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Arihant’s Value Plus – September 2019 – Monthly Investment Newsletter

S&P BSE Sensex down by 0.2% and the CNX Nifty was down by 0.6%. The month was an eventful month and the markets remained highly volatile throughout the month. The key highlight for the month was, RBI cut repo rate by 35 bps to 5.4% and maintained its accommodative stance. The month also saw the Finance Minister announcing some palliative reform steps to kick start the economy and soothe frayed nerves of FPIs.

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Arihant’s Value Plus – September 2019 – Monthly Investment Newsletter

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  1. &SHKERS INDIAN INDICES GLOBAL INDICES Monthly Monthly Change (%) Indices Aug-19 Jul-19 Indices Aug-19 Jul-19 Change (%) DOW JONES NASDAQ HANG SENG FTSE 26403.28 7962.88 25724.73 7207.18 20704.37 26864.27 8175.42 27777.75 7586.78 21521.53 -1.72È -2.60È -7.39È -5.00È -3.80È SENSEX 37322.79 11023.25 27427.85 37481.12 11118.00 28876.00 15921.20 9044.95 15620.20 267.45 -0.42È -0.85È -5.02È -1.69È -0.75È 2.50Ç NIFTY 50 NIFTY BANK NIFTY MIDCAP 10015652.20 NIKKEI NIFTY 500 8977.55 16010.00 267.20 COMMODITIES NIFTY IT Monthly Particulars Aug-19 Jul-19 Change (%) NIFTY REALTY NIFTY INFRA -0.09È MCX GOLD 38656.00 46742.00 3952.00 165.10 34517.00 41227.00 4032.00 155.10 11.99Ç 13.38Ç -1.98È 6.45Ç 3001.15 3086.65 -2.77È MCX SILVER (Source: BSE & NSE) MCX CRUDE OIL MCXNATURALGAS BSE SECTORAL INDICES Monthly Change (%) (Source: Telequote software) Indices Aug-19 Jul-19 FOREX Monthly AUTO BANKEX CD 15768.40 30949.72 23420.00 16941.77 11077.25 12875.40 16149.45 8524.28 15472.03 32689.44 22342.30 17555.91 11062.33 12704.38 15733.49 9685.46 1.92Ç -5.32È 4.82Ç Particular Aug-19 Jul-19 Change(%) USD-INR 71.62 68.98 3.83Ç EUR-INR GBP-INR JPY-INR 79.22 87.29 67.43 77.09 83.73 63.36 2.76Ç 4.25Ç 6.42Ç CG -3.50È 0.13Ç FMCG HC (Source: Telequote software) 1.35Ç FII Activity (Rs. Cr.) IT 2.64Ç Gross Purchases Date Gross SalesNet Pur/Sales METAL OIL & GAS PSU -11.99È -0.55È -8.88È -1.18È 2.31Ç Total for August 110,424.52 128,016.80 -17,592.28 13163.72 6348.92 13236.95 6967.88 Total for 2019* 933,774.94 886,464.21 47,311.43 (Source: SEBI) MF Activity (Rs. Cr.) REALTY TECK 2047.65 2072.20 Gross Purchases Gross Sales Net Pur/ Sales Date 7853.07 7675.41 Total for August 70,974.87 52,360.44 18,614.43 Total for 2019* 499,633.00 444,241.87 55,391.13 (Source: SEBI) *Till August 2019 2ARIHANT CAPITAL¡SEPTEMBER2019

