Prajna Capital - An Investment Guide

With interest rates beginning to inch upwards, companies are entering the deposit market to raise funds aggressively. The interest rates on offer are quite impressive as well. Currently, Tata Motors is offering 8.75 per cent for three-year deposits and 8 per cent for two years. Jindal Steel and Power is giving 8 per cent for one year, 8.25 per cent for two years and 8.50 per cent for three years. There are some who are offering much higher rates. United Spirits is offering 11 per cent for one-year deposits and 11.50 per cent for two years. Network18, whose issue closed recently, was paying up to 12 per cent for one, two and three years. According to a company executive, deposit schemes are being launched to take advantage of low rates offered by bank fixed deposits. And, though banks deposit rates have started moving up, industry experts say it will take sometime before banks offer over 8 per cent return. Interest rates on offer by banks are visibly lower. And, while some of them have ...

Following a balanced approach to investing in equities, investors can recoup the amount invested in stocks in few years DIVIDEND IS a tax-free income in the hand of shareholders. However, Indian companies are known for not having a regular dividend paying policy. Nonetheless, dividends are far more profitable today than it would have been in the last four years. This is because the stock prices have crashed in last one year, as result the dividend yield (dividend per share divided by price per share) has gone up. Therefore, the dividend per rupee of investment is much more today than it was earlier. However, investors should not aim at accumulating stocks with high dividend yield because such high yields may not be sustainable in case profit falls due to economic slowdown. Consistent in paying dividends and in some cases have also increased the payout ratio. A high payout ratio means a higher percentage of profits are distributed among shareholders as dividends. The table shows the ...

TIGHT financial markets will likely aggravate the down cycle in the real estate sector and lead to a sharp fall in property prices and defaults by few developers, Deutsche Bank said. Reiterating its underweight rating on the sector, the investment bank forecasts further downside in realty shares, which have declined roughly 33% so far this year. “We are yet to see a sharp fall in fundamentals for the sector in terms of a sharp fall in property prices, defaults by developers to banks, and a sharp decline in revenues and profits,” Deutsche said in a recent client note. The investment bank opines that a severe down cycle in the sector now seems inevitable with the reversal in economic growth, low property prices, slump in mortgage rates and under-supply of units. “We forecast major shortfalls in net cash flow, with asset-liability mismatches in a tight financial market environment and a currently cautious central bank. Most developers will not acknowledge a significant down cycle...

Sharp Correction Provides Good Value Buys For Investors With A Long Horizon. So how an investor can identify the good stocks to by for long term. In this article we discuss a method to do it. THE stock market is known to over react on the way up as well as down. So, it should come as no surprise that the market price-to-book value of many fundamentally-sound companies has slid to its lowest level in many years as a result of the recent turmoil. An analysis reveals that 181 companies (with strong fundamentals) are currently trading at a discount to BSE-500 index average price-to-book value (PBV) of around 4.75. And stock prices of 70 companies are trading at a PBV of less than 2. Such a sharp correction provides good value buys for investors with a long-term horizon. To give a fair picture, only those companies whose revenues and net profit grew at a CAGR of 15% or more in the past three years have been included in the study. Companies with 3-year average return on capital employed o...