Software firm-Persistant Systems going for an IPO
Posted on August 4, 2008
Filed Under IPO news & discussion, Market News & Discussions | 2 Comments
IT companies are doing bad…oops..thats not true! A better sentence would have been IT stock prices have come down drastically. The rise of rupee was reason for that and now this is an old news. Currently the exchange rate of dollar/rupee is around rupees 42, increased from 39 - which is actually good for IT companies. A must read article about this:Rupee Vs. Dollar..things are changing now! So there is no reason we should not believe in IT companies successfully expanding their business.
Persistant Systems - a software company having development centers at Pune, Nagpur, Hyderabad, Goa and Bangalore is going for an IPO of 4,974,836 equity shares of Rs 10 each for cash at a price to be decided through a 100% book building process. Persistent is a strong IT firm with great clients like Microsoft from ages. They are also opting for pre-placement IPO . For further details please go through : Persistant Systems to tap capital markets:
India’s first Oil based Mutual Fund will be launched soon…
Posted on July 25, 2008
Filed Under Global happenings affecting Indian Economy, Market News & Discussions, Mutual Funds | 1 Comment
One more option has been added by the Mutual Fund Houses to the huge pool of types of funds, and this will add to the confusion while selecting the funds. We already have funds based on various sectors - real estate, infrastructure, energy, FMCG, technology…bla bla.. and one more has been added now - OIL! We have seen the oil price rise and oil has got importance more than the celebrities these days. Oil price has doubled in the last 2 years and hence now its in the eyes of investors.
India’s first Oil based Mutual Fund will be launched by the Fund House Benchmark Mutual Fund and it has filed an offer document with the SEBI for the same. The fund called as Oil Benchmark Exchange Traded Scheme (Oil BeES) will be open ended fund and it will be similar to the existing thematic funds/sectoral funds and it will based on the global oil prices. The minimum amount of investment will be Rs:10,000/- and the fund will invest 90% in equity and remaining 10% will be in debt and money market instruments - so it will be an agressive fund. This doesn’t mean that it will give high returns, aggression is associated with high risk. As this will have indian investors, the fund will have benchmark crude oil price in rupee terms. This fund will turn out to be an ETF after its intial offer period - the fund will charge 2.25% as entry load during its initial offer period. Before investing please consider the degree of diversification you are adding to your portfolio and actually is an oil based mutual fund necessary for you. Also the most important part remains to analyze the relationship of oil prices with the NAV of this fund..more on this in next post….
Related Post: (not auto generated)
The Price of Oil- affecting factors and it’s future
Financial Term Of The Day-”Funding Gap”
Posted on July 9, 2008
Filed Under Series - Financial Term Of The Day! | Leave a Comment
Funding Gap: The amount of money needed to fund the ongoing operations or future development of a business or project that is not currently provided by cash, equity or debt. Funding gaps can be covered by investment from venture capital or angel investors, equity sales, or through debt offerings and bank loans. Funding gaps are also more likely at the early stages because a company won’t know what its full operating expenses will be until it reaches a more mature stage and, at first, there aren’t likely to be any meaningful revenues coming in.
What is a franchise business?
Posted on July 1, 2008
Filed Under Business, Investment Guide | 1 Comment
You may be having an impression that to own a business you must start it. Well, not exactly, you can even buy an already built business isn’t it? Yes you can and that’s where we have an option called franchise business. A franchise business can be explained from two perspectives, one from the franchiser -the one who sells the business and other from the franchisee -the one who buys the business. Well here don’t take the literal meaning of buying the business, because exactly its’ not the acquisition or buying shares of the business. By buying the business I mean buying the name, fame and brand of the business. Let’s look at it with an example.
Suppose there is a company called “XYZ Systems Ltd.” and consider it has a product “productxyz” and it wants to expand its business throughout the world (or simply to any place whether it doesn’t have any business till date.) It can expand the business through franchises. It declares that it has started giving out franchises. Those who buy franchise are required to pay some amount as fee (remember you are buying the name and brand value) to the XYZ Systems Ltd. and also in some cases a yearly fee and also in some cases a percentage of profit you earn after launching the business in your city. These fees are decided by the company itself. Suppose XYZ Systems Ltd decides that the joining fee should be $1 million, the yearly fee should be $20,000 and the percentage from profit should be 10%. Now suppose you find that the product of that company productxyz will have a lot of customers in your city then you buy the franchise. Here, now the company XYZ Systems Ltd. became the franchiser and you became the franchisee. Franchisee needs to pay all the fees prescribed and needs to abide by the rules defined by the franchiser. After buying the franchise you can sell the product under the name of XYZ Systems Ltd. If suppose you buy and make a profit of say $40,000 in 1st year then at the end of year you need to pay a total of:-
Franchise buying: $1,000,000
Franchise Annual Fee: $20,000
10% of profit: $4,000
——————————————–
Total: $1,024,000
——————————————–
This is for joining and the first year,
If for 2nd year suppose you made profit of $50,000 then you need to pay
Franchise Annual Fee: $20,000
10% of profit: $5,000
——————————————–
Total: $25,000
——————————————–
Generally the franchiser demands some amount of experience in handling business and financial stability to make sure that you are financial strong enough to sustain the failure in business. They guide you for some initial period to a great extent and you are like a part of them. Here there is a win-win situation for both because the franchiser is getting huge amounts in fee’s and a percentage of profit margin without doing anything besides training and helping the new franchisee’s and on the other hand the franchisee is making money by selling the product of franchiser under the franchiser’s rich brand value! XYZ Systems Ltd is very famous and people will come to your shop to get the productxyz. The success of franchisee depends largely upon the skills of the franchisee. For some people who want to own business in a very short time this is a very nice option as you don’t have to start from scratch.
