Category: Investing

Best Drone Stocks in India 2026

In 2025, with rapid technological advancement, one trending industry that you may want to have in your portfolio is the drone industry. These stocks are becoming popular because of their diversified applications across agriculture, defense, and logistics, among others, and strong government support is being given through initiatives like the Production-Linked Incentive (PLI) Scheme.

In this blog, let’s look at the best drone stocks in India and the reasons to invest in them.

Overview of the Drone Industry

Drone stocks in India have showcased a new emerging sector at the juncture of technology, aviation, and industrial applications. Unmanned Aerial Vehicles (UAV) are pioneering ways to move forward in industries like agriculture, infrastructure, logistics, and defense. People who intend to invest in this sector get lured by the disruptive innovative capabilities and the potential of transformation across sectors that are labor-driven or dependent on conventional methods.

Top 8 Best Drone Stocks in India

The best drone stocks based on market capitalization in 2026 are:

S.No.	Top Drone Company Stocks in India (as per Market Capitalization)
1	Hindustan Aeronautics Ltd (HAL)
2	Bharat Forge Ltd
3	Zen Technologies Ltd
4	RattanIndia Enterprises
5	Paras Defense & Space Technologies Ltd
6	IdeaForge Technology Ltd
7	DCM Shriram Industries Ltd
8	Droneacharya Aerial Innovations Ltd

Market Capitalisation Table of Best Drone Stocks in India

The drone stocks have been listed in descending order based on their market capitalization in the table below:

Company	Market Capitalization (In crores)	Share Prices (In INR)	52 Week High Price (In INR)	52-Week Low Price(In INR)
Hindustan Aeronautics Ltd (HAL)	3,27,710	4,900	5,166	3,046
Bharat Forge Ltd	60,631	1,268	1,626	919
Zen Technologies Ltd	14,486	1,604	2,628	945
RattanIndia Enterprises	7,878	57.0	83.0	37.4
Paras Defence & Space Technologies Ltd	5,995	744	972	401
Ideaforge Technology Ltd	2,315	536	720	301
DCM Shriram Industries Ltd	1,453	167	215	142
Droneacharya Aerial Innovations	154	64.4	152	58.0

(As of 19 September 2025)

Best Drone Stocks in India 2026 – An Overview

The best drone stocks in India are given below, along with a brief overview of the services they provide:

1. Hindustan Aeronautics Ltd (HAL)

Hindustan Aeronautics Limited is one of the pillars of India’s aerospace industry, with experience in aircraft and helicopter design, manufacturing, repair, upgrade, and related component designing and manufacturing. TAPAS (Tactical Airborne Platform for Aerial Surveillance) is being developed to perform intelligence, surveillance, and reconnaissance roles. Traditionally a partner to major aerospace companies worldwide, HAL has significantly enhanced India’s defense capability.

2. Bharat Forge Ltd

Bharat Forge Limited is an Indian MNC that operates in the forging, automotive, energy, and defense industries. It was founded in 1961 by Nilkantharao A. Kalyani. Kalyani Strategic Systems Limited (KSSL) is a subsidiary of Bharat Forge that recently launched “BHARAT 150” with a maximum take-off weight of 150 kg and a range of up to 200 km. Having its headquarters in Pune, India, the group has managed to build a brand synonymous with engineering excellence and innovation in manufacturing critical components for both automotive and aerospace industries alike.

3. Zen Technologies Ltd

Zen Technologies Ltd. was incorporated in 1993 and is one of the leading companies dealing with drones. The company offers counter-drone systems to detect and disrupt the communication system of the enemy drone. Another key offering is combat training solutions for the defense and security forces. It identifies itself as a major contributor in the field of defense and has over 40 products being used all over the globe. Zen Technologies has built strong R&D capabilities and has over 150 patents.

4. RattanIndia Enterprises

RattanIndia Enterprises is contributing to the drone industry via its subsidiary NeoSky. The company plans to offer drones as a service and product to its target audience. NeoSky works on tapping drone technology for various diverse applications, starting from agriculture, infrastructure monitoring, and logistics. With a strong focus on innovation and efficiency, the company aims to use UAVs to solve most modern-day problems across different sectors. It visualizes itself as playing a definitive role in the country’s evolving drone ecosystem.

5. Paras Defence & Space Technologies Ltd

Paras Defence & Space Technologies Ltd is amongst the most prominent companies in the defense and space sectors, and it has a basket of hi-tech solutions. Business offerings range from defense electronics, aerospace and space systems, communication systems, electro-optic devices, and defense and space components. Paras Aerospace Pvt. Ltd. is its subsidiary, which is involved in drones, drone services, and associated technologies. It also has a subsidiary named Paras Anti-Drone Technologies Pvt. Ltd., which develops RF & microwave systems and subsystems to counter UAVs and more. With a strong focus on innovation and quality, Paras Defense builds up India’s defense capabilities and makes vital contributions to India’s growing space exploration ventures.

6. Ideaforge Technology Ltd

Ideaforge Technology Ltd. is one of the apex companies in the domain of unmanned aerial systems, commonly known as drones in India. This company is known for its rugged and versatile UAV products currently being used in the domains of defense & homeland security and industrial applications.

It has been able to build a credible name based on innovation, picking up complex challenges in surveillance and reconnaissance and maintaining a clear lead over others in India’s drone industry.

7. DCM Shriram Industries Ltd

DCM Shriram Industries Ltd. was founded in 1990 and has operations in sugar, alcohol, industrial fibers, etc. Recently, the company acquired a 30% stake in Zyrone Dynamics, a Turkish drone company. The company aims to manufacture drones in India. DCM Trishul and DCM Kailash are the two prototypes developed by the company for surveillance and heavy-lifting requirements.

8. Droneacharya Aerial Innovations Ltd

Droneacharya Aerial Innovation Ltd is one of the firms known for bringing drone solutions to India’s fast-emerging UAV Sector. The company provides services with applications in a wide range of industries, from agriculture and infrastructure to surveillance and disaster management. With a strong core philosophy of bringing in innovation and exceptionally strong technological expertise, Droneacharya envisions improving operational efficiencies and safety standards across industries.

Comparative Study of Drone Stocks

Performance of Drone Stocks

The table below shows the Best Drone Stocks based on 6-month and 1-year returns.

Company	6 Month Return	1 Year Return
Hindustan Aeronautics Ltd (HAL)	69.33%	161.02%
Bharat Forge Ltd	32.73%	86.48%
Zen Technologies Ltd	83.70%	129.90%
RattanIndia Enterprises	-4.64%	88.24%
Paras Defence & Space Technologies Ltd	83.05%	101.53%
Ideaforge Technology Ltd	6.35%	-30.71%
DCM Shriram Industries Ltd	31.13%	120.66%
Droneacharya Aerial Innovations Ltd	-27.66%	-7.10%

(As of 15 July 2024)

Key Performance Indicators

Company	Net Profit Margin (%)	ROCE (%)	TTM EPS	TTM P/E (x)	P/B (x)
Hindustan Aeronautics Ltd (HAL)	25	24.49	113.96	46.77	9.23
Bharat Forge Ltd	5.76	13.3	20.43	79.25	10.51
Zen Technologies Ltd	29.5	46.3	15.22	88.91	25.36
RattanIndia Enterprises	7.56	36	3.08	25.47	15.5
Paras Defence & Space Technologies Ltd	11.86	9.8	8.77	159.1	12.19
Ideaforge Technology Ltd	14.41	9.6	11.07	75.84	5.43
DCM Shriram Industries Ltd	5.52	20.6	13.26	16.96	2.4
Droneacharya Aerial Innovations Ltd	17.56	11.65	2.58	55.79	4.7

*(all the above data is of year ended March 2024)

Benefits of Investing in Drone Stocks

The benefits of investing in drone stocks are:

High Growth Potential: The commercial drone market is expected to experience multifold growth in the next few years.
Multiple sources of revenue: With applications in various industries, including defense and agriculture, a boost in logistics and enterprise will mean diversified revenue for companies.
Government Support: The Indian government, through a 20-crore PLI incentive, is supporting the drone industry; hence, there is a need to include the factor of Make in India in business initiatives.

Factors to Consider Before Investing in Drone Stocks

An investor must consider the following factors before investing in drone stocks:

Regulatory Environment: An investor must know the regulatory frameworks that govern the drone industry in India. This might have a big impact on access to markets and profitability.
Market Potential: Growth prospects of sectors that are increasingly adopting the use of drones, such as agriculture, logistics, and surveillance.
Competitive Landscape: An investor must understand the competitive environment for drone manufacturers and service providers to understand a company’s relative placement in the markets.
Financial Health: Look at the revenue growth, profitability, and leverage levels of drone companies to check the viability of investment decisions.

Future of Drone Stocks

With the support of the government, like the Drone Shakti scheme and performance-linked incentives, the future of India’s drone market remains bright. The INR 80 crore market will likely touch INR 12,000-15,000 crore by 2026. The sectors that are seeing the entry of drones range from agriculture and defense to healthcare and e-commerce. Heavy investments by Reliance and Adani Enterprises convey the potential of the drone industry in India. Based on these factors, India will become a global drone hub by 2030.

Conclusion

The Indian drone industry holds huge potential across various industries because of the rapidly advancing capabilities of UAVs and the expansion of regulatory frameworks. Companies are working on stretching the efficiency of drones in agriculture, infrastructure, surveillance, and many other areas.

As the investment and adoption take off together, it is predicted that with the further evolution of drone technology, there will be a creation of jobs, modernization of industries, and sustainable development. India’s drone sector does seem promising for investors; however, one should consult a financial advisor before investing.

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Frequently Asked Questions

What are the top drone stocks in India?
Some of the top drone stocks in India include Hindustan Aeronautics Ltd, Droneacharya Aerial Innovations, and Paras Defense & Space Technologies Ltd.
Why should one consider investment in drone stocks in India?
The drone industry is rapidly growing, with a lot of support coming from the government and diversified applications.
What should one look at while considering investing in drone stocks?
Consider looking into financial performance, technology, regulations, market demand, and management expertise.
What are the future prospects of the drone industry in India?
The drone industry is expected to grow at a CAGR of 22.15% from 2024-2030.
Has the government come up with any specific initiative in favor of the drone industry in India?
Through the Production-Linked Incentive (PLI) scheme, support is provided for the manufacturing and growth of the drone industry.

