Tag: JainMatrix Investments

Launch of the JainMatrix Satellite Stocks Basket – A ValuePack

Dear Readers,

We are glad to announce we cross 5 years since we started our Investment Service.
On this occasion, we are proud to launch a new service – The Satellite Stocks Basket.


JainMatrix Investments has had super success with the LC and MSC Stocks Basket over the last 5 years. Our experience of researching over 100 firms in the last 3 years has thrown up a number of exciting stock finds.
Given the recent environment changes, we re-evaluated these firms (outside of LC and MSC) and picked the best opportunity 7 firms in terms of projected stock performance to create the Satellite Stocks Basket.

This has the following characteristics:

  1. It has 7 High Quality Investment Ideas with a 2 to 2.5 year Investment Horizon.
  2. This is an independent, Multi-Cap Portfolio with firms from different sectors.
  3. 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 7 stocks with 2.5 years Target prices 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 Stocks Basket Service is a ValuePack subscription for 1 year
  • Pricing can be checked on Pricing and Payment Options page.
  • Its an independent ValuePack offering for new investors. For bigger investors it can be the satellite portfolio with innovative new ideas.

Take advantage of the Fall of the markets of Feb-Mar 2018 and invest in this high potential Satellite Stocks Basket. 

JainMatrix Investments is a boutique Investment Advisory firm for Indian stock markets. Our original equity research identifies investment target firms with high conviction, and the easy to read reports make investing simple. The research process is thorough, and the opinions independent, honest and direct. And sharply focused on investment returns and wealth building for the long term. Our subscribers trust us to provide stock entry and exit calls, tracking, guidance and personal support.
We have provided excellent advisory services for over 5 years; Our Investment Service (Core Stocks Basket) 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 service and related documents have been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. These documents are 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. 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 (SEBI Registration No. INH200002747) 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.

H.G. Infra IPO – An Exciting Road Ahead

  • Date 23rd Feb 
  • IPO Opens 26-28th Feb with price range Rs. 263-270
  • Small Cap: Rs. 1,760 cr. Mkt cap
  • Industry – Roads Construction
  • Valuations: P/E 32.9 times TTM, P/B 3.7 times (Post IPO)
  • Advice: SUBSCRIBE 

Summary

  • Overview: HGI is a Jaipur based infrastructure construction, development and management firm with a focus on road projects, including highways, bridges and flyovers.
  • Revenues and profit for FY17 were Rs. 1,059 cr. and Rs. 53 cr. HGI’s revenues, EBITDA and PAT grew at 34.3%, 27.5% and 37.0% CAGR in 5 years.
  • HGI has a good 5 years performance where it has emerged as a rising star. The healthy order book, roster of completed roads projects and fair financial controls are impressive.
  • At a P/E of 32.9 times (adjusted post IPO), the valuations of the IPO appear to be high. However earnings growth is likely to be at a faster pace due to reduced interest costs, better efficiencies and sectoral traction. Good track record, robust financial performance, sectoral tailwinds and an experienced management team makes this IPO attractive.
  • Key Risks: 1) Project execution delays 2) Labor unavailability 3) Intense competition.
  • Opinion: Investors can SUBSCRIBE to this IPO with a 3 year perspective.

Here is a 5 minute video on HG. Infra Engineering IPO.

Here is a note on H.G. Infra Engineering (HGI) IPO.

IPO highlights

  • The IPO opens: 26-28th Feb 2018 with the Price band: Rs. 263-270 per share.
  • Shares offered to public number 1.71 cr. The FV of each is Rs. 10 and market lot is 55.
  • The IPO will raise Rs. 462 cr. by selling 26.26% of post IPO equity. The offer will be completed via an Offer for Sale (OFS) of Rs. 162 cr. and also by issuing fresh shares of Rs. 300 cr.
  • The promoter group owns 100% (no private equity ownership) which will fall to 73.7% post-IPO.
  • The selling shareholders are Hodal Singh, Harendra Singh, Vijendra Singh and Girish Singh of the Promoter family. They are selling 8.85% of their pre-IPO stake in HGI and are only part exiting.
  • The net proceeds from fresh issue of shares will be utilized as follows:

Exhibit 1 – IPO proceeds

  • The IPO share quotas for QIB, Non Institutional Buyer (NIB) and Retail are in ratio of 50:15:35.
  • The unofficial/ grey market premium for this IPO is Rs. 20-25/share. This is a positive.

