The Economic Times Wealth - September 12, 2022

25 Pages·2022·7 MB·English

T E T
HE CONOMIC IMES

YOUNG INDIA IS
BUSY CHASING
DREAMS
P12
www.etwealth.co | Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, Pune | September 12-18, 2022 | 24 pages | `8
HOMEBUYER’S
CHECKLIST
2022
The property
market is
buzzing with
activity. Here’s
what buyers
must keep in
mind when they
book their
house. P2
When it Bet on Explore
seems too the stocks the hidden
good to be that are treasures
true, be beating all of Andhra
wary expectations Pradesh
P7 P8 P16
cover ssttoorryy
02 The Economic Times WealthSeptember 12-18, 2022
Homebuyer’s
checklist
2022
TThhee pprrooppeerrtty mmaarrkkkeett iiss bbbbuzziinngg wiiitthhh aaccttiiiviiitty. HHeerree’’ss whhaatt
buyers must keep in mind when they book their house.
S
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Y I
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ByBabar Zaidi like the introduction of RERA, currency cost roughly `34-38 lakh, which makes could be a good time to take the plunge.
demonetisation and the disruption caused the property affordable for the middle- Property prices have risen steadily in the
A
fter several years of tardy by Covid, the demand for real estate has income group. In Ahmedabad, the other past one year and home loan rates have
growth, a surge in demand for bounced back strongly,” says Hitesh city which has witnessed double-digit gone up following the flurry of repo rate
residential property has led to Uppal, Head of Finance, Magicbricks. rise in prices in the past one year, a 800 sq hikes this year. But though this has im-
a smart uptick in real estate Delhi NCR saw the biggest jump in pric- ft property in the most happening micro pacted affordability, analysts say the pent
prices across the country. es, with prices in Noida Extension and markets will cost roughly `40-48 lakh. up demand is likely to push home prices
According to Magicbricks, residential Greater Noida shooting up smartly (see This is about 10-12% costlier than last up further in the coming months. “The
prices in some micro markets in the top chart). Despite the sharp rise, prices are year, but still within the reach of middle- performance of the broader economy and
eight cities rose 15-20% in the 12 months still within reach in these micro markets. class households in the city. changed buyer perceptions have a greater
ended 30 June this year. “Despite hiccups A 2-BHK house measuring 800 sq ft would If you are looking to buy a house, this bearing on market momentum as they
cover ssttoorryy
The Economic Times WealthSeptember 12-18, 2022 03
dictate homebuyer income levels and de- approved loan even as you are searching score. Too many enquiries imply that the scrutiny of the property ownership
mand much more directly,” says Shishir for your dream house. Lenders give an the person is credit hungry and could papers.
Baijal, CMD, Knight Frank India. in-principle approval to the loan on the downgrade your credit score,” warns
Here is a checklist that buyers should basis of the income and repayment capac- Khosla. Should you go for ready or
keep in mind when they plan what could ity of the borrower. “A pre-approved loan under construction fl ats?
arguably be the single largest purchase in is useful because if the bank is ready to Is the housing project One big dilemma for buyers is whether
their life. disburse cash, you can be tougher in nego- registered under RERA? to pay more for a ready-to-move-in flat
tiations with the seller,” says Raj Khosla, The Real Estate Regulation Act (RERA) or book an under-construction house at
Have you applied for a Managing Director of MyMoneyMantra. is a landmark legislation that protects a lower price. Though costlier, ready to
pre-approved loan? A loan aggregator can help you find the the rights of the buyer and punishes the move-in homes remove any uncertainty
Though real estate portals make it look cheapest loan. But be careful not to make developer for delays, defects in structure of delays. You get immediate possession
like child’s play, zeroing in on the right too many home loan enquiries. “Loan en- and other shortcomings. RERA ensures of the house, move into new house and
property can take several weeks of intense quiries are reported to the credit bureaus timely delivery by preventing the build- stop paying rent. If bought for invest-
research. So, it’s a good idea to get a pre- for verification of the individual’s credit er from channelising funds to other pro- ment, it starts generating rental income
jects. Check if the project is registered immediately.
under RERA. However, though all states On the other hand, under construction
except Nagaland have implemented property is 15-20% cheaper than a ready
Delhi NCR
RERA, not all projects may be covered flat. But there is also the uncertainty of
by the legislation. Also, don’t depend delays. However, if you have done your
Greater Noida West Noida Extension Dwarka Mor Sector 137, Noida Chhattarpur
solely on RERA certification. Experts due diligence and bought a RERA regis-
say the provisions of the law are not air- tered property from a reputed builder,
1-year change
tight and the enforcement mechanism that uncertainty is taken care of.
