Evolving Trends in Wealth Management in India

Historically, customers perceived wealth management to be a complex subject that only a few people understood. They lacked the knowledge to decipher the jargon and functions of these products.

As a result, the market remained under-penetrated, with customers preferring gold, real estate, and bank deposits as safe investments. However, much of this dynamic has shifted in the last 5-7 years. Bank deposit rates have fallen; real estate and gold have been difficult to profit from. Customers are increasingly interested in investing in financial assets. This is likely to be a 10-to-20-year transition in which Indians will demonstrate a strong preference for owning financial assets.

A classic Indian wealth client today is far well-versed than a decade ago. Based on the data of domestic inflows and outflows during market ups and downs, it is clear that the average Indian’s risk-taking ability has increased across income categories.

The wealth management industry is thriving. The international wealth management industry is anticipated to grow at a CAGR of 10.7% between 2021 and 2030, from USD 1.25 trillion in 2020 to USD 3.43 trillion by 2030. Race for high-net-worth individuals (HNWIs) is also fiercer than ever. As a result, in order to remain important and capture a larger share of this growing market, businesses must keep up with the newest trends.

Let’s take a look at some of the emerging trends in this industry:

  • The growing use of artificial intelligence is one of the industry’s developing trends (AI). AI can be used in a variety of ways to increase productivity, and profitability for wealth management firms, from customer acquisition to portfolio management and compliance.
  • The explosion of smartphones and internet access has familiarised investors to the domain of technology. Investors are increasingly gravitating toward platforms with simple user interfaces that allow them to make investments with the swipe of a finger.
  • Client-centricity is being ranked in the face of strong competition and margin pressure. This translates into a greater emphasis on customization and responsible goal-based wealth advisory, rather than simply financial product distribution. Wealth managers are rethinking their product strategy for their clients, taking into account cash flows as well as risk-adjusted returns.
  • Companies have tried various new tactics to reach a younger demographic over the years. Financial institutes, such as banks and wealth management firms, have been bidding to reach millennials by modifying their offerings to this demographic.
  • Another notable trend is the emphasis on asset diversification across financial and physical assets, as well as client recommendations to include foreign assets in their investment portfolio.
  • As technology becomes more inescapable in our lives, an increasing number of businesses are proposing digital-only services. Digital firms are becoming more and more common in the wealth management industry. Digital wealth management firms provide their services solely through digital channels such as the internet and mobile applications, eschewing physical offices entirely.
  • The rise of robust portfolio evaluation processes is another crucial trend in the wealth management industry. A human financial advisor may be the best choice for a client in some cases, but clients also expect some level of automation. In other words, they want their financial advisor to be able to create an investment strategy using technology and algorithms.

Wealth management is a competitive and difficult industry. Companies must keep up with the latest trends and adapt their services and offerings to meet the changing needs of their clients in order to thrive in this environment. Wealth managers are expected to curate differentiated ideas, stay ahead of the curve by uncovering opportunities, identify evolving trends, and efficiently execute them for investor portfolios in this environment. The above-mentioned points are just a few ways wealth management firms are attempting to expand their presence and stay ahead of the curve.

FPI – Foreign Portfolio Investment

FPI - Foreign portfolio Investment

Investors who invest in foreign portfolios are known as Foreign Portfolio Investors. It involves a collection of financial assets like fixed deposits, stocks, and mutual funds. All the investments are passively held by the investors.

Foreign Portfolios increase the volatility, which leads to increased risk. The reason behind investing in foreign markets is to diversify the portfolio and fetch some good returns on the investments. Foreign Portfolio Investment is a prominent investment alternative nowadays. From individuals, businesses to even Governments invest in Foreign Portfolios in India.

FPI is not to be confused with FDI (Foreign Direct Investment). In an FPI investors do not actively manage the investments or the companies that issue the investments. The investor has no direct control over the assets or the businesses. On the contrary in an FDI the investor purchases a direct business interest in a foreign country. This FDI investor controls their monetary investments and often actively manages the company into which they put money.

