The Power of Compounding – Why Starting Early Matters

Central Depository Services Ltd: CMP 830 SL 790 TGT 900

Sector: Miscellaneous

Business Area of the Company:

It is one of India's leading securities depositories in India. It offers various services such as account opening, de-materialization, processing delivery receipt instructions, account statement, Re-materialization, pledging, nomination, the transmission of securities, bank account details & SMS services for depository participants.

The company was initially promoted by BSE Ltd. All leading stock exchanges like the BSE Ltd. National Stock Exchange and Metropolitan Stock Exchange of India are also associated with it.

Technical Setup:

• Stock is trading above all important moving averages
• Stock Close above its resistance of Rs 827
• Price Strength indicated by RSI
• MACD near to cross above the signal line

Fundamental Setup:

• The Company is almost debt-free.
• Good quarterly growth in recent results, with the increase in operating margins on (YoY) basis
• Good profit growth of 24.10% CAGR over last 5 years
• The company’s dividend payout is 42.69%

Astral Ltd: CMP 1680 SL 1600 TGT 1820

Sector: Plastic products

Business Area of the company:

This company is the leading manufacturers of plastic pipes. It manufactures plumbing, Drainage, agriculture, Industrial, electrical conduit, and fire sprinkler pipes along with Hauraton surface drainage systems.

It has been a pioneer in introducing CPVC pipes and fittings. The Company offers a wide range of products across piping and adhesives to meet the needs of the real estate sector in India. It has 12 manufacturing units in India and overseas. Astral is delivering the best in its business.

Technical Setup:

• MACD crossover above the signal line
• Stock Closed above its 20 & 50 days SMA

Fundamental Setup:

• Increase in FII / FPI shareholding
• The strong cash-generating ability from core business
• Company with Zero Promoter Pledge
• Sales growth is 20.95% of last 10 years

Kabra Extrusion:  CMP 181.75 SL 171 TGT 200

Sector: Capital Goods-Non Electrical Equipment

Business Area of the company:

The Company manufactures extrusion lines with matched components, sophisticated automation concepts & tailor-made solutions enabling processors to consistently produce high-quality end products to all its customers.

Technical Setup:

• MACD crossover above the signal line
• Stock Closed above its 20 & 50 days SMA
• The stock moves out of one-month sideways consolidation

Fundamental Setup:

Company with Zero Promoter Pledge

Promoters increasing shareholding QoQ

Investment Pick: Radico Khaitan CMP 546 TGT 675+

Market Cap: 7296Cr

ROE 17.3%

Dividend Yield 0.37%

Stock P/E 30.2

Sector: Alcoholic Beverages Industry: Breweries & Distilleries

About the company:

Radico Khaitan is one of the oldest and the largest manufacturers of Liquor in India especially Indian Made Foreign Liquor. Also known as Rampur Distillery earlier, started its business in 1943, and it emerged as a major bulk spirits supplier, it is one of the most renowned liquor brands in India.

With more than 75 years of experience in spirits making, it has evolved from being just a distiller of spirits and turned into a leading IMFL company in India. With the unique vision of the promoters, started its brands in 1998 & launched 8 PM Whisky and built a strong manufacturing platform and developing a pan India distribution network to expand its premium brands. It is one of the few companies in India to have developed its entire brand portfolio organically, with in-house capabilities with R&D and customer preferences.

Major Brands – 8-PM Whisky, Magic Moments Vodka, Contessa XXX Rum, and Old Admiral Brandy are some of its well-known brands.

Business Area of the Company:

The company is engaged in the manufacturing and trading of alcoholic products such as Indian-made Foreign Liquor, Alcohol, Country Liquor, etc. The company has its presence in India as well as across global market presence is there too.

Fundamental Setup:

• The Company has delivered good profit growth of 26.89% CAGR over the last 5 years.
• Improved ROE & ROA since last two years
• Increase in FII/FPI & Institutional Shareholdings
• Company with low debt

The Indian automobile industry has to go through an amazing change, Now the future of the automobile industry is Electronic Vehicles. The India Electric Vehicle Market was valued at USD 5 billion in 2020 and is expected to reach USD 47 billion by 2026 registering a CAGR of above 44% during the forecast period (2021 - 2026).