Introduction

  • HGI is a Jaipur based infrastructure construction and development firm with a focus on road projects like highways, bridges and flyovers. Their main segments are (i) providing engineering, procurement and construction (EPC) services on a fixed-sum turnkey basis and (ii) EPC work for components of projects, primarily in the roads and highway sector.
  • HGI’s FY17 revenue, EBITDA and PAT were Rs. 1,059 cr., Rs. 124 cr. and Rs. 53 cr. resp.
  • HGI has also currently undertaking 2 water supply projects in Rajasthan on turnkey basis which includes the designing, construction, operation and maintenance of the project.
  • HGI is active across various states like Rajasthan, UP, Haryana, Uttarakhand, Maharashtra and AP. During the last 5 years, HGI has completed 13 projects above the contract value of Rs. 40 cr. in the roads and highways sector aggregating to a total contract value of Rs. 1,675 cr., which included construction, improving, widening, strengthening of 2 and 4 lane highways, construction of high level bridge and of earthen embankment, culverts and cart track underpasses.
  • As on Nov 30, 2017, HGI had 21 ongoing projects in roads & highways which includes construction, improving, widening, strengthening, upgradation and rehabilitation of 2, 4 and 6 lane highways, construction of high level bridge and construction of road network. This order book was Rs. 3,585 cr.
  • HGI is pre-qualified to bid independently on an annual basis for bids by NHAI (National Highways Authority of India) and MoRTH (Ministry of Road Transport and Highways) for contract values of up to Rs. 806 cr. based on HGI’s technical and financial capacity as on FY17.
  • HGI’s public sector clients include NHAI, PWD, MES and Jaipur Development Authority. They have also executed road construction contracts as a sub-contractor for private sector clients such as Tata Projects and IRB-Modern Road Makers.
  • HGI’s equipment base comprised of 1,064 construction equipment. Also HGI has employed 2,447 employees which includes 2,130 skilled workers like engineers and managers.
  • As of Nov 30, 2017, HGI had a total order book of Rs. 3,709 cr., consisting of 21 projects in the roads and highways sector, 4 civil construction projects and 2 water supply projects. See Fig 2.

jainmatrix investments, HG Infra IPO

Fig 2 – HGI’s order book by state and client type

  • Leadership is Harendra Singh (CMD), Vijendra Singh (Whole Time Director) and Rajeev Mishra (CFO).

News, Business Model and Strategies of HGI

  • Some impressive completed projects are 1) Yamuna Expressway in Noida, UP, 2) 4 laning of Jaipur-Tonk-Deoli project (Raj.) 3) Construction of Kuberpur to Fatehabad Road, Agra-Inner Ring Road (Phase-I) Agra, UP and ongoing 4) Rehabilitation and Up-gradation of Amravati-Nandgaon-Morshi-Warud-Pandhurna NH-53 (Mah.)
  • HGI’s business strategies are:
    • To focus on the EPC business in roads & highways sector and enhance execution efficiency.
    • Selectively expanding its geographical footprint in states such as Gujarat, Punjab and MP, which have favorable geographic and climatic conditions, other than Rajasthan and Mah.
    • Selectively explore hybrid annuity model (HAM) to grow its project portfolio.
  • Business Model: HGI follows a evaluation process during pre-bidding stage, which involves technical surveys, feasibility studies and analysing the technical and design parameters and the cost involved in undertaking the project. This approach enables them to bid at competitive prices and successfully win projects. Once they win a bid, their focus is to ensure high quality of construction during execution, as a result of which, they are able reduce maintenance and repair costs and realize higher margins during the operation & maintenance stage.

