Issues in India

Corporate Tax-Cut: Implications on Markets, Portfolio & Economy

Posted by | Indian Markets, Issues in India | No Comments

(This is a slightly edited copy of Investor Memo shared with subscribers of Stalwart Advisors’ Model Portfolio) The corporate tax rate (including cess & surcharge) in India has been slashed to 25% from earlier 35% giving a stimulus of Rs 1,45,000 Cr ($20bn). This is a flat rate with no further incentives; companies which are already enjoying some incentives like export-oriented plants or R&D expenditure etc. would have to let go of those benefits if they want to switch to this rate. This is applicable retrospectively with effect from 1st April 2019, so current year’s (FY20’s) profitability for corporate India goes up roughly by Rs 1,45,000 Cr. For companies which were paying full tax at the rate of 35%, their post-tax annual earnings go up by 15% with a commensurate rise in their …

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How to Identify Fraudulent & Fragile Companies

Posted by | Investing Framework, Investing wisdom, Issues in India | No Comments

Who knew that the liquidity crunch which began in September 2018 would kick start one of the most sweeping clean-ups in Indian corporate history? Slowly, all cockroaches are coming out one after the other. Fraudulent business, over-leveraged or fragile, the sudden drying up of liquidity has now exposed them all. Stocks of these businesses have crashed as much as 70-80 percent in the last year and this fall has surely shaken investor confidence. Many new investors are learning the same old lessons. Unfortunately, many are still committing the same old mistake of averaging costs when stocks are falling heavily. Some think that these stocks have fallen 80 percent from their 52-week high, and so, how much more can they fall? They do not realize that these shares could fall another …

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Micro Irrigation in India – A Macro View

Posted by | Issues in India, Stocks | 3 Comments

I was speaking to a fellow value investor when he mentioned how frustrating it is to look at the shrinking universe of value stocks with which I couldn’t agree more. Most of the good small & mid caps have doubled and trebled over last 3-4 months. Its a great thing to see your portfolio go up in value everyday but the issue starts when you don’t find new value stocks, or good entry point for own portfolio stocks, for deploying your incremental funds. As I look at the stocks in our portfolio and coverage universe, there are a very few which haven’t moved in past 6 months. One such stock is EPC Irrigation, a micro-irrigation company owned by Mahindra’s. Its into similar business like Jain Irrigation. The following link will take …

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How to fix india’s flawed education system

Posted by | Issues in India | 9 Comments

Before I come to the point, let me tell you where this post is coming from: In my MBA program at least half of the subjects were same as I studied in my graduation, in fact for some the recommended books were of the same authors. It was during this phase I could compare the quality of teachers, the teaching methodologies and what dramatic effect these two can have on the learning. Later I enrolled myself in one of the toughest finance courses in the world- Chartered Financial Analyst, USA. This is a self-study program where only the content is provided to the candidates and they have to appear for exams. During my three years journey, I never felt any need for classroom coaching. Why? It is because of the …

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