Quarterly Results of Infosys Q2 FY16

Infosys has posted better returns than expected. On the consolidated basis, the company has reported 9.79% & 12.18% rise in its net profit at Rs 3398 crore for the quarter ended September 30, 2015 as compared to Rs 3096 crore for the same quarter in the previous year (Q2 FY15) and Rs 3030 crore for last quarter (Q1 FY16). Net Revenues (consolidated) of the company has increased by 17.19% and 8.92% at Rs 15,635 crore for quarter under review as compared to the quarter ended September, 2014 and June, 2015 respectively.

Latest Key Indicators of the stock are as follows:

Key Market Indicators (Consolidated)
Latest Date 12-Oct-2015
Latest Price (Rs) 1122.50
Previous Close (Rs) 1167.85
1 Day Price Var% -3.88
1 Year Price Var% 13.86
52 Week High (Rs) 1219.00
52 Week Low (Rs) 929.50
Beta 0.68
Face Value (Rs) 5.00
Industry PE 20.10
TTM Period 201509
TTM EPS(Rs) 55.62
TTM CEPS(Rs) 55.63
Price/TTM CEPS(x) 20.18
TTM PE (x) 20.18
Price/BV(x) 4.50
EV/TTM EBIDTA(x) 12.74
EV/TTM Sales(x) 3.98
Dividend Yield% 2.65
MCap/TTM Sales(x) 4.51
Latest Book Value (Rs) 249.68
Market Cap (Rs. In Crores) 257832.04
EV (Rs. In Crores) 227465.04
Latest no. of shares (In Crores) 229.69

 

 

 

Comparison of quarterly results with previous quarter (Q-o-Q) and the same quarter of last year (Y-o-Y) is below:

DESCRIPTION Sep-15 Jun-15 Q-o-Q Var% Sep-14 Y-o-Y Var%
Net Sales 15,635 14,354 8.92 13,342 17.19
Total Expenditure 11,642 10,932 6.49 9,859 18.08
PBIDT (Excl OI) 3,993 3,422 16.69 3,483 14.64
Other Income 793 783 1.28 877 -9.58
Operating Profit 4,786 4,205 13.82 4,360 9.77
Interest          
PBDT 4,786 4,205 13.82 4,360 9.77
Depreciation          
PBT 4,786 4,205 13.82 4,360 9.77
Tax 1,387 1,175 18.04 1,264 9.73
Profit After Tax 3,399 3,030 12.18 3,096 9.79
           
Adj. Calculated Diluted EPS (Unit.Curr.) 14.85 13.24 12.16 13.53 9.75
           
PBIDTM% (Excl OI) 25.54 23.84   26.11 -2.17
PBIDTM% 30.61 29.29   32.68 -6.33
PBDTM% 30.61 29.29   32.68 -6.33
PBTM% 30.61 29.29   32.68 -6.33
PATM% 21.74 21.11   23.20 -6.31

 

Company has also declared interim dividend as follows:

Up Coming Corporate Action
Event AGM / Board Meeting / Record Date Details
Ex Dividend 19-Oct-2015 200% – Rs. 10

 

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Morning Huddle 14 Oct 2015

Click to get Indian indices weekly update, Global market indices and Commodity Updates dtd Oct 14, 2015 at IFMs link :

http://www.ifmglobal.in/Uploads/Attribute/morning-huddle-14-oct-2015.pdf

 

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Why markets may correct further?

We have witnessed some volatility in markets during March 2015 it may remain so for some period due to many reasons. Explanation of these reasons is as below.

Indian markets have performed very well for more than one year. NIFTY touched its highest level of 9100 in March 2015, which is a rise of 70% from its low of 5300 level in August 2013 without giving a single correction of 10% or more. It is not a healthy sign for any kind of trend & signals toward a correction.

RBI did its second rate cut of 25 basis points on March 4. It was also the day when markets touched its life time high in early trades. But it could not maintain that level and closed in red mark. It was a major trigger for markets to lead it to further highs, but it failed to do so & since then markets have corrected 8% from its high.

Untimely rains in India have how to beat  1.81 crore hectare crops of most of states of India so far. It is going to impact the inflation in times to come which RBI has brought under the set targets with so many attempts and so much difficulty. It may also delay the further rate cuts. Also it has hit the farmers heavily which will lead to loan defaults. It will further hamper the demands in different sectors due to less spending by rural India.

