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In living life, everything that the person is worried about losing tries to ensure that by something. Insurance companies are the one who provides such risk management to individuals, businesses, and institutional clients. This is done through various types of insurance products that customers look for i.e. life insurance, health or medical insurance, car insurance, etc. The basic principle of all such products remains the same that the insurer guarantees payment or reimbursement in the event of losses for the insured. From an investor’s perspective, investing in certain kinds of insurance companies like life insurance may appear risky as these businesses consist of long-term products and services, and also require high initial acquisition cost. 

Therefore, while analyzing such companies’ certain business growth parameters need to be considered over the years and margins. We have covered in this blog such 3 parameters for the top 3 life insurance companies in India to take you through their short analysis to understand and compare these companies with each other. We have selected these top 3 companies based on the market capitalization as of 26th November 2020.

Embeded Value [EV]

This is the measure of the value of the life insurance company. This measure indicates the expected profitability from the current underwritten policies and current net worth. The embedded value of the company is calculated as the sum of adjusted net worth and the discounted value of profits from in-force policies.
Below is the comparison of the embedded value of the top 3 insurance companies:

As the name indicates, this is the value of premium acquired by the entity from new policies for a particular year. So, the premium earned from the new contracts in a given financial year is referred to as the new business premium for an insurance company. Very natural to understand, if the company is able to grow at a higher rate with NBP, the business perspectives seem to be on the high good side.

Below is the comparison of NBP for the top 3 life insurance companies:

New Business Margin [NBM]  
This is a measure of profit margin used by the insurance companies for the new business received during a particular financial year. NBM is the ratio of the value of the new business to the present value of premium income. It is calculated by dividing the profit on the new business by the present value of the new business or Embedded value.
Conclusion:

Introduction:

If you check the financial statements of UTI Asset Management Company of Q1 of FY 2021 compared to Q1 of FY 2020, below is the position of the change in revenue. 

In the above table, you may notice the revenue has increased by 11.63% for Q1 YoY. Total Revenue from Operations includes gains/ losses from fair value changes. Now, let’s understand the meaning of “Fair Value”

Meaning of Fair Value: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as on date. In simple words, it can be substituted with the word, “current market price.” Fair Values are calculated according to IND AS 113. 

Now you might be wondering why are we discussing “Fair Value?”

Due to COVID-19, the equity and mutual fund markets were very volatile in Q1 of 2021 which resulted in a significant change in the fair values of such investment instruments. You might be aware of the “V shape recovery” which the market witnessed. Due to this, it’s probable that the company might have gained significantly on such investments. But since these gains are temporary but not permanent in nature, one should not consider these while analyzing the revenue from operations of the company for fundamental analysis and growth perspective along with the impact of the same on other parameters like PBT, PAT, etc. 

Let’s consider the following example. You have equity shares of Company A which you have purchased at Rs. 1000. The LTP as of 31st March is Rs. 1,800. As per Ind AS, you have to value it at the market value (LTP) in your balance sheet. So, for this, you will have to increase the asset value by Rs. 800. The 2nd impact of gain of this transaction will reflect in the profit or loss account. In IND AS terms, it’s not necessary that every such gain will reflect in profit or loss account only. Some assets are recorded through Other Comprehensive Income i.e. OCI Statement which is the second part of the statement of profit or loss which is placed after the Profit after tax element. So, a lot of such factors are determinable in such cases. 

Now let's assume a case that in the same company “Total Revenue from Operations” is Rs. 1,200 of which the gain due to “Fair Value changes” is Rs.800. In such a case, its “Revenue from core operations” will be Rs. 400 only. So, I hope you have understood that one should focus on “Revenue adjusted with Fair Value changes” rather than “Total Revenue from Operations.”

After ignoring one item of gain due to fair value changes, the position of revenue differs significantly.

Conclusion:

Based on the above, you must have understood the result of significant change in revenue pre and post consideration of the gain due to fair value changes in the case of UTI AMC on change in revenue from operations for Q1 of FY 2021 and FY 2020.

Note: We have not covered the technical perspectives like financial assets and relevant Ind AS which deals with this concept like IND AS 32, IND AS 109, and IND AS 113. The above blog writes up is only for the purpose of basic understanding about the gain or loss due to fair value changes. There are various other factors that can be considered and dependent ones, based on accounting policies and estimates followed by the companies.

Equitas Small Finance Bank is the largest SFB in India in terms of the number of banking outlets, and the second-largest SFB in India in terms of assets under management and total deposits in Fiscal 2019. They have a market share of 16% in terms of Assets Under Management in India. It is a subsidiary of Equitas Holding Limited (EHL).