India has been attracting more than 50% of its FPI from three countries – US, Mauritius & Luxembourg. Out of Rs 44.62 lakh crore investment, US investors accounted for Rs 15.38 lakh crore, Mauritius Rs 5.29 lakh crore and Luxembourg Rs 3.74 lakh crore, according to data from National Securities Depository Ltd (NSDL). The liberal policies followed by the US Fed have facilitated such flow of funds to the emerging markets with India also benefiting.

– written and contributed by Divya Shetty.

 

 

 

 

No Luxury Items for Nepal!

This move made by the government is not to live a modest life but it has been done in order to avoid any severe financial crisis.

Nepal’s trade deficit rose by nearly 34.5% on year to $9.35 billion in mid-March, while forex reserves have fallen below $10 billion.

The import ban is aimed at averting the situation now faced by Sri Lanka, which is enduring its worst economic crisis in decades after running out of foreign exchange to pay for imports. The South Asian island nation has suffered months of extensive blackouts and severe shortages of food, fuel, and pharmaceuticals, with angry demonstrations demanding the government’s resignation.

The Himalayan country has decided to ban these imported items until July 2022.

  • Cars
  • Motorbikes above 250cc
  • Colour TV above 32 inches
  • Tobacco
  • Whisky
  • Toys
  • Playing cards
  • Diamonds

Falling payments and tourism earnings, combined with a blowout budget deficit, have severely knocked off Nepal’s fiscal position during the Covid-19 pandemic. Another reason is the rising prices of oil and the situation was further worsened by the Russian Ukrainian war.

In addition to the ban, the government has also decided to introduce 2 public holidays every day from Saturday to Sunday. This decision was taken to save consumption of petroleum products and save foreign currency as well.

According to the Central Bank, the reserves are sufficient only to cover the imports for the next 6 months. This is a good short-term measure used by the government but they should also focus on a long-term measures to boost foreign investment and export earnings.

– written and contributed by Divya Shetty.

Hariom Pipe Industries IPO Opens Today – Should You Invest in Hariom Pipe IPO?

The INR 130.05 crore Hariom Pipe IPO has opened for subscription today and will remain open till 5th April 2022. The company specializes in the manufacture of a wide range of iron and steel products including Mild Steel (MS) Pipes, Scaffolding, HR Strips, MS Billets, and Sponge Iron.

MS Pipes manufactured by the company is marketed under the brand name ‘Hariom Pipes’ in the western and southern markets of India. The company also sells MS Pipes and Scaffoldings to specific developers and contractors as a part of its B2B sales. The company has a well-established network of more than dealers and distributors.

Incorporated in the year 2007, the company operates two plants, at Mahabubnagar District in Telangana and Anantapur District, Andhra Pradesh.

Hariom Pipe Industries has more than 200 employees, 1400 plus retailers distribution network, 150 plus manufacturing specifications, and a total of 300832 MT manufacturing capacity.

According to the Red Herring Prospectus (RHP), the company plans to use the proceeds of the IPO for funding the company’s capital expenditure, working capital requirements and expenses for general corporate purposes.

Some quick facts about the Hariom Pipe IPO:

Price band of the IPO

The price band for IPO is between Rs. 144 to Rs. 153 per share.

Lot size

The minimum lot size for the IPO is of 98 shares.

Issue size

The issue size for is Rs. 130.05 crores.

Listing date

Shares of Hariom Pipe are likely to be listed on 30th December 2021.

Key strengths and opportunities

  • The company makes use of environment-friendly manufacturing process
  • Manufacturing units of the company are strategically located
  • Cost advantage in manufacturing our products
  • Company’s products are competitively priced
  • Well-experienced & qualified management team

Key factors to keep in mind while investing in the Hariom Pipe IPO:

In its Red Herring Prospectus, the company has listed some factors which may impact the future performance of the company, such as:

  • Any increase in prices of raw materials or any decrease in the supply would materially adversely affect the company’s business.
  • The company sells its products through a large network of distributors and dealers. Any payment delay or default in payments or deficiency in services by any of the company’s channel partners, could adversely affect the company’s goodwill and operations.
  • Disruption of third party mining operations may impact the company’s ability to obtain raw materials at reasonable prices thus affecting the company’s business and results of operations
  • The company operates in a segment where there is intense competition from both domestic  companies and  multi-national  companies  with  wider product  ranges,  bigger  brand  recognition,  stronger  sales  forces  and  larger  financial  resources  and experience,.

