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Why invest in IIFL Royal Mint Smallcase?

The BFSI sector, Banks in particular, have fared well as against the doomsday expectations at the outbreak of the pandemic.

Measures taken by RBI, such as the ECLGS and moratorium period, along with accrued savings have likely resulted in improved liquidity for borrowers, and have consequently aided in repayment of dues.

Moreover, awareness and better financial discipline have resulted in lower restructuring.

As a result, the stressed assets are at manageable levels. PPOP & adequate provisions are likely to cover any increase in credit cost.

Therefore, we have selected a basket of BFSI stocks based on the following rationale:
1. Large Banks: This pack has benefited on account of market share gains in both advances and low cost deposits, with the latter aiding in better than expected NIMs.
2. Mid-cap financials: The NBFCs have enough liquidity & strong capitalisation to gain market share and have made adequate provisions to cover credit cost.
3. Insurance: Market share gains and lower loss ratio in focus categories for a general insurance provider. We have also selected a life insurance provider that has a balanced product portfolio along with a rising mix of high margin products like non-PAR and protection.
4. Exchange: Operating leverage business model where higher volatility would aid in volumes while new product launches and participants are growth levers.
5. The other details like tables, etc. attached
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Returns over various periods

1M 3M 6M 1Y 2Y 3Y
smallcase 9.94% 11.89% 41.91% -4.48% 32.57% 30.53%
NIFTY 100 10.08% 12.14% 37.63% 6.92% 20.08% 20.67%

Calculated as of closing price on November 23, 2020

Market Cap Distribution

  • Large Cap 70.00%
  • Mid Cap 22.00%
  • Small Cap 8.00%

Ratios

PE Ratio 20.02 26.94
PB Ratio 1.96 3.52
Sharpe Ratio 0.85 1.10
Dividend Yield (%) 0.41 1.41