All you need to know about RERA Act, 2016

The Real Estate (Regulation & Development) Act, 2016, came into force on 1 may 2017. RERA seeks to bring clarity & fair practices that would protect the interests of buyers & also impose penalties on errant builders. Issues like delays, price, quality of construction & title are also easily resolved with clauses in RERA.

The Act requires developers to get all ongoing as well as under-construction projects that have not received completion certificate, registered with regulatory authorities within 3 months, i.e., by end of July. Projects with plot size of a minimum 500 sq.mt or eight apartments need to be registered with regulatory authorities.

Applicability : RERA is applicable only to those on-going projects which have not received the completion certificates before commencement of The Act i.e., 1 May, 2017. They need to get registration done on or before 1 July 2017.

Therefore, all projects which have not got completion certificate before 01/05/2017 will be deemed ongoing & will have to be registered.

Key provisions of RERA ;

  1. The promoter of a real estate development firm has to maintain a separate escrow account for each of their projects. A minimum 70% of the money from investors / buyers will have to be deposited. This money can only be used for construction of the project & the cost borne towards the land. To provide clarity to buyers, developers will have to keep them informed of their ongoing projects.
  2. RERA requires builders to submit those original approved plans for their ongoing projects and alterations that they made later. They also have to furnish details of revenue collected from allottees, how the funds were utilised , the timeline for construction, completion & delivery that will need to be certified by an Engineer/Architect/practicing Chartered Accountant.
  3. The regulator will ensure protection the buyers in matters of poor quality construction & provision of service for 5 years from the date of possession. If any issue is highlighted by the buyer, the developer has to rectify the same within 30 days of the grevience raised.
  4. Developers can’t invite, advertise, offer, market or book any plot, apartment, house, building, investment in projects, without first registering with the regulatory authority.
  5. If the promoter defaults on delivery within agreed deadline, they will require to return the entire money invested by the buyers along with the pre-agreed interest rate mentioned in the contract based on the model contact given by RERA. If the buyer chooses not to take the money back, the builder will have to pay monthly interest on each delayed month to the buyer till they get delivery.
  6. Too add further security to buyers, RERA mandates that developers can’t ask more than 10 % of the property’s cost as an advanced payment booking amount before actually signing a registered sale agreement.
  7. Where no contractual rate of interest is mutually agreed upon between the promoter & the allottee, the interest rate payable by the promoter to the allottee or vice versa as the case may be shall be the rate which is prevalent as per existing directives of RBI i.e., MCLR the SBI PLR + 2%.
  8. The interest payable by the promoter to the allottee shall be from the date the promoter received the amount or nay part thereof till the amount or part thereof & interest Theron is refunded, & the interest payable by the allottee to the promoter shall be from the date the allottee defaults in payment to the promoter, till the date it is paid.
  9. The Act has mandated real estate developers to specify ‘carpet area’s’ rather than ‘super built up area’s for ease of comparison between multiple projects. 



Suggestions to a homebuyer: As a  homebuyer

, you must remember that a developer can offer possession only after the completion certificate has been obtained. Once that happens, the developer can apply for various utilities such as water & electricity.

If you are buying a house or have bought one, also insist on getting a copy of the clearance certificate before you take possession.

Exceptions to this Act : All those on-going real estate projects whose proposed land to be developed does not exceed 500 sq meters or 8 flats, inclusive of all the phases are exempt from the provisions of The ACT.

DISCLAIMER I : No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. As SME issues have entry barriers and having low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer. 

DISCLAIMER II : Notwithstanding any opinions my views are speculative in nature which bares me to be a guarantor of 100 % accuracy with regards to future trend prediction & pricing targets

Ethereum – An investment opportunity you will never get again.

It’s a cryptocurrency

While Bitcoin is currently trading at close to its all-time high, its dominance in terms of proportion of total cryptocurrency market cap is rapidly decreasing — ground largely given up to Ethereum.