For complete list of risk factors please refer to the Red Herring Prospectus.

To invest in the Hariom Pipe IPO click here.

– Written and contributed by Pradeep Sukumaran.

Ruchi Soya FPO Opens – Should You Invest in Ruchi Soya FPO?

The Rs. 4300 crore Ruchi Soya FPO has opened for subscription on 24th March 2022 and will be available till the 28th of March 2022.

Founded in 1986, Ruchi Soya is a top ranking player in the FMCG segment, especially in the domestic edible oil sector. The company also ranks as the largest manufacturers of soya foods with massive presence across the entire value chain in upstream and downstream businesses with secured palm plantations.

Ruchi Soya’s product offerings include edible oil and by-products, honey, atta, oleochemicals, textured soya protein, biscuits, cookies and breakfast cereals, nutraceuticals and wellness products.

The company has recently ventured into premium products such as Neutrela High Protein Chakki Aata  and  Neutrela Honey to leverage on its popular brand Neutrela.

The company owns 22 manufacturing units and has a well-established distribution network comprising 100 sales depots, over 4700+ distributors and more than 4.5 lakh retail outlets.

According to the Red Herring Prospectus, the company will be using the proceeds from the issue towards funding capital expenditure for repayment/prepayment of borrowings, funding working capital requirements and for general corporate purposes.

Price band of Ruchi Soya FPO

The price band for FPO is between Rs. 615 to Rs. 650 per share

Lot size

The minimum lot size for FPO is 21 shares.

Issue size

The issue size for Ruchi Soya FPOis Rs. 4300 crores.

Listing date

Shares are likely to be listed on 6th April 2022.

Key strengths and opportunities

  • Backed by the Patanjali group, a leading player in the FMCG segment in India
  • Wide range of product offerings in the FMCG category
  • Huge brand recall value
  • Well-established distribution network across the country
  • Leading player in branded edible oil and packaged food business
  • Well-established manufacturing capabilities
  • Experienced and professional management

Key factors to keep in mind before you invest in the Ruchi Soya FPO:

In its Red Herring Prospectus, the company has listed some factors which may affect the company’s future performance of the company, such as:

  • The company’s inability to anticipate, respond to and meet the tastes, preferences or consistent quality requirements of its consumers or inability to accurately predict and successfully adapt to changes in market demand could reduce demand for our products and in turn, impact the company’s sales.
  • The company is dependent on almost entirely on third-party suppliers in respect of availability of its raw materials. Any disruption in interruption in the supply of such products and price volatility could adversely affect the company business, results of operations and financial condition.
  • Any fluctuations in exchange or prices of agricultural commodities may adversely impact the results of company’s operations.
  • There is intense competition in the FMCG segment where the company operates from multinational manufacturers and marketers.
  • For detailed information on the risks associated with the IPO, please refer to the Red Herring Prospectus.

To invest in the Ruchi Soya FPO click here.

– Written and contributed by Pradeep Sukumaran.

What Is SGX Nifty? Difference Between SGX Nifty And NSE Nifty

Equity has become one of the most preferred instruments for investments today. With rapid digitization, aided by high speed internet and rising incomes, more and more investors today prefer investing in equity over traditional instruments of investments like real estate, fixed deposits, bonds and gold. However, in this rush to invest many people often ignore the basics. While investing in the stock market, it is very important to understand all the important terms associated with it including what is SGX Nifty.

Wish to know more about what is MIS & CNC? Click here.

As an investor one of the most common terms you would come across is ‘Nifty’. You may have come across statements like:

– Nifty closed in red today

– Nifty bounces back by xx points

– Nifty gained xx points today

– Nifty closed in green today etc.

So if you are wondering what is Nifty? Here’s the answer.

Nifty is a benchmark index that represents top 50 companies listed on the National Stock Exchange (NSE) from different economic sectors. Nifty helps investors to understand how different companies which form a part of the Nifty are performing on a regular basis before investing.

What is SGX Nifty?

A derivative of the Nifty index, the SGX Nifty is traded in the Singapore stock exchange platform, where this trade sets a predetermined price of a share and reduces the future risk of any investments. In simple words, just like Indian Nifty which trades on NSE, a domestic stock exchange platform, the SGX Nifty is the futures trade nifty in Singapore. In case of SGX Nifty, as the price of the share is preset, the participants (buyers & sellers) have to commit to that predefined price irrespective of any changes taking place in the stock market in the future.

