Tale of the Tape 

Howdy folks. Markets took a beating today following a global sell-off triggered by recession fears. PS - the US fell by -1.3%, while Japan saw its biggest two-day fall since the 2011 tsunami! Yikes.

Nifty (-1.2%) and Sensex (-1.1%) opened gap-down and weakened further as the day progressed. Midcaps (-1%) and Smallcaps (-0.8%) followed suit. 364 stocks in the NSE 500 ended in the red.

Except Pharma (+0.5%), all sectors ended in the red. Real Estate (-3.5%), Auto (-2.9%) and Metals (-2.7%) were the top losers.

Zomato soared +12% after a strong Q1 show. Read our top story below on why new growth runways are on the horizon.

Ola Electric's Rs 6,146 cr IPO kicked off today! Check out our analysis below to help you decide whether to invest.

Auto stocks got KO-ed after the sector posted weak July sales. Maruti Suzuki, Eicher Motors, Tata Motors and Mahindra & Mahindra fell between -3% and -5% each.

Paytm was up +6% after Zomato confirmed (once again) that they were in talks to acquire its movie ticketing biz.

Results reaction. Ixigo gained +4% after posting a +78% YoY jump in Q1 net profit. Meanwhile, ITC (-1%) was in focus after its bottomline missed Street estimates!

Infibeam Avenues was up +5% after it said it acquired a majority stake in Rediff.com.

Shakti Pumps hit a +5% upper circuit after bagging a Rs 558 cr contract from Uttar Pradesh’s agriculture department.

Here are the closing prints:

Stocks
Zomato Rocks! 🤘 🚀 

Zomato rallied +18% intraday, with its market cap nearly hitting $30 billion! Its blockbuster Q1 numbers are obviously the main trigger here, but there’s more here that you need to know.

Let’s start with food delivery, where Zomato has been struggling for growth. For most of FY23, this vertical basically added ZERO new ‘average monthly transacting customers’. In Q1FY25, the company added nearly the same amount of customers in one quarter that it did in the whole of FY24. Gross order value (GOV) was also up +10% QoQ. It’s not clear sailing yet, but Zomato has expanded its customer base!

Then there’s Blinkit, whose GOV surged +130% YoY. FYI - Blinkit ‘s average GOV throughput per store is now at Rs 10 lakh vs Rs 6 lakh last year. And this has happened even though the number of stores have jumped from 383 to 639. This is proof that the vertical can scale up, which implies huge growth potential. As Motilal Oswal put it: Blinkit “notoriously defies any attempts to value the stock fairly”.

Finally, there will be a new app for its ‘going out’ biz aka dining, ticketing & events. ICYMI - Zomato is in talks to buy Paytm’s ticketing business. A new app may not be the best way to go (can’t cross-sell to existing users). But the bullish view is that Deepinder Goyal believes the vertical is strong enough to not need to depend on the OG app.

Here are Zomato’s Q1 stats:

• Revenue: Rs 4,206 cr; +74% YoY

• EBITDA: Rs 177 cr vs (Rs 48 cr)

• PAT:  Rs 253 cr; +126x

TL;DR: Q1 results beat Street estimates, with all cylinders firing. Zomato also showed that there’s a LOT of growth on the horizon. FYI - CLSA has hiked its target price to Rs 350 p/sh vs Rs 248 p/sh earlier.

Specials

SEBI RA Spotlight

We all miss the legendary investor – Rakesh Jhunjhunwala! In this video, we cover his top holdings and latest portfolio updates along with fundamental and technical views on the same.

IPO

Ola Electric IPO Review

Ola Electric IPO opened for subscription today! The price band is fixed at Rs 72-76 p/sh. The company aims to raise Rs 6,146 cr from the IPO.

Founded in 2017, Ola is India’s first pure-play electric vehicle (EV) manufacturer. Its bread-and butter is electric scooters, in which it has a roughly 50% market share. The company has seven products, including its best-selling S1 scooter, and has announced plans to launch an EV motorcycle by 2025. FYI - Ola is creating a massive EV hub in Tamil Nadu, where it hopes to make its own lithium-ion battery cells and stop depending on imports. Finally, its topline has exploded, with sales doubling to 3.3 lakh units in FY24, but the company is still NOWHERE near to turning a profit.

FYI - the IPO is majorly a fresh issue of shares (Rs 5,500 cr), which is a BIG positive, with the rest being done through the ‘Offer for Sale’ route. 50% of the money raised will be used for CAPEX. The rest is as follows: Rs 1,600 cr for R&D purposes, Rs 800 cr to repay debt and Rs 350 cr for ‘organic growth’. 

FY24 snapshot:

• Revenue: Rs 5,010 cr; +90% YoY

• EBITDA Loss: 1,040 cr

• Net loss: Rs 1,584 cr vs Rs 1,472 cr YoY

Big Picture: Ola’s opportunity is HUGE. Electric 2Ws currently make up ~5% of overall 2W volumes. Some experts project this could go up to 40%-50% by FY28. But at the same time, there are hundreds of barriers Ola has to overcome before it gets there. Will it be able to make its own cells, cut costs and post profits? How much of its success depends on GOI subsidies, which may or may not disappear? And will it be able to fend off competition from rivals like Ather? 

FYI - the company has reportedly slashed the valuation it was initially seeking, but some experts say the IPO’s pricing is STILL on the higher side. That said, current grey market data suggests it may list at a 20% premium.

Charts

Movers and Shakers

Here’s a look at this week’s top NSE500 movers. PCBL took pole position after rallying +28%. Adani Energy Solution (+20%) hit the highest level since Jan 2023. Aegis Logistics fell -18% on weak Q1 earnings. Birlasoft (-17%) hit a 2-month low. Check out their charts below:

Links That Don’t Suck

🚀 Top 3 Stocks in Rakesh Jhunjhunwala's Portfolio | Top Holdings of Jhunjhunwala 2024 | Titan 

💬 Stocktwits is hosting a free AMA with Cashvisory_India. Click to ask  

🚨 Japan’s Nikkei drops 5% to an 8-month low, Topix clocks worst day in 8 years as Asia markets fall 

🥊 What To Know About Olympics Gender Debate After Italy’s Angela Carini Withdraws From Women’s Boxing Match 

😡 It’s The Underprivileged That Suffer The Most As Big Cities Crumble During Severe Weather Conditions

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