.jpg)
.jpeg)
Stock market on the one hand ropes in fundamental capital required by the companies and on the other hand it allows the buyers to enjoy ownership in businesses with the potential of availing gain in dividends form which would be in accordance with the company’s future performance. Therefore, it can be referred to as the core of the economic system.
Trading on equity with the purpose of investing is buying and selling company stock shares. The shares of distinct publicly traded companies are traded via a stock exchange or over the counter markets. Trading on Equity is a kind of trade-off. The firm makes use of its financing of debt or equity to buy new assets. In turn, it makes use of its new assets to pay for or finance its debt and equity obligations.
Trading on equity is carried out on two markets viz. The primary or the main markets – whereby new issues are first offered. The secondary markets – whereby subsequent buying and selling takes place.
Many buyers who assume common stock are too unstable are fascinated by the advantages of preferred shares. Depending on the company issuing preference shares is considered to be a good option rather than taking on greater debt.
With equity investors, there are no interest obligations and relying on the classification of shares being issued dividends don’t have to be paid annually. This approves the enterprise to reap the capital of which it wishes to increase besides on the spot money outlays for interest. It additionally provides the business enterprise time to make earnings with the new assets.
Trading on Thin Equity: If the equity capital is less than the debt capital of a company.
Trading on Thick Equity: If the equity capital is more than the debt capital of a company.
ADVANTAGES
DISADVANTAGES
Trading on equity is a simple approach in which the percentage of debt contents is increased in capital structure, however equity trading is buying and selling of shares in the stock market.
Investors are fascinated to buy shares whose rate of Interest is greater than fixed interest charges due to the fact investors can earn extra quantity of income in the form of dividends and it will additionally expand the price of shares.
Leverage means power. If an organization buys assets and its buy price is paid through getting a loan, then this system of trading on equity is known as financial leverage. Business enterprises do so because they are aware that the return on investment (ROI) is greater than fixed interest charges.
The company's tries to increase its financial power by purchasing all assets with the help of long term debt in order to earn a greater amount of profits with this system.
It is a well-known fact that option holders are always in all likelihood to cash in their options when there is a rise in earnings.
For this particular reason, buying and selling on equity leads to extra earnings, there are extra possibilities that options will earn a greater return for the holder. Since trading on equity may also lead to uneven earnings, it will increase the already known price of stock options.
The managers (not owners) are more likely to use such an option. Using the concept, managers have the danger of raising the price of stock options. On the other hand, family-run commercial enterprises will exhibit greater interest in financial stability, so they would keep away from this financing technique.
In the Primary or the New Issue Market, new issues of securities are raised, which are issued to the public for the first time. It is used by new and present companies. The company issues new shares and debentures for gathering lengthy-time period funds. The issue of securities is made thru the prospectus.
The purchaser of new shares and debentures can also be businessmen, clients of the company, personnel of the company, current shareholders, etc.
It enables capital formation through channelizing money from personal savers into perfect productive investments. It consists of a company, an investor, and an underwriter.
The company issues IPO: The securities for the first time are issued in the primary market. This system is acknowledged as an Initial Public Offering IPO. Since the securities are bought for the first time, the primary market is recognized as the New Issue Market.
Role of the underwriter: It is a whole method of raising capital by way of promoting new stock to investors through an IPO. The underwriter then decides the sale price of the new issue of securities. The underwriter enables and monitors the new issue offering. Financial establishments such as funding banks, insurance plan companies, and so on provide underwriting services.
Investors: They are the purchasers of the new securities in the primary market
Public Offering: A public offering happens when a listed company makes an offer document. The document may be of the fresh issue of securities or an offer for sale to the public.
Rights Issue: The right Issue is when a listed company issue fresh securities to the existing shareholder. It is best suitable for companies that would like to raise capital to fund their operations or looking for better growth opportunities.
Private Placement / Preferential Issue: Private placement is basically an issue of shares or convertible securities by listed companies which is neither a right issue nor a public issue. It is an effective way for the company to raise equity capital.
There are two types of investigation that are carried out:
The preliminary investigation includes designated learning about economical, financial, legal, and technical factors to make certain the soundness of the project.
