Wednesday, August 22, 2007
Wednesday, July 25, 2007
P/B Ratio and significance
The lure of the markets is so strong that an increasing number of investors come flocking with their hard-earned money. The uncertainties, the ups and downs haven't dampened their spirits and investors hope to strike it rich. The adage 'buy low, sell high' works well. So does the good advice 'invest for the long-term'. But certain technical parameters, ratios and numbers is sure to give investors a more detailed picture of the company stock they are pumping their money into. Instead of simply following the crowd, friends or financial advisors, an analysis of numbers will place you in a better position. This approach that involves simple technical analysis and research, ensures your money is not invested in the wrong places. A well-researched investment could be time-consuming. But it assures the safety of your investment, and brings in an element of predictability into the highly unpredictable volatile markets. Price-to-book ratio (P/B ratio) offers a more tangible measure of a company's value than earnings do and hence it is evaluated by most conservative investors. P/B ratio is used to compare a stock's market value with its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value. P/B is equal to share price divided by book value per share. Let us first begin with understanding what book value is. Wondered how much a company is really worth and what is its correlation to its stock price? Book value reflects a company's worth. It can be defined as the company's assets minus its liabilities. If the company pulled its shutters, this number suggests how much would be left after all the outstanding obligations are settled and assets sold off. A company that is performing very well will always be worth more than its book value for its ability to generate earnings and growth. In essence, book value is what would be left over for shareholders if a company closes its operations, pays off its creditors, collects from its debtors, and liquidates itself. Now coming back to P/B ratio, this is a good matrix to value stocks of companies with large tangible assets in their balance sheets. A lower P/B ratio can mean that the stock is undervalued or something is fundamentally wrong with the company. This ratio gives you an idea if you're paying too much for what would be left if the company declared bankruptcy. P/B ratio is particularly useful for value investors, who are always on the hunt for low price stocks that the market has neglected. If P/B is less than one, it normally tells investors that either the market believes the asset value is overstated, or the company is faring very badly in terms of returns on its assets. P/B ratio indicates the inherent value of a company. Many investors have successfully used this to discover dormant stocks, held them over a long term and booked good profits. Though it has its own flaws, it offers an extremely easy tool for identifying clearly under or overvalued companies.
INVEST IN COMPANIES WITH STRONG PARENT-
MAHINDRA & MAHINDRA:
Take M&M , for instance. Over the years, M&M has acted as a holding company for a range of diversification by the Mahindra family. Last year, it listed two of its subsidiaries — Tech Mahindra and Mahindra Financial Services. The management has now indicated its willingness to list Mahindra Holidays & Resorts, Mahindra Systems , its auto components division. All three companies are among leading companies in their respective segments and are expected to get top-dollar valuations. M&M also holds a little over 50% stake in Gesco Mahindra Developers and Musco and 47% in Mahindra Forgings. On the consolidated basis, its five listed companies are estimated to account for as much as 60% of M&M’s current m-cap . The ratio will rise even further if we account for its unlisted subsidiaries. This makes M&M one of the cheapest stocks in the automotive sector.
ICICI BANK& HDFC:
ICICI Bank has managed to place close to 5% of its subsidiary holdings at around Rs 44,600 crore, which is close to half of ICICI Bank’s m-cap . Most of the value in subsidiaries for both HDFC and ICICI Bank comes from their unlisted insurance subsidiaries. These have been witnessing strong growth, with annualised premium equivalent growing at almost 100% YoY, which has created a lot of interest in them. Moreover, strong growth in subsidiaries has also supported higher valuations in these companies. The valuations of subsidiaries comprise around Rs 420 for each share of ICICI Bank. A greater part of this value, which is close to twothirds of the parent company, is on account of ICICI Bank’s insurance subsidiaries, particularly life insurance . ICICI’s life insurance subsidiary is the largest insurer among private insurers and has grown aggressively by over 100% in the past few years. HDFC also has a significant share of subsidiary valuation at around Rs 800 per share. Again, most of the value accrues on account of insurance valuations. Insurance contributes close to Rs 300 per share. The other large contributors include asset management and the 24% stake in HDFC Bank.
