Mail id- askritu@3rwealthmanagement.com

Can 2024 Lok Sabha election serve as an impetus ….Can we expect a rally this year!

Nifty is now headed above 18100, this was the trend-deciding level investors anticipated & waited for.

“The benchmark is expected to hit an all-time high of 18,604”, predicts experts.

For the previous 2 years markets have proffered more or less 0% return. In Oct 2021 & In May 2023, as well, Nifty stood at one & the same degree i.e. around 18300.

Investors might witness a surge of 10-15% in the approaching months.

The Nifty Bank index, too, is forecasted to smash upwards its all-time high level of 41,840 in forthcoming future.

Karnataka polls repercussions on Nifty Sensex will be crucial for the markets, which will set the future trajectory in the coming days!

Considering previous track record-

An interpretation of stock market performance, during pre-election years, since 1983 reflects that, Sensex has delivered negative returns only three times amid 10 pre-election years. The preeminent pre-election year for Sensex was 2003 which ended with a 73% rally, where Investors were awarded with bounty double-digit returns in 1988, 1990 and 1997 to boot.

Prior to election in 2014, In 2008 Nifty fell, which further rallied in 2009-2010.

However, it fell again in 2011 and remained stagnant till the end of 2013.

Now again in 2020, the markets fell. Later, however it did well in the second half of 2020 & all throughout 2021.

It gave virtually no return in 2022 and in 2023 so far.

"While the ongoing sentiments are quite bullish, it is predominant to note that prices are presently trading near its all-time high, and on that account, the likelihood of a correctional fall can’t be ruled out.

So, we can anticipate a bullish market from here on!

In 2024, again elections are approaching!

Though Election related spending can support demand in sectors like FMCG and two-wheelers as the government is also expected to ensure enough spending to revive the rural economy ahead of the elections.

Though Indian stock markets appear to remain largely unaffected by the Karnataka poll results, yet in view of current scenario, when stocks driven by global macros & considering Nifty 50 steady uptrend, sentiments may take a hit!

The prime reason Indian Markets did well, was that FII invested excessively in the month of May without having sold for a single day.

In addition to, we can also look forward to the high beta sectors like metals, realty, power, and high-quality mid-caps and small-caps to outperform current levels.

We can expect more upside, in near future!

Conclusively!

If historical track record is to be believed equity index Sensex has a 70% probability of making investors cash rich in 2023 ahead of the Lok Sabha elections next year. So can we expect a rally?

Absolute! Yes.

One thing is certain.........Rally will come!

When! The point is nobody can predict the market!

So expect a rally in subsequent days to come & it will be prudent to keep investing near the lows.

Can 2024 Lok Sabha election trigger Sensex rally this year is something to watch out for!

So, The point is what should be our next move!

Nonetheless, in the short term volatility may go higher, yet even so from a long-term stance, investing makes an outright sense!

A lot of people are turning bullish now & the flaw can be used as a trump card to gain upper hand to buy and cumulate & garner stocks!

My 3 stock Picks For ...........Diwali 22

Festive season & its impact on stock market are very much evident!

With festive season doing the rounds, the incredible hit….the kick of festive season on consumer sentiments & industry demands will have a massive & colossal Bang on stock prices as well!

Festive season is flooded with festive offers by brands, which increase the sales of the stocks, consequently sales goes up & ultimately it results in positive strike on stock prices.

Traditionally Indian festive season proves to be a season of awful sale for multiple business sectors & this year is going to be no different!

The festival lineups in India generally starts in August, after Raksha bandhan & Ganesh chaturthi, Navratri & is mainly centered around 2 main Indian festivals basically Dusshera & Diwali which goes around for a month & is still going on currently,& has further prepared us for upcoming festivals like Christmas & New Year.

Right along with the festive season comes the wedding season. There are weddings too!

Festive season followed by weddings, spur the consumer demands even further- making the season of shopping orgy last longer.

For Indian economy & business sectors Indian festive season plays a crucial role!

The festive season is not only a joyous occasion for Indians but we also consider it as auspicious time for gifting & to try something new. Hence, demand for consumer items automatically increases. So during this season families make big purchases. So people buy good deal of products related to home & big ticket items!

Festive season is a natural period for shoot up brand promotions & activities. So during the season consumers are bombarded & flooded with attractive offers & discounts, by consumer centric business who aspires to upsurge their sales & boost their brand image.

Hence forth, during festive time, online E-commerce platforms like Amazon, Flipkart, Myntra, Meesho etc also offer lucrative sales & discounted offers. The demand for consumer products also inflate.

These ecstatic & exuberant festivals have started in full swing & amid the zeal & fervor; the demand for consumer products is generally takes an upturn & finally has escalated!

Post-Covid period has served as a catalyst, that has triggered an exuberant vigor among consumers this festive season.

This year will witness a surge & escalation in sales due to covid related unfulfilled sales of last year. This festive season spending has touched $32 billion by Indian consumers. Ecommerce platforms like Flipkart & Amazon has also recorded good volume sales in their recent festive sales.

Now economic activities have again resumed. So sectors such as consumer durables & electronics, automobiles, paints & adhesives, consumer finance, travel & hospitality, wedding & celebration wear might witness high demand!

Industry would certainly strike on consumer sentiments, knowing Hindu household’s habit of big ticket purchases by announcing attractive offers, they catch the pulse of masses knowing, “If consumers can afford the product then certainly they can afford the stock as well”.

Certain segments can certainly benefit from festive sales & turn out to be top performers.

Now there are many TOP Notch companies in each sector, but the biggest challenge for the investor is to pick up the right stock from each sector.

The Analysis below would certainly, enable you to make informed decision before picking up the stock.

I have Identified 3 Key Industry sectors, among numerous others, which will be tremendously benefitted from this festive season-

The stocks are picked from the sectors that are well placed to cater, the robust strong festive demand !

1)From Wedding & Celebration Wear Segment-

Vedanta Fashions Ltd.-

The 1st segment that benefits from the festive season are wedding & celebration wear. So stocks like Manyavar , raymonds, etc would be back in focus because of the shopping spree.

These stocks are not only going to get benefitted from Diwali, but also from wedding season which is around the corner. So during Diwali demand for Kurtas , Sherwanis, lehengas, Saris & kurtis also shoots up.

Vedanta Fashion is the largest listed player in the segment.

The company is India's largest in Men’s Indian wedding & celebration wear, in terms of Revenue & profit after Tax.

With a strong Pan India Presence the company’s Manyavar brand is a market leader in its category.

With a large retail footprint of 603 EBO i.e. Exclusive Brand Outlets, (meaning in that shop no other clothes of any other brands will be displayed, it will be containing only manyavar, mohey or Vedanta fashion brands). The company has a presence in 228 cities & towns in India. On top of it it has 13 EBO,s outside India. Due to such a broader reach, the company has shown good growth in revenue in FY 22 despite the second & third covid wave.

Vedanta Fashion Ltd is the Largest company in India, in the men’s Indian wedding and celebration wear segment, in terms of revenue and is among the country’s most respected brands today.

With a Market Cap of Rs 34,719.89 Cr, it is the parent enterprise to Manyavar, Mohey and Mebaz.

Its MANYAVAR brand is a category leader in the branded Indian wedding and celebration wear market, with a Pan-India presence.

The company offers a one-stop destination with a wide-spectrum of product offerings for every celebratory occasion and aim to deliver an aristocratic yet seamless purchase experience to the customers through its aesthetic franchisee-owned exclusive brand stores.

Catering to the Indian celebration and wedding wear market, Vedant Fashions Ltd. is one of the leading companies with a wide range of brands in its portfolio. These include category-leader ‘Manyavar’, ‘Mebaz’, ‘Twamev’, ‘Mohey’, and ‘Manthan’.

The company has a pan India presence with an extensive product range comprising men’s ethnic wear items such as kurtas, Indo-western, sherwanis, jackets, and accessories such as safa, jutti, and mala.

Under the umbrella of the parent company, Vedant Fashions Limited, The company also focused in the women's Indian wedding and celebration wear market & the brand introduced Mohey-Indian wedding and celebration wear for women, launched in 2015.

Mohey-Women’s celebration wear, rapidly emerged as India’s favourite and one of the fastest growing labels in the sector.

On top of it, paving the path for a happier & ultimate family destination, company acquired one of the biggest fashion brands in southern India, Mebaz, in 2018, a one-stop heritage brand catering to the entire family, with an established major presence in south India & in the states of Andhra Pradesh and Telangana.

The company has witnessed Growth in Net Profit with increasing Profit Margin basis, along with growth in Quarterly Net Profit with increasing Profit Margin(QoQ) (YoY)basis.

Further more, the Company has maintained Low Debt.

The strngth of the business is its Strong cash generating ability from core business - Improving Cash Flow from operation for last 2 years is Nearly 52 Week High

Ravi Modi is the Chairman & Managing Director of Vedant Fashions Ltd.

Key Metrics-

PE Ratio 93.69

(x)

EPS - TTM 15.27

(₹)

MCap 34,719.89

(₹ Cr.)

Sectoral MCap Rank 2

PB Ratio 31.97

(x)

Div Yield 0.00

(%)

Face Value 1.00

(₹)

Beta

-

VWAP 1,434.64

(₹)

52W H/L 1,501.55 / 790.20

(₹)

Share holding Pattern of Vedanta Fashion -

As on 30 SEP 2022

2) The 2nd segment in the category is-

Bajaj Finance-

People often prefer to buy automobiles & vehicles for these festivals because we Indians keep our big ticket expensive items for auspicious occasions.

Hence for financing on such short term credit requirements, we rely on, consumer finance companies. So,

Bajaj Finance is covered from this segment.

Bajaj Finance Ltd (BFL), a subsidiary of Bajaj Finserv Ltd, is one of the flourishing & leading non-banking financial companies & a finance lending arm of Bajaj Group, which provides its customers with the fastest financial services in the industry.

Incorporated in the year 1987,headquartered in Pune, Maharashtra, India. Bfl operates in 3 business divisions namely-

Consumer Finance

SME Finanace &

Commercial Lending.

The company has a broader & wider reach available in the whole of India, with 1368 urban & 2218 rural branches. It serves to individual and commercial clients through a network of branch offices, online portals, and investment advisers across India.

Its portfolio of offerings comprises loans, investments, insurance, and cards.

Lending solutions include loans for personal usage, home, gold, loan against shares, property, and fixed deposits; lease rent discounting; loans for professionals; and vehicle loans.

Investment services include mutual funds and fixed deposits.

The insurance portfolio consists of coverage for life, health, and non-life.

The company also offers credit and EMI cards, and e-wallets.

The consumer finance division offers two & three wheeler financing, personal loan cross-sell, salaried loans & co-branded credit cards.

The Commercial lending division offers construction equipment finance, infrastructure finance, & vendor financing.SME Finanace division offers mortgage & business loans.

The company’s top management includes Mr.Sanjiv Bajaj, Mr.Rajeev Jain, Mr.Anup Saha, Mr.Rakesh Bhatt, Mr.Anami Roy, Mr.D J Balaji Rao, Dr.Naushad Forbes, Mr.Pramit Jhaveri, Ms.Radhika Haribhakti, Mr.Rajiv Bajaj, Mr.Sandeep Jain, Mr.R Vijay.

Market Capitalization of Bajaj Finance stock is Rs 4,33,257 Cr.

Key Metrics-

PE Ratio(x) 43.67

EPS - TTM (₹) 163.88

MCap(₹ Cr.) 4,33,257

Sectoral MCap Rank 2

PB Ratio(x) 9.99

Div Yield (%) 0.28

Face Value(₹) 2.00

Beta 2.30

VWAP(₹) 7,177.30

52W H/L(₹) 8,045.00 / 5,220.00

Promoters Holdings-

As on 30 SEP 2022

The company said its gross NPA and net NPA as of September-end stood at 0.24% and 0.11% respectively, as against 0.39% and 0.24% of the last year’s.

New loans booked during the September quarter grew by 7% to impressive amount of 6.76 million as against 6.33 million in the corresponding quarter of last year.

Company reported an 88% YoY jump in its Q2 profit at Rs 2,781 crore. This was the highest-ever quarterly profit reported by the NBFC.

The company has an anticipated profit figure of Rs 2,638 crore.

While its assets under management grew 31% to Rs 218,366 crore in Q2, the net interest income surged 31% to whooping amount of Rs 7,001 crore.

Company has reported Net profit after tax of Rs 2,780.65 Crore in latest quarter.

The company’s gross NPA and net NPA as of September-end stood at 0.24% and 0.11% respectively, against 0.39% and 0.24% in the year ..

Bajaj Finance's loan losses and provisions for Q2 stood at Rs 734 crore against Rs 1,300 crore. The company said it held a management and macro-economic overlay of Rs 1,000 crore at the end of the last quarter.

Further more, the company's customer franchise had witnessed a drastic increase from 19% to 62.91 million as of 30 September 2022 compared to 52.80 million just a year-ago (i.e. within a 1 year period).

On top of it, Bajaj Finance's consolidated deposits registered a growth of 37% in the quarter of a massive amount of Rs 39,422 crore.

Strenghts-

The strength of the company is the strong market position of the company in consumer finance segment.

Finance sales in consumer durable financing cover 65% of the company’s market share. The penetration of the company’s retail stores has also increased rapidly.

Excellent Customer segmentation-

The company has a customer base of 23% CAGR between 2017 & 2022 & 19% year on year in FY 22.

Also previously, in the first quarter of 22,Customer franchise stood at 60.30 million at the end of the June quarter, as compared to 50.45 million as of 30 June 2021, a growth of 20%. During the quarter, Bajaj Finance reported its highest ever quarterly increase of customers of exponential 2.73 million.

The company has acquired a large customer base. Due to excellent relationship management skills, by being in touch with customers through emails and exclusive offers.

Due to the excellent rapport & relationship the company maintains, with its customers, Most of their loans are taken by their existing customers.

This helps them to keep their customer base intact, as happy & satisfied customers keep coming back & ultimately, helps company gain the word of mouth publicity.

Cross- selling is a key to improve revenue & customer loyalty. Bajaj Finance Limited with a large customer base, undoubtedly has a big opportunity to cross-sell its loan and non-loan products to a single customer, keeping marketing costs under control and margins intact. In future, the company can certainly tap into the advantage of cross-selling.

The company is also an established player in the unsecured personal business & business loans segment. The company also cross- sells personal loans to its existing customer durables customers.

The company has built good expertise in the unsecured loan segment which provides higher returns & also helps in improving its margins.

The company has adopted excellent Digital marketing methods-

They have optimized their SEO in such a way that if a customer searches for anything related to Bajaj finance then their company website pops up on the top, which makes the customer come back on the same page.

By Cracking tech code & going hi-tech, Company has become the largest unsecured personal loan provider in the NBFC space. With the exception of Covid-related predicament, its GNPA have been well under control.

