Category: Blog

Most people will NOT agree with this statement – but In Investing Terms House is NOT An Asset!

Robert Kiyosaki the International Financial Coach repeats that House is NOT an Asset!

Let us try to understand why he said so.. [this article involves calculations – but will save you crores if you learn it]

A House can take away Rs. 10 Crore of Yours!

If you are in the Verge of buying a House – Spend few money on learning which will give you back Crores!

Robert Kiyosaki Definitions

Robert Kiyosaki used the following Definitions:

Investment Benchmark 10%

In India the base Investment Benchmark is 10% which is the Returns on Long-Term Fixed Deposits like Corporate FD, Bonds etc. These are NO Activity NO Risk kind of returns.

So if you choose any Investment it should be having Higher Return than the Benchmark 10%.

Also note that If your Investment requires more activities & monitoring then the corresponding returns also should increase.

Rule of Thumb Any Investment which involves Activities & Risks should be having more Returns than the above Benchmark 10%!

WHY HOUSE IS NOT AN ASSET IN INDIA?

In India the Returns on House as an Investment is very low of 5% Only!

• Appreciation 5%
  • land appreciation 8%
  • building depreciation -3%
  • total 5%
• Rental Savings 2%
• Maintenance & Taxes -2%

So approximately you will get Only 5% Returns on a House!

• If you compare with Long Term Corporate Fixed Deposits of 10% – You are at Loss
• If you compare with High Returns in Stocks/Mutual Funds like 30% – You are Loosing a Fortune!

Smart Investor does what?

A smart investor is having access to 30% Return investment opportunities like stocks, mutual funds etc. as he invested time learning them. Stocks & Mutual Funds associates Higher Risks & It requires Training – but worth the 30% ROI they provide in Long Term & Compounded.

So instead of buying a home the Smart Investor prefer to Go for Rent in a Similar House and Invest the Capital into 2:

• Start a Long Term FD of 30 Lakhs which generates 10% interest to pay the rent and rental increases
• Put the remaining 70 Lakhs in high growth investments of 30% more returns

Note: 10% Interest FD is easy – We have also provided 15% yielding FDs to customers

After 10 years there will be:

• Fixed Deposit & Rental is going as it is
• You will see Rs. 10 Crore compounded returns in stocks – 10X the return than the house investment

Now the Smart Investor can sell the Stocks and Buy a Big Mansion House + Put Remaining Money for Cash Flow attaining Financial Freedom too.

After 20 years the assets will be so huge

• Fixed Deposit & Rental is going as it is
• You will see additional Rs. 20 Crore in the stock capital

At this point the Smart Investor would have generated Wealth & Income for Generations. REAL Financial Freedom!

If you waste 1 Crore today – You are actually wasting Rs. 10-100 Crore in future!

This is the reason Smart Investor wisely goes for Rent & Allow Money to Grow!

While the Poor Amateur Guy will go with Buying the House & Loose the Financial Freedom!

Note: If you add Loan on House – then the ROI will become worse as you are paying 8% Interest for a 5% Returns!

Then who is buying the houses?

Mostly, the middle class are buying the houses. They are happy with own house as it is an emotion. Plus, they think they are saving rent, but in net effect they are only gaining low 5% returns. The middle class are not trained financially – they don’t spend money on learning – hence they loose crores!

Most of the middle class takes a 150% loan on top of the house thereby becoming slaves of banks for their entire life.

Builders rob the middle class with high priced properties.

Banks rob the middle class with high interest loans.

Middle class guys are just Victims!

Government & Banks nurtured a culture of OWN HOME AS A DREAM so that people would spend mindless money on dreams. Then the middle-class owner will get locked themselves for Owning the Dream while the economy gets their work blades cutting, banks are happy with interest & government enjoy taxes.

So What do the Rich Class Do?

The Top Riches will be Renting Houses rather than Owning as Renting is Profitable in India!

Riches only Buy a House only when they are Financially Free or Huge Wealth is amassed. House will be < 10% of their Net Worth. They make remaining 90% money work for them.

While Middle Class take 150% Loan on their Net Worth and Works for Money whole life!

Example: Mukesh Ambani bought Antilla while it was less than 10% of his net worth & his remaining 90% Net Worth is working for him.

All the top riches like Bill Gates, Warren Buffett use this 10% Formula for their house, cars & jets which are Liabilities / Low-Return Assets. Their remaining 90% money always works for them.

The Big Problem

The bigger problem on owning a house it that you will loose another 10 Crore too. How?

The owned house will make you Stagnant at one location, you cannot move out to other state or country for better job opportunities. Hence you will loose another 10 Crore from Job Opportunity Loss too.