`6,200 14.8% tends to be manipulated and misused by
builders. Many homebuyers who have Do you know the real area
8.2% got judgments passed in their favour are you are paying for?
`5,400
`5,300 not able to get the orders implemented. You might find this unbelievable, but a
4.3%
`4,900 That is why you need to do your due lot of people don’t know how much area
`4,800
`4,600 20.0% diligence about the status of approvals they are buying when they book a flat.
and permissions and the title of the prop- Builders try to hoodwink buyers by
`4,200 13.5% erty. In case you are buying property on touting the super area of the project. But
`4,000
resale, it’s always a good idea to hire a this super area includes the common
`3,700
property lawyer and pay a small fee for facilities such as the lobby, elevators,
Prices in `
Jul-Sep 2021 Oct-Dec 2021 Jan-Mar 2022 Apr-Jun 2022 per sq ft
OUTLOOK
The major demand in Delhi NCR is driven by mid-segment localities such
as Dwarka, Uttam Nagar and Rohini, due to their connectivity and proximity
to employment hubs.
Greater Noida localities such as Omega-Chi-Phi, Noida Extension and Tech
Zone IV have ample options priced less than `5,000 psf. Interestingly, almost
the entire supply in Omega-Chi-Phi is below `5,000.
Kolkata
Rajarhat Action Area 3 Action Area 1 New Town E M Bypass
1-year change
`7,900
`7,600 3.9%
11.3%
`5,900 3.9%
`5,300
`5,300
`5,100 2.0%
`5,000
`4,900 `4,800 4.3%
`4,600
Prices in `
Jul-Sep 2021 Oct-Dec 2021 Jan-Mar 2022 Apr-Jun 2022 per sq ft
OUTLOOK
The key employment hubs of Rajarhat and New Town have a large
supply of 2-BHK and 3-BHK units, which are preferred by homebuyers.
Further, these and some other localities of North and Central Kolkata are in
high demand owing to their proximity to the airport and connectivity with
the rest of the city.
All data and market outlook are from Magicbricks
cover ssttoorryy
04 The Economic Times WealthSeptember 12-18, 2022
staircases and corridors which are used
Hyderabad by all residents. These facilities can ac-
count for up to 20-25% of the super area
OUTLOOK
quoted by the builder.
Beeramguda Miyapur Manikonda Kondapur Gachibowli
The built-up area is the area covered
1-year change Western localities such by a house. This also includes the area
as Gachibowli, Miyapur that gets covered by walls and storage
`8,500
`8,100 4.9% and Kondapur, which are places. What an owner actually gets to
`8,000
well connected to other use is the carpet area, which can be 60-
11.1%
`7,200 employment hubs such as 65% of the super area. Make sure you
`6,900 9.5% the Financial District and know the carpet area of the property. As
`6,300 HITEC City in Hyderabad, per the law, builders are required to pro-
10.0% were in high demand this vide the break-up of the super built-up
`5,500
`5,000 quarter due to reopening area and the carpet area.
`5,000 8.7% of off ices and their
`4,600 Can you afford the EMI?
connectivity with the ORR.
Prices in ` When buying a house on a loan, take
Jul-Sep 2021 Oct-Dec 2021 Jan-Mar 2022 Apr-Jun 2022 per sq ft time to assess whether you can afford
the EMI. Many people get emotional
while buying property and overstretch
their finances. Ideally, your loan to
Chennai income ratio should be below 35%.
OUTLOOK This means, all your existing and the
Kelambakkam Medavakkam Sholinganallur Porur Velachery planned loan EMIs should not add up
Homebuyers in Chennai to more than 35% of your net monthly
1-year change prefer mid-segment and income. In some cases, this can go up to
premium properties over 40-45%, but going beyond 50% is a route
`8,000 3.9%
`7,700 affordable housing. Houses in map to disaster. Lenders keep this in
the `5,000-10,000 per sq ft mind when they extend you a loan, but
8.5%
segment are more preferred further borrowing from other sources
`6,400 5.1% than the affordable segment. can push up the overall liability of the
individual.
`6,200
`5,900 7.4% The affordable housing Also, buying a house for self occupa-
`5,800 segment under `5,000 per
tion is different from buying one as an
`5,400 4.3% sq ft has 33% of the total investment. The former is a good idea
`4,700 `4,900 demand share and 34% of the because it builds an asset and frees you
Prices in ` share in supply. from the recurring expense of rent.