July 18, 2024

Best Artificial Intelligence (AI) Stocks In India 2026

Artificial Intelligence (AI) is now a reality and is no longer confined to the realms of science fiction. It is rapidly transforming industries and shaping our daily lives. A good investor always identifies opportunities before others, and artificial intelligence is one industry that can deliver exceptional returns in the future.

Many Indian companies are driving the AI revolution, and the best part is that the general public can also invest in them through stock markets. In today’s blog, we will explore the best Artificial Intelligence stocks in India based on their market capitalization and their recent returns. We will also discuss the services offered by these companies and the future of the AI industry.

Overview of AI industry in India

India’s AI market is expected to reach $17 billion by 2027, with a CAGR of 25% to 35%. India is a major contributor of AI talent worldwide, with 16% of the world’s AI talent coming from India. This ranks India as one of the top three talent markets. The demand for customization and integration of business processes creates a prime opportunity for companies to deliver professional services tailored to integrate them with existing systems and data. AI could greatly contribute to India’s economy. Estimates show it can add $1 trillion by 2035.

Additionally, data privacy and security are of utmost importance when adopting AI, and India should have strong regulations to ensure the responsible development of AI.

Top AI Stocks Based on the Market Capitalisation

The top AI stocks in 2026 are:

S.No.	AI Stocks
1	Tata Consultancy Services (TCS)
2	Infosys
3	HCL Technologies
4	Wipro
5	Tech Mahindra

The AI stocks have been listed in descending order based on their market capitalization in the table below:

Company	Current Market Price (INR)	Market Capitalisation (in INR crore)	52-Week High	52-Week Low
TCS	2,990	10,81,971	4,041	2,867
Infosys	1,502	6,08,809	1,903	1,307
HCL Tech	1,587	4,30,659	1,780	1,303
Wipro	232	2,43,254	321	225
Tech Mahindra	1,646	1,61,261	1,854	1,209

(Data as of 10 February 2026)

Best AI Stocks in India Based on Market Capitalization – An Overview

The best AI stocks in India are given below, along with a brief overview of the services they provide:

1. Tata Consultancy Services (TCS)

Tata Consultancy Services is an Indian multinational IT services and consulting company. TCS is headquartered in Mumbai, India. TCS has over 603,305 trained consultants in 55 countries.

TCS was founded in 1968 when Mr Fakir Chand Kohli brought together a young team of IT professionals. TCS offers a range of IT services in the following domains:

Artificial Intelligence
Cloud services
Consulting
Cybersecurity

2. Infosys

Infosys is a global IT services and consulting company that offers digital services and consulting. The company was established in 1981 in Pune by seven engineers with a capital of $250. It currently operates with 317,240 employees and has a presence in over 56 countries. It is headquartered in Bangalore, India.

Initially, the company focused on providing software consulting and development services to US clients. With time, the company pioneered the Global Delivery Model (GDM), which allowed remote execution with cost advantage. The tech giant went public in 1993. Infosys offers a range of IT services in the following domains:

Next-Generation Integrated AI Platform
Infosys Consulting
Cloud-based services
Blockchain

3. HCL Technologies

Earlier known as Hindustan Computers Limited, it is another key player in the Indian technology industry. The company is headquartered in Noida, India and has an employee strength of over 227,481.

HCL Technologies offers a range of tech services, which include:

Helping clients incorporate AI in their business processes.
Digital solutions to increase the efficiency of the client’s business.
R&D services to accelerate product development and increase returns.
Cloud Services

4. Wipro

Wipro is a leading technology services and consulting company that builds innovative solutions that address clients’ most complex digital transformation needs. It has over 225,000 employees.

The company was founded in 1945 by M.H. Hasham Premji. It initially emphasized selling consumer goods and vegetable oils. In 1981, Wipro diversified its operations into the IT business under the leadership of Azim Premji, who is still a respected figure in the Indian IT industry.

Wipro offers a range of IT services which includes:

Helping businesses migrate to the cloud and leverage its benefits for scalability and efficiency.
Providing consulting and implementation services to help companies adapt to the digital age.
Creating and maintaining custom software applications for several needs.
Developing and implementing AI-powered solutions and integrating robotic automation for advanced functions.
Managing and optimizing non-core business processes for cost savings and improved efficiency.

5. Tech Mahindra

Tech Mahindra is a part of the Mahindra Group and was founded in 1986. The company employs 138,000 employees and is present in over 90 countries. The company offers innovative and customized information and technology services that help enterprises, associates, etc.

The company offers a range of services in the following domains:

Artificial Intelligence
Digital Enterprise applications
Cloud & Infrastructure services
Strategy & Consulting

Top AI Stocks Based on 1 Year Return

The top AI stocks in 2026 are:

S.No.	AI Stocks
1	Oracle Financial Services Software Ltd.
2	Bosch Ltd.
3	Kellton Tech Solutions Ltd.
4	Zensar Technologies Ltd.
5	Cyient Ltd.

The AI stocks have been listed in descending order based on their 1 year returns in the table below:

Company	1 Year Return
Oracle Financial Services Software Ltd	-22.01%
Bosch Ltd	27.21%
Kellton Tech Solutions Ltd	-38.20%
Zensar Technologies Ltd	-31.74%
Cyient Ltd.	-27.79%

(Data as of 10 February 2026)

Best AI Stocks in India Based on 1 Year Return – An Overview

The best AI stocks according to 1 year return are given below, along with a brief overview of the services they provide:

1. Oracle Financial Services Software Ltd.

Oracle Financial Services Software Ltd. (OFSS) is a subsidiary of Oracle Corporation and has its headquarters in Mumbai. It helps financial institutions such as banks launch new products and build customer-centric digital solutions with the help of Oracle’s AI-driven applications and cloud services. It has been using machine learning to improve detection, deep learning to find patterns and natural language processing (NLP) to extract data. It offers a range of services listed below:

Anti-money laundering & Financial Crime Compliance
Cloud Infrastructure
Risk and Finance
Payments
Corporate Banking

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-22.01%	130.84%	126.81%

(Data as of 10 February 2026)

2. Bosch Ltd.

Bosch is a German multinational company headquartered in Gerlingen, Germany. It was established in 1886 and has offices worldwide. It has the largest development center in India outside Germany for the development of engineering and technology solutions. Bosch Center of Artificial Intelligence is an important part of Bosch Research and specializes in deploying AI technologies into products & services. Bosch also offers services in the following areas:

Neuro – Symbolic AI
Deep Learning
Natural Language Processing
Probabilistic Modeling
Reinforcement Learning

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
27.21%	104.88%	118.87%

(Data as of 10 February 2026)

3. Kellton Tech Solutions Ltd.

Kellton Tech Solutions Ltd. ((KTSL) is an Indian multinational company with its headquarters in Hyderabad, India. It provides AI and ML solutions, which can be used to process data and extract insights at a great pace. It offers Utilitarian AI, which can be used to convert computer vision to text. Other services offered include:

Predictive analytics
Generative AI
Machine Learning
NextGen Services

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-38.20%	60.30%	6.79%

(Data as of 10 February 2026)

4. Zensar Technologies Ltd.

Zensar Technologies is a major player in the Indian AI industry and is a subsidiary of the RPG group. It is headquartered in Pune, India and has offices in 33 global locations. Zensar’s AI/ML-driven Smart Advisor enables users to navigate market data with exceptional speed and accuracy. It analyzes market news, interprets positive and negative sentiments and provides a future outlook. It provides great value in incorporating ESG risk scores into decision-making processes. The company also offers services in the following domains:

AI engineering buddy
Accelerated generative AI
Cloud strategy
Automation

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-31.74%	147.83%	168.38%

(Data as of 10 February 2026)

5. Cyient Ltd.

Cyient Ltd. is an Indian multinational technology company with its headquarters in Hyderabad, India. It was founded in 1991 as Infotech Enterprises Ltd and was later renamed Cyient in 2014. In 2023, Cyient collaborated with Microsoft to make a product named “EnGeneer”, which will help in automating engineering processes. Cyient aims to use the Microsoft Azure OpenAI Service to deliver products in the future. It also provides services in the following domains:

Generative AI
Cybersecurity
Cloud services
Asset insights

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-27.79%	18.59%	70.27%

(Data as of 10 February 2026)

Key Performance Indicators (KPIs)

Company	ROE (%)	ROCE (%)	Debt to Equity	P/E	P/B
TCS	50.73	63.51	0	32.25	16.71
Infosys	29.77	36.81	0	27.32	9.59
HCL Tech	23	27.92	0.03	27.13	6.87
Wipro	14.81	17.86	0.19	26.5	3.93
Tech Mahindra	8.84	11.7	0.06	62.89	5.55
Oracle Financial Services Software Ltd.	28.24	35.24	0.00	42.28	13.95
Bosch Ltd.	20.66	19.48	0.00	40.34	9.41
Kellton Tech Solutions Ltd.	14.43	18.3	0.29	21.36	3.03
Zensar Technologies Ltd.	18.66	23.63	0.00	25.48	6.3
Cyient Ltd.	16.03	20.61	0.11	29.75	6.49

(all the above data is of year ended March 2025)

Benefits of Investing in AI Stocks

AI stocks can be a valuable addition to the portfolio due to the following benefits:

Future Growth: The artificial intelligence industry is expected to grow multifold in the coming years, which will cause a rise in the prices of AI stocks.
Diversification: AI stocks provide diversification benefits and protect investor portfolios from market fluctuations.
Multiple revenue sources: Artificial intelligence has applications in many industries that provide numerous revenue sources for AI companies.

Factors to Consider Before Investing in AI Stocks

Artificial intelligence is a fairly new industry, and there is a lot of uncertainty surrounding it. Investors must be cautious and consider the following factors before investing in AI stocks:

Competition: Investors should identify the industry leader as they will benefit from competitive advantage in the future.
Financial Health: Investors should analyze financial statements and look for companies with strong fundamentals.
Ethical Considerations: AI can also be used for unethical practices, which can damage a company’s reputation. Investors should avoid such companies.
Regulations: Investors should stay informed about the new regulations applicable to the AI industry and judge their impact on the stock price of AI companies.