  2. weredispatchedinAugustlastyear.Meanwhile,toptwo- wheelermakersHeroandBajajhaveregisteredaplunge of20%and13%respectivelyinsales.Overalltherewasa clearsignofslowdownintheeconomicactivityasreflected in the August auto sales numbers. Outlk Ontheglobalfront,TheUS-Chinatradewarandfearof USrecessiontookitstollontheglobalmarkets,withall themajorworldindicesendinginredforthemonthof August.US’Nasdaq,UK’sFTSEandUS’DowJonesclosed inredwithlossesof-3.8%,-5.8%and-2.9%respectively. Whereas,HongKong’sHangSeng,Germany’sDAX, China’sShanghaiCompositeandJapan’sNikkeiended themonthwithlossof-8.6%,-1.7%,-2.2%and-4.6% respectively. MonthlyMarketRoundup InthemonthofAugust,theIndianbenchmarkindices mostlyclosedflatwithS&PBSESensexdownby0.2%and the CNX Nifty was down by 0.6%. The previous month was aneventfulmonthandthemarketsremainedhighlyvolatile throughoutthemonth.ThekeyhighlightforthemonthNiftyTechnicalOutlook:Sep-2019 was,RBIcutreporateby35bpsto5.4%andmaintained itsaccommodativestance.ThemonthalsosawtheFinance Ministerannouncingsomepalliativereformstepstokick starttheeconomyandsoothefrayednervesofFPIs.The key measures announced by the FM were1)Withdrawing enhancedsurchargeonFPIsanddomesticinvestors,2) FrontloadingofRs700bncapitalinfusiontoPSUbanks, 3)Deferringtheproposedrevisioninregistrationfeesfor autosectortillJune2020,4)Increasingvehicledepreciation rate to 30% from 15% earlier and slew of other reform steps. On the monthly chart, we are observingaDoji Candlestick Patternwhichtooksupportatthefourmonthconsolidation. Furtherthepriceshavealsoclosedabovethemedianline of the channel.Hence apullback rally cannotbe ruled out. Thesestepsgavesomehopetoinvestorsthatgovernment isseriousaboutbolsteringthesaggingeconomyandwill restore investors’ faith in Indian capital market. On the sectoral front, Nifty Metal was the top loser at 9.4%, followedbyNiftyInfrawith2.4%lossforthemonth.Other majorsectoralindicessawsomereliefrallyinAugust,after witnessingheavysellingpressureinprevioustwomonths. NiftyAutowastopperformerwith3.6%gain,followedby NiftyIT(+3.4%),NiftyPharma(+2.5%)andNiftyFMCG (+1.4%)indices.Nifty50MidcapandNifty50Smallcap ended the month mostly flat with loss of -0.3% each. IncomingmonthifNiftytradesandcloseabove11129 levelthenitislikelytotest11288–11447–11632levels. However,ifNiftytradesandclosebelow10917levelthenit can test 10758 –10599 –10414 levels. Atpresentapullbackrallycannotberuledbutwe maintainourstancethatthemonthlytrendremains downandpullbackrallyintherangeof11288–11447– 11632mayattractsellingpressure.Henceoneneedstobe Ontheeconomicfront,GoodsandServicesTaxcollectioncautiousandwaitfor the dust tosettle. wasreportedtobeRs98,202crforthemonth,againof 4.5%onYoYbasis,howeveritfellshortofthecoveted1 lakhcrmark.Asfarasautosalesnumbersareconcerned, EconomicDataWrapUp:August August 2019 turned out to be another gloomy month for the automobilesectorasautosalescontinuedtofacepressure duetoweakconsumersentiment.Thesalesreportsof August2019sawasignificantdropinvolumeswithmajor players including Maruti Suzuki, Tata Motors and Hyundai reportingadropof34.4%,58%and16.6%respectively.The topsixautomanufacturersdispatchedatotalof171,193 vehiclestodealershipsinAugustthisyear,registeringa34% dropinvolumes,whencomparedtothe259,925vehiclesthat ¡ꢀIndia's August Nikkei manufacturing PMI slipped to 15-month low at 51.4 from 52.5 in July. ¡ ¡ ¡ India’s August Nikkei services PMI fell to 52.4 from 53.8 in July. India’s July IIP growth rose to 2.1% compared to 0.7% in June. India’s July CPI inflation was steady at 3.15% compared with 3.18% in June. ¡ India’s July WPI inflation fell to 25-month low of 1.08% compared to 2.02% in June. 3ARIHANT CAPITAL¡SEPTEMBER 2019

