Tale of the Tape 

Good evening, y’all! Welcome back to another week in the markets.

Nifty and Sensex ignored global cues like a sakht launda to end in the green. Midcaps (-0.2%) and Smallcaps (-0.9%) on the other hand continued to struggle. Nearly two stocks closed down for every gainer. Check out the Stocktwits Sentiment Meter:

Except for FMCG (+2%) and Banks (+1%), all the other sectors closed lower. IT (-0.7%) was the top loser followed closely by Oil & Gas and Metals. 

DMART (+1%) is up +40% in the past year hitting a new all-time high. Read our top story below on what’s fuelling this rally. 

A never-ending rally means never-ending worries of a massive correction. Are these concerns justified? More details below with inputs from DSP Netra. 

Kross Ltd’s Rs 500 cr IPO opened for subscription today. Should you subscribe? ICICI Securities sees a +35% upside from current levels in this smallcap packaging stock. Check out the deets below. 

Shriram Finance (+2%) was in focus after UBS said it sees a further +16% upside. FYI - the stock is already up 61% in 2024. 

HUL (+3%) will consider separating its ice-cream business. The stock hit a new all-time high. 

Godfrey Phillips slipped -5% after approving the removal of Samir Modi from the Board of Directors. Separately, the company will also consider the proposal of a bonus issue on Sept 20. 

SpiceJet soared +4% after private equity giant Carlyle Group agreed to convert their massive $138 million debt into equity. 

Britannia (+2%) will invest Rs 300 cr to expand its Ranjangaon plant.

Here are the closing prints:

Stock
DMART Hits New All-Time High

DMart is on fire! The stock hit a new all-time high after gaining +40% in the past year vs a +24% gain for Nifty in the same period. At a time when venture capital funds are pouring billions into funding quick commerce, the old tried-and-tested engine is still showing great returns. Here’s what’s working and what future positive triggers look like:

1) Rural + festive consumption: The company got its start in setting up stores on the outskirts of Mumbai, but now 30%+ of its stores are in pincodes with a population density of <500 people per sq km. With a sizable presence in Tier-3 and Tier-4 towns, DMart should benefit from surplus monsoon rains and the overall revival in rural demand. Also, with food inflation hitting a six-month high, experts say its cheap grocery offerings will be even more in demand. Finally, the festive season is just around the corner which should also supercharge sales!

2) Quick commerce plan: Management has been a little nonchalant about the threat posed by Blinkit or Instamart. CEO Neville Noronha said the impact from quick commerce in Mumbai could be “1-2%”. But that doesn’t mean DMart is doing nothing. The company recently launched 2-hour-deliveries, which is huge for a company that delivers ~80% of their orders in 24 hours. That said, it doesn’t plan to get into the 10-minute delivery game just yet, preferring instead to use its new stores to cover clusters where Zomato or Swiggy see high demand!

3) Store expansion: Avenue Supermarts prefers to own the land under their stores. This has meant they are far slower than their rivals in adding new stores. FYI - the company will add just 39 stores per year between FY20-25. This is expected to double to an average of ~80 stores per year partly because it’s starting to generate positive free cash flow from older more profitable stores.

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