The structure of financial arrangements involves requirements and availability of promoter’s equity, equity from the public, different ratios, and overseas exchange requirements.
The service provider bankers can be banks, financial institutions, private funding firms, etc.
An essential component of the company of new shares is the information about adequacy and structure of financial arrangements.
The second feature is carried out via sponsoring institutions. They supply advisory services. The advisory carrier includes Types of issue, Thug, Pricing, Methods of issue, etc.
The underwriting means guaranteed buy of a targeted quantity of new issues at a fixed price. The buy may additionally be for sale to the public, for solely one’s portfolio or for each purpose. Minimum subscription is assured by using underwriters. If the issue is absolutely subscribed, no legal responsibility would be left for the underwriters.
If the underwriter fails to promote the assured quantity of shares to the public, it will have to buy the unsold shares via itself. They can be banks or economic establishments or specialized underwriting firms.
Distribution of new issues means the sale of the stock to the public. The distribution job is finally hand over to brokers and dealers. The stock broker or dealers hold direct contact with the supreme investors.
Last week the Indian stock market was very interesting! The reason is the Zomato IPO. Needless to say, the much-awaited IPO knocked at your door last week!
Started as Foodiebay Online Service Private Limited, in 2008 by two IIT students Deepinder Goyal and Pankaj Chaddah, the company has grown much which is now extended to 24 countries.
As per the sources, Zomato brought a revolution to the Indian stock market. An Indian startup is a leading Online Food Service Company in terms of food sold as of December 31, 2020.
The company offers business customer services mainly food delivery and dine out where customers can search and find out the location of restaurants, restaurant menu, order food delivery, make payments for the online delivery etc.
Before we move ahead, we want you to go through the complete analysis of Zomato DRHP. It will give you an idea of the company's business and financials.
In this blog, we take a dig deep into Zomato’s IPO.
Zomato Ltd is a leading online food service company in India that connects restaurants, customers and delivery partners. Zomato mainly works on business to consumer segment or B2C that offers online food delivery and dining out services. It allows customers to easily search, find restaurants, reserve a table, order online food and make payments through Zomato’s mobile application.
Zomato’s other B2B or business-to-business services generate revenue from Hyper pure. It supplies high-quality ingredients and kitchen products and restaurants. Also, it enables restaurants to buy fruits, vegetables, groceries, poultry, meat, seafood and beverages.
Hyperpure has direct contact with farmers, producers, and processors to source these products.
On August 1, 2020, Zomato offered a facility called Zomato Pro, a customer loyalty program. The subscription-based program offers discounts on the best restaurants across dine out and delivery.
Due to the highly successful business model, Zomato is able to generate more revenue, which helps restaurants to drive more sales. Furthermore, the company also host Zomaland, India’s greatest food carnival that brings some of the top eateries, DJs, musicians, and stands up comedians under one roof.
Due to its vast services that spread across the world, the Zomato brand is widely recognized across India. They are widespread and recognized across India. In 2020, the company popped up in the headlines when it acquired UberEats.
Ona recent basis, the company received approval from the CCI or Competition Commission of India to acquire a 9.3% stake in Grofers, an online delivery platform.
Now, they also ventured into cloud kitchen space in which multiple brands/restaurants can prepare food for takeaway or delivery.
As of 2020, Zomato App has been the most downloaded application under the food and drink category in India. Keeping this in mind, restaurants pay a significant amount of fees to the company so that they can be easily available on Google Playstore and iOS App store.
Now, the company has 3.89 lakh active restaurant listings and more than 1.69 lakh delivery partners. It has 15 Lakh Zomato pro members and ~ 3.2 crore monthly active users.
The members are present in more than 500 cities in India. The company's operations are also spread across 24 countries including Canada, Australia, New Zealand, United Arab Emirates. Due to its vast spreading of operations, the company has decided to start the usage of Electric vehicles (EV) for delivery by 2030.
The issue was publicly opened on July 14 and closed on July 16. The price of Zomato IPO per lot was fixed at Rs 72-76 per share. The fresh issue of shares (of the face value of Re 1 each) aggregates to Rs 9000 Crore.
