Tale of the Tape 

Good evening, boys and girls.

Markets closed flat after yet another dull, range-bound session. We saw signs of recovery in the second half as the Nifty attempted to break above its intraday high—only for the rally to be sold into.

But the real pain was in the broader markets, with Midcaps (-1.6%) and Smallcaps (-2%) getting taken to the cleaners. The bear grip was so tight that 441 out of the NSE 500 stocks ended in the red.

Barring Autos (+0.5%), every single sector got thrashed. PSU Banks (-2%) took the worst hit, followed by Real Estate (-1.6%).

Today’s edition covers IIFL’s bold, contrarian buy call on Swiggy (spoiler alert: they see big upside from current levels), key takeaways from the FOMC meeting, the Siemens Energy listing, and more.

Here’s the NSE 500 heatmap:

Stock
Huge Upside In Swiggy?

India’s fast delivery segment has been hella chaotic lately. And with Swiggy down -31% YTD, it may seem crazy to talk about a rally. But IIFL Capital has a contrarian take and believes the stock is set to zoom from here. Here’s what the bull case looks like… 

First off, there are a couple of basic assumptions at play: 

1) Food Delivery: The brokerage believes the sector will remain a Swiggy-Zomato duopoly.  This means newer entrants will fail. It also believes Swiggy will continue to claw back market share from Zomato (the last two quarters are encouraging). 

2) Quick commerce: Higher cash burn is a certainty given the tough competition. But Swiggy’s food delivery should cushion the blow. Also, the market will eventually grow big enough to accommodate 3-4 players. Finally, Instamart is around ~3 quarters behind Blinkit on the GOV front and 8 quarters behind when it comes to EBITDA margins. That means if it executes well enough, it will eventually catch up!

Go deeper: With Swiggy’s market cap at ~$10.7 billion, Instamart is valued at around ~1.9 billion which is an INSANE 88% discount to Blinkit even though it’s only 50% smaller. This could provide what experts call "asymmetric gains” when Instamart finally does kill it. FYI - IIFL has a target price of Rs 535 p/sh; +43% upside from current levels.

Big Picture: Keep an eye out for how these assumptions are tested. For instance, food delivery is slowing down. Can ‘Bolt’ aka 10-minute-delivery turn it around? Secondly, while Rapido & BigBasket may suck, Amazon and Reliance could give Swiggy and Zomato a run for their money in quick commerce.

Specials
3 Stocks Under Rs 300 - By SEBI RAs

In this week’s video, we will walk through the Top 3 stocks to buy under Rs 300 recommended SEBI RAs on Stocktwits. In the video, we’ll break down the recommendations by SEBI RAs, covering both fundamental and technical analysis.