Roads Infrastructure Industry Outlook in India

  • India has the 2nd largest road network in the world, aggregating to 61 lakh kms. Roads are the most common mode of transportation and account for 86% of passenger traffic and 65% of freight traffic. In India, national highways with length of 1.04 lakh kms constitute a mere 1.7% of the road network, but carry about 40% of the total road traffic. On the other hand, state roads and major district roads at the next level carry another 60% of traffic and account for 98% of road length.
  • In FY16, the road transport sector contributed 3.2% to the Indian GDP.
  • Road transport is the most widely used mode of transport for freight and passengers. In Fiscal 2017, 64.5% of freight was carried by roads as compared to railways, from 56% in FY2010.

Key growth drivers for road sector are as follows:

  • Rise in GoI investments, reforms and higher budgetary support. CRISIL Research expects investment in road projects to double to Rs. 10.7 tn. over the next 5 years. Investment in state roads is expected to grow steadily, and rise at a faster pace in case of rural roads, on account of higher budgetary allocation to Pradhan Mantri Gram Sadak Yojana (PMGSY) since FY16. The GoI has approved the Bharatmala programme under which 53,000 kms of national highways have been identified to bridge critical infrastructure gaps. Bharatmala will give the country 50 national corridors as opposed to 6 at present and Phase I will be implemented from 2017-18 to 2021-22.
  • Policy changes to drive execution of national highway projects. Execution of national highway projects declined in the past two years on account of the private developers’ weak financials and unwillingness of lenders to provide further credit to infra companies. To clear this backlog, NHAI terminated projects and accordingly, work on 5,500 kilometers of length was stalled. To put execution back on track, the NHAI re-awarded almost 1,000 kilometers of the terminated projects.
  • New region-specific initiatives to drive growth in road network. The GoI has taken new initiatives to build state roads. MoRTH has set up the National Highways and Infra Development Corp which will award national highway projects in border areas and in the north-east states. Apart from these projects, the Bharat Mala programme has also been proposed to build new roads along the border.
  • Between FY18 and FY22, it is expected that an investment of Rs. 4.30 tn. would be made in the next 5 years for national highways, up 2.9 times compared with the past 5 years. Notably, the government will account for more than half of the investment.

Financials of HGI

  • HGI’s revenues, EBITDA and PAT grew at 34.3%, 27.5% and 37% CAGR in 5 years, see Fig 3.
  • The margins fell significantly in FY14-15 impacting profitability, because of rising commodity prices (for fixed-price contracts) and idling of capacities as execution could not begin on many new projects. The slowdown was common across the industry.

jainmatrix investments, HG Infra IPO

  • Fig 3 – Financials
  • HGI had a RoE of 30.3% in FY17 while the 3 year average RoE stood at 25.7% (FY15-17). The RoCE stands at 36.4%. These return ratios are high.
  • HGI has been Operational Cash flow positive in all the last 5 financial years from FY13-FY17. This is a positive. Over FY13-15, HGI repaid its borrowings and funded CAPEX from internal accruals. However since FY16, CAPEX rose sharply and were funded by borrowings. See Fig 4.
  • The current D/E ratio is 1.72:1 which is high which will fall to 0.70 post IPO.

jainmatrix investments, HG infra

  • Fig 4 – HGI Cash Flow  
  • Because of high Capex, HGI has not declared any dividends in the last 5 years.
  • Remuneration paid to the Key Management Personnel (KMP) +1 was Rs. 6.27 cr. for FY17, and 11.75% of PAT. Another Rs. 1.54 cr. was spent on insurance premiums for KMP. See Exhibit 5.

jainmatrix investments, HG infra

  • Exhibit 5 – Renumeration
  • HGI had an equity base of 5.4 cr. shares pre-IPO. Post the issue of fresh shares, the equity base will stand at 6.51 cr. (assuming fresh shares are issued at UMP of Rs. 270/share). This means the asking FY17 P/E is 27.4 (pre-IPO) and 32.9 (diluted post-IPO).