The IPO consists of an OFS or Offer For Sale by a promoter called Info Edge India Ltd, which aggregates up to Rs 375 Crore. Investors who want to invest in the Zomato IPO, are required to go through a bidding process with minimum equity shares of 195 (1 lot). You will need a minimum of Rs 14,820 to apply for the Zomato IPO. Retail investors apply for 2,535 equity shares (13 lots).
Zomato Utilizes the Income Generated from IPOs for the following purposes:
If we look at the overall structure of the IPO then, we will get to know that Zomato firmly prioritizes its duties towards the growth of the company. At the same time, the promoters of the company will continue to hold a fixed stake in the firm, which makes sense in the company’s future prospectus.
FY 2018FY 2019FY 2020Revenue487.01,397.72,742.7Expenses594.03,607.95,006.3Comprehensive Income-104.1-1013.1-2,362.8Margin %-21.4-72.5-86.1
One of the primary risk factors in Zomato DRHP is:
Zomato has seen exponential growth over the years. However, the company said that it may not be able to sustain its historical growth rate. At the same time, its historical performance may not depend on its future growth and financial results.
The company has experienced huge losses in the past few years. It expects a rise in costs and losses in the future.
The financial performance and operations of the company could be adversely affected if they are unable to increase revenue, growth and maintain cash flows.
The COVID 19 pandemic has impacted the company’s online food ordering business to a greater extent. It has been seen that many restaurants were temporarily closed due to heavy lockdown.
Zomato’s business would be negatively affected if they fail to retain the existing restaurant partners or food delivery partners.
Zomato’s IPO is heavily subscribed by the HNI and retail investors on the launching of its first day. This is because it is a brand that everyone loves, admires and depends on. As per the interview, Zomato delivery partners gave us a satisfactory note that they are happy with Zomato’s perks and remuneration.
Because of its oversubscription and GMP (Grey Market Premium), investors of the IPO received huge benefits through listing gains.
Applying for an IPO is quite subjective and if you are planning to buy Zomato’s shares, don't’ forget to check all the pros and cons.
Founded in 1946 by Tribhuvandas Patel Headquartered at Anand, Gujarat, India it is responsible for India's White Revolution India the country of milk and milk products 13 District Milk Unions, widening across 13,000 towns of Gujarat.
“MRF” stands for Madras Rubber Factory, incorporated on November 05, 1960, in India, while in Madras Chennai by KM Mammen Mappillai in 1946.
It is India's biggest Original Equipment Manufacturer (OEM) tire provider with a sweeping tire range from bikes to contender airplanes.
MRF is occupied with the manufacturing, distribution and sale of tires for different sorts of vehicles. The organization offers tire shopping, tyre drome and tire support administrations.
PVR Ltd is the market chief as far as screen counts are concerned in India. PVR is occupied with film shows and creation and works the biggest film circuit across India.
Established in 1995 by Ajay Bijli, the brand has changed the way in which individuals watch motion pictures in the country.
Along with re-defining the film business. The organization has, throughout added screens, both naturally and inorganically, through essential ventures and acquisitions. Its headquarters is located at Gurugram.
Recorded on both NSE and BSE (RBL BANK). The Bank is represented by the Banking Regulation Act, 1949 and the Companies Act, 2013. Founded in 1943 and headquartered in Mumbai Maharashtra. The Bank operates under a different administration to be specific: Corporate and Institutional Banking, Commercial Banking, Branch and Business Banking, Retail Assets and Treasury and Financial Markets Operations.
Founded in 1978 by T.V. Sundaram Iyengar and headquartered in Chennai. TVS Motor Company Ltd. is the biggest 2-wheeler organization in India. It is engaged with the manufacturing of cruisers, bikes, mopeds, three-wheelers, parts and extras.
Incorporated in 1963 by T.P.G Nambiar as a private limited it is currently a public limited company headquartered at Karnataka Bangalore under the name British Physical Laboratories India, the organization is prevalently known as BPL. The organization is engaged in the realm of clinical items turning into the country's premier in manufacturing electro-cardiographs.