Being a part of a leading stock exchange, the movement of the SGX Nifty in the Singapore Stock Exchange is useful for predicting and observing the behavior of the Indian Nifty and hence is an important factor in the Indian stock market as well.

Difference between SGX Nifty and Nifty

The basic difference between SGX Nifty and the Indian Nifty is that the SGX Nifty is a futures trade platform in Singapore whereas the Indian Nifty trades only on NSE, the Indian stock exchange. Prices on SGX Nifty are predetermined to avoid the future risk.

The secondary difference between the SGX Nifty and the Indian Nifty is of the contract size. In Indian Nifty a minimum of 75 shares are required in a contract between the buyer and the seller. However, there is no such requirement in the case of SGX nifty. In simple terms, SGX nifty does not have a contract with shares, while Indian Nifty contracts must include shares.

Thirdly, as SGX Nifty is operational for sixteen hours a day there are large volumes of trading activities, making it one of the most active trading platforms in Singapore.

Impact of SGX Nifty on Indian Markets

As we have seen above, SGX Nifty is useful in predicting and observing the behavior of Indian Nifty. As there is a time difference between the SGX Nifty and Indian Nifty with the former opening 2.30 hours before the Indian market, investors can get an idea of what to expect when the latter opens.

In simple words, by observing the SGX Nifty, investors can get a view about the expected direction of the Indian market such as whether it will open in red or green. Hence, investors who have apprehensions about investing in the domestic market can invest in SGX and track the SGX nifty. However, it is also important to understand that there are certain economic differences between India and Singapore which may impact the behavior of the market.  Besides economic factors, there are many other factors as well which may be relevant to markets in Singapore but irrelevant to India or vice-versa.

Both SGX Nifty and Indian Nifty are equally important from an investor’s perspective.

Now let’s take a look at some commonly asked questions:

Who can trade in SGX Nifty?

Investors who are unable to access Indian markets can trade on this platform.

Can Indian investors trade in SGX Nifty?

No Indian citizens are not permitted to trade in SGX Nifty. This is because currently there is a restriction in place which does not permit Indian citizens to trade in derivatives listed on foreign exchanges.

What are the trading hours of SGX Nifty?

It is open for trade on normal working days from 6.30 AM to 11.30 PM IST. The total duration for which trading can be done is 16 hours.

Click here to open a free trading and demat account and trade at the lowest brokerage rate of just Rs. 18/- per order.

– Written and contributed by Pradeep Sukumaran.

LIC DRHP Filed: Everything you need to know

LIC of India has filed the Draft Red Herring Prospectus (DHRP) for its much awaited IPO on 13th February 2022. According to the DRHP, the government is aiming to sell 316 million equity shares to investors through the IPO, out of a total of 6.32 billion equity shares available.  

In this article, let’s take a detailed look at some of the key highlights of the DRHP.

Key takeaways from LIC’S DRHP:

Offer for sale

LIC IPO will be entirely an offer for sale. This means the proceeds of the LIC IPO would go fully towards meeting the government’s divestment target.

Amount of stake sale in the upcoming IPO

Government is planning to sell 31.6 Cr or 5% stake in LIC.

Quota for different classes of investors in the IPO

·   50% of the quota is reserved of Qualified Institutional Buyers

·   35% reserved for retail investors and 15% for non-institutional buyers.

·   5% reserved for employees

·   10% for policyholders.

Embedded value of LIC

According to the draft prospectus, LIC has an embedded value stood at Rs 5, 39,686 crore as on Sept. 30, 2021. Embedded value refers to the present value of future profits plus adjusted net asset value. It is a popularly used metric to value insurance firms globally.

LIC’s Assets under management (AUM)

As of September 30, 2021, LIC’s AUM stood at Rs 39.56 lakh crore.

LIC’s solvency ratio

For the period April-September 2021, LIC’s solvency ratio, a key metric used for evaluating a company’s ability to meet its long term debt obligations stood at 183.4%. It is 3.3 times that of the AUM of all private life insurers and 1.1 times that of the AUM of the mutual fund industry in India.

