Tale of the Tape 

Hola Amigos!

Nifty and Sensex barely moved even as the broader markets saw a widespread sell-off. Midcaps (-1.4%) and Smallcaps (-2%) got thrashed for a second straight day. Fun fact: 410 out of the NSE500 stocks ended in the red!!! 

Except for IT (+0.6%) all the other sectors closed down. Real estate (-3.7%), PSU Banks (-2.6%) and Metals (-1.7%) got beat up the most. 

Who is Hari Tibrewala and why are stocks he invested in crashing? Read our top story below to understand the latest alleged scam rocking our markets.

This smallcap NBFC may give +34% returns over the next year. More details below.

ITC (-1%) was in focus after reports said British American Tobacco would sell part of its stake this week. PS - the stock is down 14% this year! 

Adani Ports was in focus. Motilal Oswal sees an additional 23% upside from current levels. The stock closed down tracking the overall market weakness.

Aditya Birla Capital jumped +4% intraday after announcing a merger with Aditya Birla Finance, the group’s NBFC arm.

SpiceJet cracked 9% after two senior executives quit abruptly.

Sanghi Industries jumped 8% after its promoter said it would sell a 2% stake to comply with shareholding norms.

RK Swamy had a weak market debut after closing -9% below its IPO price.

Here are the closing prints: 

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Market
WTF Is Happening!?

Stocks with links to alleged Dubai hawala operator Hari Tibrewala got SMOKED today. Some of the companies include Gensol Engineering (-9%), Sigachi Industries (-7%) and LKP Finance (-5%). 📉

We know what you’re thinking though: who the hell is Hari Tibrewala? And what does he have to do with those companies? 🔍

The backstory: The Enforcement Directorate (ED) has been investigating illegalities in a Dubai-based betting app called ‘Mahadev Online Book’. FYI - this scam allegedly involves BIG names from Bollywood and the political world as well. Anyway, the probe took a sharp turn last week when the ED said the money made off that scam was used to pump up the value of some Indian stocks! 🚨

Tibrewala, a partner of the two promoters behind the Mahadev app used local and foreign firms to invest over Rs 1,000 cr in the market. The ED has alleged that Tibrewala used his “immense capital” to pump stocks in collusion with the promoters of the listed companies. 👀

Reports say Tibrewala and related entities hold stakes in more than 30 listed stocks! PS - most of these companies are small-cap or penny stocks. Yet, another good reminder to do a LOT of due diligence before chasing after insane returns. 😇

 Here’s a list of some of their names and their fall from grace in the last week:

• Gensol Engineering: -21%

• Sigachi Industries: -25%

• LKP Finance: -17%

• Gogia Capital Services: -10%

• Toyam Sports: -23%

• Servotech Industries: -8%

• BLB: -8%

Specials

Vodafone Idea Multibagger Soon?

Vodafone Idea is off to a rocky start. From hitting fresh 52-week highs to falling -20% YTD the stock has seen it all. But, is this dip a buying opportunity or should you avoid it completely? 

We share major updates on the company's business, brokerage ratings and SEBI RAs' analysis on the stock. All this and more in this video. 👇🏻

Stock

“Five Star” Investment 

Five Star Business Finance had a solid 2023. The stock nearly doubled from its IPO price to hit a new all-time high of Rs 876 in August. However, from its highs, the stock has cooled off in recent months providing an attractive entry point, according to experts. Here’s all you need to know: 😎

About the company: Five Star is a South-based MSME lender, with a loan book of Rs 8,900 cr. It primarily operates in the Rs 2 lakh to Rs 5 lakh segment, offering loans to small business owners. 💸

What’s popping? For starters, small business loans (sub-Rs 10 lakh) is the FASTEST growing segment within MSME loans. Five Star specializes in SBL loans, having a 10% market share in South India. Fun fact: SBLs are a potentially GIGANTIC $275 billion market according to CRISIL. The industry is currently only around 11% of that size right now, implying huge growth runways. 📊

Secondly, SBL only works because of the nature of collateral. Over 90% of Five Star’s borrowers pledge their own self-occupied houses to take out loans for their businesses. Land records in urban areas are mostly digitized (~95%), with the rest mainly in Tier-3 regions that Five Star hopes to tap into. As land digitisation booms, this offers a BIG opportunity for the lender to expand into new regions. ✅

Finally, yes, there are lending risks. Early delinquencies, measured by the ‘days past due’ (DPD) metric, are often high. But, the lender has invested majorly in its risk, supervisory & legal teams. The result? Its GNPA is only 1.4% vs the industry standard of 5% for SBLs. 👌

TL;DR: Five Star is expanding in a new, potentially huge area of MSME loans. The runways for growth are clear and it seems to be managing the risks well for now. FYI - IIFL securities has a 12-month target price of Rs 900 p/sh; +34% from current levels! 🔥

Stocktwits Spotlight

Zomato is +3x in the past year. If you’ve missed the bus and are desperately looking to enter then it may be advisable to wait for a breakout. Reports of Flipkart’s entry into quick commerce plus the recent stake sale by Ant Group have slowed Zomato’s rally. Vipul Ramaiya recommends short-term traders wait for a breakout above 170 before adding. 📈

Follow Vipul for more awesome trading insights and add $ZOMATO.NSE to your watchlist and track the latest from the community.

Links That Don’t Suck

💯 Vodafone Idea: Multibagger Soon? | Vodafone Idea Latest News | Buy Vodafone Idea Shares

💬 Stocktwits is hosting a free AMA with Parveen Kumar aka StockMarketScientist Click to Ask 

🤖 Ready Player One creator debuts ‘Open,’ a metaverse battle royale experience

👪 CAA notified: How to apply for citizenship under the 2019 Act on online portal? Details here

🏏 Pant gets BCCI clearance to play IPL 2024; Prasidh Krishna ruled out 

🚩 3 red flags recruiters look out for in job candidates: They’re how you ‘get blacklisted’

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