Corporate earnings have still not picked up & dismal earning growth will be witnessed for current quarter too. Markets have grown at much higher pace as compared to earnings growth from past 2-3 fiscals continuously. It is not good as markets are slave of earnings.

Europe has still not recovered as demand in euro zone is still not picking up. China and Japan are also facing downtrend in demands. It will hurt the export led sectors of India. Also currency war is under process in the world. INR has remained flat as compared to USD but has appreciated heavily against the baskets of currencies of other countries. It will further hamper the competitiveness of Indian export companies. Also, US may hike interest rates this year which will lead to some volatility in foreign inflows in India. All these global factors are also indicating the volatility ahead.

Due to all these reasons markets may remain volatile for some period and may correct further from current levels.

Posted in Useful Articles

Save tax by investing in equities and debt.

The most common  and accepted form of  investment is  fixed deposits. The interest which they earn gets added into their income and thus they end up paying marginal rate of tax. For example a person, who is 30% tax slab, gets Rs. 1,00,000 interest income on his fix deposits at the interest rate of 9% then he has to pay 30.9% tax on the interest income and finally gets Rs. 69,100 in hand. It means you get just 6.2% return in hand after tax. So, there is the need to understand other investment options & their taxation.

Save tax  by investing in equities and debt

An alternate to fixed deposits  with minimum risk  is Debt funds. They invest in Govt. & corporate interest papers. However while investing in these funds one needs to keep in mind the  taxation. If one invests for less than 36 months then the taxation is just like the taxation on fixed deposits, but if one invests for more than 36 months then he will have to pay 20% tax after indexation. For example if a person earns 9% annualized return and inflation rate is 6% which means he/she earns 3% after inflation and will have to pay 20% on it which will be just 0.6%. So one will  be  able to get 8.4% return in hand after tax irrespective of your tax slab.

However in terms of returns the best advisable option to invest is the equities. One can buy stocks directly from the market or through equity mutual funds. Equity markets may be risky for short tenure, but in long run they provide highest returns in comparison to other asset class. SENSEX has provided the annualized return of 16.8% since inception. Also the taxation in equities is low. If one invests for less than 12 months then it will be consider as short term capital gain & he will have to pay 15.45% tax on capital gain. If one invests for more than 12 months then gain will be considered as long term capital gain and it will be totally exempted from tax.

Third option could be the balanced funds where at least 60% is invested in equities and rest in debt. It is safer then equities but riskier than debt. In long run balanced funds have provided annualized return of 14-15%. The taxation of balanced fund is same as in equities. So by investing in balanced fund you can save the tax even on the portion which has been invested in debt.

However investment in any of the above asset class will depend on risk profile of  the customer  and time horizon  of the investment.  A  Financial advisor can assist you in understanding  your risk profile  and advise you right investments  to achieve your  financial goals.

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SENSEX posted 31% fall in earnings in the quarter ending March-15

Corporations posted heavy falls in the earning in the quarter ending Mar-15. Bad results were being estimated but no one had expected such huge falls in profits. SENSEX earnings (of 25 companies who has posted results so far) in Q4 FY15 have come down by whopping 31% as compared to the year before in Q4 FY14.

Company Name

Q4 FY15

Q4 FY14

Percentage Change

Vedanta

-19,228.12

1,621.55

-1285.79

Tata Steel

-5,674.29

1,035.87

-647.78

Tata Motors

1,716.50

3,918.29

-56.19

BHEL

888.35

1,844.59

-51.84

Bajaj Auto

69.14

137.71

-49.79

GAIL

510.75

972.03

-47.46

Hindalco

159.53

248.15

-35.71

TCS

3,712.67

5,357.61

-30.70

ONGC

3,935.07

4,889.00

-19.51

Hero MotoCorp

476.53

554.43

-14.05

Coal India

4,238.55

4,434.19

-4.41

Wipro

2,272.00

2,226.50

2.04

Infosys

3,097.00

2,992.00

3.51

ITC Ltd.

2,361.18

2,278.01

3.65

Dr. Reddys Lab

518.84

481.6

7.73

Reliance

6,381.00

5,881.00

8.50

HDFC Ltd.

