Not Looking Good

Tale of the Tape

Good evening ladies and gentlemen. Markets ended lower for a second straight day. 👎

Nifty and Sensex dropped ~1% each. Mixed earnings, steep valuations, and weak global cues hurt investor sentiment. Midcaps and Smallcaps crashed 2.5%. The advance-decline ratio (1:5) ratio remained firmly in favor of the bears. 🐻

It was a sea of red across the board. Metals (-2.2%) and Real Estate (-2%) stocks witnessed deep cuts. ✂

ACC’s (+1%) strong results and positive management commentary were well received. Weak same-store sales growth overshadowed Jubilant Foodworks (-9%) decent Q2 performance. Read more below. 📊

Midcaps and Smallcaps were obliterated for the second day in a row. Many investor favorite stocks like IRCTC (-19%), Mastek (-15%), and Deepak Nitrite (-12%) were beaten down. Check out their (horrifying) charts below. 📉

LIC is likely to back Zee Entertainment’s (+3.5%) merger with Sony India, as per Livemint. ✅

Vodafone Idea (+7%) accepted the four-year moratorium on AGR dues. This is positive for the company as it will have more time to repay the Government. 😇

Astral Ltd will enter the faucets and sanitaryware business. The stock closed down 3% in line with overall market weakness. 🛁

IPCA Labs (-2%) will consider the proposal of a 1:2 stock split on November 13. ✌

Mindtree (+1%) extends gains to Day 5. The company won a new order from Western Assets, a leading global fixed-income investment manager. Mindtree didn’t disclose the deal size and other details. 💸

Cryptos edged higher. Bitcoin (+3%) neared its all-time high. Ethereum climbed +2%. 👍

Here are the closing prints :

Nifty	18,267	-0.8%
Sensex	61,260	-0.7%
Bank Nifty	39,518	-0.1%

Earnings Roundup

ACC’s (+1%) earnings were slightly better than estimates. Volumes were flat YoY despite Q3 being a seasonally weak quarter. Prudent cost control measures aided operating profits. 📊 Here are the key stats:

Revenue: Rs 3,653 cr; +5% YoY (vs Est: Rs 3,575 cr)
EBITDA: Rs 712 cr; +6% YoY (vs Est: Rs 698 cr)
EBITDA Margin: 19% (vs Est: 19.5%)
PAT: Rs 450 cr; +24% YoY (vs Est: Rs 437 cr)

ACC is bullish on cement demand rising in the coming quarters. Government’s infrastructure push and healthy real estate demand may drive growth. The company is in expansion mode currently and most units are likely to start by the end of next year. 🏭

ACC is +39% YTD.

Jubilant Foodworks crashed 9% despite strong earnings. Why so? The company reported same-store sales growth (SSG) of 26% vs estimates of 30-35%. FYI – SSG refers to the YoY growth in sales for restaurants operating for over a year. 🤓 Check out its report card:

Revenue: Rs 1,101 cr; +37% YoY (vs Est: Rs 1,104 cr)
EBITDA: Rs 286 cr; +33% YoY (vs Est: Rs 215 cr)
EBITDA Margin: 26% (vs Est: 23.1%)
PAT: Rs 122 cr; +58% YoY (vs Est: Rs 104 cr)

Pratik Pota, CEO and Wholetime Director at Jubilant Foodworks Limited said:

We are pleased with our strong performance in Q2 FY22. Notwithstanding the operating challenges and inflationary headwinds, we delivered a robust topline growth, strong EBITDA margins and record new store openings. We are excited about the future and believe that we have the right strategy to lead growth in the exciting period that lies ahead.

Jubilant Foodworks is +42% YTD. 🤑

Overheard on Stocktwits

Here’s an interesting chart setup by Sandeep Majjigi on Stocktwits that might interest you. Add $ANDHRSUGAR.NSE to your watchlist and track its performance. Sugar stocks have been on a tear in the last year. What are the fundamental triggers for the sector? Check out our YouTube video to learn more – https://youtu.be/l3uhKLHMcUk

Broader Market Selloff

Midcaps and Smallcaps saw a savage correction. A somber start to the earnings season coupled with eye-watering valuations spoilt investors’ mood. 😥 The volatile AF IRCTC (-19%) hovered near its lower circuit mark. Mastek (-15%) and Deepak Nitrite (-12%) were also under pressure. Here are their disturbing charts: 📉

Take #2

Ola is reportedly in talks to restart its grocery delivery business. Maybe second time’s the charm! ✌

Ola first launched its grocery delivery business called Ola Store in 2015. The project never made it beyond the pilot stage due to weak demand and high operational costs. But, a lot has changed in that time. 😎

The Covid-19 pandemic has revolutionized online shopping. Consumers are buying everything from milk, soap, hair oil to fresh meat online. Rising smartphone penetration and cheap data costs are set to drive growth. According to RedSeer, The online grocery market in India is expected to touch $24 billion by 2025. 💰

But, Ola’s got company in its fight to deliver groceries to your doorstep. Swiggy’s Instamart, Grofers, BigBasket, and Flipkart already have a headstart in this space. And, they’re now focussing on the fast-growing “less than 45 minutes” delivery market. All the best guys! 👍

On a not-so-positive note, there has been a major shakeup in the top management of Ola. Both the COO and CFO of the company have resigned recently, as per media reports. Several top executives have left in the past year which is a worrying sign for Ola. 😓

We just dropped the latest episode of Stocktwits & Friends. In this episode, we have Darshan Bathija with us. Darshan started off as an investment professional, he moved on to head partnerships for TapChief (acquired by Unacademy) and then he co-founded Vauld in 2018.

In this episode, he shares his view on why cryptocurrency is a new asset class, the role of regulators, how to choose a cryptocurrency and much more. Watch here – youtu.be/oCthafuy6MY