The Solution

So if you are Not in a Hurry to Buy a House, then you may Postpone the Buying for few years & let the capital grow.

• If you are in Age 30-40 range and wanted to Grow your Career Abroad, then you can Postpone buying the house & after 7-10 years you will have Immense Wealth and Cash Flow to be Financially Free & Boast with a Mansion & BMW too.

BE FINANCIALLY SMART & LIVE LIKE A KING!

Summary

• House is NOT AN ASSET as it a low return investment
• 90% of Home Loan Buyers have locked their Life for Financial Slavery
• Rich Class do not consider House as Investment – But as Luxury EnjoyabeToys like BMW & Mercedes cars which depreciates
• Rich Class chooses 30% ROI Investment Vehicles – They put 90% Net Worth on these and thus Nullify above Depreciation
• Don’t be an Amateur Investor – Be a Smart Investor!
• Learn other 7 Smart Investor Strategies in our MASTER MIND TRAINING
  • How to Evaluate Real Estate, Stocks & Any Investments?
  • How to buy your Luxury House free of cost?
  • How to Handle your Net Worth?
  • How to Achieve Financial Freedom in 5 Years?
  • How to Gain 30% Returns from Real Estate using Rich Class Strategy?
  • How to Gain 30% Returns from Stock Market using Rich Class Strategy?
  • 1 Hour Consultation with Advisor

Remember another Middle Class Bad Habit – They won’t Invest money in Learning & Learn from Failures at Higher Cost!

Testimonials

• Raj Chennai I was having a 1 Crore Ancestor Property yielding only 1% Rent along with Maintenance & Tenant Issues. I was not planning to live there for next 5 years – Based on your Secret Strategy I converted that to a 20% ROI Property. Now in few years I can buy a new house free of cost with the Income & My Extra Job Savings while having Financial Freedom too – Thanks for the Great Idea!

MASTER MIND TRAINING Acquire the Skills of a Smart Investor – Stock Market, Real Estate, Valuation in Just 3 Months! Rs. 9999 Only!

FUTURECAPS | BEST VALUE ADVISOR INDIA

Net worth growth strategies

Congratulations! As of today you are Believing that your Portfolio is also having Multibaggers! All our promises & investment advises are getting fruitful. Good for YOU!

However, to be really rich you need to focus on your Net Worth Growth of 20%! This includes your Real Estate, Stocks, Fixed Deposits, Vehicles, Gold etc.

The Problem

For example If you Stock Capital of 10 Lakhs gained 50% returns. (5 Lakhs)

Your remaining Assets of 90 Lakhs grow only 5%. (5 Lakhs)

Now your Net Worth Growth is only 10% (5 + 5)!

You cannot be Rich going at this Speed!

The Solution

The Solution is mentioned in the eBook 7 Habits of Highly Effective Riches.

Premium Subscribers can claim the book by Sending email to FuturecapsAdvisor@Gmail.com

If you are Not a customer, try to use the Discount going on & Subscribe.

Note No other advisor will tell you about these secrets & you will Never reach become Really Rich chasing any best advisors in the world. I too wasted my initial 5 years without managing Net Worth but just focusing on Multibagger Returns. Hence I am giving honest advice to you!

Note: This report is NOT A MULTIBAGGER Report

Tata motors has always been India’s first choice since 1988, however with increase in competition & market saturation it has seen a constant decline since 2017.

Since 2017 we have seen a sharp decline in Tata Motors stock price from Rs.523 to Rs.138 in October 2020 which is a fall of over 70%.

Hence, one can imagine how cautious shareholders & investors need to be.

In this article we at Futurecaps have tried to help readers understand Tata Motors stock’s future & analysed its potential with legendary Warren Buffet’s investing strategy.

About Tata Motors

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Formerly know as Tata Engineering & Locomotive Company, Tata Motors was founded in 1945 as a locomotive manufacturing company.

The multinational company is headquartered in Mumbai with products including passenger cars, trucks, buses, sports cars, construction equipment and even military vehicles.

With manufacturing establishments spread across the globe, Tata Motors has plants in Jamshedpur, Pant Nagar, Lucknow, Sanand, Dharwad & Pune.

Moreover, its overseas expansion includes plants in Argentina, South Africa, Great Britain & Thailand.

In 1954 Tata Motors launched its first commercial vehicle & in 1991 it launched its infamous Tata Sierra entering in passenger vehicle market.

The breakthrough came during 1998 when the company launched its first completely indigenous passenger car that dominated the Indian passenger vehicle for many years.