The EV has established a market in the USA and other countries with rapid growth in the Indian market. The major benefits of electric vehicles are that it's total pollution-free and with low maintenance. In the USA market, electric vehicles are in great demand and across the globe, the demand seems to increase.

The pandemic hit a lot of industries and one of the major set back is the automobile industry. The sales of vehicles across all the segments have gone down drastically in the country.

The Electric Vehicle market, which had just started to move up and was witnessed a stable rise in its sales, also become a victim of it. Overall, the automobile sector had just started to recover from the first wave of virus when the second, more serious, wave struck earlier this year adding to the misery of the vehicle manufacturers.

But once when things get normal, electric vehicles will witness a  boom. With a population of more than 1.3 billion, the market potential of India is second only to China. The world's most populous country has the largest share in the EV market and it contributes to more than 30 pc of the total EV sales around the globe.

The EV market in India has huge potential. One of the reasons for that is an average Indian consumer likes his/her vehicle to be economical and easy on the pocket and the operating cost of an EV is a mere 80 paisa per kilometre, far less than what an ICE-based vehicle costs.

Moreover, battery prices declining since 2010, electric vehicles are expected to become almost as cheap as fuel-powered cars in the future.

India also has a lot to gain from the widespread adoption of e-mobility. Under the 'Make-In-India' program, the manufacturing of e-vehicles and their associated components is expected to increase the share of manufacturing in the country's GDP to 25 per cent by 2022.

The recent uplift in the sales of e-vehicles in the country points towards a rising preference for the same. There is no doubt about it, that the future belongs to EV's with fast-charging batteries and extended driving range.

The government of India also looking to grant some amount under PLI Scheme so that it will boost up the manufacturing of batteries in the country itself.

The major requirement in EV is Lithium-Ion Batteries which is a major requirement for the electric vehicle, several major companies that are manufacturing the same will also get benefited from it.

Major Batteries Stocks in India

1. Exide Industries

Headquartered in Kolkata, Exide Industries Ltd manufactures lead-acid storage batteries and inverters. The company manufactures lead-acid storage batteries from 2.5 ampere-hours to 20,600 ampere-hours. The products manufactured by the company include automotive batteries, industrial batteries, and submarine batteries.

Company with a market cap of Rs.15861 & ROE 11.8% with ROCE16.8% & Dividend Yield 2.20%

Brands & Products

With 7 world-class batteries and 2 inverter manufacturing factories across India, it offers the widest battery range for the widest applications, possible. The products are sold across the world, under its brand names EXIDE, CHLORIDE, SF SONIC, CEIL, INDEX & DYNEX.

2. Amara Raja Batteries

The flagship company of the Amara Raja Group is the technology leader and is one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian storage battery industry. It is looking to build a Lithium-ion assembly plant soon. The firm is already working in collaboration with different state governments to promote the use of electric vehicles.

Company with a market cap of Rs.13436 & ROE 18.6% with ROCE23.5% & Dividend Yield 1.40%

Brand & Products

Amara Raja is the preferred supplier to major telecom service providers, Telecom equipment manufacturers, UPS sector (OEM & Replacement), Indian Railways, and Power, Oil & Gas among other industry segments.

3. Eveready Industries Ltd

Eveready Industries India is engaged in the business of marketing dry cell batteries, rechargeable batteries, flashlights, packet tea, general lighting products, small home appliances, and confectioneries which come under a single business segment known as Consumer Goods.

Company with a market cap of Rs.2135 & ROE 10.5% with ROCE 15.1% & Dividend Yield 0%

Brands & Products

Dry Cell & Rechargeable Batteries, Flashlights & Lanterns, Lamps & luminaries (Eveready Cell, Power cell)

4. HBL Power

HBL Power Systems Limited is engaged in the business of manufacturing batteries. The Company's segments include Batteries and Electronics.

