Issue #0

Good Morning Sunshine! Wakey...Wakey..,

And welcome to the pre-launch edition of EveryFin's Sunday Weekly Newsletter. I hope this becomes part of your Sunday morning ritual. There is plenty to get through, but I promise to keep it interesting.

IN TODAY'S NEWSLETTER

• Market update & news in brief
• August inflation numbers & why onion is in tears
• CAMS Ltd IPO - Are you buyin't?
• Cover story - A FASCINATING drama on investing in 3 scenes

QUIZ

How many 2000 rupees notes are in circulation in total?

MARKET UPDATE

NEWS IN BRIEF

1. Tik-Tok saga got uglier this week - Microsoft's bid to buy Tik-Tok's US operations got rejected. Tik-Tok decided they aren't going to sell out just because Trump said so. Instead, Oracle is going to handle Tik-Tok's data in North America. Happy compromise? No! Late Friday night, Tik-Tok decided enough is enough - They filed a case against Trump saying the president is destroying an online community.
2. RIL continues its fund raising spree. Carlyle group, world's largest private equity company, seems to be in discussions with Reliance Retail to invest $2Bn. That is not very much considering the Retail group got $6Bn in new invesments recently from a bunch of PE players. If you have money, Mukesh bhai is looking for you.
3. SpiceJet posted its quarterly results this week; revenue dropped by 77% compared to the same quarter last year. They made a net loss of Rs.593 crores. The tourism ministry meanwhile told the parliament that while no formal study was conducted to assess the impact of COVID on the sector, discussions with stakeholders point to massive losses. "Really?"
4. SEBI issued a circular modifying the requirements for Multi-cap mutual funds. They now have to invest atleast 75% of AUM in equity with a minimum of 25% in each of large, mid and small cap stocks by January 2021. A lot of money is expected to flow out of large cap stocks to mid and small cap stocks in the coming months. Where is your money?
5. HCL, the technology major, released a mid-quarter update this week stating that their revenue and profit expectations will exceed the guidance they provided earlier. They said that they now expect to clock 3.5% in revenue growth quarter on quarter and deliver operating profit margin of ~21%.

IN LESS THAN 200 WORDS (1/2)

Inflation data & why onion is in tears

The office of the economic adviser released inflation data this week. Wholesale price index (WPI) witnessed positive y-o-y inflation of 0.16% after spending 4 months in the negative territory. This low inflation figure was primarily driven by a near 10% reduction in fuel and power prices year on year. At a retail level however, the food price index is up by about 9% with vegetables now costing 11% more and meat & fish 17% more than last year.

But the surprise came in the form of an onion, which lost about 1/3rd of its price/kilo at wholesale level. Potato on the other hand now costs near double, up 83% year on year. Nobody really is able to put a finger on why this is - some say it is because people are stocking up due to the pandemic, some say there is a reduction in potato production this year while some others say, "It is all in the cold storage, we just don't have enough labour to get it to the market". Whatever it is, the only truth is that our Aloo Do Pyaza now has more onions than, well Aloo.

IN LESS THAN 200 WORDS (2/2)

CAMS Ltd. IPO - Are you buyin't?

CAMS Ltd, India's largest registrar and transfer agent of mutual funds(MFs), is coming out with IPO this week. In simple terms, what they do is keep up digital records of investors for MFs and charge them a % fee on total AUM (~0.04%, I estimate). CAMS thinks it is worth Rs.6,000 crores and wants you to subscribe @ ~Rs.1,220/share.

MF data capturing isn't exactly a specialist skill. It is also highly regulated - SEBI is all over them. With >4,000 employees, CAMS generated Rs.720 crores in revenue in 2020 - ~Rs.16 Lakhs/employee/year. That is quite low for a technology services company. Moreover, 1) there is constant need to upgrade technology 2) their revenue & profits have grown by just ~10% over the last 3 years 3) over 65% revenue comes from top 5 clients & 4) funds raised through this IPO will only go to investors exiting the business.

EVEN if a) MFs AUM grow at 20% p.a. for 10 years b) CAMS retains 70% market share and its 0.04% fee, c) it delivers 20% after-tax profit d) CAMS stock trades at 15X PE in 2030 - Your investment in the IPO will return 8% CAGR over 10 years. Is it worth it? Try listing day gains, may be?

COVER STORY

A FASCINATING drama on investing - In 3 scenes

Let us assume that you had Rs.1 Lakh saved up on the 1st of January 2010. There are 3 people you are taking advice from on where to invest.

• Your dad – Who says, “Beta, put it all in fixed deposit at SBI. That is the best way to secure your future.”
• Your mum – Who says, “Putthar, you must buy gold. Rekha aunty’s son bought a lot of gold 10 years ago and its value has gone through the roof now.”
• Prashant Jain, Chief Investment Officer, HDFC – Who says, “You should invest in the HDFC top 100 mutual fund. Our RSI indicator suggests that there is deep value in the market right now, stocks are making a come back…(and some more unintelligible financial terms)”.

A decade later, who was right? Hit the link to find out.

IN CASE YOU MISSED IT...

EveryFin - What is the story about?

A boy and his mother were walking back home after school. The mother was leading the way and the boy was holding his mum’s hand. It was the day the boy had his English test. The mother expectantly looked at her son, while he was completely lost in thought. Something was clearly troubling him.

She said, “So how did school go today?

The boy said, “We had an English test.”

The mum said, “And how was it?”

He replied, “I think I got everything right except for one question.”

She said, “Oh that is good. What was that one question?”

Hit the link to read the rest of the story and the story about EveryFin.

ANSWER TO QUIZ

~274 crores

- the total number of Rs.2000 notes in circulation. If you had to split that up equally to everybody in India, each person gets 2 notes. That's it. Not a lot, no?

READ/WATCH/LISTEN

• Economists are saying we will witness a K-shaped recovery (They said U first, then V, then W, L and J). This happens when an economy recuperates unevenly, and there’s a separate trajectory for two segments of the society; one growing faster and one going down the drain - Fastcompany

• India will have about 30 old people (65+) for every 100 working age people (20 to 64) by 2060. The ratio at the moment is 10 for every 100. But even with that increase, our population will still be one of the youngest in the world  - Visualcapitalist
• When 5 out of the 6 underground vaults in a temple in Kerala that remained locked for hundreds of years were opened in 2011, treasures worth more than $20Bn were found. The unopened 6th vault however is still shrouded in secrecy. - Medium

From the writer in me, to the reader in you ♥

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