IPO season continues with the 12th IPO post lockdown this year. IPO subscription starts from Oct 20, 2020, till Oct 22, 2020. The IPO price range is from Rs. 32 to Rs. 33 per share. The minimum market lot is 450 shares and in multiples thereof. At the upper price band, the subscription amount for 1 lot is Rs. 14,850. The shares are expected to list on Nov 2, 2020.

We already had a detailed discussion regarding the IPO in our video on YouTube. Here, are some additional points that we need to know about the bank.

SWOT Analysis of the bank:

Litigations against the bank:

What is CIBIL?

What is CIBIL Score?

To put it simply, our CIBIL score is like a rating given to us by CIBIL based on our credit histories such as borrowing and repayment. Banks or lending institutions use this score to understand our creditworthiness before approving any loan to minimize default risk. This score ranges from 300 to 900. The higher the score higher is your chance of getting the loan and vice-versa. If you have a good CIBIL score you may get a lower rate on a personal loan, credit cards, and lower insurance premium. However, too many loans, untimely repayment, and high utilization of credit limits can poorly impact your credit score. If you have never taken any loan your CIBIL score would be -1.

How can you check your CIBIL score?

CIBIL provides CIBIL score and Credit Report once a year for free. You just need to create an account with CIBIL online and apply for your free annual credit report. They also offer unlimited access plans allowing you to track your CIBIL score and Credit Report every 24 hours and other credit monitoring services for some charges applicable. All you need to do is visit their website and subscribe!

Ways to improve/maintain your CIBIL Score

• Timely Repayment

Be it your credit card bills or EMIs, making timely payment of your dues is one of the important factors in improving your CIBIL score. If you miss your repayment deadlines, you are charged interest on the interest you are already paying. Ultimately, this reflects poor creditworthiness and drags down your CIBIL score.

• Check your Credit Report

Monitoring your Credit Report will help you realize where you are spending more and what caused your score to slip. If there are any errors in your report because of incorrect information or delay in updating your report, you can put up an enquiry with CIBIL, and get it corrected. This will get your score right back on track.

• Pay attention to your Credit Mix

You must have a good credit-folio including secured and unsecured loans. Secured loans include Home loans, car loans, etc. whereas Unsecured loans include personal loans, credit cards, etc. A good balance between the two indicates better credit management on your part. However, if a person highly relies on unsecured loans then it is not favourable.

• Credit Utilization

Credit utilization of above 30% on your credit card can adversely impact your CIBIL score. Just because you have a certain credit limit does not mean you use it all at once. On the other hand, not using your credit card at all will also affect your score poorly. The only solution to this is to keep a track of your spending which will help in limiting your credit utilization. If you are not using any of your credit cards it is best to cancel them.

• Say no to Multiple loan application

Every time you apply for a loan; the bank initiates a hard enquiry on your credit profile to understand the default risk involved. This hard enquiry is reflected on your credit report for two years affecting your CIBIL score. So, if you apply for multiple loans at the same time, it will open several hard enquiries on your account which will damage your score. Additionally, if your loan application gets rejected, it could cause more harm to your CIBIL score. So, next time you apply for a loan or credit card keep this in mind.

• Avoid closing Old Debt Accounts

By now you must have understood that the CIBIL score is all about your past credit habits. Therefore, it is advisable to keep your old loan accounts open even after you have repaid them. If you have had a good credit record for past loans then it will contribute positively to your CIBIL scores.

Bottomline

Healthy credit habits can help you improve and maintain a good CIBIL Score. It will undoubtedly pay off when you need to take a loan. Tracking your expenses regularly can help you make conscious spending decisions. Manage your debt smartly and pay your dues in advance wherever possible. Your CIBIL score is a crucial factor in availing of loans and credit cards. Hence, keeping an eye on it is a must. Remember, Perseverance is the key to success, or in this case to avail credit😉

Ladies and gentlemen, welcome onboard flight- Basics of Stock Markets with service from level newbie investor to a smart investor. Please fasten your seatbelts and keep your devices, notebook, and pen handy. Tips/calls are prohibited for the duration of the flight. Thank you for choosing team CARR. Happy learning!

You might be wondering that why is ma’am making this announcement. Well, learning about the stock market is no less than a flight. When you start learning about the stock market, you take off in the market, you might even face some turbulence during the journey and ultimately you land well only if you have learned the secrets to successful and efficient investing. If you wish to board on this fun flight you have arrived at the right airport, my friend. We will make sure that you understand all the concepts, right from the basic to the advanced level in the stock market, in the most simplified manner.
Are you ready? Let’s get started!