Natarajan Chandrasekaran took over as chairman of the company in the year 2017 & increased its Utility Vehicle to over 8% in Financial Year 2019.

Following are the Checklist parameters :

Positives for Tata Motors Stock

1. Increase in demand of Passenger Vehicles in India is expected
2. Sales of JLR is expected to take a turn around in FY-21

Negatives for Tata Motors Stock

1. S&P Global Ratings downgraded Tata Motors from stable to negative due to slow recovery post COVID-19
2. Recovery of the automotive industry can get disrupted & its negative impact on Tata Motors’ earning could be observed for the next 12-24 months.
3. No new products lined up in Electric or eco friendly variants
4. Consistent increase in debt due to underperforming JLR & International uncertainties.
5. Delivered poor growth in the past 5 years.
6. Earning Per Share (EPS) has been constantly declining YoY since 2015
7. Cash Flow has been on a constant decline since the last 5 years
8. Consistent widening of Net Loss & Revenue drop

Conclusion

With focus shifting towards electric & eco-friendly automotive cars, passenger as well as commercial, Tata Motors desperately needs to adapt to the changing the market.

If not taken into consideration, Tata Motors stock could see a further decline due to the new innovative entrants in the International markets.

Moreover, our research team at Futurecaps estimate a further decline in the company’s earnings & revenue due to the Covid-19 pandemic & global impact on the economy.

Going forward it can be an extremely challenging times for Tata Motors & we suggest investors to stay wary of Tata Motors stock.

NOT A MULTIBAGGER

If you find it challenging to pick a high potential stock, we at Futurecaps are here to make your investing journey easier through our Multibagger selection.

Our one of the previous multibagger, Caplin Point, delivered 200% return in just 8 months.

Update: Apr 2021 BASED ON THE DEMERGER DEVELOPMENTS ITC POSSESS MULTIBAGGER PROPERTIES

WATCH VIDEO HERE

OLD Contents Below

ITC stock has been struggling from a long time now with its share price declining to more than 34% since last year. Such immense fall has wiped out more than Rs.206540 crore from its market capitalization.

We at Futurecaps has done an in-depth analysis so that you can understand if ITC stock is a multibagger or more of a value trap. Yes, even with the Sunrise Acquisition & Demerger possibilities.

Note: This is NOT A multibagger recommendation

About ITC

Established in 1910 as Imperial Tobacco Company of India Limited, was renamed to ITC in 1974.

Headquartered in Kolkata, ITC was primarily set up as a cigarette & leaf tobacco business but later strategically expanded to other businesses in FMCG, hotel, paperboard, paper & packaging as well as Agriculture to avoid any margin decline and achieve consistent growth.

In 2010 ITC completed 100 years & by 2019-20 touched an annual turnover of $10 billion.

Following are the Checklist parameters :

Capitalization	Rs.200000 CR
History of Consistently Increasing Sales, Earnings & Cash Flow	No
Durable Competitive Advantage	Moderate
Future Growth Drivers / Sector Growth	Moderate
Conservative Debt (long term debt < 3 Net Profit)	No Debt
Debt Equity Ratio, Current Ratio	No Debt, Current Ratio is 2.27
Return on Equity must be Above Average	25%
Low CAPEX required to maintain current operations	No
Inventory Turnover Ratio, Debtor Days, ROCE	2.17%, Debtor days decreasing, ROCE : 32.6%
Management is holding / buying the stock	Promoter holding is 0
Market Price < Intrinsic Value	No Intrinsic Value Discount Intrinsic Value Calculator
Stock Price is consolidating (now)	Yes
Stock Price is growing in past years along with EPS growth	No
Consolidated PE, PB Ratio, PEG Ratio	High PB
Cash Flow Positive, Net Profit % greater than 8%	Cash Flow: Positive Profit: 20%
Paying Dividends, Tax	Dividends: Yes Tax: High
EPS Growth Rate	Around 20% past 3 years
Jump in Trailing Result EPS	Yes
Jump in Quarterly Result EPS	Yes
Expected Gain in 5 Years	2X & Very Risky
Price Movement Graph, 52 Week High & Low	Okay
Volume Analysis	Very High
Power of Brand	High
Corporate Governance, Reputation of Leaders	Good
Fraud reported	No

ITC Stock – Superstar of the Past

Since inception ITC ltd. has been a top cigarette manufacturer & one of the fast growing FMCG companies in India.

As a fact, ITC stock was among the best performers & delivered close to 3000% return from 2000 to 2017.

These 17 years proved to be a golden period for ITC & shareholders alike and despite of being a Tobacco company it has been enjoying valuations of an FMCG company.