Jul-Sep 2021 Oct-Dec 2021 Jan-Mar 2022 Apr-Jun 2022 per sq ft
The latter may not be such a good idea
because you may end up paying 6-7%
interest on the loan for an asset that may
not grow at the same pace. “If you are
Bengaluru buying for self use, go right ahead. But
if buying a second or third house for the
OUTLOOK
Electronic City Yelahanka Whitef ield Kanakapura Road Sarjapur Road purpose of investment, think thrice be-
fore you take the decision,” says Sanjay
Eastern localities
1-year change Agarwal, Head, Retail Assets Business
`7,200 such as Whitef ield and
of Edelweiss ARC. Investing in a second
`7,000 3.9% Sarjapur Road, which
`6,800 `6,900 or third house made sense when prices
are well connected
`6,500 `6,800 5.1% were galloping at 20-25% in the early
to other employment
`6,400 2000s. Now, property prices may not rise
8.5% hubs in Bengaluru faster than the cost of the home loan.
`6,000
such as Electronic City It’s also a good idea to go for as short
7.4% and Kanakapura Road, a loan tenure as possible. If that’s not
`5,200 continue to be the most immediately possible, make it a point to
`5,000 4.3% preferred localities for increase the EMI amount every year in
homebuyers. line with an increase in your income.
Prices in ` Increasing the EMI amount can bring
Jul-Sep 2021 Oct-Dec 2021 Jan-Mar 2022 Apr-Jun 2022 per sq ft
down the tenure dramatically. A 5%
increase in the EMI every year will
reduce the tenure of a 20-year loan by
more than eight years. Increasing it by
Mumbai
10% every year would end the loan in
OUTLOOK less than 10 years.
Kandivali West Mulund West Borivali West Goregaon East Andheri West
Will a fi xed rate loan suit
Western localities such
1-year change you more?
`26,500 as Andheri and Goregaon
`25,500 3.9% witnessed the highest Given the rise in home loan rates in re-
cent months, many home loan custom-
demand and supply
11.1% ers may be considering loans at a fixed
during the quarter driven
rate rather than a floating rate. Fixed
by proximity to business
`21,000 3.9% rate loans are costlier than floating rate
hubs, airport,
loans by almost 100-150 basis points, but
`18,900 `18,700 1.8% connectivity of the they don’t change. The prevailing rate
`18,000 `16,900 Western Express Highway, for floating rate loans is about 7-7.5%,
`16,600 `16,800 4.3% and phase 1 metro lines - while fixed rate loans charge 7.9-8.5%.
`16,100 2A and 7. Understand the features of the fixed
Prices in `
Jul-Sep 2021 Oct-Dec 2021 Jan-Mar 2022 Apr-Jun 2022 per sq ft rate loan before you sign up. Many fixed
rate loans are fixed only for a couple

cover ssttoorryy
06 The Economic Times WealthSeptember 12-18, 2022
of years before they switch to a floating
Pune rate.
OUTLOOK Do you have life insurance
Wagholi Hadapsar Wakad Kharadi Baner
to cover the loan?
1-year change Localities such as With almost 60-70% of the value of the
`8,900 Kharadi, Wagholi and property funded by a loan, you need to be
`8,100 9.9% Wadgaon Sheri, which ready for unforeseen circumstances. Buy
`7,900
`7,600 3.9% are located close to the a term insurance cover equal to the loan
`7,200 airport and employment amount so that your family is not saddled
`6,600 9.1% hubs are preferred by with unaffordable debt if something hap-
`6,500 homebuyers. The high pens to you. When the pandemic was rag-
10.8% demand has caused the ing, there were numerous cases where
`5,200 average property rates the sole breadwinner of a family passed
13.0% to shoot up in these away, leaving the dependents with a
`4,600
localities. heavy liability. “Lenders do look at such
Prices in ` cases with sympathy, but loans cannot be
Jul-Sep 2021 Oct-Dec 2021 Jan-Mar 2022 Apr-Jun 2022 per sq ft waived,” says Agarwal of Edelweiss ARC.
Lenders usually push a reducing cover
term plan when they give a loan. But
a regular term plan is a better way to
Ahmedabad OUTLOOK cover this liability. It can continue even
after the loan is repaid or if you switch
Bopal and SG Highway
Gota South Bopal Shela SG Highway Satellite to another lender. Moreover, insurance
remain the top two preferred
policies linked to a loan are usually sin-
micro-markets, both in terms
1-year change gle premium plans. These are not as cost
of demand and supply, due to effective as regular payment plans.
