A New Beginning :2016 Value pick 1

 Hi All ,

A very Happy New Year to all our readers.

New year started and there is lots of hope comes with it in market as well. 2015 is pretty flat year for sensex but some stocks have outperformed and market is full of stock which will outperform coming time.  So we started new series of value picks for 2016.

So let’s start with our first pick:

Britannia Industries Ltd.
CMP: 2991 ( 1 Jan 2016).
On 1 Jan 2015 :  1825

Last year Britannia has given more than 60% return and we believe it will continue to outperform this year as well. 

Few facts that make it clear winner

•   Company is virtually debt free. 
•    Company has good consistent profit growth of 28.38% over 5 years
•   Company has a good return on equity track record: 3 Years ROE 46.22%
•   Sound management like Varun Berry, the former chief executive officer of PepsiCo Foods India
•   Flagship products like Good Day, Tiger, Marie Gold, 50 50 and Milk Bikis etc.

All factors are in favor of Britannia. Hoping GST bill will pass this year which will give new boots to company profit margin.  With all this we suggest our first 2016 pick with year target 4000+. Don’t miss this gem. 

And remember nothing will change in 2016 until you do. Start investing today.

Be Smart. Invest Smartly

Life Insurance: Your first investment towards your family.

      Believe or not but life is uncertain and one must have Life Insurance because you leave not your family. In today’s world no relative will support your family for life time but your Life Insurance does.   Imagine a 35 year old young only earning man left forever with 2 kids and wife and parents behind. Did he earn enough for his kid’s future? Indeed money cannot fill your absence but still it helps your family to survive.

 
One old saying about insurance is that “Buy Insurance when you don’t need it because when you need it you will not get it easily” So buy it as early as possible.

Now question comes which Insurance policly you will buy?

There are mainly two categories of Life Insurance :

A.Term Insurance: Which provide only death benefit , no return on maturity

B.All other: Which provide Death benefit and return on maturity

Now when it comes to buy Insurance most people prefer Money back or endowment plans as they want return from their money. Though insurance is primarily a risk mitigation tool, many people use insurance for the purpose of long term investment. These people buy endowment and money back plans sold by insurance companies. Why it is that insurance is used for investments? There are two reasons for this- 1) Insurance agents mis-sell insurance as they want to get maximum commission and 2) People buying insurance feel it is a good return option along with insurance cover. However, most of traditional insurance products don’t provide returns even close to other traditional investment products like PPF, Bank deposits etc.

How do you know what is the return offered by the insurance product that you have purchased? If you ask a person who has purchased an insurance product about the returns, he will not be able to give answer to this question. So how do you calculate returns offered by the insurance policy? Let me take an example. Suppose you have purchased the following endowment plan:

1. Policy Term 20 years
2.  Premium Payment annual
3.  Premium amount 25000 per year (Assumed)
4.  Sum Assured 5 lakhs
5.  Maturity value (Sum Assured plus Bonus)
6.  Bonus: 3.5 lakhs (Assumed)

 If we calculate premium of 20 years it stand 8.25 lakh while return you get will be 8.5 lakhs. So your return stands around 5.26%. In case of death you will get Sum Assured and Bonus (if any). Does it worth??

 Now take example of Term insurance Plan:

1. Policy Term 30-35 years
2. Annual premium: 6000
3. Sum assured: 50 lakhs.

If we calculate total Premium for 30 year that it will be 1.8 lakhs. By paying 1.8 lakhs over 30 years you secured the future of your family.

People argue that there is no return on term plan where money back policy provides them 6-8% return.

 Let now take another Example to overrule this myth:

Person A: Buys Money back plan with premium 25000 and sum assured of 10 lakhs. He will get assured money back with 7% return on maturity of 20 years.  So after 20 year he will get around 5 lakhs of Sum assured and around 5.9lakhs of interest on it. Sounds good. Wait but what about tax?? Yes mostly this money back police show pre-tax return. One has to pay tax on interest amount. Assuming 10% tax on interest so final interest amount will be around 5.4 lakhs.

Person B: Buys Term Insurance with premium of 5000 and sum assured of 50lakhs on death for 30years. So as compare to Person A person B pay 20thousand less yearly. Now Person B opt PPF account and placed 20thousand yearly in it. So now Person B is paying 1.5lakhs over 30 years with no return. Now what he get from PPF over 20years lets see:

Annually ROI of PPF is around 8.7% which is also compounding so after 20 years   he will get 10.75lakhs which is tax fee also.

Other than PPF, there are many good Mutual Funds which has past record of 10-15% returns annually.

Simply we can say Term Insurance is only insurance that one should opt if you want return there are many other products available with great returns

In conclusion we can say one must not mix Investment and Insurance. Both are different and essential product. One must have both in pocket.



 Be Smart. Invest Smartly

Hidden Gems: Gabriel India Ltd:

As we mention previously that small cap industry has huge potential than Blue chips.