However, unfortunately since 2017 onwards, ITC stock has been tremendously declining with decreasing valuations.

Moreover in 2017, Sanjiv Puri took over reign of the company as the CEO & has proven to be an highly successful leader by growing company to new heights & increasing net profit to almost Rs.15000 crore annually.

ITC Stock – A Falling Star

Even though, total revenue of ITC’s FMCG businesses has grown from Rs.3000 crores in 2008-09 to Rs.12000 crores in 2018-19, its sales growth percent has been considerably declining from 13.09% in March 2009 to only 2.17% in March 2020.  

Major Reasons for ITC Stock decline :

Government Policies on Cigarettes

In September 2020, Maharashtra Government decided to ban the sale of loose cigarettes & beedis & consumers now will have to buy the whole packet of each item.

The decision is based on the fact that these single stick loose cigarettes or beedis don’t have specific health warnings on it which is not in public interest.

Notification has been issued under subsection (2) of section 7 of the cigarette and other Tobacco Products (prohibition of Advertisement and Regulation of Trade and commerce Production, supply and Distribution) Act, 2OO3 (Act No. 34 of 2OO3) by the State government.

This move coming from Maharashtra Government in times when taxes on Tobacco products are expected to increase can have a major impact on its sales & profit as its 80%+ earnings comes from Tobacco business.

Financials

Our repeated analysis at Futurecaps has revealed that ITC’s sales growth percent has been on a major decline since 2014 from 11.66% to mere 2.17% in March 2020 but its expenses has been on the rise from Rs.22,232 crores in 2014 to Rs.30,044 crores in March 2020.

 Moreover, even though its net profit has increased to Rs.15,306 crores in 2020 from Rs.8,891 crores in 2014, ITC ROCE (Return on Capital Employed) has decreased from 50% in 2014 to 33% in March 2020.

This raises a huge question on the company’s growth & its ability to provide a consistent return to its shareholders.

Valuation

ITC has been trading with FMCG company like valuations from years, however since 2017 while FMCG companies have been consistently growing, ITC has not even seen 30% of its growth.

Also dishearteningly now it has reached to Price to Earning ratio of 13.6 which is closer to the Tobacco companies instead of an FMCG.

The Industry PE of a FMCG company ranges around 60 level however of a Tobacco company ranges around 20 which means DIIs & FIIs considers its value similar to a Tobacco company instead of an FMCG.

Demand of products

Many experts believe a portfolio with good mix is composed of resilient pockets of the economy.

These are companies which are not effected much due to the COVID-19 pandemic like IT, pharma & FMCG.

However, where HUL and Britannia’s shares are now almost back to the pre-COVID levels with HUL gaining over 13% and Britannia gaining over 24% for the year ITC stock price has declined over 30%.

Also, as per current technical indicators suggest a bearish momentum. 

Technical analysis reveals ITC stock price has broken 150 EMA of Rs.194.50 & 200 EMA of Rs.169.40 making a weak trade.

Hope for Multibagger

The chances of Viewing ITC as a Multibagger relies on the Success Acquisition of Sunrise companies & De-merger of the Non-FMCG Business which could take few years to reflect on. If our view changes during the time we will update back.

Conclusion

Although IT has businesses growing in various verticals like FMCG, hotel, Paperboard, paper & packaging and Agro Business but lately its stock price decline has proven that market doesn’t consider it a strong buy.

Even though it has made a huge returns for its shareholders in the past, its better for investors to stay away & observe it from the sidelines. Futurecaps analysis above shows that ITC stock is definitely a company to be cautious of among investors & traders alike due to the Sluggish EPS Growth Rate & Lack of Intrinsic Value Discount.

To ensure you pick a right stock with high growth potential enrol with Futurecaps Subscription.

NOT A Multibagger as of 2020!

This is NOT a Multibagger post but Evaluation purpose only!

Sun Pharma Multibagger analysis in this post targets to understand the impact of COVID-19 & growth potential it brings for the healthcare industry in general & Sun Pharmaceuticals in particular.

The below Sun Pharma multibagger analysis is based on legendary Warren Buffet’s strategy of choosing assets.

About Sun Pharma

Established in the year 1993, Sun Pharma is a Large Cap company with a market capitalisation of Rs.117987.30 Crore operating in Pharmaceuticals sector.

Sun Pharmaceuticals major Revenue streams include Pharmaceuticals contributing Rs.11906.74 Crore to Sales Value which is about 95% of Total Sales.