  3. Fundamental Stck Manappuram Finance Ltd Investment Rationale BUY Target Price: Rs. 151 Goldloanbusinessontrackafterdemonetisation Afterfacingseveralissuelikedemonetizationand volatilityingoldprices,MFLmovedtoshortterm goldloanproductsthathelpedthemtoeffectively managethegoldprices.Aftertemporaryhiccupsfrom demonetisationandGST,thegoldloanbusinessis backonthetrack.Therisinggoldprices,coupledwith decreaseininterestratesinthelatestRBImonetary policy, to act positively for the company. Value Parameters BSE Code 531213 MANAPPURAM Rs 120 NSE Symbol CMP (As on 2ndAug, 2019) Face Value Rs 2 52 Week High / Low Market Cap (Rs Cr) EPS (FY21E) 145/66 10,081 DiversificationofBusinessModel;Afruitful strategy Rs 14.8 PE ratio (x) (FY21E) 8.1 MFLhasdiversifieditsbusinessprofileinnon-gold portfoliolikevehicleFinance,Microfinance,home financeandInsurancebrokingbusiness.AsonQ1FY20 thenon-goldbusinessconstitutes~34%ofthetotal portfolio. Shareholding Pattern %(Jun ’19) AsirvadMicrofinance–OneoftheStrong Subsidiary At present, MFL have more than ~90% stake in Asirvad microfinance.ItoffersIncomegeneratingprogramme (IGP),ProductandSMEloan,withtenureofupto24 months.Thecompanyexhibitedarobustperformance, withaneartofour-foldAUMgrowthovertheperiodof FY17 to Q1FY20. Valuations Company Overview AtCMPofRs120,ManappuramistradingatFY20Eand FY21E,P/ABVmultiplesof1.9xand1.6xrespectively, whichisattractiveconsideringitslowerNPAlevels, impressivereturnratio,strongoperatingefficiency andhealthycapitaladequacyratio.Thecompanyalso doesn’thaveanynotableassetliabilitymismatchesto beacauseofconcern.WehaveaBuyratingonthestock withatargetpriceofRs151(2xP/ABVFY21E),giving a potential upside of 26%. ThecompanywasincorporatedasManappuramGeneral FinanceandLeasingLtd(MGFL)on1992inKeralaandlater itrenamedasManappuramFinanceLtd(MFL).Itisasecond largestNBFCcompanyengagedingoldloan.Overthepast threeyearsithasdiversifieditsportfoliointonon-goldfinance areaslikehousing,vehicleandmicrofinanceloan.Atpresent, ithas4380branchesacross28states/UTswithAUMofRs 20,186 cr, out of which Rs 13,292 cr in gold loan business. 4ARIHANT CAPITAL¡SEPTEMBER 2019

  4. AUT SECTOR AugustSales Maruꢀ Suzuki TVS Motor TotalSales: 106,413 units,-32%YoYdown Domesꢀc Sales: 97,061 units, -34% YoYdown PV Sales: 93,173 units, -36% YoYdown Exports: 9,352 units, -10% YoYdown TotalSales: 290,455 units, -15% YoYdown 2Wheeler Sales: 275,851 units, -16% YoYdown 3Wheelers Sales: 14,604 units, 11% YoYup Exports: 69,702 units, 6% YoYup Mahindra & Mahindra TotalSales: 36,085 units,-25% YoYdown Domesꢀc Sales: 33,564 units, -26% YoYdown PV Sales: 13,507 units, -32% YoYdown CV Sales: 14,684 units,-28% YoYdown M&HCV Sales: 354 units,-69% YoYdown Exports: 2,521 units,-15% YoYdown AtulAuto TotalSales: 3,681 units,-16% YoYdown TataMotors Escorts TotalSales: 29,140 units,-49% YoYdown PV Sales: 7,316 units, -58% YoYdown CV Sales: 21,824 units, -45% YoYdown M&HCV Sales: 5,340 units, -58% YoYdown TotalSales: 4,035 units,-16% YoYdown Domesꢀc Sales: 3,763 units, -19.5% YoYdown Exports: 272 units, 97% YoYup Bajaj Auto Ashok Leyland TotalSales:9,231 units,-47% YoYdown M&HCV Sales: 5,349 units,-59% YoYdown LCV Sales: 3,882 units, -8% YoYdown TotalSales: 390,026 units,-11% YoYdown Domesꢀc Sales: 208,109 units, -19% YoYdown CV Sales: 64,726 units, -13% YoYdown Motorcycle Sales: 325,300 units, -10% YoYdown Exports: 181,917 units vs 181,461 units YoY Volvo-Eicher Commercial Vehicles TotalSales: 3,538 units, -41.7% YoYdown Eicher Motorcycle TotalSales: 57,056 units, -19% YoYdown Domesꢀc Sales: 52,904 units, -24% YoYdown Exports: 4,152 units, 205% YoYup Hero MotoCorp TotalSales: 543,406 units, -21% YoYdown 5ARIHANT CAPITAL¡SEPTEMBER 2019