Future of the AI Industry

The future of the AI industry looks bright due to the following factors:

The development of more powerful and affordable computer chips, especially those designed for AI applications, is helping create more effective AI models.
The exponential growth of data is driving the rapid advancement of AI technology. AI algorithms need large amounts of data to learn and enhance their capabilities.
Investments in AI are increasing from both private and public sectors, which helps fund research and development and create new AI applications.
Nowadays, businesses are looking for methods to automate tasks, and AI is considered an important technology for achieving this.

Conclusion

The AI industry in India is growing rapidly because of a large talent pool, consistent government support, and expanding digital infrastructure. However, the road ahead has hurdles. The industry needs more skilled workers and stronger regulations because of data privacy concerns. Even though there are certain challenges, the benefits of AI are undeniable, and as far as AI stocks are concerned, they offer a great avenue for investment. It is important to consider several factors, such as market volatility, competition, etc. and consult a financial advisor before making any investment decision.

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Frequently Asked Questions (FAQs)

What is AI?
Artificial intelligence is a field that uses technology to perform advanced tasks like learning and problem-solving.
Why would AI stocks be a good investment?
AI stocks are good investment options because of the high demand for AI solutions, the potential for technological breakthroughs and increased government support.
How can we ensure responsible AI development?
Open discussions, addressing ethical concerns, and strong regulations are important for responsible AI development.
Will AI take away all our jobs?
While some jobs might be automated, AI is also expected to create new opportunities in different work areas.
What are some other AI stocks in India?
AI stocks in India are TCS, Infosys, Wipro, etc.

July 18, 2024

What is Contrarian Investing?

Investing in financial markets is becoming an increasingly popular way to realize financial objectives. Many investors invest to achieve their retirement goals. But how can an individual achieve returns that significantly exceed the benchmark? An investor needs to think outside the box to beat the benchmark, and contrarian investing strategies are a way to create huge wealth.

In today’s blog, we will discuss contrarian investing, different approaches used to do contrarian investing, its implementation challenges, and real-world examples.

What is Contrarian Investing?

Contrarian investing is a strategy where investors intentionally go against the prevailing market trends. Investors who follow a contrarian investing strategy are known as contrarians. They follow the basic rule of buying when others are selling and selling when others are buying.

Contrarian Investor aims to capitalize on mispriced assets by deliberately going against the latest market trends. This approach requires independent thinking, careful analysis, confidence, and a willingness to withstand sudden market fluctuations.

Contrarian investing is an active strategy aiming to outperform the market. Contrarian investing consists mostly of long-term investment strategies focusing on overlooked and mispriced opportunities.

Different Approaches Used to Do Contrarian Investing

Investors follow different processes mentioned below to do contrarian investing:

Market Sentiment Analysis: Investors analyze the market sentiment through news, social media, economic data releases, etc, to gain valuable insights. By gauging the prevailing sentiment, traders can identify potential turning points in the market and make informed decisions based on sentiment shifts.
Value Investing Approach: Contrarian investors constantly search for undervalued assets that the market has overlooked. Investors conduct a detailed fundamental analysis of the asset and gauge its potential for long-term capital appreciation.
Distressed Investing: Contrarian investors actively search for companies facing distress, restructuring, or bankruptcy because most market participants do not favor such assets. By carefully analyzing the underlying value and potential recovery, investors try to acquire them at low valuations. Investors make substantial gains once the company’s profitability increases.
Event-Based Trading: It involves capitalizing on market reactions to specific events, such as government policy change, central bank policy announcements, budget, regulatory announcements, and company earnings releases. Contrarian traders predict market reactions to these events and position themselves accordingly to profit from market fluctuations.
Pattern Recognition: Using chart patterns and technical analysis to identify potential trend reversals can be a powerful tool for contrarian traders. Even the put-call ratio can be used for contrarian investing. These patterns tell about potential shifts in market sentiments, providing opportunities for contrarian trades.

Challenges of Contrarian Investing

Limitations of contrarian investing are as follows:

Time-consuming: It needs lots of research to go against the prevailing trend, so it’s a time-consuming practice.
Difficult to Time: It’s extremely challenging to accurately time the trades as identifying the exact reversal points is difficult.
Patience and long-term focus: Patience is required as the focus is to realize gains from mispriced assets that others haven’t identified at the right time. Investors need to create positions before others identify the opportunity and wait until the majority of the market participants identify it. Once the majority identifies it, the asset’s market price moves in a favorable direction. Therefore, a longer time frame is required to realize substantial gains.
Potential for an extended period of underperformance: If market sentiment continuously goes against your view, it can result in portfolio underperformance in the short term.
Knowledge of the market and methods is required: One should be well versed in different analysis methods, such as fundamental analysis, technical analysis, etc., to identify mispriced assets ahead of time with confidence.
Limited Liquidity: Contrarian investors also invest in assets that are not widely traded, making it difficult to create and exit the investment position.
Lack of information or limited information: Sometimes, contrarian investors may have limited information or wrong information about the asset, which can lead to incorrect analysis and wrong investment decisions.

Examples of Contrarian Investing

John Paulson and the Subprime Mortgage Crisis (2007-2008):

Case: When most investors believed the housing market prices would continue to rise, Paulson predicted against popular belief and took a contrarian position.
Strategy: Paulson used credit default swaps (CDS) to bet that mortgage-backed securities would collapse. CDS is a tool through which credit risk is transferred, similar to insurance, where the buyer pays premiums for protection against risk. Hence, the buyer of the CDS gets a set amount if the underlying assets default, go bankrupt, or face credit ratings downgrade.
Outcome: When the housing market crashed, Paulson made a fortune of USD 4 billion alone while his firm earned a total of USD 15 billion, which earned him the tag of “a man who made one of the biggest fortunes in Wall Street history.”

Warren Buffett and Goldman Sachs (2008):

Case: At the peak of the Global Financial crisis in 2008, when all the banks in the US were facing a liquidity crisis, Buffett supported Goldman Sachs soon after the fall of the Lehman Brothers.
Strategy: Warren Buffett’s Berkshire Hathaway invested USD 5 billion of preferred stock in Goldman Sachs to strengthen the firm’s capitalization and liquidity in turbulent times.
Outcome: The preferred stock was redeemed in 2011, which generated a profit of USD 3.7 billion for Berkshire Hathaway, which is approximately 74% of the investment.

Warren Buffett and Bank of America (2011):

Case: During the debt-ceiling crisis of 2011, Bank of America’s stocks lost more than half of its value and fell from $14 to $5 over a year.
Strategy: Buffett invested $5 billion in Bank of America through preferred shares and warrants to buy 700 million common stock at a price of $7.14 per share. The preferred shares were redeemable at a 5% premium and paid a 5% annual dividend.
Outcome: Bank of America’s stock prices increased over the next few years, and Berkshire Hathaway more than tripled its investment without considering the dividend income.

George Soros and the British Pound (1992):

Case: The British government was trying to keep the pound within the European Exchange Rate Mechanism (ERM) despite economic indicators suggesting it was overvalued.
Strategy: Soros created a short position against the pound, betting on its devaluation.
Outcome: On 16 September 1992, also known as the Black Wednesday, the pound crashed, and Soros made an estimated USD 1 billion profit, while the British government had to withdraw the pound from the ERM.

Historical Returns of Contrarian Investing

The return an investor can earn using the contrarian investing approach is enormous, but these abnormal returns require lots of time, effort, knowledge, and patience. However, it’s not a suitable strategy for the short term as a big risk of uncertainty is involved.

Historical returns of contrarian investing are beyond imagination. Warren Buffet, Michael Burry, George Soros, John Paulson, etc., earned a fortune through contrarian investing strategy, but they all took calculated risks based on their knowledge and analysis.

Conclusion

In summary, while contrarian investing can be lucrative, at the same time, it’s time-consuming, and it requires a deep understanding of market fundamentals, the right timing, confidence, patience, and the ability to withstand potential losses. Investors should carefully consider these factors and should combine contrarian strategies with other investment approaches and tools to achieve balanced and long-term returns.

The contrarian investing approach requires an in-depth understanding of the financial markets. Therefore, it is important to consult a financial advisor before investing.

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Frequently Asked Questions (FAQs)

What is a contrarian strategy?
A contrarian strategy is implemented by creating an opposite position relative to the prevailing market sentiment, i.e., when everyone is buying, the contrarian investor looks to create a short position and vice versa.
Is contrarian investing profitable?
It can be rewarding, but at the same time, it’s risky as well, as it may go wrong or take time to show desired results.
Who is the famous contrarian investor?
Warren Buffet is one of the most prominent contrarian investors.
What is one of the limitations of Contrarian investing?
It may take a significant amount of time before an undervalued asset begins to show desired results.
Can AI be used to execute contrarian strategies?
Yes, artificial intelligence can be used to identify patterns of herd behavior, and models can be trained on predefined market variables to uncover opportunities to execute contrarian strategies.

July 12, 2024

Business Cycles of a Company

Businesses operate in a dynamic economic environment, with various economic factors impacting their operations simultaneously. Each company experiences many fluctuations in economic activity over its operational time.

Every equity investor in a company is a partial owner of the company due to which investors should understand the business’s current phase and its characteristics to make better investment decisions. In today’s blog, we will discuss various phases of the business cycle and their impact on the company, along with an example.

What is the Business Cycle?

A business cycle refers to the fluctuations in a country’s economic activities that a company experiences over time. These fluctuations are part of a cycle of expansion and contraction and are influenced by various external economic factors. Significant factors include market demand and supply, government policies, and global economic conditions. Every company’s business cycle has five phases, which are explained below.

Five Phases of a Company’s Business Cycle

The five phases of a company’s business cycle are influenced by different factors impacting the business environment in which they operate. Understanding each of these phases can help investors decode the reason behind the company’s performance in a specific year. The five phases of the company’s business cycle are:

1. Expansion Phase

The expansion phase is the initial phase where a company grows in terms of revenues and profits. During this phase, a company experiences growing demand for its products or services, leading to increased sales and revenues. It is a phase of upward economic trends, with high consumer confidence and a favorable market environment.