This shift is probably being driven by a few factors. Despite its recent appreciation in value, as a technology, Bitcoin has stagnated over the last three years. Two rival factions have emerged with violently opposing views on what should be done to allow the Bitcoin network to handle more transactions than it can right now. While Bitcoin has been paralysed by indecision, Ethereum has raced ahead with technology that not only does everything Bitcoin can do faster, in higher volume, and at lower cost — it does a lot more besides.

The other part of the story which I won’t get much into is, bitcoin is splitting into two halves.

While Bitcoin is currently trading at close to its all-time high, its dominance in terms of proportion of total cryptocurrency market cap is rapidly decreasing — ground largely given up to Ethereum.

This shift is probably being driven by a few factors. Despite its recent appreciation in value, as a technology, Bitcoin has stagnated over the last three years. Two rival factions have emerged with violently opposing views on what should be done to allow the Bitcoin network to handle more transactions than it can right now. While Bitcoin has been paralysed by indecision, Ethereum has raced ahead with technology that not only does everything Bitcoin can do faster, in higher volume, and at lower cost — it does a lot more besides.

As a “hard fork” looms, which looks set to split Bitcoin into two separate currencies that will have to fight for custody of the Bitcoin moniker, anxious Bitcoin holders are increasingly divesting themselves of Bitcoin to acquire Ether — the cryptocurrency that fuels the Ethereum network.

The other side of it is that Bitcoin is really only useful as a store of value. Even then, its usefulness for actually transacting value is limited. In a world where people are used to online payments being confirmed instantly, Bitcoin transactions can take anywhere from tens of minutes to several hours, depending on how busy the network is. It’s also expensive — especially if you’re only sending small amounts. The average transaction currently costs about $1.50.

Ethereum, on the other hand, was never intended as a Bitcoin competitor. Ethereum is actually a platform for new kinds of decentralized (often financial) applications (dApps) that run on a peer-to-peer network of computers. These dApps are designed to disintermediate the kinds of relationships and transactions for which we have traditionally required things like banks, public registries, and the legal system.

For technologists, this is exciting stuff, and a vibrant community of software developers has enthusiastically embraced it. Hundreds of projects, startups, and companies at every scale — including the likes of Intel, Microsoft, and Samsung — are building software using Ethereum. And everyone who wants to use any of these dApps on the public Ethereum blockchain will need to pay a small fee in Ether each time they do so.

The utility of many of these dApps are based on network effects, so Ethereum as the underlying protocol is a network upon which other networks are being built. It is therefore a group-forming network— a much faster growing and more resilient kind of network effect than Bitcoin enjoys. In group-forming networks, even if the utility of individual groups is low, the network effect of all being part of the same underlying network can dominate the overall economics of the system. In other words, the value of the whole becomes greater than the sum of its parts. That’s particularly interesting in the case of Ethereum as that value is captured within the Ether price.

Platforms requiring network effects are however, famously hard to bootstrap — but here Ethereum has an ace up its sleeve. Token sales, or Initial Coin Offerings (ICOs), allow Ethereum projects to sell their own native token to the crowd. A token is a cryptocurrency that has special purpose within the dApp to which it corresponds. The purpose and value of these tokens varies, but what they all share in common is that their sale not only provides funding for the dApp’s development, it also catalyses the creation of a community around the dApp that is financially incentivized to see it succeed. The more successful a dApp becomes, the greater the demand for, and therefore value of, the token required to use it.


Bitcoin’s dominance is slipping because its utility is limited and weakening versus other more recently developed, less politicized cryptocurrencies. Financial markets don’t like uncertainty, and Bitcoin is gearing up for a messy divorce. Ethereum was never intended as a competitor to Bitcoin, it’s something very different. But the value of Ether is underpinned by utility within the kind of group-forming network that tends to grow rapidly when it picks up steam. That’s why its value is increasing faster than Bitcoin, and why many pundits are predicting it will continue to do so long after Bitcoin’s market cap has been exceeded.

