Tale of the Tape 

Howdy folks. Welcome back to the Daily Rip!

Markets were volatile AF after the Hindenburg bullet, but Nifty and Sensex ended the day flat. Midcaps (+0.3%) and Smallcaps (+0.2%) didn’t move much either. The advance-decline ratio was evenly split.

It was a mixed-bag kinda day for sectors. Real Estate (+1.3%) and Metals (+0.8%) were the top gainers. PSU Banks (-1.2%) and FMCG (-0.8%) saw the most selling pressure.

Hindenburg is back again and this time firing shots at the SEBI. Read our top story to understand the short-seller’s motives and what needs to be done to end this ugly mess.

Voltas jumped 11% after a super Q1 show. Meanwhile, Bharat Dynamics fell -19% intraday after an awful Q1. More details below.

Adani Group stocks saw big intraday moves after the latest allegations. Check out their charts below.

Ola Electric was locked in a +20% upper circuit for a second day in a row as investors cheered India’s EV market prospects.

Results reaction. Inox Winds (+20%) was the top NSE 500 gainer after it returned to profits in Q1. Meanwhile, Balkrishna Industries cracked -7% on muted commentary & brokerage target cuts over fears of a poor demand outlook.

ONGC (+3%) was the top Nifty gainer after the GOI said gas pricing from new wells would be at a 20% premium compared to old ones.

Aavas Financiers (+5%) gained after CVC Capital Partners said it would buy a majority stake in the firm.

Allied Blenders jumped +7% after a report said it was in talks with Russian Standard & ThaiBev to market their products in India.

Here are the closing prints:

Market
Indian Investors 1 - Hindenburg 0

Markets were volatile AF as ‘Hindenburg vs Adani’ entered Round 2.0 over the weekend. Adani Group stocks took a hit, but markets overall are OK, ending in the green. This is a big relief after all the Japan and US craziness last week. But the episode does tell us two things: one, that Hindenburg is getting desperate. And two, the Adani probe saga has gone on for too long. 

The allegations this time aren’t just about Adani but instead take shots at SEBI boss Madhabi Puri Buch’s reputation. The accusations include: Buch’s investments in an offshore fund that Gautam Adani’s brother also used, a Singapore consultancy biz and allegedly influencing REIT rules to help her husband. While embarrassing for Buch, quick clarifications from 360-One WAM, which managed the fund, have taken the sting out of the more serious accusations.

So why is Hindenburg going full scorched earth? Well, part of it is that it makes money by creating chaos. Some of it may be due to vested interests as Navam Capital’s Rajeev Mantri noted: “Make no mistake - this is economic warfare by vested interests, many of them in the Western world.The objective is to disrupt Indian equity markets and cast doubts on Indian regulators who would rank at the top for the work they have done in the last 15-20 years in India.”

But it’s also because Hindenburg is grasping at straws. In Jan 2024, the Supreme Court ruled that SEBI’s probe into Adani would be final. So it’s Buch or nothing, which is why it’s targeting her integrity now. In July 2024, Hindenburg also received a notice from SEBI over the laws it violated in pulling off the Adani short back in 2023.

The walls are closing around Hindenburg, so it wants to kick up enough dirt to muddy the waters. The only real solution is for SEBI to finish the Adani probe. It’s been 18 months and the regulator still says it has only finished 23 out of 24 investigations. Finish it, publish the results with evidence and spare retail investors from getting caught in this ugly mess.

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Earnings
Earnings Roundup

Voltas (+11%) hit a record high after blockbuster Q1 results. A crippling heatwave + huge power demand helped overall AC volumes grow by a whopping +67% YoY. Fun fact: the company said it sold 1 million units in Q1FY25, which is 50% of FY24 sales! Beyond this, its EMPS division -- which looks at water, electrical & solar projects -- saw a solid +40% YoY topline bump with its margins also turning positive to 7.1%. Speaking of margins, Voltas’ EBITDA margins also saw a cool bump, aided by cost-control measures and the sale of more high-margin products.

Here is its Q1 report card:

• Revenue: Rs 4,921 cr; +47% YoY

• EBITDA; Rs 424 cr; +129% YoY

• EBITDA Margin: 8.6% vs 5.5% last year

• PAT: Rs 335 cr; +160% YoY

Big Picture: Voltas had a rough 2023, losing market share to foreign rivals and seeing its margins dip. The company has managed to bounce back, helped by the weather. Key monitorables include making sure it maintains growth in the EMPS vertical and improves margins up to the 9%-10% range by FY26.

Voltas is +62% YTD.

Bharat Dynamics (-6%) nosedived  after posting weak Q1 numbers. Net sales declined by 36% YoY due to supply chain issues caused by Russia-Ukraine war & Middle East conflicts. FYI - it needs to import critical components from other countries to make finished products. On top of this, the company said it won NO new major orders in Q1FY25. Yikes. To make all of this worse, the company reported an EBITDA loss. Its bottomline would’ve been in the red too, but it was helped by higher other income.

Here are its Q1 stats:

• Revenue: Rs 191 cr; -36% YoY

• EBITDA loss: Rs 52 cr vs 32.7 cr last year:

• PAT: Rs 7 cr; -83% YoY

Big Picture: The management has said supply issues should be solved by the September quarter. ICYMI - the company KILLED it for most of FY24. Most experts believe this to be a temporary problem. ICICI Securities upgraded the stock with a target price of Rs 1,745; +30% from current levels.

Charts

Chartbusters

Adani Group stocks were at the centre of all the action today. The Gautam Adani-led conglomerate reportedly lost $19 billion in market value after the latest Hindenburg attack. Volatility was INSANE with most Adani group stocks recovering from their intraday lows and recouping a majority of the losses. Check out their charts below:

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