`7,400 5.7% excellent connectivity and fast A term insurance plan of `50 lakh
`7,000 developing infrastructure. will not cost a 35-year old more than
15.4%
`700-800 a month, while a 40-year old will
Most of the demand in
`6,000 14.6% Ahmedabad is concentrated in pay about `1,000 per month. This cover
should be over and above what you might
`5,500 the western and northern micro-
10.4% have planned as a replacement of your
`5,200 `5,300 markets such as South Bopal,
`5,000 income.
`4,800 13.6% Shela, Gota, Thaltej and Bokadev
`4,400 as majority of the commercial
Prices in ` and residential developments are Please send your feedback to
Jul-Sep 2021 Oct-Dec 2021 Jan-Mar 2022 Apr-Jun 2022 per sq ft concentrated here. [email protected]
Why investing in property is a good idea
It can be a steady source of income, lends stability to the portfolio and allows leverage at very low risk, says Hitesh Uppal
R
eal estate has the potential to loans. Since these loans against property rent net worth in real estate. Most lenders
deliver very high returns in the (LAPs) are secured, they are cheaper require only 20-30% as down payment.
long run. It can provide a steady than personal loans (unsecured) and This leverage makes property investment
cash flow and enjoys several available for longer tenures. LAPs are a viable opportunity for aspiring inves-
tax benefits. Here are some of popular among customers and the market tors.
the many advantages that real estate offers is forecast to grow at 14% CAGR by 2025-26. What’s more, this leverage comes at a
over other investment classes. There is also reverse mortgage financing very low price because at 7-8%, home loans
arrangements for senior citizens who can are possibly the cheapest form of credit. It
Steady source of income get a loan against their property, without gets even better if the house is self occupied
Demand for rental housing is rising. With having to relinquish its ownership. or given out on rent. In the 30% tax bracket,
offices opening up, Magicbricks’ Rental Real estate has always been a big-ticket the tax benefits on the interest reduce the
Index mirrors this trend in the second investment, but things have changed in re- effective cost of the loan to barely 5-6%.
quarter of 2022. Rental housing demand cent years. Investors can now take a small- To sum up, real estate helps diversify
has grown 29.4% q-o-q and 84.4% y-o-y, er exposure through real estate investment the investment portfolio and neutralise
while average rents have risen 8.4% q-o-q trusts (REITs). REITs are companies that the impact of volatile investments such as
in the April-June quarter. This demand is own, operate and finance income generat- stocks and equity funds. At the same time,
expected to increase in coming years, mak- ing real estate assets. They are popular as there are challenges such as illiquidity
ing rental units a steady income source. they are SEBI regulated, offer liquidity as and transparency. Therefore, the impor-
Real estate is also an effective tool strongly, bringing renewed investor confi- they are publicly traded, and require as tance of background checks, due diligence
against capital loss if the purchasing power dence in the sector. The latest Magicbricks’ little as `300-400 per share. Currently only and comparative price evaluations cannot
of the currency depreciates due to inflation PropIndex Report corroborates this trend. for commercial property, REITs might be be undermined. Buyers should also refer
or other macroeconomic trends. RBI data Aggregate demand across the 13 cities allowed to extend to other assets such as to data reports and credible expert advice
shows that property rates increased by an tracked by the index shot up 16.9% q-o-q malls, warehouses, industrial parks and to make the right decision.
average of 15.1% across the major cities and 27.7% y-o-y while average residential possibly housing.
between 2011 and 2021 , well above the infla- rates in these cities increased 2.4% q-o-q
tion rates which averaged at 6.15% during and 8.0% y-o-y, displaying the strength of Power of leverage
this period . Despite hiccups like the global the sector. One big advantage of investing in real es-
financial crisis of 2008, introduction of tate is that it can be financed through debt. HITESH UPPAL IS
RERA, demonetization and the pandemic, Provides ample liquidity Unlike assets such as bonds, mutual funds HEADM OAFG FICINBARNICCKES,
demand for real estate has bounced back Property is also used as collateral to raise or stocks, one can invest more than his cur-
guest ccoolluummnn
The Economic Times Wealth September 12-18, 2022 07
If it seems too good to
be true, it probably is
The battle between savers and those out to defraud them has always
been an asymmetric one, says Dhirendra Kumar.
I
f you are an investor then over the
last few years you must have received
DHIRENDRA KUMAR
many, many phone calls from call
CEO, VALUE RESEARCH
centres in a certain city in central
money India. I won’t name the city because
its citizens now tend to be quite sensitive
mysteries
about the unsavoury reputation that their
hometown has gathered, specially because
the city is more justifiably famous for many
other things, most of them quite delicious.