DISCLAIMER I : No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. As SME issues have entry barriers and having low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer. 

DISCLAIMER II : Notwithstanding any opinions my views are speculative in nature which bares me to be a guarantor of 100 % accuracy with regards to future trend prediction & pricing targets

HUDCO IPO – A BET ON AFFORDABLE HOUSING FOR ALL 2022

​The Modi administration is know for its execution of projects in time & it’s far more formidable to believe that the Affordable Housing for all scheme will be his pitch for 2019 general elections.

Housing and Urban Development Corporation (Hudco), a wholly-owned subsidiary of the Government of India is first of its kind IPO which is a step by the government to meet its disinvestment targets.HUDCO is a wholly owned government company with focus on housing and urban infrastructure finance in India. HUDCO primarily lends to urban infrastructure projects relating to water supply, roads & transport and power accounting for 69 per cent of the loan book.  Housing Finance forms the remaining 31 per cent of its loan book. It’s business model is skewed towards state government spending The success of this IPO will lay a trajectory for the government to make other govt. owned enterprises, publicly listed.

Proceeds from this 1200 crore IPO is to be used by the government unlike other IPO’s which use it for capex, debt repayment or to meet working capital requirements.The IPO is priced between Rs 56-60 and can be applied in lot sizes of 200 shares.

Financials At a P/E of around 14 plus and at a P/BV of around 1.3 plus. It has no listed peer to compare with.

ADVANTAGES TO THE COMPANY: 

  1. PAN India presence
  2. Zero default risk from the lending book exposure to state governments.
  3. The Company is set to play a significant role in PMAY under Housing for All (HFA) by 2022.
  4. Available at a fair valuation & a Rs 2/- discount to retail investors.
  5. Should show long term interest of big fund houses.

Risk : Default on the obligations by borrowers  primarily the private Cos. may adversely affect the financial metrics of the company, which is a key risk in the business of HUDCO.

ALL ABOUT LISTING : This listing is expected to give a return of Rs 24 per share i.e., a low risk target of Rs 80, a moderate risk target of Rs 90 (Rs 34 premium) a high risk target of Rs 99 (Rs 43 per share premium).

 DISCLAIMER I : No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. As SME issues have entry barriers and having low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer. 

DISCLAIMER II : Notwithstanding any opinions my views are speculative in nature which bares me to be a guarantor of 100 % accuracy with regards to future trend prediction & pricing targets

Why Avenue Supermarts Ltd. (DMart) IPO deserves a record listing – Yash Dave

DMart came into existence in some year which only augur’s little relevance to this analytical opinion.

Coming straight to the facts & figures before forming basis to a range bound conclusion.

  • Follows ownership model of business similar to global giant Walmart.
  • PE at 33, FY 17 Vs industry PE of 179.
  • Promoter holding at 82% (approximate) after share allotment.

Comparison of Supermarts Avenue with its closest peer V-mart retail ltd 

Revenue CAGR of 40% Vs 30%.

Operating profit margins at 7.9% Vs 7.6%.

Annual Revenue (FY 17) at Rs 25,844 crores Vs Rs 9849 crores.

ROE at 21.1% Vs 17%.

Net profit (CAGR) at 52% Vs 27%.

Asset T/O at 3.9 times Vs 6.55 times

Inventory T/O at 14.18 times Vs 4.11 times

  •    Out of total issue size :
  1.  35% is open for Retail allotment
  2. 50% for QIBs
  3. Rest 15% for institutional buyers.

Conclusion : To the blogger the data seems to suggest that an upper price band of Rs 299 per share is comparatively cheap. Hence, it’s a definite buy with an modest target of Rs 350, moderate target of Rs 399 & an aggressive price target of Rs 480.

For questions, suggestions, opinions & queries please comment.

Disclaimer : Notwithstanding any opinions my views are speculative in nature which bares me to be a guarantor of 100 % accuracy with regards to future trend prediction & pricing targets.