During this phase, companies invest in new projects, increase their workforce, and expand their operations. For example, a tech company might launch new products or expand into new markets as demand for the latest technology grows.

2. Peak Phase

The peak phase represents the height of economic activity in a company’s business cycle. During this stage, a company’s growth reaches its maximum limit, where the production, sales, and revenue growth rates are at their peak. However, this phase is generally short-lived as the market becomes saturated.

At this point, a company must prepare to transition into the contraction phase. A common example of a company in the peak phase is a retailer selling gifts and sweets during the festival season. The demand for gifts and sweets is at its peak during the festive season.

3. Contraction or Recession Phase

Following the peak phase, the economy contracts in the third phase, and two consecutive quarters of contraction are generally considered a recession. It is known as a period where economic activity begins to decline. During this phase, sales decrease, production slows, and the overall economic climate worsens. The decrease in production activities reduces the demand for raw materials and impacts other businesses. This decline can be triggered by market saturation, decreased consumer spending, or broader economic downturns. An extremely severe recession is known as a depression, which generally occurs when the GDP declines more than 10%.

Companies generally reduce their workforce, cut costs, or halt expansion plans during this period. For example, in this phase, a retailer reduces the number of employees and focuses on high-margin products to maintain cash flow when the number of customers declines.

4. Trough Phase

The trough phase represents the lowest point in the business cycle. The economic activities are minimal at this stage, and the growth rate becomes negative. Also, the situations within and around the company are generally negative. However, it is also a crucial time for making critical decisions that affect a company’s future trajectory. Companies often streamline operations to improve efficiency, which includes automating certain processes or consolidating operations to reduce operational costs.

The trough phase is a time for reevaluating and possibly overhauling business strategies. Companies might explore new markets or different customer segments to serve. An example of a company in the trough stage is a manufacturing firm optimizing its production lines for efficiency during low-demand periods to reduce operational costs.

5. Recovery Phase

The recovery phase signifies the beginning of an upward trend in the company’s business cycle. It shows a gradual increase in consumer confidence, spending, and overall economic activity. During this time, companies start reinvesting in areas scaled back during the contraction and trough stages. These include marketing, new product development, and workforce expansion. As the market recovers, companies expand their operations or enter new markets to capitalize on growing demand.

Now, businesses must monitor the market and adapt their strategies as needed. Timely decisions help them capitalize on early recovery-stage opportunities. An example of a company in the recovery stage is an automobile company that begins to increase its production as the market demand grows and the economy recovers.

Illustration of Different Stages of Business Cycle

Decoding the Business Cycle of Reliance JIO Industries

Reliance Industries can be used as an example to understand the different phases of a company’s business cycle over the years. During the expansion phase, the launch of Reliance Jio in 2016 led to rapid growth and significant market capture in the telecom sector. The peak phase was evident around 2018-2019 when Jio became India’s largest telecom operator, and other business segments thrived.

The contraction phase occurred during the COVID-19 pandemic, with reduced demand and operational challenges. In the trough phase, Reliance focused on strategic adjustments and raised capital from major investors like Facebook and Google. Post-pandemic, the company entered a recovery phase, emphasizing digital expansion and retail growth, demonstrating resilience and adaptability.

Conclusion

The business cycle of a company conveys the economic environment in which it is operating. Several factors affect the company’s business cycle, including the demand and supply of its products and services, capital availability, inflation, and consumer spending. Understanding these factors helps investors better forecast the phases in the near future and ultimately predict the company’s future performance, but always consult your financial advisor before making any investment decisions.

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Frequently Asked Questions (FAQs)

Why is it important for equity investors to understand the business cycle?
Equity investors must understand the business cycle as it helps them anticipate changes in the company’s performance, manage risks, and make informed decisions about buying or selling shares.
How does the expansion phase affect a company’s strategy?
A company typically experiences increased demand for its products during expansion. It leads to higher sales and revenue. Higher demand prompts the company to invest in new projects, expand operations, and hire more staff to capitalize on favorable market conditions.
What signals the transition from the peak phase to the contraction phase?
The transition from the peak to the contraction phase is often signalled by market saturation, where the rate of production and sales reaches its maximum and begins to decline. This phase may also start as consumer demand decreases or external economic conditions worsen.
What strategic decisions are critical during the trough stage?
During the trough stage, companies must make strategic decisions regarding operational efficiency, cost management, and potential market repositioning. This stage is also suitable for reevaluating and possibly overhauling business strategies to prepare for the next growth cycle.
How do companies prepare for the recovery stage?
Companies prepare for recovery by gradually reinvesting in key areas such as marketing, new product development, and workforce expansion. It is also important for businesses to stay agile, closely monitoring the market and adapting strategies to capitalize on early signs of recovery.

July 10, 2024

Recent Telecom Tariff Hike and its Impact

India is one of the biggest consumers of data, spending approximately 5 hours daily on smartphones. Recently, a tariff hike was announced by the major telecom companies in India.

Reliance Jio, Bharti Airtel, and Vodafone Idea have increased their mobile plan prices by up to 25%. Airtel and Jio’s new rates are effective from July 3, while Vodafone Idea’s (VI) new pricing was implemented on July 4.

In today’s blog, we will discuss the reason behind tariff hikes and the impact of hikes on their stocks.

Overview of the Telecommunications Industry

The Telecommunications industry is divided into sub-sectors like Infrastructure, Equipment, Mobile Virtual Network Operators, White Space Spectrum, 5G, Telephone service providers, and Broadband. The 5G network has been rolled out in all 28 states and 8 UTs.

India is close to becoming the second-largest smartphone market in the world, with around 850 million smartphone users by 2026. This will create a giant customer base using 5G technology and will contribute approximately USD 450 billion to the Indian economy. India ranks 60th as per the Network Readiness Index 2023, signifying the industry’s investment potential.

Sensing this opportunity, telecom companies have increased their tariffs to increase their average revenue per user (ARPU) and invest in the latest technologies. Other factors resulting in a positive outlook for the telecom industry include:

Robust Demand: India is one of the biggest consumers of data worldwide. As per TRAI, the average wireless data usage per wireless data subscriber was 19.47 GB per month in March 2024 compared to 61.66 MB in March 2014. The total volume of wireless data usage increased by more than 10 folds from 4,206 petabytes in Q1, FY18, to 47,629 petabytes in Q2, FY24. In India, the teledensity of rural subscribers reached 59.19% in March 2024. Growing consumption and increasing teledensity together result in a robust demand for telecom services.
Attractive Opportunities: 5G subscriptions in India will grow to 350 million by 2026, accounting for 27% of all mobile subscriptions. An increasing number of 5G users will be a huge customer base, which requires companies to invest in 5G technology.
Government Support: The Union Cabinet approved a Rs. 12,195 crore production-linked incentive (PLI) scheme for telecom & networking products under the Department of Telecom. As of December 2022, 42 companies have committed an investment of Rs. 4,115 crore (US$ 502.95 million) comprising 28 MSMEs and 14 Non-MSMEs (eight domestic and seven global companies) approved under the PLI Scheme to develop 6G technology.
Increased Investments: In the Union Budget 2023-24, the Department of Telecommunications was allocated Rs. 97,579.05 crore. FDI inflow in the telecom sector stood at US$ 39.32 billion between April 2000 and March 2024.

Reason Behind Tariff Hike

The telcos have reasoned the price hike to improve the Average Revenue per User (ARPU). The new rates reflect a substantial increase of up to 25 percent, affecting both prepaid and postpaid plans. According to Bharti Airtel, the mobile ARPU was considerably low and needs to be upwards of Rs 300. In terms of ARPU (average revenue per user), Airtel leads the industry with Rs 208, against Jio’s Rs 181.7 and Vodafone Idea’s Rs 145.

The March 2024 quarter ARPUs (Average Revenue Per User) for the telecom operators varied between a low Rs.145 for Vodafone Idea and Rs. 208 at the higher end for Bharti Airtel, which is far from the required level and need efforts from telecom companies to improve return on investment.

Impact on Major Telecom Companies

The tariff hike will improve the profits and cash flows that telecom companies will utilize to invest in high-margin fiber broadband and enterprise or data-center offerings and thus would increase their margins going forward.

The telecom company’s revenues are expected to rise by approximately 15%, resulting in increased profits. The telecom industry has suffered from price wars in the past, but with a positive industry outlook, the market expects a future price hike. Tariff hikes will have a positive impact on the stock prices of telecom companies due to increased revenues and profits. The positive impact has also been confirmed by the brokerage houses that have raised targets for telecom stocks.

Indus Towers, the country’s largest mobile tower installation company, has been reporting strong results. For the March 2024 quarter, the number of towers increased by 3.8% sequentially and 13.9% year-on-year to nearly 220,000. Indus added nearly 27,000 towers in FY24 compared with 24,000 between FY21 and FY23. Any improvement in the cash flow of telcos will support this trend.

So, the latest increase in tariffs by Reliance Jio, Bharti Airtel, and Vodafone Idea can be considered a step in the right direction. However, whether these companies will be able to commence another price hike and their timing isn’t known yet. The latest increase was after a gap of almost 2.5 to 3 years. Any adverse effect of such tariff revisions on the subscriber’s data usage pattern will be crucial.

Government Intervention

The government and the telecom regulator have no intention of intervening in the telecom sector’s decision to increase prices, as the tariffs in India are still among the cheapest in the world. However, the government wants the companies to focus on quality of services. There is healthy competition in the telecom sector that may not require the intervention of government authorities.

Conclusion

Tariffs were hiked in the Indian telecom sector recently, resulting in a rise in revenues by nearly 15%. The tariff hike is likely to be absorbed by the market, and the impact will become visible in their Q3 2025, i.e., December quarter financials. The effect may take longer for Reliance Jio since it has a higher percentage of customers on longer-duration packs.

The need to invest in the latest technology has forced telecom companies to raise tariffs to increase their ARPU. Revenue and profit increases will have a positive impact on telecom stocks. However, you should consult your financial advisor before investing.