HCL Technologies is an IT administrations organization. Founded on 11 August 1976 by Shiv Nadar headquartered at Noida Uttar Pradesh, HCL gives modernized programming items to worldwide customers for their innovative and industry-explicit necessities.
Delhi Land and Finance deals with the construction of private, office, and retail properties. It was incorporated in 1946 by Chaudhary Raghavendra Singh and headquartered in New Delhi, India.it is responsible for residential creation like Shivaji Park, South Extension, Hauz Khas in Delhi.
Founded by S.K. Burman in 1884 headquartered at Ghaziabad Dabur India Limited is a main Indian multinational Consumer goods Company with interests in Hair Care, Oral Care, Health Care, Skin Care, Home Care and Foods. fades and healthy skin items.
Cipla Limited is a worldwide drug organization zeroed in on dependable and practical development of manufacturing, exchanging in India and International business sectors
Founded in 1935 by Khawaja Abdul Hameid, headquartered in Mumbai the organization is engaged with manufacturing, creating, and marketing Active Pharmaceutical Ingredients (APIs).
ITC was incorporated on August 24, 1910, its original name being Imperial Tobacco Company of India Limited. afterwards to I.T.C. limited in 1974.itis headquartered at Virginia house, Kolkata, West Bengal
ITC has its presence in FMCG, Hotels, Paperboards Packaging, and Specialty Papers and Agri-Business.
Exide Industries Limited is a public organization Limited in India the organization is principally occupied with the manufacturing of Storage Batteries and partnered items in India. Founded by Rajan Raheja Group headquartered in Kolkata West Bengal India it is consolidated under the arrangements of the Companies Act, 2013. Its offers are recorded on three perceived stock trades in India.
Wipro is a main worldwide data innovation, consulting and business process services company. Founded by Azim Premji in 1945 and headquartered in Bengaluru the Company is engaged with IT Software, Services and related exercises
It is Globally recognized for its comprehensive portfolio of services, strong commitment to sustainability and Creating innovations to assist its customers with adjusting to the advanced world and make them fruitful.
Stocks of the paper industry set a new record high as most of the frontline paper stocks are currently trading up to 15 percent higher with the majority of them experiencing a 52 week high level in intraday trading on this Wednesday.
Star Papers Mills, Orient Paper & Industries, and Seshasayee Paper and Boards have rallied over 10 per cent on the Bombay stock exchange.
Whereas Astron Paper & Board Mill, Andhra Paper, JK Paper, Tamil Nadu Newsprint and Paper, Ruchira Papers and West Coast Papers were on the 8 per cent on the Bombay Stock Exchange.
Yesterday, the S&P BSE Sensex was up to 0.20 per cent at 52,965 points hitting upper circuits.
Let’s look at how the paper stocks performed individually on Wednesday.
Stock Name Highest Stock Price Recorded on Intraday Trade Percentage Change Stock Price at the Time of Writing JK Paper 237.258%226.55Seshasayee Paper & Boards222.812%211.90Emami Paper189.5020%204.70Star Paper Mills17814.5%168.35Pudumjee Paper Products46.5020%44.20Orient Paper & Industries33.3013%31.90Malu Paper Mills38.9019%39.75
For all the companies that are listed above, J&K Paper stocks stood out in gains, jumping more than 40% in the last month.
For all the companies that are listed above, J&K Paper stocks stood out in gains, jumping more than 40% in the last month.
According to a report, JK paper has booked a net profit of Rs 135.79 crore in the quarter ended in March 2021.
It is more than twice the number was recorded in the third quarter of FY 21. JK Paper’s consolidated net profit stood at Rs 65.94 Crores.
This company increased its net revenue by 20.5% to Rs. 898 Crores in the 4th from Rs 745 Crores in the preceding quarter.
According to the JK Paper, the elevated performance of its stocks results from increased production and sales volume than the previous quarter.
Although the company has yet to witness any impact of the second wave, its management team expects some sort of disturbance in the coming months.
Experts also said the demand is expected to pick up and grow by at least 11-15% in FY22 with school, colleges and office spaces likely to open and drive the demand.