Company with a market cap of Rs.1055 & ROE 2.99% with ROCE 6.06% & Dividend Yield 0.79%

Brands & Products

Batteries. We manufacture a wide range of specialized batteries in Nickel, Lead, Silver Zinc & Lithium

Electronics: Railway electronics, Defense Electronics & Thyristor control rectifiers.

1. Glenmark Pharmaceuticals:- CMP 591.5 SL 570 TGT 640

Sector: Pharmaceuticals   Industry: Pharmaceuticals - Indian - Bulk Drugs & Formulation

Business Area:

The company is engaged in the development of new chemical entities & new biological entities. Speciality Business: Drug Discovery, Primarily focused in the areas of inflammation, metabolic disorders, and pain. Speciality Business: Formulation Business, The formulation business focuses on therapeutic areas viz. Dermatology, anti-infective, respiratory, cardiac, diabetes, gynecology, CNS & oncology.

Technical Setup:

• Stocks are trading above short, medium & long-term moving averages
• MACD crossover above the signal line
• Price Strength indicated by RSI

Fundamental Setup:

• Company with high TTM EPS growth
• The company has reduced debt
• Growth in net profit with an increasing profit margin

2. Lux Industries:- CMP 1980 SL 1900 TGT 2150

Sector: Textiles    Industry: Textiles

Business Area:

The company is primarily engaged in the manufacturing and sales of knitwear. The company has an enduring brand image in the hosiery market. With the rapid growth that the company has been experiencing, in both sales and profits, constantly expanding and innovating products and production techniques while manufacturing an uncompromising stance on comfort.The company has operations in India & caters to both domestic and international markets.

Technical Setup:

• Strong price momentum with volume
• Double bottom price formation on daily charts indicating a strong move above CMP1980
• Stocks trading above its all-important moving averages

Fundamental Setup:

• FII & FPI or institution increasing their shareholding
• The company has delivered good profit growth of 22.81% CAGR over the last 5 years
• The company has a good return on equity (ROE) track record: 3 Years ROE 27.66%

3. Carborundum Universal: CMP 571  SL 535  TGT 620

Sector: Capital Goods-Non Electrical Equipment   Industry: Abrasives and Grinding Wheels

Business Area:

The company pioneered the manufacture of Coated Abrasives & bonded abrasives in India in addition to the manufacture of Super Refractories, Electro Minerals, Industrial Ceramics & ceramic fibers. The  Company's range of varieties of Abrasives, Ceramics, Refractory products & electro-minerals is manufactured across several locations in & outside the country.

Technical Setup:

• Stock Formed Inverted Head & Shoulder kind of price pattern
• Increase in volume with the high delivery percentage in last few trading sessions

Fundamental Setup:

• The company has been maintaining a healthy dividend payout of 20.04%
• Company with reduced debt.
• FII & FPI or institution increasing their shareholding
• ROE & ROA is improving for last 2 years

Investment Pick

4. Gujarat Narmada Valley Fertilizers: CMP 367  TGT 485

Sector: Chemicals  Industry: Fertilizers

Business Area:

Gujarat Narmada Valley Fertilizer& Chemical is one of India's Leading entities engaged in the manufacturing & selling of fertilizers, Industrial chemical products & providing IT services.

Products & Services:

GNFC Fertilizers GNFC Chemical

5. Information Technology ( For IT related products & services)

Fundamental Setup :

• Stocks are trading at 1.05 times its book value
• The company has delivered good profit growth of 25.77% CAGR over the last 5 years
• Stock is trading at 0.99 times its book value
• Over the last 5 years, the Debt to equity ratio has been 34.23% V/S industry average of 107.62%
• Growth in Net Profit with increasing Profit Margin (QoQ)
• Increasing Revenue every quarter for past 2 quarters

When it comes to investing, the name of the stock market comes second to none as many investors or traders actively participate in trading and achieve profit from it.