Frequently Asked Questions (FAQs)

Why are telecom operators increasing tariffs?
The telecom companies are increasing tariffs to boost the average revenue per user (ARPU) after significant investments in 5G services.
What are the advantages of investing in the Telecom sector?
The advantage of investing in the telecom sector is that investors can benefit from price appreciation in telecom company stocks due to the constantly increasing consumer base and data consumption.
How much Foreign Direct Investment is allowed in the Telecom Sector?
100% FDI is allowed in the telecom sector under the automatic rule.
Is the recent Tariff hike good for the industry?
Yes, as the profitability of the individual companies increases, it will be good for the telecom industry.
Which key players will benefit from the tariff hike?
Reliance Jio, Bharti Airtel, Vodafone Idea, and other related businesses, like Indus Towers and Tejas Networks, will benefit from the tariff hike.

July 9, 2024

What is Earnings Per Share (EPS)?

When investing in stocks, you must have heard about the term “Earnings Per Share” or ”EPS”. The EPS metric is of great importance as it conveys the profitability of a company and the amount shareholders earn for each outstanding common stock.

In today’s blog post, we will introduce you to earnings per share, or EPS, and discuss its features, formula types and limitations.

The amount of profit allotted to each outstanding share of the corporation is known as earnings per Share or EPS. It is a financial metric used to assess a business’s profitability. The company’s EPS value can be used to compare its profitability with its peers. A higher EPS indicates higher profitability. Various factors and metrics other than EPS must be considered to determine whether to purchase or sell this company.

EPS offers the following features:

1. EPS measures a company’s profitability and conveys the amount earned by each outstanding share of common stock.

2. The company’s net earnings are divided by the number of outstanding common shares to calculate EPS.

3. It measures the company’s financial health, indicating whether or not it is growing steadily.

4. Share repurchases reduce the number of outstanding shares and can raise EPS without a change in income.

EPS Formula

The formula to calculate EPS is explained below-

Earning Per Share = (Net Income – Preferred Dividends) / Common Shares outstanding at the end of the period.

The common shares outstanding change over the period of time, and thus, many analysts use weighted average common shares outstanding in the denominator.

Earning Per Share = (Net Income – Preferred Dividends) / Weighted Average Common Shares Outstanding during the period

Net income refers to a company’s earnings after taxes for a given fiscal year. Preferred dividends are the dividends given to preferred shareholders. Outstanding common shares denote the total number of shares currently held by shareholders.

To further understand this, let’s use the example of ABC Ltd., which reported earning Rs. 11 lakhs in net income for the previous fiscal year. The business distributed Rs. 1 lakh to preferred shareholders as a dividend. Additionally, there are 5 lakh outstanding common shares in total.

Now, we can compute ABC Ltd.’s EPS using the formula mentioned above:

EPS = (11,00,000-1,00,000)/5,00,000 = Rs. 2

Hence, in this case, the EPS of the company is Rs. 2 per share, which means that each shareholder earns Rs. 2 for each share held by them.

Read Also: Top 10 Cable Stocks in India

The various types of EPS are mentioned below:

1. Trailing EPS: This metric refers to a company’s earnings per share computed for the previous 12 months. Its calculation is straightforward and consistent. Trailing EPS is one of the most utilized measures. This measure uses actual data and does not depend on assumptions.

Trailing EPS = (Net Income of past 12 months – Preferred Dividends) / Weighted average common shares outstanding during the period.

2. Basic EPS: EPS is calculated by dividing net income by the weighted average common shares outstanding during the period.

Basic EPS = (Net Income – Preferred Dividends) / Weighted average common shares outstanding during the period

3. Diluted EPS: The impact of the company’s prospective convertible securities is considered when calculating diluted earnings per share. All convertible securities are assumed to be exercised and converted to common shares. It is the most elaborate method of EPS computation.

Diluted EPS = (Net Income – Preferred Dividends) / (Weighted average common shares outstanding + Shares from convertible securities)

4. Adjusted EPS: EPS is determined by removing the one-time income or expenses from the net earnings of the business to get an adjusted income measure.

Adjusted EPS = (Adjusted Net Income – Preferred Dividends) / Weighted average common shares outstanding during the period

The following points highlight the importance of EPS:

Through EPS, one can easily measure the profitability of the company.
EPS allows you to easily compare the company’s profitability with its peers.
A steady increase in EPS over time ensures an investor that the company is managing its resources optimally.
Investors look at the company’s EPS growth rate when making investment decisions.

EPS has the following limitations:

Generally, a historically low or high EPS does not mean that the company will perform similarly in future.
Profitability can be significantly changed due to various external factors.
Cash flows are not included while calculating the EPS. Therefore, it might not represent the exact financial position of the company.
EPS can be artificially increased by reducing the number of outstanding shares. Outstanding shares can be reduced using buybacks.

Conclusion

To sum up, EPS is a crucial financial metric for assessing the profitability of the business. The profit a shareholder earns for each share they own can be determined using EPS. Earnings per share provide significant insights and can help simplify investment decisions, but it is advised that before investing, a person should speak with their investment advisor.

Frequently Asked Questions (FAQs)

What is EPS?
Earnings per Share, or EPS for short, is a financial metric that shows how much profit is earned by each outstanding share. It is computed by dividing the company’s net income by the total outstanding shares.
Can a company have negative earnings per Share?
A business with negative income has a negative EPS.
When does the company report the EPS?
Companies generally report EPS on a quarterly or yearly basis.
What does adjusted EPS mean?
Any one-time income or expense is subtracted from the company’s earnings to get adjusted net income in the adjusted EPS formula. One-time gains and losses are removed to provide a more accurate net income measure that a company normally earns.
How does the buyback of shares impact the company’s EPS?
The company’s share repurchase program will directly boost earnings per share (EPS) since it will reduce the number of outstanding shares while net profit remains unchanged.

July 5, 2024

Top 5 Highest Dividend Paying Stocks in India

The stock market is unpredictable because stock prices can fluctuate a lot. Regular income from the stock market seems to be quite a difficult task to achieve, but not if you own shares of the companies that pay dividends. What if we told you that a small number of businesses give you the chance to receive dividends regularly?

Dividend-paying stocks are stocks of those companies that distribute a percentage of their profits to shareholders regularly, usually on a yearly or quarterly basis. Usually, companies that pay dividends generate consistent earnings.

We’ll provide an overview of the top 5 dividend-paying firms in today’s blog.

List of Best Dividend Companies in India

1. Vedanta Limited

Vedanta is an Indian corporation that operates in the mining, oil, and gas industries. The firm was previously known as Sterlite Industries Limited and started its business operation in 1979. Vedanta owns India’s largest copper smelter, which contributes nearly 50% of its profits. Vedanta also takes corporate social responsibility seriously and has contributed USD 37 million towards community development. It has been ranked as one of the top ten sustainable firms in India. It has 97,015 employees.

2. Indian Oil Corporation Limited

The Indian Oil Corporation Limited (IOCL) operates in the oil and gas industry and is owned by the Ministry of Petroleum and Natural Gas, Government of India. The Indian Oil Company Limited and Indian Refineries Limited were two distinct businesses that were merged to form Indian Oil Corporation Limited in 1964. IOCL owns subsidiaries in other countries as well. As of 2022, the company is ranked 94th on the Fortune 500 list. The corporation serves its customers through 34,000 petrol stations across India, and it can produce approximately 3,200 kilotons of petrochemicals annually. IOCL spent Rs. 1,800 crore on healthcare, education, environmental sustainability, etc.

3. Coal India Limited

Coal India Limited was founded in 1975 and has its headquarters in Kolkata, West Bengal. It is one of the biggest coal mining companies in the world. The Indian government granted the corporation the designation of “Maharatna” in 2011. The company owns multiple subsidiaries that are involved in coal mining operations. It was listed on the stock market in 2010. Coal India Limited contributes approximately 85% of India’s total coal production.

4. Bharat Petroleum Corporation Limited

The company was founded in 1928 and was initially known as Burmah Shell Oil Storage and Distributing Company of India Limited. It has more than 20,000 fuel stations across India. They began selling LPG cylinders to Indian households in the mid-1950s. The corporation was nationalized in 1976. Bharat Petroleum also started a joint venture named Indraprastha Gas Limited (IGL) with the Gas Authority of India Limited (GAIL).

5. Oil and Natural Gas Corporation Limited

The Oil and Natural Gas Corporation Limited (ONGC) is owned by the Ministry of Petroleum and Natural Gas, Government of India. ONGC was established in 1956 by the Government of India and produces 70% of India’s domestic crude oil production and around 84% of natural gas. It has a subsidiary named ONGC Videsh Limited (OVL), which manages its global production and exploration operations.

What is Dividend Yield?

The dividend yield is a financial ratio used to measure the dividend amount as a percentage of its share price.

Dividend Yield = (Annual Dividends per Share) / (Price per Share)

A company’s historical dividend yield does not guarantee that it will continue to pay out the same yield in the future due to several factors. For example, a downturn in the economy will always reduce the company’s profitability and cash flows, and high interest rates can occasionally deter investors from buying dividend stocks. As a result, dividend investing might be a smart choice for cautious investors.

Types of Dividend

The companies discussed above provide different types of dividends. Investors need to understand the different types of dividends mentioned below:

Final Dividend – A company generally declares this type of dividend at the end of a financial year based on the company’s annual profits. This dividend is announced after financial statements are audited and released.
Interim Dividend – The company declares and pays an interim dividend in the middle of the fiscal year.
Stock Dividend – A stock dividend is paid in the form of additional shares rather than cash.
Special Dividend – These dividends are non-recurring and are only paid out in specific circumstances. For example, when a company accumulates profit over time, it distributes it in the form of a special dividend to its shareholders.

