Tale of the Tape 

Howdy folks. Markets took a beating today!

Nifty and Sensex ended down -1.2% each, falling for a third straight session, as reports of SEBI going ahead with its derivatives crackdown + global weakness dented sentiment. Midcaps (-1.6%) and Smallcaps (-1.3%) also got thrashed. 393 stocks in the NSE 500 ended in the red!

It was a sea of red across sectors. PSU Banks (-3.6%), Oil & Gas (-2.2%) and Auto (-1.2%) were hit the worst.

Vodafone Idea got KO-ed after Goldman Sachs said it sees an -80% downside from current levels. Read our top story on why the brokerage is pessimistic.

Bajaj Housing Finance’s IPO kicks off on Monday. Check out our analysis below to help you decide whether to subscribe.

HPCL (-3%) and BPCL (-2%) fell after reports said the GOI was considering a fuel price cut.

Mrs Bectors Food Specialities jumped +10% after launching a Rs 400 cr QIP to support its expansion plans.

KEI International hit a 52-week-high after securing new transmission orders in Saudi Arabia worth Rs 1,423 cr.

SBI Cards gained +4% after Goldman Sachs upgraded the stock and its target price to Rs 913 p/sh (vs Rs 652 p/sh earlier). Meanwhile, Indus Towers fell -4% after the brokerage downgraded the stock, saying its re-rating cycle was over.

Wockhardt was locked in a -5% lower circuit after the Congress Party accused SEBI boss Madhabi Buch of a conflict of interest with the firm.

Godfrey Phillips jumped +11% after it said it would consider a 1:2 bonus issue on September 20.

Indigo Paints cracked -4% after 1.17 cr shares (25%) equity changed hands in a big block deal. Reports say PE firm Peak XV likely sold an 11% stake while the other sellers are unknown.

Here are the closing prints:

Stock
WTF! Voda-Idea 🤯 

Vodafone Idea tanked -13% intraday after Goldman Sachs reiterated its bearish stance. FYI - the stock has been volatile AF in 2024 as the company fights for its life. Even small news updates make it go up and down bigtime. That said, here’s why Goldman is pessimistic:

1) Revenue market share: Even in the best case scenario, Goldman estimates VI’s cumulative five-year capex between FY23-FY27 to be $7-8 billion. This will be ~60% lower than Bharti & Jio in the same period. Since experts believe there’s a strong link between capex market share and revenue market share, Goldman projects the company’s revenue market share to decline by 300 bps between FY24 and FY28. Put simply: Vodafone will continue to bleed subscribers despite ramping up capex because Airtel and Jio will still invest more.

2) Free cash flow: Vodafone’s debt + GOI dues obligations are massive. Its repayment obligations come in at $3.3 billion in FY26, and rise to $5 billion in FY27. FYI - the company’s current EBITDA after recent tariff hikes is ~$1.5 billion per year. This means for VI to be free cash flow breakeven, it will have to increase ARPUs by ~2.5x in the next 3 years. Which to be honest seems impossible.

Big Picture: There’s a lot of question marks here, some of which could benefit VI as well! Take its AGR dues, which will soon be decided by the Supreme Court. The company believes this will reduce by ~65% but nobody knows if that’s going to happen. It’s a gamble at this point, but that’s what markets are sometimes about. FYI - Goldman Sachs understands this very well. Yes, its base projection sees a -81% downside from current levels, but its target price has been increased to Rs 2.5 p/sh (vs Rs 2.2 earlier).

Stocktwits Specials

₹10,000 invested in Raymond during the COVID dip would be ₹1XX,254 today. Post-demerger, the company’s lifestyle business listed on the 5th September at Rs 3,020 p/sh (93% premium to its base price). This is the first step in the mega restructuring of the Group which will also see the demerger and listing of its Real Estate arm later this financial year.