Investors are of two types: first are those who hold equity investment for more than 1 year and show their income as LTCG or long term capital gains. The second type of investors is those who hold equity investments for more than 1 day or less than 1 year.

There are several types of investors in every financial market, each of them applies its strategy to achieve its financial goals. Hence, the ROI generated by each investor can vary from one to another.

Hence, taxation applied to people who depend on salaried income can be easily calculated. However, the taxation applied on trading income can be a bit complicated as compared to the former one.

Since the income generated from trading varies from trader to trader, taxation law cannot be applied uniformly to all the traders. Like income, the amount of tax applied can also be variable.

If you are new to the trading world, understanding taxation seems to be a difficult word for you.

Here, we will explore all the aspects of taxation that help you to understand tax on different trading styles.

Different Types of Taxation for Traders

Taxation in trading can be classified into four types: Long term capital gain, Short Term Capital Gain, Speculative Business Income, Non-Speculative Business Income.

All the types of taxation along with their features and benefits are mentioned below; read them carefully:

Long Term Capital Gains

Long term capital gains are a type of tax levied by the government of India if an investment is held by a trader for a specific period. For instance, if a trader is seeking long term investment and parks its investment for 1 year or longer than it, any purchase or sales profit from the investment comes under long term capital gain tax.

If we talk about equity investment, Long term capital gains are exempted under section 10 of the Income Tax Act. In such cases, the profits are entirely tax-free. However, this is only applicable under certain conditions.

For instance, if you make any transaction via a recognized exchange and sell your equities within the country, long term capital gain taxes are exempted.

As said above, the tax implications for long term investors can be applicable under certain conditions.

If your equity investments cross the threshold of over 1 lakh in a financial year, the tax will be charged at 10%.

Short Term Capital Gains

In short term capital gains, the duration of holding securities is less than 1 year. According to the norms, the duration of investment in short term capital gains can be held for longer than a day but shorter than a year.

The tax implications on trading income via equity, any capital gains generated by selling a stock leads to a tax deduction of a profit of 15%.

However, your short term capital gains will never be taxed at a standard 15% rate unless your total taxable income is below Rs 2.5 lakhs.

Are capital losses carry forward in long term capital gain and short term capital gains?

Since long term gains are tax-free, they do not carry forward long term capital losses.

Short term capital gains are taxable and therefore they can be carried forward for a year of 8 years from the financial year during which the losses occur.

Business Income Vs Capital Gains

One of the simplest ways of filing your capital gain returns is to show them as a part of your income statement. However, there are cases where your profits/losses from share trading cant come under income tax returns.

This happens to the individuals, who are traders by profession or most of their equities are held as a stock in trade; in such cases, the profits or losses from the stock trading can be counted as business income and the returns generated on it must be filed accordingly.

To distinguish between normal capital gains and capital gains as a business income, the Income Tax has set certain parameters that are explained below:

If the volume of share trading transaction of any individual exceeds Rs 2 Crore in any FY then the individuals are required to get an audit and then the audit may insist them to file this income as a business income.

Another way of differentiating capital gains and capital gains as business income is the profit threshold.

The income tax department has set a fixed profit percentage (6%) to identify income coming from equities.

If the profit percentage is below 6% of the total volume traded, then the income comes from stocks and shares can be considered as business income rather than normal capital gains.

Speculative Business Income

Business income that comes under intraday equity trading is considered speculative. It is defined as the income generated through trades in which securities are bought and sold within the same day.

As the capital gain tax is taxed at a specific percentage; there are no rates for speculative business income. Instead, your speculative business income is taxed alongside your tax income according to section 43 of the Income Tax Act.

This means, if you have salaried income along with speculative business income, the tax will apply to your combined income.

Non Speculative Business Income

Business income that comes from trading futures and options on the recognized exchanges are considered as non-speculative business income. Just like speculative business income, the income generated from F&O also added with your other income sources. As a result, the appropriate tax rate slab is applied to your overall income.