A few days back Sebi published an order
against an ‘unregistered investment ad-
viser’. The matter originated in a complaint
Individual victims— from someone who had received a phone
even when they call from this research and trading outfit
are well-off and in the above city. This investor handed
over a few lakh rupees to this outfit, part
educated—are poorly
of it being deposited in a demat account
equipped to detect
and part of it directly to this research and
fraud. The fraudsters
trading outfit as some kind of a fee. I’m sure
are invariably you can guess the rest of the story. Most of
well-experienced at the money vanished. The investor chased
what they are doing the company and got a little bit back. It’s a S
E
G
because they have common story, although the denouement MA
honed their skills on of a Sebi complaint, order and some kind of TYI
a large number of punishment is not so common. From what GET
I have gathered, most investors take some
victims.
losses and move on. financial advisers were freely handing out is enough to do serious financial damage
quotes about greed and ignorance. There to most of them.
The onus of preventing
were articles about how much better Dravid This asymmetry means that the onus
frauds lies with the would have done had he invested in this or of preventing frauds lies with the regula-
that. Like any case involving a celebrity, it tor. As for us individuals, the lesson is
regulator. As for us
was basically just entertainment for most to always be extra suspicious and extra
individuals, the lesson is to people. careful. If something sounds too good to be
I firmly believe that the blame, whether in true, then it is probably not true.
always be suspicious.
the current case, or that of Rahul Dravid or
the millions of other victims of fraudulent
The sad part is the common ‘I told you financial schemes, does not lie with the vic- Please send your feedback to
[email protected]
so’ air of people commenting on the case tims. In each individual case in which savers
on social media. The general idea seems to fall for some fraud, the easy conclusion that
be that anyone with a modicum of under- can be drawn is that the victim should have
standing of how investing works should been more careful and less eager to earn
have known that such offers are likely to higher returns. Essentially, that’s the blame-
be fraudulent. I don’t like this kind of a the-victim argument that can be applied to
blame-the-victim response. I’m reminded (and often is) almost any crime. If one looks
of another case, one where the investor was at any financial crime in isolation, it’s easy
a famous name. to fall into this belief. However, when you
Some years ago, Rahul Dravid gave `20 step back and look at the aggregate, then it
crore to some commodity trading broker becomes clear that there has to be some other
who promised very high returns. Compared solution except wringing one’s hands and
to most such cases, that story ended talking about investor education so that peo-
relatively well—Dravid lost only `4 crore ple don’t fall for scams.
and actually got back the rest. Of course, Here’s the important part: individual
there was a huge stream of advice that victims—even when they are well-off and
flowed Dravid’s way on Twitter, the most educated—are poorly equipped to detect
ironic and amusing being from commodity fraud. The fraudsters are invariably well-
traders and other brokers who were experienced at what they are doing because
basically telling him to come to them and if they have honed their skills on a large num-
he wanted to actually make a lot of money. ber of victims. The fraudsters can fail with a
Regrettably, everywhere, in all kinds of few targets, gain experience and move on to
media, the general tone was one of victim- other potential victims. However, the victims
shaming. In newspapers and on Twitter, are novices at detecting fraud. Just one fraud
stocks
08 The Economic Times Wealth September 12-18, 2022
Bet on stocks that have
beaten expectations
Stocks that have outdone street expectations
over time have robust fundamentals. These
can prove to be valuable investments.
by Sameer Bhardwaj
T
he rising differential between
Nifty-50 earnings yield and
risk-free government bond
yield is exposing the domestic
equity markets to high vola-
tility and correction. The differential
has jumped from 1.71% at the begin-
ning of 2022 to 1.99% in the first week
of September. The markets are already
volatile due to global factors like economic
downturns in Russia and China and sup-
ply chain constraints.
In 2022, the Nifty 50 index was on a roll-
er coaster ride, losing over 16% between S
E
January and June and then regaining AG
M
close to 15% between June and September. YI
The NSE VIX or volatility index has aver- TT
E
aged 20.7 so far in 2022 compared to 2021, G
when the index averaged 18. In terms of supply chain diversification will help the
valuations, the Nifty-50 index 12-month country to generate additional demand.
