YES Bank - good potential for growth

I will try to be very brief in this post.

YES Bank

• January 2012 - Price 270
• June 2012 - Price 330
• May 2013 - Price 512

I think this is one stock to be part of core portfolio.

Reason:

• High growth rate
• Very good and experienced management
• CASA grew @ 72% YOY
• NIM 3%

Hindustan Unilever Ltd - HUL - Open offer price @ 600 Rs per share.

Hindustan Unilever Ltd - HUL - Open offer price @ 600 Rs per share.
What should you do?

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Disclaimer:
I am not an expert in stock market. Please do you own due diligence.
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On 30th April, after the results, the parent arm of HUL announced a buy back via open offer @ 600 Rs per share to gain a max of 75% shareholding.
Currently the stake of the parent company (Unilever) is apprx 52%.
Deal size is close to USD 5.4 Billion.

Why would Unilever want to buy this 23% (approx) stake?

- Probable de-listing in the future?
- High return on investment in the India market via
   - More dividend
   - More royalty

Should you tender your shares in the open offer?
As per me the answer is a definite NO.

- If Unilever wants to de-list, it will/should offer a better price in the future.
- HUL is one of the most expensive stock but if its earnings multiples are 25%-30%, one can expect good share price value.
(What are HUL products?
- Rin, Fair n Lovely, Axe, Kwality, Pears, LifeBuoy, Bru, Kissan, Wheel, Surf, Lux, sunsilk, vim, closeup etc etc etc)
Tell me what you think?
I am keeping my shares close to my chest.

Should you buy more at this level?
Tough call. I would wait and watch.

I don't know financial planning (part 2)

I am going to stretch my part 1 of the same post a little bit more.

Step 1.
If you are a salaried employee, you would have EPF (employee provident fund).
There is an equal amount (subjected to a limit) that the company also pays.
Max out the EPF option if possible (check your salary and expenses).

Step 2.
Keep some money (max 6 months salary) part in savings and part in liquid funds.
This is your emergency fund

Step 3.
FD, NSC, Debt MF are all great tools for fixed income but its a known fact that equities will outperform in the long run.
Do have a proper mix of asset allocation to:
- Equities
- Fixed MF/FD
- Gold (ETF/physical)

Step 4.
Do get the full tax benefit that you can get. Thats also a saving in some form. (PPF,FD,NSC etc)

Step 5.
As your salary increases, the allotment to the above should also increase.

Step 6.
Monitor your portfolio atleast once or twice in a year.

Step 7.
As you get closer to 50, start moving your equity funds to Post office MIS, FD, Debt MF etc.
This is the time to save your money since retirement is closer.

Invest early and reap the benefits of the power of compounding.

Recurring Deposits Explained

What are recurring deposits?
They are similar to fixed deposits and Systematic Investment plans.
An individual will make a fixed investment (monthly) to get a certain rate of Interest.
On maturity, you get the total accumulated corpus with interest earned.

Where can I open it?
Any Bank or in Post office as well.

Whats the advantage?
- Lock higher interest rates for long term
In case some banks are providing high interest rates for a year or 555 days or even 10 years, one can lock these interest rates by opening an RD.

- Small investment monthly installments
If you do not have a lump sum to open a fixed deposit, you can put small monthly installments (e.g. min of 100/500 Rs - varies with banks) and lock the interest

What if you default and not make a payment?
All banks have their own rules and one should check before making the RD.
In some banks there is a grace period of some months while in other there is a penalty.

Tax Savings?
There is no tax savings in RD.
One needs to pay tax on the interest earned.
For minors, the interest needs to be added to the guardians income.