Benchmarking

We benchmark HGI against other listed infrastructure construction companies. See Exhibit 6.

jainmatrix investments, HG Infra IPO

  • Exhibit 6 – Benchmarking
  • The PE post IPO is high, so pricing appears aggressive, as seen with IPOs, a negative.
  • The sales growth is excellent, comparable to sector leader, Dilip Buildcon. Profit growth is good also, partly due to a recovery from a slowdown in 2014.
  • The post IPO D/E looks reasonable and is much better than a few of its other peer members. The IPO being partly fresh issue will help to reduce debt burden.
  • The RoE at 30.3% and RoCE at 36.4% is excellent, high in the industry. This is a positive.
  • HGI had the lowest EBITDA margin in the industry. However in H1 FY18, EBITDA margin is improving, due to better scale and efficiency in operations.
  • PAT margins may improve due to lower interest costs going forward.
  • Orders booked to Billings looks healthy and indicates over 3 years of revenue visibility.
  • Putting it together HGI looks like a firm at the start of a high growth phase that can be accelerated by this IPO.
  • Dilip Buildcon has done very well in last 2 years since IPO, and so is the sector leader. IRB looks undervalued and profitable. See our recent IRB report – In INVIT We Trust 
  • Also see our Roads Sector Note – THE ROADS SECTOR – IS IT A REVIVAL?

Positives for HGI and the IPO

  • HGI has strong project management and execution capabilities. It also owns its construction equipment needed for ongoing projects. This helps control costs, and improves reliability.
  • We can see a healthy order book; also HGI is pre-qualified to bid independently for project tenders by NHAI and MoRTH. This provides enough head room for faster growth.
  • HGI’s management team is qualified and experienced in the construction industry. The Promoters Girish Pal Singh, Vijendra Singh and Harendra Singh have 20 years of infra sector experience.
  • HGI has evolved from a sub-contractor to independent EPC firm, and subcontracting work has reduced to about 30% of revenues. Thus HGI is successfully moving up the value chain.

Risks and Negatives for HGI and the IPO

  • The valuations appear on the higher side among peers as P/E is 32.9 times (adjusted post IPO).
  • As HGI takes up projects on HAM in future compared to EPC, its working capital may increase.
  • With no private equity ownership, HGI will transition from a family owned firm suddenly to a public listed firm. This change will have to be handled carefully, including disclosures.
  • All firms in the sector face business risks like high working capital requirement, long project gestation periods, govt. clearances, local public opposition and PIL/ litigation issues.
  • Delays in the completion of construction of current and future projects is a risk. A significant part of business is with GoI and any change in govt. policies or delays in payment are a risk.
  • The firm has a business concentration in Raj. and Mah. with 96% of orders from there. But HGI is quite capable of growing a pan India footprint given good opportunities and projects.
  • Competition is intense in road projects, particularly in EPC projects rather than BOT.
  • HGI’s business is manpower intensive and any nonavailability of employees or labor issues can have an adverse impact on operations.

Overall Opinion and Recommendation

  • The GoI has over the last few years and in Budget 2018 emphasized the roads and infra push in terms of budgets and ministry focus. This long suffering Roads sector has seen a revival in last 2-3 years is now expected to be a significant beneficiary of govt. spending.
  • HGI has a good 5 years performance where it has emerged as a rising star. The healthy order book, roster of completed roads projects and fair financial controls are impressive.
  • At a P/E of 32.9 times (adjusted post IPO), the valuations of the IPO appear to be high. However earnings growth is likely to be at a faster pace due to reduced interest costs, better efficiencies and sectoral traction. Good track record, robust financial performance, sectoral tailwinds and an experienced management team makes this IPO attractive.
  • Key risks are 1) Project execution delays 2) Labor challenges 3) Intense competition.
  • Opinion: Investors can SUBSCRIBE to this IPO with a 3 year perspective.

JainMatrix Knowledge Base:

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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 stake, ownership or known financial interests in HGI or any group company. 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.

