The Pain Continues

Tale of the Tape

Good evening ladies and gentlemen. Markets extended their losing streak to day 4. 📉

Nifty and Sensex recovered from day’s low to end with minor cuts. Midcaps (-0.4%) and Smallcaps (-2.9%) were volatile AF. 🎢

Most sectors ended lower. IT (-1.2%) and Auto (-0.9%) were the key sources of weakness. Real Estate (+0.7%) stocks snapped their five-day losing streak. 🔥

Results reaction. Gujarat Gas soared over 9% intraday on blockbuster Q4 earnings. Vodafone Idea’s net loss narrowed in Q4. More details below. 📊

Aurobindo Pharma (-3%) received 6 negative observations from the US Food and Drug Administration (USFDA) for its Jedcherla unit. 🚨

Texmaco Rail (+3%) won new orders worth Rs 6,450 cr from the Indian Railways. 💰

Ajanta Pharma (+2%) approved a 1:2 bonus issue. ✌️

Delhivery IPO was subscribed just 0.1x on day 1. 😶

Cryptos continued to bleed. Bitcoin (-2%) rebounded after almost dipping below the $30K-mark. Ethereum was down 1%. Solana, Cardano, and Doge tumbled between 6%-9% each. 👎

Here are the closing prints:

Nifty	16,167	-0.5%
Sensex	54,088	-0.5%
Bank Nifty	34,693	+0.6%

What’s Happening To Mr. Market?

There seems to be no respite for Dalal Street investors as the Nifty and Sensex ended lower for the 7th time in 8 days. Despite all the brutal newsflow, Markets are down barely over 10% from their all-time highs. Yet, it feels like a lifetime since our portfolios ended in the green. 🤕

What’s going on here? Remember how we’ve been obsessing about inflation for months? Turns out Central Banks globally got it horribly wrong (lol) and are now trying their best to control it. More like a last-ditch effort to be honest. The only way they can do so is by increasing interest rates which as we all know by now sucks! Several Covid-era measures to boost economic growth are also being rolled back. 🔙

The Russia-Ukraine conflict has only made matters worse. Oil prices are heavily influenced by Russia which controls 12% of the global supply. Several European countries like France and Germany rely on Russian oil and natural gas for their energy demands. Trade sanctions on Russia have sent oil prices (and a host of other commodities) soaring which is a big negative for India. ⛔

Other factors like China’s harsh zero-tolerance Covid-19 policy, consistent FII selling pressure, weak rupee, and lackluster earnings have fuelled pessimism. 🚨

What to do? 2022 will be a tough year for markets. This means we may see more pain in the short term. Having said that, the worst part of the correction may be behind us, according to Sridhar Sivaram, Investment Director, at Enam Holdings. Meanwhile, Sridhar continues to remain bullish on state-owned companies, banks, and NBFCs given their attractive valuations. ✅

Earnings Roundup

Gujarat Gas (+6%) had an insane Q4. The company beat Street estimates on all counts. CNG volumes hit an all-time high led by strong industrial demand. A higher share of CNG sales plus price hikes boosted operating margins. 💸 Here are its key stats:

Revenue: Rs 4,669 cr; -9% QoQ (vs Est: Rs 4,600 cr)
EBITDA: Rs 698 cr; +3x QoQ (vs Est: Rs 490 cr)
EBITDA Margin: 14.9% (vs Est: 10.7%)
PAT: Rs 444 cr; +4x QoQ (vs Est: Rs 300 cr)

Gujarat Gas added 155 CNG stations in FY22, taking its overall total to 711. Robust industrial demand, preference for CNG cars amidst soaring oil prices plus cheap valuations are key positives. 👍

Gujarat Gas is -16% YTD.

Vodafone Idea ended down 1% despite decent Q4 results. Revenues rose for a third straight quarter and losses narrowed. Average Revenue Per User (ARPU) jumped 7.5% over the previous quarter to Rs 124 thanks to price hikes. But, continued loss of active subscribers (-34 lakh in Q4) and uncertainty over fundraising plans hurt sentiment. 📊 Here’s its report card:

Revenue: Rs 10,240 cr; +5% QoQ
Net Loss: Rs 6,461 cr (vs Net Loss of Rs 7,189 cr QoQ)

Big Picture: Vodafone Idea has been a complete wreck in the past few years. Its consistently losing subscribers to rivals Jio and Airtel, hasn’t turned a profit in ~6 years, and owes Rs 30,000+ cr to banks. 🤯

The last year’s game-changing telecom reforms plus VI’s decision to convert outstanding AGR dues into equity have eased some of the burden. But there’s still a lot of work to be done. For Vodafone Idea, finding a sustainable and scalable business model is priority #1 for its revival. Without it, there’s only soo much cash it can burn. 🤷

Vodafone Idea is -44% YTD.

Stocktwits Spotlight

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Earnings Highlight

Cipla: Revenue: Rs 5,260 cr; (+14% YoY) | Net Profit: Rs 362 cr; (-12% YoY)
Mahanagar Gas: Revenue: Rs 1,188 cr; (+52% YoY) | Net Profit: Rs 132 cr; (-38% YoY)
Kansai Nerolac Paints: Revenue: Rs: 1,537 cr; (+5% YoY) | Net Profit: Rs 25 cr; (-80% YoY)
Balaji Amines: Revenue: Rs 779 cr; (+88% YoY) | Net Profit: Rs 109 cr; (+29% YoY)