2,646.35

2,414.70

9.59

ICICI Bank

3,084.92

2,724.26

13.24

Hindustan Unilever

1,018.08

872.13

16.73

Axis Bank

2,180.59

1,842.32

18.36

SBI

4,694.11

3,963.82

18.42

HDFC Bank

2,806.91

2,326.52

20.65

Bharti Airtel

1,255.30

961.6

30.54

Maruti

1,284.24

800.05

60.52

Tata Power

159.14

-145.33

209.50

SENSEX (25 Companies)

66,628.34

96,331.60

-0.31

Read more ›

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Investors should invest in quality stocks to get the right benefit of the correction

Markets are facing correction since March, 2015 after NIFTY touching life time high of 9100. Markets have corrected by almost 10% since then due to various reasons, the most important among them is the low corporate earnings. Correction may continue for some time further. This correction is going to provide opportunities for fresh investments as valuations are again becoming attractive.

quality-stocks-for-investment

In this correction, stock prices of large-cap companies have already fallen by 10-20% & where as of mid-cap & small-cap companies by whopping 20-30%. These prices are attracting investors for fresh investments. But the prominent question here to ask is where one should invest to maximize the returns while keeping the risk low. For fresh investments, one should go for quality stocks to get the maximum benefit of this correction. Also one should also try to reshuffle his portfolio by selling the non-quality stocks and replacing them with quality stocks.

Rationale behind it is that price of company’s stock is function of potential growth in earnings in long term. It is not the past which determines its price & its growth. Most of investors have a myth that if share price of company has done well in past then it will definitely do well in future too. Actually, share price of penny stocks & low quality shares jumps heavily in Bull-run & these shares also dive heavily during correction, not to see its previous high for long term or sometimes ever. People start investing in these low quality stocks and get stuck in them for long term without receiving any gains.

One should invest in quality stocks which have strong fundamentals. Quality stocks have the potential to multi-fold & these shares outshine the markets. Even if the price of quality stocks goes down, these stocks keep the potential to jump back. Thus quality stocks do provide higher return with low level of risk in long term.

To determine if the particular stock is a quality stock or not, one should follow some rules. Firstly, the company should have a product which do have some kind of competitive advantage against others & ho much sustainable it is. It helps to sustain as well as to provide growth in revenues and it also helps in high margins. Secondly, one should check if the management provides the return back to shareholders or not. One should never invest in company whose management is not good even if product is very promising. Thirdly, company should have potential of growth in business. One should also look how company has performed in tough times. If one can perform well in tough times then he can do wonders in favorable times. Fourthly, how the valuations of company looks. One should try to buy at cheep valuations as it reduces the risk of downsize and at the same time increases the return potential. Corrections normally help in providing right valuations.

This correction is going to provide an opportunity to everyone for fresh investments. One should invest warily in right stocks. Also start investing in tranches as correction may continue for few months. Once you have invested in right stocks then there will be need of just sitting tight to enjoy the ride.

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Why markets may correct further?

We have witnessed some volatility in markets during March 2015 it may remain so for some period due to many reasons. Explanation of these reasons is as below.

Indian markets have performed very well for more than one year. NIFTY touched its highest level of 9119 in March 2015, which is a rise of 78% from its low of 5118 level in August 2013 without giving a single correction of 10% or more. It is not a healthy sign for any kind of trend & signals toward a correction.

RBI did its second rate cut of 25 basis points on March 4. It was also the day when markets touched its life time high of 9119 in early trades. But it could not maintain that level and closed in red mark at 8923. It was a major trigger for markets to lead it to further highs, but it failed to do so & since then markets have corrected 8% from its high.

Untimely rains in India have ruined 1.81 crore hectare crops of most of states of India so far. It is going to impact the inflation in times to come which RBI has brought under the set targets with so many attempts and so much difficulty. It may also delay the further rate cuts. Also it has hit the farmers heavily which will lead to loan defaults. It will further hamper the demands in different sectors due to less spending by rural India.

Corporate earnings have still not picked up & dismal earning growth will be witnessed for current quarter too. Markets have grown at much higher pace as compared to earnings growth from past 2-3 fiscals continuously. It is not good as markets are slave of earnings.

