (EcoTimes) – 24th June
  60. Post-crisis, increase integration with global economy – (EcoTimes) – 20th June
  61. Kharif planting rises 40% on strong monsoon start – (EcoTimes) – 20th June 
  62. Maruti Suzuki’s model can make India a global mobile mfg hub – (EcoTimes) – 18th June 
  63. Indian economy to recover very fast: HDFC Bank CEO – (EcoTimes) – 18th June 
  64. A COVID-19 workplace readiness tool for organisations – (IISC) – 17th June 
  65. It is time to be a little positive on financial space – (EcoTimes) – 17th June 
  66. Exports bounce back to last year’s levels in June – (EcoTimes) – 16th June 
  67. Unemployment rate declines sharply as India exits lockdown – (Livemint) – 16th June 
  68. Local trains, Mumbai’s lifeline, resumes services – (Livemint) – 15th June 
  69. Construction work restarts at over 100 projects in NCR – (EcoTimes) – 15th June 
  70. Govt urges use of bicycles, EVs to mitigate risks – (EcoTimes) – 13th June 
  71. Digital is the Key to Unlock this Disruption’ – (EcoTimes) – 13th June 
  72. ‘Put the money in Indian stocks, forget till 2025’ – (EcoTimes) – 12th June 
  73. Loans are getting cheaper, HDFC cuts lending rate – (EcoTimes) – 12th June
  74. View: Replacing China imports possible, even in EVs – (EcoTimes) – 11th June 
  75. ‘Time for Bold Investments, not conservative decisions’ – (Livemint) – 11th June 
  76. After steep falls, June exports show signs of improvement (EcoTimes) – 10th June 
  77. Partial lockdown lift gives work to 21 million; not salaried class (EcoTimes) – 10th June 
  78. Covid-19 is no plague or cancer; fear psychosis unnecessary (EcoTimes) – 09th June
  79. Import-intensive spending likely to feel the pinch – (EcoTimes) – 09th June 
  80. Getting growth back on track is non-negotiable: Uday Kotak (EcoTimes) – 08th June 
  81. Post Covid Opportunities – Global Work Force (Nasdaily) – 8th June
  82. Impetus To Realty Demand, But More Needs To Be Done (NDTV) – 06th June
  83. Collections improving, demand picking up in rural India (EcoTimes) – 06th June
  84. View: How to get Make-in-India to work this time (EcoTimes) – 05th June 
  85. Effects of Unlock 1.0 as new guidelines come into play – (IndianExpress) – 05th June 
  86. Cabinet approves amendment of Essential Commodities Act (Livemint) – 04th June 
  87. Goods movement pickup in May signals economic revival (Livemint) – 04th June 
  88. PM’s First Major Address On Economy After Unlock 1.0 (ndtv.com) – 03rd June 
  89. Five Indian states are leading in the recovery from lockdown – (EcoTimes) – 03rd June
  90. India’s 3-phase ‘Unlock’ Plan starts at last (ToI) – 1st June 
  91. Supply to improve post-unlock 1.0; demand pickup may be slower (Livemint) – 1st June 
  92. Over 1.65 lakh people traveled in 2,198 flights since Monday: Puri (Livemint) – 30th May 
  93. The global supply chain is being reconfigured, India can gain (EcoTimes) – 30th May
  94. Nearly 65,000 cured from COVID-19 in India, 42% recovery rate (Livemint) – 29th May 
  95. An India lockdown survey: The good, bad and the ugly (Eco Times) – 29th May 
  96. How is India doing against COVID19 in 3 graphs – 28th May
  97. Covid-19 proves the importance of telecom in India (Eco Times) – 28th May
  98. India runs on Rails: MORE TRAINS BASED ON DEMAND (Fin Expr.) – 27 May
  99. MY TAXI HAS VEHICLES WITH PPE KITS, CURTAINS (Eco Times) – 27th May
  100. COVID-19 Is Fast-Tracking Digital Transformation – 26th May 
  101. HOW DHARAVI IS TACKLING THE COVID INFECTION RATE – 26th May 
  102. AFTER 2 MONTHS, FLIGHTS ARE BACK – 25th May
  103. HOW INDIA INC. GOES BACK TO WORK, LEADERSPEAK (Eco Times) – 25th May
  104. A THIRD OF NSE MFG FIRMS BACK AT WORK (Eco Times) : 23rd May
  105. MAHINDRA FACTORY – COVID CARE READY – 23rd May
  106. We actually wrote about the need for a lockdown in Mar 2020 – CALL IN THE INDIAN ARMY TO HANDLE THIS EMERGENCY – 20th March

