Tale of the Tape 

Good evening everyone. Welcome back to the market of stocks!

Markets kicked off the week on a negative note, with the Nifty (-0.3%) and Sensex (-0.1%) closing lower after a volatile session. Midcaps (-1.7%) and Smallcaps (-1.6%) took a beating. 417 stocks in the NSE 500 ended in the red. Check out the Stocktwits Sentiment Meter:

Except Auto (+0.4%) all other sectors ended in the red or flat. Metals (-1.5%) and Real Estate (-1.4%) were the top losers.

Tata Consumer Products was the top Nifty loser after a disappointing Q2. Kotak Mahindra Bank cracked -5% after a hit to Q2 asset quality. More details below.

Deepak Builders and Engineers IPO kicked off today! Check out our analysis below to help you decide whether to subscribe.

HDFC Bank, PNC Infratech and Tejas Networks saw big movements today. Take a look at their charts below to find out why.

Results reaction. Indiamart Intermesh tanked -16% despite decent Q2 results; Jefferies downgraded the stock citing weak subscriber growth. Ultratech Cement (-2%) after its net profit fell -36% YoY. 

Bajaj Auto rallied +4% after Rajiv Bajaj reiterated his target of Rs 20,000 p/sh and hinted at “buying the dip” himself. That’s insane $hit! 

Waaree Energies IPO was subscribed +3.5x on Day 1 of bidding.

Raymond Lifestyle (+2%) was in focus after Motilal Oswal initiated coverage on the stock; the brokerage sees a +30% potential upside.

Stanley Lifestyles (+4%) gained after ace investor Mukul Agrawal picked up a 1.58% stake in the firm.

Here are the closing prints:

Earnings
Earnings Roundup

Tata Consumer Products (-7%) was the top Nifty loser after its Q2 results missed estimates. On the surface it seems like things are kinda okay. Strong demand across both beverage & food verticals resulted in double-digit top line growth. But a LOT of this was led by recent acquisitions (Organic India + Capital Foods). If you take those out, its Q2 revenue grew only +5% YoY, with its ‘India beverages’ vertical actually shrinking -4% YoY. PS - if you look at ‘like-for-like EBITDA growth, it fell -23% YoY due to surging input costs in the tea & salt business.

Here are its key stats:

• Revenue: Rs 4,214 cr; +13% YoY (vs Est: Rs 4,340 cr)

• EBITDA: Rs 626 cr; +11% YoY

• EBITDA Margin: 14.9% vs 15.2% YoY

• PAT: Rs 367 cr; +1% YoY (vs Est: Rs 343 cr)

Big Picture: Overall a rough quarter when you don’t take into account its big new deals. Most brokerages are bearish, pointing out that the rural sector revival is being offset by softening urban demand. ICYMI - this is the case for most big FMCG firms. With inflation now playing spoilsport, Tata Consumer could be in for a rough few quarters. FYI - Jefferies has cut its target price to Rs 1,170 p/shs vs Rs 1,190 earlier.

Tata Consumer Products is down -6% YTD.

Kotak Mahindra Bank fell -5% after posting mixed Q2 numbers. Advances grew +17% YoY on the back of healthy demand, with deposits almost keeping up at +16% YoY growth. This allowed net income to beat Street estimates!

On the other hand, its asset quality took a big hit. Slippages, or the proportion of good loans turning bad, jumped +38% QoQ to hit Rs 1,875 cr. Kotak CEO Ashok Vaswani admitted it was due to stress in the microfinance + credit card space, which is something we warned you about a month ago! PS - Vaswani added that around ~40% of the slippages were due to credit cards.

Here is Kotak’s Q2 report card:

• Net Interest Income:Rs 7,020 cr; +11% YoY (vs Est: Rs 6,297 cr)

• PAT: Rs 3,344 cr; +5% YoY (vs Est: Rs 3,424 cr)

• Gross NPA: 1.49% vs 1.39% last quarter

• Net NPA: 0.43% vs 0.35% last quarter

Philip Capital has downgraded the stock and reduced its target price to Rs 1,940 p/sh vs Rs 2,010 earlier. The brokerage says the stress in the unsecured portfolio will continue for several more quarters!

Kotak Mahindra Bank is -7% YTD.

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