RELIANCE COMMUNICATIONS:
The 5% stake sale by RCom values its tower entity Reliance Telecom Infrastructure (RTIL) at Rs 27,000 crore ($6.7 billion). RTIL has close to 14,000 towers under its belt. This means, its enterprise value per tower (EVPT) will be around Rs 2 crore at the current valuation. This is in line with the global trend in telecom tower valuations. In case of RCom, the subsidiary valuation is more than one-fifth of the market capitalisation of the parent company.
L&T:
Its major subsidiaries are L&T Infotech and IDPL. Infotech had recorded a turnover of Rs 1,281 crore last year based on comparable valuations for mid-sized IT companies, the company will be worth Rs 4,000-4,500 crore. IDPL is a holding company for L&T's stakes in infrastructure projects.
SOME VALUATION FIG OF SUBSIDIARIES IN PARENT
Thursday, January 25, 2007
Online remittance to India
To Send money to India online
1. ICICI: www.money2india.com
2. HDFC-Quick remit https://www.timesofmoney.com/remittance/secure/rmtRegistration.jsp?partnerId=HDFC&opMode=INTL&uiId=HDFC
1. ICICI: www.money2india.com
2. HDFC-Quick remit https://www.timesofmoney.com/remittance/secure/rmtRegistration.jsp?partnerId=HDFC&opMode=INTL&uiId=HDFC
How to obtain PAN Online
To Obtain PAN onlineFollowing links for obtaining PAN online
1. http://www.tin-nsdl.com/DownloadsPAN.asp
2. http://www.utitsl.co.in/pan/pancardsearch.php
1. http://www.tin-nsdl.com/DownloadsPAN.asp
2. http://www.utitsl.co.in/pan/pancardsearch.php
Buying Land in India- Things to note
Before you purchase any plot or land in India ensure that the following are checked:
1.Corporate Office (for urban areas eg CMDA) or Panchayat (for sub-urban & rural areas) to check the current and all prior ownership records
2.District Magistrate or City Development Authority (e.g. Delhi Development Authority) to check FSI, Land Ceiling rules, etc.
3. All relevant Courts of Law (High Court, District Court, Tribunal Courts) to check for current and/or prior disputes.
4. Qualified lawyers to review the agreement and terms of payment and possession
5. Locality and site survey to cross-check any illegal possession or current occupants. In several instances, deals satisfy conditions a-e but would have un-notified illegal occupants. delete
1.Corporate Office (for urban areas eg CMDA) or Panchayat (for sub-urban & rural areas) to check the current and all prior ownership records
2.District Magistrate or City Development Authority (e.g. Delhi Development Authority) to check FSI, Land Ceiling rules, etc.
3. All relevant Courts of Law (High Court, District Court, Tribunal Courts) to check for current and/or prior disputes.
4. Qualified lawyers to review the agreement and terms of payment and possession
5. Locality and site survey to cross-check any illegal possession or current occupants. In several instances, deals satisfy conditions a-e but would have un-notified illegal occupants. delete
NRI Property FAQ
Do non-resident Indian citizens require permission of The Reserve Bank to acquire residential/commercial property in India?No. All Indian citizens are entitled to buy property in India, irrespective of their residential status.
Do foreign citizens of Indian origin require permission of the Reserve Bank to purchase immovable property in India for their residential use?
Yes. However, the RBI has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain separate permission of The Reserve Bank.
Who is a foreign citizen of Indian Origin?
A foreign citizen is deemed to be of Indian Origin if : i) he held an Indian Passport at any time or ii) he or his father or paternal grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955. However this does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal)
How should the purchase of residential immovable property be paid for by foreign citizens of India origin under the general permission?The purchase consideration should be met either out of inward remittance in foreign exchange through normal banking channels, or out of funds from NRE/FCNR accounts maintained with banks in India.
What formalities have to be completed by foreign citizens of Indian origin to purchase residential immovable property in India under the general permission?They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the documentary evidence for the transaction and bank certificate for the money paid.
Can such property be sold without the permission of Reserve Bank?
Yes. Reserve Bank has granted general permission for sale of such property. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of balances in NRE/FCNR accounts.