Concerns-

The major challenge for the company is that the company’s main products are growing significantly during the competition.

In coming quarters, the company might face challenge of increasing the size of loan book without compromising on quality of borrowers. So company needs to maintain, a fine balance between growth and future risk.

Consequently, with the rising inflation & change in the interest rate cycle, company might face a new challenge of finding a balance between the two, with a possibility of future drop in growth numbers.

At present, the company has maintained its margins through price hikes, but it may prove difficult for the company to do so regularly in the coming times.

What's Next-

Company’s digital figures would play a key role in sustaining elevated valuations. So What’s next in its digital domain, how does the new version of its super app performs & helps in acquiring new clients & how does the company manages its risk, are some of the crucial factors to be gauged & watched upon.

Bajaj Finance is undoubtedly a Compounding Machine & a Multi bagger-

Lets delve in-

They have different revenue streams like small medium-sized enterprises loans, rural loans, commercial loans, and charges for their services.

They also provide their customer with different products and services like consumer finance, SME finance, commercial lending, lending.

Company has displayed Astonishing Financials!

Yes Bajaj Finance is a compounding machine not just stock wise, but Business performance wise, as well.

The growth numbers presented by Bajaj Finance are very interesting …astronomical & consistent…..More over the result of last & this quarter delivered by the company undoubtedly confirms the statement, that it is a compounding machine & certainly a multi bagger.

From business perspective as well, it is compounding machine. The company has set an unbeatable standard, the long term benchmark, the numbers, the company has set for itself are also very marvelous.

Core asset under management, the total asset under management of the company is again an outstanding sum of 2.04 lakh crore Rs on YOY basis, so the Growth of AUM is Jaw dropping figure of 25% , in a way, if we consider 25% CAGR, then the company has capability to double the book in 3 years, which is once again phenomenal !

Furthermore, Core income of the company has been grown exponentially! The Net interest income is Rs 6140 crore, & the YOY growth of this number is again a massive sum of 48%.

Consequently, the astronomical figures of the company has confirmed the fact of it, to be a growth machine!

Furthermore, If we will look into its growth numbers of 8-10 years, it has delivered astronomical CAGR of 30-35%.

Profit after tax of the company, delivered in last quarter, was a hefty sum of Rs 2596, which is 159% YOY growth, one of the highest ever profits the company has ever delivered!

The company has lessened its provisions to 1000 crores, this is the prime reason, the profits of the company have surged to massive numbers.

The best part about banking business & lending business& which the company had also adopted is that , the business had focused more on lending part, & further by cutting & improving on mistakes, exponential profits had been earned by the company.

The companies had focused more on risk management part & henceforth, scope of growth has increased drastically.

Return on equity 23.07% again has displayed a very strong number of 1.27%. Furthermore, gross NPA & Net NPA of last quarter was at .51 %, meaning, (long term benchmark the company had set for Gross NPA was at 1.4%-1.7%),& it’s even below the marginal range, which is again a very good indicator.

It is a phenomenal achievement by the company & should get a score of 100/100 in risk management domain.

Landmark Achievements-

New loans of 74 lakhs had been taken by the company, which is again a massive amount & that too from their own balance sheet which is again phenomenal !

Furthermore an impressive amount of 27.1 lakh new customers has been added in Q1 23, total customer franchise is more than 6 crores & percentage of cross sell is more than 50%, which means 3.46 crore cross sell franchise meaning more than one loan is given to a single customer, further company is adding 20-25% new customers along with existing ones.

Again, Such phenomenal data, prove it to be a compounding machine in adding repeated customers. So undoubtedly company is compounding machine in context of adding customers as well.

Operating expenses to NII ratio is going down consistently, so this is currently at 39.9%, previously, it used to be at 45-50%, 6-7 years back so the company has maintained consistent efficiency, Company is continuously improving its operational efficiency, as well as focusing equally on technology high.

Prime reason of it being called a compounding machine -

The company set high standards & endeavor to surpass it & break its own records!

Company’s Capital adequacy ratio is 26.16% .The benchmark the company has set for AUM growth, is between 25%-27%.Further more, every year the company wants to increase their benchmark by 25% & every three year they want to double their book.

The target companies have set for profit growth is also 23-25%, meaning they want to increase their profit also & double it in every 3 years.

Return on assets benchmark is also 4-4.5%, this is also very strong number, normally ROA,s of banks are around 2%, so the Bajaj finance has set its target more than 2% in that context here also, it proves itself to be a multi bagger.

On top of it, the company’s Balance sheet numbers are also phenomenal even bigger than many of the banks; return on equity long term benchmark is 19-21%. So these benchmark numbers is suggesting that in every 3 years, BF has the capacity to double itself, where, company is setting such high growth standards & is also achieving them.

In every aspect Bajaj Finance is a multi-bagger the phenomenal returns it has delivered over a period of time.

Furthermore, recent quarter results were also awesome!

Bajaj finance Q2 results : Again it has outclassed everyone’s expectations & its own past records. It has given one of the best ever performance. Company posts highest ever quarterly profit at Rs 2781 crore, upto 88% YOY, i.e. 88%year on year basis, one of the best performances ever.

The company’s Asset Under Management had grown by 31% to 218,366 crore in Q2, the Net interest income surged to Rs 31% to Rs 7001 crore, so on every parameter the results are exponential !

The lesser the NPA, the better it is.

The company said its gross NPA & Net NPA as of September end stood at .24% & .11% respectively, as against .39% & .24%, a year ago period. So the company’s effort is to lessen the NPA, as lesser the NPA better it is. So it’s good More the loan books of the company grows better it is.

New loans booked during September quarter grew by 7% to 6.76% millions against 6.33million in the corresponding last quarter of last year, so on each and every parameter the results of the company are phenomenal. The provisions against loans is 730 crores, which were previously 1300 crores, which is also less.

What makes Bajaj Finance A Multi Bagger….A Componding Machine…..A Phenomenol stock….A Must Have in a portfolio !

Let’s delve into its key financials of last 10 years-

Key Highlights-

Bajaj Finance last 10 years Sales, Componded Profit, CAGR & ROE at a Glance!

Componded sales growth Compounded Profit growth

10 years 10 years

5 years 26% 5 years 31%

3 years 20% 3 years 21%

TTM 30% TTM 99%

Stock Price CAGR Return on Equity

10 years 50% 10 years

5 years 32% 5 years 18%

3 years 23% 3 years 18%

1 year -4% Last year 17%.

In last 5 years, sales have been compounded exceptionally by 26%, versus profits of 5 years which compounded by 31%, which is awesome. CAGR is astonishing, beyond imagination, in last 10 years, the stock price CAGR is 50% which is phenomenal, beyond imagination !

Further in 5 years span the growth of 32% is exponential as well.

Last 5 years overall return has been 37%, which means the stock has tripled. Moreover, YOY as well as quarterly returns are also exponential. Further, Profits generated are exceptionally good.

Companies all time returns are beyond imagination over & above a jaw dropping sum of 125 lakh % returns, meaning it is more than 1280 times. Now that’s phenomenal!

Key Note-

Pont to note-

Looking to these figures, if anyone had invested in Bajaj Finance, share initially, would have bagged crores or even more than crores by now.

Consequently, in long run the stock price would follow business performance. So, currently the stock is trading at 8000, so people find the stock price expensive.

For such people SIP is an ideal choice.

So, I suggest the ideal thing is that you can start to invest small amounts via SIP mode on monthly basis.

Conclusion-

Bajaj Finance is one of the largest NBFCs in India.

Last quarter company’s Net Profit: stood at Rs 2596.25 crore up, which was at all time high 159%, year-on-year, reported as, highest ever.

The analysis of the business model of Bajaj finance reflects, it has categorized its business model at par with Industry standards, in fact has surpassed it. It has created a large advantage for the company now & in the future.

Bajaj finance has also been using digital marketing like optimizing its SEO and showing its website on all its customer’s related searches.

The company has won the hearts of masses with its brilliant marketing efforts and iconic advertising !

The company had made a Brilliant connect with the common people & its amazing tagline HUMARA BAJAJ had stayed with the common middle class masses & certainly become part of their thought process!

They have made some remarkable successful Landmark decisions in pasts like entering the retail segment during 2007-08 and capturing most of the market.

The Key Financials of the company displays a Spectacular view !

Its magnificent & phenomenal growth numbers makes it a amazing fundamentally strong stock, Stock for a life time, forever a multi-bagger !

Furthermore, it is progressing as a technology based company & has grown itself exponentially multifold.

The market cap of the company is 455 lakh crore, company in coming 5-8 years, is further going to multiply money of shareholders.

Few of the fortunate or lucky people who would have invested initially in the company, would have been millionaires by now. It’s a Market Giant Giant !

Results of last quarter makes it a compounding machine & a multi bagger to bet upon. So this is certainly,one company which should be on your radar from long term perspective.

Bajaj Finance Genius Business Strategy makes it a goldmine stock!

3) Next player from segment is-

Asian Paints-

With festive season doing the rounds, there is a lot of use of paints & adhesives in renovation or repair. So as a matter of fact, companies from this sector will benefit from this festive season.

Whenever there is a need of for getting paint or renovation done at home, we wait for the auspicious occasion of this Diwali & only one name that comes to our mind is "Asian Paints".

Asian Paints has decorated India’s walls and ceilings for decades.

A perfect blend of Economic Appeal & Innovation Asian paints generates 80% of its revenue from decorative paints & the rest from industrial paints & overseas operations.

Asian Paints Ltd and a part of India’s legacy family business concerns, is a Large Cap company (having a market cap of Rs 296,622.32 Crore) operating in Building Materials sector.

Incorporated in the year 1945, having witnessed & being part of India’s freedom struggle era, the company posses "Deeply Ingrained Nationalistic Appeal".

Company offers a Wide range & Product portfolio that enables them to cater, different segments and industries. Not only in the paint business for homes but they are also present in the

Industrial coating.

Decorative paints

Chemicals.

Home Decor and Fixtures.

Industrial finishing products.

Ancillaries

The company is also into chemicals, wall covering , water proofing , adhesives , sanitizers, kitchen & bath fittings.

Established in 1942, Asian paints is into manufacturing, selling & distribution of paints, coatings products related to home décor & providing paint related services.

It has also entered into the home improvement space including 2 categories of kitchen & bath fitting, comprising ranges of modular kitchens & sanity wear .

Its decorative segment which is the largest contributor to the company’s revenue features the comprehensive portfolio including paints, painting tools, water proofing solutions, wall covering & adhesives.

Asian Paints Ltd. key Products/Revenue Segments include Paints, Enamels, and Varnishes & Black.

Asian Paints Royale which is one of their most unique ideas.

The company knows its customers well. Hence forth, It’s "very well riding the Indian middle class".

The result was the, introduction of Tractor Emulsion a budget friendly paint, which caters the needs & ultimately emerged as a first choice of Indian middle class, a link between cheap peel off paints and expensive high-quality plastic paints, which ultimately, outpaced its competitors, & led company to soaring heights.

With introduction & popularity of tractor Emulsion, company emerged as a giant of the industry & the company has stuck to their success formula with an unshakeable position in the market ever since.

The company’s top management includes Mr.Deepak Satwalekar, Mr.Manish Choksi, Mr.Amit Syngle, Ms.Amrita Vakil, Mr.Ashwin Dani, Mr.Jigish Choksi, Mr.Malav Dani, Ms.Nehal Vakil, Mr.Milind Sarwate, Mrs.Pallavi Shroff, Mr.R Seshasayee, Mr.Suresh Narayanan, Mrs.Vibha Paul Rishi, Mr.R J Jeyamurugan.

Key Metrics-

PE Ratio (x) 80.92

EPS - TTM (₹) 38.22

MCap (₹ Cr.) 2,96,622

Sectoral MCap Rank 1

PB Ratio(x) 21.22

Div Yield (%) 0.62

Face Value (₹) 1.00

Beta 0.53

VWAP(₹) 3,106.88

52W H/L (₹) 3,590.00 / 2,560.00

Promoters Holding-

As on 30 SEP 2022

Future Prospects-

What’s Next-

Company would certainly benefit from future growth in Paint sector -

Overall both the domestic & industrial paint sector are expected to grow at a very good rate. Factors like increase in disposable income rapid urbanization, Increase in trend of nuclear families, reduction in repainting cycle, improving lifestyle, need for Unique & personalized space, government initiatives towards infrastructure building including home & industries would continue to drive this growth for paint sector in India & certainly would propel the growth of company as well.

In the coming times, the home improvement segment, such as kitchen and bathroom accessory business, could be one of the key drivers of overall sales growth and margin expansion.

One of the biggest strengths of Asian paint is its strong distribution network of dealer and retailers, which has helped the company to create a mix of urban and rural sales.

Final Conclusion-

Asian Paint is an Oldest and established company and a market leader in the paint industry. The company is performing brilliantly and had witnessed significant growth over the years.

Asian paints is leader among its contemporaries & has sustained its position in market leadership in India for 50 years!

Indian paint industry is over 100 years old. The domestic paint industry is estimated to be Rs 500 billion Industry with decorative paint category constituting almost 75% of the market, where Asian paints hold majority of the shares.

Asian paints is 3 times bigger than the 2nd competitor Berger paints.

Further more,It is No 1 in Returns of capital employed as compared to Nerolac & berger paints.

Overall the company is performing very well & had witnessed significant growth over the years & needs to sustain the position by staying relevant to the consumer choices.

Asian paints is clearly the leader in terms of market share, cap revenue & profit, among the 3 top contemprory players in the Industry.

The company’s network is at the core of expanding the home improvement segment. With more dealers had signed up for multi-product distribution, network.

Further more,In terms of, Profitability, including ROCE & ROE Asian paints is No 1 followed with berger paint & then Nerolac.

Asian paints promoters’ shareholding stood at 52.63 %for FY22. So the company has good amount of holding & major share from promoters. Furthermore, there is no change in the promoters shareholding in the company in last 3 years which Shows the "trust of promoters" in company.

One of the prime reasons, for the company’s success, is its Great Marketing Campaigns.

The marketing and promotional strategies of the company are very unique and creative which has made Asian Paints a synonym for paints. Companies have relied heavily on their success through marketing and are always looking for talented marketers.

It has always been famous for its marketing efforts and iconic advertising. The cartoon character ‘Gattu’, proved to be the the mascot of the company and was widely popular among masses.

The first such product that foreshadowed how the company will outpace its competition was their ‘Tractor Emulsion’ paint, the 1st & perfect choice of middle class.

The marketing and promotional strategies of the company are very unique and creative which has made Asian Paints a synonym for paints.

As a result,

Asian Paints has decorated India’s walls and ceilings for decades.

The stock is known for its resilience & steady returns over a longer horizon.

A unique marketing and promotional strategies, Excellent customer service, a loyal rural base, smart & top notch use of technology and managers hired from the premier & best B schools, are few of the prime reasons, how Asian Paints continues to dominate the Indian Market as well as, the "walls and ceilings of India", along the way.