Europe has still not recovered as demand in euro zone is still not picking up. China and Japan are also facing downtrend in demands. It will hurt the export led sectors of India. Also currency war is under process in the world. INR has remained flat as compared to USD but has appreciated heavily against the baskets of currencies of other countries. It will further hamper the competitiveness of Indian export companies. Also, US may hike interest rates this year which will lead to some volatility in foreign inflows in India. All these global factors are also indicating the volatility ahead.

Due to all these reasons markets may remain volatile for some period and may correct further from current levels.

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Why should you invest in debt oriented mutual funds instead of FDRs?

In India, most of investors are conservative & thus invest their liquid money into fixed deposits. In fact there is great need to provide awareness about alternate products which provide better returns and are also very safe & very less risky.  Debt oriented fund is a great alternative to FDRs right now. It is a product which constitutes govt. debt papers and corporate debt papers.

To collect funds both govt. & corporate issue debt papers/bonds. They provide specific interest on these papers. Duration of these papers can be both short-term & long-term. Most important thing about it is that these papers are tradable. Government securities, also known G-sec are less risky as compared to corporate papers. Trading price of these papers is also the function of interest rate changes.

One should understand how he can take benefits from interest rate cycles. Prices of bonds have inverse relation with interest change. If interest rates come down then the prices of bonds go up and vice-versa. Also, longer the maturity period/duration of bond higher will the impact on price change. Let’s try to understand the impact of interest rate change on price in very easy manner with one simple example. Say, Govt. issues a debt paper at INR 1,000 with annual interest rate of 8% with maturity of 10 years. In next few weeks if interest rate falls by 0.25% or 25 basis points then the bond price should also shift to the level where it will get 7.75%. Due to this adjustment price of bond will increase to INR 1,017. So the fall of 0.25% interest rate gives you the capital appreciation of 1.7% and you will also get 8% returns annually on the investment paid.

repo-rate-india-Jan2006-Jan2015

India is currently going through the face where Inflation levels have come down, thus actions will be taken to strengthen GDP growth. Declining phase of interest rates has started and interest rate will further fall in coming period. Right now the repo rate is 7.75% and 10 year govt. sec yield is 7.70% approximately.

As interest rates are in declining phase one should invest in high duration government securities or GILT funds. GILT funds invest only in government securities. So the risk of loosing money is even lesser than banks. If interest rates fall by 100 basis points by year end and which is expected then GILT funds can easily give 15% return. These investments are very safe as they are not related to stock market.

Also, if one holds these funds for more than 3 years then he gets tax benefits on the income/return generated. If investments made under these funds are for more than 3 years than tax on the income generated will be taxed at 20% after indexation irrespective of tax slab. For example, if one gets annualized return of 10% & inflation is 7% then tax will be 0.6% (20% of 3%), but in FDRs return is added to your income and is taxed accordingly to your tax slab. For example, if your tax slab is in 30% range then, in FDR giving 10% annualized return, you will get just 6.91% return in hand after taxation.

GILT Scheme Name

Returns

1 Year

Since Inception

Birla SL Gilt Plus-PF

22.10%

8.76%

Franklin India G-Sec-LTP

22.70%

9.06%

ICICI Pru Gilt-Invest-PF-Reg

23.10%

8.98%

Reliance Gilt Securities Fund

20.70%

8.78%

GILT funds have also performed very well last year as shown in table and it may continue for next 2-3 years till the interest rate cycle reverses. So its time to accept and invest alternates of traditional products to get good returns.

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Debt Market Outlook 2014-15, Reliance Regular Savings Fund–Debt Plan(Growth option) – Mr. Prashant Pimple (CIO, Reliance Mutual Fund – Debt)

MINUTES OF MEETING

Venue Board room, Chandigarh office Date November 25, 2014
Subject Debt Market Outlook 2014-15, Reliance Regular Savings Fund –Debt Plan – Growth option Time 1730 Hrs
Details

 

Discussion with Mr. Prashant Pimple (Chief Investment Officer, Reliance Mutual Fund – Debt) Duration 45 mins

Participants:

Internal Iqbal Singh, Anuj Singla, Pankaj Sharma, Jagjit Singh, Akaljot Singh
External Mr. Prashant Pimple

Agenda:

  • Debt Market Outlook 2014, Reliance Regular Savings Fund – Debt Plan, Growth option

Discussion:

