Tale of the Tape 

Hiya everyone. Happy Friday!

Nifty and Sensex jumped +0.8% each led by strong gains for IT stocks. Meanwhile, Midcaps were flat while Smallcaps (+0.2%) posted minor gains. The advance-decline ratio was in favour of the bears (3:2).

It was a mixed-bag kinda day for sectors. IT (+4.5%) was the top winner, while Oil & Gas (+0.6%) and FMCG (+0.4%) saw more modest gains. Meanwhile, Real Estate (-1.5%) and PSU Banks (-0.5%) witnessed selling pressure.

TCS (+7%) rocketed to the moon after investors went nuts over its Q1 results. Read our top story below to find out why its numbers are good but not great. 

This real estate stock could rally +55% in the next year. More details below.

Oil India gained +8% after Morgan Stanley upgraded its target price to  Rs 663 p/sh; +11% upside after today’s rally. ABB India (-3%) fell after UBS downgraded the stock to ‘neutral’, citing expensive valuations.

Adani Ports was in focus after reports said it would invest $1.2 billion in its Vizhinjam port in Kerala.

Zee Entertainment rallied +7% intraday after it said its board would consider raising funds on July 16.

Cyient gained +4% after it announced an expansion of its semiconductor biz with a new subsidiary.

Here are the closing prints:

Earnings
TCS Q1 Review

TCS kicked off the earnings season in style, rallying +7% to end as the top Nifty gainer. While its Q1 results were SOLID, we may need to wait for a quarter or two more before declaring FY25 the year of recovery. Let’s get into it.

First the positives. The company’s Q1 topline beat Street estimates, while the bottomline was inline. FYI - profit growth was actually strong, adjusted for the salary hikes in Q1. Most importantly, all major markets & key verticals returned to growth on a sequential basis. Finally, TCS also reported a positive net headcount addition of 5,452 for Q1. This reverses a decline that we’ve seen for three quarters in a row!

Then there are the negatives. On a YoY basis, the North American market still shrank -1.1% and the BFSI segment declined -0.9%. These are TCS’s two key engines: which means that while the company may have bottomed out, we still aren’t near its golden era! On top of this, the order pipeline doesn’t look great. Order wins for Q1 came in at $8.3 billion, a big drop from $13.2 billion recorded in Q4FY24 (& $10.2 billion YoY). Finally, the management seems super cautious and unsure whether Q1 topline growth is sustainable. 

Here are its key Q1 stats:

• Revenue: $7.5 billion; +2.2% QoQ in CC terms

• Net Profit: Rs 12,040 cr; +8.7% YoY (vs Est: Rs 11,989 cr)

Big Picture: TCS’s Q1 results were good but not +7% kinda-great. Markets are just happy that they didn’t miss estimates. Additionally, hopes of a rate cut later this year + AI-driven growth and efficiency boost are key positives. FYI - Jefferies has upped its target price to Rs 4,615 p/sh (+14% from current levels).

Spotlight

SEBI RA Spotlight

Madhumita Banerjee is bullish on GE Power. The stock has given a multi-year breakout on the long-term charts. Volumes too have been on the higher side indicating strong institutional interest. Investors can enter above 418 for targets of 548 and 730. 

FYI - Madhumita Banerjee has been a SEBI registered advisor for 7 years. Her posts on Stocktwits include momentum picks (cash+futures), and multibagger ideas based on turnaround. 

Follow her for more amazing insights and add $GEPIL.NSE to your watchlist and track the latest from the community.

Stock

What’s Popping?

TARC has been on a red, hot streak! The stock has more than TRIPLED in the last year, easily beating the already insane Nifty Realty Index. With the stock cooling off slightly in the last week, should you buy the dip or avoid it? Here’s what experts say.

For the unaware, TARC has been around for decades as a government-focused construction contract firm. In the last few years, it’s pivoted towards becoming a luxury real-estate player in the NCR region. FYI - in 2023, it delivered the TARC Maceo project in New Gurugram.

What’s popping? The company has INSANE prime land holdings of 500 acres within 30 km of Delhi. A lot of this land bank was acquired in the 1990s when it was cheap and TARC was still a contractor for GOI projects. TARC currently has planned launches worth Rs 15,000 cr from FY25-FY27, which analysts say if executed smoothly, could be a MAJOR positive for the stock.

We know what you’re thinking: NCR has been a death trap for many big builders and that’s true. The number of NCR real estate developers dropped from 125 in 2011-12 to just 30 in 2017-18.  But real estate demand remains and experts say there is scope for TARC to become a trusted name, with its successful Gurgaon project. FYI - TARC currently has a sub-1% market share in NCR and is hoping to get to 5% over the next few years, which would imply a 15x jump in its residential portfolio.

Lastly, TARC ran into some debt & liquidity issues during Covid. But they’ve largely solved the issue by retiring existing debt with the help of a fundraise from Bain Capital!

Big Picture: Launches of TARC Kailasa in West Delhi and TARC Ishva in Gurgaon (total revenue potential: Rs 4,600 cr) are triggers to watch out for. Smooth execution and being able to bridge the buyer trust deficit are key moniterables. FYI - Ambit Capital has a target price of Rs 325 p/sh over the next 12 months; +55% from current levels!

Charts

Movers and Shakers

Here’s a look at this week’s top NSE500 movers. RVNL took pole position after rallying +28%. Oil India (+25.5%) hit a new all-time high. Schaeffler India (-13%) closed down for a second consecutive week. Uno Minda (-12%) snapped its 5-week gaining streak. Check out their charts below:

Links That Don’t Suck

💯 5 Stocks to Buy in July 2024 | 2024 Top Picks by SEBI RAs | Stocks to Buy Right Now

💬 Stocktwits is hosting a free AMA with SEBI RA Shubham Jain. Click to ask   

👕 Answer 2 questions and stand a chance to win free* merchandise (*T&C Apply) 

😍 In Pics: Kardashian Sisters, Priyanka-Nick, David Beckham, John Cena, Tech CEOs, And Other Guests At Ambani Wedding 

🍿 Indian 2 Movie Review: Kamal Haasan becomes the saving grace in a half-baked screenplay with great concept and story 

🏏 Gambhir wants Morne Morkel as bowling coach; BCCI yet to take final call

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