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Time To Be Cautious
Yash Upadhyaya
August 06, 2024
Tale of the Tape
Howdy folks. Markets were volatile AF!
Nifty (-0.3%) and Sensex (-0.2%) ended in the red despite opening gap-up as investors used the opportunity to book profits. Midcaps (-0.6%) and Smallcaps (-0.4%) followed suit. The advance-decline ratio ended in favour of the bears (3:2).
Most sectors ended in the red. Real Estate (+0.8%) and Metals (+0.3%) saw some gains. Meanwhile, PSU Banks (-1.3%) and Auto (-0.8%) continued their loss streak.
Bharti Airtel fell after reporting a mixed set of Q1 results. Meanwhile, TVS results met Street estimates! More details below.
Firstcry IPO kicked off today. Check out our analysis below to help you decide whether to subscribe.
Which listed companies are affected and who stands to gain by the crisis in Bangladesh? Find out below.
Samvardhana Motherson rallied +6% intraday after reports said it could join Apple’s supply chain in India.
Zydus Wellness was in focus after 1.7 lakh shares (2.7% equity) changed hands in a block deal; the buyers and sellers were not immediately known.
Results reaction. Syrma SGS cracked -8% after its Q1 net profit declined -32% YoY. Meanwhile, Graphite India rallied +9% intraday after its bottomline beat all Street estimates!
Akums Drugs and Pharmaceuticals had a decent market debut, ending the day +18% higher than its IPO price of Rs 679 p/sh.
Here are the closing prints:
Nifty | 23,993 | -0.3% |
Sensex | 78,593 | -0.2% |
Bank Nifty | 49,748 | -0.7% |
Earnings
Earnings Roundup
Bharti Airtel (-2%) Q1 results were a mixed bag. Higher 4G & 5G users helped boost its India biz, but the overall topline was dragged down by forex issues in its Africa market. The company’s operating margins were also down 95 bps YoY, missing Street estimates. Also, don’t be fooled by the massive bottomline jump; most of it was due to a one-off exceptional gain.
On the positive side, its mobile ARPU increased to Rs 211 vs Rs 209 QoQ. The company once again remains the industry leader; ICYMI - rival Jio reported flat ARPUs for Q1.
Here are Airtel’s key stats:
Net Profit: Rs 4,160 cr; +2x (vs Est: Rs 3,620 cr)
EBITDA: Rs 19,944 cr; +2% YoY (vs Est: Rs 20,096 cr)
EBITDA Margin: 51.8% vs 52.7% YoY (vs Est: 52.2%)
Revenue: Rs 38,506 cr; +3% YoY (vs Est: Rs 38,500 cr)
Big Picture: The stock ended down, partly due to weaker margins and partly due to some profit-booking. Most experts say the best is yet to come though. Its tariff hike will start showing results from Q2 and hopefully juice up ARPUs to the company’s eventual goal of Rs 300,
Bharti Airtel is +42% YTD.
What’s your view on the stock? |
TVS Motor Company (-1%) Q1 results were mostly in-line with Street estimates! Strong domestic & global demand for two-wheelers resulted in double-digit topline growth. FYI - total sales jumped +14% YoY. The company also posted its highest-ever quarterly EBITDA, while margins improved +90 bps YoY on the back of lower expenses.
Here is its Q1 report card:
Revenue:Rs 8,376 cr; +16% YoY (Rs 8,365 cr)
EBITDA: Rs 960 cr; +26% YoY
EBITDA Margin: 11.5% vs 10.6% last year
PAT: Rs 577 cr; +23% YoY (vs Est: Rs 574 cr)
Big Picture: The two-wheeler industry overall had a decent FY24 and looks set to continue as rural demand revives. The only sour note last year was that exports slumped, but this also looks like it is turning around with TVS’s foreign market sales rising +12% YoY!
TVS Motor Company is +23% YTD.
IPO
FirstCry IPO Review
Brainbees Solutions IPO aka FirstCry opened for subscription today! The price band is fixed at Rs 440-465 p/sh. The company aims to raise Rs 4,194 cr from the IPO.
Founded in 2010, FirstCry is India’s biggest multi-channel retail platform for mother & child care products. FYI - it enjoys a ~17% market share by gross merchandise value (GMV) and has over 1,060 stores across 433 cities. Most of its business comes from India (70% of FY24 revenue), with its online platform catering to other markets such as the UAE and Saudi Arabia. Fun fact: the company has reported losses for the last THREE years, similar to many new-age startups.
FYI - a decent chunk of the IPO will be done through fresh issue of shares (Rs 1,666 cr), with the rest being an ‘Offer for Sale’. The money raised will be used to set up new stores under its ‘BabyHug brand’, investing in digital ops and overseas expansion.
FY24 snapshot:
Revenue: Rs 6,481 cr; +15% YoY
EBITDA: Rs 70 cr vs (Rs 263 cr)
Net loss: Rs 321 cr vs Rs 486 cr YoY
Big Picture: The company’s losses are due to its focus on gaining market share and overseas expansion. FYI - since 2020, it’s made five acquisitions worth about Rs 1,287 cr, which is insane. The company says its India biz is already ‘adjusted EBITDA positive’ while its international markets still require more time. That said, it’s unclear how strong its market advantage is. It depends heavily on contract manufacturers for its products and third parties for logistics. Experts say its success will solely depend on the power of its brand, similar to MamaEarth.
FWIW - the IPO pricing is reasonable and current grey market data suggests it may list at a decent 18% premium.
Are you applying for the IPO? |
Specials
Vijay Kedia Portfolio Changes
Who doesn’t want to know which stocks legendary investor Vijay Kedia is currently holding? In this video, we cover his top holdings and latest portfolio updates along with fundamental and technical views on the same.
Charts
Chartbusters
Bangladesh is burning after protests forced ex-PM Sheikh Hasina to flee the country. The event as unfortunate as it is has some major repercussions. Here’s a quick look at who gains/loses, how they moved today and their charts!
For the unaware, Bangladesh is a MAJOR global textile hub. If there’s chaos, business shutdowns and Internet blackouts, those companies can’t function well. In that case, global customers may look to start outsourcing from countries like India. This is why Gokuldas Exports zoomed +18% intraday, leading the textile pack. Other stocks like Century Enka (+16%), KPR Mill (+12%) and Arvind (+6%) also saw solid gains.
Then there are the losers. Marico cracked -5% because 44% of its international revenue comes from Bangladesh. FYI - exports account for 25% of Marico’s topline, so it’s quite a big hit. Finally, there’s VIP Industries (-1%). Nearly 35% of its manufacturing capacity is located in Bangladesh.
Check out their charts below:
Links That Don’t Suck
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