What to Make of the Richly Funded Taxi Services, Uber and Ola

Uber’s spending $400m in India. Ola just raised $320m. (Each of those, if you’ve been reading Capital Mind, is greater than all the IPOs in 2014 in India, put together)

This money will go to something, someplace. They won’t buy taxis, but will help finance drivers who would like to buy a car. (Uber, Ola)

I’ve used both services – Ola and Uber – and am watching the landscape change rapidly. From being expensive beasts, they’ve both gone to the lower end of the taxi ecosystem – and Ola even has autorickshaws on its network.

How do they work?

I have been speaking with drivers and in general, the concept is: You pay less (through discounts) and the driver gets paid a lot more. Uber and Ola are funding the difference, largely as “acquisition cost” for customers. I tweeted this lot:

  • 1/ Uber and Ola pay their drivers a different amount from what […]

By |November 24th, 2014|Categories: Startups|Tags: , |9 Comments

Premium: Webinar Recording: Adjusting Portfolios and Stock Prices for Bonuses/Dividends

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By |November 22nd, 2014|Categories: Premium|Tags: |0 Comments

The Big Mo Corner: Retail Investors Barred

The Big Mo Corner by Mohit Satyanand.

Note: We’re making this Capital Mind Premium post freely available, we hope you like it!

Since investing is for the future, I decided to consult my 16-year old son about companies and sectors he saw as holding promise.
“Technology,” he said. “Phones, and computers.” Like Apple, I thought. That’s a US company. Samsung? Korean. There is, of course, Micromax, but that’s not yet listed.

“Can’t really invest in those.” I told him.

“Other gadgets?”, he offered “Like TVs, fridges, air-conditioners?”

“The Koreans practically own the space”, I explained. “And none of them have listed in India”

“If I was a little younger, I would have said, candy”.

“Chocolates dominate candy markets around the world. And I would love to own shares in Cadbury. But that’s now owned by Mondelez, and they delisted Cadbury India a long time ago”

“Amul?” he asked. That’s a cooperative federation, […]

By |November 22nd, 2014|Categories: Premium|Tags: |7 Comments

Kotak-ING Vysya Bank Merger – The Story in Pictures

Kotak Bank will buy ING Vysya bank in an all stock transaction that gives ING Vysya shareholders 725 shares of Kotak Bank if they own 1000 shares of ING Vysya.

This will create a larger bank in assets; the new Kotak bank will be about 50% larger. However, the price increase in Kotak’s shares (to Rs. 1200) might have fully factored in the growth increase, without allowing for any issues in the merger going forward.

Here’s snippets from their presentation that puts things in perspective.

Financials: Kotak About 4x Profits, 2x Size

Kotak earned about 6,600 cr. in H1 in total income, and a profit of 1,400 cr. compared to ING Vysya’s 324 cr. in profits.  Kotak’s

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The combined CASA of both the entities is still […]

By |November 21st, 2014|Categories: Banks|Tags: , |1 Comment

Is the New Kisan Vikas Patra Creating Holes to Store Black Money?

The Finance Minister wants Indians to save more. The press release from the fin ministry says:

The Finance Minister said that in last few years due to slower rate of economic growth, the rate of domestic savings had come below 30 % while it had once touched the peak of 36.8%. He stressed the urgent need for raising the domestic rate of savings.

This has led them to relaunch the “Kisan Vikas Patra” (translates to “Farmer Benefit Bond”). These will be issued by the Postal department. The product is simple, and the gazette notification states:

  • You buy them for Rs. 1000 (minimum), and no maximum exists (each certificate has a max value of Rs. 50,000)
  • Your money doubles in 100 months (8 years, 4 months) – the annualized rate of return is 8.7%. (this is the maturity of the KVP)
  • You can pledge the certificates for a loan
  • You can exit partially after 2.5 years, rates […]
By |November 19th, 2014|Categories: Government|Tags: |12 Comments

The CAPM Portfolio: Two Stops on Lousy Results and Consequent Moves

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By |November 19th, 2014|Categories: Premium|Tags: |0 Comments

Premium: Bank Nifty Companies Q2 Growth Surges; Net NPA Ratio Inches Upwards

Last week, we brought to you a comparative analysis of the Nifty companies performances, vis-à-vis Q1 and Q2 2015.

