Tale of the Tape 

Happy Monday everyone, and welcome back to The Daily Rip! 🤗 

Markets continued to rip, with the Nifty (+0.4%) and Sensex (+0.2%) hitting new all-time highs. Midcaps (+0.9%) popped off while Smallcaps (+0.5%) had a decent day too. The advance-decline ratio was in favour of the bulls (3:2). 💪

Except for IT (-0.3%), all sectors ended in the green. PSU Banks (+3.1%), Oil & Gas (+2%) and Real Estate (+1.3%) were the top winners. 🔥

Zomato (+3%) hit an all-time high after hiking its platform fees. What explains the move? Read our top story below to find out. 🔍

HCL Tech rallied +5% intraday on decent Q1 numbers. Meanwhile, IREDA hit a new all-time high on a strong Q1 show. More details below. 📊

Tanla Platforms, JK Tyre and Zen Technologies all saw big movements today. Check out their charts below to find out why. 🚀

Aurobindo Pharma (+4%) hit a record high after it said it would consider a share buyback plan on July 18. 🤑

Varun Beverages gained +3% after expanding its snack portfolio in Zimbabwe and Zambia. 🥯

Order wins. Ashok Leyland (+2%) was in focus after bagging a big Rs 980 cr bus order from the Maharashtra government. Apollo Micro Systems was locked in a +5% upper circuit after winning a drone systems order from the Indian Army. 💣

Q1 reactions. Bank of Maharashtra was up +6% after its net profit jumped +47% YoY. Avenue Supermarts (+1%) posted decent Q1 numbers, with Nuvama raising its target price to Rs 5,091 p/sh. 👍

Here are the closing prints:

Spotlight
SEBI RA Spotlight

Buy the dip!!! JK Tyre has come off from its highs and is consolidating near its key support levels. If the stock manages to hold above the current level Aditya expects it to jump +500 in the next year. 📈 

FYI - Aditya Hujband is an experienced finance professional and a SEBI-Registered Research Analyst. With over 7 years of experience in the finance industry, his expertise spans Derivatives Trading, Fundamental Analysis, Technical Analysis, and Financial Services. 😎

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

Earnings
Earnings Roundup

HCL Tech rallied +5% intraday before giving up its gains after posting solid Q1 results! Overall revenue and profit beat Street estimates as demand slowly picks up across verticals & geographies. That said, its bottomline was boosted by a $70 million one-time bump in other income. The company said it was on track to maintain its FY25 revenue growth guidance of 3%-5% in constant currency terms. The only sour note was that new deal wins came in at $1.57 billion in Q1 (vs $2.29 billion QoQ). 📊

Here are its key stats:

• Revenue: $3.36 billion; -1.9% QoQ (vs Est: $3.34 billion)

• EBIT Margin: 17.1% vs 17.6% in Q4 (vs Est: 16.7%)

• PAT: Rs 4,257 cr; +6.8% QoQ (vs Est: 3,776 cr)

Big Picture: Overall results were decent, but not great, just like TCS. The company’s key financial services vertical declined -1.3% YoY. American biz was up +8% YoY in constant currency terms. The more bullish analysts say that HCL’s FY25 guidance doesn’t take into account hopes of a rate cut in the US and a general rebound in global economic growth. FYI - Nomura has raised its target price to Rs 1,720 p/sh (vs Rs 1,560 p/sh earlier); +9% from current levels! ✅

HCL Tech is +6% YTD.

IREDA (+3%) reported blockbuster Q1 results. Strong power sector demand boosted loan disbursals by +68% YoY, which in turn propped up the topline.  Its overall loan book came in at Rs 63,150 cr; +34% YoY. NIMs were flat but asset quality improved, helping bump up the bottomline. 💰

Here is its Q4 report card:

• Net Interest Income: Rs 508 cr; +38% YoY

• PAT: Rs 384 cr; +30% YoY

• GNPA: 2.19% vs 2.36% QoQ

• Net NPA: 0.95% vs 0.99% QoQ

FYI - most analysts remain bullish on the stock, but the big bear here is Phillips Capital which sees a -56% downside from current levels! The brokerage warns that higher exposure to the private sector could raise credit costs, put pressure on margins and ensure that earnings growth doesn't keep up with loan growth! Make of that what you will. 👀

IREDA is up nearly +3x YTD.

Specials

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Stock

Honey, I Jacked Up The Food Bill

Ding dong! That’s the sound of the Zomato delivery guy coming not to give your food, but to start collecting all the cash they’ve burnt in building up their biz. The company has reportedly hiked platform fees to Rs 6 per order. ICYMI - it started at Rs 2 per order in 2023 and it’s been raised steadily since then. Investors love the profitability focus: the stock rallied +4% intraday to hit an all-time high. But there’s a lot more going on under the hood with this move. Let’s get into it. 🔍

Platform fees have been a GREAT profitability lever for Zomato because they sound small. Oh just, Rs 2 or Rs 3 per order. But the company ships a LOT of orders. Elara Capital estimates that every one rupee increase leads to a positive impact of Rs 85-90 cr on Zomato’s EBITDA, which is a ~7% increase in profitability. FYI - Elara expects the fee to eventually be hiked to Rs 8-10 per order in some metro cities. 🤑

Why is Zomato doing this when it already posted its first full-year profit in FY24? One possible reason is it wants to stop the bleeding in its ‘Gold’ loyalty programme, which boosts ‘gross order value’ & volumes but eats into margins. Higher platform fees help stem these losses but also will piss off non-Gold users aka the majority of its customer base. 🍛

It could also be that Zomato wants to build up a bigger cash runway to give more time for Blinkit and newer bets like its ticketing & movie verticals (recently acquired from Paytm). Or it could simply be that Zomato feels food delivery growth is starting to reach a ceiling and this is just how much it will cost now to pay for the service. It helps that rival Swiggy is also hiking its version of platform fees. The broader bet is this: how long can Zomato continue to hike platform fees before its customers simply realize it's better to eat home-cooked food? It’s a fine line to walk! 💸

Charts

Chartbusters

Here are three companies that saw big movements today!

1) Tanla Platforms rallied over +10% intraday after they signed a deal with a ‘global tech major’ to help curb scams on their messaging platform by identifying fraudulent phone numbers. FYI- this is a BIG boost to Tanla’s AI-driven anti-phishing solution. While Tanla didn’t share the customer’s name, some reports say the deal is with Meta-owned WhatsApp! 📲

2) JK Tyre rallied +13% intraday after reports said industry biggie MRF will hike prices. Why is this a big deal? Mostly because raw material costs have spiked from the start of 2024. JK Tyre and others have already announced price hikes, so with MRF doing the same, nobody gets hurt. Fun fact: experts say more hikes are needed in the future as they have barely kept up with cost increases. 🛞

3) Zen Technologies hit a +5% upper circuit after it rolled out four new defence products and said it would focus on AI-powered robots! All the new launches revolve around surveillance, tracking and generally security. AI and defence are top investor buzzwords right now, which explains the stock’s movement! 🚀

Check out their charts below:

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