Budget 2018 – LTCG Tax and Investor Updates

Date: 2nd Feb, 2018 

Taxation on Indian Equities

There are Tax rates in place for LTCG (Long Term Capital Gain) and STCG (Short Term). A long-term capital gain is a gain from selling a share held for longer than 1 year. Gains are aggregated across all an investor’s LTCG transactions for the FY. So far, LTCG was zero tax in India, while STCG rate was 15%.

The LTCG Tax proposals in the Union Budget for FY18-19?

In Budget 2018, the Govt. has proposed a 10% LTCG tax for equity and equity MFs with 2 conditions:

  1. The LTCG tax of 10% would be levied only on the LTCG in excess of Rs 1 lakh in one fiscal.
  2. The gains up to 31st Jan, 2018 will be grandfathered. This will protect our LTCG gains so far.

Let us understand this with an example the FM used while presenting the budget. If an equity share is purchased 6 months before 31st Jan 2018 at Rs. 100/- and the share price trades at Rs. 120/- on 31st Jan 2018 than in respect of this, there will be no tax on the gain of Rs. 20/- if this share is sold after 1 year from the date of purchase. However, any gain in excess of Rs. 20 earned after 31st Jan 2018 will be taxed at 10% if this share is sold after 31st July, 2018. To put it simply,

  • Any LTCG accrued until 31st Jan 2018 wouldn’t be taxed.
  • Any incremental LTCG above this would then be taxed at 10% (If you hold it at least for 1 year)
  • If you sold in less than 1 year, the existing 15% STCG would be applicable as earlier.

Background to LTCG and impact for investors?

It was in 2004 that tax on LTCG was removed and Securities Transaction Tax (STT) was introduced. STT levies a small tax on every transaction – buy or sale, done through stock exchanges. For FY18 the govt. may earn Rs. 7,769 cr. of revenue from STT. So now we see both STT and (LTCG – STCG) taxes in place.  As per projections, the govt. may collect Rs. 20,000 cr. through LTCG tax.

Tax Planning:

  1. If your portfolio gains have been 20% for LTCG so far, we can estimate that this may fall to 18% incrementally for fresh investments. Investors should continue to make Buy and Sell decisions based on portfolio growth objectives.
  2. Investors can Set Off the LTCG against any Long Term Capital Losses in the year for Tax planning.
  3. For investors with a direct equity and Equity MF portfolio of less than Rs 10 lakhs, they may like to plan the sales so that the ‘less than 1 Lakh LTCG rule’ applies for that financial year.
  4. Where the portfolio is larger, this additional tax will be inevitable.

So what might be the market mood now?

  1. The grandfathering concept will protect the Investors for past LTCG gains.
  2. Equity as an asset class has been enjoying good returns for the last few years. We feel it will continue to outperform other asset classes like gold, real estate, FDs etc.
  3. Investors need to bake in the LTCG tax impact. The markets may see a small correction or negativity for a few days before recovering.

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. 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 or Chartered Accountant. 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.

Vikas Ecotech – Get ‘Vikas’ for your Investments

  • Date: 22nd Jan 2018
  • CMP: Rs. 40.7

Today we have published an update report on Vikas Ecotech.

  1. To remind you, on 24th Apr 2017, at a CMP: Rs. 21.25, we had published this report on this website.
  2. We had set a Target price of Rs. 52.7 by May 2019, a growth of 143% from then CMP, over 25 months.
  3. The entire report is available on VIKAS ECOTECH – Get ‘VIKAS’ for your Investments. 
  4. We are happy to note that our Apr 2017 report has given 92% gains in 9 months. 
  5. However, this update report is restricted to our valued subscribers only.

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Disclaimer and Additional Details

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 discloses that he has been a shareholder at VET since May 2017. Other than this, Punit Jain and JM have no known financial interests in Vikas Ecotech & Co or any related firm. 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. Equity investments are subject to market risks. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, we recommend that investors looking to invest in equity should take advice from a Registered Investment Adviser. Punit Jain is certified and registered under SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

Is Investing a Science or an Art – Or Both?

