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Lets start 🏃🏽‍♂️ FY23

What sensational did you missed this week?

  • India’s air traffic in Jan stood at 1.25 cr – 96% more than in Jan 2022.

  • Sugar production rose 2.8% to 2.28 cr tonnes till Feb 15 of the ongoing marketing year: ISMA

What can you learn from this?

  1. Sectoral Analysis of the Aviation sector and Sugar Sector. The latter is a cyclical sector

Upcoming IPOs:

  • Srivasavi Adhesive Tapes Limited IPO and SVJ Enterprises Limited IPO opens 23rd Feb 2023.

  • Amanaya Ventures Limited IPO opens 24th Feb 2023.

  • ITCONS E-Solutions Limited IPO and ResGen Limited IPO opens 28th March 2023.

Video in Focus!

Wish to start your Investments for FY 2023? Click here to start!

Market Outlook this coming week!

Nifty50 : This Week

You Ask We Deliver Section:

Topic: Fundamental Analysis of Tech Mahindra
Requested by: Praveen

Financial Sheets:

  • The stock has very impressive 5Yr ROCE of 24.5%.

  • The company has a good surplus Free CashFlow for previous 5Yrs and 3Yrs.

  • Promoter holding is good at 35%, but it is very slowly decreasing (in decimal points) which raises some eyebrows, as promoters are slowly booking their profits.  

  • Sales growth (around 9%) is a little below the sectoral average of 11.19%, but has been consistent and in uptrend. Compounded profit growth for 5 Years is at 15% which is very similar to what Nifty50 has provided in the past decade.

  • A healthy increasing trend in EPS and Operating profits. 

  • Interest well within limits and impressive Interest Coverage Ratio.


Valuation Metrics:

  • Stock PE (21.1) is less than Sectoral PE (27.2)

  • Stock is trying to breakout of its consolidation zone. 

  • The stock has recently closed above 200 Daily Moving Average, producing a buy signal. 

Dividends for the past year: 
Rs 15 (300% in July) Special
Rs 15 (300% in July) Final
Rs 18 (360% in July) Special Interim

Dividend Yield at 1.32% and fair Dividend Payout which is fair but not good if seen as a Dividend Investment Strategy stock.

Technical Perspective of the Stock:

 

About and Perspective:

  • The company provides a range of IT services – IT enabled service, application development and maintenance, consulting and enterprise business solutions. 

  • The company has a global presence with 1,50,000+ employees across 90+ countries. 

  • The company offers a wide range of services e.g. infrastructure & cloud services, engineering services, application services, data analytics, network services, testing services, performance engineering, Security & risk management services, business process services, product engineering, consulting, etc. 

  • The company has good Moats specifically Brand Loyalty.

Ranked 6th as per Market Capitalization in Peer Comparison.

Verdict: Good buy and right now at fair valuation but keep stop loss towards end of consolidation zone.

This is not a financial advice. 

Disclaimer: This is not recommendation to buy/sell. It is just for the purpose of information.

Story of the Week

Two friends Priya and Siya, were working together in an IT company and were extremely confident about the growth of this sector. They planned to invest Rs 10,000 per month with a goal to buy a house for themselves with the amount after 10 years.


While Priya researched to find the right Mutual Fund by checking the Asset Under Management and Expense Ratio, Siya just divided her SIP into 10 Mutual Funds available in the market at that time.

Whenever the uptrend started after markets corrected, Priya increased her SIP by 10% for some time while Siya replicated the same while markets were falling. Initially there were no differences or profits that appeared in their portfolio, but as time passed by differences became prominent.Priya was getting very good growth about 15% per annum while Siya’s growth was little lesser. This put Siya in confusion as what went wrong with her. Withdrawing the amount after 10 years, Priya had more money than Siya.

 

The two mistakes which Siya committed were:

 

1. Over-Diversification: She invested her money into way too much Mutual Funds, in which some of them were good, while other were not so good.

Tip: Never take more than 3 Mutual Funds for the same sector.

2. Expense Ratio: She never looked at the expense ratio of the Mutual Funds, which was the next major reason for the difference.
Tip: Always look for Expense ratio!

3. Investing more, but at right time: While Priya averaged up by putting her money when the uptrend resumed Siya averaged down as she put her money when markets were correcting.

Tip: Always try to average up and not down!

Question of the Week #5

Replies with correct answers (within the first 5 mins of receiving this newsletter), will get a shoutout from us...

PS: Don't forget to share your Instagram handle too in the reply!

What is the full form of IRDA?
1. Insurance Regulatory Development Association.
2. Investment Regulation Development Authority.
3. Insurance Regulatory Development Authority.
4. Investment Regulatory Development Association.

Answer to Week#4 was option 1 (Pledged Shares are Promoter shares which are kept as collateral to avail a loan, where interests and capital gains on such shares continue.)

Word of the week

SIP: SIP or Systematic Investment Plan is an investment mode wherein the investors deposit a certain sum at fixed intervals into a certain asset such as Mutual Fund, or stocks etc. The period might be repeating daily, weekly, monthly, semi-annually, or annually etc. Although the widely popular one is monthly, and that’s why we hear about monthly SIPs so much!