LIC’s consolidated profit after tax

LIC’s consolidated profit after tax for the FY21 stood at Rs 2,974 crore.

LIC’s market share and agent productivity

As of March 31, 2021, LIC had a market share of 66% in new business premiums with 283 million policies.

According to media reports, for the FY21, LIC had the highest agent productivity at Rs 413,000 per agent. During the same period, the number of policies sold by each agent was 15.3. The company had the highest number of MDRT members among all domestic corporates in the financial services business in the calendar year 2020 at 583 and ranked 25th at global level.

Risk factors mentioned in LIC’s DRHP

Any negative or unfavorable publicity could adversely affect the company’s brand name, business and cash flows.

The pandemic could adversely affect all aspects of the company’s business, such as  restricting the ability of agents to sell products, increasing expenses due to regulation changes, thus affecting investment portfolio or operational effectiveness, and heightening the risks in business.

If actual claims experienced and other parameters vary from the assumptions used in pricing the products and setting reserves for the products, it could have a material adverse effect on business and results of operations.

Fluctuations in interest rates may materially and adversely affect the profitability of the company.

Any adverse persistency metrics or variation in persistency metrics could hit the corporation’s financial condition, operations, and cash flows.

The segregation of the corporation’s life fund into a participating policyholders’ fund and a non-participating policyholders’ fund, with effect from 30th September, 2021, may impact the company’s business and results.

Embedded value calculations involve significant technical complexity and the estimates used in the embedded value reports may vary materially if key assumptions are changed or if experience differs from assumptions used for calculating Indian Embedded Value.

A significant proportion of the corporation’s total new business premiums are generated by participating products and single-premium products. Future regulatory changes or market developments that affect sales of such products will impact the business and cash flows adversely.

About LIC of India

LIC is India’s largest and oldest life insurance company established in the year 1956. The insurance behemoth has a strong network of 1.35 million agents as well as nationwide presence across almost all regions of India. Besides its domestic network, LIC also has operations abroad through its fully owned subsidiary in Singapore, overseas branches in Fiji, Mauritius and United Kingdom as well joint-ventures in Bahrain, Bangladesh, Srilanka and Nepal.

– Written and contributed by Pradeep Sukumaran.

Adani Wilmar Share Prices Surge. Is Adani Wilmar Worth Buying Now?

Despite a muted debut on 8th February 2022 due to weak global cues, Adani Wilmar share prices have surged continuously to hit a new high of Rs. 419.90 recently.

The record gains for Adani Wilmar share prices has catapulted the stock to the big league of top 100 listed companies with a market cap of around Rs. 50000 crores. The market capitalization of Adani Wilmar now stands higher than companies like Tata Elxsi, ABB India, Page Industries, Biocon, Bosch etc.

Seven companies of the Adani Group are currently listed on the stock markets. Of these except for Adani Power, all other companies such as Adani Enterprises (Rs 1.96 tn), Adani Total Gas (Rs 1.96 tn), Adani Green Energy (Rs 3 tn), Adani Transmission (Rs 2.18 tn) and Adani Ports and Special Economic Zone (Rs 1.50 tn) have a market cap in excess of Rs 1 tn each.

Adani Wilmar reports strong Q3 numbers

0n 14th February, Adani Wilmar reported a 66% year-on-year growth in consolidated net profit to Rs 211.4 crore for the third quarter ended December. On a year-on-year basis for the reported quarter, the company’s consolidated revenues also grew 40.6% to Rs 14,378.7 crore.

In a statement issued by the company, Adani Wilmar’s MD & CEO said “We have been able to continue our business performance in line with what we have been able to showcase in the recent past”.

The record growth in company’s topline performance can be attributed to 40 percent year-on-year growth in Adani Wilmar’s edible oil business riding on strong volumes and 46% increase in the company’s FMCG segment.

In the third quarter the company commissioned an additional Oleochemical plant with a capacity of 400 tons per day at Mundra in Gujarat, which resulted in doubling of its total capacity to 800 tpd. The company’s Mundra plant is the largest domestic single location Oleochemical plant.