Annual Dividend Yields

Company	Annual Dividend Yield
Vedanta Ltd.	6.44%
Indian Oil Corporation Ltd.	7.13%
Coal India Ltd.	5.32%
Bharat Petroleum Corporation Ltd.	13.80%
Oil and Natural Gas Corporation Ltd.	4.46%

Comparative Study of Dividend Paying Companies

Company	Share Price	Market Capitalization (In crores)
Vedanta Limited	457.85	1,70,192
Indian Oil Corporation Limited	168.3	2,37,660
Coal India Limited	479.1	2,95,256
Bharat Petroleum Corporation Limited	304.4	1,32,064
Oil and Natural Gas Corporation Limited	274.85	3,45,768

(As of 2 July 2024)

Key Performance Indicators

Particular	Vedanta Limited	Indian Oil Corporation Limited	Coal India Limited	Bharat Petroleum Corporation Limited	Oil and Natural Gas Corporation Limited
Net Profit Margin (%)	5.24	5.36	25.95	5.75	8.50
ROCE (%)	24.09	23.90	27.89	32.53	15.43
Current Ratio (x)	0.66	0.73	1.70	0.81	0.88
Debt to Equity Ratio (x)	2.34	0.72	0.08	0.60	0.36
3-Year CAGR Sales (%)	27.78	46.05	25.73	39.53	45.44
Operating Profit Margin (%)	18.8	8.18	34.57	8.82	13.41

Out of all the companies described above, IOCL has the highest growth rate during the past three years, as demonstrated by the graph above, but it also has the lowest operating profit margin.

(Source – Company Financials)

Advantages of Investing in Dividend Paying Companies

Dividend-paying companies usually have the following features:

It is suitable for investors who are looking to earn a stable income.
Dividends can be reinvested to get the benefit of compounding.
In addition to dividends, investors also benefit from increased stock prices over time.
These companies are less volatile when compared with growth companies.

Conclusion

To sum up, investing in dividend-yield companies allows you to generate consistent income over time. Since these businesses are typically regarded as stable and less volatile, they are appropriate for conservative investors. However, always consult an investment advisor before making any decisions.

Frequently Asked Questions (FAQs)

What is the future of dividend-paying stocks in India?
Dividend-paying stocks offer a combination of dividend income and capital appreciation as they are profitable, distribute dividends to their shareholders, and retain some profit for future growth.
Is investing in dividend-paying stocks a safe and good option?
Dividend-paying companies are suitable for a cautious investor seeking steady income with minimal risk.
What is a dividend yield?
Dividend Yield is calculated by dividing the annual dividend by the share’s current market price, showing how much a corporation pays in dividends as a percentage of its share price.
A dividend yield company must declare a dividend every year.
No, dividend companies are not required to pay dividends annually. The decision to distribute dividends depends on several circumstances, including the company’s profit and the board of director’s discretion.
Name a few dividend-paying companies in India.
A few well-known dividend-paying businesses in India are Bharat Petroleum Limited, Indian Oil Corporation Limited, Vedanta Limited, and Coal India Limited.

July 4, 2024

Top Tyre Stocks in India

The Indian auto industry is a powerhouse, driven by a thriving tyre sector that keeps its wheels turning. For investors seeking to get in on the action, tyre stocks can provide a stable journey with solid growth opportunities. But with several major players, where do you begin?

No worries, in today’s blog we will deeply do a comparative analysis of the top 5 tyre stocks in India.

By including the focus on best tyre stocks in India, you’ll have a clearer understanding of which companies stand out in terms of market performance, innovation, and investment potential.

MRF

MRF is an Indian multinational tyre manufacturing company with its headquarters in Chennai, Tamil Nadu. Founded in 1946 by K.M Mammen Mappillai, it started as a toy balloon manufacturing unit and has grown into a tyre giant. The company manufactures a wide range of products including tyres for two-wheelers, cars, trucks, and even aeroplanes. They are also into the manufacturing of tyres, treads, tubes, conveyor belts, paints and toys.

MRF is the largest tyre manufacturer in India and ranks among the top 20 globally. They are well-recognised for their high-quality tyres and extensive reach across the country.

It was incorporated as a private company, Madras Rubber Factory Limited, and began tyre production in partnership with an American company, Mansfield Tire & Rubber Factory.

MRF has a wide distribution network in India, serving retail stores, dealerships, and car manufacturers. The company sells tyres directly to manufacturers (B2B) for factory use and also has a strong presence in the replacement tyre market for individual consumers (B2C).

They achieve this reach through an extensive network of franchised stores and dealers. The company focuses on offering excellent customer service through initiatives like roadside assistance programs and informative resources on its website.

MRF Consolidated Financial Statements

MRF Balance Sheet

Key Metrics	FY 2024	FY 2023
Total Assets	26,849	24,369
Total Liabilities	10,146	9,662
Total Equity	16,703	14,708

(Note : All values are in INR Crore)

MRF Income Statement

Key Metrics	FY 2024	FY 2023
Total Revenues	25,486	23,261
Total Expenses	22,699	22,191
Net Profit	2,081	769

(Note : All values are in INR Crore)

MRF Cash Flow Statement

Key Metrics	FY 2024	FY 2023
CFO	3,301	2,755
CFI	-2,379	-1,923
CFF	-868	-840

(Note : All values are in INR Crore)

Balkrishna Industries

Balkrishna Industries Limited (BKT) is an Indian company that makes tyres for different types of vehicles and industries. They focus on off-highway tyres. The company was founded in the year 1987 and is headquartered in Mumbai. The company products include agriculture, industrial, and OTR tyres, as well as tubes and carbon black.

The company’s expertise lies in manufacturing Off-Highway Tyres (OHT) for agricultural, industrial & construction, earthmovers & port, mining, forestry, and All-Terrain Vehicles (ATV). They have five modern production facilities in India located in Aurangabad, Bhiwadi, Chopanki, Dombivali, and Bhuj.

Balkrishna Industries Consolidated Financial Statements

Balkrishna Industries Balance Sheet

Key Metrics	FY 2024	FY 2023
Total Assets	13,684	12347
Total Liabilities	4,830	4,790
Total Equity	8,853	7,556

(Note : All values are in INR Crore)

Balkrishna Income Statement

Key Metrics	FY 2024	FY 2023
Total Sales	9,368	9,759
Total Expenses	7,764	8,623
Net Profit	1,471	1,057

(Note : All values are in INR Crore)

Balkrishna Cash Flow Statement

Key Metrics	FY 2024	FY 2023
CFO	2,082	1,447
CFI	-1,475	-1,783
CFF	-601	358

(Note : All values are in INR Crore)

Apollo Tyres

Apollo Tyres Limited is an Indian multinational tyre manufacturing company headquartered in Gurgaon, Haryana. The company was established in the year 1972 by Onkar Kanwar, and since then it has grown from a domestic Indian company to a global tyre manufacturer with a presence in over 100 countries. Apollo caters to a wide range of segments, including passenger vehicles, two-wheelers, trucks, buses, and light trucks.

In the 1990s, Apollo Tyres expanded globally with an ambitious strategy. The company acquired manufacturing facilities in the Netherlands in 2009 to better serve the European market.

The company employs a multifaceted business model, wherein it successfully integrates manufacturing, branding and a customer-centric approach. This strategic blend enables the company to effectively compete in the highly competitive global tyre market.

Apollo Tyres Financial Statements

Apollo Consolidated Balance Sheet

Key Metrics	FY 2024	FY 2023
Key Metrics	FY 2024	FY 2023
Total Assets	26,957	27,359
Total Liabilities	13,054	14,481
Total Equity	13,901	12,877

(Note : All values are in INR Crore)

Apollo Tyres Income Statement

Key Metrics	FY 2024	FY 2023
Total Sales	25,377	24,568
Total Expenses	22,485	22,651
Net Profit	1,721	1,104

(Note : All values are in INR Crore)

Apollo Tyres Cash Flow Statement

Key Metrics	FY 2024	FY 2023
CFO	3,439	2,134
CFI	-710	-476
CFF	-2,659	-1,691

(Note : All values are in INR Crore)

JK Tyres

JK Tyre is another leading Indian tyre manufacturer. The company was not always a separate entity. It began as part of the J.K. Organisation, a diversified Indian conglomerate founded in 1918 by Lala Kamlapat Singhania. It became the first company to manufacture radial tyres in India.

J.K. Industries Limited, the parent company of JK Tyres, was restructured and in 2007, JK Tyres & Industries were created to concentrate more on the tyre business. They cater to a wide range of vehicles, including cars, motorcycles and off-road vehicles.

Additionally, with operations in key regions such as ASEAN, the Middle East and Africa as part of the APMEA region, the Company continued to invest in brand building, working on the requirements of each region to bring country-specific products.

JK Tyre has a strong distribution network in India that serves retail outlets, dealerships, and original equipment manufacturers (OEMs) of automobiles. This helps them keep a strong position in the local market.

The company’s manufacturing facility in Mexico serves the North American market and exports to over 100 countries worldwide. The global reach of the company enables them to access and explore untapped markets and exciting opportunities.

JK Tyre Consolidated Financial Statements

JK Tyre Balance Sheet

Key Metrics	FY 2024	FY 2023
Total Assets	14,094	12,448
Total Liabilities	9,606	9,051
Total Equity	4,488	3,395

(Note : All values are in INR Crore)

JK Tyre Income Statement

Key Metrics	FY 2023	FY 2022
Total Income	15,001	14,644
Total Expenses	13,388	13,815
Net Profit	811	264

(Note: All values are in INR Crore)

JK Tyre Cash Flow Statement

Key Metrics	FY 2024	FY 2023
CFO	1,614	1,224
CFI	-1,208	-400
CFF	-413	-747

(Note : All values are in INR Crore)

CEAT

CEAT Limited, previously known as Cavi Electtrici e Affini Torino (Electrical Cables and Allied Products of Turin), is a leading and recognised multinational tyre manufacturing company headquartered in Mumbai, India. It was founded in 1924 in Turin, Italy, and then moved to India in 1958. The company is a flagship entity of the RPG Group, a prominent Indian conglomerate.

CEAT is more than just car tyres. They manufacture tyres for motorcycles, cars, trucks, buses, and other vehicles. The company has a global footprint spanning over 120 countries. Their tyres are trusted across various regions. It focuses on producing top-notch products and embracing innovation to meet the varied requirements of customers in different terrains and locations.

The company caters to a wider range of vehicles. They make tyres for a wide variety of vehicles, including motorcycles, cars, trucks, buses and other types of vehicles.

The company has a strong distribution network in India and abroad. It divided India into regions, and each Regional Distribution Centre (RDG) supplies tyres to Carrying Forward Agents or directly to dealers based on demand.

Carrying Forwarding Agents (CFA) act as intermediaries between RDCs and dealers ensuring efficient delivery of tyres to local retailers.