I hope this post makes you understand what the franchise business is, your questions are welcome through comments.
Related Posts: (not autogenerated)
Franchise Business in India:To know why India is good and which sectors in India are good for franchise business.
Financial Term Of The Day-”CAPEX”
Posted on June 17, 2008
Filed Under Series - Financial Term Of The Day! | Leave a Comment
CAPEX (Capital Expenditure):
Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof to building a brand new factory. The amount of capital expenditures a company is likely to have depends on the industry it occupies. Some of the most capital intensive industries include oil, telecom and utilities.
HDFC Bank - still a good buy…
Posted on June 15, 2008
Filed Under Investment Guide, Market News & Discussions | Leave a Comment
HDFC Bank has seen a great dip in recent week and is trading close to 1140 down about 200 rupees that is 15% in last 10 days or so. This is nice time to buy it. While many think that it will be foolish to buy as the stock is falling continously from past 3 weeks, well, we need to realise the potential of the stock to strike back. The stock market has shown a negative sentiment in last 2-3 weeks and many big-B’s are in red. If the stock market shows more disappointment, just because of market sentiment HDFC Bank may even go futher down and may touch 1000 in next 2 weeks may be. As a result the current strategy to be on a bit safer side will be to buy only 60-70% of the capacity you want allocate to HDFC Bank. For E.g: you can buy HDFCBank of Rs: 1 lakh then buy only of 60-70K above level of 1100, not more than that.
Averaging out is another perspective altogether and you will see an article on how and when to average out your previous high buy’s. As for now, in this case, if you want to average out your previous buying then wait, it may go down more. But if you havn’t bought it till now, its time to buy - with yout own risk as the market sentiment isn’t strong as it should be for heavy buying.
HDFCBank - A good buy now…
Posted on May 28, 2008
Filed Under Investment Guide, Market News & Discussions, Todays Market | Leave a Comment
HDFCBank is one of the widely spread banks with second largest market capitalization in India, followed by ICICI Bank. I am tracking the stock from the past 3 months and observing closely frompast 2 weeks. Right now, in the past 3 days it has fallen about 8% which is seeking the bottom if you look the price fluctuation from past 3 months. The dip of Jan-Feb period can be explained by various global reasons and overall bearish sentiment in the equity market, many many stocks fell about 10-15% during that period. But the current fall from the past 3 days which I am talking about is unexplainable and I find this a temporary short term fall. This is time to buy HDFCBank. Buying at levels of 1340 with stoploss at 1310 will be a good. Book some profits at around 1400. I recommend holding period of 1-2 week after you buy. And above all, HDFCBank is fundamentally strong. It’s worth to have it in one’s portfolio.
Financial Term Of The Day-”Profit Margin”
Posted on May 24, 2008
Filed Under Series - Financial Term Of The Day! | Leave a Comment
Profit Margin: A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings.
Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors.
Raymond and SBI in problem
Posted on May 10, 2008
Filed Under Investment Guide, Market News & Discussions, Todays Market | Leave a Comment
Raymond is currently trading at the market price of Rs:259/- and the fair valuations are around Rs: 200/- says Merrill Lynch. The poor earnings visibility, especially in the denim business is mainly said to be the reason behind the lowering the rating of Raymond, which was looking strong in Jan and Feb, but now it’s time to book your profits. Merrill Lynch says “We expect the rebound in sales growth for the worsted division to sustain infuture driven by growth in both volumes and realizations led by higher income levels and consumers up-trading to higher-end fabrics. However, we remain concerned about high wool prices, which is likely to sustain the pressure on the margins. The denim market is unlikely to see a turnaround in the near term. Cotton prices are likely to rise further in FY09.”
SBI is currently trading at Rs: 1,682/-. The stock has not crossed levels of 1800+ after falling below that level since mid-March. Morgan Stanley has downgraded its rating on SBI to underweight from equal-weight and pared its price target from Rs 1,910 to Rs 1,550 per share, citing deteriorating quality of its assets. SBI’s non-performing loans (NPL’s) rose 21% quarter-on-quarter for the January-March period. Morgan Stanley says “This was driven by higher agricultural NPLs (farmers stopped coming to branches to repay, after the debt waiver scheme announced by government - according to management). The other driver for higher NPLs is small medium enterprises/small scale industries - a sector witnessing some stress. Given that these remain focus areas for growth, we expect an NPL increase as we move forward. Moreover, with NPL coverage of 42%, credit costs could rise.”
The Banking Sector was expected to have great days in 2008, half of the year is over, do we find any bank getting stronger in it’s business?
Financial Term Of The Day - “Know Your Client (KYC)”.
Posted on April 25, 2008
Filed Under Series - Financial Term Of The Day! | 1 Comment
Know Your Client: A standard form in the investment industry that ensures investment advisors know detailed information about their clients’ risk tolerance, investment knowledge and financial position. KYC forms protect both clients and investment advisors. Clients are protected by having their investment advisor know what investments best suit their personal situations. Investment advisors are protected by knowing what they can and can not include in their client’s portfolio.
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