Besides this, the company also commenced operations of a gram flour plant in Nagpur with capacity of and a 50 tpd soya nuggets plant in Haldia with a capacity of 150 tpd. To grow its massive footprint across the South-East Asian region, the company acquired Bangladesh Edible Oil Limited (BEOL), by taking 100 per cent stake in Adani Wilmar Pte Ltd (AWPTE), the former’s holding company.

With this, many investors are asking the same question:

Is Adani Wilmar worth buying at current levels?

While a possibility of correction in the near term cannot be ruled out given the unprecedented surge in Adani Wilmar share prices, the long term prospects for the stock appear bright given its strong fundamentals and backing of its parent group.

Another reason for this meteoric rise in Adani Wilmar’s share prices could be its reasonable valuation (PE of 37.56x) compared to peers in the FMCG industry such Britannia (54.7x) and Nestle (81.6x).

With its diversified product offerings in the FMCG category, strong brand recall value and well-established distribution network across the country the company is a leading player in branded edible oil and packaged food business. The company offers a wide range of FMCG goods such as edible oil, wheat flour, rice, pulses, and sugar. Besides this Adani Wilmar is also the largest domestic basic oleochemical manufacturer and backed by an experienced and professional management team.

In its Red Herring Prospectus, the company had mentioned that one of the objectives of the IPO was repayment of debt. Once the debt is repaid, the company will become debt-free.

Incorporated in the year 1999 Adani Wilmar is a 50:50 joint venture between the Adani Group, a multinational conglomerate with business interests across diversified sectors such as transport, logistics, utility and energy and Singapore’s Wilmar Group, a leading agribusiness group in Asia. The joint venture enjoys immense benefit from Adani Group’s strong understanding of local markets, wide experience in domestic trading and well-established domestic logistics network as well as Wilmar Group’s global sourcing capabilities and technical expertise.

Click here to open a free trading and demat account and trade at the lowest brokerage rate of just Rs. 18/- per order.

– Written and contributed by Pradeep Sukumaran.

Vedant Fashions IPO Opens on 4th February 2022 – Know All Details Here

The Rs. 3149 crore Vedant Fashions IPO is all set to hit markets on 4th February 2022 and will be open for subscription till 8th February 2022. The company offers a wide range of celebration wear and its popular brands include Manyavar, Mohey, Mebaz, Manthan and Twamev.

Besides, exclusive franchisee-owned EBOs (EBOs) and its website, the company also offers its products through multi-brand outlets, large format stores and online platforms. The company has a widespread retail footprint across India, USA, UAE and Canada.

Some quick facts about the Vedant Fashions IPO:

Price band

The price band for the Vedant Fashions IPO is between Rs. 824 to Rs. 866 per share.

Lot size

The minimum lot size for the IPO is of 17 shares.

Issue size

The issue size for Vedant Fashions IPO is Rs. 3149 crores.

Listing date

Shares of Vedant Fashions are likely to be listed on 16th February 2022.

Key strengths and opportunities

  • Top ranking player in the Indian celebration wear market
  • Diverse product offerings with multiple brands catering to the aspirations of the entire family
  • Increasing demand for branded apparel in Indian wedding and celebration wear market
  • Experienced and professional management team
  • Widespread retail footprint through multiple channels across India, USA, UAE and Canada
  • Technology driven strong supply chain and inventory replenishment systems
  • Longstanding relationships with vendors

Key factors to keep in mind while investing in the Vedant Fashions IPO:

In its Red Herring Prospectus, the company has listed some factors which may impact the future performance of the company, such as:

  • The company’s business is mainly focussed on Indian wedding and celebration wear and any changes in consumer preferences could have an adversely affect its business
  • The company’s inability to renew maintain, renew or enhance relationships with its franchisee-owned EBOs that generate a significant portion of sales, could adversely affect its business
  • Pricing pressure from the company’s competitors may affect the company’s ability to maintain or increase its product prices thus affecting its revenue from product sales, gross margin and profitability
  • There is intense competition in the Indian celebration wear market where the company operates from several regional brands, unorganized retailers as well online retailers
  • The COVID-19 pandemic or any other pandemic arising in future could adversely affect the company’s business
  • For detailed information on the risks associated with the IPO, please refer to the Red Herring Prospectus

To invest in the Vedant Fashions IPO click here.

– Written and contributed by Pradeep Sukumaran.