CEAT has over 4500 dealers and 51,000 sub-dealers in India, which makes their tyres widely available to consumers.

CEAT Consolidated Financial Statements

CEAT Balance Sheet

Key Metrics	FY 2024	FY 2023
Total Assets	9,994	9,627
Total Liabilities	5,951	6,187
Total Equity	4,042	3,439

(Note : All values are in INR Crore)

CEAT Income Statement

Key Metrics	FY 2024	FY 2023
Total Sales	11,943	11,314
Total Expenses	10,858	10,843
Net Profit	614	174

(Note : All values are in INR Crore)

CEAT Cash Flow Statement

Key Metrics	FY 2024	FY 2023
CFO	1,719	1,205
CFI	-853	-849
CFF	-871	-319

(Note : All values are in INR Crore)

Tyre Stocks Comparative Analysis

Tyre Stocks Market Capitalisation (in INR crore)

Company Name	Market Cap (in INR crore)
MRF	55,561
Balkrishna Industries	62,060
Apollo Tyre	31,450
JK Tyre	10,263
CEAT	10,058

Tyre Stocks Current Market Price

Company Name	CMP (in INR)
MRF	1,26,145
Balkrishna Industries	3,210
Apollo Tyre	495
JK Tyre	394
CEAT	2,486

Tyre Stocks Price-to-Earnings Ratio

Company Name	PE Ratio
MRF	26.70
Balkrishna Industries	39.99
Apollo Tyre	17.24
JK Tyre	13.49
CEAT	15.65

Conclusion

The Indian tyre industry showcases a diverse range of companies, each with its unique strengths and specialities. MRF’s legacy and brand recognition, BKT’s focus on Off-Highway Tyres, and Apollo Tyre’s global presence constitute compelling options that cater to the diverse needs of the investors. JK Tyres dominates the trucks/bus Radial segment, while CEAT offers a comprehensive portfolio across various vehicle types. So which tyre stock suits you best? Consider your investment goals, risk tolerance and the specific market segment. The Indian Tyre industry is poised for growth due to rising vehicle production, incomes and infrastructure development. As these trends continue to unfold, the top tyre companies will probably take the lead by pioneering constant innovation and adapting to the ever-evolving needs of the market.

Frequently Asked Questions (FAQs)

What factors should I consider before choosing a tyre stock?
Legacy, product range, market presence, brand recognition and commitment to innovation should be considered before selecting a stock.
How are these tyre companies adapting for the future?
These companies are likely to continuously innovate and develop new technologies to fulfil the needs of the customers.
Should I invest in the above-discussed stocks?
Conduct your own research and due diligence before making any investment decisions.
Where can I find more information about these companies?
You can visit the company websites or search for industry reports and news articles.

July 1, 2024

Listed AC Manufacturing Companies in India

Summers are around the corner, hotter than ever, and nowadays you cannot sit without an air conditioner, but have you ever thought of making profits in this summer season while enjoying your soft drinks? Yes, you can achieve this by investing in a listed AC manufacturing company in India with a strong market presence.

In this blog post, we’ll provide you with all the information you need about India’s top five air conditioner manufacturers.

What are Air Conditioner Stocks?

AC manufacturing firms are those that design, develop, and manufacture commercial air conditioners, room air conditioners, and other cooling equipment. Suppliers of AC unit parts, such as compressors and condensers, are also included in this industry. Additionally, some businesses distribute air conditioners and sell the units to merchants.

List of Best AC Stocks in India

Voltas Ltd.
Blue Star Ltd.
Amber Enterprises India Ltd.
Johnson Controls
EPACK Durable Ltd.

Explore the top air conditioner stocks in India with this comprehensive list of the best-performing AC companies to invest in for steady growth.

1. Voltas Limited

In 1954, the company was established in partnership with Volkart Brothers and became a member of the Tata Group. The company’s name comes from the union of its two original names, Volkart’s “Vol” and Tata Sons’ “Tas.” The company started off selling air conditioners, but later on, they added air coolers, water dispensers, and commercial refrigeration to their line of products. To manufacture household appliances, the company recently partnered with the Ardutch, which is controlled by the Koc Group which makes the Beko brand of appliances, and started manufacturing appliances under the name of “Voltas Beko”. The Ministry of Finance awarded the company “The Most Energy Efficient Appliance of the Year in Air Conditioners” in 2021. The company’s headquarters are located in Mumbai.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-9.58%	72.74%	39.36%

(As of 27 January 2026)

2. Blue Star Limited

In 1943, Blue Star Limited was established by Mohan T. Advani. The company’s first concentration is on air conditioner and refrigerator repair and reconditioning. The company worked along with a US-based company to manufacture air conditioners. The company employs 765 service associates and has 5000 stores and has presence in 18 countries. The company owns and operates manufacturing plants in Dadra, Kala Amb,Wada and Ahmedabad. The company’s headquarters are located in Mumbai.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-5.90%	171.02%	343.74%

(As of 27 January 2026)

3. Amber Enterprises India Ltd.

The company was founded in 1990, and its main office was located in Gurugram, Haryana. In 2004, they also began producing room air conditioners and sheet metal components. The business was listed on a stock exchange in 2018. They employ more than five thousand people. To support the strategic expansion of their business, they have completed several well-considered acquisitions, including those of PICL India Pvt. Ltd. and IL JIN Electronics India Pvt. Ltd.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-21.41%	167.77%	116.93%

(As of 27 January 2026)

4. Johnsons Control India

The company is a part of Johnson Controls International PLC. The company offers a range of products, including heating, ventilation, and air conditioning systems. The business set up a shop in India in 1995 and bought HVAC automation equipment for the populace there. In an attempt to broaden its product line in India, the business merged with Tyco International, a firm that offers fire safety and security solutions.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
55.00%	-16.15%	-19.02%

(As of 27 January 2026)

5. EPACK Durable Limited

This Indian business produces a broad variety of long-lasting consumer goods. It was established as “EPACK Durable Solutions Private Limited” as a private company. The company started to expand its line of products to include consumer durables like refrigerators, air conditioners, and other household appliances. The business changed its name to “EPACK Durable Limited”, a public limited company in June 2023. The company is acknowledged as India’s second-largest manufacturer of original room air conditioner designs.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-50.05%	5.54%	5.54%

(As of 27 January 2026)

Comparative Study of AC Companies Stocks

Market Capitalization

Company	Share Prices (In INR)	Market Capitalization (In crores)	52 Week High Price(In INR	52-Week Low Price(In INR
Voltas Ltd.	1,314	43,472	1,531	1,135
Blue Star Ltd.	1,690	34,757	2,270	1,521
Amber Enterprises India Ltd.	5,424	19,077	8,626	5,235
Johnson Controls	1,762	4,792	2,621	1,109
EPACK Durable Ltd.	234	2,248	484	229

(As of 27 January 2026)

Income Statement Comparison (FY 2024)

Company	Total Sales	Total Expenses	Net Profit
Voltas Ltd.	12,481	12,054	386
Blue Star Ltd.	9,685	9,118	413
Amber Enterprises India Ltd.	6,729	6,423	141
Johnson Controls	1,918	2,011	-75
EPACK Durable Ltd.	1,419	1,338	36

(The above-mentioned figures are in crores unless stated otherwise)

According to the above statistics, Voltas Ltd.. reported the greatest profit of INR 414.31 crores and had the highest sales of INR 12734 crores.

Balance Sheet Comparison (FY 2024)

Company	Total Asset	Inventory	Total Shareholder Funds	Current Liabilities
Voltas Ltd.	12,035	2,135	5,820	5,756
Blue Star Ltd.	6,618	1,407	2,609	3,879
Amber Enterprises India Ltd.	6,593	840	2,063	3,285
Johnson Controls	1,657	656	582	968
EPACK Durable Ltd.	1,767	378	891	752

(The above-mentioned figures are in crores unless stated otherwise)

According to the above table, EPACK Durable has the least amount of assets, while Voltas has the most.

Cash Flow Statement Comparison (FY 2024)

Metric	Voltas Ltd.	Blue Star Ltd.	Amber Enterprises India Ltd.	Johnson Controls	EPACK Durable Ltd.
Cash Flow from Operating Activities	761	289	964	254	256
Cash flow from Investing Activities	(522)	(524)	(1034)	(32)	(376)
Cash flow from Financing Activities	(116)	364	(121)	(172)	166

(The above-mentioned figures are in crores unless stated otherwise)

Among the above-mentioned companies, all companies have negative cash flows from investing activities, whereas only Blue Star and EPACK durables have positive cash flows from financing activities.

Key Performance Indicators

Particular	Voltas Ltd.	Blue Star Ltd.	Amber Enterprises India Ltd.	Johnson Controls	EPACK Durable Ltd.
Net Profit Margin (%)	6.23	4.95	2.81	-3.94	2.67
ROCE (%)	19.31	24.82	15.72	-8.05	12.62
Current Ratio (x)	1.48	1.28	1.02	1.20	1.04
P/E (x)	57.36	74.28	100.14	-34.32	64.13
P/B (x)	7.41	14.33	10.67	4.44	3.71

(Source – Company Financial Reports 2025)

Of the companies listed above, Blue Star has the highest ROCE while Johnson Controls has a negative ROCE.

Reasons to Invest in Air Conditioning Stocks

Due to hot climatic conditions, the demand for air conditioners will be on the higher side, resulting in higher revenues and profits. AC stocks can be considered as a good investment opportunity.
The introduction of innovative technologies such as inverter ACs or energy-efficient ACs creates an opportunity for companies to introduce new products to the market and increase their revenue.

The Risk Associated with AC Stocks

The risks associated with investing in AC company stocks are as follows-

Due to intense competition between various players in the industry can lead to price competition and lower profit margins.
If the disposable income of the people decreases due to economic conditions, the demand for such products will be affected negatively.
The sales of AC are seasonal, which will lead to fluctuation in the stock prices, hence not suitable for investors who are looking for long-term gains.