Conclusion

Traders are very well informed about the market condition, stock’s value, company performances, similarly they also need to be informed about the tax rate slab applied to the different trading styles.

This information is not only apt for traders as well as for newbies who are seeking investment in stocks for the very first time.

दो सप्ताह से सीमित दायरे में चल रही कीमती धातुओं में अक्षय तृतीया पर कीमतों में सपोर्ट देखने को मिला है। सोने की कीमतों में पिछले सप्ताह निचले स्तरों से 300 रुपये प्रति दस ग्राम सुधर कर 47600 और चाँदी की कीमते 600 रुपये प्रति किलो सुधर कर 70700 पर रही है।  अमेरिका और यूरोप में घटते कोवीड मामले के कारण अर्थव्यवस्था मे सुधार हो रहा है जिसके कारण मुद्रास्फीति में बढ़ोतरी देखि गई है। गुरुवार को जारी अमेरिकी वार्षिक कंस्यूमर प्राइस इंडेक्स के आंकड़े 2.6 प्रतिशत से बढ़कर 4.2 प्रतिशत पर पहुंच गए, जिससे सोने के भाव को सपोर्ट मिला है।मुद्रास्फीति में बढ़त के कारण डॉलर इंडेक्स में उछाल देखने को मिला लेकिन अमेरिकी फ़ेडरल रिज़र्व की तरफ से ब्याज दरों में समय से पहले कोई बदलाव नहीं करने के बयान पर डॉलर में दबाव बना रहा। तेज़ी से होते टीकाकरण और बड़े राहत पैकेज से अमेरिकी आर्थिक आकड़ो मे मजबूती देखि गई है। अमेरिकी फ़ेडरल रिज़र्व के अधिकारिओ द्वारा मुद्रास्फीति में बढ़ोतरी को अस्थाई बताया है और अर्थव्यवस्था मे वर्ष के अंत तक अच्छी मजबूती आने की सम्भावना व्यक्त की है।हालाँकि आर्थिक विकास आने वाले वर्षो मे सामान्य गति से ही बढ़ने के संकेत भी दिए है। बढ़ती मुद्रास्फीति पर फेड का शांत बने रहना कीमती धातुओं के भाव को सपोर्ट कर रहा है। लंदन मेटल एक्सचेंज में औद्योगिक धातुओं के भाव में अप्रत्याशित बढ़ोतरी होने के कारण अतिरिक्त मार्जिन लगाने से औद्योगिक धातुओं में गिरावट रही जिसके चलते चाँदी की कीमतों में भी दबाव रहा।

तकनीकी विश्लेषण

घरेलु वायदा बाजार में सोने के भाव 47000 रुपये के ऊपर बने रहने में कामयाब हुए है जिससे इसमें तेज़ी बने रहने की सम्भावना है। सोने में 46400 पर सपोर्ट है तथा 48000 रुपये पर प्रतिरोध है। चाँदी में भी तेज़ी रहने की सम्भावना है। इसमें 69000 रुपये पर सपोर्ट है और 73000 रुपये पर प्रतिरोध है।

There are different types of investment stocks available in the stock market such as debt fund stocks, mid cap stocks, growth stocks and more.

Many investors invest in these stocks to get high returns with limited investments. However, there are other stocks too, that give investors regular payments against investment amounts. Such stocks are known as dividend-paying stocks.

Investing in dividend stocks is a great choice as it allows investors to meet their cash requirements as well as gives them a chance to see their stock value grow upward in the future.

Here, we will discuss everything about dividend-paying stocks and the rules you should follow while investing in them.

Before, getting started, let’s get acquainted with the term “Dividend”.

Dividends can be cash, reward or anything that a company gives to its shareholders against the shares they bought of a company.

Dividends can be issued in several forms such as cash payments, stocks or other forms.

Who declares dividends?

A company’s dividend is decided by its board of directors and it requires the shareholders’ approval as well.

A company does not need to declare its dividend. It is a part of a company's profit that the company distributes to its shareholders.