  • Mr. Prashant started the discussion by saying that we have the Interest rate Policy coming next week.
  • Mr. Prashant stated that a lot has happened in the past 2-3 months in India and outside.
  • Oil has come down significantly. We have an OPEC meeting on Nov 27th 2014, and so Crude might go up in the short term if they cut output.
  • We don’t expect Crude to fall to USD 50-60 levels. We think its range should be USD 70-90.
  • Crude price fall has also impacted our local Oil prices and the subsidy on Diesel has also been done away with. In CPI also Crude has 10% weightage.
  • Lower Minimum Support Price and lower wages will support low inflation.
  • All these factors should contribute to keeping CPI around 6%.
  • In GDP, Fiscal Deficit and CAD: Fiscal Deficit is the outcome of what kind of subsidies we are paying. Next year we expect the Food and Fertiliser subsidies to be targeted.
  • GDP appears to have bottomed out.
  • CAD is dependent on how INR moves. Should be around 2.5%.
  • Therefore, most macroeconomic factors are quite in favour of low yields.
  • Secondly, a lot of FII money has come in.
  • India has less flows as a %age of XYZ . Only 4% as compared to 30% eg. in Malaysia.
  • Lastly, RBI has been contemplating US rate hikes. We believe India will not be impacted so much, because the quality of investors is good.
  • If US continues to hike rates, then Europe and others will buy their securities and yields will drop. Doesn’t look like US can continue to hike rates.
  • Secondly, US-India differential has been historically 600 bps. But it has also seen a low at 200 bps in the past. Dependent upon inflation data.

So, India can reduce rates, and US can increase rates and Bps gap can reduce for some time.

  • We have a majority party now so good reforms are expected. Environment not like UPA II. 
  • Returns on Dynamic Bond Fund: 8-9% since March, due to changes in Duration. Over a 3 year period, returns have been very good.
  • Over longer periods of time, Duration management pays off, although in a shorter period it could be volatile.
  • Relative to FDs, it is a strong case, this Fund. It has low volatility. Past year’s returns have been 9.5%, greater than FD and Post Office schemes.

Question Answer Session

Q1 Iqbal Singh: RRSF Debt: Mod. Duration 6.78 and YTM is 8.81. Your opinion on which side we should take the call ? Further Nil exit load on Reliance income fund relative to RRSF. What was the criteria ?

A: Mr. Prashant: Reliance Income fund has no exit load because it is playing on duration and good exposure to Gsec. RRSF debt portfolio is illiquid and playing on accrued income with credit spread.(YTM-10.55%) Its papers are not sold so easily. Hence lock in is there.

Q2 Iqbal Singh: What is the rationale behind Edison Utility Works, or Pune Infoport etc., which are large percentages of your portfolio but not big names and not rated ?

A: Mr. Prashant: Edison is an exposure to the Zee group. Pune Infoport is an exposure to Blackstone (Express Towers at Nariman Point).

Underlying assets are very strong even if names are not known. Loans against shares. Locked in at 13-13.5%. Our average rating is AA. We have flexibility to go upto A.

Café Coffee Day is a lending to its owner. Similarly lent to Mindtree.

Purely Loans against Shares (LAS)  operations. Have not done anything in which the cover is less than 2.

Q Iqbal Singh: Out of Dynamic Bond Fund and Income Fund how should we allocate ?

A Mr. Prashant: Keep 60% in Dynamic Bond Fund and 40% in Income Fund

Q Iqbal Singh: Dynamic Bond Fund started on Nov 15, 2004, since Inception IRR 6.7% ?

A Prashant: It was earlier started as NRI fund and got merged to dynamic bond fund in 2009.

 

 

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Market Outlook 2014, SBI Magnum Balanced Fund – Mr. R Srinivasan (CIO, SBI Mutual Fund)

MINUTES OF MEETING

Venue Board room, Chandigarh office Date November 20, 2014
Subject Market Outlook 2014-15,

SBI Magnum Balanced Fund

Time 1600 Hrs
Details

Discussion with Mr. R Srinivasan (Chief Investment Officer, SBI Mutual Fund) Duration 45 mins

Participants:

Internal Iqbal Singh, Anuj Singla, Pankaj Sharma, Akaljot Singh, Jagjit Singh, Vishwapreet Singh, Jagdeep Singh
External Mr. R Srinivasan, Mr. Sandeep Sharma