Due to the outbreak of Covid 19, the paper and paper product industry is one of the worst affected industries. Closure of education institutions, work from home by offices,
Moreover, downcast demand also had a great impact on the prices of paper & paper products that further affected the revenues of the industry.
The long term demand of the paper industry always remains favourable as the demand increases by increasing literacy levels, growth in print media, higher government spending on the education sector, upgrading urban lifestyle and economic growth.
As the factors are likely to be continued for an extended period, the paper industry is likely to grow at 5-8% per annum in the coming years.
Going ahead, CRISIL expects a huge demand for printing and writing paper to grow at 1-3 per cent CAGR and reach 5.5 million tonnes by Fiscal 2025.
As the new education policy comes into effect, a slow rise in the education spend by the government (~20% higher spend) and increased expenditure on education is likely to support demand for the P & W segment, the company once said in a report.
As per the CRISIL Report, P&W paper demand will increase at a CAGR between 1-3%, hence, giving a 5.5 million tonnes mark within fiscal 2025.
Enrolment of students is set to increase faster, ranging between 0.5% to 1% in the coming years.
As per the experts’ estimation, the demand for paper stocks is all set by 11-15% on a y-o-y basis in FY 23. The primary factor behind the rise of paper stocks is the possibility of reopening of schools, colleges, offices etc.
Consumers will have to pay a tad more for buying anything from branded garments to fast-moving consumer goods (FMCG) bought through e-commerce.
The corrugated box industry expects to increase a sharp cost in a short period and raw materials supply disruptions.
Here, the rise in prices is the main issue. On the other hand, paper mills say they do not have the material.
A paper manufacturing company once said in a letter to its customer, the firm was forced to raise prices after the paper pulp prices increased 70-100% in the last 3 months.
Paper prices, particularly kraft paper, have increased by the two factors; one is supply-side problems and the other is the availability of containers and ships.
Kraft paper mills say the prices of domestic and imported waste paper is rising due to supply misery as a result of Covid led lockdowns and international logistics disruptions.
China had been importing waste paper from all over the world before the ban. For instance, it includes all waste paper generated in the US, Europe and other developed nations. The waste paper was recycled to manufacture paper.
Given the ban on wastes, Chinese paper mills were unable to get the main raw materials and they began to import the kraft paper from India. Kraft paper is recycled paper and Chinese mills use it as a fibre source to manufacture paper.
Companies are also facing issues regarding the availability and prices of waste paper. As the educational institutes closed due to the Covid 19 pandemic, the usage of notebooks and exercise books also declined. This has further increased the demand for paper used for writing and printing dropping.
All these things waste paper supplies. Also, China has set up new units in the US and south-east Asia to convert the waste paper into pulp and send them home.
This has resulted in the domestic industry facing problems in sourcing waste paper and recycling it.
As far as the long term is concerned, the demand for the Indian paper industry needs to be increased. Some of the important factors include economic growth, literacy rates, spending on education etc. In addition to this, print media’s growth to a new level is also something that investors need to consider. If these factors do not hamper the growth of the paper industry, the Indian paper industry is likely to expand rapidly over the next few years.
Since the year’s beginning; the stock market’s performance has done exceptionally well with Sensex breaching the 53,000 points mark again.
Here are 8 large-cap funds that have given outstanding stock market trading returns since January 2021.
All of these funds are not rated by some of the leading agencies that conduct research, hence they are not suggested to invest. Before taking a dig deep into large-cap funds; let’s understand the large-cap funds in detail:
Large-cap funds are a part of equity trading; are equity schemes that heavily invest in large-cap companies. These funds constitute at least 80% of their total assets in equity related instruments in large-cap companies.
As per the SEBI, the best 100 companies, having a full market capitalization are categorized as large-cap companies.
Large-cap companies have a competitive edge in their respective sectors. Also, they have a sustainable market share which makes them large-cap companies. The companies that come under large-cap companies have steady cash flows, strong balance sheets that makes them strong enough to handle difficult situations.
These companies are traded more frequently and as a result, they are more liquid than other companies.