As of Now-

Valuations are clearly expensive. All the 3 stocks are currently available at expensive valuations. Hence forth, Currently Company is at expensive valuation.

Current valuations are on the higher side & one of the reasons is due to prior earning of lockdown.

Better strategy is to buy when the valuation are little less expensive.

Undoubtedly, India is one of the fastest growing economies of the world & the Indian economy is bound to grow in next 20-30 years, to become the third largest economy of the world after US & China!

Now when Indian economy would grow, so would the every sector in economy, be it banking, paint, health care etc, Consumer Finance or wedding & celebration wear segment.

India’s raising demand is mainly driven by expanding reach & acceptance of E-commerce in tier 2 & tier 3 cities in India.

Almost, all high frequency indicators suggest that the Indian economy is on a verge of a upturn!

Festivals are the time that brings excitement & believe it or not , our economy is creating right impetus for it.

It has turned out to be a catalyst that has triggered a new type of Buzz & Exuberance amid consumers this festive season !

We may see high demand in sectors such as consumer durables & electronics, automobiles, paints & adhesives, consumer finance, travel & hospitality, wedding & celebration wear these sectors might witness high demand.

So consequently the leaders of each segment would also grow Exponentially!

The above Analysis would certainly, enable you to make informed decision before picking up the Right stock.

All the 3 contemporary players have Brilliant Business Strategy & have displayed Spectacular Financials as well & certainly Reflects Promising Prospects!

Based on the analysis, all the three companies are strong contemporary players & Market Leaders in their respective segments. With Strong Fundamentals & Brilliant key Financials, all 3 stocks, certainly should be on your Radar for Long Term Perspective.

So, That is all for todays blog. I really hope you gained some insight.

If you have any further query or if you want more of my input on this or any topic of your interest, drop a comment & I will definitely come up with the blog giving insight on the topics inquired.

Bye for now. I will see you in the next blog.

All You Need to know about MWPA

Married Woman Property Act 1874

Are you a businessman with highly leveraged businesses?

Owner of a Partnership firms having unlimited liability.

Member of a joint family setup with future possibilities of ownership disputes over property or money.

Or just a salaried individual with multiple loans & liabilities.

Are you adequately insured…… but still worried that in case of your absence ….creditors or partners might approach court to recover their outstanding debts….or your family would loose insurance money to creditors or greedy relatives!

Are you scared, in your absence…. your family might end up in Financial trouble!

Do you really want to Ensure that your dependents i.e. wife & children SOLELY & ONLY receive the insurance policy claim proceeds.

Furthermore, Do you believe

A wife has the right to live her life with dignity and to have the same lifestyle that of her husband and in-laws . She further also has right to live free from any men, if she wishes to!

Don’t worry

MWP Act is the answer!

MWP Act was created to Save & Secure the properties owned by women from relatives, creditors and furthermore from their own husbands as well. The Act has been created to shield women’s rights, even after marriage.

MWP Act ensures ONLY your dependent(Wife & children) gets insurance policy proceeds.
The Insurance claim proceeds of a plan attached to MWP Act are free from creditors, court, family disputes and tax attachments!

Yes.......It cannot be claimed by creditors, relatives or form a part of the will (estate of the proposer). And you can be assured that the policy money will be given only to your nominees (wife & children).

So, Don't want your family to be deprived of their rights!

Go with MWP Act!

Purchasing an insurance policy under the MWP Act shields the family from the burden of debts and family disputes It was created to insulate the properties owned by women from in-laws, relatives, and creditors. The death benefit or any other bonuses arising out of it are to be awarded solely to policyholders beneficiaries i.e. wife and children.

What is MWP Act-

The Married Women's Property Act or the MWP, 1874 is a welfare act enacted in 1874.

It is a legal safeguard to ensure, that a married woman, has a separate and sole right to her husband’s property. It ensures financial safety to her, in case of her husband’s unfortunate demise.

It was enacted to curb the injustice against married woman.

It ascertains protection of assets & properties owned by a woman from in-laws, relatives, and creditors & to ensure that the dependent wife retains the absolute ownership of earnings, property, investments, and savings after the death of a policyholder.

It was created to foster the financial interest of a wife & her dependents in case of a sudden demise of her husband.

Consequently, the claim proceeds under MWP Act are free from –

Creditors
Tax and
Court attachments.

Our motive of buying insurance-

The recent pandemic has taught us that one’s life is always prone to multiple risks and uncertainties & yes the unpredictability of life has become even more apparent since the pandemic.

There are certain things in life that are unavoidable and safeguarding it by taking right decisions at right time is extremely crucial. The only thing that we can do is, prepare for these eventualities by buying insurance.

Life insurance is a must for everyone today. So, if you are a male and the only breadwinner of your family.

Future Financial security of your family should be a top priority & concern!

Investing in life insurance is a significant financial security for unanticipated urgency.

Individual having dependents family members should be adequately insured & should have adequate Term Plan, if the family members are dependent on him / her.

When buying a term insurance policy, you aim to secure the future of your wife and children in your absence. You want that the claim amount reaches them quickly and without any hassles.

So you have Insurance & you think you have secured your family & done your bit? your family is Safe & protected-

Are you sure by taking Insurance plan you have fulfilled the family’s financial obligation on your part……

You think you have fulfilled your responsibility…..

Think Again!

If you are of the opinion, simply by buying adequate insurance cover you have secured your family financially & you have fulfilled your obligation & your family is in safe space!

Then you are sadly mistaken!

Are you aware of the fact that……

Simply buying a term insurance policy alone will Not inevitably ensure that your beneficial nominees (i.e. wife & children) will receive the Insurance claim proceeds (death benefit or sum assured), after the unfortunate event of your passing away.

That brings me to the next point-

Creditors right over your Insurance Policy money-

Are you an Individual with a home/ personal loan or a businessman with accumulated outstanding debt?

Most people have some kind of debt, or borrow money to cover & finance a huge large-scale expense, which is beyond their means like a home loan, car loan, child education & marriage. So they hire money.

Individuals sometimes rely on loans such as personal loan, home loan, business loan and consumer loan to achieve their financial goals.

A common man with limited income cant self fund huge expenses, they need to rely on loans. There is nothing wrong in it.

Further do you know that…….

In case of insolvency or unfortunate demise, your creditors have the First Legal right to claim the insurance proceeds from your policies, legally, in order to compensate for their loan amount.

Yes…….

After your sudden demise, the creditors have First Right over your assets & might approach the court to contend & claim their right to recover outstanding debt or loan amount out of your Insurance policy proceeds.

If there is any outstanding loans to any creditors or relatives or friends, they all would have a prior claim to the Insurance policy money before your beneficial nominees (spouse and children).

As, the creditors might approach the court and assert their right to get paid out of the proceeds of the Term Insurance policy. Consequently, the family might not be benefited from it as the claim proceeds (death benefits) will be taken away by the creditors.

Hence, A regular conventional term insurance policy i.e. a policy which is not bought under the MWP (Married Women’s Property) Act, i.e. the death proceeds might be claimed by Nefarious beneficiaries such as loan hawks, creditors or any other family members who would grab the policy benefits.

In such predicament, insurance, will not serve the purpose for which it was bought & your family will be under tremendous financial trouble!

The motive & intent with which the insurance was bought i.e. to compensate financial loss & gap & secure the future of the family financially would have been defeated.

As, sadly the family members for whom insurance was bought would have not benefited from the insurance proceeds. The claim proceeds death benefits would be paid off & taken away by the creditors.

In such scenario, in order to ensure that only your dependents receive the insurance policy claim proceeds & to Protect your family against such crisis.

You need to bring your policy under the scope of the Married Women’s Property (MWP) Act.

This ensures that on the death of the life assured, the dependents receive the proceeds, not the creditors.

To protect your family against such crisis, MWP Act comes to your rescue!

MWP Act Safeguard & Secure your family in your absence!

The MWP Act entails that if a married man buys an insurance policy with the MWP addendum.

It helps in protecting your family's financial interests in your absence.

How MWP act works…..-

Once a policy is availed under the MWP Act, it secures your family members financially and they cannot fall prey to relatives, partners or creditors, as it would be beyond the reach of-

Creditors (in case policyholder has taken personal loans)

Relatives in case of joint family.

or court attachments

1)Creditors-

Wife & children are rescued from the legal liabilities of the husband. They are freed from the liability that was supposed to be paid by the assured. In case of an ill-timed event, the benefit of his policy cannot be attached by the creditors and be rightfully utilized by his wife and children. Thus, the (death cover) claim amount cannot be attached or taken away for repayment of debts.

2) Relatives in case of joint family-

If the policyholder is a part of a Hindu Undivided Family (HUF) or a joint family system, in case of family property disputes arising due to division of property or any joint family friction or discord.
Policy with MWP addendum does not form part of joint family property & the only nominated beneficiary would be the wife and/or children & hence it ensures that wife & children are protected. Helps in dividing the assets, in the name of family members. Assets are divided among family in the most simplified & correct fashion.

3) Court attachments-

As it cannot be attached by courts, in case you declare yourself bankrupt, court has a right to seize property for recovery of debts, but the policy under MWP addendum, cannot be attached by courts, for recovery of debt & is beyond the reach of banks or court attachment.

Purchasing an insurance policy under the MWP Act protects the family from the burden of debts and family disputes.

Thus, to ensure that the sum assured is passed on Solely & Only to your wife and/or children. It’s crucial to have a term insurance policy under the Married Women’s Property Act, 1874 addendum.

As it assigns all rights to nominated wife & children & does not form part of creditors dominion, henceforth No creditor has any right on it and No creditor can make a claim on it.

A policy under the MWP Act simply means that your insurance claim amount absolutely & straight away reaches your wife/children, insulating shielding her/them from any loans or liabilities that you owe.

In other words, it ensures that no one else can claim this amount. As It cannot be claimed by creditors, relatives or form a part of the will (estate of the proposer).

If the policy is bought under the MWP Act, then your family’s interest, significance & priority comes first and your wife and children are solely entitled to the sum assured in case of your sudden demise.

Insurance benefits with MWP addendum are only available to your wife & children.

Section 6 of MWP Act-

The MWP Act, 1874 was amended in 1923 to include policies. There upon, Section 6, of the married women’s property act, 1874 covers Life Insurance plans .

Section 6‘deals with insurance, where policy of insurance is taken by husband for the benefit of wife. The relevant extract of said section is as follows:-

“ A policy of insurance effected by any married man on his own life, and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall ensure and be deemed to a trust for the benefit of his wife, or of his wife and children, or any of them, according to the interest so expressed, and shall not , so long as any object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate.”

It also operates to give the beneficiaries under such a policy certain statutory privileges by virtue of which they secure protection.

Policy taken under the provisions of MWP act operates as a valid declaration of trust giving the beneficiary a vested interest in the policy.

Such a policy will not be aggregated with the other property left by the deceased.

Crux of section 6 in more simplified fashion-

The MWP Act entails that if a married man, including a divorcee or a widower, buys life insurance plan with the MWP addendum.

The entire proceeds is regarded as discrete from policyholders possessions, henceforth in case of a unfortunate sudden demise of the policyholder.

The claim proceeds (Death benefit) can neither be used by creditors for repayment of loan or debt of any sort, or court attachments, nor can it form part of joint family property.

The proceeds of insurance upon death or maturity are the solitary belongings of nominated beneficiaries and NO ONE else, inclusive of the policyholder himself, has any right over the benefits.

Scope of policy under MWP Act-

It helps to get added & amplified security by opting for your term policy under the MWP Act during inception of the policy.

The term policy under MWP needs to be executed before the creation of any liability and at the time of purchase of the policy.
The insurance policy issued under the MWP Act is equally beneficial for salaried individuals or people in business.

MWP act is valid & applicable for all married women of all religions.

However, Mohammedan proposers can only take up named policies for children and wife. The benefits of the policy proceeds can be mentioned as specific percentages to each beneficiary or as equal amounts.

The policy can be taken only on one’s own name i.e. the life assured ( the person on who’s life the policy is taken) has to be the proposer himself.

Any type of plan be it Term plan, money-back, whole life, Endowment etc. can be endorsed to be covered under MWP Act.

Who can take a policy under MWP Act?

Any resident individual be it-

Married man

Widower

Divorcee and also a

Married woman.

A married woman can also buy an insurance policy under MWP Act for financial security of her along with her children.

Yes, Even a married woman can buy MWP policy in her name with her children as beneficiaries.

However a wife cannot make her husband the beneficiary and take the benefit of this Act.

She can, however, buy a policy under the MWP Act in her name with her children as beneficiaries.

MWP Act as a trust-

It will be considered as a separate asset.

If you take an insurance policy under MWP Act, your life insurance policy is treated as a TRUST and you can be assured that the policy money will be given to your nominee(s) only.

.

However, many times, beneficiaries or dependents fall prey to creditors, greedy relatives or loan hawks who try to snatch the ‘insurance money’ for repayment of loan or debt. The MWP Act creates a trust in the name of the beneficiaries, ensuring that only the insured wife and children receive the money. There are several benefits to buying insurance with MWP Act.

It will be beyond the grasp of creditors, loan hawks or grabby relatives.

As it would prevent your dependents from being afflicted & falling prey to people who might snatch such insurance proceeds from them in order to recover their loan or debt amount, as they won’t be able to grab hold of claim amount, ensuring that only the insured wife and children receive the money.

Who can you name as beneficiaries in Insurance under MWP Act, 1874?

The beneficiary can be:

only wife, or

Only children (natural & adopted).

Or both wife & children (Wife and children together or any of them).

The insurance policy can be bought only to insure your wife and children. Hence, beneficiary can be either wife or your children or wife or children both.

The policy can also be a named policy meaning the name of the wife and the child/children are mentioned in the plan or as a class by not mentioning the names.

As a policyholder, you can assign specific percentages of the sum assured to each beneficiary or divide it in equal amounts.

In No case, the husband or any other relative can be a beneficiary under this policy.

Although the husband pays premiums as well as manages, keeps & continues the policy, still he cannot be the beneficiary under the policy.

Since MWP has a single title, it cannot be claimed by any relative or guardian, acting on behalf of the beneficiaries.

The beneficiaries must be decided at the time of buying policy with an MWP addendum .The nominated beneficiaries, decided at inception cannot be changed later and are the only recipients of insurance proceeds (death claim or maturity benefit).

As a consequence, beneficiaries, once decided and nominated will remain unchanged throughout the course of the policy.

In a policy bought under the MWP Act the beneficiaries, once declared cannot be changed at any time in future by the proposer.

It is crucial, however, to declare more than one beneficiary at the time of taking a policy. So that, in case of early demise of the beneficiary wife, the legal heir of the policyholder is entitled to claim insurance proceeds.

Moreover In case of divorce; the wife continues to remain a beneficiary and cannot be changed.

