To answer your second question, theoretically yes, the price is supposed to move up as the EPS will eventually increase owing to the lesser number of shares in the market (since bought back shares are cancelled, bringing down total number of outstanding shares, hence higher EPS)
I read this online ( Share buybacks and why they’re important to shareholders (santander.com)):
Share buybacks enable companies to generate additional shareholder value. Under regular market conditions, the portion of profits that a company uses to buy back shares has a positive effect on the share price.
The point above highlighted in bold is important. The current market conditions and perception of the company have a role to play. For example, after announcing a buyback, if the company’s future prospect aren’t that great, then it’s of no use doing a buyback, in such conditions the share price could fall. Paytm from my understanding was a classic case of distributing cash which was not so freely available, and the markets didn’t like it.
How do traders approach it? that I don’t know 
Why do we have inflation?
Can someone explain from the first principles?
Even if there is no problem, we have seen inflation increasing over years.
How can we be confident that if we keep investing in stock market, we will be beating the inflation other than data that supports it, atleast in India? Is there any fundamental thing am I missing?
Mostly our textbook example says that when a business earns a high ROCE/ROE and you get a stock with a low PE is a must buy to generate better wealth, but somehow there is a difference to be identified between a cyclical companies and a sustainable, consistent wealth generating companies, I have seen many of the individuals ( Including me) thought with such criteria I have dig out a multi-bagger stock but in reality haven’t minted money in any of those, I felt there is something surely wrong with my analysis, talking with few people and observing the markets I get to some conclusions which I am sharing with you via my twitter thread, please have a read at it to understand the minor but an important lesson.
There is one saying by Chanakya “Learn from the mistakes of others, you can’t live long enough to make them all yourselves”.
Hope you learn a basic lesson from this thread.
https://twitter.com/pujanshah_15/status/1611272279417311233?s=20&t=ZRMJN3h0A_R6ez4ftoGakA
This video explains the how prominent economic theories explain the cause of Inflation
- Keynesian economics - supply/demand imbalances cause inflation (in previous example, it is the rice/fish supply increase/decrease)
- Monetarism - “Inflation is always and everywhere a monetary phenomenon”: Milton Friedman (in previous example, rice is money and monetary reasons cause inflation)
- New Keynesian economics - Just expecting “Forward Looking Inflation” causes behaviour change which then causes inflation as a self-fulfilling prophecy.
As mentioned in the video, the inflation readings of the past 15 years (no inflation despite a decade of printing money and sudden inflation in past 2 years) require the theories to be updated and possibly a new theory…
Whenever we hear banks/NBFCs interview or concalls, i hear a term called technical write-off. What does this mean and how this is different from regular write-off
A technical write off is when an NPA which is 100% provided for, is removed from the balance sheet of a bank (Loan gets knocked off from asset side and equal amount of provision gets knocked off from the liability side. Therefore there is no hit to the P&L and simply the balance sheet contracts by the amount of the loan). While the loan no longer shows up on the balance sheet, the bank still tries to recover the money and is often successful. Any recoveries from a written off loan are recorded in Other Income in subsequent periods.
To the best of my knowledge, an other than technical write off is when a written off loan is not 100% provided for. Therefore the net written off amount is taken as a P&L hit in the reporting period and the entry shows up under the heading “Provisions & write offs” in the P&L.
I don’t think there is any partial write-off to a loan, unless they restructure a loan. For 100% writeoff, there will be impact in P&L. Managements sometimes say “Write-offs are technical in nature” and in regular cases they say “We written off so and so loan”. Why the term “Technical”.
A simple example of “technical write offs”.
Let’s say you lend Rs. 1,00,000 to a friend from your emergency funds for 6 months, but you are sceptical about receiving the money back, so you create a provision against it by breaking your FD of Rs. 1,00,000 ahead of time.
After 6 months, you were right and he is in no condition to pay you back (maybe ever). But you already set aside the capital to protect yourself and your family in case of an emergency.
You do a “technical write-off” of the bad loan, so your wife doesn’t find out and kick you out of the house.
Your philosophy is, “I still have funds in case of an emergency, why bother? I haven’t forgiven my friend’s loan and I will still try your best to get my Rs. 1,00,000. But for the time being, don’t talk about it.”
Hope this helps.
Can any one please tell me which companies will get benefits from increasing options trading volume… I know about brokers and wants to invest in Zerodha but its not listed. Apart from brokers which other companies will benefit from it? Will BSE get the benefits of rising options volume (I am doubtful since most of the options trading happens in Nifty and BankNifty) or CDSL or any other companies, please let me know.
MCX in commodities
Angel one
Nse in unlisted space
Risk remains- if sebi takes a regulatory actions to discourage like they increased the margin requirements for Futures in the past.
Disc: hold a tracking position in McX
A question on HUL’s current ratio calculation:
HUL’s current liabilities are more than its current assets (March 22)
About 21k Cr of liabilities and 15k Cr of operational assets
If we calculate current ratio, it should be 15/21 = less than 1 but on screener its 1.3
Also, HUL should have negative working capital? But screener says 4K Cr
How to get news of stocks which added in our portfolio?
How to calculate any shares intrinsic values?
HUL has a solid distribution network and brand. They have the ability to purchase goods from suppliers without paying them for months, and they can take advance money from retailers to supply goods in a future date.
This translates to having a negative cash conversion cycle.
HUL has 1.35 times current ratio. In other words, Rs. 1.35 current assets to every Rs. 1 current lia. So, that’s why have working capital of 4,700 crores.
What counts for cash flow calculation is ‘change in working capital’. That number is (-) 2,862 crores.
Hope this helps!
Create a watchlist of stocks on screener.in
You can get news updates for only those stocks.
Thanks
HUL, Sept 2022:
From balance sheet,
Other liabilities = 21198 Cr
Other assets = 15360 Cr
So Current ratio = 15360/21198 = less than 1
Also working capital = 15360-21198 = Minus 6K
Is this calculation correct?
I am assuming that current assets = other assets and current liabilities = other liabilities
Other liabilities are listed as trade payables, non controlling interest, advances and other items
Other assets are as inventories, receivables, cash, loans/advances and other items
Let me know where i am making a mistake pls
This is taken from screener.in
You are right!
I think it’s screener’s mistake. Sometimes you can get wrong data from third party services and data vendors.
If you feel any mismatches, you can report it on screener’s help desk. Just fall back on official quarterly results pdf.
Basic question:
Everyone is gung ho about idfc first bank results.(Q3 FY23)
However, when I check screener ‘financing profits’ for the quarter are negative.
Profits are because of ‘Other income’.
I see most experts are also happy with results, what am I missing?
Thanks!
Pro tip: For banks and NBFCs don’t check results via screener, refer quarterly presentations, result announcements and ARs. The P&L flow for a financing company is slightly different than any other company. The P&L flow goes something like this:
- Interest Income (A)
- Other income - fees, commissions, brokerages, off book AUM earnings etc. (B)
- Total income (C = A + B)
- Interest expenses (D)
- Net total income (E = C - D)
- Operating expenses (F)
- Pre provisioning operating profit (G = E - F)
- Net Provisions + Write off expenses (H)
- PBT (G - H)
Revenue for a bank is made up of both 1. Interest income (Lending income) and Other income (Fees + Off book AUM income). Other income for banks is not necessarily one-off income, it is usually quite stable as fees/commissions are dependent on usage of regular products by its clientele. While Interest income is the core income of a bank, fee based income is equally important because it gives a boost to the ROE of a bank (To earn fee income you don’t have to first raise capital and then lend it out).
A bank with sustainably high Other income as a % of net total income is golden.