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Monday Meltdown

Tale of the Tape 

Hey guys. Markets got smoked today! 💣

Nifty and Sensex slipped nearly a percent each. However, Midcaps (-2.5%) and Smallcaps (-4%) took an even bigger beating. The advance-decline ratio was firmly in favour of the bears (4:1). 🤕

Most sectors ended in the red. PSU banks (-4.4%), Real Estate (-3%), and Oil & Gas (-2.6%) saw the biggest cuts. IT (+0.8%) and FMCG stocks (+0.3%) escaped the carnage. 🏃

Entero Healthcare’s Rs 1,600 cr IPO is open for subscription! Read our analysis below on whether or not you should subscribe. 💯

Hero MotoCorp slumped 5% despite a good Q3. Mama Earth was up 2% despite the sell-off in broader markets. More details below. 📊

PSU stocks got KO-ed. SJVN was locked in a -20% lower circuit. NBCC (-10%), HUDCO (-10%) and IRFC (-9%) also saw significant selling pressure. 🔥

Listing gains. Apeejay Surrendra Park Hotels closed at Rs 204 p/sh; +31% over its IPO price. 🚀

PB Fintech was in focus after Jefferies started coverage on the stock; the brokerage firm sees another 24% upside potential from current levels. ✅

LIC has upped its stake in Navin Fluorine to 7.07% vs 5.03% earlier. The stock closed up 1%. 👍

Easy Trip Planners will spend Rs 100 cr to open a 5-star hotel in Ayodhya. 🏨

SpiceJet (-3%) will sack 1,400 employees to reduce costs. ✈️

Gensol Engineering (+5%) partnered with Matrix Gas to manufacture green hydrogen. ♻️

Here are the closing prints: 

Nifty 21,616 -0.8%
Sensex 71,072 -0.7%
Bank Nifty 44,882 -1.7%

Earnings Roundup 

Hero Motocorp Q3 results beat Street estimates on all counts! Strong demand across motorcycle & scooter segments led to an 18% YoY jump in volumes. Lower input costs + price hikes led to a jump in margins, which in turn boosted the bottom line. To top it off, the company declared a total interim dividend of Rs 100 p/sh. 🤑

Here are its key stats:

  • Revenue: Rs 9,724 cr; +21% YoY (vs Est: Rs 9,555 cr)
  • EBITDA: Rs 1,362 cr; +47% YoY (vs Est: Rs 1,319 cr)
  • EBITDA Margin: 14% vs 11.5% last year
  • PAT: Rs 1,073 cr; +51% YoY (vs Est: Rs 1,015 cr)

Big Picture: Despite a great Q3, the stock was down 4%! Some of it was due to profit-booking. But others are worried over the firm saying it expects a margin hit over its EV investments. Analysts are also divided over the company’s future. The biggest bear, Goldman Sachs, currently has a ‘sell’ rating on the stock and sees a 20% downside. 🔻

Goldman and others argue that valuations are high and margins are only being kept up due to a fall in raw material costs. In other words: Hero still has to show it can execute in the 125cc segment, make headway in electric two-wheelers and ensure its tie-up with Harley Davidson is a success. 🏍️

Hero MotoCorp is +83% over the last year.

Honasa Consumer (+1%) posted a great set of Q3 numbers. Decent demand across key beauty & personal care verticals (hair, body & makeup) helped lift up the top line. Lower employee expenses boosted margins & the bottom line. FYI – 4 out of its 6 brands are now in the Rs 150 cr annualized revenue rate club. Also, the ‘Derma Co’ brand turned EBITDA positive in Q3! 📊

Here is its Q3 report card:

  • Revenue: Rs 488 cr; +28% YoY
  • EBITDA: Rs 34 cr; +191% YoY
  • EBITDA Margin: 7.04%
  • PAT: Rs 26 cr; +250% YoY

Honasa Consumer is +30% over the past year. 📈

Stocktwits Specials

Realty stocks are off to a great start in 2024. The Nifty Realty index is already up 12% YTD. Given this momentum, SEBI RAs shared 3 interesting trade setups on real estate stocks. 🚀

In around 5 minutes, we cover the developments in the sector and SEBI RAs’ top real estate picks for 2024. Check out the video here 👇🏻

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New Day New IPO

Entero Healthcare IPO is open for subscription this week! The price band is fixed at  Rs 1,195 p/sh – Rs 1,258 p/sh. The company aims to raise Rs 1,600 cr from the IPO. 💸

Founded in 2018, the firm is a pharmaceutical & healthcare product distributor. As of FY23, it supplied medical devices and surgical consumables to over 81,000 retail pharmacists and 3,400 hospitals. Its product range is massive: Entero handles 64,500 SKUs sourced from 1,900 pharma & healthcare firms. As of Sept 2023, its distribution network covered 495 districts across the country through its 74 warehouses. FYI – the IPO is a mix of ‘Offer for Sale’ (Rs 600 cr) and fresh issue (Rs 1,000 cr). The company will use this money mainly to fund expansion plans and repay debt. 🏭

FY23 snapshot:

  • Revenue: Rs 3,330 cr; +31% YoY
  • EBITDA Margin: 1.9% vs 1% YoY
  • Loss: Rs 12 cr vs Rs 30 cr loss YoY

Big Picture: The company has been loss-making despite a 36% CAGR topline over the last three years.  In H1FY24, the firm reported its first profit since FY21. Tbh, this is a tough business with low margins. The pharma distribution industry is heavily informal & fragmented, with no clear signs of a shift towards organized players. The firm’s contract with Roche (where it will promote its nephrology products) is an example of how it can move up the value chain. But most experts say wait it out. 🤔

The IPO is also on the pricier side, which is why current grey market data suggests it may list at a meh 9% premium. PS – the IPO was subscribed 20% on day 2.

Stocktwits Spotlight

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Earnings Highlights 

  • SJVN: Revenue: Rs 543 cr; -2% YoY | Net Profit: Rs 139 cr; -52% YoY 
  • NHPC: Revenue: Rs 2,056 cr; -20% YoY | Net Profit: Rs 628 cr; -19% YoY 
  • MIDHANI: Revenue: Rs 252 cr; +9% YoY | Net Profit: Rs 13 cr; -67% YoY 
  • IRFC: Total Income: Rs 6,745 cr; +8% YoY | Net Profit: Rs 1,604 cr; -2% YoY 
  • HAL: Revenue: Rs 6,061 cr; +7% YoY | Net Profit: Rs 1,254 cr; +9% YoY 
  • Bharat Forge: Revenue: Rs 2,263 cr; +16% YoY | Net Profit: Rs 378 cr; +31% YoY