Can sale proceeds of such property (if and when sold) be remitted out of India?
For residential properties purchased on or after 26 May 1993, the Reserve Bank considers applications for repatriation of sale proceeds. Approval is usually granted for up to the consideration amount remitted in foreign exchange in acquiring the property for a maximum of two such properties. The balance amount of sale proceeds, if any, or sale proceeds for properties purchased prior to 26 May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.
Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final instalment of the consideration amount, whichever is later.
What is the procedure for seeking such repatriation?Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of The Reserve Bank at Mumbai within 90 days of the sale of the property.
Can foreign citizens of Indian origin acquire or dispose residential property by way of gift?
The Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin, whether resident in India or not, provided gift tax has been paid.
Can immoveable property held in India be transferred by way of gift to in India?
General permission has been granted by Reserve Bank to non-resident persons (foreign citizen) of Indian Origin to transfer, by way of gift, immoveable property held by them in India to relatives and charitable trusts / organisations subject to the condition that the provisions of all other laws, as applicable are complied with
Can foreign citizens of Indian origin acquire commercial properties in India?Properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India. A declaration has to be submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.
Can they dispose of such properties?
Yes.
Can sale proceeds of such property be remitted out of India?
Yes. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26 May 1993 can be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final instalment of consideration amount, which ever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property in form IPI 8.
Can the properties (residential/commercial) be given on rent if not required for immediate use?
The Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.
Can NRIs obtain loans for acquisition of a house/flat for residential purpose from financial institutions providing housing finance?The Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC and authorised dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation, subject to certain conditions. Criteria regarding the purpose of the loan, margin money and the quantum of loan will be at par with those applicable to resident Indians. Repayment of the loan should be made within a period not exceeding 15 years, out of inward remittance through banking channels or out of funds held in the investors' NRE/FCNR/NRO accounts.
Can Indian companies grant loans to their NRI staff?
The Reserve Bank permits Indian firms to grant housing loans to their employees deputed abroad and holding Indian passport subject to certain conditions.
Can an authorised dealer grant a housing loan to non-residents of Indian nationality where the NRI is the principal borrower with his resident close relative as a co-obligant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative?
Yes. However in such cases the payment of margin money and repayment of loan instalments should be made by the NRI borrower.
What should be the method of payment for purchasing residential immovable property in India by foreign nationals of Indian origin under the general permission?
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India
Do non-resident Indian nationals require permission of Reserve Bank to acquire residential / commercial property in India?
No permission is required by non-resident Indian nationals to acquire immovable Property in India.
Are foreign nationals of Indian origin allowed to purchase immovable property in India? Yes, foreign nationals of Indian origin, whether resident in India or abroad, have been granted general permission to purchase immovable property in India
In what way the Non-resident Indian can finance the flat?
The purchase of the flats can be financed from the fresh remittance through the normal banking channels or from payment from original non-resident account or from Non-resident (External) Accounts. Non-resident Indians who are citizens of India (India Passport holders) are eligible for housing finance for the acquisition of an immovable property or construction of a new house, or a flat for their occupation or for that of their family in India. But the HDFC also considers granting of loans to non-resident Indians even if they are abroad, provided a family member of his or her in India is made a co-borrower and a power of attorney is given to his representative in India
Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
Can such residential property be given on rent if not required for immediate residential use?
YES
Can the rental income from such property be remitted outside India?
No. Such income cannot be remitted abroad and will have to be credited to the ordinary non-resident rupee account of the owner of the property.
Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
Are there any formalities to be completed by foreign nationals of Indian origin for purchasing residential immovable property in India? They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Bombay within a period of 90 days from the date of purchase of immovable property.
.
Do foreign citizens of Indian origin require permission of the Reserve Bank to purchase immovable property in India for their residential use?
Yes. However, the RBI has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain separate permission of The Reserve Bank.
Who is a foreign citizen of Indian Origin?
A foreign citizen is deemed to be of Indian Origin if : i) he held an Indian Passport at any time or ii) he or his father or paternal grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955. However this does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal)
How should the purchase of residential immovable property be paid for by foreign citizens of India origin under the general permission?The purchase consideration should be met either out of inward remittance in foreign exchange through normal banking channels, or out of funds from NRE/FCNR accounts maintained with banks in India.