Why should one invest in the Stock Market?

Because I said so? Absolutely no! We all have dreams and aspirations in our lives which we are passionate about. For some people, it might be getting a nice car, for some, it might be going on a fancy vacation or some might wish to build their dream home. Irrespective of what the dreams are, they become achievable when the finances are in the right place. So, let’s understand how investing in the stock market can help us in our financial life.

1. Start with a small amount : 

Believe me or not, but investing in the market could cost as low as a pizza! Yes, you read that correctly. On average, we spend between Rs. 500 - 1000 on pizza. There are several quality stocks within this price range to invest in. We can even invest with a minimum of Rs. 500 regularly in stocks or mutual funds. This proves that investing in the stock market doesn’t burn a hole in the pocket. Just imagine how well your wealth and health can improve only by redirecting your pizza money into the market.

2. Enjoy the magical power of compounding :

We all have learned about compound interest in our schools. What we did not know then was how it is rightly called the 8th wonder of the world. It is simply a way of earning more interest on the already earned interest. Let’s understand this with an example. Let’s say you invest Rs. 1000 every month for 25 years expecting 10% return p.a. Your total investment amount of Rs. 3 Lacs would have grown to approximately Rs. 13 Lacs. And that, my friend, is the power of compounding!

It’s like your money is earning more money for you, isn’t it? The compounding effect would be more if you stay invested for a longer period. Hence, it is correctly said that “Time is money” and one must start investing as early as possible.

3. Victory over inflation

Inflation is like a hanging sword over our necks. It is reducing the purchasing power of our money. As per the trading economics, the average rate of inflation between 2012 to 2021 was around 6.01 percent in India. The bad news is that inflation is here to stay and we can’t do much about it. The good news is that the stock markets can help us generate inflation-beating returns of around 10-12% if invested efficiently.

This is possible because India is a developing country. Hence, our industries grow in tandem with our economic growth and have the potential to reflect and generate returns by outperforming the inflation rate.

4. Higher returns than traditional investment avenues:

FDs have been a popular choice for investment amongst Gen X (born before the 1980s) and Gen Y (Born between 1980-95). They are considered to be a safe and secure option. Currently, FD rates range between ~4.50% to 6.00% percent for tenures between 1 and 10 years. Now, have a look at the Nifty chart below. The Nifty50 index has grown ~150% in the last 10 years! I agree stocks can be volatile however, the risk gets averaged out over a longer investment term. Investing in sound and proven companies can help you generate stable and better returns than FDs

5. Additional income source:

It is always wise to have more than one source of income. If at all you face any difficulties in your professional or personal life and are forced to discontinue your job then you might experience financial distress after a while. Hence, having an additional source of income comes in handy and the stock market can be of help in this case. You can earn through value appreciation and dividends from your investments providing steady income apart from your paycheck.

6. It is not rocket science:

You do not need any fancy degree or qualifications to understand investing in the market. No matter what your educational background or age is. If you approach it in the right way, you can perform the required analysis and research all by yourself.

Bottom Line:

There are several exciting concepts to learn like- the structure of the Indian financial market, what is Nifty, the basics of IPO, different types of corporate actions, Dividends, Stock splits, Block deals, and many more!.

Click the following image to know how to start learning about the stock market.

The Stock market is intriguing if you can dedicate your time and devotion to learning and applying it practically. It is rightly said that “Practice makes you perfect”, and that is exactly what we need to apply here as well. Even Spider-Man had to learn how to use his power and figure out the best possible way to apply it while fighting the bad guys. So, what makes us any different when it comes to learning about the stock market?

People have different opinions on how one should initiate this journey. However, I am sharing the top 5 things you can do as a beginner to learn about Stock Market below. Let us find out, without further ado.

1. The first step is to track news related to the stock market daily. You can watch news channels like CNBC, Zee Business before 9 am and/or after 3.30 pm wherein you can watch shows parting knowledge on the subject. If you watch these channels between 9 am to 3.30 pm (which is market hours) you might get overwhelmed with all the information being telecasted about the market throughout the day. So, remember one day at a time. You can also download media apps like Economic Times, Livemint, moneycontrol, etc. which will further add to your knowledge basket.

2. For my reader folks, you can subscribe to market-related magazines like Dalal Street Investment Journal, Money life, Business Today, Outlook Money, etc. Apart from this, you can also read books related to investments and trading to understand the market in depth. You can check out my book suggestions here.