COROMANDEL INTERNATIONAL
forward PE of 19.3 times—very close to The reversal of FII outflows also fuels
its last one-year average of 19.8 times—is optimism. FIIs bought `58,156 crore of UPSIDE
limiting further upside, according to data equities since July 2022 after offload- 12-m forward PE Current price (`) 1-year target price (`) POTENTIAL
compiled from Bloomberg. ing `2.56 lakh crore of equities between 12.3
%
Lacklustre corporate earnings, im- October 2021 and June 2022. 16.5 1,032.05 1,159.5
pacted by rising input costs, have also However, the Morgan Stanley report
contributed to the volatility. In the last cautions that external risks loom larger IMPROVED MARGINS IN the nutrient ANALYSTS’ RECOMMENDATIONS
couple of quarters, the earnings growth than domestic ones for India. A renewed business helped the company report BUY HOLD SELL
was lopsided and led by the BFSI sec- supply-driven rise in oil and commodity above estimate numbers in the f irst 10 2 0
tor. In the first quarter of 2022-23, most prices could pose risks to India’s macro quarter of 2022-23. Factors like the
heavyweights of the Nifty-50 index missed stability indicators. A deeper slowdown benef it of higher NBS subsidy, eff icient good monsoon, improved farm incomes
estimates resulting in a cut in earnings or recession in developed markets could sourcing of phosphatic rock, higher and government reforms.
estimates of the overall index. A Motilal weigh on growth via weaker exports or a subsidy on channel inventory and tight- Also, the favourable policy environ-
Oswal first quarter review report has tightening of financial conditions. ening of logistics costs supported the ment in the form of budgetary support
reduced the 2022-23 Nifty EPS estimate by The presence of macro headwinds nutrient business. to the fertilizer sector coupled with
2.7% due to notable earnings downgrades indicates the likelihood of increased The company’s operating EBITDA is the government’s initiative on increas-
in ONGC, RIL, BPCL and Tata Motors. market or systematic risks. To counter expected to sustain in the medium term ing farm incomes will bode well for
A recent Nomura report expects a slow- or minimise the impact of such risks, due to the likely expansion in volumes the company. Some of the government
down in India’s GDP growth in 2023-24 due direct equity investors should invest in the nutrient and crop protection initiatives include an increase in the
to fading of pent-up demand and global in companies that are constantly business segments. It is well placed to minimum support prices of crops and
spillovers, which will result from dete- improving their financial performance absorb the raw material price volatil- allowing farmers to directly sell pro-
riorating global growth prospects across over a period of time. One way to identify ity given the backward integration in duce in the markets.
the US and Europe. Also, high inflation is such companies is by looking at their chemicals like phosphoric acid and
likely to impact real incomes and weigh performance with respect to market sulphuric acid. The management is Coromandel International
on rural consumption where the savings expectations. Stocks that report numbers conf ident about the company’s growth
129.38
buffers are lower. Moreover, less accom- better than expectations over a period prospects due to the hike in NBS rates,
modative domestic financial conditions of time are adequately rewarded by the
are expected to moderate the pace of markets and are well suited to manage
100
growth in interest rate-sensitive sectors. volatility led by external factors. BSE500
Despite such concerns, a Morgan To identify such companies, ET Wealth 103.43
Stanley report believes that India is well studied constituent companies of the
acquainted with structural positives like BSE500 index. Companies that have re-
a young and still growing workforce and ported adjusted EPS (for extraordinary
low per-capita incomes providing scope items) higher than Bloomberg consensus
for an increase in productivity growth adjusted EPS in the past three quarters
rates. These along with government re- were filtered out with the latest quarter
forms like PLI and likely benefits of global being the first quarter of 2022-23. There 6 Sept 2021 5 Sept 2022
stocks
The Economic Times Wealth September 12-18, 2022 09
PERSISTENT SYSTEMS FORTIS HEALTHCARE
UPSIDE UPSIDE
12-m forward PE Current price (`) 1-year target price (`) POTENTIAL 12-m forward PE Current price (`) 1-year target price (`) POTENTIAL
12.7 10.6
% %
26.4 3,402 3,833.7 39.8 287.0 317.3
THE COMPANY REPORTED above esti- ANALYSTS’ RECOMMENDATIONS HIGHER OCCUPANCY LEVELS in the ANALYSTS’ RECOMMENDATIONS
mate revenue, EBITDA and PAT in the f irst BUY HOLD SELL hospital business helped the company BUY HOLD SELL
quarter of 2022-23 helped by growth to report f irst-quarter numbers that
16 9 6 11 0 0
across verticals—BFSI, hi-tech and health- were better than the street estimates. Its
care. The TCV (total contract value) grew consolidated revenue and EBITDA were
operating expenses. is currently facing pressure due to a drop
61% y-o-y to touch $394 million and the 2.8% and 40.7% higher than the consen-
A JP Morgan report believes that the in covid testing volumes.