Our last year call Sintex has given 100% return in a year.(visit: http://kevaljethi2363.blogspot.in/2014/05/gujarat-base-small-cap-multi-gainer.html ). We brings you another Gujarat base company with high growth potential.   

 Gabriel India: 

Sector: Auto Ancillaries
CMP : 103 (on 30/01/2015)
Target: 180 Timeline: 8 -12 months
M-cap:1490 cr
P/E :24

     Gabriel delivers one shock absorber every second. With close to 300 models, the company offers the most diversified basket of products to its customers, supplying to every major vehicle manufacturer in the country across segments. As the leading OEM supplier in the country, Gabriel holds a 45% share in the Passenger Vehicles segment, 19% in the Two-wheeler segment and over 80% in the Commercial Vehicles Segment. Gabriel leads in the Aftermarket with exporting ride control products to developed markets in North America, Europe, Australia and the Asia-Pacific region.

Gabriel India  has Big Customers like Bajaj Auto, TVS, Tata Motors, Ashok Leyand, Mahindra, Yamaha etc.

Gabriel India has good past performance as well.
Return On Equity :  

10 Years :20.28%

5 Years: 19.97%

3 Years:18.58%

Last year: 15.72%

 

While all are bullish on Auto sector one can bet on  Gabriel India ltd for long terms.

Be Smart. Invest Smartly.

Hotpicks of 2015.

After a 30%  upside in 2014 ,  Sensex is ready with more or even better in 2015. As 2014 in 2015 also mid cap and small cap will shine.

I have picked up some of the most prospective stock which will outperform in 2015.


Berger Paint: 
CMP: 452.
M cap: 15676cr.

Berger Paint is one of the dominant in Paint industry with good past record. Stock gain 100% last year and story will continue in 2015 also. Also stock hit 52 wk high before stock split on 9th Jan 15.
So start your new year with this stock and it will not let your money go for sure.

Ashok Leyland: 
CMP: 53

Have already mention in last blog :http://kevaljethi2363.blogspot.in/2014/12/bull-is-ready-dont-miss-opportunity.html about this value stock. Ashok Leyland was traded 17 INR on Jan 2014 and after one year it touch 53 which make 240% returns. AL tour around in mid 2014 and after that it did not look back. Stock find resistance at 54 level but soon it will cross it and make new high. So keep this Auto stock with you in 2015 aslo.

Century Ply board:
CMP: 162
M -cap: 3600

Century ply board is dominant in furnished play board  market with 25% of domestic market.
With in year stock came from 25 level to 160. We will expect same of better performance from it for 2015 as well.


KRBL:
CMP: 115

KRBL has good consistent profit growth of 40.95% over 5 years. It export rice to many country and it is one of the key player in domestic market also. One can diversify  portfolio with this stock.

South India bank:
CMP: 30

When all banking stock outperform in 2014, South India Bank also gain over 50% last year.
Company has good consistent profit growth of 21.21% over 5 years. We could expect more upside in 2015 from this stock. 


So lets begin 2015 with above great picks and grow your money.


  Be Smart. Invest Smartly 

Bull is ready.. Don’t miss the Opportunity

Indian market is set to begin roller coaster ride for next 3 to 6 year. Mid-cap will be on the front seat. Keep your portfolio ready with quality stocks to enjoy the ride.

Let's find out some of the possible candidate for our front seat:

Sintex Industries: 

CMP: 100
Sintex has shown sustain growth in 2014 and create more than 300% return this year. Balance sheet of Sintex is positive for last couple of quarters. All factors for company are positive and it will continue to grow also in FY15 with same as in FY14. So if you don't have it in your portfolio thinks again about it.
(Also read: http://kevaljethi2363.blogspot.in/2014/05/gujarat-base-small-cap-multi-gainer.html)

Axis Bank:

CMP: 490
Axis Bank is leading from front in private sector banks. Stock almost double in FY14. One must have this blue chip in his model portfolio.

Ashok Leyland:

 CMP: 49
 Ashok Leyland came from loss to profit in FY14. Stock is hitting 52 week high. It has bags big order recently and company is set to join ride.

Gati:

CMP: 280
Gati is the one of the wealth creator in FY 14. Stock was trading at 26 on DEC13 and today it surges to 280.Within a year it created 10 x returns for its investor. E Commerce market is booming in Indian and it directly bring business to logistic and courier industries. Gati will keep doing well in FY15-16.So don't miss this wealth creator.

Eveready Industries:

CMP: 190
Along with Gati Eveready was another wealth creator in FY14. Eveready stock gained more than 600% in FY14. With Warren Buffet’s Duracell buy stock of dry cell are hitting high. Keep this stock in your portfolio and see its magic.

    
    Along with above there are many small and midcaps stocks like Adani Ports, Ceat, South India Bank, GMR Infrastructure , JM Finance, Pipavav Defence, Rolta, Rico Auto, Tata Coffee. All you need to do is to buy on every dip. Indian market is now entering in Bull phase and all this stock will be the money makers for their investor. Pick your money maker smartly.




  Be Smart. Invest Smartly