The real estate market in India expanded at a CAGR of ~10% from $50bn to $120bn between 2008-17.

It's estimated to expand at a CAGR of 17.7% to $1tn by 2030. It will added $820bn in 10 years from $180bn in 2020.

Will throw a number of opportunities along the way.

Ethanol blending as a concept has roots in 1826. In 1876 a more evolved use began. Nicolaus Otto, the inventor of the modern 4-cycle IC engine, used ethanol to power an early engine

Modern industry has its root in crony capitalism of 1960-70s in US

It's still a sunrise sector🙄

Why & how does rising Crude Oil hurt India?

A short thread 🧵

India is the 3rd largest consumer of Oil at 5.35 million barrels per day (MBPD) behind US (21.2mbpd) and China (15.1mbpd)

India imports nearly 85% of its total Crude oil consumption every year.

India's own production has been below 700,000 barrels per day for a long time.

India imports oil in the following share as per FY 21 numbers:

Iran 17%,
Saudi Arabia 16%,
UAE 14%,
USA 9%,
Qatar 8%,
Others 38%

India import share for Oil from Russia is under 2%, an insignificant number.

India imports about 290 Million tones of Oil in a year.

Assuming that Oil prices are at $75 (last year),
India's oil import bill is ~ $165bn

India exports refined petroleum products as well. At $75 oil price those exports would amount to $58bn

=Oil trade deficit of $105bn

Oil at:
$100, India's oil trade deficit (imports - exports) would be ~ $140bn

For every $10 rise in Crude Oil from say $100, India's oil trade deficit will rise by ~$15bn

For instance at $120 Oil price it would be ~ $170bn

Headline is a click bait, but nos are good.
Housing sales surge 113% in top 7 cities even as prices rise; massive 300% spike in Hyderabad

https://t.co/NODfkp3BxA

Why and when the markets stopped caring about the Russia-Ukraine conflict? A short thread🧵

The news coming in from Ukraine remains concerning with huge losses and humanitarian crisis.

But for the last 10 days the markets seems to 'Not Care' and react to the news.

Read why

Markets become very jittery if they can sense a large financial panic because of an external event.

One gauge to measure what the market is pricing-in is the funding stress indicator.

For instance, the FRA-OIS spread in US measures the funding stress in interbank markets.

The FRA-OIS spread, which measures the gap between the U.S three-month forward rate agreement and the overnight index swap rate, is an indicator similar to the TED Spread.

TED spread gained a large analyst following during the global financial crisis in 2008.

The FRA/OIS spread expanded from under 5bps to 38bps since Russia Ukraine crisis began.

The same spread had jumped to 80 from 10 during the COVID crisis scare before US Fed and other central banks stepped in.

Take a look at the graph.

What does this mean?

Equity, bonds and currency markets are most sensitive to problems in interbank markets. Why?

Because interbank markets runs financial markets to a very degree. From margin payment in f&o segment, to short term credit, to credit for economy ....

Why Gold could be 'The' asset to focus on and how to play it?

In 2021, gold hasn't done much. Its down 6% YTD. It was up a clean 20% in 2020.

What could be in store ahead. A thread 🧵 explaining drivers and way ahead.

There are 4 factors that are key to watch

1. Massive financial debasement across the world

2. Negative Real Interest rates

3. Gold's unique diversification edge

4. Incremental demand Vs limited supply

Financial debasement
US Fed's balance sheet has doubled from $4.2 trn to $8.4trn since COVID began. Similarly ECB, BOJ, BOE and EM central banks have embarked on massive monetary stimulus.

This was used to finance Govt deficit. This monetization/debasement is bullish for Gold.

Negative real rates
Gold prices follow moves in interest rates. Real interest rates are the nominal level of interest rates minus the inflation rate. Negative real rates erode the value of money. Gold being a store of value benefits from this...

Real rates are the most negative that they have been. Even junk bond yields have turned negative adjusted for inflation.
Gold moves inline with moves in real rates. With inflation still above normal trend and central banks likely to keep rates low, Gold is likely to benefit.

A THREAD on how most real estate folks structure deals with outside investors.

Most people utilize the "preferred equity" structure when they raise money from outside investors. They "syndicate" deals.

Here's the basics:

The person (or team of people) putting the deal together is the "sponsor". Also called general parter. Referred to on twitter as the GP.

They find the property, do all the work, hire the management company and take fees. They often co-sign debt and always secure the financing.

The investor is generally passive, doing no work and putting in cash. This is the "limited partner". Referred to on twitter as the LP.

They don't co-sign debt. They simply read reports and ask the sponsors questions and cash checks every month (if the deal is going well).

There are two equity classes.

"Preferred equity" belongs to the LPs. Cash talks, so this is a higher class of shares. They are first in the "capital stack" behind the debt (bank loan).

"Common equity" belongs to the sponsor. They are generally last in the capital stack.

Sponsors generally co-invest. That means they hold both equity classes. A 10% co-invest is standard.

That means the GP has skin in the game. His 10% co-invest makes him both an LP and a GP.

Headline is a click bait, but nos are good.
Housing sales surge 113% in top 7 cities even as prices rise; massive 300% spike in Hyderabad

https://t.co/NODfkp3BxA

#CenturyPly

👉Capex done in d last 8years = ~1000crs

👉Capex to be executed in next 2 years = ~1000crs

Speaks volumes about demand from the real estate sector.🚀

Real Estate Inventory is consistently reducing across the top 7 cities in India.

source: Jefferies, Propequity

Some points for Canfin Homes bulls to ponder upon:

1. It has been on the block twice in the last 5 years. Why didn't anyone buy?

2. If it gets sold, would the liabilities side stability remain?

3. Is it granular enough or only limited to Tier 2 cities unlike Aavas which is in

Tier 3 and Tier 4 and is able to print abnormal ROAs.

4. NIMs are okay-ish for a HFC. ROA is good at 2%+

5. ROE is 19%, because it is leveraged almost 9x.

My view remains- it isn't granular enough to escape competition from Banks like SBI and ICICI etc. Thus we see a lower

growth rate. Why not HDFC ltd over this in that scenario if you are settling for a lower growth rate and also taking the risk of competition and company being sold. Its likely to be a compounder and not a fast grower. Adjust expectations accordingly.

Disc: not invested in both^