Tale of the Tape 

Hola Amigos.

Nifty and Sensex went up and down before ending flat! Midcaps (+1.1%) and Smallcaps (+1%) had a much better day. The advance-decline ratio was in favour of the bulls (3:2). Check out the Stocktwits Sentiment Meter:

It was a mixed-bag kinda day for sectors. PSU Banks (+2.3%) and Real Estate (+2.1%) were the top gainers. Energy (-0.7%) and FMCG (-0.7%) witnessed the most selling pressure.

With Swiggy’s Q2 results out, how does it stack up against Zomato? Read our top story for how to place your bets.

SEBI has officially cancelled Trafiksol’s IPO. More details below on why SME IPOs are turning out to be such big red flags.

Defence stocks were zooming today! Check out their charts below to find out why.

PSU banks were on fire after Citi said they would benefit from a potential CRR cut by the RBI. UCO Bank (+13%), Central Bank (+8%) and Indian Overseas Bank (+9%) jumped the most.

Star Cement (+6%) gained after reports said Adani-owned Ambuja was in talks to acquire the firm.

Honasa Consumer was up +6% after co-founder Varun Alagh hiked his stake in the firm.

Reliance Power was locked in a +5% upper circuit after the GOI took it off a tender blacklist.

Here are the closing prints:

Stock
Swiggy vs Zomato

Swiggy rallied +7% intraday after reporting its first quarterly earnings post-IPO! We know that the Zomato comparisons are inevitable, so here’s a quick look at how Swiggy performed and what the broader picture looks for both companies. 

Let’s start with the Q2 numbers, which were decent. Overall topline jumped +30% YoY to hit Rs 3,601 cr, beating Street estimates, on the back of a strong performance in its quick commerce vertical. PS - Instamart’s revenue +2x to Rs 490 cr in Q2. Food delivery remained solid, with its new 10-min service ‘Bolt’ accounting for ~5% of gross order value (GOV). The company reported a loss but it was in-line with analyst expectations and overall EBITDA margins improved 700 bps (YoY)

Zooming out, there’s two important things to keep in mind on Swiggy vs Zomato. 

Firstly, Swiggy is catching up in terms of GOV growth. Both firms reported +5% QoQ growth for food delivery and +25% QoQ growth in quick commerce. In food delivery, there are also encouraging signs that Swiggy’s profitability is nearing Zomato’s. FYI - Swiggy’s EBITDA (as a % of GOV) for food delivery rose to 1.6%, just 190 bps lower than Zomato’s!

The elephant in the room is that Swiggy should probably be growing a LOT faster. After all, Zomato is still CRUSHING Swiggy in terms of size. Consider this: in the quick commerce vertical, Zomato’s GOV is around 81% higher than Swiggy’s. Even in terms of average order value, Zomato is at Rs 660 for Q2 vs Swiggy’s Rs 499, indicating Zomato’s customers either are richer or simply like and use the service a LOT more.

Finally, there’s the obvious. Zomato has posted a full year in consolidated profit now (even though Blinkit EBITDA remains shaky), while Swiggy isn’t projecting group-level break-even till 2025 end!

Big Picture: Swiggy’s market cap is ~$13.5 billion, 55% lower than Zomato’s ~$30 billion. This valuation discount, mostly because its #2 and profits are a long way off, makes Swiggy an attractive bet IF you are bullish on its long term growth prospects.

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Stocks To Buy In This Fall

Markets have seen a healthy correction from their all-time highs. Experts say this may be one of the best times to build your portfolio. Here are 5 midcap & smallcap stocks that you must absolutely not miss according to market experts.