Furthermore, In case of early demise of the beneficiary wife, the legal heir of the policyholder is eligible to claim insurance proceeds.

Moreover, Parents cannot be added as beneficiaries under the MWP Act.

A nomination by the beneficiary is also not permissible.

However, Mohammedan proposers can only take up named policies. The benefits of the policy proceeds can be mentioned as specific percentages to each beneficiary or as equal amounts.

Further more, The Beneficiary and the Trustee can be the same person (e.g. your wife can be both the beneficiary and the Trustee).

Benefits to beneficiaries-

Policyholders can divide policy proceeds per beneficiary.

It can be split in equal amounts or diverged in to specified percentages. The amount allocated or the specified percentages must be decided at the time of inception and cannot be changed later.

Prime Features-

The main advantage for the beneficiaries-

In case of policy under MWP Act there is-

1) No surrender

2) No Assignment

3) No Alterations

1)Policy under MWP Act cannot be surrendered.

2)Be assigned for taking a loan by the proposer.

3)Policy cannot be altered. No alterations or changes can be made in the policy. As no assignments or nominations for loans can be made under the policy.

More elaborate interpretation-

Below illustration will aid you with better understanding-

Life Insured has No control over the policy under MWP Act-

This type of policy will not operate in counter & reverse & yes even the husband will not get anything from the policy.

Yes, Life insured though buys the policy, but has NO control over the policy.

He is transferring the rights to the beneficiaries i.e. wife & kids. So he is not the legal owner of the policy .He is not allowed to make any assignment or nomination is not permissible in the policy because MWP act is applicable.

A nomination by the beneficiary is also not permissible.

Since the insurance policy can be bought only to insure your wife and children. Only wife or children can be made as beneficial nominees.

1) In case of divorce-

Mr. A bought policy under MWP act with wife as beneficiary & later they got separated. So after separation, can Mr. A being the policyholder change the beneficiary?

The answer is simple.

No he cannot.

As Mr. A is not the legal owner of the policy & the legal rights have been transferred to the beneficiary, so he cannot change the nominee or beneficiary, no matter what. If something happens to him in future, money would go to first wife only. The one who is appointed at the time of buying the policy as no alterations can be done in the policy.

2) Even after divorce, the policy would continue as a trust in favor of the divorced wife.

If there is any person who opted for MWP policy and got separated later on.

So only solution to this what they can do is stop paying premium, wife being the beneficiary, can herself pay the premium & get the proceeds at the maturity of the policy whenever applicable. Consequently, the future benefits can be carried out by her, otherwise no alterations can be made by the life assured, the person buying the policy cannot make any changes in the policy.

3)In case of the beneficiaries death -

For instance, Husband made wife the beneficiary & the wife dies then-

Trust does not come to an end on the death of the beneficiary.

Trust is not only limited to one beneficiary. So policy will remain as it is & money will be passed on to kids, they will be the new beneficiaries under the policy & assured himself cannot become the new beneficiary of the policy in place of the deceased wife, as assured has no control over the policy.

Policy under MWP Act is a Separate trust-

Policy under MWP Act Helps in creation of non attachable trust.

More elaborate interpretation-

On its relevance for salaried people-

For Instance,

A 35 year old guy with wife & 2 children with a home loan of 85 lakh on his name dies in an accident. Fortunately, he had a policy with MWP addendum. So now creditors could not claim the policy money. Otherwise the policy money would had been gone towards legal proceedings &towards settlement of home loan.

Consequently, the MWP Act creates a trust in the name of the beneficiaries; in order to assure & establish that only the insured wife and children receive the money.

If you take an insurance policy under MWP Act, your life insurance policy will be considered as a SEPARATE TRUST. So it is a separate trust meant for the wife and children only.

Hence forth, each policy under MWP Act is automatically considered as a separate trust.

Since the policies are considered as an automatic trust so there is no need to set up a separate trust for beneficiaries under the Act.

Furthermore, providing the trustees name is not mandatory.

Though Policyholders may assign a trustee to overlook the proceeds but it is NOT compulsory.

Trustees are NOT the primary beneficiary and only act as manager of the policy for the ultimate beneficiaries, i.e. wife and/or children.

The trust shall be holding the claim proceeds for the benefit of the wife and/or children.

The trustee needs to be mentioned at the time of the proposal, inception stage.

There may be one or more persons appointed as Trustees.

The trustees can be the wife and/ or one or more of his adult children, or any third person.

The trustees can be the wife and/or one or more of adult children, or a third person.

In case of a death claim, the insurance policy proceeds are given to the trust and cannot be claimed by the creditors.

As your life insurance policy is treated as a TRUST and you can be assured that the policy money will be given to your nominee(s) only.

Thereupon, the policy maturity benefits will also go to the Trust.

The Trustee must be over 18 years of age and their consent must be approved & conceded along with the MWP addendum.

At the time of making the application, a separate from has to be filled by the proposer for it to be covered under MWP Act.

The form will seek details of the beneficiaries, the share of the benefits that are to be accrued to them and the trustees.

The policy holder has the option to change the trustees at any point in time.

Also in case of a death claim, the policy proceeds are received by the trust and cannot be claimed by the debtors nor will it form part of the estate of the proposer.

Hence, the wellbeing & felicity of the wife/child/children are shielded with utmost care.
Trustees can be added, removed or changed as per the will of the policyholder.

Some common prevalent Queries-

Q1)How to get an Insurance Policy covered under the MWP Act?

Getting a policy endorsed under MWP Act is hassle free & effortless.

The process of getting an insurance plan assigned under the MWP Act is quite simple.

For a policy to be covered under MWP Act. At the time of making an application, at the proposal stage for buying a policy, a separate MWPA form has to be filled by the proposer. You need to fill the addendum i.e. the annexure to the main proposal form.

Policyholders need to fill up and sign an MWPA addendum along with the insurance application at the time of taking the policy.

Some of the insurers even offer the ‘yes’ option in the application form which needs to be selected by the policyholder.

You need to provide details of the beneficiaries, as well as the trustees, along with the share of the benefits that are to be accrued to them.

Providing the trustees names is not mandatory.

Q2)Can existing Insurance Policy be assigned under MWP Act-

If you already have an insurance policy, the existing life insurance policies cannot be assigned under MWP Act. This means you cannot get your existing term insurance policy modified under MWP Act.

Despite of the above benefits still not many policies are covered under the MWP Act.

There are few major reasons behind it :

1)Majority of the people are not familiar with the provisions of the Married Women’s Property Act (MWPA), 1874.

2)They lack awareness, with regards to the benefits, privileges & rights of a woman & dependent children under MWP Act.

3)Once covered under MWP Act, the proposers lose power & authority to change or make any alterations in the plan. Some men might not appreciate the fact.

4)As many men prefer to have complete supremacy on their life insurance plans.

Many men do not prefer the fact that the policy on their life for which they pay premium from their pockets is beyond their control. In some genuine cases, their viewpoint might be justifiably rational.

They might be having an authentic & legitimate reasons behind it.

That brings me to the next point-

Who should NOT take policy under MWP Act-

If a man is in a relationship, which is on the brink of divorce, or if a man finds the acts of his wife to be dicey & suffers & is a victim of cruelty, desertion, adultery by the wife .

In consequence, your relationship seems hazy & vacillating & you find yourself being trapped in the wrong marriage & you have a valid & justified grounds for the same.

Moreover, you find your marriage is on the verge of separation.

If you are concerned & fear future of your elderly parents in your absence. If you fear future possibility of flimsy cases and complaints, false accusations against you & your family, by your wife.

Then DON’T go for MWP Act.

As the Act is biased against men & is more favorable to women.

Since Both genders, be it Men or Women, have the right to live a life with dignity & yes Men too have the right to be treated fairly & equally.

Points to be noted to gain further clarity on appointment of beneficiary & trustee & the difference between the two-

At proposal stage, i.e. at the time of applying for insurance, the names of beneficiaries, needs to be mentioned.

Furthermore, the beneficiaries of the plan once declared cannot be changed.

However, the policy holder has the option to change the trustees at any point in time.

It is not mandatory though, but the names of trustees, (if any) needs to be mentioned.

Moreover, in case the beneficiary is a minor then the appointment of the Trustee is mandatory.

The trustees can be the wife and/or one or more of his adult children, or a third person.

Furthermore, the appointed Trustee cannot be a minor or HUF (Hindu Undivided Family.

More than that, the proposer I.e. the person taking the policy can neither be the beneficiary nor the Trustee.

On top of it, The Beneficiary and the Trustee can be the same person. For instance wife or the adult child (18 years or older) can be both the beneficiary and Trustee as well.

Can a policy under MWP Act be surrendered-

Surrender request should be made from policyholder and signed by the Trustee (if appointed) and beneficiary.

The beneficiary should be major at the time of surrender request.

Surrender proceeds will be paid to the Trustee/Beneficiary.

Loan on policies which are under MWP Act?

No, policyholder cannot assign the policy to another person or take a loan on the policies which are covered under MWP Act.

However, if loan request comes from policyholder, signed by the beneficiary & Trustee then it can be processed.

Process of distribution of claim proceeds-

If a policyholder surrenders the policy surrender value policy, the benefits along with surrender value will go to the respective beneficiaries.

In case of death of a wife, who is the beneficiary of the policy, the legal heir of the policyholder will receive the said benefits.

Secondly, in case of maturity, the survival or maturity benefits would be given to the enlisted beneficiaries of the policy.

Changes in the policy, amended into MWP Act-

Is a policy under MWP Act different from regular policy -

Whether you buy a insurance policy under the MWP Act or not, the policy features, benefits and other terms and conditions remains the same.

Who should opt for MWP Act-

Policyholders who want to safeguard their wife’s and/or children’s claim on the policy proceedings

Salaried individuals, businessmen or any individual who have pending debts such as home loan, business loans or personal loans at their disposal

Individuals who want to ensure their dependents are the Sole recipients of the insurance payout in their absence.

Women who is a sole earner in family with dependent children.

Crux is-

Backed by Government of India, being the highest kind of protection MWPA is an ultimate Safeguard for your belongings & possessions.

As it aids you-

To Create a legacy, exclusively for the direct benefits of, immediate family members.

Creates attachment free money for the family as your family is directly benefitted from claim amount, as it shields your family from court attachments, court proceedings , banks ,Tax authorities, family disputes etc.

To sum it up-

MWPA offers your family a Double Security. It acts as an Insurance for your already existing Insurance plan .So, basically It’s an insurances for your insurance plan.

This Act basically works as a safeguard from the repayment of loans, extended family members or any other creditors who might claim the money after the demise of the policyholder and guarantees that the financial future of spouse and children is harbored & protected.

Salaried individuals with outstanding loans, business owners with accumulated debt, members of joint families and HUF and people with irregular or unstable income living on credit, must opt for life insurance under MWP Act for financial stability of family in case of policyholders' untimely demise.

If the motive of insurance which is compensation of financial loss along with future financial security & stability of family, in case of your unfortunate absence, is to be achieved in its fullness, then having the life insurance plan availed under MWP Act should be considered.

Having said that, next query that pops up in mind is-

Which Type of Insurance plan should be availed under MWP Act-

Before moving on to the this question lets delve into –

Insurance & its Relevance-

Life insurance is one of the most predominant & key aspect of financial planning.

Given the uncertainty that exists in these unprecedented times.

Notably, Covid fallout, was an eye-opener!

Recent holocaust, where death cases skyrocketed, with Covid claiming multitude lives, the significance of life insurance abruptly came to the fore!

Especially Catastrophic Upshot, i.e. Aftermath of mishap (COVID-19) which have been the shock to the economy & to the world, enlightened all of us with the discernment that life is really unforeseeable, & it is very crucial to secure your family financially by offering them financial shelter & protection in form of Insurance.

Each & every life was affected in some way or the other. There was Not a single life untouched by the mishap.

We all had personally come across cases where family suffered immensely after the death of Sole earner & struggled financially, just because they did not had the financial protection & Insurance cover to compensate for the posterior income loss.

Hence it is pertinent to cater most financially comfortable life to our family.

Now, the next question that pops-up in every one’s mind-

Insurance plan to be availed & opted under MWP Act-

Type of Insurance plan to opt for-

The Answer to the question is plain & simple, it’s recommended to-

Simply take a Term plan with ample amount of life cover, so that in case of any unfortunate event, your family do not have to struggle financially, they can still live a financially comfortable & dignified life.

It’s prudent to opt for a Term plan.

Term insurance policies, ONLY offer a death benefit to the nominee if the policyholder passes away during the policy tenure.

But lamentably, when it comes to taking an Insurance plan there is a lot of fear & confusion among masses.

Life insurance one of the most significant aspect of our lives unfortunately have become one of the most Mis sold financial product in India!

Buying a life insurance leads to a long term relationship with an Insurance provider & subsequently payment of a hefty amount, along with good ample number of consistent premiums(a hard earned money which is a further pinch to a common man’s pocket ) over a longer horizon to avail the benefits offered (Death cover, Bonus & Maturity Benefit).

Consequently,

Masses are panic stricken & go cold feet when it comes to buying insurance, due to illicit sales of Insurance-

That brings me to the next point-

Deliberate & illegitimate sale of insurance products-

Woefully one sad facet is that the insurance Industry in India is plagued with greed & miss selling. Most insurance agents would bombard you with spam calls & messages, in fact many agents would try spike you all the time, to sell you the insurance plan, until u get one ,simply to get their targets meet.

Majority of the people don’t even know the terms & conditions, they simply buy Life insurance without any prior knowledge. Consequently, they end up taking wrong insurance plan.

Incognizance & their unfamiliarity on right product paralyzes people to take any decision with regards to buying insurance-

Some of the common concerns that crop up in their minds are, what is the right –

Amount of cover required.

Duration of a plan

Parameters you should look at before selecting the term plan.

Cited analysis below, will throw light on prevalent concerns among masses with regards to right selection of insurance & assist you with the requisite insight-

Let’s get started,

how much cover is enough for a term plan.

Adequate amount of cover-

How much amount of cover is adequate for a term plan. For instance, should it be 1 crore,2 crore or more

Foremost, the Term Plan cover would vary from family to family-

To ascertain & determine amount of cover required families monthly expenses needs to be taken into consideration. So you need to ask yourself, what’s your monthly expense.

1)Amount of cover would depend on your monthly expense-

So let’s say, your monthly expense is 50, 000, so you would ideally want to ensure that your term plan would have cover, that would be enough to take care of 50,000 monthly expenses.

For instance, let’s say, you take a term plan for 1 crore, in case of an unfortunate event, this 1 crore Rs kept in FD at 6 % fixed interest rate, would have generated a fixed income of 6,00,000 a year, so that would equal Rs 50000 per month. So in that case a term plan with a cover of 1 crore is ample enough.