Plus, Other Operating Revenue which contributed Rs.625.19 Crore to Sales Value which accounts for around 4% of Total Sales for the financial year ending 31-Mar-2020. 

Its contribution towards the fight against Covid-19 has been head on by developing new medicines.

The second phase of clinical trials for AQCH, a plant-derived drug, began during June this year as well as in August, Sun Pharma launched FluGuard (Favipiravir 200 mg) which was helpful in the treatment of mild to moderate cases of Covid-19.

 The company’s targeted R&D expenditure is estimated to be Rs.2,000 crore in 2019-20 & has also initiated a global licensing agreement in August last year with the CSIR-Indian Institute of Chemical Technology for patents related to medical developments in their focus areas.

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Following are the Checklist parameters for Sun Pharma Multibagger:

Capitalization	Rs.117987 CR
History of Consistently Increasing Sales, Earnings & Cash Flow	Yes
Durable Competitive Advantage	High
Future Growth Drivers / Sector Growth	High
Conservative Debt (long term debt < 3 Net Profit)	Low Debts
Debt Equity Ratio, Current Ratio	Low Debt, Current Ratio is 2.84
Return on Equity must be Above Average	10%
Low CAPEX required to maintain current operations	Moderate
Inventory Turnover Ratio, Debtor Days, ROCE	Debtor days increasing, ROCE : 10.5%
Management is holding / buying the stock	Promoter holding is at 54% & Consistent
Market Price < Intrinsic Value	At 15% Discount Intrinsic Value Calculator
Stock Price is consolidating (now)	Yes
Stock Price is growing in past years along with EPS growth	Consolidating
Consolidated PE, PB Ratio, PEG Ratio	Moderate
Cash Flow Positive, Net Profit % greater than 8%	Cash Flow: Negative Profit: -13%
Paying Dividends, Tax	Dividends: 25% Tax: Low %
EPS Growth Rate	Average 30% above past 3 years
Jump in Trailing Result EPS	Yes
Jump in Quarterly Result EPS	No
Expected Gain in 5 Years	2X
Price Movement Graph, 52 Week High & Low	Declining
Volume Analysis	Too High
Power of Brand	High
Corporate Governance, Reputation of Leaders	Well Known
Fraud reported	No

Factors making Sun Pharma Multibagger

• U.S. market conditions are highly stable with no imminent signs of further consolidation of buying groups or any fresh entrants in the industry.
• Company is focussing on profitability and ROCE improvement which can be observed in focused filings and new launches.
• Sun Pharma over 2014-2018 entered a significant investment phase in relatively competitive products such as specialty products and complex generics which significantly increased R&D spending & effected operating margins. This futuristic vision turned out to be highly profitable over the past 12-18 months when R&D-backed products have started garnering profits.
• With Sun Pharma launching all its specialty products in the U.S. and their efficient monetisation, U.S. margins are expected to grow over the next three years significantly turning Sun Pharma multibagger.
• Even though DIIs have been highly optimistic since 2016, FIIs have stayed away from the Indian health sector. With such positive developments, an improved outlook is expected & attract FIIs.
• Announcement of positive results for its investigational drug, SDN-03 few days back. Drug is useful in the treatment of inflammation & pain due to ocular surgery.
• In the last month, Sun Pharma announcing its geographical expansion plans of its specialty business in Greater China and Japan will definitely enhance the company’s profit margins.
• Specialty medicines are used in treatment of Oncology, autoimmune diseases and immunology which are considered the major segments in the chronic, complex & rare diseases space which is expected to be likely the key growth drivers in the 2019-2024 period.
• Fastest growth for Speciality medicines Is expected to be in the developed markets that is expected to accounts for more than 50% contribution by 2024 as per Sun Pharmaceuticals.
• Sun Pharma’s Japanese subsidiary got approval from the Japanese government for specialty product Ilumya that is used in treatments of plaque psoriasis in adult patients in Japan in June this year.

Concerning Factors

• Negative Quarter-on-Quarter growth.
• Negative Cash Flow
• High Minority Interest
• Ex-board member Ashwin Dani of Sun Pharma is getting investigated by SEBI regarding the alleged role in an insider trading case which is related to trading in the shares of Ranbaxy Laboratories between 2013 and 2015.
• Sun Pharma had to recently recall 747 bottles of generic diabetes drug in the U.S. due to a possibility of the affected lot containing cancer causing nitrosodimethylamine (NDMA) above the acceptable intake limit.

NOT A MULTIBAGGER

Summary

This is just an Evaluation on Sun Pharamaceuticals based on Subscriber Request. You can send your Free Evaluation Request to FuturecapsAdvisor@Gmail.com.

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