Tale of the Tape 

Hiya everyone.

Markets continued their losing streak with the Nifty (-0.2%) and Sensex closing in the red for a 4th consecutive day. Midcaps (-0.3%) and Smallcaps (-0.2%) were also weak. The advance-decline ratio was in favour of the bears (3:2). Check out the Stocktwits Sentiment Meter:

It was an even mix of red and green for sectors. PSU Banks (+1.2%) were the top gainer. FMCG (-2.8%) and Real Estate (-1.1%) saw heavy selling pressure.

HUL (-6%) saw its worst intraday fall in four years on bad Q2 results. Read our top story on why FMCG is struggling.

Diwali is almost upon us! Wondering what to place your bets on? Check out SBI Securities’s top three festive picks. 

KPIT Tech, Sona BLW and Piramal Pharma saw big movements today. Look at their charts below to find out why.

Reliance Industries was in focus after Mukesh Ambani and NVIDIA chief Jensen Huang announced they would build AI infra together.

Hindalco fell over -6% intraday after rival Constellium’s weak earnings sparked fears for Novellis’s future growth.

Paytm (+3%) was in focus after Citi upgraded the stock; the brokerage sees an +18% upside from current levels.

Results reaction. Aster DM jumped +10% after it returned to profits in Q2. SBI Life slipped -5% after cutting its FY25 growth guidance.

Order wins. Railtel was up +6% intraday after bagging a Rs 144 cr order from Gujarat government. KEC International gained +3% before slipping into the red after securing orders worth Rs 1,142 cr.

Here are the closing prints:

Earnings
HUL Q2 Review

Winter may be two months away, but it’s already cold AF for India’s FMCG firms. HUL cracked -7% intraday and ended up the top Nifty loser after its bad Q2 results. FYI - this is the biggest one-day fall in four years for the stock. So, what’s going on? HUL is being hit by a three-pronged blow.

Let’s start with the topline. Domestic volumes in Q2 grew only at +3% YoY vs an estimated 5%. While homecare did well and the beauty biz was decent, its personal care & food/refreshments segment declined and missed expectations. This gels with what Nestle’s India boss said recently: premium segments are doing well as rich urban Indians are spending. But the actual middle class is hurting aka lower ketchups, jams and Horlicks sales.

This brings us to expenses which were higher. Yes, crude oil costs are down, but higher tea + palm oil prices erased this benefit and ultimately brought down margins. This took a toll on the bottomline.

Finally, rural growth is improving but it's slower than expected. As a result, slowing urban growth is having an outsized impact. CFO Ritesth Tiwari said: "When overall market demand signals are muted, we are seeing urban growth in the market moderating. Now this impacts all the categories at Hindustan Unilever."

Here are HUL’s key stats:

• Revenue: Rs 15,508 cr; +2% YoY (vs Est: Rs 15,665 cr)

• EBITDA: Rs 3,647 cr; -1% YoY (vs Est: Rs 3,750 cr)

• EBITDA Margin: 23.5% vs 24.2% YoY

• PAT: Rs 2,612 cr; -4% YoY (vs Est: Rs 2,675 cr)

Big Picture: There are a couple silver linings. Firstly, HUL maintained or increased market share in most segments. Secondly, it has started to hike prices which should help out with margins and allow it to step up ad spending.  While many analysts including JP Morgan have cut earnings projections for FY25, they are still bullish in the long-term!

HUL is -6% YTD.

Stocktwits Spotlight
Stocktwits India Momentum Index! 🚀

The Stocktwits India Momentum Index was down -1.5% today!

Godfrey Phillips, the MVP of the Momentum Index, slipped over -5% and wiped out a majority of yesterday’s big upmove. OFSS (-4.7%) hit a 2.5 month low after today’s beating. On the flip side, Cochin Shipyard was the only stock to gain over a percent.

PS - The Stocktwits India Momentum Index highlights the top 10 performing companies based on their weekly returns. Plus, we bring you tons of exclusive content on the featured stocks including SEBI RA trade ideas, latest news & earnings updates, fundamental and technical insights.