But here you also need to consider 2 other significant consideration-

1st facet you need to ponder upon is inflation-

Today your monthly expenses are 50k, but due to rising inflation, in the next 5-6 years, your monthly expenses might surge to 60000 per month, that being the case you need a cover of more than 1 crores, may be Rs 1.5 crore would be adequate enough.

2nd facet you need to consider is liabilities-

If you have Major liabilities (home loans, car loans or any other loans) than make sure you add that amount to your term cover.

For instance, let’s say, you procure a home loan of Rs 50,00,000.

After paying 10 lakh of loan if lamentably, anything adverse happens to you then your family will be required to pay remaining 40 lakh loan amount on their own & consequently your term cover of Rs 1 crore, would be depleted consequently in the course, as your family would end up paying 40 lakh to bank, out of a 1 crore cover.

So now your family would be left with minimal amount of 60 lakh out of a 1 crore cover, which would be insufficient to take care of their future lifelong expenses.

Hence in that case, it’s crucial to add loan amount of Rs 50,00,000 in your term cover.

So, in case of any ill fated, destitute state, your family can repay the entire home loan of 50 lakh & still will be left with adequate cover of 1 crore to live a nice comfortable life, thereafter.

Likewise, you need to add all the major liabilities & then calculate your term insurance plan for your family.

Yet, having said that

Another important consideration for short listing a term plan for your family is-

2)Duration of a term plan-

Up Till what age & up to what duration one should take term plan, till the age of 50 years,60 years, 70 or even beyond.

Many people are muddled with regards to duration. Should they take term plan till 60 years or 70 years of age.

To address this query, first of all you need to understand why, in the first place, you take a term plan.

Term plan is to secure loss of income.

People insure themselves to compensate future Income loss & Gap in case of unfortunate demise & absence of sole earner.

Prime reason, being young & with less earnings, with meager & scarce money, you would like to mainly ensure that, in case of an unfortunate event, term plan would take care of your family in your absence.

Notwithstanding, by the time you reach 60 years of age, picture would be something non-identical & discrete.

As majority of your future financial obligations would have been fulfilled by then.

You probably would have built a nice retirement corpus, your kids would have been settled & your wife won’t really need to depend on a term plan. Primarily, post 60 years of age your family would probably NOT need a term plan in first place to begin with.

It’s recommended to take a term plan at least till the age of 60 so that in case anything happens prior to 60 years, term plan would offer financial cover to your family.

Consequently, past 60 years of age it makes No sense & is not recommended, as your family being self-sustained, would have enough money by then, & could sustain on their own.

Please ponder over the fact that, Insurance premium increases with increase in age.

So you will end up paying more premium till the age of 65 as compared to age of 60, especially after the age of 70 years your term plan premium shoot up significantly as an average life expectancy in our country is around 70 years, so it does not make a sense to pay a very high premium by taking a cover beyond 70 years of age.

So ideally you can have a term plan cover between the age of 60 & 65.

That brings me to the next point-

Right selection of an Insurance plan-

Well traditionally life insurance has been sold by agents, but unfortunately due to excessive Illicit & illegitimate sale practices prevalent among agents they end up selling wrong insurance out of greed & term plan is something that you can take only once in your life.

So you want to ascertain that you pick a right plan that fits your requirement.

There are multiple plans available online which certainly could be bought online but the crunch is, people generally, gets very baffled & perplexed with regards to sorting out & picking up the right plan.

Consequently, while entering into a long term relationship, where you’re hard earned money consistently goes in, a right selection of Insurer with credibility & authenticity is extremely crucial!

The last thing any family can endure after suddenly losing a family member, which is a big irreparable emotional blow in itself is the rejection of an insurance claim.

Claim rejected on any grounds can gravely Wrek & jepordize your future financial corpus & subsequently create a dent to Future financial planning & ultimately turns out to be a huge Massive financial blow!

Picking up the right Insurer which fulfills major Relevant yardsticks like CSR, CRR etc is crucial to ensure the future financial security of your family.

It is your job as a sole earner to ensure that your family does not go through that ordeal!

At least you can do your bit.

Consequently they need someone who can mentor & lead them with the right choice of a term plan as per their requirement.

Below mentioned are certain metrics to gain insight & aid you to gauge the credibility of Insurance Company & consequently assist you to pick up the right Insurer for you-

Key parameters to shortlist the best term Insurance plan-

Foremost there are 4 major parameters that you should look for-

Claim settlement ratio-

Claim settlement ratio-

The claim settlement ratio of a life insurance provider is a reliable indicator of its capacity to honor claims.

This should be one of the key parameters that you should check before purchasing a policy from a particular company.

A claim settlement ratio of an insurer is among one of the most significant metric used to gauge its credibility. It helps you get a clear picture of the way claims are handled & settled by the company and its position & credibility in the market.

When buying a life insurance policy, it is relevant to opt for an insurer with high claim settlement ratio.

A claim settlement ratio of an insurance company is the number of claims settled against the overall insurance claims filed/received by the company for a particular financial year.

For instance, a Company received 100 claims and among those, it settled 98, then the claim settlement ratio is said to be 98%. Claim settlement rate of 98% means that out of 100 claims the insurance company had settled 98 claims. The remaining 2% claims were rejected by the Company.

To put it simply-

It basically means what percentages of claims were settled by life insurance company.

It is expressed as a percentage.

The claims settlement ratios of various companies can be found in the IRDAI’s (Insurance Regulatory and Development Authority of India) annual report section.

It is computed by dividing the total number of claims settled by the number of claims received by the insurance provider.

Claim Settlement Ratio = (Total claims approved and paid)/ (Total claims received by the insurer)*100

Example below would give you the further clarity-

For instance,

A life insurance company has received 1,500 death claims for financial year from 1 April 2021 till 31 March 2022. Out of these claims:

The company settled i.e. paid 1450 claims to the diseased family/beneficiaries (legal heir).

The insurer rejected 30 claims.

Decision on 20 claims is still pending i.e. decision on 20 claims is yet to be taken. The pending claims could be due to genuine reasons.

In this scenario, the claim settlement ratio of the company would be (1450/1500)*100 = 96.66%.

The claim rejection ratio or claim repudiation ratio would be (30/1500)*100 = 2%.

The pending claim ratio of the insurer would be (20/1500)*100 = 1.3%.

It is highly recommended to assess the claim settlement ratio of an insurance provider before buying an Insurance product.

Parameter to gauge Claim Settlement ratio (CSR)-

Though the CSR higher than 90% is generally considered a sort of good ratio. A claim settlement ratio higher than 90% is a good indicator, & reflects the insurers reliability & credibility.

But I would suggest insurance provider having a high CSR of more than 95% should be a preferred option.

I personally recommend If 100 claims has arisen, then at least 95 or more than 95 should be settled ,so the ideal criteria should be above 95%.

Furthermore, If a company has more than 95% CSR & is also offering a distinguished value product, then it is prominent & more than welcome.

Though the top players offer more than 99%CSR

Needless to say, higher the claim settlement ratio better it is. Consequently, a high claim settlement ratio indicates the company’s willingness to settle claims.

The settlement ratio is a very reliable yardstick indicating if a certain insurer is dependable & trustworthy. A favorable ratio indicates that the insurer is right for you.

Points to be noted-

Practical Insurance Hacks-

In general, the CSR ratio could be possibly twisted i.e. skewed, prejudiced & biased based on multiple aspects.

So, your research should not be confined & limited only to the claim settlement ratio when deciding on an insurer. You need to filter product on few other relevant yardsticks as well. So several other criteria’s as well needs to be taken into consideration before picking up the right insurance product.

That brings me to the next point-

Number of policies-

Another parameter is number of policies as against the claims that have arisen.

Apart from the premium, number of policies on which claims have arisen, also serve as an important metric to gauge the surge & rise of the insurance industry both state wise and nationally.

It gives you a clear insight as regards, to company that is most widespread, has covered major chunk of customers & is dominant contender in insuring people. Majorly, number of policies gives us insight about the number of people that have been insured by the insurer in particular area.

Data regarding Number of policies helps in the comparison between insurers who are leading predominant player & ruling the market in insuring people and companies which are lagging.

No of Policies on which claims have arisen should be greater than 5000 policies in a year.

No of claims should be at least greater than 500 crores.

2)Amount of policies-

Next parameter is the premium amount of total number of policies.

The motive behind analyzing the amount of policies is, in case the amount of premium charged by company is very less & in case if in any particular financial year, a large amount of claim arises, then is the company stable enough financially, to settle the claims, if not then there’s huge possibility of the company being in a arduous & burdensome position.

Ideally company should be handling at least more than 500 crore of claims in a financial year.

By applying these 2 criteria you will be able to filter out India’s Top 5 companies that are handling the highest number & amount of claims.

These are the two basic filters.

By Putting these two filters Top 5 companies, cropped up to the surface. So among 23 companies only 5 popped up & emerged by applying the above 2 benchmark.

Company No of policies Amount of policies

LIC 933889 18295

HDFC LIFE 16639 1037

ICICI pru life 14518 1505

Max Life 19922 886

SBI Life 31855 1399

3)Claims Rejection/Repudiation Ratio –

How many claims were rejected upfrontly by an insurer. Ideally claims which are upfrontly rejected should be less than 1%.

Nondisclosures.

Partial disclosure and

In correct disclosures

Of noteworthy and material facts are the prime grounds for claims repudiation.

Nothing is as traumatizing as the death of a loved one. An insurance company can further add to the agony by repudiating the insurance claim filed by the family.

Before moving towards next point lets understand why claims are rejected in first place to begin with-

Y claims are rejected…….

Let’s delve into claim rejection-

Rejection of Claims-

Regulated by IRDAI Companies are obligated & bound to consider genuine claims.

Usually there’s a valid justification for turning down a claim, companies don't repudiate insurance claims without justified & technical grounds.

Many insurance companies have to remove fraudulent cases which leads to a decrease in Claim Settlement Ratio. This cannot be blamed on the insurer as it is vital to eliminate such frauds

Claims are generally rejected due to misrepresentation, fraud, or it can also be decision pending on few claims by Insurance providers.

Generally claims rejected on group policies are higher, due to slight delays in intimation of claims on technical grounds Unless & otherwise it is proved by the claimant, certain unavoidable circumstances prevented them from abiding by policy conditions, like intimating within the time-frame.

Company conducts a tight scrutiny as per the standards norms & protocol to ascertain the validity of the claim and ensure that the claim is not hoaxed or forged.

After ensuring the validity of the claim, the requisite amount is disbursed to the concerned beneficiary/ nominee or the legal heir.

3)Claim settlement amount ratio-

It is calculated as the total amount of claims received against the total amount of claims settled. Its relevant to know how much amount of claims has been settled by the company in a financial year.

Its very crucial to gauge Claim settlement amount ratio because,

Generally companies are quick to settle lesser amount of claims, but are reluctant to disburse massive amount claims.

So claim settlement amount is another facet to ponder upon.

As a life insurance company may have a higher percentage of claim settlement by number of policies but a lower percentage when it comes to paying the benefit amount.

If average amount of claim settlement is very less, it means years before company might have sold some traditional plans, which are usually passed by default.

4)Claim rejection amount ratio-

How much amount of claims has been rejected. Does company reject massive amount claims.

At times, not all but certainly few companies are quick to settle small amount claims but are reluctant to settle the claims which are enormous in amount.

Lets say, For instance, a company received 100 crore claim. It’s vital to find ,Out of 100 crore claims how much claim has been rejected amount wise.

Finally,

Apart from these 4 prime basic relevant filters, there are few other aspects, as well that needs to be looked upon-

5)Claim settlement time/Policyholder servicing turnaround time-

Claim settlement time, along with Policyholder servicing turnaround time is the other aspect that needs to be considered.

You also need to look into the average claim settlement time taken by the company.

Once the claim is raised & documents submitted, after verifying documents within few days, claims are settled.

Well in time settlement is a great indicator of the efficiency mechanism of the Insurer. It is best to opt for a company that settles claims in a most prompt & expedient manner as it ensures that your dependent doesn’t face any hassles amid claims settlement stage.

Anywhere within 30 days is good and anything less than 20 days is excellent.

Though Insurers are super fast & quick in claim settlement, with all the documents in place, the claims are even settled within 15 or even 7 days, further online claims are settled within 24 hrs.

6)Persistency ratio-

You should refer to the persistence ratio of an insurer to know how persistent policyholders have been in renewing their policies. It reflects the policyholder’s trust in the products and the services offered by the insurer.

The higher the persistency ratio, the more reliable the company is among policyholders.

Other Relevant Metrics-

Also delve into Quality of services offered and customer relationship management Of the insurer. Ensure to check when the insurance company was established, the various customer service channels provided by the insurer, the number of branches across the country, grievances solved ratio of the insurer, awards won, etc. are few of the other metrics to gauge upon.

You have to find out about the various policies and covers offered by the insurance company. You need to know how their customers review them in terms of services and customer relationship management.

Checking these factors will give you a good a good indication of the insurer’s dependability.

Practical & Handy Insurance Hacks-

1)Another important parameter to shortlist the right insurance plan is do not just look for low premium to shortlist the insurance provider.

Yes, don’t just go with the insurance plan with lowest premium. It’s NOT canny & far-sighted approach to go about.

Buying an Insurance plan is a once in a lifetime decision.

Term plan is something that you take once in your life & you have long term relationship with your insurance provider, as long as 30, or may be 40 years, hence you would like to associate with company that is trustworthy & reliable, & that would exist even after 50 years from today, so don’t just look at low premium to shortlist a plan.

It’s better to go with long lasting top companies with a relatively high premium, offering superior quality products rather than capricious & fickle companies with cheap premium.

As sense of safety & reliability is more crucial than saving some money on future premiums.

You should, ideally, opt for a policy that fulfills major relevant criteria, offers you significant coverage at an affordable cost.

2) Answer honestly all questions in proposal form yourself.

Fill up the proposal form on your own, rather than depending on the life advisor to do so. Don't leave it to the agent.

Your intent of taking insurance should be right (for meeting your needs).

Financial Disclosures & Medical Disclosures should be right.

Incorrect disclosures, of personal details, particularly information related to medical status, often lead to claim repudiation.

Yes, Claims are generally rejected only if a buyer hides relevant information while filling the proposal form. Typically, the information hidden relates to poor health, habit’s related to smoking & drinking or it can be related to other insurances that a person already possess.

If the company suspect any dicey situation or find a flaw, company will present & put forth all possible reasons that led the policy holder hide facts at proposal stage to refuse & disallow the claim.

Be genuine while filling in the proposal form & most importantly fill it on your own.

Never underrate & belittle the potency & expertise of an insurer to excavate & dig out a flaw, an ulterior motive behind a forged claim. They are well-equipped to unearth the hidden agenda & intent & further invalidate &repudiate the claim.

They can put forth all possible rationale, if they find one, to dismiss & debar the claim.