  • Date: 21st Dec 2017
  • Subject: Thoughts around Investing 

What is a Science?

Science as per Wikipedia is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe. Science is associated with consistent, independent and timeless outcomes.  A science can be studied in a textbook, and when applied in an experiment, it will always deliver an expected result under same conditions.

What is an Art?

An Art can be defined as the ‘expression or application of human creative skill and imagination’. Across painting, music and literature, people find Art as a way to express themselves and create something uniquely different, that communicates to other humans. It somehow combines both technique and emotion.

So is Investing a Science, or an Art?

When I speak of Investing, I differentiate it from Trading and refer to stock purchased for a holding period greater than 1 year, bought based on fundamentals analysis.

The Science: Investing appears to be a Science when we look at the quantitative side of things. The analysis of the balance sheet, income statements and calculation and understanding of the key ratios, as well as interpreting them seems to be a fairly scientific exercise. Companies can fairly quickly be bucketed under Poor, Average and Good using quantitative techniques, based on data about the past.

The Art: However the qualitative side of investing is not so well defined. It is also very important.

  1. Which sector is the firm from? Is this sector doing well overall and are prospects good?
  2. How good is management in this firm?
  3. Is the firm encouraging a second line of leadership and executives?
  4. How are the products of the firm? What is the USP of the firm? The moat? How does it compare with peers?
  5. What’s the future for this firm given these realities? How do we value this firm? If there is a valuation gap (mispricing) when will this gap be filled by the market?
  6. What are the risks, uncertainties and bad scenarios for this firm?
  7. What are the exit criteria for the firm?
  8. As an investor, can I control my emotions like fear, pride, regret, laziness and greed? The psychological part of investing, that which involves your emotions, your expectations, your attitudes and your habits, is a crucial part of the recipe for success. How does one react to market news and fluctuations? Can I generate and stick by my ideas long enough to find success? Or would I prefer to follow the herd?
  9. Finally with so many complex inputs, and unknowns, I feel intuition plays an important part in key decisions. This too is more Art than Science as it is more judgement and not quantifiable.
  10. In addition each investor brings to the table his own set of strengths and biases. This helps him identify successful investing ideas only in certain situations. This can be a core strength of an investor if it is well understood.

So we can see that this part of Investing certainly has a technique, involves a lot of judgments and interpretations and is quite an Art. The objective of course is to protect and grow wealth, so its an applied Art.

The Brain – 

jainmatrix investments

Conclusion:

So we can see that while the core of Investing is scientific and quantitative, this has over it a thick wrapping of human judgement, emotion and real life uncertainties.

Can a Computer Do Good Investing?

Here is a famous quote by the legendary investor Peter Lynch. “Investing in stocks is an art, not a science, and people who’ve been trained to rigidly quantify everything have a big disadvantage.”

My feeling is that computers can handle the quantitative side of investing well. This is of course based on the fact that computers are powered by good programming and applications.

The Art or qualitative part of investing is very hard to program and incorporate into a computer.

However there are a bunch of newer technologies such as Machine Learning, fuzzy logic and Artificial Intelligence. It’s quite possible that some of these techniques can be adapted to help in Investing and may even become quite good.

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.

The Most Profitable Research this year from JainMatrix Investments

  • Apex Frozen Foods Ltd.
  • A 225% gain for our Subscribers for purchases from open markets in just 3 months. 
  • The IPO allottees still holding have got a 324% gain in 3 months. 

At JainMatrix Investments, we’ve done a lot of research reports in the last year. We’ve had our share of (many) successes and (a few) failures. This has been a good year for the stock markets so no surprises that our success rate has been high. Even so, lets focus on the best success we have had this year.

On 20th August 2017, we published an IPO report on Apex Frozen Foods Ltd. This was a public report, and you can see it even now at Apex Frozen Foods IPO – An Apex Buy.

jainmatrix investments, apex frozen foods

The subscription for this IPO was not impressive, it went just 6.1 times subscribed, not much by this years standards.