Future of AC Stocks in India

India’s need for air conditioners is predicted to rise as a result of rising disposable income and urbanization. Additionally, as a result of the rising temperatures, more people are eager to get air conditioners, which will boost business revenue. Numerous other variables, including government programs and energy efficiency legislation, also have an impact on this sector’s growth. As a result of the increasing popularity of energy-efficient and creative technologies like inverter air conditioners, companies can increase the manufacturing of these kinds of products.

Conclusion

In conclusion, urbanization, temperature rise, and rise in disposable income present growth opportunities for investing in AC stocks. However, there are several other elements you should take into account before investing, including the company’s finances, product innovation, general economic conditions, etc., all of which could have an impact on the performance of the firm. Therefore, before making any investing decisions, it is advisable to take all of these issues into account and consult with your financial advisor.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	List of Best Tata Group Small Cap Stocks
2	List of Aviation Stocks in India
3	Best Midcap IT Stocks List
4	List of Best Monopoly Stocks in India
5	Top 10 Most Expensive Stocks in India
6	Best Air Purifier Stocks in India

Frequently Asked Questions (FAQs)

Which is the largest AC company in India?
Based on market capitalization and market share, Voltas is the biggest AC company. Its market capitalization is about 49133 crores, and its market share is approximately 35%.
What are some of the biggest air conditioner stocks in India?
Some of the leading air conditioner stocks include Voltas Ltd., Blue Star Ltd., Amber Enterprises India Ltd, and Johnson Controls Ltd.
How can I invest in air conditioner stocks?
You can invest in air conditioner stocks by choosing a brokerage firm and opening a demat account with them.
What factors should I consider before investing in air conditioner stock?
There are various factors, such as economic conditions, seasonal demand, financials of the company, its market share etc.
Should I invest in air conditioner stocks?
The growth of air conditioner companies depends on the climatic conditions in a region or country; as in India, the temperature is rising continuously, and along with this, disposable income is also increasing. One can consider investing in these stocks after consulting their investment advisor.

July 1, 2024

FII vs FDI vs FPI: What Is the Difference Between FDI, FII, & FPI

Large market players worldwide are known for their ability to significantly affect a country’s financial structure. Today’s blog will cover the realm of domestic and foreign investment and its impact on the country’s capacity for growth.

Let’s dive in and understand the distinctions between Foreign Portfolio Investor (FPI), Foreign Institutional Investors (FIIs), and Foreign Direct Investments (FDIs).

Foreign Institutional Investors (FIIs)

FII stands for Foreign Institutional Investors, such as pension funds, mutual funds and insurance companies, that invest in a country’s stock market from outside the country. These investors play a significant role in the financial markets of developing countries like India by providing a fresh source of capital and liquidity.

FII activity is influenced heavily by broader macroeconomic factors such as global economic conditions, interest, and currency exchange rates. Analyzing FII activity with other economic indicators can give a more comprehensive understanding of the factors impacting the financial markets. Additionally, sudden changes in FII activity can contribute to increased market volatility.

Types of FIIs include pension funds, insurance companies, sovereign wealth funds (SWFs), mutual funds, and endowment funds.

Foreign Direct Investors (FDI)

FDIs are companies from one country investing in businesses in another, intending to establish a long-term interest and control over the investment.

It can take many forms, such as mergers and acquisitions, joint ventures, greenfield investments, and brownfield investments.

Note:

Greenfield investment – when a foreign company builds a new facility from scratch in a foreign country.
Brownfield Investment – When a foreign company acquires an existing facility in a foreign country.

Foreign Direct Investment can significantly boost a country’s economic growth by introducing new capital, technology, and expertise. It can also generate jobs and increase exports.

Governments generally implement policies to regulate foreign direct investment and these policies are designed to attract direct investment by offering tax breaks and other incentives. These policies also aim to protect domestic industries from foreign competition.

Foreign Portfolio Investment (FPI)

FPI involves acquiring financial assets in a foreign country, including stocks, bonds, mutual funds, or ETFs. Unlike FDI, FPI investors do not aim to exert control over the companies in which they invest. They simply want to earn money from their investment through capital gains or dividends.

FPI investors seek short-term to medium-term returns and have the flexibility to buy and sell their holdings on a stock exchange with ease. They do not have a say in the management of the companies they invest in and are dependent on the performance of the overall stock market

Differences Between FDI, FII, and FPI

Basis	Foreign Direct Investment (FDI)	Foreign Institutional Investment (FII)	Foreign Portfolio Investment (FPI)
Investment Type	Direct Investment in physical assets or companies	Investments in financial assets on behalf of large foreign institutions	Investment in financial assets for the sake of earning higher returns by a broader category including individuals.
Control	Investors intend to have a controlling interest in the investment.	FIIs are often fund houses who act as an intermediary and thus the root-investor has no control.	Investors generally do not have control.
Investment Horizon	Long-term	Medium to long-term	Short-term to medium-term.
Risk	Reduced volatility over long periods but moderate risks exist. (Political, economic, regulatory and cultural risks).	Moderate to high risk depending on the investment strategy	Higher volatility as the horizon is only for the short term.
Examples of Investors	MNCs, large enterprise, and private equity firms.	Pension Funds, insurance companies, and mutual funds.	Individual investors, mutual funds, and hedge funds.

Impact on the Economy

Economic Impact of FDI

FDI brings in fresh capital for businesses, which can be used for expanding operations, driving innovation, and creating new jobs in the long run.
Foreign companies bring advanced technology and expertise, which improves productivity.
FDIs can help local companies reach global markets through the networks and supply chains of multinational companies.

Economic Impact of FII

FIIs inject liquidity into the stock market, making it more appealing to other investors.
Increased foreign investment can potentially result in reduced interest rates. This is because there is more money available to lend, which drives down the borrowing costs for businesses and consumers. This can stimulate economic activity.
The presence of FII can enhance corporate governance in companies

Economic Impact of FPI

FPIs bring in more capital, which boosts trading activity in the financial markets. Increased liquidity helps investors trade securities more easily, without affecting prices significantly.
Domestic investors can reduce risk by expanding their investment portfolios with the help of the FPIs, across different asset classes and geographies.
To attract foreign investors, governments can make changes to improve the investment climate, like adjusting regulations, offering tax incentives, and enhancing infrastructure.

Conclusion

The world of international investment is intricate; thus, grasping the pivotal actors is imperative. FPIs and FIIs focus heavily on earning higher returns by entering new markets. Therefore, it is natural for them to exit at the slightest possibility of losses. This exposes retail investors to immense risks as they face the brunt of their selfish actions.

Therefore, understanding these types of investments empowers individuals to make informed decisions when participating in the stock market.

Frequently Asked Questions (FAQs)

What is the difference between FPI and FII?
Both invest in foreign markets, but FPIs focus on financial assets (stocks, bonds) for short-term returns, while FIIs focus on mid to long-term gains by gaining control over companies.
What are the benefits of FDI for a host country?
Benefits of FDI include new job creation, technology transfer, and infrastructure development.
What are the risks of FII for a country?
Market volatility is a major risk as investors can get spooked and pull out their money quickly.
What can be done to mitigate the negative impact of FPIs?
Effective regulatory frameworks, prudent economic policies, and continuous monitoring are essential to balance the benefits of FPI inflows while minimizing the risks to the economy.
What role do FIIs play in corporate governance?
FIIs often advocate for higher corporate governance standards, greater transparency, and better management practices to protect their investments.

June 27, 2024

Category: Investing

Overview of the Drone Industry

Top 8 Best Drone Stocks in India

Market Capitalisation Table of Best Drone Stocks in India

Best Drone Stocks in India 2026 – An Overview

1. Hindustan Aeronautics Ltd (HAL)

2. Bharat Forge Ltd

3. Zen Technologies Ltd

4. RattanIndia Enterprises

5. Paras Defence & Space Technologies Ltd

6. Ideaforge Technology Ltd

7. DCM Shriram Industries Ltd

8. Droneacharya Aerial Innovations Ltd

Comparative Study of Drone Stocks

Performance of Drone Stocks

Key Performance Indicators

Benefits of Investing in Drone Stocks

Factors to Consider Before Investing in Drone Stocks

Future of Drone Stocks

Conclusion

Frequently Asked Questions

What are the top drone stocks in India?

Why should one consider investment in drone stocks in India?

What should one look at while considering investing in drone stocks?

What are the future prospects of the drone industry in India?

Has the government come up with any specific initiative in favor of the drone industry in India?

Overview of AI industry in India

Top AI Stocks Based on the Market Capitalisation

Best AI Stocks in India Based on Market Capitalization – An Overview

1. Tata Consultancy Services (TCS)

2. Infosys

3. HCL Technologies

4. Wipro

5. Tech Mahindra

Top AI Stocks Based on 1 Year Return

Best AI Stocks in India Based on 1 Year Return – An Overview

1. Oracle Financial Services Software Ltd.

2. Bosch Ltd.

3. Kellton Tech Solutions Ltd.

4. Zensar Technologies Ltd.

5. Cyient Ltd.

Key Performance Indicators (KPIs)

Benefits of Investing in AI Stocks

Factors to Consider Before Investing in AI Stocks

Future of the AI Industry

Conclusion

Frequently Asked Questions (FAQs)

What is AI?

Why would AI stocks be a good investment?

How can we ensure responsible AI development?

Will AI take away all our jobs?

What are some other AI stocks in India?

What is Contrarian Investing?

Different Approaches Used to Do Contrarian Investing

Challenges of Contrarian Investing

Examples of Contrarian Investing

Historical Returns of Contrarian Investing

Conclusion

Frequently Asked Questions (FAQs)

What is a contrarian strategy?

Is contrarian investing profitable?

Who is the famous contrarian investor?

What is one of the limitations of Contrarian investing?

Can AI be used to execute contrarian strategies?

What is the Business Cycle?

Five Phases of a Company’s Business Cycle

1. Expansion Phase

2. Peak Phase

3. Contraction or Recession Phase

4. Trough Phase

5. Recovery Phase

Illustration of Different Stages of Business Cycle

Decoding the Business Cycle of Reliance JIO Industries

Conclusion

Frequently Asked Questions (FAQs)

Why is it important for equity investors to understand the business cycle?

How does the expansion phase affect a company’s strategy?

What signals the transition from the peak phase to the contraction phase?

What strategic decisions are critical during the trough stage?

How do companies prepare for the recovery stage?