Be fair & genuine while making all relevant disclosures while filling in the personal material facts in your proposal form, in order to expatiate claim settlement process & to make it a hassle free affair.

3)Make it quick & expedient….Go Online-

Though Policies are generally offered through both online & offline channels.

Avoid the hassle of going all the way to insurer’s branch, practiced previously by traditional policyholders.

To Ease out Premium Payment mechanism & make it more hassle-free and time- efficient. Save your time & money. Opt for an online mode rather.

It is advisable to go with online channels, either directly through the insurer’s official website or through trusted third-party insurance websites.

Conclusion-

When buying life insurance, you need to check various aspects before deciding on which company is right for you. You need to figure out & gauge various policies and covers offered by the different insurers & if they fulfill the requisite relevant metrics & suit your needs.

Thankfully over the last few years there is an increasing awareness among masses concerning life insurance.

Most importantly people have now realized one should simply not mix insurance & investments.

Top 3 handpicked Term Insurance Plan for 22-23-

Based on the TOP 4 filter & metrics i.e. Number of policies, amount of policies, Claim Settlement Ratio, Claim Repudiation ratio, Claim settlement amount , claim rejection amount & few other relevant benchmark Top 3 plans that cropped up & loomed on the surface , fulfilled all the relevant yardsticks & emerged as a clear cut TOP contenders are-

HDFC Life

Max Life

LIC

1)HDFC Life Term Insurance-

Company No of Policies Claim Amt Avg Claim CSR CRR Crores Amt

. HDFC LIFE 16639 1037 623373 99.40 .49

Claim Settlement Ratio 99.40%

Death Benefit Paid For 1037 Policies

Inception 2000

Claim Rejection Ratio .49%

HDFC Life Insurance Company is a collaboration between Standard Life Aberdeen PLC and Housing Development Finance Corporation Limited. It began its operations in the year 2000.

Established in 2000, with 5.4 crore lives insured & 200,000 crore lives insured it is one of the best & top players among its contenders.

Easily accessible services With 390 branches across, the country and additional distribution touch points and banc assurance partners.

A staggering Claim Settlement Ratio (CSR) of 99.40% in FY 2021-2022 is another indicator of the company’s efficient, a hassle-free and smooth claim settlement mechanism.

Further, the company was awarded many accolades and awards for its continuous contribution to the Indian Insurance Industry.

Best Life Insurance Company” by BFSI in the year 2018.

It has further won the 'Best Governed Company Listed Segment: Large Category' at the 21st ICSI National Awards for Excellence in Corporate Governance.

On top of it, is also recognized as Super brand 2021,which reflects company’s reliability, credibility & its popularity among masses.

2) Max Life Term Insurance-

Company No of Policies Claim Amt Avg Claim CSR CRR Crores Amt

19922 886 444519 99.35 .64

Claim Settlement Ratio 99.35%

Death Benefit Paid For

Inception 2000

Claim Rejection Ratio .64%

Max life Insurance company is a joint venture between Max Financial services limited & Axis bank limited, is amongst the top life insurers in India.

With ₹1,174,515 Cr Sum Assured in force & ₹107,510 Cr assets under management & a customer base of more than 32 lakhs, it is one of the fastest-growing insurance companies in India & is among the top 3 contenders

With one of the highest & most impressive claim settlement ratio of 99.35%, Max Life has been awarded as ‘Claims Service Leader’ and ‘Excellence in Claims Service’ by CMO Asia Awards.

It offers high-quality customer services, with a a wide portfolio of products multi-distribution channels and 269 offices across the country & a strong online presence. Its popular among masses for its superfast & expedient customer services & is the fastest & largest growing non-banking private sector insurance brand in India.

3)LIC Term Insurance-

Company No of Policies Claim Amt Avg Claim CSR CRR Crores Amt

LIC 933889 18295 195901 98.62 .69

Claim Settlement Ratio 98.62%

Death Benefit Paid For

Inception 1956

Claim Rejection Ratio .69%

One of the largest & oldest Government owned life insurer in the country, Established in the year 1956, backed by the Central Government with over 66 Years of Trust. It is one of the most trusted & preferred brand among more than 75% of Indians & is one of the leading & prominent players in the country.

Life Insurance Corporation (LIC) currently holds more than 75% of the total Indian Life Insurance market as against 25% held by all the 23 private players & is the most wide reaching, popular & favored among masses. All the LIC policies are guaranteed by the Central Government which offers buyers a sense of security, as major chunk of population have their hard-earned money in safe place.

The higher LIC CSR depicts that, out of 100 claims filed, 98.62 claims were settled successfully in the FY21-22 , with total assets under management of INR 3,111,847 crores (USD 450 billion) & still maintains huge & largest customer base of over 29 crores policyholders, which is the highest among all insurers along with 2048 branches across the country along with an Unparalleled Customer Support available 24X7, it is one of the most predominant & preferred insurance player.

As compared to the other 2 private contenders MAX & HDFC with average cost of premium, LIC relatively charges higher premium, as it relies primarily on its agency force to sell its policies.

So, if you prefer average cost of premium, than you can think of other two private insurers & pick up a plan that suits & fits your needs.

Finally, all the 3 companies compassed all the relevant yardsticks & are at par with industry standards & are major, leading, fastest growing & top contemporary players of the industry.

So, that is all about today’s blog. I really hope you gained some insight on the topic.

I have much more to share , if you have any further query or challenges or if you want more of my input on this or any topic of your interest, drop a comment & I will definitely come up with the blog giving insight on the topics inquired.

Bye for now. I will see you in the next blog.

All You Need to Know About Equity Linked Saving Scheme.....

Tax Benefit

Shortest Lock In Period

ELSS

Potential For Superior Returns Than FD & PPF

SIP Option

Save Tax + Build Wealth = ELSS

The ultimate pick for Tax benefit & wealth creation!

&

A perfect fit for Tax & Wealth conscious investment wallet!

ELSS potentially plays a significant role in your portfolio. These equity-linked instruments have the potential to offer higher returns and are a perfect choice for a long term investment.

Contrary to other 80 C instruments which are mostly fixed income products an ELSS is a pure plain equity product which means it is regarded more as a “wealth creation product” rather than a “savings product”.

One of the best tax-saving options, Investing in ELSS funds is an excellent way of planning your future along with saving on taxes.

ELSS, an acronym for Equity Linked Savings Scheme, is a Flexi cap fund (mutual funds which can invest in large cap, mid cap & small cap as well & that too without any restriction) diversified equity mutual fund scheme, which offers dual benefit of "wealth creation" & "Tax benefit".

In short, Crux………. in 3 Sentences..

An open ended Mutual Fund in which 80% of the assets are invested in stocks. The portfolio of these funds is dominated by equity-linked instruments like equity, shares, & its main objective is to offer capital appreciation to the investor.

They are the only class of mutual funds that are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. These schemes not only offer tax benefits but also aids in Saving adequate sum of Tax .

These schemes have a lock in period of 3 years.

High Lights-

ELSS funds are the only tax-saving instrument with the potential to offer Inflation-beating returns.

ELSS is a good way to get exposure of equity market.

The portfolio of these funds is majorly dominated by equity-linked instruments such as shares & primarily consists of equities, while they have some exposure towards mid-cap & small cap securities as well.

Much like all equity funds, ELSS does follow a volatile path, to progress which then compensates for potentially higher returns to investors.

This increases the risk part of ELSS funds, but in long horizon investments in ELSS offer rewards as well. So higher the risk, higher the reward.

If you are looking for a potentially superior returns along with Tax benefit than ELSS could turn out to be one of the ideal option.

Types of ELSS

ELSS funds are broadly categorized into -

Dividend funds and

2. Growth funds.

Growth Fund-

Growth Fund is long-term wealth creation platform for investors where the full value of the fund is realized at the time of redemption. Not only dividend but money is compounded & reinvested.

Dividend fund is further divided into 2 sub-categories –

Dividend Payout and

2.Dividend Reinvestment.

1.Dividend Payout-

Under the Dividend Payout option, you will receive tax-free dividends.

2.Dividend Reinvestment-

In the case of Dividend Reinvestment, dividend received can be reinvested; your dividends will be reinvested as a new investment. Once you reinvest the lock in period would start from reinvestment date. The lock in period grows as you reinvest.

How ELSS works………In a Nutshell !

Generally we look at mutual funds as an investment option, but in ELSS we get twin advantage of "wealth creation" along with "tax saving".

ELSS is a tax saving instrument that invests your money into equity-linked mutual funds.

The category of mutual funds invests in shares of companies. Hence the interest received on it is market based.

Money is pooled & collected from investors and put in stocks of companies with potential to deliver superior profits. The profits earned are further distributed amongst the investors.

Since money is invested in stock market so returns are market based & high & so it becomes more preferred, popular & alluring alternative among investors with moderate to high risk appetite.

However, if you wish to get the maximum benefit out of your investment then it is advisable to keep your investments for a longer period.

ELSS gives you the flexibility of choosing a diverse investment portfolio, including large-cap, mid-cap, small-cap, and others.

SIP OR LUMPSUM-

You can invest either lump sum or opt for a periodic payment route Via SIP.

Lump Sum-

A lump sum is a single payment mode. You are required to put in the entire amount in one go. A single sum of money that is paid at one time.

SIP (Systematic Investment Plan)-

The investor has the option to invest small amount periodically, instead of lump sum. The frequency of investments can be monthly, weekly quarterly.

Choice of Funds-

There are No index funds in ELSS category, which means all funds, are actively managed & therefore have their own distinctiveness & characteristics in terms of their investing style which can be growth, value or blended.

The proportion of equity & debt-

ELSS funds may have different investment strategies in context of the proportion of equity and debt held and the level of diversification offered.

Market capitalization -

The level of diversification & concentration in these funds is of course market capitalization based, where some funds focus on large caps while some other funds actively allocate major corpus to mid-cap & small cap space.

In numbers currently the ELSS category has only 33% assets in mid & small caps which is generally the case, most of the times. Some funds have cracked their allocation on mid & small cap which has helped them deliver superior performance.

The lock in period-

ELSS fund has the shortest lock-in period among all tax-saving investment options.

What differentiates ELSS from other funds ......

Funds held under ELSS category have to be held for at least 3 years i.e. 36 months. You can’t withdraw money before 3 years & this 3 year duration is called lock in period.

In simple words, if you invest money in ELSS, you will not be able to withdraw it for a minimum period of 3 years.

So the question arises, if you invest money via SIP then does every installment will have a lock in period of 3 years.

The Answer is YES.

For Instance-

Say, If you start your monthly investments via SIP, from July 22 onwards.

Amount invested in the month of July 22, installment of invested amount of July 22 will be locked in for a period of 3 years from July onwards, the installment of August will be locked in for a period of 3 years from the month of August & so on & so forth.

Comparison of a lock in period of all saving investment product.......

Product Lock in

NSC 5 yrs

Tax Saving FD 5 yrs

PPF 15 yrs

NPS Fully withdraw able

only at retirement

ELSS 3 yrs

With reference to Tax FD with Minimum lock in period of 5 years, NSC with 5 years, PPF 15 years with some exception of course, ELSS has a very short lock in period of just 3 years.

Comparatively, the ELSS category has the shortest lock in period with all funds within this category & requires a minimum holding of 36 months, before these units can be redeemed.

Treatment of Lump sum Investment-

Transaction Type Investment Date Eligible date for redemption

Lump sum 1st Jan 20 1st Jan 2023

If you buy 100 units in any ELSS funds on 1st of January 2020, then you can redeem these 100 units only after 3 years i.e. on or after 1st of January 2023.

Treatment of SIP Investment-

Now, one confusion that many investors have, is on treatment of SIP in the ELSS category.

Example below will help you with further clarity-

Transaction Type Amount Investment Date Eligible date for redemption

SIP 1000 1st Jan 20 1st Jan 23

SIP 1000 1st Feb20 1st Feb 23

SIP 1000 1st March20 1st March 23

With reference to the above table,

For instance, we are doing SIP of R.s1000 every month. So Rs1000 is invested on the first of January, another 1000 on 1st of February, then the next 1000 on first of March & so on.

The thing to remember with SIP is that, each transaction & each installment needs to be treated independently for calculating the 36 month or 3 year holding period.

This means the units we receive against our purchase on 1st of January 2020 would be redeemable on the first of Jan 23 as per the 36 months holding period rule & by the same logic the units received on the 1st Feb2020, so the installment will be redeemable on 1st Feb. 2023 & that’s pretty much, how the cycle goes.

Example 2

The below example will help you better understand the category and enable you to resolve some of the most common prevalent queries, as regards redemption of SIP units.

Treatment & Redemption of SIP units-

In this scenario,

For Instance, say a person invests a lump sum of R.s. 50,000 on 1st April 2020 and the NAV (cost of one fund unit) is R.s. 50 at the time.

So, he will receive a total of 50,000/50 = 1000 units.

Now, since the minimum lock in period of ELSS is 3 years, these units cannot be withdrawn before 31st March 2023.

Things become a bit distinct and ticklish when you choose to invest in ELSS in the form of a Systematic Investment Plan or SIP.

SIP-

In the case of SIP, the investor does not invest a big sum and instead chooses to put in a fixed amount every month for a fixed period.

For Instance,

Say a person invests 5000 R.s. Per month for 12 months. You start investing on 1st April 2020. In the first month, you get 100 units at a NAV of R.s. 50. In the second month, you get 125 units at a NAV of R.s. 40.

Subsequently, The NAV surge to R.s. 60 resulting in a total of 83.33 units. In three months of investment, you will receive a total of 308.33 units at an investment of R.s. 60,000.

Each individual unit will have a lock-in period.

You can withdraw these units only after their respective 3-year period is over.

For example:

100 units earned on 1st July 2020 can be redeemed after 30th June 2023.

125 units received in the month of August 2020 can be withdrawn after 31st July 2023.

83.33 units received in the month of September can be redeemed after 31st August 2023.

Similarly, other units received over subsequent months of investment can be withdrawn only after the completion of the respective lock-in period.

Tax benefit offered-

Investing in ELSS funds are an efficient way to save taxes when compared to the other investment avenues available under Section 80C of the Income Tax Act, 1961.

An ELSS is the only kind of mutual fund eligible for tax benefits under Section 80C.

There is No Upper Limit to the amount that can be invested, while the minimum investable amount varies across fund houses.

Investments made in an ELSS funds are eligible for tax deduction &Maximum deduction under section 80 C is up to R.s 1,50,000.

So,

A maximum of 1.5 lakh is what becomes eligible for a tax break as per the income tax rules.

In fact this 1.5 lakh is the aggregate number, which means this section 80 C deduction includes your investment in other tax saving instrument as well, like provident fund, national saving certificate, life insurance premium and a few more products.