What formalities have to be completed by foreign citizens of Indian origin to purchase residential immovable property in India under the general permission?They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the documentary evidence for the transaction and bank certificate for the money paid.
Can such property be sold without the permission of Reserve Bank?
Yes. Reserve Bank has granted general permission for sale of such property. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of balances in NRE/FCNR accounts.
Can sale proceeds of such property (if and when sold) be remitted out of India?
For residential properties purchased on or after 26 May 1993, the Reserve Bank considers applications for repatriation of sale proceeds. Approval is usually granted for up to the consideration amount remitted in foreign exchange in acquiring the property for a maximum of two such properties. The balance amount of sale proceeds, if any, or sale proceeds for properties purchased prior to 26 May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.
Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final instalment of the consideration amount, whichever is later.
What is the procedure for seeking such repatriation?Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of The Reserve Bank at Mumbai within 90 days of the sale of the property.
Can foreign citizens of Indian origin acquire or dispose residential property by way of gift?
The Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin, whether resident in India or not, provided gift tax has been paid.
Can immoveable property held in India be transferred by way of gift to in India?
General permission has been granted by Reserve Bank to non-resident persons (foreign citizen) of Indian Origin to transfer, by way of gift, immoveable property held by them in India to relatives and charitable trusts / organisations subject to the condition that the provisions of all other laws, as applicable are complied with
Can foreign citizens of Indian origin acquire commercial properties in India?Properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India. A declaration has to be submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.
Can they dispose of such properties?
Yes.
Can sale proceeds of such property be remitted out of India?
Yes. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26 May 1993 can be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final instalment of consideration amount, which ever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property in form IPI 8.
Can the properties (residential/commercial) be given on rent if not required for immediate use?
The Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.
Can NRIs obtain loans for acquisition of a house/flat for residential purpose from financial institutions providing housing finance?The Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC and authorised dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation, subject to certain conditions. Criteria regarding the purpose of the loan, margin money and the quantum of loan will be at par with those applicable to resident Indians. Repayment of the loan should be made within a period not exceeding 15 years, out of inward remittance through banking channels or out of funds held in the investors' NRE/FCNR/NRO accounts.
Can Indian companies grant loans to their NRI staff?
The Reserve Bank permits Indian firms to grant housing loans to their employees deputed abroad and holding Indian passport subject to certain conditions.
Can an authorised dealer grant a housing loan to non-residents of Indian nationality where the NRI is the principal borrower with his resident close relative as a co-obligant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative?
Yes. However in such cases the payment of margin money and repayment of loan instalments should be made by the NRI borrower.
What should be the method of payment for purchasing residential immovable property in India by foreign nationals of Indian origin under the general permission?
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India
Do non-resident Indian nationals require permission of Reserve Bank to acquire residential / commercial property in India?
No permission is required by non-resident Indian nationals to acquire immovable Property in India.
Are foreign nationals of Indian origin allowed to purchase immovable property in India? Yes, foreign nationals of Indian origin, whether resident in India or abroad, have been granted general permission to purchase immovable property in India
In what way the Non-resident Indian can finance the flat?
The purchase of the flats can be financed from the fresh remittance through the normal banking channels or from payment from original non-resident account or from Non-resident (External) Accounts. Non-resident Indians who are citizens of India (India Passport holders) are eligible for housing finance for the acquisition of an immovable property or construction of a new house, or a flat for their occupation or for that of their family in India. But the HDFC also considers granting of loans to non-resident Indians even if they are abroad, provided a family member of his or her in India is made a co-borrower and a power of attorney is given to his representative in India
Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
Can such residential property be given on rent if not required for immediate residential use?
YES
Can the rental income from such property be remitted outside India?
No. Such income cannot be remitted abroad and will have to be credited to the ordinary non-resident rupee account of the owner of the property.
Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
Are there any formalities to be completed by foreign nationals of Indian origin for purchasing residential immovable property in India? They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Bombay within a period of 90 days from the date of purchase of immovable property.
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