We have been tracking this infection since March when it came to India and we had to declare the lockdown. Today, 6 months on, we are at a different phase in the economy. We have to understand that this virus will not go away, it is we who have to adjust to it. Even as we maintain social distancing, and wear masks, and wash hands regularly, the important thing now is to dive back into business and achieve some semblance of normalcy.

Regards,

Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain and JM has no ownership or known financial interests in any company mentioned in this note. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

Indian PetroTaxes, the Dharam Sankat – A Solution

Introduction

In this public interest article, JainMatrix Investments ideates on the Oil & Gas sector. In India, currently the retail prices of petrol & diesel are at all-time high. On 16th Feb’21, petrol cost ₹ 89.29/liter in Delhi, while diesel cost ₹ 79.70/L. In some parts of India, like Raj. and MP, petrol crossed the ₹100/L mark for the first time. This is of concern to the retail consumer. There is also a cascading effect of diesel prices impacting transportation, and truck rental and bus / taxi prices are rising.

Background

These products are not covered under GST, which has set tax slabs. The price build-up of petrol can be well understood from Fig 1. Govt. of India (GoI) has increased taxes on petrol & diesel over 5 years, to raise revenues, discourage excessive use & promote usage of environment friendly Electric Vehicles, see Fig 2.

Fig 1 – Price Build up of Petrol, Fig 2 – Excise and VAT (Source ToI)

Volume and Crude price volatility: Due to pandemic effect, the sales volume of diesel reduced by 10 M tons compared to the previous year. Crude prices also fell steeply as global demand fell, see Fig 3. To meet the budgeted FY21 Tax collection of ₹ 16.35 lakh cr., GoI had to raise excise duty on petrol by ₹13/L and on diesel by ₹16/L in two tranches. By Sept-Oct 2020, crude prices rose again, and Indian retail prices have risen to new highs.

Thus the problem is that collection of taxes (state VAT & center’s Excise Duty) is fixed by GoI assuming fixed base prices & sales volume of petrol & diesel. These 2 main factors contribute to petro price volatility: 1) Crude prices 2) Sales volumes.

The Finance Minister has referred to this situation as a ‘Dharam Sankat’. We have a Suggestion.

Fig 3 – Crude Prices (Source: TradingView)

Suggestion

  • This problem can be resolved by having monthly resets of Excise and VAT from petrol & diesel.
  • Thus the Union Excise Duties budget of ₹ 3.61 lakh crore (assumed from petrol & diesel) can be taken as ₹ 30,083 cr. /month. Similarly states’ VAT.
  • Every month, the VAT and Excise charges per liter can be modified to meet the monthly budget, based on last month’s collections, and petro sales volumes. Any monthly variance of collections from budget can be rolled over and made up in next month, so that the budget is achieved.
  • Naturally the states and center need to coordinate for the monthly tax reset task. Perhaps the infra is already in place, as PSU firms change prices rapidly when crude prices change.

Benefits

  • This system allows an auto correction of tax levels – excessive tax collection one month results in lower taxability next month so that over 2 months the budget is maintained. And vice versa.
  • As the Indian economy recovers, we feel that petro product consumption volumes will rise. The above system will trigger lower per liter prices in this scenario.  
  • It’s important that the GoI does not excessively tax petrol and diesel, and stay within budget, while also recognizing that petro products are an important way for GoI to control deficits post the covid year.

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. JM has no known financial interests in any of these firms. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JM at punit.jain@jainmatrix.com.