  5. MUTUAL MUTUALFUNDROUNDUP Indianequitymarketsendedonnegativenote inAugust2019.Thebarometerindex,S&PBSE Sensexdeliveredminornegativereturnsof0.42 %tosettleat37322.79andNifty50lost0.85% ending the month at 11023.25. MF ACTIVITY Indianmutualfundsturnednetbuyersofequities tothetuneofRs18614.43croreinthemonthof August2019.Highestbuyingwasrecordedinthe fourthweekofthemonthwhenthefundhouses madetotalnetbuyofRs4463.05croreofequities. Ontheotherhand,foreigninstitutionalinvestors (FIIs)soldRs17592.28croreworthofequitiesin August 2019. MutualFundActivityInAugust2019 Gross Purchases Net Investment Rs in Crores 1stWeek Gross Sales 4928.71 7996.20 18881.17 10820.18 14731.84 3067.49 4433.13 3426.61 4463.05 2ndWeek 3rdWeek 4thWeek 14448.04 7393.57 10268.79 5thWeek 18545.48 15321.33 3224.15 Total 70974.87 52360.44 18614.43 Note: Mutual Fund activity as on 31stAug 2019 6ARIHANT CAPITAL¡SEPTEMBER 2019

  6. EquitySchemeRecommendation Min. Investment Amount AUM as on 31st Returns (%) Launch Date Latest NAV* Scheme Name July,2019 Lump OneThreeFive YearYearsYearsInception Since SIP (Rs in Cr) sum Large Cap Fund 29.09 40.37 49.23 6,501 21,125 13,492 05-Jan-10 1.04 11.9310.69 7.718.71 11.69 13.17 14.99 1000 100 5000 100 Axis Bluechip Fund(G) 23-May-08-6.94 04-Apr-08-3.43 ICICIPruBluechipFund(G) Mirae Asset Large cap Fund(G) Multi Cap Fund 10.2311.81 1000 5000 Axis Focused 25 Fund(G) 27.49 33.95 7,785 29-Jun-12-7.60 11-Sept-09-4.81 11.2512.49 15.14 13.04 1000 500 5000 5000 Kotak Standard Multicap Fund(G) 24,959 8.50 7.46 12.04 11.91 SBI Magnum Multicap Fund (G) 47.20 7,465 29-Sept-05-4.91 11.79 500 1000 Mid Cap Fund HDFC Mid-Cap Opportunities Fund(G) 49.53 20,893 4,805 25-Jun-07-16.20 9-Aug-04-17.33 2.99 5.89 10.01 11.66 14.03 17.92 500 500 5000 5000 L&TMidCapFund(G) 119.79 Note: Returns as on 31stAugust, 2019, Returns < 1 yr annualized, Returns > 1 yr compounded annualized. DebtScheme-LiquidFundsRecommendation AUM as on Returns (%) Six Latest NAV* 31st July, 2019 (Rs in Cr) Scheme Name YTM One Three One Since MonthMonthsMonthsYearInception Liquid Fund 2124.74 283.38 30,115 67,928 0.51 0.51 1.64 1.64 3.53 3.52 7.35 7.29 7.91 7.84 Axis Liquid(G) 6.01 6.08 ICICI Pru Liquid Fund(G) Ultra Short Term Fund Kotak Saving Fund(G) 7.01 6.46 30.96 31.54 12,994 2,541 0.69 0.66 2.04 2.03 4.22 4.15 8.31 8.24 7.80 7.49 L&T Ultra Short term Fund(G) Note: NAV and Returns as on 31stAugust,2019, Returns < 1 yr annualized, Returns > 1 yr compounded annualised. ELSSSchemeRecommendation AUM as on Returns (%) Launch Date Latest NAV* Scheme Name 31st Since One YearThreeYearsFive Years July,2019 (Rs in Cr) Inception Mirae Asset Tax Saver(G) Axis LT Equity Fund(G) 17.11 44.24 2,208 28-Dec-15 29-Dec-09 -2.95 -4.69 12.93 9.86 - 15.75 16.62 18,953 11.93 Kotak Tax Saver(G) 41.98 896 31-May-96 -4.80 6.86 10.47 10.98 Note: NAV and Returns as on 31stAugust, 2019, Returns <1 yr annualised, >1 yr compounded 7ARIHANT CAPITAL¡SEPTEMBER 2019

  7. 8ARIHANT CAPITAL¡SEPTEMBER 2019

  8. 9ARIHANT CAPITAL¡SEPTEMBER 2019

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