Stock pick for year 2017

Stock pick for 2017, MCX India Ltd..

Rationale :

1. Largest listed Indian commodity index.

2. Possibility of favourable option trading norms by SEBI in coming weeks.

3. Listing of BSE a sentiment booster which can potentially lift share price .

4. Positive announcements in union budget 2017-18 to encourage farmers hedge positions through use of commodity derivatives.

Opinion :

Greetings !! 

Today was the last trading session of Indian markets. 2017 seems to be less of a challenge & investors can expect indian equities to outperform & end on a rather higher positive note.

Wishing you a fundamentally backed, technically indicated & sentimentality boosted, prosperous 2017.


Disclaimer : Notwithstanding any opinions my views are speculative in nature which bares me to be a guarantor of 100 % accuracy with regards to future trend prediction & pricing targets.

TRUMP victory & it’s impact on Global Financial Markets

The people of the world experienced a shocker as they woke up on Wednesday morning, the 9th of November 2016 by witnessing the unexpected HILARY loosing to DONALD TRUMP.

The policies of this new leader of world’s richest democracy are uncertain & unpredictable. In his victory speech he emphasised on a $500 billion infrastructure led investment growth for the economy.

This shall have enormous futile impact on global economies except the United States.

A fiscal stimulus as big as $ 5 trillion can revive global commodity markets except crude & create just the inflation required for long anticipated FED interest rate hike. This would create additional jobs making every statistical aspect hunky-dory for further rate hikes. This would bring GDP growth back to the world’s largest economy.

Shouldn’t this be good ?

That’s what most of the experts would say. There is a general presumption that if US  does well India fares well too.

Well, have a look at this then..

A FED rate hike would mean a stronger dollar & increase in US T-Bills yield. This would result in large outflows from emerging markets like INDIA who is trying to bring in FDI. Rupee will be weaker, RBI will have to intervene.

Further the constitution of United States has granted power to its president to take trade decisions (without a majority in parliament) for upto 60 days & levy an import duty of 40% flat on all goods & services from any country.

If trump makes a move, China & Mexico are likely to be his immediate targets. This will result in lower Chinese exports hence a slowdown in the second biggest economy which is sitting on a debt pile which if rises any further can cause worst ever global recession.

Globally most banks will go bankrupt, people will be jobless & their wealth will be less then half the value of what was before as most of their investments will find no/very few buyers. There will be hunger/theft, poverty levels will rise.

There is one community which will benefit if such uncertain event takes place & that is the ones having enough exposure to commodities like..

GOLD / SILVER / PLATINUM / DIAMOND..

Just hope the actions of this newly elected US President do not turn out as he portrayed to win his votes.

The European-Chinese Recession 2017-2020

Global markets are at or close to all time highs on back of signs of better US economic growth outlook, liquidity push by global central bankers & recovery in commodity prices from its 2015 lows.

Time for a global recession again ?

The next global recession the world is going to witness shall be from Europe / China or both.

China has been BORROWING $ 6 for a GDP growth of $ 1. On detailed historical observation The United States of America pre Lehman crisis, borrowed $ 3 for a GDP growth of $ 1.

There has been observed stagnant or negative growth in European continent as a whole. Major European banks are at the verse of bankruptcy. Post brexit the situation has worsened. Much below IIP growth posted by the European growth engine Germany, was the confidence breaker. When a country as fundamentally powerful as Germany fails to post results, investors can expect no gold rush in other European countries. Several European banks are in extreme stress with a total pile of 1 trillion $ debt. If one major bank fails, it shall have major ripple effect on whole financial framework. European banks have started to trim EM exposure. RBS has already sold it’s india business to RBL bank, HSBC & standard chartered are trimming their operations.

If European banks fail, the first ones to get caught in the ripple effect will be Chinese banks which are most vulnerable in present scenario, amplifying it’s impact making it the worst recession the globe has ever witnessed.

Unless growth does not pick up in europe, which is not likely to, investors should be ready to face the worst.