3.You can also use your Google skills to read about the market via various websites available on the internet. Blogs on Investopedia, Groww, Zerodha Varsity provide good content which a beginner can easily comprehend. You can also check out my Blogs here for easy reference.

4. If you are not a reader, no worries, I got you covered. There are so many YouTube channels that can help you understand basic concepts in the stock market. You can check out my YouTube channel where I have explained numerous concepts right from the ‘Basics of the Stock market’ in the most simplified manner that even a non-finance person can understand, that too ‘FOR FREE!’

5. If you are keen on learning about the market in a detailed and structured format, you can check out my readily available courses here. I have designed all of my courses from beginner level with ‘Basics of Stock Market’, ‘Basics of Technical Analysis’, ‘Magic of Mutual Funds’ to advance level with ‘Art of Value Investing’. I am sure you won’t be disappointed.

Now you are all geared up and eager to invest. But wait, to participate in the market, you need to open a Demat A/c with a SEBI registered broker. This process is very simple and completely online. Click on the image below to know more.

If you have watched Pokémon, you might know how all the Pokémon’s used to evolve when they reached a certain level. Pikachu would evolve into Raichu, Charmander would evolve into Charmeleon, etc. After their evolution, they turn into an advanced version of themselves with new looks, moves and, even skills. So, why not take inspiration from our favourite childhood show and advance ourselves in this journey of learning about the stock market. Till now, we have learned so many basic concepts about the stock market in the most simplified manner through my YouTube channel, course, and blogs. But now the question remains on how do we go ahead from here and what should be the next step. This is exactly what we are going to discuss in this blog.

KYS- Know yourself

You are at a stage where you know about financial markets and how they work, nifty, corporate actions, IPO terminologies, etc. but do you know yourself enough to step into the stock market? It is crucial to find out how much risk you can take. You may check out this video to understand how to check your risk profile. Other important points include understanding your investment horizon, capital and keeping your short-term liquidity intact with an emergency fund.

But wait, what factors could you consider in deciding all of this? Factors like your monthly income expenses, the number of dependents in your family, your/family’s medical expenses, your age, and your other financial goals will help you find out the answers you need before jumping into the market. Another important question to ask yourself is whether you possess the required skills to make well-informed investment decisions ahead. There are 2 branches in equity analysis namely- Fundamental analysis (FA) and Technical analysis (TA) and I think understanding both works the best to make good investment decisions. Let’s find out more about them as you read ahead.

Why learning Fundamental analysis is important?

FA helps us understand the actual value or the intrinsic value of a company based on its financials, economic environment, competitive position, and other qualitative factors. More focus is given to finding stocks that are undervalued i.e., stocks available at a cheaper price than their fair value. Investors believe that as the company is performing better, it will be recognized soon by the market, leading to a rise in its price because of the increased demand. This will help investors grow their wealth exponentially with not the only capital appreciation but also dividends and compounding. Hence, FA will help you pick financially strong and well-positioned stocks at a better price to gain the best out of the investments.

So, how to start learning about Fundamental Analysis. To find an undervalued stock, first, you must understand how to perform a financial analysis of a company. You can find out all about it in my "Fundamental analysis" course. After gaining confidence in FA, you can level up a little to learn more about the “Art of value Investing” which will help you fetch undervalued stocks.

Why learning Technical analysis is important?

To put it simply for you, Technical analysis involves observing past price movement and patterns of a financial asset to predict future price direction. TA will help you understand the current market trend. This is possible by studying various candlesticks, charts, and indicators. Investors and traders both need to learn TA. Now, you might be wondering, “For traders, it’s understood, but why do investors need to learn TA?” The answer is simple. After performing an extensive FA of a company, don’t you wish to get the stock at the best possible price available in the market? Of course, you do! Hence, you must learn TA to know the best time and best price to enter/exit a stock. Now the big question is how do you know what is the best time & price to enter/exit stocks. I got you covered. I have designed a course on “Technical analysis” which will help you understand TA in the most systematic, simplified, and practical way. 

Bottom line

“Safar khoobsurat hai manzil se bhi..” I am sure you would totally relate to this line from the song - Ae Dil Hai Mushkil, while you are on this amazing journey of learning about the stock market and investing. But the question that remains is what sequence you should follow while watching the courses. First, get your basics in place by completing the Basics of Stock Market course. Then you can go ahead with Fundamental Analysis, Art of value investing and lastly Technical Analysis to reach on that advanced level manzil you all wished for. I have designed these courses in the most simplified manner such that a person from a non-finance background, housemaker, student, retired, everyone, will understand it.