Tax Benefit-

30% Tax Slab…………………..R.s 46800

20% Tax Slab…………………..R.s 31200

Income Tax Rate 30% 20%

Income Taxes Saved 45,000 (R.s 150000 * 0.3) 30,000 (R.s 150000 * 0.2)

Health and Education cess @4% 1,800 (R.s 45,000 * 0.04) 1,200 (R.s 30,000 * 0.04)

Total Taxes Saved R.s 46,800 R.s 31,200

So, Investor can Save up to R.s 46800 assuming you come under 30% tax slab & assuming you invest entire 1,50,000 amount. This is the maximum amount.

However, you can invest more than this designated amount, but the excess over R.s 1.5 lakh will not qualify you to avail the tax benefits as per the provisions of Section 80C.

The returns generated from ELSS are the dividend distribution tax (DDT) and tax on Capital Gains (LTCG)-

Tax Treatment on Long Term Capital Gain(LTCG)-

Funds held under ELSS category have to be held for at least 3 years.

Hence any profit made on redemption (sale) of those units will be deemed as LTCG Long Term Capital Gain.

The Long-Term Capital Gains on ELSS are tax-exempt up to R.s 1 lakh.

LTCG attracts a tax of 10% which is over & above the aggregate limit of 1,00,000.

So, The gain which you earn on ELSS are tax free to the extent of R.s. 1 lakh in one year. If gain is exceeding beyond one lakh, the gains would be taxed at 10 per cent.

Meaning, Whatever you will earn above 100,000 on that 10% capital gain tax will be implied.

So,

Up to 100,000 Tax Free

Over & Above R.s. 100000 10% Capital Gain Tax

Long Term Capital Gain (LTCG) Tax on ELSS-

LTCG Tax on ELSS up to Rs 1 lakh NIL

LTCG Tax on ELSS above Rs 1 lakh 10%

Tax Treatment on Dividend-

Any dividends received from your ELSS investments are added to your overall income and taxed as per your income tax slab rate.

Comparative Analysis of Tax treatment of contemporaries like PPF & Fixed Deposit-

As compared to tax saving fixed deposit where the interest earned is taxable as per the income tax slab which can be as high as 30% & on the other side though PPF which offer tax free interest rate but has a 15 year lock in period.

In that context ELSS with just 10% tax on capital gain exceeding the R.s 1,00,000 is still a very good deal.

Snap shot-

Tax rules for ELSS are as under-

No short term capital (STCG) gain due to lock in period of 3 years.

Long term capital gain(LTCG) of up to 1 lakh is exempt from taxation per year.

Gains above 1 lakh are taxed at 10%.

Moreover with reference to the post tax returns as well, ELSS rose as a clear cut winner.

LIQUIDITY OPTIONS …….How to redeem ELSS before 3 years.....

How it works & how beneficial it can be if you need some immediate money-

Does ELSS offer Liquidity……can money be withdrawn from ELSS before three years-

In spite of having a lowest lock in period among all the tax saving instruments, many investors seek answers to any possibility of withdrawing it before 3 years.

The simple answer to that is NO

You cannot withdraw from ELSS funds before 3 years.

In ELSS There are no provisions to make a premature exit.

ELSS investments do not provide the option to withdraw the invested amount before the end of the 3-year lock-in period.

All ELSS mutual funds come with a mandatory lock-in period of three years. You cannot withdraw your ELSS investment within the three years from the date of investment.

Furthermore, there are no provisions of paying the penalty and redeeming your units within this period.

Furthermore, It is not the option to explore if you need to park some emergency short term funds.

That brings me to the next point-

LOANS AGAINST ELSS (LAMF)-

In case the mandatory lock-in period of 3 years is not yet over on your ELSS funds, & you are in urgent need of funds then you can opt for a loan against ELSS, also known as LAMF.

They usually come with short tenures helping you meet the temporary financial gaps.

You can get a loan against your Mutual Fund holdings from banks and Non-Banking Financial Companies (NBFCs).

The loan amount depends on the size of the portfolio and the category of mutual funds. Banks & Many other financial institutions offer loan facility with a loan amount equal to 50-60% of investment value.

So, generally one can avail loan 50-60% of total amount invested in equity funds.

The lender can usually give you loan up to 50-60% of the value of securities at the time of applying.
Loan comes with a very low interest rate of 9-10%.

Some lenders will let you keep the funds as collateral to take a loan.

The tenure of the loan is usually up to 1 year.

In addition to, meeting your urgent financial needs, Loan Against Mutual Fund further aids you to earn tax benefits as well.

What sets ELSS apart from other category fund & other Investment Avenues-

Its first step towards building equity as an asset class in your portfolio.

ELSS funds are a good option for investors with a long-term investment horizon looking to seek exposure to the stock markets and save taxes.

The equity exposure of the ELSS funds gives you an opportunity to earn excellent returns by staying invested in, for at least five years.

It is one of the best & of its kind investment options that offer tax benefits with potentially higher returns and shortest lock-in period (3 years).

An ELSS fund gives you the triple benefit of professional fund management, tax deductions and wealth creation, over time.

There is No capping on the amount invested with ELSS.

You may invest any amount of your choice depending on your preferences & convenience in an Equity-Linked Savings Scheme.

However, the tax benefits are capped at R.s 1,50,000 a year.

Hence forth, investments only up to R.s 1,50,000 a year are tax-exempt under Section 80C of Income Tax Act, 1961.

Furthermore, there are multiple other aspects as well that sets its apart-

Stay Invested In ELSS with a long term perspective-

Though you can redeem your Equity Linked Saving Scheme after 3 years, it is advisable to remain invested for a longer horizon. Longer duration ensures higher returns. Longer the duration higher the returns.

So you need to be cognizant about your long-term financial goals and risk-taking capabilities before investing.

ELSS comes with the advantage of a shorter lock-in period and professional fund management, which can lead to wealth accumulation.

Professionally Managed-

ELSS investment portfolios are managed by trained ,qualified and experienced finance professionals called fund mangers who’s expertise enable investors to protect the’ money and ensure high returns which ultimately can lead to wealth accumulation.

Better option than all other 80 C Investments –

ELSS is a gateway of a huge relief for investors seeking tax rebate.

An ELSS is the only kind of mutual fund eligible for tax benefits under Section 80C.

ELSS Funds are a only class of mutual funds that are eligible for tax deductions under the provisions of Section 80C of the Income Tax Act, 1961.

By investing in ELSS, you can claim a tax rebate of up to R.s 1,50,000 a year and save a good sum of R.s 46,800 a year in taxes (provided you invest entire 1,50,000 in ELSS & fall under 30% tax bracket).

In spite of returns being taxed, ELSS emerge as a clear cut winner, with highest post-tax returns than any other contemporaries under Section 80C investment avenues such as Public Provident Funds (PPFs) and ULIPS.

Moderate Risk-

Unlike equity it does not have high risk, so it is comparatively safer & so we receive higher returns along with moderate risk.

Flexibility-

ELSS gives you the flexibility of choosing a diverse investment portfolio, including large-cap, mid-cap, small-cap, and others.

SIP option-

Nominal amount to start ELSS can be as low as ₹500 monthly. Minimum investment is as low as R.s 500 with No upper limit.

Protection in times of volatility-

Although ELSS funds have the highest potential to generate returns these returns come with an element of risk. The reason, equity being a risky asset class is exposed to volatility, uncertainty and market fluctuations.

Volatility scares investors.

It acts as a strong shield to weather the volatility associated with investing in stock markets. The scheme not only derive gains & returns from the market highs but also pacify the impact of the market lows.

You have the option to make lump sum investment or go Via SIP mode, which further mitigates the risk of timing the market.

Moreover, if investments are made via SIP, it can further help you beat the effects of volatility.

Returns-

ELSS continues to be a predominant & most influential league in the mutual fund space with AUM of over 135000 crores across 1.27crore folios which makes ELSS one of the sizeable & massive class within equity oriented funds.

Given that ELSS invests predominantly in the equity instruments, the returns are much higher than most contemporary investment options along with tax-saving benefits in the longer run.

ELSS Mutual funds tend to offer better returns than most of the equity funds.

Generally ELSS delivers 13-20% return on an average. An average return offered by the ELSS category over 10 years is around 15%.

An examination of top schemes shows that a category has done extremely well over the years.

Comparative analysis of the ELSS funds performances versus benchmarks Index returns over a 5 year 10 year 20 year horizon, shows that these funds have been handsomely beating the indexes when we look upon their returns over a longer time frame.

Most apt point of reference would be to look at a 10 & 20 year performance which has been good for the ELSS category, overall investing in ELSS funds should be done with the long term perspective which not only helps building wealth but also helps investors riding the volatility, which is often associated with market linked instruments.

Historical performance shows that ELSS generates about 15% over ten years and beyond. As compared to a mere 8% return offered by PPF & 10-12% of ULIP it is a significant gain.

It generates 2x more returns than FD/PPF.

ELSS has emerged as an ideal choice for an individual willing to invest for a medium to long term horizon.

Comparative Analysis with Contemporary 80 C Instruments-

80 C Instruments Indicative reasons Lock in

ELSS Market Linked(12-14%) 3 yrs

FD 6-7% 5 yrs

PPF 7-8% 15 yrs

EPF 7-8% 5 yrs

NSC 7-8% 5 yrs

NPS 7-8% Until Retirement

ULIP Market Linked(12-14%) 5 yrs

Sukanya 8%

Samridhi Yojna

Furthermore, looking at the corpus generated at the end of the investment term, along with the shortest lock in period, it is evident that ELSS emerged as the clear cut winner.

In terms of Flexibility ………….ULIP versus ELSS-

In the context of comparison-

Besides fairing well in terms of indicative returns, it also excels in context of flexibility versus ULIP

ULIP doesn’t offer the flexibility of ELSS.

ULIP might possibly generate returns similar to that of an ELSS in the longer haul.

In the case of a ULIP, if you are not happy with the funds performance, you can only make a shift and adjustments with in funds offered by that particular ULIP policy itself, as you are bound to remain invested to that particular ULIP policy.

But this is not so in ELSS, In case ELSS, is not generating fair returns then anytime one can switch to another fund as one is not bound to remain invested in that particular fund.

ELSS offers quite well diversified portfolio gives you the flexibility of choosing a diverse investment portfolio, including large-cap, mid-cap & small-cap.

Overall Comparatives Analysis-

Comparison PPF NPS NSC FD ELSS

Risk Low Moderate Low low Moderate

Lock in period 15 yrs 60 yrs till 5 yrs 5 yrs 3 yrs

retirement

Return 7-8% 7-8% 7-8% 6.5-7.5% 15-20%

Tax Benefit 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000

Return Taxable Free Taxable Taxable Taxable Tax free till 1,00,000

partially after that 10% tax on balance

amount

Historical performance reflects that ELSS generates about 15-20% return & scores over other contemporaries under section 80 C when compared to a mere 8% returns offered by a PPF, 6-9% by FD,8.5% of EPF, 10% by NPS & ULIP & mere 8% by Sukanya Samridhi Yojna and has outperformed all the counterparts with a significantly fair margin & has as springed up as significant investment option for investors looking for superior returns, lowest lock in period, professional fund management by experts along with tax benefit.

So, with reference to multiple parameters be it indicative returns, lock in period, flexibility, taxation benefit, ELSS has emerged as a clear cut winner, as it fairs well in almost all aspects when compared to its contemporaries.

Practical & Handy Insights-

Things to know about ELSS before you invest-

The Long-Term Capital Gains on ELSS are tax-exempt up to R.s 1 lakh.

Any gains made from ELSS is taxable at the same rate as your other income. Any dividends received from your ELSS investments are added to your overall income and taxed at your income tax slab rate.

You can continue to invest in this scheme even after the completion of the lock-in period of three years.

Investing at one go is not the right strategy, the best approach to deal with market volatility is to opt for systematic Investment plan(SIP).

It is critical to assess the risk of the scheme before investing in it. So consider Risk -Adjusted return.

Apart from above mentioned points, there are further other aspects as well that you need to know-

Investors with shorter horizon-

If your investment horizon is only 3 years, & you are looking for guaranteed returns in a short time, then you should NOT go with ELSS consider some other investment avenue.

The lock in of 3 years helps fund managers to take long term bets that enables them to play out at their own pace.

As it is advisable to remain invested in ELSS with a long term perspective of at least 5 years in order to ensure better returns.

Ideal time horizon for reaping benefits under ELSS is 5 years.

Is ELSS guaranteed?

As ELSS fund value is based on market performance, even though ELSS yields high return potential, these high returns are not guaranteed.

Investing in equity can be a risky proposition but also rewarding. Hence, investors with a moderate to high-risk appetite should consider investing in an ELSS scheme.

The risk involved with ELSS is higher when compared to a fixed deposit or PPF, but undoubtedly has the potential to deliver elevated profits!

If you want to go for long-term investment which is aligned to your financial goal or wealth creation perspective then, ELSS might be a good option!

Investing in ELSS funds is an excellent way of planning your future while saving on taxes!

How to Invest-

If you are running short of time, & want to make it more hassle free & swift.

Mobile APP is the Answer!

Investing in ELSS Funds is super easy & expeditious with the App!

Download Mobile APP.

Install it.

Complete the KYC which is 100% Automated & Superfast.

Tap on the ELSS category & choose the scheme of your choice.

There are multiple funds available under ELSS category to match investor’s consideration & preferences.

On top of it, Mobile App comes with a report card on every scheme, which assists investors track their fund & portfolio performance on a daily basis & aid them in analyzing buy sell strategy.

There are multiple payment modes & options available, to suit investor’s convenience.

Many investors run to somehow gain Tax rebate before the financial year end.

The last minute rush & hassle amid late risers during Tax saving season from JAN to March, which is generally more of a Tax Saving move & intent & less from Investment perspective, which according to me is not the right approach to go about it.

Do not wait for the last minute!

Rather the most prudent approach according to me is to -

Make a smart tax move a year Ahead!

Make a smart tax plan for next year & implement it as soon as possible.

Strategize ways to maximize your gains and optimize tax before the financial year ends on March 31, 2022.

While in hurry of filing tax return, going with the most simple plan like ELSS can be the wise decision.

A perfect fit for Tax conscious investment wallet!

ELSS comes with the upper hand of a shorter lock-in period and professional fund management, which not only gives it an edge over other contemporaries, but it also leads to massive corpus over a span of time.

So, it not just helps you reduce your tax outgo, but also aids to create substantial wealth with that money.

Over the past few years Mutual Funds including ElSS have gained a lot of traction.

The AUM of the Mutual Fund Industry have enlarged from 4.13 trillion in 2008 to 20.86 trillion in 2018. This marks about 5.5 escalation in the span of over 10 years.

The Top performing ELSS funds have outperformed their respective benchmark index over the years!

A Good start for people desiring to explore equity market.

ELSS mutual funds has emerged as the first point of engagement for investors, a launching pad, who intend to venture into stock market. Many equity investors start off their investments in equity-linked funds and then further explore the equity market.