Smart Rules to Follow While Investing in Dividend Paying Stocks

Get a Detailed Insight into the company

Before investing in dividend stocks, it is important to do a stock market research and get detailed knowledge about a company and the sector in which it operates. This is because the potentiality of a dividend stock is highly dependent on the company’s fundamentals and the sector that it belongs to.

For instance, if the company operates in a volatile sector that is highly fluctuating in nature such as energy, it would affect the dividend price for sure.

Therefore, be careful before investing in these stocks. Also, don't forget to check the basic details of a company (stock value, past performance) and the risks associated with it.

Go For the Companies with Consistent Dividend Payments

Investing in the companies that give consistent dividend payout is always considered a better option. Consistent dividend payments is a sign of a strong company. This means, the company is constantly growing and has a strong background with long term stability.

Dividend incomes generated by these companies are consistent. Even if the dividend increases by a small number per year, they can give you incremented results due to compounding effects.

Be Aware from High Debt Companies

It is important to check the debt ratio of a company before opting for dividend stocks. If a company pays a good dividend payment despite having a high debt; then check the company details carefully.

They do so just to keep their stocks valuable. Hence, always check the debt market ratio of a company as the lower the ratio is; the more stable the company is or vice versa.

If the debt market ratio of a company hasn’t decreased with the time despite paying a high dividend, it would be ideal to not invest in such stocks as the debt impacts the value of the stocks which also affect the dividend payments in the future.

High Dividend Yield is Not a Sign of a Good Company

Many of you might think the stocks that offer a high dividend yield can be great stock. However, this is not so true. Sometimes, a high dividend yield is a way to mislead you.

Companies that pay a high dividend yield may be a sign of underperforming security and therefore it is of no use. Therefore, don't make decisions that completely depend on high dividend yield. While doing so, kindly check other factors too (debt market cap ratio, stock’s value, performance, future growth etc).

Pay Attention to Payout Ratio

The payout ratio tells the company’s ability to support dividend payouts. If the ratio exceeds 1 then the company pays more dividend to its shareholders than its earnings which makes it ambiguous about the company’s asset value and long term stability.

How to Identify Good Dividend Stocks?

The following steps can be used to identify the potential dividend stocks:

Step1: Check out the profit and loss of a company.

Step2: Check the earnings per share of a company i.e. whether it has grown in the 5 years or not.

Step3: Measure the growth of dividends per share in the last 5 years.

Step4: Compare if EPS growth and dividend per share growth are similar.

If EPS and Dividends per share growth are similar then the company is trustworthy, know why?

• Earnings per share mean the company's net profit is growing.
• Dividend per share growth means a company gives a consistent dividend to its shareholders.
• EPS growth similar to Dividend per share growth means as a company's profit will increase in its future, its dividend will also grow.

Difference Between Dividend Stocks and Fixed Deposits

Which is a better place to invest in; dividend yield stocks or Fixed Deposits? Many investors find FDs is the better place to invest while stock market lovers give preference to good dividend yield stocks than FDs.

Although both the instruments provide better returns to investors, the difference may depend on the investors.

Dividend stocks offer three benefits to the investors:

First: Although the starting yield on the dividend is slow compared to FD’s interest, it improves with time. Also, good dividend stocks provide stable yield income in the short term.

Second: Dividend stocks provide you with long term gain. Dividend per share will also improve yield on the dividend. Another advantage is: as the share price will also improve with time which provides a double profit for the investors.

If we talk about Fixed Deposits, then the interest rate is fixed. Also, it will never grow with time.

Conclusion

Dividend-paying stocks are the additional ones issued to the shareholders as a reward. Nevertheless, dividend-paying stocks provide consistent returns to their shareholders, one should not invest in such stocks without getting complete information about the company. Just because the company pays a high dividend doesn't necessarily mean it has good worth. Therefore, it would be ideal if you check the company’s annual report, earning growth, consistency of dividend payouts before investing in such stocks.