Bulls Got No Chill

Money Money Money

2022 has been rough for small-cap investors. The Nifty Smallcap Index tumbled nearly 30% before staging a modest recovery in the past month. Meanwhile, most stocks continue to trade 20%-25% off highs. 🤕

But, there is one exception. Gujarat-based Industrial gears and equipment maker Elecon Engineering is +85% in 2022. In the past year, the stock has doubled investor wealth. 💰

Founded in 1951, Elecon Engineering is one of Asia’s largest manufacturers of industrial gears and material handling equipment. Core sectors like power transmission, ports, cement, and industrial metals use their equipment. As we all know, the economy is firing on all cylinders. Manufacturing activity hit an 8-month high of 56.4 in July, which is a positive. ✅

It is part of a niche industry with only a handful of players. Elecon has a solid financial track record. Its profits have grown at a 69% CAGR in the past 5 years and have a decent +15% return on equity (ROE). They won fresh orders worth Rs 282 cr in Q1. Notably, ace investor Vijay Kedia bought an additional 0.8% stake in the company. He now holds ~2%. 🧐

Big Picture: The GOI remains focused on driving growth and increased the budget for capital expenditure by 35% to Rs 7.5 lakh cr this year. Various measures like the Make In India initiative and PLI scheme are expected to give a major boost to the country’s manufacturing industry. 📊

A robust business outlook, strong institutional interest, and healthy financials are key positives. But, fears of a global recession remain a major concern. Let’s see how this goes. 👍

How To Achieve Financial Freedom?

Before we ask the most burning question let’s first try and understand what financial freedom actually means. Finance means money and in this context personal money. Freedom here means having the choice to pursue whatever you want. 🕺

How do you do so? By accumulating assets that earn an income for you that can cater to your present living expenses and needs in the future. If only it were that easy, right? 🙈

Feroze Azeez, Deputy CEO at Anand Rathi Wealth lists down a few pointers for beginners that could make the whole process a little bit easy. But, before we do that, a super important disclaimer, personal finance is more “personal” than “finance” so a one-size-fits-all policy doesn’t work. These are broad guidelines that should help you manage your money better and generate long-term wealth. 🤑

The first step is to set a goal, according to Feroze. For example, you want Rs 2 crore to buy a house. The second step is to determine your income and expenses. The difference between the two becomes your investable corpus. A great way to do this is by creating a budget and tracking your expenses over time. 📈

The next step is to mobilize your savings into investments. Equities are a great place to park your money but not without proper risk management. I’m looking at you who YOLO’d his life savings into a penny stock. Feroze recommends you start a SIP in mutual funds and increase it by 10% every year. A periodic review of your investment performance and rebalancing are equally necessary. Lastly, creating an emergency fund or buffer for any contingent events is an absolute must, according to Feroze. 🏦

Following these steps would require both discipline and patience. Remember, Rome wasn’t built in a day! All the best ✌️

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