But at JainMatrix Investments we were very positive about it. So much so that before the firm’s listing on 4th Sept, we published a Pre-Listing Note on Apex. This was a Premium report, available only to subscribers, but the Summary is shared below:

JainMatrix Investments, Apex Frozen Foods IPO

The listing was good but not very impressive, it closed at Rs 210, a rise of 20% on first day. Thereafter, restricted by its 5% upper and lower price limit, it rose 5% every day for a few days, then actually fell by 5% for a few days too.

Our Subscribers who took our instructions got ample opportunity to buy this share below Rs 230.

And very soon, with the seafood industry doing well, and some news flow such as good results declared for the Half Year and Quarter ended Sept 2017, the share has done very well, see graphic.

jainmatrix investments, apex frozen IPO

Today we are happy to note that investors who took our recommendation to buy the share below Rs 230 have seen a 225% gain. IPO applicants still holding today have got a 324% gain on their investment in just 3 months. 

Clearly the share has by far exceeded our 1.75 year target of Rs 469, to reach Rs 742 today. This is a success beyond our imagination.

This is a marketing article. At this point we do not express any opinion of BUY, SELL or HOLD on Apex Frozen Foods. We are just happy to share with you that this is Our Most Profitable Research this year. 

Happy investing,

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 discloses that he holds Apex Frozen Foods shares since the IPO this year.  Other than this, JM has no known financial interests in Apex or any group company. 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.

Bharat22 ETF – A Balanced ETF – Post Listing Note

  • Date 29th Nov
  • Equity MF- ETF, Diversified
  • Allotment price: Rs. 35.97
  • CMP: Rs. 37.42
  • Advice: Buy with a 3 year perspective

Here is a post listing note on Bharat 22 ETF (BH22).

In this note, we continue from the 13th Nov Note – Bharat 22 ETF NFO Offer – A Balanced ETF 

jainmatrix investments, bharat 22 etf nfo

Subscription, Allotment Price and NFO details 

  • The BH22 is an open-ended index ETF which listed on 28th Nov, 2017. The investment objective is to provide returns like the S&P BSE Bharat 22 Index.
  • The NFO received the highest subscription for any new fund offer (NFO) in the history of Indian MF industry. The ETF was subscribed about 4 times as the amount to be raised was Rs. 8,000 cr. and it received applications for around Rs. 32,000 cr. The NFO attracted 3.35 lakh retail investor applications.
  • Due to the excellent response, the ETF issue size was raised to Rs. 14,500 cr. A NFO discount of 3% was offered to all investors including retail, retirement funds, QIBs and non-institutional investors.
  • Retail investors who applied with Rs. 2,00,000 (Retail cap) were allotted 5,560 units at Rs. 35.97/unit (including the 3% discount). Retail applicants appear to have received 100% allotment this time.
  • Currently the ETF is trading at Rs. 37.42 translating into a gain of 4.03%. This means any retail investor who applied for the max. allowable limit of Rs. 2,00,000 has notionally gained Rs. 8,060. This is because of the discount as well as rise in the S&P BSE Bharat 22 Index.
  • You can check the index value as well as the ETF value using the following link. Bharat 22 ETF Price – http://www.moneycontrol.com/india/stockpricequote/miscellaneous/iciciprudentialmutualfund/ICI15

Overall Opinion

  • This ETF is set to create good value for the investor as profit making PSUs, PSUs undergoing reforms and private sector firms have been bundled together. ETFs are also advantageous in terms of management costs & liquidity. Also with the discounts given in BH22, we feel that this is a good long term buy for low risk equity investor and is comparable to the Balanced MFs.
  • If you have missed out Bharat 22 ETF in the NFO, you can also BUY it from the open market.
  • Investors can BUY with a 3 year perspective.

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 discloses that he holds a position in BH22 ETF as a successful Retail applicant in NFO. He may also hold positions in some of the constituents of the ETF. Other than this JM has no known financial interests in BH22 ETF or constituent 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 independent expert/advisor. Punit Jain is a registered Research Analyst and compliant with SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com .