The factors stated above make large-cap companies less volatile than other companies and more capable of withstanding stock market downturns.
Hence, by investing in large-cap funds, investors will save themselves from the jeopardy of selecting independent stocks while benefiting from a diversified portfolio that consists of top Indian companies.
Generally, large-cap funds constitute the base of at least 50% of equity’s portfolio.
As per the stock market research agency, the fund Franklin India Bluechip Fund has given an outstanding return of 23.40%, since the beginning of the year. This is only for mutual funds that come in the large-cap fund. Although the company Franklin India Bluechip fund invests in a variety of companies, they're majorly invested in large-cap companies.
The long term returns from this fund are 13.44% on an annualized return for 3 years and 11.2% on an annualized basis for 5 years. The SIP of Franklin India Bluechip Fund starts with a small amount of Rs 1000 every month.
As per the research report from top analysts, the fund comes under the second position among large-cap stocks as they give high returns since the beginning of the year. The fund gave a return of 20.87% from 1 January to 14 July 2021. This fund invests in large-cap blue-chip companies.
SIP of Tata Large Cap Fund starts with Rs 150 per month. The Tata large Cap Fund is not that big company under the management is less than Rs 1000 Crore.
The three-year return of Tata large Cap Fund is 12.6%, while the five-year returns are 11.91%. As per the sources, Tata large Cap Fund has invested in major stocks like ICICI, HDFC etc.
Since January 2021, the stock has been able to generate returns of 19.38%, and that’s the reason the fund has been ranked as No.3 in stock rating for the year to date returns in the large-cap category.
The fund is very small and newly launched, hence it is not possible to analyze the long term returns. The AUM of this fund is Rs 123 Crores. Since the company has holdings in stocks such as ICICI Bank, Reliance Industries and Infosys.
The minimum investment amount of the fund Mahindra Manulife is Rs 1000 every month.
Like the above companies, Nippon India Large Cap Fund invests in the major listed companies in the business. The fund is ranked fourth in terms of the returns it gave to the investors up to date. Surprisingly, the fund allows investors to start a SIP of Rs 100, and the minimum amount required to invest is Rs 100.
On an annualized return, the three-year return of the fund is almost 13.5%, which is in line with how the markets have performed the previous year.
We wish to emphasize the fact that the Sensex at Rs 53,000 points is at a new record and any large scale exposure to large-cap equity mutual funds can consume wealth. Therefore, it’s more important to invest, if you select the SIP mode of this fund.
The fund gave 18.21% with the year to date which makes this fund come in the large-cap fund. This large-cap fund gives exposure to stocks like ICICI, HDFC Bank, Infosys. Many investors don't suggest going for the fund as if the stock market goes up or down, it will highly affect the fund’s growth rate.
The fund heavily invests in large-cap companies as the fund has good quality management, strong fundamentals, growth potential and a proven track record. The strategy is maintained at the ICICI Prudential Bluechip Fund so as to ensure portfolio diversification and minimize concentration risks.
It adopts a buy and holds strategy for investing while selecting the bottom-up approach for the selection of stock.
The fund also takes huge exposure to high conviction scripts in order to generate outstanding returns in a short period of time.
The scheme mainly invests in large-cap stocks that have a good brand entity and market sectors in their respective segments. This is because the funds may also invest up to 20% of their portfolio in equities than other funds.
The fund follows a combination of investing and growth with a mix of top-down approach and bottom-up approach for the selection of stocks across different sectors.
IDFC funds invest in large-cap companies with an opportunistic allocation to small and mid-cap companies not exceeding 20% of the fund portfolio. The objective is to generate consistent returns with low volatility.
The fund is based on three pillars - buying the right sectors, buying the sector leaders, and allocation to small/mid-cap stocks.
Mutual funds are always known for better returns. Also, these investments are much less risky than other equity-related instruments.
Therefore, many investors always prefer mutual funds over other equity-related instruments. Amongst all mutual fund schemes, large-cap funds are often associated with fewer risks and also they offer a minimum amount as a SIP.
Trust Our Expert Picks
for Your Investments!
.webp)
.png)
.png)