Agenda:

  • Market Outlook 2014, SBI Magnum Balanced Fund

Discussion:

  • Mr. Iqbal Singh started the discussion by asking Mr. Srinivasan dlpwa.com new zealand adult friend finder keygen about his view on the macro picture of the economy.
  • Mr. Srinivasan replied that they don’t do macro analysis that much. Their approach is bottom to top to meet the companies. Nevertheless:
  • Macro Picture
  • Mr Srinivasan said, that what they’re coming to know from the companies is that, on the ground, there is no real improvement. The only positive is the sentiment. Expectations are for ahead of reality. The recovery is expected to be cyclical in nature.
  • Things have been exceedingly bad in FY’2014. In fact in some sectors numbers have been even worse than FY’ 1996.
  • Hence we expect a cyclical recovery and a mean reversion to do it.
  • Market has already started factoring in a cyclical recovery. FY’15-16-17 has already been factored in. Beyond this, market is not factoring it in. austin texas 6th st web cams So valuations are not so expensive also.
  • However, http://jcpuriart.com/spooz/free-older-swingers-personals/ finding good companies is difficult now. If valuation comfort is there, growth comfort is not there. If there is growth in EPS , valuation are unreasonable.
  • On the other hand in many companies, Eg. SKF, it is very expensive, but at least it’s a good company. Similarly, BOSCH. It has gone to Rs 20,000/-. We were expecting it to be a defensive play. But it has run up so much.
  • Risk reward tradeoff is not very attractive. But then Mr. Srinivasan says, he’s usually cautious.
  • On The Balanced Fund side
  • The Balanced Fund is kept as 75% Equity and 25% Debt. Mr. Srinivasan manages the 75% portion. Of this he keeps 40% in Large Caps, and 60% in Mid & Small Caps.
  • So, of the Fund, 50% is safe and 45% is risky.
  • The Small & Mid Cap portions have done very well. That’s why the Balanced fund has done well.
  • Question & Answer session

Q1 Iqbal Sir: If we look at your Balanced fund, relative to its peer group, your PE and P/Book ratios are higher. Any particular reason ?

A: We haven’t really looked at it, and were also not aware. We will need to look into it and let you know.

Q2 Iqbal Sir: Your highest holding is HDFC Bank in your portfolio ? Don’t you think it has underperformed in the last one year ?

A: We can’t look at HDFC Bank from such a short term perspective. I feel it can do in the next 10 years, what it has done in the past 10 years.

It is an amazingly well managed stock and is trading at a PE of 12.

The risks are if Aditya Puri moves out of the bank, but it looks unlikely. Or, the Bank merges with HDFC. We’ll have to monitor these.

It has doubled its branches in the past 3 years, and is investing heavily in Tier II & III http://comercializadoraroma.com/ds/2013/11/08/olivia-munn-dating/ cities. It is a brilliant strategy, and therefore the bank is a good buy.

Q3 Iqbal Sir: You always have a contrarian view, and it pays off well. After Private Banking, you have Auto Ancillary as your major exposure. Tube Investments is present in most AMC’s funds. Any particular reason ?

A: For the past two years, Autos were flat. When recovery comes, Auto Ancillaries do well.

So we bought Ramkrishna Holdings, and Sundaram Clayton which we couldn’t get reative dating enough of.

Tube Investments is a Holding company, holding Chola Investment and Finance, and Shanti Gears. Of itself Tube Investments manufactures cylindrical tubes etc.

We think its valuations are quite reasonable. Upside 10-15% along with business upturn.

Q4 Iqbal Singh: Could you shed some light on Vinati Organics use web cam on hp pavillion ?

A: It is a Speciality Chemicals company, competing against Dow Chemicals etc. It has 60-65% market share and great ROCE.

Q5 Iqbal Sir: If we say, markets have run ahead of fundamentals, what’s your assessment of returns in the portfolios in the next one year ?

A: Frankly, I don’t expect much returns. But momentum is there, so you can’t say.

It is not easy to find 25 stocks today which will double in the next 1 year.

Q6 Iqbal Sir: A direct question – Can I shift money from Debt to Balanced ?

A: Yes secret encounters singles can. But economic numbers will come only after one year. Not right now. Market has run ahead of its numbers.

 

 

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