A few interesting points emerged; on a y-on-y basis, the companies did not perform as well in Q2 FY15 as they did in Q1. Now we extend our analysis to see how Banks have performed.

By |November 19th, 2014|Categories: Premium|Tags: |0 Comments

Optionalysis: The CAPM MA20 Shows Another Outlier Trigger

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By |November 18th, 2014|Categories: Premium|Tags: |0 Comments

Macronomics: From Green Shoots to “Yellow Leaves”

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By |November 18th, 2014|Categories: General|Tags: |0 Comments

Indian Exports Contract for First Time in Seven Months in Oct 2014

Export data for October 2014 shows a stunning drop in goods exports by 5% this month. This is the first time we’ve contracted in terms of exports, year or year (both dollar and rupee terms) in seven months.

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The only saving grace: Our trade deficit wasn’t as wide as it was last month. It still is among the highest since May 2013 (second highest month, in fact)

What happened to our exports?

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This is totally going awry now. We have a new, stable government. We have much lower oil costs now that crude has fallen about 20%. And […]

By |November 17th, 2014|Categories: Macro|Tags: , |5 Comments

Q2 Profit Growth for Nifty Companies Shockingly Low After a Vibrant Q1

In our last post we spoke of how the Nifty companies show very Q2 growth (YoY) of 3.7% on revenues and 5.17% on Net Profit. Q1 on the other hand was excellent with both revenue and earnings growth about 18%.

That was with only 37 Nifty companies announcing results. Now, we have all of them. And the sight isn’t any prettier:

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This is using consolidated data where available.

The Sep 2014 quarter looks like the worst, just when markets seem to be making new highs on a regular basis. There’s cheap money doing the rounds, clearly. Apparently, it’s helping stocks, but isn’t exactly helping earnings…

By |November 17th, 2014|Categories: Nifty|Tags: |0 Comments

Japan Shocks With Negative GDP Growth

Tokyo, just as we speak, has fallen prey to another recession. Japanese GDP came in at -1.6% despite their efforts in flooding the world with a lot of money. Here’s the Nikkei:

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Japanese Premier Shinzo Abe wanted to increase a recently increased sales tax to perk up GDP. What a sales tax should do do is make things more expensive and in some random way impact inflation. But it will increase GDP too, or so they hoped. But apparently it did not, so further hiking it may be out of the question.

Japan’s become a basket case in economics. No GDP growth, no inflation, the stock market refuses to hit new all time highs no matter how much money is printed, protection of the top houses, the central […]

By |November 17th, 2014|Categories: Macro|Tags: |4 Comments

The CAPM Portfolio: Q2 Reviews and Revised Stops

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The CAPM Portfolio has done well, and it’s nearly a year since we started (We started in December 2013). The portfolio now has a reasonable number of stocks, and here’s a quick review of where they stand.

By |November 13th, 2014|Categories: Premium|Tags: |1 Comment

IIP Hits 2.5% in Sep 2014, Manufacturing Stages a Comeback

The Index of Industrial Production (IIP) for September 2014 is at a three month high of 2.5%. I know, even 2.5% sounds low, but it is indeed better than earlier. IIP for Jun 2014, which was first announced at 3.4% has been revised up to 4.3%.

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Mining and Electricity are both benign, while Manufacturing (the heaviest weight in the index) recovered to be up 2.5%, the highest in three months.

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If you’re keen on the use-based indexes, here you go:

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By |November 13th, 2014|Categories: IIP|Tags: |0 Comments