management is conf ident of maintaining sus estimates of analysts compiled by
company will benef it both from accelera- The company maintained a comfortable
growth momentum in the future. Bloomberg.
tion in the product roadmap journey of liquidity position with net debt of `550
It acquired f ive companies in 2021-22 The management is expected to add
hi-tech companies and also increased crore at the end of 2021-22, compared
for building capabilities in payments and 1,500 beds over the next 4-5 years
demand for platforms from enterprise to `850 crore in 2020-21. A Prabhudas
cloud and is eager for further acquisitions and expect increased revenues from
clients. It is well placed to reap the ben- Lilladher report remains positive on the
in the future. The management remains high-end surgeries. It may also consider
ef its of its strategy around winning large company and expects margin improve-
conf ident of maintaining operating acquisitions in various geographies. The
and longer-duration deals and may clock ment across segments given the improv-
margins within a narrow range in 2022- revenues from digital channels and in-
industry-leading organic growth of 20% ing case mix in hospital segment with
23 supported by growth leverage and ternational patients are witnessing good
over the next three years. cost rationalisation initiatives, traction in
revenue mix despite supply side pressures traction. It has also ramped up the testing
international patient footfall and increase
in the industry and likely increase in the capacity of its diagnostic business SRL by
in test volume on network expansion in
opening centres and drive-through sites
the diagnostics business.
across the country. However, the segment
BSE500
BSE500
103.43 100
103.43
100
Persistent Systems Fortis Hospitals
96.33 101.28
6 Sept 2021 5 Sept 2022 6 Sept 2021 5 Sept 2022
GAIL (INDIA)
ANALYSTS’ RECOMMENDATIONS
UPSIDE
12-m forward PE Current price (`) 1-year target price (`) POTENTIAL BUY HOLD SELL
30% 28 4 2 BSE500
6.4 91 119
103.43
100
THE COMPANY REPORTED a strong beat in According to a JP Morgan report, the delta
GAIL IN Equity
revenue, EBITDA and net prof its in the f irst in GAIL’s earnings comes from its commod-
93.09
quarter of 2022-23 helped by gas trading ity price-linked segments of trading and
gains. Such gains have resulted from the LPG. With higher oil prices such segments
competitiveness of GAIL’s US LNG volumes are likely to perform better. Also, unlike
given high spot prices. Also, the govern- ONGC, GAIL would not be subject to any
ment’s target to increase the share of gas in windfall taxes and remains a play on global
India’s energy mix to 15% by 2030 provides LNG tightness.
strong policy tailwinds. However, there are concerns about the
The company has aggressive capex impact of the decline in Gazprom cargoes,
plans for pipeline expansion and it is also which is likely to create challenges for
increasing its petrochemical capacity. Also, the company going forward. Gazprom was
the commissioning of new pipelines over supposed to supply 36 cargoes in 2022-23,
the next one year is expected to improve however, there have been supply disrup- 6 Sept 2021 5 Sept 2022
volumes and prof its. tions since May. Current price as on 5 September 2022. BSE Sensex 12M Forward PE: 20.6 times. Source: Bloomberg.
Above estimate Below estimate
are 20 such companies. In the last one year, More BSE500 61.7%
57% 57.4%
these companies (as a group) have deliv-
companies
ered an average return of 26.6% compared 43% 42.6%
to BSE Sensex, which delivered 1.63%. reported 38.3%
The majority of these stocks have rallied
in the past three months and are trading adjusted EPS
close to their consensus target prices com-
that beat
piled by Bloomberg. Following are four
such companies that offer double-digit estimates
1-year forward price potential with prom- Third quarter 2022 Fourth quarter 2022 First quarter 2023
ising growth prospects. Source: Bloomberg.
fi nancial ppllaannnniinngg
10 The Economic Times Wealth September 12-18, 2022
Make assets accesible to heirs
Take time to consider operational and procedural aspects of investing, says Uma Shashikant.
minor, and taxable in the major’s name sub-
sequently. These transactions thus amount
to bequest, where the assets will transfer to
the child who will have independent opera-
tional access on becoming major.
I do not tire of warning the perils of mind-
less investments parents make for their
children in land and property. These assets
are chunky, require consistent mainte-
nance, and are difficult to rent or sell if the
child in whose benefit it was bought is not
living there. Family courts are filled with
cases of various hues when properties are
left behind without wills, stuck without be-
ing transferred legally to heirs, who have
moved on to live elsewhere.
An elderly lady who met me many years
ago told me that her son had asked for the
house to be gifted to him, and she signed off
the registration deeds with the agreement
that he will take care of her until her death.