With the correction in stock market, ELSS has further emerged as most preferred & prudent investment option.

It serves multiple purposes, In such scenario, ELSS acts as a savior & comes to rescue,

The only investment avenue under 80C, that gives you relatively inflated yields. So not only you save on taxes but also gather soaring returns/profits.

So tax savings & Investments can go together!

ELSS continues to be the most preferred tax saving option which shows the growing maturity of the Indian investors who now sees ELSS not just as a tax saving tool but also as a wealth building vehicle.

Parameters to Analyze before Investing-

Are you a seasoned investor!

If not……..Do you wonder if you will be able to pick up the right fund for yourself?

The answer is Yes You Can!

Below mentioned tips will enable you to analyze Funds on your own & assist you in picking up the right mutual fund for your portfolio.

You need to align your investments along with your financial goals, risk appetite & the investment horizon.

It is essential to consider all aspects of the funds as well as your investment objective before making any investment moves.

Keep in mind your risk appetite & Choose funds that are a perfect match for your financial objectives & resonates with your long term goals. Investments should be aligned to your financial goals. Use your prudence.

The returns on the ELSS will depend on the quality of its underlying portfolio and how the market performs.

There are few parameters to analyze if a fund is a perfect fit for you. You can analyze which Mutual Funds to pick considering these parameters.

1)Funds performance -

The most significant & initial aspect that any investor would look for, in a fund is its performance over the years.

Its long-term performance. It reflects the funds resilience to withstand market cycles, the highs & lows.

The performance of the fund contrary to its benchmark should be the criteria for consideration.

The quantum of excess returns over & above the benchmark returns is known as funds Alpha. One should look for a positive Alpha in a fund.

It is recommended to compare the returns of particular fund against the returns of its benchmark index. If the fund has consistently outperformed the benchmark index, then you can certainly go for it.

2)Historical returns-

Historical returns are the returns generated by the fund over a period of time. It helps to predict & forecast the future returns of a fund.

The most important aspect of historical returns is its rolling returns. Rolling returns is the best measure of a fund's performance, which basically means how consistently the fund is providing you returns. Rolling returns is consistency of returns.

Rolling returns are generally used to analyze the historical data and give a clear picture of the performance of the mutual fund.

A recommended fund is one which has delivered consistent & stable returns over a span of 5-10 years.

3)Asset Under Management-

AUM (Asset Under Management) means the total market value of investments that the fund handles. AUM is the sum of the all of the investments managed by a fund. Total amount of assets managed for all Investors.

Simply put,

It refers to how much investors money, the fund house is managing.

The funds with higher AUM, seems to be more trustworthy & more popular. It reflects the size of the business.

The AUM of the fund is a good indicator of its popularity. A fund with a high AUM means a lot of money has been invested in it, and investors like it.

The higher the AUM, better it is.

4)Portfolio turnover ratio-

Portfolio turnover ratio simply means how many times the portfolio manager is buying & selling the stocks in MF Portfolio.

Higher the portfolio turnover ratio, higher the buying & selling of securities & it would attract higher transaction charges in form of brokerage & fees.

Higher the portfolio turnover higher the expense ratio. Consequently higher portfolio turnover ratio reduces the Net returns.

So I recommend lower Portfolio turnover ratio.

5)Expense ratio-

The expense ratio is the annual fees & charges, that a fund house charges an investor for managing their money. It is usually a percentage of total assets and includes transaction charges, management fees, funds service charges & so on.

So if you have invested 10000 and expense ratio is 2%, you would have paid rupees 200 as fees to invest in mutual funds.

Expense ratio reduces the returns received by the investor. So the investor must look into the expense ratio of the funds.

Lower the better.

In order to maximize returns an investor should look for funds with lower expense ratio.

6)Sharpe ratio-

It’s a risk/return measure. The ratio describes how much excess return you receive for the extra volatility you endure for holding a riskier asset.

How much returns the mutual fund is able to generate over & above the risk free return. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance.

Higher the better.

Portfolio concentration- how portfolio is concentrated on the top 10 stocks. Portfolio concentration should not be very high.

Top 2 Handpicked ELSS funds for 2022-23....

The Top performing ELSS funds which have outperformed their respective benchmark index over the years.

1) Quant Tax Plan Direct-Growth

Quant Tax Plan-★ ★ ★ ★ ★

Fund manager(s) – Anikt Pande , Vasav Sahgal

Launch date – Jan-2013

Benchmark - Nifty 500 TRI

Min SIP amount - R.s 500

Type : Open Ended Fund. You can invest any time in this fund.

VRO Rating- 5 ★

Quant Tax Growth Direct- is a scheme launched on 01/01/2013, is an open ended fund & comes with the 5 star rating & has delivered 20.98% average annual returns Since launch.

One of the top performers of the category, with annual returns of 20.97% the scheme has generated excellent returns consistently since inception. Fund has consistently maintained highest rank in the ELSS since last 5 quarters.

The returns of last 1-year are 9.73% .The fund has doubled the money invested in it every 2 years delivered returns consistently higher than most of its contemporaries, with an Excellent Downside Protection & has perfectly Controlled losses during market corrections average.

It is an open ended scheme launched in the year 2000 & its direct plan was launched in the January 2013 & was handled by Escorts mutual fund.

The year 2018 was the turning point for the fund when it became Quant mutual fund, & the fund’s performance has drastically picked up since then.

Fund size- as on 30/06/2022, it has ₹1,370 Crores worth of assets under management (AUM)

Quant Tax Plan Returns-

1-Year 3-Year 5-Year Since Inception

9.84% 40.73% 22.27% 21.07%

The fund has an expense ratio of 0.57%, which is comparatively less than other contemporaries, which indicates funds ability to deliver good returns.

The fund has 99.34% investment in domestic equities of which 57.88% is in Large Cap stocks, 18.61% is in Mid Cap stocks, 12.42% in Small Cap stocks.

The major allocation of the portfolio is towards Large cap which is 60.7% versus 60.4 of category average, 22.69% in mid caps as compared to 19.66% of category average & 12.58% in small caps as compared to 20.3% of the category average.

ALLOCATION BY MARKET CAP

Large Cap 64.07%

Mid Cap 22.69%

Small Cap 12.58%

Other Cap 0%

ALLOCATION BY SECTOR

Services 20.6%

Financial 16.55%

Consumer Staples 13.23%

Healthcare 9.55%

The major portion of the money is invested in Services, Financial, Consumer Staples, Healthcare, Energy sectors. It has taken less exposure in Services, Financial sectors compared to the contemporaries in the category.

TOP STOCK HOLDINGS

State Bank of India 7.41%

ITC Ltd. 6.62%

ICICI Bank Ltd. 6.24%

Patanjali Foods Ltd. 6.18%

The fund's top 5 holdings are in State Bank of India 7.41%, ITC Ltd., ICICI Bank Ltd., Patanjali Foods Ltd., Adani Enterprises Ltd..

The fund has a standard deviation of 19.77, which is comparatively higher as compared to 17.39 of the category average, which indicates that the fund is highly volatile.

The beta of the fund is .84, slightly low as compared to .89 of the category average, which indicates more predictable performance & there is higher possibility that fund would continue giving similar superior returns.

The funds sharpe ratio is 1.18 versus .58 of the category average, further trenoyr’s ratio is .28 versus .12 of the category average, which indicates better risk adjusted return.

The Alpha of the fund is 17.09, which is quite high versus 2.29 of the category average, which indicates the fund has beaten Nifty returns. So higher the Alpha, the better it is & in case of Quant it is very high.

If anyone would have invested 12000 P.M. Via SIP, after 5 years they would have earned the profit of exorbitant Rs 8.3lakh.

Total investment of R.s = 7.2 Lakh

Current value of investment R.s =15.56 Lakh

Profit = R.s8.36 Lakh

Category Total value Profit Annualized %

This fund 15.54 Lakh 8.34 Lakh 31.37%

Category Average 10.5 Lakh 3.3 Lakh 15.08%

Bank FD 8.59 Lakh 1.39 Lakh 7.18%

Gold 9.39 Lakh 2.19 Lakh 10.58%

Above figures indicate that if the same amount of 12000 would have been invested in bank FD the corpus after 5 years would have been Rs1.39 lakh which is lesser by large margin of 5.17 lakhs than the returns generated by the fund.

Further the same amount in gold would have accumulated the corpus of around2.13lakh which is 6.23 lakh lesser than the said funds return.

So, The above figure are confirmation of the fact that ELSS has outperformed other asset classes with massive margin & superior returns.

2) Mirae Asset Tax Saver fund-

The 2nd best performing fund under the category is Mirae Asset Tax Saver fund.

Fund manager(s) –Neelesh Surana

Launch date – Dec-2015

Benchmark - Nifty 500 TRI

Min SIP amount - R.s 500

Type : Open Ended Fund. You can invest any time in this fund.

VRO Rating-5★

Mirae Asset Tax Saver Direct Growth Fund - is a scheme from launched on 20/11/2015. It's an Open Ended Fund fund of its category comes with a 5 star rating & it has delivered 19.93% average annual returns Since launch. & has Above average performance among peers.

The performance quality of the fund has been excellent & the fund has generated consistent returns since inception. Fund has consistently maintained high rank in the ELSS since last 5 quarters. Its ability to deliver returns consistently is higher than most funds of its category.

The scheme seeks to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity related instruments.

The returns of last 1-year are 6.27%. Furthermore, its ability to control losses in a falling market is above average the fund has very good downside protection & has delivered returns without frequent ups and downs. The fund has doubled the money invested in it every 3 yrs.

Fund Size as on 30/06/2022 The fund has ₹11,495 Crores worth of assets under management (AUM).

Mirae Asset Tax Saver Fund Returns-

1-Year 3-Year 5-Year Since Inception

5.48% 23.45% 16.11% 20.05%

The standard deviation of the fund is 18.15 versus 17.39 of the category average. The beta of the fund is .98 as compared to .89 of the category average, which indicates the fund is highly volatile.

The Sharpe ratio is .66 versus .58 of the category average, trenoyrs ratio is .12 which is similar to .12 of the category average, which indicates the fund has better risk adjusted return.

The Alpha of the fund is 2.76 which is relatively higher as compared to category average of 2.29.

An expense ratio of the fund is 0.57%, which is less than other contemporaries.

The portfolio turnover ratio of the fund is 21% which is 65.63% of its category average which is good t indicates

ALLOCATION BY MARKET CAP-

The fund has 99.11% investment in domestic equities of which 58.49% is in Large Cap stocks, 11.52% is in Mid Cap stocks, 7.1% in Small Cap stocks.

The major allocation of the fund is in large cap with 72.72% as compared to 60.04% of its category average, 17.29% in mid cap as compared to 19.66% of its category average & 9.1% in small cap as compared to 20.03% of its category average.

Large Cap 72.72%

Mid Cap 17.29%

Small Cap 9.1%

Other Cap -0%

The major portion of funds money is invested in Financial, Technology, Energy, Healthcare, Automobile sectors. It has taken less exposure in Financial, Technology sectors compared to other funds in the category.

ALLOCATION BY SECTOR

HDFC Bank Ltd. 7.85%

Infosys Ltd .6.52%

ICICI Bank Ltd. 6.47%

Reliance Industries Ltd. 6.15%

The fund's top 5 holdings are in HDFC Bank Ltd., Infosys Ltd., ICICI Bank Ltd., Reliance Industries Ltd., Axis Bank Ltd.

TOP STOCK HOLDINGS

HDFC Bank Ltd. 7.85%

Infosys Ltd. 6.52%

ICICI Bank Ltd. 6.47%

Reliance Industries Ltd. 6.15%

If anyone would have invested 12000 P.M. Via SIP, after 5 years they would have earned the profit of exorbitant Rs 8.3lakh.

Current value of investment of R.S 12000 = R.s 11.74 Lakh

Total investment = R.s 7.2 Lakh

Profit = R.s 4.54 Lakh

Category Total value Profit Annualized %

This fund ₹11.77 Lakh 4.57 Lakh 19.75%

Category Average 10.5 Lakh 3.3 Lakh 15.08%

Bank FD 8.59 Lakh 1.39 Lakh 7.18%

Gold 9.39 Lakh 2.19 Lakh 10.58%

Above figures indicate that if the same amount of 12000 would have been invested in bank FD the corpus after 5 years would have been Rs1.39 lakh which is lesser by large margin of 3.19 lakhs than the returns generated by the fund.

Further the same amount in gold would have accumulated the corpus of around 2.25 lakh which is 2.33 lakh lesser than the said funds return.

So, The above figure are confirmation of the fact that ELSS has outperformed other asset classes with massive margin & superior returns.

Mail id- askritu@3rwealthmanagement.com

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Can 2024 Lok Sabha election serve as an impetus ….Can we expect a rally this year!

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Considering previous track record-

So expect a rally in subsequent days to come & it will be prudent to keep investing near the lows.

Can 2024 Lok Sabha election trigger Sensex rally this year is something to watch out for!

So, The point is what should be our next move!

A lot of people are turning bullish now & the flaw can be used as a trump card to gain upper hand to buy and cumulate & garner stocks!

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My 3 stock Picks For ...........Diwali 22

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Festive season & its impact on stock market are very much evident!

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1)From Wedding & Celebration Wear Segment-

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Vedanta Fashions Ltd.-

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Key Metrics-

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2) The 2nd segment in the category is-

Bajaj Finance-

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The consumer finance division offers two & three wheeler financing, personal loan cross-sell, salaried loans & co-branded credit cards.

Key Metrics-

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Promoters Holdings-

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The company said its gross NPA and net NPA as of September-end stood at 0.24% and 0.11% respectively, as against 0.39% and 0.24% of the last year’s.

New loans booked during the September quarter grew by 7% to impressive amount of 6.76 million as against 6.33 million in the corresponding quarter of last year.

Excellent Customer segmentation-

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The company has adopted excellent Digital marketing methods-

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Bajaj Finance is undoubtedly a Compounding Machine & a Multi bagger-

What makes Bajaj Finance A Multi Bagger….A Componding Machine…..A Phenomenol stock….A Must Have in a portfolio !

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Let’s delve into its key financials of last 10 years-

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Key Highlights-

Conclusion-

3) Next player from segment is-

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Asian Paints-

Key Metrics-

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Promoters Holding-

Future Prospects-

What’s Next-

All You Need to know about MWPA

Married Woman Property Act 1874

Our motive of buying insurance-​

Creditors right over your Insurance Policy money-

To protect your family against such crisis, MWP Act comes to your rescue!

Crux of section 6 in more simplified fashion-

MWP Act as a trust-

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Who can you name as beneficiaries in Insurance under MWP Act, 1874?

Benefits to beneficiaries-

Prime Features-

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More elaborate interpretation-

Policy under MWP Act is a Separate trust-

Some common prevalent Queries-

Q1)How to get an Insurance Policy covered under the MWP Act?

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Our motive of buying insurance-