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UPI has been a game changer for India.
In fact, if you really want to understand what has happened in this space, I highly recommend you listen to this podcast to truly appreciate the scale and importance of what UPI has done not just to the payment ecosystem in India but Globally.
You read that right, globally.
You see, never before anywhere in the world has it ever been possible for someone to remit payment instantly from one account to the other irrespective of a different bank account, location and identity instantaneously.
With UPI coming into picture, massive Fin-Tech innovation has happened on top of this. The India Payments Stack as we call it has been vividly possible and relevant because of UPI coming into picture.
At this point you must be thinking - Why is Saket talking about something that all of us know and is fairly, old?
How does knowing this makes me smart?
Health ID
Well, allow me to introduce you to the UPI moment of healthcare, the ABDM or the Ayushman Bharat Digital Mission (ABDM).
Before I jump into digital Health ID, let me take you back to the era of paper trades of securities.
We lived in a time when shares were not dematerialised and trades happened through physical share certificates leading to a whole host of issues.
Cut to 2021, you have discount digital brokers, depositories, electronic exchanges and a regulator that ensures participation in the ecosystem goes up thanks to a small key change that made it all possible - existence of securities in Dematerialised or DEMAT or digital format.
For almost decades, it has been next to impossible for someone to maintain their health records. A doctor’s visit is not complete unless you’ve had a few blood tests done, made a visit to the pharmacy or had to re-visit again to get the medical reports ratified.
For someone with advanced stages of certain chronic illness, these reports could run into 100’s of pages and multiple physical files.
How do you ensure that you get everything in one place?
Well, for starters a few private chain hospitals did try to implement having all your digital health records w.r.t. your profile. This however, existed within the hospital’s ecosystem.
If you had to go from Hospital A to Hospital B for a second opinion, well, good luck with getting your access on the digital trail from Hospital A.
This made it ripe and almost certain for someone to really make an ecosystem out of these digital trails so that one Hospital could start talking to the other - well not literally but the data-systems in case there was a unique patient overlap.
Think of it this way, you have a Bank Account with SBI and a loan with HDFC Bank but in a pre-Aadhar world neither SBI nor HDFC Bank could truly know your real net worth.
The digital Health ID seems like a massive stride to ensure Indian Healthcare goes to the next level alongside disbursals of Centre and State sponsored Insurance. This can actually pave way for massive med-tech investments for the coming years.
Webinar Updates - October kick-off
The October Webinar schedule is out. Find out more about it here.
We kicked it off today with a detailed deep dive on understanding Balance Sheet and Cash Flow statement with multiple exhibits to truly analyse investment implications.
Understanding Balance Sheet and Cash Flow Statement is unique across different industries and companies. At Beta to Alpha’s 0.01% club, it has always been our endeavour to read between the lines and immerse ourselves in what is relevant.
Here’s a small discussion from today’s presentation -
When you look at Exhibit B, you see that there’s a business which almost has 4x leverage on its Balance Sheet and that makes you think, OMG - D/E Ratio of this Company is so high, this is really bad.
Let’s take another example.
You will often find that companies disclose Standalone and Consolidated Balance Sheets. Here’s a Standalone Balance Sheet of Exhibit C.
On a quick reading you see that the company has Fixed Assets worth ~USD 1 bn, adequate reserves and a comfortable D/E ratio of 0.5x.
Let’s look at the Consolidated Balance Sheet of Exhibit C.
When one looks at the Consolidated Balance Sheet of C, the Leverage suddenly shoots up making the company’s D/E Ratio look ~3.2x compared to 0.5x at a Standalone level - almost 600% increase!
So, what are these companies into and what are the implications? Scroll to the bottom to find out more.
[Premium] Why is Music Streaming going all the way to the moon? 🚀
While we were in the middle of a hectic week trying to gage what the Fed had to say, whether the Evergrande default will take place and what synergies will the Zee and Sony merger in India create, the world’s biggest record label UMG listed at a valuation of USD 53 billion.
This has been the largest European listing this year. Is this a one-off event? Probably not. Earlier this year, Warner Music Group Inc. raised USD 1.9 billion in an upsized IPO valuing the company at USD 13 billion. As early as in June ‘21, the French record label listed at a valuation of USD 2.2 billion.
(Probably the only article you need to read to stay on top of things in this space.)
Click here to read more.
Alpha Swing
In this week’s 3 swing trades, we are back with the interesting guessing game.
If you can guess the stock right, you get a complimentary 1-month premium access to Alpha Swing.
Hint - With the Zee-Invesco-Sony battle intensifying, the entire media sector is in focus.
From FY17 to now, this company has consistently shown improvement in Operating Profit margins from 3% to 20% (almost 7x) and has also improved it’s return ratios.
The company has been consistently strong operating cash flows for the past 2 years alongside specific focus on increasing Working Capital efficiency for FY21.
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StockRoom Sunday
Podcast of the Week
Song of the Week
Book of the Week
I have now started reading resources around history and geopolitical issues to get a good worldly view of perspectives. I recently stumbled around this book called - A New Idea of India, written by two great thought leaders who also happen to be prolific investors and have a deep understanding of India’s history.
In fact, while researching about this book, I also happened to learn the fact that the authors received a shout-out from the Prime Minister himself which made their website crash!
Click here to check it out.
If you liked reading this, why not make someone else smarter too?
Answer
Exhibit B is Bajaj Finance. Typically Lending businesses have leverage based on their contributed equity into the business and their loan growth aspirations.
Exhibit C is Ashok Leyland. At a Standalone level you get the Commercial Vehicle Business but at the Consolidated Level there’s a NBFC i.e. Hinduja Leyland Finance that makes the leverage look massively high for an auto business.
Just a snippet of a small feedback received on the session 👇
Will see you again next week.
Ciao.