Sensex hits 80K!!!

Author

Yash Upadhyaya
July 03, 2024

Tale of the Tape 

Hey guys. Welcome back to the Daily Rip! 👋

Markets continued to climb higher. Nifty and Sensex hit new all-time highs AGAIN after gaining +0.7% each. Midcaps (+0.8%) and Smallcaps (+1%) were also on fire. Over 2 stocks advanced for every 1 loser on the NSE500. 📈

It was a sea of green across the board. Financials single-handedly drove the markets higher. Metals (1%) and MCG (+0.9%) also witnessed healthy gains. 💪

SEBI’s latest rules may usher in a NEW era of cost for brokers and traders. Read our top story below to find out how this will affect you too. 🤔

HDFC Bank hit a RECORD HIGH on reports that global index provider MSCI may DOUBLE its weightage; triggering up to $4 billion of buying in the stock. 💰

Emcure Pharma’s Rs 1,952 cr IPO kicked off today! Check out our analysis below to help you decide whether to subscribe. 🔍

PFC and REC were in focus after global brokerage firm Bernstein initiated coverage with a buy rating. They see at least a +16% upside in both of the stocks from current levels. 🚀

Federal Bank rose +4% after reporting a healthy Q1 update. Here’s more details. 📊

Listing gains. Vraj Iron and Steel closed at Rs 252 p/sh; +22% from its IPO price. 🤑

Here are the closing prints:

Nifty

24,287

+0.7%

Sensex

79,987

+0.7%

Bank Nifty

53,089

+1.8%

Market
End of Zero Brokerage Model?

Shares of stock broking companies were down 5-10% over the last two days after SEBI rolled out its new rules. FYI - the full impact of these new regulations is still unclear but it looks quite bad for now. 😣

So what is SEBI trying to do? The new rules look to standardize the fees charged by ‘market infrastructure institutions’ (MIIs) aka stock exchanges. Every time a broker places an order with an exchange, the exchange charges a transaction fee. Now, the issue is that this isn’t a uniform fee for everyone. The exchange charges lesser fees for brokers that generate huge volumes. This makes business sense for the exchange (more business = more discount given) but benefits big brokers over smaller ones. This is one reason why SEBI wants to do away with this slab-based transaction fee system. ⛔

So why are big brokers being hurt? Well, most of them don’t pass on the discount they get from exchanges to their customers (aka retail traders). They pocket the difference and charge you the non-discounted rate. This can be anywhere between 5% to 50% of a broker’s revenue. HDFC Securities estimates this extra income accounts for ~8% of Angel One’s gross revenue! 🤯

Now, this practice isn’t all bad. Zerodha, for example, uses the F&O fees it gets to subsidize its zero brokerage system for equity trades. But it can also be devious: no broker should be allowed to tell you that the NSE transaction fee is say Rs 100 when they are actually paying only Rs 80 (after being given a discount of Rs 20). 💸

As Zerodha’s Nithin Kamath puts it: “This is a substantial change that will have a significant impact on the financials of all brokers. All brokers may be forced to tweak their pricing models to adjust to the new reality in a few months.” But if stock exchanges opt for a uniformly higher rate, it could result in higher charges across the board, which sucks for traders who are anyways paying SOOOO many fees. 😡

Specials

Lost In Vietnam 🇻🇳 

Hey everyone. I’m back from my amazing trip to Vietnam! Thank you all for your love, support, and patience while I was away. I’ve got some fun stories and pictures to share with you – from the breathtaking landscapes of Ha Giang to the colorful wonderland that is Hội An. Can’t wait to dive back into our daily adventures together! Cheers. 🍻

IPO

Emcure Pharmaceutical IPO Review

Emcure Pharmaceuticals IPO opened for subscription today! The price band is fixed at Rs 960 - 1,008 p/sh. The company aims to raise Rs 1,952 cr from the IPO. 💸

Founded in 1981, Emcure is a leading pharmaceutical company with a presence in key therapy segments like gynecology, cardiovascular and oncology. FYI - they are the 13th largest company in terms of sales and are a ‘full stack’ player, doing everything from developing & manufacturing to marketing. Domestic sales make up a decent chunk of their topline (48% in FY24 vs 52% for exports). They currently have 13 manufacturing facilities spread across the country that produce orals, injectables and complex APIs. Fun fact: you might recognize one of Emcure’s promoters, Namita Thapar, from her time as a Shark Tank judge! 🦈

FYI - the IPO’s fresh issues of shares comes around to Rs 800 cr, with the rest being an ‘Offer for Sale’. These proceeds will be mainly used to repay debt. 📊

FY24 snapshot:

  • Revenue: Rs 6,658 cr; +11% YoY

  • EBITDA: Rs 1,229 cr

  • EBITDA Margin: 18.5% vs 19.7% YoY

  • PAT: Rs 527 cr; -6% YoY

Big Picture: The company’s margins & profitability are down over the last two years. Some of this is due to higher capex, depreciation + interest costs, which are easily manageable after the IPO. That said, its topline has been doing well. Four new facilities are set to begin operations and its focus on exports should offset the lower growth in domestic biz. Experts say the long-term fundamentals look solid. FWIW - the IPO is also reasonably priced and current grey market data suggests it may list at a cool 30% premium! 🤑

Are you applying for the IPO?

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Community Star of The Month

Winner Winner Chicken Dinner

Congratulations Dr. Aneeket Khandagale for winning the Community Star of the Month! ⭐

Here are a few investment & trading ideas shared by him on Stocktwits that you must check out: 😎 

Aneeket Khandagale is a doctor turned full-time trader. He started his trading journey in 2014 back when he was in college. Aneeket does both intraday & positional trades and is actively trading across F&O, cash stocks, commodities and currency. Follow him: http://www.stocktwits.com/i_am_aneeket 

Disclaimer: Aneeket Khandagale is not a SEBI registered advisor and you should not construe any information discussed herein to constitute investment advice. Consult your financial advisor prior to making any actual investment or trading decisions.

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