He subsequently abandoned her. When she
S
E approached the lawyer, she learned that
G
MA gifts are irreversible and unconditional.
Y I She regretted not consulting the lawyer be-
T
ET fore she signed the gift deed.
G
Another widowed mother held the prop-
T
here was unexpected panic after a account held with her children would have au- erty jointly with her husband, and on his
friend’s child recently turned 18. tomatically passed the rights to account to the demise the son completed the paperwork for
The parents had been investing survivors. joint ownership with the mother, telling her
all the monetary gifts he received The ownership of an asset vests with the it was operationally convenient to do so. She
meticulously in his name. They persons named in the documents evidencing later realized that the son had taken many
held bank accounts, mutual funds and also a the ownership. No one else can claim the as- loans against the property and offered per-
demat account into which the shares gifted by set. This basic property right is fundamental sonal guarantees for business loans, that the
the grandfather were kept. To fund his higher to ensure that others do not unfairly use the property was foreclosed on his default. She
education, they decided to use this money, only asset. Operational procedures are designed to was devasted when they turned homeless.
to be told that they can no longer operate the ac- establish this right after necessary due dili- Many have suffered from needless secre-
UMA SHASHIKANT counts, as the boy had now turned major. While gence, protect this right and to transfer it after tiveness about assets, and the lack of a basic
IS CHAIRPERSON, I am surprised how such well informed parents another round of due diligence and checks. understanding of ownership rights. It is
CENTRE FOR INVESTMENT would be oblivious of this procedural require- Household financial assets and physical assets considered impolite in many households to
EDUCATION AND LEARNING
ment, it is not uncommon for many to focus on must take these procedures into account, to ask what insurances have been taken and
returns alone while managing investments make their own lives easy. Let’s consider some who the beneficiaries are. There is no virtue
and to generalise that processes are needlessly common issues this week. in the declaration that one does not know
complicated. One must be a major (18 years of age or older) anything about money matters. I have met
Returns and risk dominate the discussion to be able to enter a valid contract with an- young widows struggling with insurance
about investments and asset creation. But other. To own financial assets, the Know Your and pension benefits naming the husband’s
many do not take the time to consider the op- Customer (KYC) process is mandatory for all parents as beneficiaries, while the widowed
I do not tire of erational and procedural aspects. Streedhan in financial institutions. This requirement is for mother had children to bring up but no way
personal law includes assets a woman brings to establishing the identity of the account holder to access her deceased husband’s assets.
warning the perils of
her marital home such as financial assets, gold and to record the address and verify the same in People who move abroad tend to hold fi-
mindless investments
and land and is exclusively hers. It cannot be at- person. The signature of the account holder is nancial assets back home and many are not
parents make for
tached even if the husband turns bankrupt. But also recorded. In the case at the start of this col- meticulous about the paperwork. Many of
their children, in land
I know of many women who do not know their umn, KYC process will be done afresh, and the these assets remain unclaimed and inopera-
and property. These
rights, and even if they did, remain stuck with now major can operate the accounts after that. tive. In an era when incomes from assets
assets are chunky,
small procedural issues such as the change Parents who make investments in the chil- mattered so much and growth in value was
require consistent
in their maiden name. Many let the husband dren’s name should know that such accounts still a new idea, many elders invested in
maintenance, and are
transfer and modify the holding pattern of the of minors cannot be jointly held and that they company FDs, bank deposits, bonds, post
diff icult to rent or sell assets and sign off transfer and gift deeds. will all be operated only by the minor turned office, and government institutions for the
if the child in whose Pension accounts are held in single names major after the child turns 18. I know of bonds interest income. These unclaimed deposits
benef it it was bought by many. I know of senior citizens who operate purchased in the names of minor children and maturity amount now accumulate
is not living there. these accounts with great caution and needless maturing after they turned major and getting in the Investor Protection and Education
suspicion. A 90-year-old woman in our village unintentionally stuck for access to the maturity Fund, utilized among others to teach inves-
who drew pension as a retired schoolteacher value by the parents. Similar issues arise with tors how to claim what is theirs by under-
left behind a pension account with lakhs in de- PPF accounts opened in the name of minors. standing the operational procedures. Cruel
posits with no nomination. Her very amicable While parents are allowed to make gifts to chil- irony.
son and daughter who cared for her are still dren, the income arising from these are taxable
running from pillar to post. A simple act of in the name of the child. Such income will be
Please send your feedback to
transferring the pension through a standing clubbed to the income of the parent (whosoever
[email protected]
instruction every month, into another joint has a higher taxable income) while the child is a